Document:

Exhibit 4.11

                                                                                                    Exhibit
    4.11
     

    

    
      	
               

            	
              Technology
                Partnerships Canada

               

              An
                Agency of Industry Canada

               

            	
              Partenariat
                technologique Canada

               

              Un
                organisme
                d'Industrie Canada

               

            	
               

              "TPC"
                AGREEMENT NO. 720-482523

               

            

    

     

    TECHNOLOGY
      PARTNERSHIPS CANADA

     

    DNA
      Micro-Array Technologies: Novel Platform and Applications

     

    This
      Agreement made

     

    
      
        	 Between:	 	
                 HER
MAJESTY
                  THE
                  QUEEN IN
                  RIGHT
                  OF
                  CANADA

              
	 	 	
                 as
                  represented by the Minister of
                  Industry

              
	 	 	
                 (hereinafter
                  referred to as "the Minister")

              
	 	 	 
	 And: 	 	 TM BIOSCIENCE CORPORATION,
                a
                corporation duly incorporated 
	 	 	
                 under
                  the laws of the Province of Ontario, having its head office located
                  at

              
	 	 	  900-439 University Avenue, Toronto,
                Ontario
	 	 	 (hereinafter referred to as "the Proponent")

      

    

     

     

    WHEREAS
      in a context in which innovation is essential in an increasingly knowledge-based
      economy, the Minister is charged with the achievement of Canada's objectives
      of
      increasing economic growth, creating jobs and wealth, and supporting sustainable
      development; and

     

    WHEREAS
      the Techiology Partnerships Canada ("TPC") Program is specifically designed
      to
      promote the above objectives by means of strategically investing in research,
      development and innovation in order to encourage private sector investment,
      and
      so maintain and grow the technology
      base and technological capabilities of Canadian industry throughout the country;
      and

     

    WHEREAS
      the
      Minister agrees to make a TPC investment in the Proponent's project
      described
      in this
      Agreement, considering that:

     

    
      	(i)
  	the technology developed under this project will
              lead
              toward development of genetic
              testing products; and

    

    
      	 	 

    

    
      	(ii)  	
              the
                project will assist the Government of Canada in fulfilling its Innovation
                Strategy objectives more readily;
                and

            

    

     

    
      	(iii)  	
              the
                project will strengthen the Canadian biotechnology industry and will
                enhance Canada's position as a technologically advanced
                nation.

            

    

     

    AND
      WHEREAS the entering into this Agreement is not contingent upon any
      export performance on the part of the Proponent.

     

    NOW,
      THEREFORE, in consideration of their respective obligations set out
      below, the parties hereto agree as follows.

     

    Canada

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

    "TPC"
      AGREEMENT NO. 720-482523 

     

    TECHNOLOGY
      PARTNERSHIPS CANADA

     

    DNA
      Micro-Array Technologies: Novel Platform and Applications

     

    This
      Agreement made

     

    
      	Between:	 	
               HER
MAJESTY
                THE
                QUEEN IN
                RIGHT
                OF
                CANADA

            
	 	 	
               as
                represented by the Minister of
                Industry

            
	 	 	
               (hereinafter
                referred to as "the Minister")

            
	 	 	 
	 And: 	 	 TM BIOSCIENCE CORPORATION,
              a
              corporation duly incorporated 
	 	 	
               under
                the laws of the Province of Ontario, having its head office located
                at

            
	 	 	  900-439 University Avenue, Toronto,
              Ontario
	 	 	 (hereinafter referred to as "the Proponent")

    

    
       

       

    

    WHEREAS
      in a context in which innovation is essential in an increasingly knowledge-based
      economy, the Minister is charged with the achievement of Canada's objectives
      of
      increasing economic growth, creating jobs and wealth, and supporting sustainable
      development; and

     

    WHEREAS
      the TechrXology Partnerships Canada ("TPC") Program is specifically designed
      lo
      promote the above objectives by means of strategically investing in research,
      development and innovation in order to encourage private sector investment,
      and
      so maintain and grow the technology base and technological capabilities of
      Canadian industry throughout the country, and

     

    WHEREAS
      the Minister agrees to make a TPC investment in the Proponent's project
      described in this Agreement, considering that:

     

    
      	(i)  	
              the
                technology developed under this project will lead toward development
                of
                genetic testing products; and

            

    

     

    
      	(ii)  	
              the
                project will assist the Government of Canada in fulfilling its Innovation
                Strategy objectives more readily;
                and

            

    

     

    
      	(iii)  	
              the
                project will strengthen the Canadian biotechnology industry and will
                enhance Canada's position as a technologically advanced
                nation.

            

    

     

    ANDWHEREAS
      the
      entering into this Agreement is not contingent upon any export performance
      on
      the p of the Proponent.

     

    NOW,
      THEREFORE, in consideration of their respective obligations set out
      below, the parties hereto agree as follows.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Article
      1 - Deadline for receipt of signed agreement

     

    
      	
            	1.1	
              ThisAgreement
                must be signed by the Proponent and received by the Minister within
                thirty
                (30) days of its signature on behalf of the Minister, failing which
                it
                will be null and void.

            

    

     

    Article
      2 - Documents forming part of this Agreement

     

    
      	
            	2.1	
              The
                following documents form an integral part of this
                Agreement:

            

    

     

    These
      Articles of Agreement

    Schedule
      1 - TPC General Conditions

    Schedule
      2 - The Project

    Schedule
      3 - Claims and TPC Project Cost Principles

    Schedule
      4 - Contractual Benefits

    Schedule
      5 - Reporting Requirements

    Schedule
      6 - Project Fact Sheet for News Release

     

    
      	
            	2.2	
              In
                the event of conflict or inconsistency, the order of precedence amongst
                the documents forming part of, this Agreement shall
                be:

            

    

     

    these
      Articles of Agreement, 

    Schedule
      1 - General Conditions 

    Schedule
      2 - The Project

    Other
      Schedules

     

    Article
      3 - The Proponent's Obligations

     

    
      	
            	3.1	
              The
                Proponent will carry out the DNA Micro-Array Technologies: Novel
                Platform
                and Applications Project ("the Project") as described in
                Schedule 2, will make claims in accordance witlj Schedule 3, will
                provide
                the benefits mentioned in Schedule 4, will issue the reports required
                under Schedule 5 and will fulfil all of its other obligations hereunder,
                in a diligent and professional manner using qualified
                personnel.

            

    

     

    
      	
            	3.2	
              The
                Proponent shall ensure that the Project is completed on or before
                July 31,
                2006 ("Project Completion Date"),
                unless otherwise agreed to in writing by the
                Minister.

            

    

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Article
      4 - The Contribution

     

    
      	
            	4.1	
              Subjectto
                all the other provisions of this Agreement, the Minister will make
                a
                Contribution to the Proponent in respect of the Project, of the lesser
                of:

            

    

     

    
      	
            	(a)	
              29.2
                % of the Eligible Costs; and

            

    

     

    
      	
            	(b)	
              $7,300000.

            

    

     

    
      	
            	4.2	
              TheMinister will
                not contribute to any Eligible Costs incurred by the Proponent prior
                to September 1, 2002 nor after the Project Completion Date, unless
                otherwise agreed to inwriting by the
                Minister.

            

    

     

    Article
      5 - Environmental Assessment

     

    
      	
            	5.1	
              The
                Minister has assessed the Project under the Canadian Environmental
                Assessment Act and is satisfied that any potentially adverse
                environmental effects that may be caused by the Project are
                insignificant.

            

    

     

    Article
      6 - Other Government Assistance

     

    
      	
            	6.1	
              The
                Proponent hereby acknowledges that, except for scientific research
                and
                experimental development taC credits, deductions or allowances, no
                other
                federal, provincial or municipal government financial assistance
                other
                than that described below has been requested or received by the Proponent
                for the Eligible Costs of the
                Project.

            

    

     

     

     

    
      	 Federal	 	  	 	 
	 	 	$	Nil	 	 	 
	 Provincial	 	$ 	5250,000
	 	
              (Province
                of Ontario)

            	 
	 Municipal	 	$ 	Nil	 	 	 
	 Total	 	$ 	250,000	 	 	 
	 	 	 	 	 	 	 

    

     

     

    
      	
            	6.2	
              The
                Proponent 11 inform the Minister promptly in writing of any other
                federal,
                provincial or municipal government assistance (except for scientific
                research and experimental development tax credits, deductions or
                allowances) to be received for the Eligible Costs of the Project
                and the
                Minister will have the right to reduce the Contribution = der this
                Agreement to the extent of any such
                assistance.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
      7 - Addresses

     

    
      	
            	7.1	
              Any
                notice to the Minister wi11 be addressed
                to:

            

    

     

    Director,
      Enabling Technologies Technology Partnerships Canada 10th Floor

     

    300
      Slater Street

    Ottawa,
      Ontario K1A OC8

     

    Fax
      No:
      (613) 954-9117

     

    
      	
            	7.2	
              Any
                notice to the Proponent will be addressed
                to:

            

    

     

    Chief
      Financial Officer

    Tm
      Bioscience Corporation 900-439 University Avenue Toronto, Ontario

    M5G
      1Y8

     

    Fax
      Nod
      (416) 593-1066

     

    Article
      8 - Special Conditions

     

    
      	
            	8.1	
              Alternate
                Dispute Resolution

            

    

     

    If
      a
      dispute arises concerning the application or interpretation of this Agreement,
      the parties will attempt to resolve the matter through good faith negotiation,
      and may, if necessary and the parties consent in writing, resolve the matter
      through mediation by a mutually acceptable mediator or arbitration in accordance
      with the Commercial Arbitration Cole set out in the
      schedule to the Commercial Arbitration Act (Canada), and all
      regulations made pursuant to that Act.

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	
            	8.2	
              Liquidated
                Damages Clause

            

    

     

    
      	
            	8.2.1	
              If
                in accordance with subsection 8.2 of the General Conditions (Schedule
                1).,
                the Minister declares that an event of default has occurred and directs
                the Propone:zt to transfer and deliver to the Minister, title to,
                possession of, and all rights of the Proponent
                in the Intellectual Property, then the Proponent shall immediately
                cornply
                or
                as an alternative, the Proponent may offer to pay a settlement amount
                ("the Settlement
                Amount"), as determined by the formula in Article 8.2.2, and the
                Minister
                shall accept this offer.

            

    

     

    
      	
            	8.2.2	
              The
                Settlement Amount shall be $14,625,000 (Fourteen Million Six Hundred
                Twenty
                Five Thousand Dollars) which is approximately one and a half (1
                %2)
                time:
                the cumulative royalty payment amount of $9,750,000 (Nine Million
                Seven
                Hundred Fifty Thousand Dollars) refereed to in Subsection A. 2.2
                of
                Schedule 4.

            

    

     

    
      
        	
              	 	
                If
                  some royalty payments have already been made to the Minister under
                  Section
                  A ("the
                  Payments to Minister") of Schedule 4, the Settlement Amount shall
                  be
                  reduced
                  by
                  the royalties so paid by the
                  Proponent.

              

      

    

     

    
      	
            	8.2.3	
              The
                Settlement Amount due to the Minister under Article 8.3 shall be
                paid by
                the Proponent
                within thirty (30) days of the Minister directing the Proponent to
                transfer and
                deliver to the Minister, title to, possession of, and all rights
                of the
                Proponent in the
                Intellectual Property, otherwise the Proponent shall immediately
                comply
                with the
                Minister's direction regarding the Intellectual
                Property.

            

    

     

    
      	
            	8.2.4	
              The
                Minister and the Proponent agree that if the Settlement Amount, as
                determined by
                the frormula in Article 8.2.2, is paid in full by the Proponent,
                then the
                Agreement is
                deemed to be terminated in accordance with Section 7 of the General
                Conditions
                (Schedule 1).

            

    

     

    
      	
            	8.3	
              EquityEquivalency
                Clause

            

    

     

    
      	
            	8.3.1	
              The
                Minister shall grant the Proponent an option to terminate this Agreement
                in the event of a change in ownership. A change in ownership shall
                be
                deemed by the Minister
                to have occurred if and when a new person or entity becomes the
                beneficial
                owner of the shares of Common Stock ("the Common Shares") of the
                Proponent
                carrying
                in excess of fifty (50) per cent of the voting rights attached to
                all
                Common
                Shares issued and outstanding ("the Change in Ownership"). The Proponent
                shall advise the Minister in writing, at least, thirty (30) days
                prior to
                any anticipated Change in
                Ownership.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	8.3.2	
              If
                as a result of the Change of Ownership, the Proponent decides to
                withdraw
                from the project ("the Event of Withdrawal"),
                the Minister shall not deem the Event of Withdrawal
                as an event of default and the remedies set forth in subsection 8.2
                of
                the General
                Condition (Schedule 1) shall not apply. For greater certainty, the
                Change
                of Ownership
                shall be deemed as a "Material Change" as this term is defined in
                Article
                2
                of the General Conditions (Schedule
                1).

            

    

     

    
      	
            	8.3.3	
              Within
                ninety (90) days following the Event of Withdrawal, the Proponent
                shall
                pay to
                the Minister an amount of money equal to the value of the Common
                Shares i
                n the
                capital of the Proponent ("the Equity Equivalency"),
                valued at the price per share payable on the transaction date that
                gave
                rise to the Change in Ownership. The number of Common Shares in the
                Equity
                Equivalency shall be determined by an indepe dent qualified professional,
                given the actual contribution(s) made by the Minist r to the Proponent
                at
                the time the contribution(s) were made, as i f this contrib tion(s)
                were
                capitalized as an investment in equity capital of the Proponent.
                The Pr
                ponent shall cover all expenses associated with this
                valuation.

            

    

     

    
      	
            	8.3.4	
              In
                the event of stock splits, stock consolidations, or stock
                reclassifications that have occurred prior to the Event of Withdrawal,
                the
                Equity Equivalency position of the Minister shall be adjusted accordingly,
                so that the virtual ownership interest of the Minister is maintained
                intact as described below:

            

    

     

    Stock
      Splits

     

    In
      the
      event of any subdivision, re-division, or change of the Common Shares of
      the Proponent
      into a greater number of Common Shares at any time whilethis
      Agreement is
      in
      farce, the new Equity Equivalency number of Common Shares shall
      thereafter be
      such
      greater number of Common Shares of the Proponent as would have
      resulted
      from
      said subdivision, re-division, or change had the Minister actually held the
      previous
      Equity Equivalency number of Common Shares immediately prior to such
      subdivision, re-division, or change.

     

    Stock
      Consolidation

     

    In
      the
      event of any consolidation of the Common Shares of the Proponent into a lesser
      number of Common Shares at any time while this Agreement is in force, the new
      Equity Equivalency number of Common Shares shall thereafter be such lesser
      number of Common Shares of the Agreement as would have resulted from such
consolidation
      had the Minister actually held the previous number of Common S hares
      immediately prior to such consolidation.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Reclassifications

     

    
      	
            	(a)	
              In
                the event of any reclassification of Common Shares of the Proponent,
                resulting, but not limited to, the payment of a stock dividend other
                than
                dividends
                in the ordinary course, capital re-organization, or amalgamation
                of
                the Proponent with another corporation or the sale or conveyance
                of the
                undertaking or assets of the Proponent, as an entirety or substantially
                as
                an entirety to another entity, including pursuant to a take-over
                bid at,
                any time while this Agreement is in force, the new Equity Equivalency
                number of Common Shares shall thereafter be the number of Common
                Shares of
                the Proponent or of the appropriate class or classes resulting from
                such
                reclassification that the Minister would have been entitled to receive
                in
                respect
                of the number of Common Shares had the Minister actually held
                the
                previous Equity Equivalency number of Common Shares before such
                reclassification; and

            

    

     

    
      	
            	(b)	
              In
                the event of any amalgamation, merger or transfer of the undertaking
                or
                assets
                of the Proponent as an entirety or substantially as an entirety to
                another
                corporation ('the Successor Corporation'), the Successor Corporation
                resulting
                from such amalgamation, merger, or transfer (if not the
                Proponent) shall
                be deemed to assume the due and punctual performance and
                observance of
                each and every covenant and condition contained herein to be
                performed
                and observed by the Proponent.

            

    

     

    
      	
            	8.3.5	
              Any
                payment due to the Minister under this Article shall be payable within
                ninety (90)
                days of the transaction date that gave rise to the Change in Ownership.
                Any late payment
                shall incur interest charges at the Interest Rate set forth in Schedule
                1.
                Upon
                payment by the Proponent to the Minister of the monetary value of
                the
                Equity Equivalency pursuant to Section 8.3.3 with interest, if applicable,
                this Agreement shall
                be terminated in accordance with Section 7 of the General Conditions
                (Schedule 1).

            

    

     

    8.4 Required
      Government Approvals

     

    All
      payments to be made by the Minister to the Proponent, pursuant to this
      Agreement, on or after December 31, 2005 are subject to the required
      Governmental approvals,
      including that of the Treasury Board of Canada. In the event that the Minisler
      is prevented
      from disbursing the full amount of the Contribution, the Parties agree to
      review the
      effects of such a shortfall in the Contribution on the implementation of the
      Agreement
      and to
      adjust, as appropriate, the Contractual Benefits specified therein.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Article
      9 - Entire Agreement

     

     

    This
      Agreement constitutes the entire agreement between the parties and supersedes
      all previous
      documents, negotiations, arrangements, undertakings and understandings related
      to its subject matter.

     

    IN
      WITNESS WHEREOF the parties hereto have executed this Agreement through
      duly authorized representatives.

     

    
       

      

      
        	
                HER
                  MAJESTY THE QUEEN IN RIGHT OF CANADA, 

              	
                 

              
	,
                as
                represented by the Minister of Industry	 

      

      

      
        	 	 	 
	Per: 
                /s/ Jeff Parker	 	
                2/12/03

              
	
                

                Technology Partnerships Canada	 	
                
                  
 Date

              
	Jeff
                Parker- Executive Director	 	 

      

    

     

    
      	 	 	 
	Tm
              Bioscience Corporation 	 
	 
 	 
 	 
 
	Per:
              /s/ James Pelot	  	
              3/12/03

            
	
              
                

              

              
                James
                  Pelot 

                CFO 

              

            	
              
                

              

              Date

            
	
               

            	 

    

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

    SCHEDULE
      1 - TPC GENERAL CONDITIONS

     

    TABLE
      OF CONTENTS

    

     

    
      	 1.Definitions	 8.1
              Events of Default
	 "Agreement"	 8.2 Remedies on Default
	 "Background Intellectual
              Property"	
               8.3
                Remedies Fair and
                Reasonable 

            
	 "Contribution"	 8.4 No
              Waiver
	  "Eligible
              Costs" 	 
	 "Fiscal Year" 	 9. Force
              Majeure
	
               
                "Intellectual Property"

            	 9.1 Event of Force Majeure
	 "Interest Rate"	 9.2 Definition of Force
              Majeure
	 "Project"	 
	
               
                "Project Completion Date"

            	 10. Announcements
	 "Schedule"	 10.1 Consent
              to Public Announcement 
	 "Statement of Work"	 10.2 Confidentiality
              Obligation
	 	 10.3 Reporting under Security
              Laws
	 2.Material
              Changes	 
	 	
               11.
                Notice

            
	 3.Disposal
              of
              Assets	 11.1 Form and Timing of Notice.
              
	 	 11.2 Change of Address
	
               4.Claims
                for Payment

            	 
	 4.1 Payment of Claims	 12.  Compliance
              with
              Laws
	 4.2
              Hold-back Rights	 
	 4.3 Overpayment by Minister 	 13.  Members
              of Parliament
	 4.4 Set-off Rights of
              Minister	 
	 	 14. 
              Annual
              Appropriations
	 5.Monitoring	 14.1 Parliamentary Allocation
              
	 5.1 Minister's Right to Audit Accounts
              and Records 	 14.2 Lack of Appropriation
	 5.2 Access to Premises	 
	 5.3 Access to Third-parry
              Information	 15.  Confidentiality
	 	 15.1 Consent Required
	 6.  Representations,
              Warranties and Undertakings	 15.2 International Dispute
	 6.1 Power and Authority
              of Proponent	  15.3 Financing and
              Licensing
	 6.2 Authorized
              Signatories
              	 
	 6.3 Binding Obligations	 16.  Consent
              of the Minister
	 6.4 No Pending Suits or Actions
              	 
	 6.5 No Gifts or Inducements	 17.  No
              Assignment of Agreement
	  6.6 Intellectual
              Property	 
	 6.7 Compliance with
              Environmental	 18.  Compliance
              with Post-employment
              Pro%isions
	
                
                Protection Requirements
                6.8 Other Agreements

            	 
	 6.9 Dividend Restriction 	 19.  Contribution
              Agreement Only
	 6.10 Other Financing.	 
	 6.11 Lobbyist Act	 20. Binding
              Agreement
	 	 
	 7. Term
              of Agreement	 21.  Severability
	 7.1 Contractual Benefits 	 
	 7.2 Advance Payment 	 22.  Applicable
              Law
	 7.3 Audit	 
	 	 23.  Signature
              in Counterparts
	8. Default
              and Recovery 	 
	 	 
	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      TPC
        GENERAL CONDITIONS

    

    
 

     

     

     

    
      	1. Definitions	 	 
	
              For
                the purposes of this Agreement,

            	 	
              (c) the
                Project is carried out at locations other than thosementioned in
                the
                Statement of Work;

            
	 	 	 
	
              "Agreement"
                means the agreement to which these General Conditions
                relate,
                consisting of Articles of agreement and the Schedules referred to
                in these
                Articles.

               

            	 	
              (d)a
                change in respect of any other aspect of the Project (including but
                not
                limited to a change to key Project personnel, Project financing,
                or
                ownership of the Proponent) which has been specifically identified
                in
                another part of the Agreement as a "material change" for
                the purpose of this provision, his occurred.

            
	 	 	 
	
              "Background
                Intellectual Property" mepns the intellectual property rights
                in
                the technology developed prior to the beginning of the Project and
                required
                for the carrying out of the Project or the exploitation of the
                Intellectual Property.

            	 	
              3. Disposal
                of Assets

              The
                Proponent shall retain possession
                and control of the Project assets, the cost
                of which has been contributed to by the Minister under the
                Agreement,
                and shall not dispose of the same until they are no longer required
                to
                complete the Project.

            
	 	 	 
	
              "Contribution"
                means the funding, in aanadian dollars, payable by the Minister under
                the
                Agreement.

            	 	
              4. Claims
                for Payment

               

            
	 	 	
              4.1
                Payment of Claims

            
	
              "Eligible
                Costs" means the Project cost elements specified in the Statement
                of
                Work in Schedule 2 and incurred by the Proponent in accordance with
                the TPC
                Project Cost Principles, excluding those Project cost elements that
                may
                be specifically mentioned in the Statement of Work as not being supported
                by the Minister.

            	 	
              The
                Minister will pay the Contribution to the Proponent in respect of
                Eligible Costs
                incurred on the basis of itemized claims submitted in accordance
                with
                the procedures set out in Schedule 3.

               

            
	 	 	4.2
              Hold-Back Rights
	
              "Fiscal
                Year" means the federal government fiscal year beginning on April
                1 and
                ending on the following March 31.

               

            	 	
              The
                Minister may withhold up to ten per cent (10%) of the Contribution
                prior to
                the completion of the Project or until such audit as he/she may require
                has
                been performed. In the event that no audit has been performed eighteen
                months after receipt of the final claim, any amount so withheld shall
                be
                released to the Proponent.

            
	 	 	 
	
              "Intellectual
                Property" means all technical data, including, without
                limitation,
                all designs, specifications, software, data, drawings, plans,
                reports,
                patterns, models, prototypes, demonstration units, practices, inventions,
                methods, applicable special purpose equipment and related technology,
                processes
                or other information conceived, produced, developed or reduced
                to
                practice in carrying out the Project, and 1 rights therein including,
                without limitation, patents, copyrights, industrial designs, Vade-marks,
                and any registrations or applications for the same pnd all other
                rights of
                intellectual property
                therein, including any rights which arise from the above items
                being
                heated by the Proponent as trade secrets or confidential
                information.

            	 	
              4.3
                Overpayment by Minister Where for any reason:

               

              (a)  the
                Proponent is not entitled to the Contribution; or

               

              
                (b)      
                  the Minister determines that the amount of the CmVibution
                  disbursed
                  exceeds 

                the amount
                  to which the Proponent is entitled,

              

            
	 	 	 
	
              "Interest
                Rate" means the Bank Rate, as defined in the Interest
                And Administrative Charges Regulations, in
                a ect on the due date, plus 300 basis points, compounded monthly.
                The
                Interest Rate for a given month can be found at:
                httpJ/www.pwgsc.gc.ca/recge
                ext/podd-e.html

            	 	
              the
                Proponent will repay to the Minister, promptly and no later than
                30
                days from
                notice from the Minister, the amount of the Contribution disbursed
                or the
                amount of the overpayment, as the case may be, together with interest
                at
                the Interest Rate from the date of the notice to the day of repayment
                to
                the Minister in full. Any such amount is a debt due to Her Majesty
                in
                Right of Canada and is recoverable as such.

            
	 	 	 
	"Project" means the project
              described
              in Schedule 2.	 	4.4 Set-off Rights of
              Minister
	 	 	 
	
              "Project
                Completion Date" means the d$e set in the Articles of Agreement for
                the
                completion of the Project

            	 	
              Without
                limiting the scope of the
                set-off rights provided for under the Financial
                Administration Act, it
                is understood that the Minister nay set off against
                the Contribution, any amounts owed by the Proponent to Fier
                Majesty
                in
                Right of Canada under legislation or contribution agreements and
                the
                Proponent
                shall declare to the Minister all amounts outstanding in that
                regard
                when making a claim under Schedule 3.

            
	 	 	 
	
              "Schedule"
                means a schedule to the Agreement.

            	 	5. Monitoring
	 	 	 
	
              "Statement
                of Work" refers to the docuOent in Schedule 2 containing the description
                of the Project.

            	 	5.1
              Minister's Right to Audit Accounts and Records
	 	 	 
	2. Material
              Changes	 	
              The
                Proponent will, at its own expense,
                preserve and make available for audit and
                examination by the Minister or the Minister's representatives the
                books, accounts
                and 

            
	
              No
                material changes will be made to the estimated total scope or nature
                of
                any
                element of the Project without the prior written consent of the
                Minister.
                Without limiting the generality of the foregoing, a material change
                will
                have occurred if:

            	 	
              records of the Project and of the information
                necessary to  ensure
                compliance with  the

              terms
                and conditions of this Agreement,
                including payment of amounts to the Minister. The  Minister 
                will  have tie  right to  conduct
                such  additional  audits at  the Minister's
                

            
	 	 	
              expense
                as may be ,:onsidered
                necessary using the audit staff of the Minister, the Audit Service;
                Group
                of Consulting and Audit Canada, an independent auditing firm or
                the

            
	
               (a)
                a Project performance milestone is not expected to be achieved within
                six(6)  months of the projected completion date mentioned in the
                Statement of Work for that element;

            	 	 
	 	 	 
	
               (b) 
                the estimated Eligible Costs mentioned in the Statement of Work are
                expected to   

              be exceeded
                by 20% or more;

            	 	 

    

     

     

     

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
            

          

        

      

    
      	
              Proponent's
                external auditors. The
                Propq'nent
                will ensure that any licence agreement it enters into for the exploitation
                of the Intellectual Property will contain
                similar provisions to permit the Minister to audit licensees'
                accounts and
                records in
                respect to the calculation of
                amounts that
                may be
                payable by
                the Proponent to the Minister under this
                Agreement.

            	 	
              6.7
                Compliance with Environmental Protection
                Requirements

              The
                Proponent
                shall apply, in relation to the Project, in all mater al
                respects, the
                requirements ofall applicable environmental laws, regulations, orders
                and decrees
                and of regulatory bodies having jurisdiction over the Prop anent
                or
                the
                Project.

               

            
	 	 	 
	
              5.2
                Access to Premises

              The
                Proponent will provide the representatives of the Minister reasonable
                access
                to the Proponent's premises to inspect and assess the progress of
                the Agreement
                or any element thereof and supply promptly on request such
                data
                as the Minister may reasonably require f statistical or project evaluation
                purposes.

            	 	
              6.8
                Other Agreements

              The
                Proponent
                represents and warrants that it has not entered, and
                undertakes
                not to enter, without the Minister's written consent, into any agrrement
                that would prevent the full implementation of the Agreement by the
                Proponent.

               

            
	 	 	 
	
              5.3
                Access to Third-Party Information

              The
                Proponent will, to the extent practicable, assist the Minister with
                the
                implementation of the Agreement and facilitate access by the Minister
                to
                information from third parties, relating to the
                Agreement.

               

            	 	
              6.9
                Dividend Restriction

              The
                Proponent will not make any dividend payments or other shareholder
                distributions that would prevent it from implementing the Project
                and
                other Proponent's obligations under the Agreement including the making
                of
                payments to the Minister as required under the
                Agreement.

            
	 	 	 
	
              6. Representations,
                Warranties and Hndertakines

               

            	 	
              6.10
                Other Financing

              TheProponent
                remains  solely responsible for  providing or  obtaining
                 the  funding, in 

            
	 6.1 Power and Authority of
              Proponent	 	
              addition
                to the Contribution, required
                for the carrying out of the Project and the fulfilment of the Proponent's
                other obligations under the Agreement.

            
	
              The
                Proponent represents and war ants that it is duly incorporated and
                validly existing
                and in good standing and has the power and authority to carry on
                its business,
                to hold property and to enter into this Agreement and undertakes
                to
                take all necessary action to maintain itself in good standing and
                to
                preserve its legal capacity.

            	 	 

              6.11
                Lobbyist Act

              The
                Proponent represents and warrants that any person who Icbbys on its
                behalf
                to obtain the Agreement, or any benefit thereunder, umd who is
                required
                to be registered pursuant to the Lobbyists
                Registration Act R.S. 1985 c.
                44 (4'
                Supplement), is registered pursuant to that
                Act.

            
	 	 	 
	
              6.2
                Authorized Signatories

              Each
                party represents and warrants that the, signatories to the Agreement
                have
                been duly authorized to execute and deliver the
                Agreement.

            	 	
               7. Term of
                Agreement

               

            
	 	 	 7.1 Contractual
              Benefits
	
              6.3
                Binding Obligations

              Each
                party represent and warrants t the execution, delivery and
                performance
                of the Agreement have been duly and validly authorized and
                that when
                executed and delivered, the Agreement will constitute a legal, valid
                and
                binding obligation enforceable in accordance with its
                tem.

               

            	 	
              The
                Agreement will terminate when all of the Proponent's undertakings
                in
                regard to the contractual benefits mentioned in Schedule 4 have bean
                fulfilled.

               

              
                7.2
                  Advance Payment

                Any
                  advance or accelerated payment by the Proponent of the amounts
                  due
                  to
                  the Minister under Schedule 4 shall not have the effect of shortening
                  the
                  period set in Schedule 4 for the fulfilment of contractual benefit
                  to
                  Canada.

              

            
	 	 	 
	
              6.4
                No Pending Suits or Actions

              The
                Proponent warrants that it is under noobligation or prohibition,
                nor is it
                subject
                to or threatened by any actions, snits or proceedings which could
                or
                would prevent compliance with the Agreement. The Proponent will advise
                the
                Minister forthwith of any such occurrence during the term of the
                Agreement.

            	 	
               7.3 Audit

              The
                audit right of the
                Minister
                under section 5
                above
                will
                survive
                for one

              
                year
                  the termination date established under subsection 7.1
                  above.

              

               

              8. Default
                and Recovery

            
	 	 	 
	
              6.5
                No Gifts or Inducements

              The
                Proponent represent and warrants that it has not, nor has any person
                offered or promised to any official or employee of Her Majesty the
                Queen
                in Right of Canada, for or with a view to obtaining the Agreement,
                any
                bribe, gift or other inducement, and it has not for has any person
                on its
                behalf employed
                any person to solicit the Agreement for a commission,
                contingency
                fee or any other consideration dependMt upon the execution of the
                Agreement.

            	 	
              8.1
                Events of Default

              The
                Minister may declare that an event of default has occurred
                if:

               

              
                (a)
                  the Proponent is adjudged or declared bankrupt or if it goes into
                  receivership
                  or takes the benefit of any statute from t me to time
                  in force relating to bankrupt or insolvent
                  debtors

              

            
	 	 	 
	
              6.6
                Intellectual Property

            	 	
              (b)
                an order is made which is not being contested or appealed by the
                Proponent
                or a resolution is passed for the winding; up of the Proponent or
                it is
                dissolved;

            
	
               

            	 	 
	
              (a) The
                Proponent represent and warrants that it either owns the Background
                Intellectual Property or holds sufficient rights in the same
                to
                permit the Project to be carried out and the Intellectual Property
                to
                be
                exploited by the Proponent.

            	 	
              (c)
                the Proponent has intentionally submitted Use or misleading information
                to
                the Minister or intentionally made a false or misleading
                representation;

            
	 	 	 
	
              (b) The
                Proponent will
                ensure
                that title
                to
                the
                Intellectual Property is
                to be vested,
                and unless otherwise agreed to in writing by the Minister, to remain,
                exclusively with the Proponent.

            	 	
              (d)
                any material term, condition or undertaking in the Agreement is not
                complied with in any material respect; or

            
	 	 	 
	
              (c) The
                Proponent shall take appropriade steps to protect the Intellectual
                Property and shall, upon request, provide information to the Minister
                in
                that regard.

            	 	
              (e)the
                Proponent neglects or fails to pay to the Minister any amount due
                in
                accordance with this
                Agreement;

            

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    provided
      that the Minister will not declare an event of default has occurred
      by reason
      of paragraphs (c), (d) or (e) unless the Minister has given notice to
      the
      Proponent of the condition or event which in the Minister's opinion
constitutes
      an event of default and the Proponent has failed, within 30
      days of
      receipt of the notice, either to correct the Condition or event complained
      of or
      to demonstrate, to the satisfaction of the!Minister, that it has taken
      such steps
      as are necessary to correct the condition, and has notified the
      Minister
      of the rectification.

     

    8.2
      Remedies on Default

    If
      the
      Minister declares that
      an event
      of
      default has
      occurred, the Minister may exercise one or more of the following
      remedies:

     

    
      	(a)  	
              suspend
                any obligation by the Minister to contribute or continue
                to
                contribute to the Eligible Costs including any obligation to
                pay
                any amount owing prior to the date of such
                suspension;

            

    

     

    
      	(b)  	
              terminate
                any obligation of the Minister to contribute or continue
                to
                contribute to the Eligible Costs, including any obligation to
                pay
                any amount owing prior
                to the
                date of
                such termination;

            

    

     

    
      	(c)  	
              require
                the Proponent to repay to the Minister all or part of the
                Contribution
                paid by the Minister to the Proponent, and pay the
                Minister any amounts due under the Agreement, together with interest
                from
                the date of demand at the Interest
                Rate;

            

    

     

    Wm
      event of default has occurred
      in relation to paragraph
      8.1(a) or
      (b),
      or as a result of the failure of the Proponent
      to
      comply
      with subsection 6.6 of these General Conditions (Intellectual Property), section
      A (Payments to Minister) or
      subsection B.1 (Work in Canada) of Schedule 4, or the provisions that may be
      part of the Agreement regarding the disposal of special purpose
equipment,
      the Minister may direct the Proponent to transfer and deliver
      to
      the Minister title
      to,
      possession of, and
      all
      rights
      of
      the Proponent
      in the Intellectual Property, and the Proponent Will
      immediately
      comply.

     

    83
      Remedies Fair and Reasonable

    The
      Proponent
      acknowledges that in view
      5f
      the policy
      objectives served
      by
      the Ministers
      agreement to
      make the contribution, the fact
      that
      the contribution comes
      from public monies, Ind
      that the amount of damages sustained by the Crown
      in
the
      event of default
      is difficult to ascertain, that it is fair and
      reasonable that the
      Minister be entitled to exercise any or all of the remedies provided
      for
      in
      this section 8
      and to
      do
      so
      in the
      manner provided
      for
      in
      that section if an event
      of default occurs;
      provided
      that in
      exercising any
      remedy
      in
      accordance with
      paragraph
      8.2
      (c)
other
      than for
      a
breach
      of paragraph 8.1(e), the
      Minister will
      credit
      the Proponent for any amounts paid to
      the Minister
      under
      Schedule 4 of this
      Agreement.

     

    8.4
      No Waiver

    he
      fact
      that the Minister refrains from exercising a remedy he or she is entitled to
      exercise under the Agreement Will not constitute a waiver of such right and
      any
      partial exercise
      of a right will not prevent
      the
      Minister in any
      way
      from
      later exercising any other right or remedy under the Agreement or other
      applicable law.

     

    9. Force
      Majeure

     

    9.1
      Event of Force Majeure

    The
      Proponent
      will
      not
      be in default
      I>fy
      reason
      only of any failure
      in performance of the Project in accordance with Schedule
      2
      if
such
      failure arises
      without the fault or negligence
      of
      the
      Proponent and is caused by any event
      of
      force
majeure.

     

     

    of
      government, strikes or any Act of God or other similar circumstance
      which is
      beyond the Proponent's
      control, and which could not have been reasonably
      circumvented by the Proponent without incurring unreasonable
      cost.

     

    10.
      Announcements

     

    10.1
      Consent to Public Announcements

    The
      Proponent
      hereby consents
      to public announcements by
      or
      on
behalf
      of the Minister containing any of the information contained in Schedule 6
entitled
      "Project Fact Sheet for News Release".

     

    10.2
      Confidentiality Obligation

    The
      Minister will inform the Proponent
      of
      the
date
      on
      which
      the lint public
      announcement
      is to be made and
      the
      Proponent will not disclose thy: existence of this Agreement until such
      date.

     

    10.3
      Reporting under Security Laws

    Nothing
      in
      this
      Agreement shall be
      interpreted
      as
      preventing the

    fulfilment
      by
      the Proponent of its
      reporting
      obligations
      under
      applicable

    security
      laws. 11.0
      Notice

    11.1
      Form and Timing of Notice

    Any
      notice, information or document provided for under the Agreement
      shall be
      effectively given if delivered or sent by letter or facsimile, post<<ge or
      other
      charges prepaid. Any notice that is delivered shall have been received on
delivery;
      any notice sent by facsimile shall be deemed to have been
      received
      one working day after having been sent, and any notice mailed shall be deemed
      to
      have been received eight (8) calendar days after being
      mailed.

     

    11.2
      Change of Address

    A
      party may change the address which that party has stipulated in the Agreement
      by
      notifying in writing the other party of the new address.

     

    12.  Compliance
      with
      Laws

    In
      implementing the Agreement, the Proponent will comply with all
applicable
      federal, provincial and municipal laws, including but not
      limited
      to statutes, regulations, by-laws, ordinances and decrees.

     

    13.  Members
      of Parliament

    No
      member
      of the House of Commons will be admitted to any share or part of this Agreement
      or to any
      benefit
      to arise therefrom. No person who is a member of the Senate will, directly
      or
      indirectly, be a party to or bo concerned in
      the Agreement.

     

    14.  Annual
      Appropriations

     

    14.1
      Parliamentary Allocation

    Any
      payment by the Minister under this Agreement is subject to there
      being an
      appropriation for the Fiscal Year in which the payment is to Lw made;
      and to
      cancellation or reduction in the event that departmental funding levels
      are

     

    changed
      by Parliament.

     

    14.2
      Lack of Appropriation

    
       

      P
        91
        Definition of
        Force
        Majeure Force majeure means any cause whicl is unavoidable or beyond the
        reasonable control of the Proponent, including war, riot, insurrection,
        orders

       
In
      the event that the Minister is prevented from disbursing the full amount
      of the
      Contribution due to a lack or reduction of appropriation or
      departmental funding
      levels, the parties agree to review the effects of such a shortfall in
      the
      Contribution on the implementation of the Agreement and tc adjust, as
      appropriate, the Contractual benefits specified in Schedule
      4.

     

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          
            Page
              

          

        

      

    

    provisions
      of the Agreement.

     

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          
            Page
              

          

        

      

    

    15.  Confidentiality

     

    15.1
      Consent Required

    Subject
      to section 10 and the Access to 1r+formation Act, each parry shall keep
      confidential and shall
      not
      without the Consent of all parties disclose the
      contents
      of the Agreement and the documents pertaining thereto, whether provided
      before
      or
      after the Agreementwas entered into, or of the transactions contemplated
      herein.

     

    15.2
      International Dispute

    The
      Minister is hereby
      authorized to
      disclose any
      of
      the
      information referred to in paragraph
      15.1
      above
      where,
      in
      the opinion of the Minister, such
      disclosure is required
      to
      an
      international trade panel for the purposes of
      the
      conduct of a dispute in which Canada is party or a third parry intervener.
      The
      Minister shall give prior notice to the roponent of such disclosure.

     

    15.3
      Financing and Licensing

    The
      Minister hereby consents to the Propor ent disclosing the Agreement or
any
      portion thereof for
      the purposes
      of
      sedduring additional
      financing
      or of
      licensing for commercial exploitation, sub~ect to the Proponent having the
      person
      to whom the information is
      disc
      osed execute a non-disclosure agreement prior to
      disclosure

     

    16.  Consent
      of the Minister

    Wheneverthe
      Agreement provides for
      the Pfoponentobtaining
      the
      consent or
      agreement of the Minister, it is understood that such consent or agreement
      shall
      not be unreasonably
      withheld
      and that the Minister may make the issuance of such consent or agreement subject
      to reasonable
      conditions.

     

     

    22.  Applicable
      Law

    The
      Agreement shall be interpreted in accordance with the laws in :orce in
      the
      province
      where the Proponent's
      head
      office
      is
      located.

     

    23.  Signature
      in Counterparts

    This
      Agreement may be signed in counterparts, each of which when taken together,
      will
      constitute an original Agreement

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	 17.  No
              Assignment of Agreement	 	 
	 The
              Proponent shall not assign the Agreement nor any part thereof without
              the
              prior written consent of the Minister.	 	 
	 	 	 
	18.  Compliance
              with Post-Employmenr Provisions	 	 
	
              The
                Proponent
                confirms
                that
                no individu for
                whom
                the
                post-employment provisions
                of the Conflict
                of
                Interest
                and
                Post-Employment
                Code for Public Office
                Holders
                or
                the Conflict of
                Interest d
                Post-Employment Code for the Public
                Service
                apply, will derive a direct nefrt from this Agreement unless that
                individual is
                in compliance with the applicable
                post-employment provisions.

            	 	 
	 	 	 
	19.  Contribution
              Agreement Only	 	 
	
              The
                Agreement is a contribution agreement only,not a contract for services
                or
                a contract of service or employment, add nothing in the Agreement,
                the
                parties
                relationship or actions is intended tc create, nor shall be construed
                as
                creating,
                a partnership, employment or agency relationship between them.
                The
                Proponent is not in any way authorized to make a promise, agreement
                or
                contract
                and to incur any liability on
                behalf
                of Canada,
                nor
                shall Canada
                make a
                promise, agreement or contract and
                inch
                any
                liability
                on
                behalf of the Proponent, and the Proponent shall be sclely responsible
                for
                any and all payments and deductions required by the applicable
                laws.

            	 	 
	 	 	 
	20.  Binding
              Agreement	 	 
	This
              Agreement is binding on the parties aid their successors and permitted
              assigns.	 	 
	 	 	 
	21. Severability	 	 
	Any provision
              of
              this Agreement prohibite will
              be ineffective only to the extent of such will
              be severable 	 	 

    

     

     

     

     

     

     

     

    
      	
               

              .
                without
                invalidating or o

            	
              by
                law or otherwise ineffective prohibition
                or ineffectiveness and
                herwise affecting the remainingExhibit 4.12

    Exhibit
      4.12

     

    
 

    THIS
      DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR ANY STATE SECURITIES LAWS. THIS DEBENTURE MAY NOT BE SOLD, OFFERED FOR SALE,
      PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      AS
      TO THIS DEBENTURE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
      AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO TM BIOSCIENCE CORPORATION THAT
      SUCH REGISTRATION IS NOT REQUIRED.

     

    UNLESS
      PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS DEBENTURE
      SHALL NOT TRADE THE DEBENTURE BEFORE DECEMBER 16,
      2006.

     

    UNSECURED
      SUBORDINATED DEBENTURE

     

    FOR
      VALUE RECEIVED,
      Tm
      Bioscience Corporation (the “Borrower”),
      hereby promises to pay to Gundy
      Co., ITF A/C 515-0001427, 161 Bay Street, BCE Place, Toronto, Ontario, M5J
      2S8
      (the
“Holder”)
      or its
      permitted assigns or successors in interest, on order, on presentation and
      surrender of this Unsecured Subordinated Debenture, the aggregate principal
      amount of three
      million and fifty thousand
      in
      lawful money of the Canada ($3,050,000), together with any accrued and unpaid
      interest thereon, on the
      date
      which is the first anniversary of the date hereof (the “Maturity
      Date”)
      or at
      such other times as set out herein or as otherwise directed by the
      Holder.
      

     

    This
      Unsecured Subordinated Debenture is one of the Unsecured Subordinated Debentures
      issued by the Borrower on the date hereof. Each such Unsecured Subordinated
      Debenture shall rank pari
      passu
      to one
      another. No amendments shall be made to any one of the Unsecured Subordinated
      Debentures or to any provision common to all the Unsecured Subordinated
      Debentures without the same amendments being made to the other Unsecured
      Subordinated Debentures. All payments of principal, interest and other amounts
      due and made to or on behalf of the holders of Unsecured Subordinated Debentures
      shall be made rateably to or for the benefit of each Holder thereof.

     

     

         
      ARTICLE I  

    DEFINITIONS

        1.1  Defined
      Terms.
      As used
      in this Unsecured Subordinated Debenture, the following expressions shall have
      the following meanings:

     

    “Borrower”
means
      Tm Bioscience Corporation, a corporation incorporated under the laws of the
      Province of Ontario.

     

    “Cash
      Infusion”
has
      the
      meaning ascribed thereto in Section 2.3 hereof.

     

    “Event
      of Default”
has
      the
      meaning ascribed thereto in Article V hereof.

     

    “Holder”
means
      Gundy
      Co., ITF A/C 515-0001427, 161 Bay Street, BCE Place, Toronto, Ontario, M5J
      2S8.

     

    “Maturity
      Date”
means
      the first anniversary of the date hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Obligations”
means
      all monies and all obligations now or at any time and from time to time
      hereafter owing or payable by the Borrower to the Holder under this Unsecured
      Subordinated Debenture (whether now existing, presently arising or created
      in
      the future), and whether direct or indirect, absolute or contingent, matured
      or
      not.

     

    “Person”
means
      an individual, partnership, corporation, trust, unincorporated association,
      joint venture, governmental agency or other entity.

     

    “Permitted
      Encumbrances”
has
      the
      meaning ascribed thereto in Schedule “A”
      hereof.

     

    “Proceeding”
has
      the
      meaning ascribed thereto in Section 3.2 hereof.

     

    “Subscription
      Agreement”
means
      the subscription agreement dated as of the date hereof between the Borrower
      and
      the Holder relating to the issuance of this Unsecured Subordinated Debenture
      by
      the Borrower to the Holder.

     

    “Senior
      Debt”
has
      the
      meaning ascribed thereto in Section 3.1 hereof.

     

     

          
      ARTICLE II  

    INTEREST
      & REPAYMENT

     

        2.1  Interest.
      The
      interest payable on this Unsecured Subordinated Debenture shall accrue at eleven
      percent (11%) per annum, payable
      monthly in arrears.

     

        2.2  Optional
      Prepayment.
      The
      Borrower may prepay to the Holder, at any time prior to the Maturity Date,
      the
      then remaining principal amount, in whole or in part, together with accrued
      but
      unpaid interest thereon, if any, then due, accrued, payable or owing to the
      Holder under this Unsecured Subordinated Debenture.

     

        2.3  Mandatory
      Prepayment.
      The
      Borrower shall prepay this Unsecured Subordinated Debenture by paying to the
      Holder the then remaining principal amount of the Unsecured Subordinated
      Debenture together with accrued but unpaid interest thereon, if any, then due,
      accrued, payable or owing to the Holder under this Unsecured Subordinated
      Debenture, within 30 days of any investment, offering (of debt or equity),
      receipt of capital contributions, investment income or partnership proceeds,
      sale of assets or shares, or any similar transaction (collectively, a
“Cash
      Infusion”)
      that
      results in net proceeds to the Borrower of fifteen million dollars ($15,000,000)
      or more. In the event the Cash Infusion results in net proceeds to the Company
      of less than fifteen million dollars ($15,000,000), the Company shall prepay
      this Unsecured Subordinated Debenture by paying to the Holder a pro
      rata
      portion
      of the then remaining principal amount of the Unsecured Subordinated Debenture,
      being the proportion of the actual amount of the net proceeds to the Company
      of
      the Cash Infusion relative to fifteen million dollars ($15,000,000) together
      with accrued but unpaid interest, if any, then due, accrued, payable or owing
      to
      the Holder under this Unsecured Subordinated Debenture, within 30 days of the
      Cash Infusion.

     

        2.4  No
      Gross-Up
      Payments
      of principal and interest on this Unsecured Subordinated Debenture shall not
      be
      increased to take into account any taxes, levies, imposts, deductions, charges
      or withholdings, including any Canadian withholding taxes payable in respect
      of
      interest or amounts deemed to be interest on this Unsecured Subordinated
      Debenture. For greater certainty, the Borrower shall not be responsible for
      any
      present or future stamp or documentary taxes or any other excise or property
      taxes, charges or similar levies that arise from any payment hereunder or from
      the execution, delivery or registration of, or otherwise with respect to, this
      Unsecured Subordinated Debenture. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

         
        ARTICLE III  

    SUBORDINATION

     

        3.1  The
      Obligations are expressly subordinated and postponed, to the extent and in
      the
      manner provided in this Article III without any further action or documentation
      whatsoever being necessary to give effect to such subordination, in right of
      payment to the prior payment in full of the secured convertible note dated
      November
      22, 2005
      held by
      Laurus Master Fund, Ltd. and any refinancings and renewals thereof (the
“Senior
      Debt”).
      

     

        3.2  In
      the
      event of any insolvency or bankruptcy proceedings, or any receivership,
      liquidation, reorganization or other similar proceedings relating to the
      Borrower, or to its property or assets, or in the event of any proceedings
      for
      voluntary liquidation, dissolution or other winding-up of the Borrower, whether
      or not involving insolvency or bankruptcy, or any marshalling of the assets
      and
      liabilities of the Borrower (collectively referred to as a “Proceeding”),
      the
      holders of Senior Debt shall be entitled to receive payment in full of all
      the
      Senior Debt before the Holder shall be entitled to receive any payment or
      distribution of any kind or character, whether in cash, property or securities
      which may be payable or deliverable in any such event in respect of this
      Unsecured Subordinated Debenture.

     

        3.3  Upon
      any
      payment or distribution of assets of the Borrower referred to in this Article
      III, the Holder shall be entitled to call for and rely upon a certificate,
      addressed to the Holder, of the Person making the payment or distribution for
      the purpose of ascertaining (i) the Persons entitled to participate in the
      distribution, (ii) the holder of Senior Debt and other indebtedness of the
      Borrower, (iii) the amount of the indebtedness, (iv) the amount or amounts
      paid
      or distributed, and (v) all other pertinent facts.

     

        3.4  Subject
      to the payment in full of all Senior Debt, the Holder shall be subrogated to
      the
      rights of the holder of Senior Debt to receive payments and distributions of
      property and assets of the Borrower in respect of and on account of Senior
      Debt,
      to the extent of the application thereto of moneys or other assets which would
      have been received by the Holder but for the provisions of this Article III,
      until the principal of and interest on this Unsecured Subordinated Debenture
      shall be paid in full. No payment or distribution of assets of the Borrower
      to
      the Holder which would be payable or distributable to the holder of Senior
      Debt
      pursuant to this Article III shall, as between the Borrower, its creditors
      (other than the holder of Senior Debt) and the Holder, be deemed to be a payment
      by the Borrower to or on account of the Holder, it being understood that the
      provisions of this Article III are, and are intended, solely for the purpose
      of
      defining the relative rights of the Holder on the one hand, and the holder
      of
      the Senior Debt on the other hand. Nothing contained in this Article III or
      elsewhere in this Unsecured Subordinated Debenture is intended to or shall
      impair, as between the Borrower and its creditors (other than the holders of
      Senior Debt), the obligation of the Borrower, which is unconditional and
      absolute, to pay to the Holder the principal of and interest on this Unsecured
      Subordinated Debenture and any other amounts payable under this Unsecured
      Subordinated Debenture as and when the same shall become due and payable in
      accordance with its terms, or to affect the relative rights of the Holder and
      creditors of the Borrower other than the holder of the Senior Debt, nor shall
      anything herein or therein prevent the Holder from exercising all remedies
      otherwise permitted by applicable law upon default under this Unsecured
      Subordinated Debenture, subject to the rights, if any, under this Article III,
      of the holder of Senior Debt upon the exercise of any such remedy.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

        3.5  In
      the
      event that, notwithstanding the foregoing provisions of this Article III, the
      Holder shall have received any payment after a Proceeding has commenced and
      before all Senior Debt has been paid in full, the Holder shall hold such payment
      in trust for the benefit of the holders of Senior Debt and shall immediately,
      upon the completion of the Proceeding, pay the payment over to the holders
      of
      Senior Debt for application against unpaid Senior Debt.

     

        3.6  For
      greater certainty, this Article III shall not be construed so as to prevent
      the
      Holder from receiving and retaining any payments on account of this Unsecured
      Subordinated Debenture which are made (i) in a manner that is consistent with
      the terms of this Unsecured Subordinated Debenture or the Subscription
      Agreement, and (ii) at any time when no event of default, as defined in the
      instruments creating any Senior Debt, has occurred and is continuing and in
      respect of which notice has been given by or on behalf of the holder of Senior
      Debt to the Borrower and the Holder. Until written notice has been given to
      the
      Holder by or on behalf of any holder of any Senior Debt of the occurrence of
      any
      default with respect to the Senior Debt or the existence of any other facts
      which would have the result that any payment in respect of this Unsecured
      Subordinated Debenture would be in contravention of the provisions of this
      Article III, the Holder shall be entitled to assume that no such default has
      occurred, or that no such facts exist.

     

        3.7  The
      holder of Senior Debt shall be entitled to rely and shall be third party
      beneficiaries of the provisions of this Article III.

     

     

           
      ARTICLE IV  

    COVENANTS
      OF THE BORROWER

     

        The
      Borrower
      hereby covenants and agrees for the benefit of the Holder, that so long as
      this
      Unsecured Subordinated Debenture remains outstanding:

     

        4.1  To
      Pay
      Principal Amount and Interest.
      The
      Borrower will duly and punctually pay or cause to be duly and punctually paid
      to
      the Holder, all amounts payable by the Borrower under this Unsecured
      Subordinated Debenture at the times and places and in the currency and manner
      mentioned therein.

     

        4.2  Proper
      Records.
      The
      Borrower will maintain proper books of account and other records in accordance
      with applicable generally accepted accounting principles, consistent with past
      practice.

     

        4.3  Insurance.
      The
      Borrower will maintain insurance at all times with financially sound and
      reputable insurers and in such amounts and covering such risks as the Borrower
      reasonably believes is customary for companies engaged in similar businesses
      and
      owning similar properties in the same general areas and to the extent available
      on commercially reasonable terms. 

     

        4.4  Compliance
      with Laws.
      The
      Borrower will comply in all material respects with all applicable laws, rules,
      regulations, permits, authorizations, consents and orders, the non-compliance
      with which would materially adversely affect the ability of the Borrower to
      perform its obligations under this Unsecured Subordinated
      Debenture.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

        4.5  Notice
      of Default.
      The
      Borrower will give the Holder notice of the occurrence of any Event of Default
      pursuant to this Unsecured Subordinated Debenture or any event which, with
      the
      lapse of time or the giving of notice or both, would constitute an Event of
      Default;

     

        4.6  Notice
      of Litigation.
      The
      Borrower shall give the Holder, as soon as practicable after it shall become
      aware of the commencement or threat in writing of any material action,
      proceeding, arbitration or investigation against the Borrower or any material
      part of its properties, assets or business.

     

        4.7  Existence.
      The
      Borrower shall preserve and maintain its legal existence in good standing and
      shall qualify and remain duly qualified to carry on business and own property
      in
      each jurisdiction in which failure to maintain such qualification would have
      a
      material adverse effect on the business or existence of the
      Borrower.

     

        4.8  Use
      of
      Proceeds.
      The
      Borrower shall use the proceeds of this Unsecured Subordinated Debenture for
      the
      Borrower’s pipeline of genetic tests and for general corporate purposes.

     

        4.9  Reporting
      Issuer Status.
      The
      Borrower will maintain reporting issuer status in at least the provinces of
      British Columbia, Alberta, Manitoba, Ontario and Quebec.

     

        4.10  Inspection.
      At all
      reasonable times the Borrower will, upon prior written notice, furnish or cause
      to be furnished to the Holder or its duly authorized agent or attorney such
      information relating to its business as the Holder may reasonably require and
      such books of account shall at all reasonable times be open for inspection
      by
      the Holder or such agent or attorney of the Holder.

     

        4.11  Financial
      Statements.
      Upon the
      reasonable request of the holder, the Borrower will furnish to the Holder a
      copy
      of all financial statements, whether annual or interim, of the Borrower and
      the
      report, if any, of the Borrower’s auditors thereon and of all annual and other
      periodic reports of the Borrower, if any, furnished to its shareholders at
      the
      same time as they are furnished to the shareholders.

     

        4.12  Negative
      Covenants.
      The
      Borrower will not, without the consent of the Holder:

     

    
      	(a)  	
              make
                any amendment to the articles of the Borrower in a manner which may
                prejudice the Holder or could reasonably be expected to result in
                a
                material adverse change to the
                Borrower;

            

    

     

    
      	(b)  	
              make
                any payment of any dividend to any shareholder of the
                Borrower;

            

    

     

    
      	(c)  	
              create,
                incur, grant, assume or suffer to exist any mortgages, charges or
                security
                interest over the property and assets of the Borrower other than
                the
                Permitted Encumbrances;

            

    

     

    
      	(d)  	
              prepay
                any debt obligations which are subordinate in right of payment to
                the
                prior payment in full of the Obligations, in advance of the maturity
                date
                or such other date as may be otherwise prescribed by the instrument
                creating such debt obligation;

            

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	(e)  	
              guarantee
                the obligations of any Person, other than obligations secured by
                a
                Permitted Encumbrance or obligations incurred in the ordinary course
                of
                business; and

            

    

     

    
      	(f)  	
              enter
                into a transaction with any Person not dealing at arm’s length (as defined
                in the Income
                Tax Act (Canada))
                with the Borrower outside the ordinary course of
                business.

            

    

     

     

    ARTICLE
      V  

    EVENTS
      OF DEFAULT AND DEFAULT RELATED PROVISIONS

     

        Upon
      the
      occurrence and continuance of an Event of Default (as defined below), the Holder
      may by notice in writing to the Borrower declare the principal amount and all
      accrued interest thereon, and all other amounts, if any, accruing, payable
      or
      owing under this Unsecured Subordinated Debenture to be immediately due and
      payable. 

     

        The
      occurrence of any of the following events set forth in Sections 5.1
      through
      5.7, inclusive, constitutes an “Event
      of Default”:

     

        5.1  Failure
      to Pay Principal, Interest or other Amounts.
      The
      Borrower fails to pay when due any instalment of principal, interest or other
      amounts in accordance herewith, or the Borrower fails to pay when due any amount
      due under any other Unsecured Subordinated Debenture issued by Borrower, and
      in
      any such case, such failure shall continue for a period of five (5) business
      days following the date upon which any such payment was due.

     

        5.2  Breach
      of Covenant.
      The
      Borrower breaches any covenant or any other term or condition of this Unsecured
      Subordinated Debenture in any material respect, and such breach, if subject
      to
      cure, continues for a period of twenty (20) business days after the occurrence
      thereof.

     

        5.3  Receiver
      or Trustee.
      The
      Borrower or any of its subsidiaries shall make an assignment for the benefit
      of
      creditors, or apply for or consent to the appointment of a receiver or trustee
      for it or for a substantial part of its property or business; or such a receiver
      or trustee shall otherwise be appointed, and such appointment is not contested
      by the Borrower in good faith within five (5) business days of such
      appointment.

     

        5.4  Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any of its
      subsidiaries, unless in any case such proceeding or process is stayed,
      withdrawn, dismissed or vacated, as the case may be, within ninety (90)
      days.

     

        5.5  Default
      Under Other Agreements.
      The
      occurrence and continuance of any event of default (or similar term) by the
      Borrower under any other indebtedness (including
      without limitation any claim under a guarantee, acceleration of or demand under
      existing credit agreements or action taken concerning the enforcement of
      security) which
      is
      not incurred in the ordinary course of business and
      which
      is for an amount in excess of $100,000.

     

        5.6  Default
      Interest Rate.
      Following the occurrence and during the continuance of an Event of
      Default, all
      outstanding obligations under this Unsecured Subordinated Debenture, including
      unpaid interest, shall continue to accrue such interest at eleven percent (11%)
      per annum from the date of such Event of Default until the date such Event
      of
      Default is cured or waived. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

        5.7  Cumulative
      Remedies.
      The
      remedies under this Unsecured Subordinated Debenture shall be
      cumulative.

     

     

         
      ARTICLE VI  

    MISCELLANEOUS

     

        6.1  Currency.
      All
      principal, interest and other amounts owing under this Unsecured Subordinated
      Debenture, that in accordance with their terms, are paid in cash shall be paid
      in Canadian dollars.

     

        6.2  Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

        6.3  Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively received: (a) upon personal delivery to the party notified,
      (b) when sent by confirmed telex or facsimile on the business day of the sending
      (provided it was sent before 4:30 p.m. Toronto time), if not, then on the next
      business day, and the applicable printed facsimile record shall be definitive
      evidence of the time and date of such telex or facsimile transmission, or (c)
      one day after deposit with a nationally recognized overnight courier, specifying
      next day delivery, with written verification of receipt. All communications
      shall be sent to the Borrower at 439 University Avenue, Toronto, Ontario, M5G
      158, attention: James Pelot, Chief Operating Officer and Chief Financial
      Officer, and to the Holder at the address provided in the Subscription Agreement
      for such Holder, or at such other address as the Borrower or the Holder may
      designate by ten (10) days advance written notice to the other parties hereto.
      

     

        6.4  Amendment
      Provision.
      The
      term “Unsecured Subordinated Debenture” and all reference thereto, as used
      throughout this instrument, shall mean this instrument as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

     

        6.5  Assignability.
      This
      Unsecured Subordinated Debenture shall be binding upon the Borrower and its
      successors and assigns, and shall inure to the benefit of the Holder and its
      successors and assigns, and may be assigned by the Holder with the consent
      of
      the Borrower, such consent not to be unreasonably withheld. Notwithstanding
      the
      foregoing, the Holder shall have the right to assign this Unsecured Subordinated
      Debenture to an affiliate (as such term is defined in the Business
      Corporations Act
      (Ontario)) without the consent of the Borrower. This Unsecured Subordinated
      Debenture shall not be assigned by the Borrower without the consent of the
      Holder, such consent not to be unreasonably withheld. All assignments and
      transfers of this Unsecured Subordinated Debenture shall be in accordance with
      applicable securities laws. 

     

        6.6  Governing
      Law.
      This
      Unsecured Subordinated Debenture will be governed by, interpreted and enforced
      in accordance with the laws of the Province of Ontario and the federal laws
      of
      Canada applicable therein. 

     

        6.7  Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

        6.8  Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Unsecured Subordinated Debenture and, therefore, stipulates that the rule
      of construction that ambiguities are to be resolved against the drafting party
      shall not be applied in the interpretation of this Unsecured Subordinated
      Debenture to favor any party against the other. 

     

        6.9  Counterparts.
      This
      Unsecured Subordinated Debenture may be executed in any number of counterparts
      and all such counterparts taken together shall be deemed to constitute one
      and
      the same instrument.

     

        6.10  Cost
      of Collection.
      If
      default is made in the payment of this Unsecured Subordinated Debenture, the
      Borrower shall pay to Holder reasonable costs of collection, including
      reasonable legal fees. 

     

        6.11  Third
      Party Beneficiary Clause.
      There
      are no third party beneficiaries under this Unsecured Subordinated Debenture
      other than the holders of Senior Debt.

     

        IN
      WITNESS
      WHEREOF,
      the
      parties have executed this Unsecured Subordinated Debenture as of this _____
      day
      of August, 2006.

     

    
      	 	 	 
	 	TM
              BIOSCIENCE CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ James
              Pelot 
	 	
              
Name:  James
              Pelot 
	 	Title 

    

     

     

    
      	 	 	 
	 	
              GUNDY
                CO. 

            
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
Name: 
	 	Title 

    

     

    

     

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      “A” 

     

    PERMITTED
      ENCUMBRANCES

     

    “Permitted
      Encumbrances”
means
      any of the following:

    

    
      	
              (i)

            	
              liens
                for taxes, assessments, governmental charges or levies not at the
                time due
                unless contested in good faith by all necessary proceedings;
                

            

    

     

    
      	
              (ii)

            	
              defects
                or irregularities in title to land, easements, rights of way or other
                similar rights in land existing at the date hereof which individually
                or
                in the aggregate do not materially impair the usefulness in the business
                of the Borrower, its subsidiaries or the property subject
                thereto;

            

    

     

    
      	
              (iii)

            	
              rights
                reserved to or vested in any municipality or governmental or other
                public
                authority by the terms of any lease, licence, franchise, grant or
                permit,
                or by any statutory provision, to terminate the same or to require
                annual
                or other periodic payments as a condition to the continuance
                thereof;

            

    

     

    
      	
              (iv)

            	
              any
                lien or encumbrance the validity of which is being contested by the
                Borrower in good faith and in respect of which either there shall
                have
                been deposited with the Holder cash in an amount sufficient to satisfy
                the
                same or the Holder shall be otherwise satisfied that its interests
                are not
                prejudiced thereby;

            

    

     

    
      	
              (v)

            	
              any
                reservations, limitations, provisos and conditions expressed in any
                original grant from the Crown;

            

    

     

    
      	
              (vi)

            	
              title
                defects or irregularities which, in the opinion of counsel to the
                Holder,
                are of a minor nature and in the aggregate shall not materially impair
                the
                usefulness in the business of the Company or its
                Subsidiaries;

            

    

     

    
      	
              (vii)

            	
              a
                security interest in cash or governmental obligations deposited in
                the
                ordinary course of business in connection with contracts, bids, tenders
                or
                to secure worker’s compensation, unemployment insurance, surety or appeal
                bonds, costs of litigation when required by law, public and statutory
                obligations, liens or claims incidental to current construction,
                mechanics’, warehousemen’s, carriers’ and other similar
                liens;

            

    

     

    
      	
              (viii)

            	
              security
                given in the ordinary course of business to a public utility or any
                municipality or governmental or other public authority when required
                by
                such utility or municipality or governmental or other authority in
                connection with the operations of the Borrower or any of its subsidiaries;
                

            

    

     

    
      	
              (ix)

            	
              a
                security interest arising under a lease (other than a lease for real
                property) entered into in the ordinary course of business over the
                goods
                that are the subject matter of such lease, to an aggregate amount
                of
                $500,000; 

            

    

     

    
      	
              (x)

            	
              a
                security interest in or title retention relating to equipment (not
                constituting, for greater certainty, inventory) which is created
                to secure
                the unpaid purchase price thereof or retain title thereto until so
                paid,
                provided that each such security interest is limited to the asset
                so
                acquired (and any insurance or other proceeds thereof) and does not
                secure
                an amount in excess of the purchase price thereof or any re-advance
                on the
                security of the equipment; 

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (xi)

            	
              security
                interests or any security granted by the Company in connection with
                the
                letter of credit issued by the Royal Bank of Canada in favour of
                Luminex
                Corporation and in connection with the secured convertible note issued
                by
                the Borrower to Laurus Master Fund, Ltd., and any refinancings and
                renewals thereof; 

            

    

     

    
      	
              (xii)

            	
              other
                encumbrances arising by operation of law or which are not material
                in
                character, amount, and extent and do not materially detract from
                the value
                of the property subject thereto, the use of the Borrower’s or any of its
                subsidiaries’ assets or materially impair the operations of the Borrower
                or any of its subsidiaries; and

            

    

     

    
      	
              (xiii)

            	
              liens
                held by customers or suppliers of the Borrower or any of its subsidiaries
                in respect of the work-in-progress relating to: (i) goods under production
                for customers and any assignment of such liens to third parties as
                approved by the Holder; (ii) all equipment drop shipped to the Borrower
                or
                any of its subsidiaries by its customers (or suppliers) for integration
                to
                machinery which is owned by such customers (or suppliers); and (iii)
                in
                leasehold improvements. 

            

    

     

    

     

    
      
        
        

      

      
        2

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