Document:

United States Securities and Exchange Commission EDGAR Filing

EXHIBIT 10.3

SECOND AMENDMENT TO

MASTER LOAN AND TRUST AGREEMENT

SECOND AMENDMENT TO MASTER LOAN AND TRUST AGREEMENT (this “Amendment”), dated as of May 1, 2008, between BUSINESS FINANCE AUTHORITY OF THE STATE OF NEW HAMPSHIRE (“Issuer”), a body corporate and politic and a public instrumentality created and existing under and by virtue of the Constitution and laws of the State of New Hampshire, PENNICHUCK WATER WORKS, INC. (“Borrower”) and THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee (“Trustee”), a national banking association organized and existing under the laws of the United States of America, being an amendment to the Master Loan and Trust Agreement, dated as of October 1, 2005 (as amended by the First Amendment to Master Loan and Trust Agreement dated as of October 1, 2007, the “Master Agreement”), among said Issuer, Borrower and Trustee (defined terms used in this Amendment and not otherwise defined have their respective meanings as set forth in said Master Agreement).

W I T N E S S E T H :

WHEREAS, in accordance with a resolution of the Board of Issuer, Issuer has heretofore entered into the Master Agreement pursuant to which Issuer made available the proceeds of the Series 2005 Bonds to Borrower for the purpose of financing Borrower’s cost of acquisition, construction, improvement or equipping of the Project owned by Borrower, all in accordance with the Act; and 

WHEREAS, the Master Agreement permits any amendments to the Master Agreement with the consent of the Bond Insurer and the unanimous consent of the affected Bondowners; and

WHEREAS, to facilitate the remarketing and marketing of Bonds as Term Rate Bonds and Bonds in the Fixed Rate Mode, Borrower desires that those provisions of the Master Agreement relating to redemption be amended to provide for the redemption of Bonds owned by deceased beneficial owners; and

WHEREAS, Borrower has requested that Issuer and Trustee execute this Amendment initially with respect to those portions of the subseries of the Bonds originally designated as the 2005 Series B-2 Bonds and 2005 Series C Bonds, which Bonds, as of the date of this Amendment are designated as the 2005 Series BC-2 Bonds, the 2005 Series BC-3 Bonds and the 2005 Series BC-4 Bonds (the “Affected Bonds”), and Issuer and Trustee are agreeable to amending or modifying the Master Agreement solely as set forth in Section 1 hereof; and

WHEREAS, there has been presented to Issuer and Trustee written evidence of the consent to this Amendment of the Bond Insurer and of each beneficial owner of the Affected Bonds;

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby and in consideration of the premises, do hereby agree as follows:

Section 1.  Amendment of the Master Agreement.  The Master Agreement is hereby amended as follows with respect to the Affected Bonds:

(a)

The Master Agreement is hereby amended by adding the following subsection to Section 3.06(g) thereof:

“(g)

Redemption (or Purchase) by the Borrower in the Event of Death of a Beneficial Owner.

(i)

Unless the Bonds (excluding for purposes of this Section 3.06(g), the Escrow Bonds) have been declared due and payable prior to their maturity by reason of an Event of Default, the Representative (as hereinafter defined) of a deceased Beneficial Owner (as hereinafter defined) who has owned (or whose estate has owned) the Bonds at least six months prior to any request for redemption has the right after April 1, 2010, to request redemption prior to stated maturity of all or part of such Beneficial Owner’s interest in the Bonds, and the Borrower shall redeem (or shall cause the Issuer to redeem) the same subject to the limitations that the Borrower will not be obligated to redeem (or cause to be redeemed), during the period from April 1, 2010, through and including April 1, 2011 (the “Initial Period”), and during any 12-month period which ends on and includes each April 1 thereafter (each such 12-month period being hereinafter referred to as a “Subsequent Period”), (A) on behalf of a deceased Beneficial Owner any interest in the Bonds of a subseries which exceeds $25,000 principal amount (the “Individual Limitation”) or (B) interests in a subseries of the Bonds exceeding $50,000 for each $2,500,000 in aggregate principal amount of such subseries (the “Annual Limitation”).  A request for redemption may be initiated by the Representative of a deceased Beneficial Owner at any time and in any principal amount.

(ii)

The Borrower may, at its option, redeem (or cause to be redeemed) interests of any deceased Beneficial Owner in the Bonds in the Initial Period or any Subsequent Period in excess of the Individual Limitation.  Any such redemption, to the extent that it exceeds the Individual Limitation for any deceased Beneficial Owner, shall not be included in the computation of the Annual Limitation for such Initial Period or such Subsequent Period, as the case may be, or for any succeeding Subsequent Period.  The Borrower may, at its option, redeem (or cause to be redeemed) interests of deceased Beneficial Owners in the Bonds, in the Initial Period or any Subsequent Period in an aggregate principal amount exceeding the Annual Limitation.  Any such redemption, to the extent it exceeds the Annual Limitation shall not reduce the Annual Limitation for any Subsequent Period.  On any determination by the Borrower to redeem (or cause to be redeemed) Bonds in excess of the Individual Limitation or the Annual Limitation, Bonds so redeemed shall be redeemed in the order of the receipt of Redemption Requests (as hereinafter defined) by the Trustee.

(iii)

A request for redemption of an interest in the Bonds may be initiated by the personal representative or other person authorized to represent the 

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estate of the deceased Beneficial Owner or by a surviving joint tenant(s) or tenant(s) by the entirety or the trustee of a trust (each, a “Representative”).  The Representative shall deliver a request to the Participant (hereinafter defined) through whom the deceased Beneficial Owner owned such interest, in form satisfactory to the Participant, together with evidence of the death of the Beneficial Owner, evidence of the authority of the Representative satisfactory to the Participant, such waivers, notices or certificates as may be required under applicable state or federal law and such other evidence of the right to such redemption as the Participant shall require. The request shall specify the principal amount of the interest in the Bonds to be redeemed.  The Participant shall thereupon deliver to the Depositary a request for redemption substantially in the form attached as Exhibit D hereto (a “Redemption Request”).  The Depositary will, on receipt thereof, forward the same to the Trustee.  The Trustee shall maintain records with respect to Redemption Requests received by it, including date of receipt, the name of the Participant filing the Redemption Request and the status of each such Redemption Request with respect to the Individual Limitation or the Annual Limitation.  The Trustee will immediately file each Redemption Request it receives, together with the information regarding the eligibility thereof with respect to the Individual Limitation or the Annual Limitation with the Borrower.  The Depositary, the Issuer and the Trustee may conclusively assume, without independent investigation, that the statements contained in each Redemption Request are true and correct and shall have no responsibility for reviewing any documents submitted to the Participant by the Representative or for determining whether the applicable decedent is in fact the Beneficial Owner of the interest in the Bonds to be redeemed or is in fact deceased and whether the Representative is duly authorized to request redemption on behalf of the applicable Beneficial Owner.

(iv)

Subject to the Individual Limitation and the Annual Limitation, the Borrower will, after the death of any Beneficial Owner, redeem (or cause to be redeemed) the interest of such Beneficial Owner in the Bonds on the next interest payment date occurring not less than 30 days following receipt by the Borrower of the Redemption Request from the Trustee.  If Redemption Requests exceed the aggregate principal amount of interests in Bonds required to be redeemed during the Initial Period or during any Subsequent Period, then such excess Redemption Requests will be applied in the order received by the Trustee to successive Subsequent Periods, regardless of the number of Subsequent Periods required to redeem such interests.  The Borrower may, at any time notify the Trustee that it will redeem (or cause to be redeemed), on the next interest payment date occurring not less than 30 days thereafter, all or any such lesser amount of Bonds for which Redemption Requests have been received but which are not then eligible for redemption by reason of the Individual Limitation and the Annual Limitation.  Any Bonds so redeemed shall be redeemed in the order of receipt of Redemption Requests by the Trustee.

(v)

The price to be paid by the Borrower for the Bonds to be redeemed pursuant to a Redemption Request is 100% of the principal amount thereof plus 

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accrued but unpaid interest to the date of payment.  Subject to arrangements with the Depositary, payment for interests in the Bonds which are to be redeemed shall be made to the Depositary upon presentation of Bonds to the Trustee for redemption in the aggregate principal amount specified in the Redemption Requests submitted to the Trustee by the Depositary which are to be fulfilled in connection with such payment.  The principal amount of any Bonds acquired or redeemed by or at the direction of the Borrower other than by redemption at the option of any Representative of a deceased Beneficial Owner pursuant to this section shall not be included in the computation of either the Individual Limitation and the Annual Limitation for the Initial Period or for any Subsequent Period.

(vi)

For purposes of this section, a “Beneficial Owner” means the Person who has the right to sell, transfer or otherwise dispose of an interest in a Bond and the right to receive the proceeds therefrom, as well as the interest and principal payable to the holder thereof.  In general, a determination of beneficial ownership in the Bonds will be subject to the rules, regulations and procedures governing the Depositary and institutions that have accounts with the Depositary or a nominee thereof (“Participants”).

(vii)

For purposes of this section, an interest in a Bond held in tenancy by the entirety, joint tenancy or by tenants in common will be deemed to be held by a single Beneficial Owner and the death of a tenant by the entirety, joint tenant or tenant in common will be deemed the death of a Beneficial Owner.  The death of a Person who, during his lifetime, was entitled to substantially all of the rights of a Beneficial Owner of an interest in the Bonds will be deemed the death of the Beneficial Owner, regardless of the recordation of such interest on the records of the Participant, if such rights can be established to the satisfaction of the Participant.  Such interests shall be deemed to exist in typical cases of nominee ownership, ownership under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, community property or other similar joint ownership arrangements, including individual retirement accounts or Keogh (H.R. 10) plans maintained solely by or for the decedent or by or for the decedent and any spouse, and trust and certain other arrangements where the decedent has the right to receive all or a portion of the income and such Person has substantially all of the rights of a Beneficial Owner during such person’s lifetime.

(viii)

In the case of a redemption request which is presented on behalf of a deceased Beneficial Owner and which has not been fulfilled at the time the Borrower gives notice of its election to redeem the Bonds, the Bonds which are the subject of such pending redemption request shall be redeemed prior to any other Bonds.

(ix)

Any Redemption Request may be withdrawn by the Person(s) presenting the same upon delivery of a written request for such withdrawal given by the Participant on behalf of such Person to the Depositary and by the 

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Depositary to the Trustee not less than 60 days prior to the interest payment date on which such Bonds are eligible for redemption.

(x)

The Borrower may, at its option, purchase any Bonds for which Redemption Requests have been received in lieu of redeeming (or causing the redemption of) such Bonds.  Any Bonds so purchased by the Borrower shall either be reoffered for sale and sold within 180 days after the date of purchase or presented to the Trustee for redemption and cancellation.

(xi)

During such time or times as the Bonds are not Book-Entry Bonds and are issued in definitive form, all references in this section to Participants and the Depositary, including the Depositary’s governing rules, regulations and procedures shall be deemed deleted, all determinations which under this section the Participants are required to make shall be made by the Borrower (including, without limitation, determining whether the applicable decedent is in fact the Beneficial Owner of the interest in the Bonds to be redeemed or is in fact deceased and whether the Representative is duly authorized to request redemption on behalf of the applicable Beneficial Owner), all redemption requests, to be effective, shall be delivered by the Representative to the Trustee, with a copy to the Borrower, and shall be in the form of a Redemption Request (with appropriate changes to reflect the fact that such Redemption Request is being executed by a Representative) and, in addition to all documents that are otherwise required to accompany a Redemption Request, shall be accompanied by the Bond that is the subject of such request.”

(b)

The Master Agreement is hereby amended by adding a new exhibit designated as “Exhibit D—Form of Redemption Request” as follows:

“EXHIBIT D

FORM OF REDEMPTION REQUEST

Business Finance Authority of the State of New Hampshire

Water Facility Revenue Bonds

(Pennichuck Water Works, Inc. Project)

2005 Series BC-__ due October 1, 2035 (the “Bonds”)

CUSIP NO. _____

The undersigned, ______________________________ (the “Participant”), does hereby certify, pursuant to the provisions of that certain Master Loan and Trust Agreement dated as of October 1, 2005 (as amended on October 1, 2007 and May 1, 2008, the “Master Agreement”), among the Business Finance Authority of the State of New Hampshire (the “Issuer”), Pennichuck Water Works, Inc. (the “Borrower”), and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”), to The Depository Trust Company (the “Depositary”), the Borrower, the Issuer and the Trustee that:

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1.

[Name of deceased Beneficial Owner] is deceased.

2.

[Name of deceased Beneficial Owner] had a $__________ interest in the above-referenced Bonds.

3.

[Name of Representative] is [Beneficial Owner’s personal representative/other person authorized to represent the estate of the Beneficial Owner/surviving joint tenant/surviving tenant by the entirety/trustee of a trust] of [Name of deceased Beneficial Owner] and has delivered to the undersigned a request for redemption in form satisfactory to the undersigned, requesting that $__________ principal amount of said Bonds be redeemed pursuant to said Master Agreement.  The documents accompanying such request, all of which are in proper form, are in all respects satisfactory to the undersigned and the [Name of Representative] is entitled to have the Bonds to which this Request relates redeemed.

4.

The Participant holds the interest in the Bonds with respect to which this Request for Redemption is being made on behalf of [Name of deceased Beneficial Owner].

5.

The Participant hereby certifies that it will indemnify and hold harmless the Depositary, the Trustee, the Issuer and the Borrower (including their respective officers, directors, agents, attorneys and employees), against all damages, loss, cost, expense (including reasonable attorneys’ and accountants’ fees), obligations, claims or liability (collectively, the “Damages”) incurred by the indemnified party or parties as a result of or in connection with the redemption of Bonds to which this Request relates.  The Participant will, at the request of the Borrower, forward to the Borrower, a copy of the documents submitted by [Name of Representative] in support of the request for redemption.

IN WITNESS WHEREOF, the undersigned has executed this Redemption Request as of _______________, 20___.

				
	 
	 
	[PARTICIPANT NAME]

	 

	  

	 
	 
	 

	  

	 
	 
	 

	                                                                          

	By

	 
	 

	 
	Name

	 
	 

	 
	Title

	 
	”

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Section 2.  Miscellaneous.

(a)

All references in the Master Agreement or any other agreement or document delivered in connection therewith shall be deemed to refer to such Master Agreement as amended and modified by this Amendment.

(b)

This Amendment shall be coterminous with the Master Agreement.

(c)

This Amendment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

(d)

This Amendment shall be governed by and construed in accordance with the laws of the State.

(e)

Except as expressly provided by Section 1 of this Amendment, all terms, provisions, representations, covenants, warranties and agreements of the Master Agreement continue in full force and effect.

(f)

Trustee makes no representation as to the validity or sufficiency of this Amendment.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, Issuer has caused this Second Amendment to Master Loan and Trust Agreement to be executed in its corporate name and with its official seal hereunto affixed and attested by its duly authorized officials.  Company has caused this Second Amendment to Master Loan and Trust Agreement to be executed in its corporate name and with its official seal hereunto affixed and attested by its duly authorized officials.  Trustee has caused this Second Amendment to Master Loan and Trust Agreement to be executed in its corporate name with its corporate seal hereunto affixed and attested by its duly authorized officials.  All of the above occurred as of the date first above written.

					
	[SEAL]

	BUSINESS FINANCE AUTHORITY OF THE

STATE OF NEW HAMPSHIRE

	  

	                                                          

	 
	 

	  

	 
	 
	 

	 
	 
	By

	/s/ Jack Donovan

	 
	 
	Name

	Jack Donovan

	 
	 
	Title

	Executive Director

	  

	 
	 
	 

	  

	 
	 
	 

	 
	 
	PENNICHUCK WATER WORKS, INC.

	  

	 
	 
	 

	  

	 
	 
	 

	 
	 
	By

	/s/ William D. Patterson

	 
	 
	 
	William D. Patterson

	 
	 
	 
	Senior Vice President and

	 
	 
	 
	Chief Financial Officer

	  

	 
	 
	 

	[SEAL]

	THE BANK OF NEW YORK TRUST

	 
	 
	COMPANY, N.A., as Trustee

	  

	 
	 
	 

	Attest:

	 
	 

	  

	 
	 
	 

	  

	 
	By

	/s/ Chi C. Ma

	By

	/s/ Christina Mullen

	Name

	Chi C. Ma

	 
	Assistant Vice President

	Title

	Vice President

	  

	 
	 
	 

	Acknowledged and consented to as of the

date first above written:

	 
	 

	 
	 
	 
	 

	AMBAC ASSURANCE CORPORATION

	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	By

	/s/ Dennis Pidherny

	 
	 

	Name

	Dennis Pidherny

	 
	 

	Title

	Managing Director

	 
	 

8Filed by Bowne Pure Compliance

 

Exhibit 10.1

May 6, 2008

Bradford Zakes

Chief Executive Officer

ImaRx Therapeutics, Inc.

1730 E. River Road, Suite 200

Tucson, Arizona 85718

Letter of Intent

Dear Mr. Zakes:

1. Microbix Biosystems Inc. (“Microbix”), is pleased to submit to you this Letter of
Intent (the “Letter”) outlining the general terms and conditions on which Microbix proposes
to acquire (the “Proposed Acquisition”) from ImaRx Therapeutics, Inc. (“ImaRx”) all
of the Assets (as defined below) which relate to the urokinase business conducted by ImaRx (the
“Business”). The Proposed Acquisition would be made upon the following terms and subject
to the following conditions:

2. Structure. The Assets would be acquired, free of all liens and encumbrances, by
Klarogen Biotherapeutics Inc., a company to be formed by Microbix for purposes of completing the
Proposed Acquisition (“Klarogen”).

3. The Assets To Be Acquired. The assets to be acquired (the “Assets”) will
include all assets or rights owned, controlled or leased by ImaRx which relate to the Business,
including but not limited to, all of the urokinase assets which ImaRx acquired or gained rights to
from Abbott Laboratories (“Abbott”) and any improvements thereto; all inventory of Kinlytic
labeled product (this is understood to be comprised of not less than 29,000 vials), testing
equipment, and unlabeled urokinase drug product inventory (this is understood to be comprised of
not less than 77,000 vials), cell banks, testing references and standards, work- in-process,
samples, retained samples of previously released drug substance and drug product batches; all
intellectual property rights, including but not limited to methodologies, processes, protocols,
specifications, techniques, patents, trademarks, service marks, trade secrets and know how; all
regulatory filings, including IND and NDA filings; records, reports, data bases, clinical data,
history, protocols and reports, adverse event reports history, formulae and product development
history; all marketing and sales materials in print, electronic or other form; all contracts with
third parties, including those for storage of finished drug product and raw materials, product
testing, rights to access information owned or controlled by Abbott to the extent such rights exist
and are assignable and agreements with suppliers, customers and distributors, including those with
hospitals, GPO’s and wholesalers; and the fully-paid up, worldwide, perpetual, royalty-free right
to use the technology assets co-owned by Abbott and ImaRx to market, promote sell, distribute
and/or service products embodied in or derived from the Assets (the “Technology Assets”);
and any other assets or rights that ImaRx owns or controls that are necessary to make, manufacture,
market, sell, or distribute the urokinase products.

 

 

 

4. Purchase Price. The purchase price for the Assets shall consist of the following:

(a) At the Closing (as defined below), Klarogen shall pay to ImaRx by wire transfer the sum of
U.S. $12,000,000.

(b) At the Closing, Klarogen shall deposit into an interest bearing escrow account at a
mutually agreeable financial institution (the “Escrow Agent”) a sum of U.S. $5,000,000 (the
“Milestone Payment”). Immediately upon confirmation of the achievement of the Extended Dating
Milestone (“EDM”) (as defined below), the Escrow Agent shall release to ImaRx by wire transfer the
sum of U.S. $5,000,000 and the remaining balance to Klarogen. In the event the EDM is not achieved
as set forth below, on or before December 31, 2009, and such failure to achieve the EDM is not due
to the failure of Klarogen to use commercially reasonable efforts to secure the EDM, then, there
shall be no further obligation to pay the EDM milestone and the Escrow Agent shall release all
funds to Klarogen.

(c) Following the Closing, Klarogen will use commercially reasonably efforts to secure, prior
to September 30, 2009, the approval of the U.S. Food and Drug Administration (“FDA”) to
extend the expiration date of Kinlytic urokinase included in the Assets to March 2011 (the
“Extended Dating Milestone”). ImaRx will use commercially reasonably efforts (where
commercially efforts are to be defined as no less effort than consistent with the efforts that
ImaRx has made prior to the date of this Letter, including as evidenced in material provided to
Microbix and as reviewed by Microbix via the current and prior due diligence processes) to provide
support for Klarogen to achieve this goal. Klarogen will engage the contract testing laboratory,
BioReliance, currently qualified by ImaRx, to perform stability testing following the FDA approved
protocol in approximately March 2009. Data will be submitted to FDA in a 30-CBE. A lot of
Kinlytic included in the Assets will be labeled with expiration dating of approximately March 2011.
The Extended Dating Milestone will be met if the FDA approves the release of the product lot
labeled with the March 2011 expiration date on or before December 31, 2009.

5. Definitive Agreement. The obligations of Microbix and ImaRx are expressly subject
to the negotiation and execution of a definitive acquisition agreement (the “Definitive
Agreement”), in form and substance satisfactory to Microbix and ImaRx. The Definitive
Agreement will contain customary representations and warranties; survival periods, indemnification
covenants and escrow provisions in respect of representations and warranties; covenants;
conditions; termination rights; and other terms, conditions and provisions as are customary or
appropriate in cross-border transactions of this size and type.

6. Support Services Agreement. Simultaneously with the Closing, Klarogen and ImaRx
will enter into a mutually agreeable Support Services Agreement (the “Support Services
Agreement”) pursuant to which ImaRx will assist Klarogen (including by providing specified
ImaRx personnel) in the transition of the Assets; maintenance of regulatory files, including in
connection with seeking to achieve the Extended Dating Milestone; acquisition of information,
documentation and materials as required or available from Abbott; and such other services as the
parties may agree. The term of the Support Services Agreement shall end on the achievement of the
EDM or December 31, 2009, whichever occurs first.

 

 

 

7. The Closing. The closing and consummation of the Proposed Acquisition (the
“Closing”) will be held at a time and place to be mutually agreed upon by Microbix and
ImaRx on or before June 23, 2008, provided that the conditions to Closing set forth in Section 7.
of this Letter and the Definitive Agreement have been satisfied or waived. The Closing Date may be
extended by Microbix, as may be determined by Microbix to be necessary to complete the conditions
for Closing, until no later than July 21, 2008. The parties may extend the Closing beyond July 21,
2008 based upon mutual agreement. In the event that Closing is extended beyond June 23, 2008, ImaRx
may sell up to 2,500 of the Kinlytic labeled vials of finished product to not more than five (5) of
its current customers for a price which is not less than 95% of the average price for which it has
sold product to these customers during the past 12 months. There shall be no price adjustment to
reflect the reduced inventory.

8. Conditions to Closing. The consummation of the Proposed Acquisition will be
subject to and conditioned upon, at or prior to the Closing: (a) the approval by the Boards of
Directors of each of Microbix and ImaRx; (b) receipt of all material consents and material
approvals, governmental, private or otherwise, or waivers of such material consents and material
approvals, which may be necessary or desirable to consummate the transactions contemplated in the
Definitive Agreement, in form and content satisfactory to Microbix; (c) execution and delivery of
the Support Services Agreement in form and content satisfactory to Microbix; (d) sales people of
ImaRx who are responsible for the sale of urokinase, as may be specified by Microbix, shall enter
into mutually agreeable employment agreements with Microbix; (e) all of the Assets shall be free
and clear of all liens and encumbrances, except as may be acceptable to Microbix; (f) all
outstanding obligations between ImaRx and Abbott shall have been paid or settled in full, or
otherwise amended to the satisfaction or Microbix, such that Abbott shall not have any rights to or
claims upon any of the Assets (other than its co-ownership of the Technology Assets); (g) there
shall have been no institution or threat by any governmental authorities or by any other person of
litigation or proceedings against any of the parties to the Definitive Agreement or their
affiliates by reason of the Proposed Acquisition; (h) Klarogen shall have received proceeds from a
financing transaction (the “Financing”) to be entered into in connection with the Proposed
Acquisition, on such terms and in such sums as are satisfactory to fund the payments at
Closing; (i) the completion of a due diligence review of the Assets, the Business and its financial
condition, customers and suppliers satisfactory to Microbix and the proposed investors in the
Financing in their sole discretion; (j) the absence of any material adverse change in the Business
or the Assets; (k) no further shareholder approvals being required by ImaRx’s shareholders; and (l)
such other terms, provisions and conditions as are customary in similar transactions or as are
otherwise agreed upon by the parties.

9. Access to Facilities; Due Diligence. ImaRx will afford Microbix and its
prospective investors and lenders, and their respective authorized representatives, full access,
upon reasonable notice during normal business hours and at other reasonable times, to all
properties, books, contracts, records and other information related to ImaRx for purposes of
conducting such investigations, appraisals or audits as Microbix or its prospective investors or
lenders deem reasonably necessary or advisable under the circumstances. Such due diligence will
include meetings with existing customers, suppliers, employees and other third parties with respect
to the Business. ImaRx shall cause its employees, accountants and advisers to cooperate in the
performance of such due diligence investigation.

 

 

 

10. Public Disclosure. Until such time as they mutually agree that a public
announcement will be made, neither Microbix nor ImaRx will publicize or otherwise disclose the
existence or contents of this Letter or Microbix’ interest in or negotiations with ImaRx, except
(a) in connection with such party’s disclosure to its directors, professional advisors, employees,
bankers and prospective investors or lenders, in each case under a confidential relationship, in
connection with the Proposed Acquisition; and (b) if required pursuant to any law, court order,
subpoena, investigation or regulation of any applicable jurisdiction, in which event the party from
whom such disclosure is sought pursuant to this Section 8(b) will, if practicable, request that the
subject matter to be disclosed be kept confidential and not used for any other purpose; and (c) as
may be required to satisfy any disclosure obligation arising from the fact that the party is a
public reporting company. Prior to any required disclosure, the disclosing party shall provide
notice, at least two business days if reasonably possible, to the other party.

11. Brokerage Fees; Transaction Costs. Each party shall indemnify and hold harmless
the other from any claim for brokerage or finders’ fees arising out of the transactions
contemplated hereby by any person claiming to have been engaged by such party. All fees and
expenses paid or incurred by Microbix in connection with the transactions contemplated by this
Letter will be paid by Microbix, and all fees and expenses paid or incurred by ImaRx in connection
with the transactions contemplated by this Letter will be paid by ImaRx, and neither party will be
liable to the other for any fees or expenses incurred by the other party; provided, however, that
in the event that the Closing does not occur for any reason other than the breach of the Definitive
Agreement by Microbix, and ImaRx enters into an agreement with respect to any transaction involving
the sale, license, transfer or lease of all or any material portion of the Business or Assets
within a 120 day period of the targeted closing date of June 23, 2008, (an “Alternative
Transaction”), then, upon the closing of such Alternative Transaction, ImaRx shall pay to
Microbix an amount equal to all of the expenses incurred by Microbix in connection with the
Proposed Acquisition plus U.S. $1,000,000, further provided, however, that the payment of such
amounts by ImaRx shall not apply if (a) ImaRx has cooperated in the due diligence process on a
timely basis, and has made all commercially reasonable efforts to meet its own Closing obligations,
and (b) the Closing does not occur because Microbix is unable to Close or elects not to
Close because of the failure to achieve the conditions to Closing set forth in paragraph 8(a)
[solely with respect to the approval of the Board of Directors of Microbix], (b) [solely with
respect to approvals to be obtained by Microbix], (h), and/or (i).

12. Confidentiality. The existence and terms of this letter of intent are deemed
confidential and, except as provided in Section 8, shall not be disclosed by any party without the
prior written consent of the other party. Further, each party hereby agrees that prior to the
Closing such party will have access to and may become familiar with various trade secrets and other
confidential information and data of the other, including, but not limited to customer lists,
worksheets, memoranda, compilations of information, plans, programs, records, procedures, methods
of doing business, and other business and financial information and documents prepared by or made
available to the party in connection with the Proposed Acquisition. Each party agrees and
acknowledges that it shall not disclose, reproduce or otherwise use any such confidential
information except as necessary in the performance of due diligence in connection with the Proposed
Acquisition; provided, however, that in the event the Proposed Acquisition is consummated, Microbix
and Klarogen shall have the right to disclose, reproduce or use any such information in any manner they deem appropriate in their sole discretion. The parties will
continue to be bound by that certain Confidentiality Agreement dated January 31, 2006 (the
“Confidentiality Agreement”).

 

 

 

13. Binding Effect. This Letter constitutes an outline of the principal intended
terms of the Proposed Acquisition to facilitate the negotiation and preparation of the Definitive
Agreement. Neither this Letter, nor any negotiations or understandings prior to the execution of
the Definitive Agreement are intended to be or will constitute a binding and legally enforceable
agreement of the parties hereto; provided, however, that Microbix (for itself and
Klarogen) and ImaRx covenant and agree that Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 19
and 20 of this Letter will be binding and legally enforceable agreements of the parties. Each
party covenants not to institute or participate in any proceeding seeking to establish a contrary
interpretation. In addition, the parties agree that except as specifically set forth herein, there
shall be no binding or enforceable agreement between the parties with respect to the Proposed
Acquisition, except as set forth in the Definitive Agreement.

14. Injunctive Relief. It is understood and agreed that money damages would not be a
sufficient remedy for any breach of the enforceable provisions of this Letter by either party
hereto and that the parties will be entitled to equitable relief, including preliminary injunctive
relief, injunction and specific performance, as a remedy for any such breach. Such remedies will
not be deemed to be the exclusive remedies for a breach by either party of the enforceable
provisions of this Letter but will be in addition to all other remedies available at law or equity
to the non-breaching party. In the event of litigation relating to this Letter, if a court of
competent jurisdiction determines that any party has breached the enforceable provisions of this
Letter, then such party will pay to the other the reasonable legal fees and disbursements incurred
in connection with litigation relating thereto, including any appeal therefrom.

15. Acceptance and Effectiveness. This Letter must be accepted by ImaRx no later than
5:00 p.m. EDT on May 6, 2008, and will terminate and be of no further force or effect if not
accepted by such date. The effective date of this Letter will be its acceptance date.

16. Representation and Warranty. Each party hereto represents and warrants to the
other that, in entering this Letter of Intent, it is not breaching or violating any other contract,
covenant or commitment to any third parties, and that it is unaware of any contract, covenant,
commitment or condition which would prevent that party from closing the transaction contemplated
herein, except those conditions to closing which are set forth in this Letter of Intent, or as
otherwise specifically set forth herein.

17. Integration; Exclusive Agreement. This Letter and the Confidentiality Agreement
constitute the full and complete agreement of Microbix and ImaRx with respect to the subject matter
contained in this Letter, and there are no further or other agreements or understandings, written
or oral, in effect between Microbix and ImaRx relating to such subject matter except as expressly
referred to herein. For avoidance of doubt, the Non-Binding Letter of Intent between Microbix and
ImaRx dated as of January 16, 2008 is hereby terminated and superseded in its entirety by this
Letter.

 

 

 

18. Conduct of Business. From and after this date until termination of this Letter,
and except as otherwise contemplated herein, ImaRx shall, and will cause each of its subsidiaries
to, with respect to the Business, conduct business only in the normal and ordinary course and use
its reasonable commercial efforts to preserve its business organization intact, to retain the
services of its present employees involved in the Business and to preserve the goodwill of its
customers and suppliers. In addition, ImaRx shall not:

(a) Incur any indebtedness secured by the Assets;

(b) Issue or sell, or contract to issue or sell, any shares of capital stock of ImaRx or any
of its subsidiaries, or any securities convertible into or exchangeable for shares of capital stock
of ImaRx or any of its subsidiaries, or securities, warrants, options or rights to purchase any of
the foregoing, other than upon the exercise of currently outstanding options or warrants, that
would have an adverse impact on the ability to complete the transaction contemplated herein;

(c) Amend its charter documents in any manner that would adversely affect the ability to
complete the transaction contemplated herein;

(d) Other than routine compensation adjustments made in the ordinary course of business, with
respect to any individual who would become an employee of Klarogen following the Closing, increase
the compensation of such individual, create any additional employee benefit plan or amend any
existing employee benefit plan (including but not limited to repricing, or accelerating the vesting
of, any outstanding stock options or granting any new stock options); or

(e) With respect to the Business or the Assets, enter into any agreement which is (i) outside
the ordinary course of business or (ii) not subject to termination for convenience within 90 days
following execution.

19. Exclusivity. In consideration of the time which will be expended and the expenses
which will be incurred by Microbix in connection with the Proposed Acquisition, ImaRx agrees that
it will not, and the officers, directors, shareholders, employees and agents of ImaRx will not,
during the Exclusivity Period (as defined below) (i) solicit, negotiate, discuss or consider any
inquiries or proposals relating to (x) the possible direct or indirect acquisition of the Business,
the Assets, or ImaRx’s capital stock or other equity interests in ImaRx or any material assets or
business of ImaRx, or (y) any business combination with ImaRx, or (ii) discuss or disclose either
this proposal or other confidential information pertaining to ImaRx or the Business (except as may
be required by law, or except as specifically permitted hereunder), with any other party, including
but not limited to any corporation or other form of entity, governmental agency or other person
without Microbix’ prior written approval. ImaRx shall notify Microbix immediately in writing if
any third party makes any proposal, offer, inquiry or contact with respect to any of the foregoing
and shall provide Microbix with a copy of any such written proposal. The “Exclusivity
Period” shall be the period commencing on the date of this letter and expiring upon the later
of (a) July 21, 2008 or (b) the Closing or termination of the Definitive Agreement.

 

 

 

20. Termination. Subject to the provisions of Section 11 hereof, either party may
terminate this Letter if the parties have not executed and delivered a Definitive Agreement on or
before July 21, 2008.

21. Governing Law. This Letter and all negotiations, acts and transactions pursuant
hereto will be governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law. Each of Microbix and ImaRx
consents to exclusive jurisdiction of the U.S. federal courts located in the Southern District of
the State of New York with respect to any dispute arising under or related to the transactions
contemplated by this Letter; provided, however, that Microbix shall be entitled to seek equitable
relief, including preliminary injunctive relief, injunction and specific performance, with respect
to any breach of this Agreement by ImaRx, in any court of competent jurisdiction.

If the foregoing accurately sets forth our understanding regarding the subject matter of this
Letter, please acknowledge your acceptance by signing this Letter where provided below and
returning it to the undersigned. We appreciate the opportunity to present this Letter to you and
we look forward to working with you toward the successful completion of the Proposed Acquisition.

	 	 	 	 	 
	 	Very truly yours,

MICROBIX BIOSYSTEMS INC.

 	 
	 	By:  	/S/ Philip Casselli
 	 
	 	 	Philip Casselli, President 	 
	 	 	 	 
	 

	 	 	 	 	 
	ACCEPTED AND AGREED as of	 	 
	the 6 day of May, 2008:	 	 
	 
	 	 	 	 
	IMARX THERAPEUTICS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/S/Bradford Zakes	 	 
	 

	 	 	 	 
	 

	 	Bradford Zakes, Chief Executive Officer

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