MADE as of the 27th day of May, 2008
EXHIBIT
7.02
MADE as
of the 27th day of May, 2008
BETWEEN:
SONUS
PHARMACEUTICALS, INC.
-and-
ONCOGENEX
TECHNOLOGIES INC.
DuMoulin
Black LLP
Barristers
and Solicitors
10th
Floor – 000 Xxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx
X0X
0X0
TABLE
OF CONTENTS
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1.
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INTERPRETATION |
1
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1.1
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Definitions
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1
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1.2
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Interpretation
Not Affected by Headings, etc.
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15
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1.3
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Currency
|
15
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1.4
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Number,
etc.
|
15
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1.5
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Date
For Any Action
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15
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1.6
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Entire
Agreement
|
15
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1.7
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Accounting
Matters
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16
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1.8
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Construction
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16
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1.9
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Knowledge
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16
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1.10
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Exhibits
|
17
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2.
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THE ARRANGEMENT |
17
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2.1
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Implementation
Steps by OncoGenex
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17
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2.2
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Interim
Order
|
17
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2.3
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Articles
of Arrangement
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19
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2.4
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OncoGenex
Proxy Circular
|
20
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2.5
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Sonus
Proxy Statement and Meeting
|
20
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2.6
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Securities
Compliance
|
21
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2.7
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Preparation
of Filings
|
23
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2.8
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U.S.
Tax Treatment
|
24
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2.9
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Voting
Agreements
|
25
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2.10
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Execution
of Escrow Agreements by Sonus
|
25
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2.11
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Executive
Officers of Sonus.
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25
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3.
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REPRESENTATIONS AND WARRANTIES |
25
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3.1
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Representations
and Warranties of OncoGenex
|
25
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- i
-
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3.2
|
Representations
and Warranties of Sonus
|
58
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3.3
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Non-Waiver
|
91
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3.4
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Survival
|
91
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4.
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ESCROW PROVISIONS |
91
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5.
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ADDITIONAL COVENANTS |
92
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5.1
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Retention
of Goodwill
|
92
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5.2
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Covenants
of OncoGenex
|
92
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5.3
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Covenants
of Sonus
|
98
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5.4
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Applications
for Regulatory Approvals
|
103
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5.5
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Covenants
Regarding Non-Solicitation
|
103
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5.6
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Notice
by Sonus of Superior Proposal Determination
|
105
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|
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5.7
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Access
to Information
|
106
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5.8
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Covenant
Regarding Representations and Warranties
|
107
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5.9
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Closing
Matters
|
107
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5.10
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Directors
and Officers Insurance.
|
107
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6.
|
CONDITIONS |
108
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|
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6.1
|
Mutual
Conditions Precedent
|
108
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6.2
|
Additional
Conditions Precedent to the Obligations of Sonus
|
109
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6.3
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Additional
Conditions Precedent to the Obligations of OncoGenex
|
110
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6.4
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Notice
and Cure Provisions
|
112
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6.5
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Satisfaction
of Conditions
|
112
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7.
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AMENDMENT AND TERMINATION |
112
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7.1
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Amendment
|
112
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7.2
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Mutual
Understanding Regarding Amendments
|
113
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7.3
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Termination
|
113
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7.4
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Effect
Of Termination
|
115
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- ii
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7.5
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Expenses
|
115
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7.6
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Liquidated
Damages
|
115
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7.7
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Remedies
|
115
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7.8
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Effect
of Break Fee Payment
|
116
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8.
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GENERAL |
116
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8.1
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Notices
|
116
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8.2
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Assignment
|
117
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8.3
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Binding
Effect
|
117
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8.4
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Waiver
and Modification
|
118
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8.5
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No
Personal Liability
|
118
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8.6
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Further
Assurances
|
118
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8.7
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Consultation
|
118
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8.8
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Governing
Laws
|
118
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8.9
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Severability
|
118
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8.10
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Counterparts
|
119
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8.11
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Withholding
Rights
|
119
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Exhibit A
- Appropriate Regulatory Approvals
Exhibit B
- Arrangement Resolution
Exhibit C
- Plan of Arrangement under section 192 of the Canada Business Corporations
Act
Exhibit D
– Intentionally omitted
Exhibit E
– Voting Agreements
- iii
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THIS
AGREEMENT made as of the 27th day of May, 2008.
AMONG:
SONUS
PHARMACEUTICALS, INC., a corporation existing under the laws of the State
of Delaware
(hereinafter
referred to as “Sonus”)
AND:
ONCOGENEX
TECHNOLOGIES INC., a corporation existing under the federal laws of
Canada
(hereinafter
referred to as “OncoGenex”)
THIS
AGREEMENT WITNESSETH THAT in consideration of the respective covenants and
agreements herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by each party), the
parties hereby covenant and agree as follows:
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1.
|
INTERPRETATION
|
1.1 Definitions
In this
Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following terms shall have the following meanings
respectively:
“Acquisition Proposal” means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement) involving Sonus, OncoGenex or their
respective Subsidiaries, as applicable: (i) any merger,
reorganization, consolidation, share exchange, recapitalization, business
combination, liquidation, dissolution, arrangement or other similar transaction
involving, or, any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of, all or any significant portion of the assets or twenty-five
percent (25%) or more of the equity securities of, Sonus, OncoGenex or any of
their respective Subsidiaries, in a single transaction or series of related
transactions; (ii) with respect to Sonus, the acquisition by any Person
(other than any beneficial owner of more than five percent (5%) of Sonus Common
Shares as long as such beneficial owner is eligible to make filings in respect
thereof on Schedule 13G under applicable SEC rules and regulations) of
beneficial ownership of ten percent (10%) or more of the outstanding Sonus
Common Shares (including Sonus Common Shares currently beneficially owned by
such Person); (iii) with respect to OncoGenex, the acquisition by any
Person (other than as a result of financings with existing shareholders of
OncoGenex) of beneficial ownership of ten percent (10%) or more of the
outstanding OncoGenex shares; (iv) any tender offer or exchange offer for
twenty percent (20%) or more of the outstanding shares of capital stock of Sonus
or OncoGenex, as applicable, or, with respect to Sonus, the filing of a
registration statement under the Securities Act in connection therewith; or
(v) any public announcement of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the foregoing, as
applicable;
- 1
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“Affiliate” has the meaning
ascribed thereto in the Plan of Arrangement;
“Announcement Date” means the
day on which Sonus and OncoGenex first publicly announce the entering into this
Agreement by Sonus and OncoGenex;
“Appointed Directors” means
three individuals to be designated by OncoGenex, and one individual, who shall
be independent, acceptable to OncoGenex and Sonus;
“Appropriate Regulatory
Approvals” means those sanctions, rulings, consents, orders, exemptions,
permits and other approvals (including the lapse, without objection, of a
prescribed time under a statute or regulation that states that a transaction may
be implemented if a prescribed time lapses following the giving of notice
without an objection being made) of Governmental Entities, regulatory agencies
or self-regulatory organizations, as set out in Exhibit A
hereto;
“Arrangement” means an
arrangement under Section 192 of the CBCA on the terms and subject to the
conditions set out in the Plan of Arrangement, subject to any amendments or
variations thereto made in accordance with Section 6.1 hereof or
Article 5 of the Plan of Arrangement or made at the direction of the Court
in the Final Order;
“Arrangement Resolution” means
the special resolution of the OncoGenex Securityholders, to be substantially in
the form and content of Exhibit B hereto;
“Articles of Arrangement” means
the articles of arrangement of OncoGenex in respect of the Arrangement that are
required by the CBCA to be sent to the Director after the Final Order is
made;
“Assumed Option” has the
meaning ascribed thereto in Section 2.3(d);
“Assumption Agreement” means
the Stock Option Assumption, Amending and Confirmation Agreement relating to the
assumption by Sonus of the OncoGenex Stock Option Plan and OncoGenex Options to
be made between Sonus and OncoGenex prior to the Effective Date;
“Average Market Price” means
the average closing price of a Sonus Common Share on the NGM (or any other
exchange on which Sonus Common Shares are listed for trading) for the ten
consecutive Trading Days commencing with the Announcement Date or commencing
with the first Trading Day after the Announcement Date if the announcement is
after 1:00 p.m. Pacific Time;
“BC Advantage Debenture” means
the US$165,519 principal amount secured debenture of OncoGenex issued to BC
Advantage Funds (VCC) Ltd. and outstanding at the date of this
Agreement;
“BC Advantage Debenture Repayment
Amount” means the principal and interest owing to the holder of the BC
Advantage Debenture on the tenth Trading Day following the Announcement
Date;
“BC Advantage Shares Issuable”
means the number of Sonus Common Shares issuable that is equal to the BC
Advantage Debenture Repayment Amount divided by 85 percent of the Average Market
Price;
“Business Day” means any day on
which commercial banks are open for business in Xxxxxxx, Xxxxxxxxxx xxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx other than a Saturday, a Sunday or a day observed as
a holiday in Seattle, Washington under the laws of the State of Washington or
the federal laws of the
- 2
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United
States of America or in Vancouver, British Columbia under the laws of the
Province of British Columbia or the federal laws of Canada;
“Canadian Jurisdictions” means
British Columbia, Alberta and Ontario;
“Capital Adjustment” means the
amendment of Sonus’ certificate of incorporation prior to the Effective Date
such that, immediately following the Reverse Stock Split, the authorized share
capital of Sonus consists of (i) that number of Sonus Common Shares as is
equal to two times the Sonus Common Shares outstanding immediately following the
Effective Time (including the Deposited Securities), and (ii) 5,000,000
Sonus Preferred Shares, or in each case such other number of Sonus Common Shares
or Sonus Preferred Shares agreed upon by Sonus and OncoGenex prior to mailing
the Proxy Statement;
“CBCA” means the Canada Business Corporations
Act, R.S.C. 1985, c. C-44, as amended;
“Certificate of Amendment”
means the certificate of amendment to the certificate of incorporation of Sonus
to be filed with the Secretary of State of the State of Delaware and effective
prior to the Effective Date, effecting the Reverse Stock Split, the Capital
Adjustment and the Name Change;
“Circular” means the notice of
the OncoGenex Meetings and accompanying management proxy circular, including all
schedules, appendices and exhibits thereto, to be sent to the OncoGenex
Securityholders in connection with the OncoGenex Meetings;
“Code” means the Internal
Revenue Code of 1986, as amended;
“Company” means Sonus,
SonusSub, OncoGenex or OncoGenexSub, as the context requires;
“Confidentiality Agreement”
means the confidentiality and non-disclosure agreement dated as of
February 22, 2008 between Sonus and OncoGenex;
“Court” means the Supreme Court
of British Columbia;
“Debenture Shares Issuable”
means the BC Advantage Shares Issuable plus the Other Debenture Shares
Issuable;
“Debt Instrument” means any
bond, debenture, mortgage, promissory note or other instrument evidencing
indebtedness for borrowed money;
“Deposited Securities” has the
meaning ascribed thereto in the Plan of Arrangement;
“Director” means the Director
appointed pursuant to Section 260 of the CBCA;
“Dissent Procedures” has the
meaning set out in section 3.1 of the Plan of Arrangement;
“Dissent Rights” means the
rights of dissent in respect of the Arrangement described in Section 3.1 of
the Plan of Arrangement;
“Dissenting Securityholder”
means a holder of OncoGenex Shares or OncoGenex Debentures who dissents in
respect of the Arrangement in strict compliance with the Dissent
Procedures;
- 3
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“Effective Date” means the date
shown on the certificate of arrangement to be issued by the Director giving
effect to the Arrangement;
“Effective Time” has the
meaning ascribed thereto in the Plan of Arrangement;
“Employee Benefits”
means:
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(a)
|
salaries,
wages, bonuses, vacation entitlements, commissions, fees, stock option
plans, stock purchase plans, incentive plans, deferred compensation plans,
profit-sharing plans and other similar benefits, plans or
arrangements;
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(b)
|
insurance,
health, welfare, drug, disability, pension, retirement, travel,
hospitalization, medical, dental, legal counseling, eye care and other
similar benefits, plans or arrangements;
and
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(c)
|
agreements
or arrangements with any labour union or employee association, written or
oral employment agreements or arrangements and agreements or arrangements
for the retention of the services of independent contractors, consultants
or advisors;
|
“Encumbrance” means any
mortgage, charge, easement, encroachment, lien, adverse claim, assignment by way
of security, security interest, servitude, pledge, hypothecation, conditional
sale agreement, security agreement, title retention agreement, financing
statement, option, right of pre-emption, privilege, obligation to assign,
licence, sublicence (other than non-exclusive licences and sublicences of
intellectual property made in the ordinary course of business) or other
encumbrance;
“Environmental Laws” means all
applicable domestic, foreign, federal, state and local laws (including the
common law), rules, requirements and regulations relating to pollution, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or protection of human health as
it relates to the environment including, without limitation, laws and
regulations relating to releases of Hazardous Materials, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or relating to management of
asbestos in buildings.
“ERISA Affiliate” means any
entity or trade or business (whether or not incorporated) other than a Company
that together with a Company, is considered under common control and treated as
a single employer under Section 414(b), (c), (m) or (o) of the
Code.
“Escrow Agent” means
Computershare Trust Company of Canada or such other Person as the parties hereto
may approve, in its capacity as escrow agent under the Escrow Agreements, and
includes any successor escrow agent appointed thereunder;
“Escrow Agreements” means the
agreements to be made among Sonus the Escrow Agent and each of the Escrow
Shareholders (or the Escrow Shareholders' Agent on behalf of one or more Escrow
Shareholders), which shall be substantially in the form and content of Appendix
1 to the Plan of Arrangement, with such changes thereto as the parties hereto,
acting reasonably, may approve;
“Escrow Ratio” means the number
calculated by dividing 25,000,000 by the number of OncoGenex Shares outstanding
immediately prior to the Effective Time;
- 4
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“Escrow Shareholder” means a
Person who is an OncoGenex Shareholder immediately prior to the Effective Time
and for whose benefit Deposited Securities have been deposited with the Escrow
Agent under an Escrow Agreement;
"Escrow Shareholders' Agent"
means Xxxxxx Xxxxxx, or such other Person as the parties hereto may approve, in
his capacity as shareholders' agent under the Escrow Agreements and includes any
successor shareholders' agent appointed under the Escrow
Agreements;
“Exchange Act” means the United States Securities Exchange
Act of 1934, as amended;
“Exchanged Portion” means (i)
with respect to the BC Advantage Debenture, the principal amount of the BC
Advantage Debenture that is equal to the Original Principal Amount of the BC
Advantage Debenture multiplied by the number of Sonus Common Shares issued under
Section 2.3(a) divided by the BC Advantage Shares Issuable; and (ii) with
respect to the Other Debentures, the principal amount of the Other Debentures
that is equal to the aggregate Original Principal Amount of the Other Debentures
multiplied by the number of Sonus Common Shares issued under Section 2.3(a)
divided by the Other Debenture Shares Issuable;
“Expiration Date” means the day
that is six years after the Effective Date;
“Final Order” means the final
order of the Court granted pursuant to Section 192 of the CBCA approving
the Arrangement as such order may be amended at any time prior to the Effective
Date or, if appealed, then, unless such appeal is abandoned or denied, as
affirmed;
“Financial Year End” means
December 31, 2007;
“GAAP” means the generally
accepted accounting principles used in the United States, as in effect from time
to time;
“Good Clinical Practices”
means, as applicable, the then current standards for clinical trials for
pharmaceuticals (including all applicable requirements relating to protection of
human subjects), as set forth in the FDCA and applicable regulations promulgated
thereunder (including, for example, and without limitation, 21 C.F.R. Parts 50,
54, 56, 312, and 314), as amended from time to time, and such standards of good
clinical practice (including all applicable requirements relating to protection
of human subjects) as are required by other organizations, foreign Governmental
Entities or foreign Regulatory Authorities, as applicable, including applicable
regulations or guidelines from the International Conference on Harmonisation of
Technical Requirements for Registration of Pharmaceuticals for Human
Use.
“Good Laboratory Practices”
means, as applicable, the then current standards for the conduct and reporting
of laboratory studies regarding pharmaceuticals, as set forth in the FDCA and
applicable regulations promulgated thereunder, as amended from time to time, and
such standards of good laboratory practices as are required by other
organizations, foreign Governmental Entities or foreign Regulatory Authorities,
as applicable, including applicable regulations or guidelines from the
International Conference on Harmonisation of Technical Requirements for
Registration of Pharmaceuticals for Human Use.
“Good Manufacturing Practices”
means the then current standards for the manufacture, processing, packaging,
testing, transportation, handling and holding of pharmaceutical products, as set
forth in
- 5
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the FDCA
and applicable regulations promulgated thereunder, as amended from time to time,
and such standards of good manufacturing practices as are required by other
organizations, foreign Governmental Entities or foreign Regulatory Authorities,
as applicable, including applicable regulations or guidelines from the
International Conference on Harmonisation of Technical Requirements for
Registration of Pharmaceuticals for Human Use.
“Governmental Entity” means
any:
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(a)
|
multinational,
federal, provincial, state, regional, municipal, local or other
government, governmental or public department, central bank or
Tribunal;
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(b)
|
subdivision,
agent, commission, board, or authority of any of the
foregoing;
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(c)
|
quasi-governmental
or private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the
foregoing;
|
“Guarantee” means any
agreement, contract or commitment providing for the guarantee, indemnification,
assumption or endorsement or any like commitment with respect to the
obligations, liabilities (contingent or otherwise) or indebtedness of any
Person;
“Hazardous Materials” means
wastes, substances, or materials (whether solids, liquids or gases) that are
deemed hazardous, toxic, pollutants, or contaminants under any Environmental
Laws, including, without limitation, substances defined as “hazardous
substances”, “toxic substances”, “radioactive materials, including sources of
ionizing and nonionizing radiation”, “petroleum products or wastes” or other
similar designations in, or otherwise subject to regulation under, any
Environmental Law.
“IND” means an investigational
new drug application filed with the FDA, including all documents, data and other
information concerning the applicable drug which are necessary for or filed with
such application;
“Information” has the meaning
ascribed thereto in Section 4.7(b);
“Interested Person” means any
present or former officer, director, shareholder, employee, consultant or
advisor, excluding attorneys, accountants and other third party professional
advisors of a Company in connection with this Agreement and the transactions
contemplated herein, of or to such Company or any Person with which such Company
or any of the foregoing does not deal at arm’s length within the meaning of the
Income Tax Act (Canada)
(including a spouse, parent, child or sibling of any such Person);
“Interim Order” means the
interim order of the Court, as the same may be amended, granted pursuant to
Section 192 of the CBCA in respect of the Arrangement, as contemplated by
Section 2.2;
“Laws” means all statutes,
regulations, statutory rules, principles of law, orders, published policies and
guidelines, and terms and conditions of any grant of approval, permission,
authority or licence of any court, Governmental Entity, statutory body or
self-regulatory authority, and the term “applicable” with respect to such Laws
and in the context that refers to one or more Persons means that such Laws apply
to such Person or Persons or its or their business, undertaking, property or
securities and emanate from a Person having jurisdiction over the Person or
Persons or its or their business, undertaking, property or
securities;
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“Material Adverse Change”, when
used in connection with Sonus or OncoGenex, means any change, effect, event or
occurrence with respect to its condition (financial or otherwise), properties,
assets, ownership, capital, liabilities, obligations (whether absolute, accrued,
conditional or otherwise), businesses, operations or results of operations or
those of its Subsidiaries, if any, that is, or would reasonably be expected to
be, material and adverse to the business, properties, assets, operations or
condition (financial or otherwise) of such party and its Subsidiaries taken as a
whole, other than any change, effect, event or occurrence:
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|
(a)
|
relating
to the Canadian or United States’ economy or securities markets in
general; or
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(b)
|
generally
affecting the industry in which such party
operates;
|
“Material Adverse Effect”, when
used in connection with Sonus or OncoGenex, means any matter or action that has
an effect that is, or would reasonably be expected to be, material and adverse
to the business, properties, assets, operations or condition (financial or
otherwise) of such party and its Subsidiaries taken as a whole, and “Materially
Adversely Affected” shall have a corresponding meaning;
“Meeting of Class A
Shareholders” means the special meeting of the holders of OncoGenex
Class A Preferred Shares (including any adjournment thereof) that is to be
convened as provided by the Interim Order to consider and, if deemed advisable,
approve the Arrangement (unless each and every holder of OncoGenex Class A
Preferred Shares consents in writing to a resolution approving the Arrangement,
to the extent and in the manner permitted pursuant to the Interim
Order);
“Meeting of Class B
Shareholders” means the special meeting of the holders of OncoGenex
Class B Preferred Shares (including any adjournment thereof) that is to be
convened as provided by the Interim Order to consider and, if deemed advisable,
approve the Arrangement (unless each and every holder of OncoGenex Class B
Shares consents in writing to a resolution approving the Arrangement, to the
extent and in the manner permitted pursuant to the Interim Order);
“Meeting of Common Shareholders and
Optionholders” means the special meeting of the holders of OncoGenex
Common Shares and the holders of OncoGenex Options (including any adjournment
thereof) that is to be convened as provided by the Interim Order to consider
and, if deemed advisable, approve the Arrangement (unless each and every holder
of OncoGenex Common Shares and each and every holder of OncoGenex Options
consents in writing to a resolution approving the Arrangement, to the extent and
in the manner permitted pursuant to the Interim Order);
“Meeting of Debentureholders”
means the special meeting of the holders of OncoGenex Debentures (including any
adjournment thereof) that is to be convened as provided by the Interim Order to
consider and, if deemed advisable, approve the Arrangement (unless each and
every holder of OncoGenex Debentures consents in writing to a resolution
approving the Arrangement, to the extent and in the manner permitted pursuant to
the Interim Order);
“Name Change” means the change
of name of Sonus to “OncoGenex Pharmaceuticals, Inc." or such other name as may
be agreed upon by Sonus and OncoGenex;
“NCM” means the distinct tier
of The Nasdaq Stock Market referred to as the Nasdaq Capital
Market;
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“NDA” means a new drug
application for a drug filed in accordance with 21 C.F.R. Part 314, and all
supplements filed pursuant to the requirements of the FDA, including all
documents, data and other information concerning the applicable drug which are
necessary for FDA approval to market such drug in the United
States;
“NGM” means the distinct tier
of The Nasdaq Stock Market referred to as the Nasdaq Global Market;
“Off-Balance Sheet Arrangement”
has the meaning set forth in Item 303 of Regulation S-K adopted under the
Exchange Act;
“OncoGenex Affiliated
Stockholders” has the meaning set forth in Section 2.9.
“OncoGenex Business” means the
business of OncoGenex and its Subsidiaries as described in
Section 3.1.27;
“OncoGenex Class A Preferred
Shares” means OncoGenex Series 1 Class A Preferred Shares and
OncoGenex Series 2 Class A Preferred Shares;
“OncoGenex Class B Preferred
Shares” means OncoGenex Series 1 Class B Preferred Shares and
OncoGenex Series 2 Class B Preferred Shares;
“OncoGenex Common Shares” means
the common shares in the capital of OncoGenex;
“OncoGenex Debentureholders”
means the holders of OncoGenex Debentures immediately prior to the Effective
Time;
“OncoGenex Debentures” means
the BC Advantage Debenture and the Other Debentures, collectively;
“OncoGenex Disclosure Schedule”
means that certain Disclosure Schedule dated as of the date hereof and delivered
by OncoGenex to Sonus concurrently herewith;
“OncoGenex Environmental Claim”
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens, investigations, proceedings
or notices of noncompliance or violation (written or oral) by any Person or
Governmental Entity alleging any material liabilities or potential material
liability arising out of, based on or resulting from the presence, or release or
threatened release into the environment of, or any exposure to, any Hazardous
Materials at any property or location owned or leased by OncoGenex or
OncoGenexSub or other circumstances forming the basis of any material violation
or alleged material violation of any Environmental Law.
“OncoGenex Financial
Statements” means the audited annual consolidated financial statements of
OncoGenex as at December 31, 2007, consisting of the balance sheet of
OncoGenex as at December 31, 2007 and the accompanying statement of
operations and deficit and statement of cash flows for the 12-month period ended
December 31, 2007, including the notes thereto and the auditor’s report
thereon, all of which are expressed in United States currency;
“OncoGenex Intellectual
Property” means all intellectual property including, without limitation,
trade marks and trade xxxx applications, trade names, certification marks,
patents, patent
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-
applications,
patentable concepts, copyrights, know-how, formulae, processes, inventions,
technical expertise, research data, trade secrets, industrial designs and other
similar property, whether registered or unregistered, that is owned by, licensed
to or otherwise used by OncoGenex and/or any of its Subsidiaries in the conduct
of the OncoGenex Business, and including, without limitation, the OncoGenex
Inventions and OncoGenex Trademarks;
“OncoGenex Inventions” means
the inventions described in the patents and patent applications listed in Table
1 of Section 3.1.37 of the OncoGenex Disclosure Schedule;
“OncoGenex Interim Financial
Statements” means the unaudited consolidated financial statements of
OncoGenex as at March 31, 2008, consisting of the consolidated balance
sheet of OncoGenex as at March 31, 2008 and the accompanying statement of
operations and deficit and statement of cash flows for the period from the
Financial Year End to and including March 31, 2008, all of which are
expressed in United States currency;
“OncoGenex Leased Property”
means all the right, title and interest of OncoGenex or OncoGenexSub in and to
the subject matter (whether realty or personalty) of the OncoGenex
Leases;
“OncoGenex Leases” means the
real or personal property leases or subleases, or other rights of occupancy
relating to real property, which OncoGenex or OncoGenexSub is a party to or
bound by or subject to, including those set forth and described in
Section 3.1.23 of the OncoGenex Disclosure Schedule;
“OncoGenex Licences” has the
meaning ascribed thereto in Section 3.1.32;
“OncoGenex Material Agreements”
means the agreements, indentures, contracts, leases, licences, options,
instruments and other commitments of OncoGenex or OncoGenexSub set forth in
Section 3.1.25 of the OncoGenex Disclosure Schedule;
“OncoGenex Meetings” means the
Meeting of Class A Shareholders, the Meeting of Class B Shareholders,
the Meeting of Debentureholders and the Meeting of Common Shareholders and
Optionholders;
“OncoGenex Optionholders” means
the holders of OncoGenex Options;
“OncoGenex Options” means the
options to purchase OncoGenex Common Shares granted under the OncoGenex Stock
Option Plan which are outstanding and unexercised on the Effective
Date;
“OncoGenex Preferred Shares”
means OncoGenex Class A Preferred Shares and OncoGenex Class B
Preferred Shares;
“OncoGenex Securityholders”
means, collectively, OncoGenex Optionholders, OncoGenex Shareholders and
OncoGenex Debentureholders;
“OncoGenex Series 1 Class A
Preferred Shares” means the Series 1 Class A Preferred shares
in the capital of OncoGenex;
“OncoGenex Series 1 Class B
Preferred Shares” means the Series 1 Class B Preferred shares
in the capital of OncoGenex;
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-
“OncoGenex Series 2 Class A
Preferred Shares” means the Series 2 Class A Preferred shares
in the capital of OncoGenex;
“OncoGenex Series 2 Class B
Preferred Shares” means the Series 2 Class B Preferred shares
in the capital of OncoGenex;
“OncoGenex Shareholders” means
the holders of OncoGenex Shares;
“OncoGenex Shares” means
OncoGenex Common Shares and OncoGenex Preferred Shares,
collectively;
“OncoGenex Stock Option Plan”
means the employee stock option plan of OncoGenex, as amended and in effect on
the date hereof;
“OncoGenex Trademarks” means
the trade-marks and trade names listed in Table 2 of Section 3.1.37 of the
OncoGenex Disclosure Schedule;
“OncoGenexSub” means OncoGenex,
Inc., a corporation existing under the laws of the State of Washington and being
a wholly owned Subsidiary of OncoGenex;
“Original Principal Amount”
means the principal amount of an OncoGenex Debenture immediately prior to the
Effective Time;
“Other Debenture Exchange
Ratio” means 1,000 divided by 4,334,481;
“Other Debenture Repayment
Amount” means the aggregate principal and interest owing to the holders
of the Other Debentures on the tenth Trading Day following the Announcement
Date;
“Other Debenture Shares
Issuable” means the aggregate number of Sonus Common Shares issuable that
is equal to the Other Debenture Repayment Amount divided by 85 percent of the
Average Market Price;
“Other Debentures” means the
US$4,334,481 aggregate principal amount secured debentures of OncoGenex issued
to Ventures West 7 Limited Partnership, Ventures West 7 U.S. Limited
Partnership, H.I.G. Horizon Corp., Working Opportunity Fund (EVCC) Ltd., BDC
Capital Inc. and WHI Morula Fund, LLC and outstanding at the date of this
Agreement;
“Permitted Encumbrances” means
(i) liens for Taxes or governmental assessments, charges or claims not yet due
or which are being contested in good faith, and for which adequate reserves or
other appropriate provisions have been established in financial statements in
accordance with GAAP, (ii) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other liens
imposed by applicable Law incurred in the ordinary course of business which are
either for sums not yet delinquent, or being contested in good faith, or which
would not, individually or in the aggregate, result in a Material Adverse
Effect, and(iii) defects and irregularities of title and encumbrances that do
not materially impair the use thereof for the purposes for which they are held,
and (iv) a contingent liability not to exceed $500,000 issued pursuant to Sonus'
lease for its headquarters in Seattle, Washington;
“Person” includes any
individual, firm, partnership, joint venture, venture capital fund, association,
trust, trustee, executor, administrator, legal personal representative, estate,
group, body corporate,
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-
corporation,
company, unincorporated association or organization, Governmental Entity,
syndicate or other entity, whether or not having legal status;
“Personal Information”, when
used in connection with a Company means any information in the possession of
such Company about an individual other than the name, title, business address or
telephone number of any employee;
“Plan of Arrangement” means the
plan of arrangement substantially in the form and content of Exhibit C
hereto and any amendments or variations thereto made in accordance with
Section 6.1 hereof or Article 5 of the Plan of Arrangement or made at
the direction of the Court in the Final Order;
“Pre-Effective Date Period”
means the period from and including the date hereof to and including the earlier
of the Effective Time and the date of termination of this Agreement pursuant to
Section 6;
“Products” means all products
that are owned, created, designed, developed, manufactured, marketed, licensed
or sold (whether in existence or in development) by or on behalf of a
Company;
“Proxy Statement” means the
proxy statement relating to the Sonus Meeting, as amended or supplemented from
time to time;
“Remaining Portion” means, with
respect to the OncoGenex Debentures, the aggregate Original Principal Amounts
less the Exchanged Portion;
“Representatives” has the
meaning ascribed thereto in Section 4.7(a);
“Reverse Stock Split” means a
reverse stock split of Sonus Common Shares on the basis of between 10 and 20
Sonus Common Shares being combined into one (1) Sonus Common Share or on such
other basis as agreed upon by Sonus and OncoGenex prior to mailing the Proxy
Statement;
“Reverse Stock Split Factor”
means the number of Sonus Common Shares that is combined into each one (1) Sonus
Common Share pursuant to the Reverse Stock Split;
“SEC” means the United States
Securities and Exchange Commission;
“Securities Act” means the
United States Securities
Act of 1933, as amended;
“Share Cap” has the meaning
ascribed thereto in Section 2.3(a);
“Share Exchange Ratio” means
the number calculated by the following formula:
|
Share Exchange
Ratio
|
=
|
(A + B - C)
D |
|
Where:
|
A
=
|
the
number of Sonus Common Shares outstanding immediately prior to the
Effective Time
|
|
|
B
=
|
25,000,000
Sonus Common Shares
|
|
|
C=
|
the
Debenture Shares Issuable, subject to a maximum equal to the Share
Cap
|
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-
|
|
D
=
|
the
number of OncoGenex Shares outstanding immediately prior to the Effective
Time;
|
“Shareholders’ Agreement” means
the shareholders’ agreement among OncoGenex and certain of its shareholders made
as of September 24, 2003, as amended effective August 10, 2005 and
September 7, 2006;
“Software” means all computer
software including, without limitation, application software, systems software,
software design tools, interfaces, object libraries, and microcode in object
code or source code forms and firmware, embedded in or used to develop products,
and any related documentation including, without limitation, technical
documentation, system designs and specifications, flow charts, record and file
layouts, memoranda, correspondence and other such documentation containing or
relating to the design, structure or coding or testing of, or algorithms or
routines used in, or errors discovered in or corrected in such software, user
guides and manuals related thereto and any other documentations or material (in
whatever form, whether human or machine readable, and in whatever media)
relating to such software;
“Sonus Affiliated Stockholders”
has the meaning set forth in Section 2.9.
“Sonus Business” means the
business of Sonus and its Subsidiaries as described in
Section 3.2.26;
“Sonus Common Shares” means the
shares of common stock, having a par value of $0.001 each, in the capital of
Sonus;
“Sonus Disclosure Schedule”
means that certain Disclosure Schedule dated as of the date hereof and delivered
by Sonus to OncoGenex concurrently herewith;
“Sonus Environmental Claim”
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens, investigations, proceedings
or notices of noncompliance or violation (written or oral) by any Person or
Governmental Entity alleging any material liability or potential material
liability arising out of, based on or resulting from the presence, or release or
threatened release into the environment of, or any exposure to, any Hazardous
Materials at any property or location owned or leased by Sonus or any SonusSub
or other circumstances forming the basis of any material violation or alleged
material violation of any Environmental Law.
“Sonus Financial Statements”
means the audited annual consolidated financial statements of Sonus as at
December 31, 2007, consisting of the balance sheet of Sonus as at
December 31, 2007 and the accompanying statement of operations and deficit
and statement of cash flows for the 12-month period ended December 31,
2007, including the notes thereto and the auditor’s report thereon, all of which
are expressed in United States currency;
“Sonus Intellectual Property”
means all intellectual property including, without limitation, trade marks and
trade xxxx applications, trade names, certification marks, patents, patent
applications, patentable concepts, copyrights, know-how, formulae, processes,
inventions, technical expertise, research data, trade secrets, industrial
designs and other similar property, whether registered or unregistered, that is
owned by, licensed to or otherwise used by Sonus and/or any of its Subsidiaries
in the conduct of the Sonus Business, and including, without limitation, the
Sonus Inventions and Sonus Trademarks;
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-
“Sonus Interim Financial
Statements” means the unaudited consolidated financial statements of
Sonus as at March 31, 2008, consisting of the consolidated balance sheet of
Sonus as at March 31, 2008 and the accompanying statement of operations and
deficit and statement of cash flows for the period from the Financial Year End
to and including March 31, 2008, all of which are expressed in United
States currency;
“Sonus Inventions” means the
inventions described in the patents and patent applications listed in Table 1 of
Section 3.2.36 of the Sonus Disclosure Schedule;
“Sonus Leased Property” means
all the right, title and interest of Sonus or SonusSub in and to the subject
matter (whether realty or personalty) of the Sonus Leases;
“Sonus Leases” means the real
or personal property leases or subleases, or other rights of occupancy relating
to real property, which Sonus or SonusSub is a party to or bound by or subject
to, including those set forth and described in Section 3.2.22 of the Sonus
Disclosure Schedule;
“Sonus Licences” has the
meaning ascribed thereto in Section 3.2.31;
“Sonus Material Agreements”
means the agreements, indentures, contracts, leases, licences, options,
instruments and other commitments set forth in Section 3.2.25 of the Sonus
Disclosure Schedule;
“Sonus Meeting” means the
special meeting of the holders of Sonus Common Shares (including any adjournment
thereof) that is to be convened as provided by this Agreement to consider and,
if deemed advisable, approve the Sonus Shareholder Resolutions;
“Sonus Preferred Shares” means
shares of preferred stock, par value $0.001 per share, of Sonus, none of which
have been issued and no series of which has been designated;
“Sonus SEC Documents” means all
registration statements, prospectuses, forms, reports, proxy statements,
schedules and other documents and filings required to be filed by Sonus under
the Securities Act or the Exchange Act, as the case may be, since January 1,
2006;
“Sonus Shareholder Resolutions”
means all necessary approvals by shareholders of Sonus required by Delaware law,
applicable securities laws and the Nasdaq Stock Marketplace Rules, to allow
Sonus to perform its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement, including the Reverse Stock Split,
Name Change and election of directors of Sonus;
“Sonus Shareholders” means the
holders of Sonus Common Shares;
“Sonus Trademarks” means the
trade-marks and trade names listed in Table 2 of Section 3.2.36 of the Sonus
Disclosure Schedule;
“SonusSub” means Sonus
Pharmaceuticals, Ltd., a corporation existing under the laws of the United
Kingdom and being a wholly owned Subsidiary of Sonus;
“Subsidiary” means, with
respect to a specified body corporate, any body corporate of which more than 50%
of the outstanding shares ordinarily entitled to elect a majority of the Board
of Directors thereof (whether or not shares of any other class or classes shall
or might be entitled to vote upon the happening of any event or contingency) are
at the time owned directly or indirectly by such specified
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-
body
corporate and shall include any body corporate, partnership, joint venture or
other entity over which it exercises direction or control or which is in a like
relation to a Subsidiary;
“Superior Proposal” means a
bona fide Acquisition Proposal made by any Person that the Board of Directors of
Sonus determines in its good faith judgment to be more favorable to Sonus’
shareholders than the Arrangement and for which financing, to the extent
required, is then committed or which, in the good faith judgment of the Board of
Directors of Sonus, is reasonably capable of being obtained by such
Person;
“Tax” and “Taxes” means, with respect to
any entity, all income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits or selected items
of income, earnings or profits) and all capital taxes, gross receipts taxes,
environmental taxes, sales taxes, use taxes, ad valorem taxes, value added
taxes, transfer taxes, franchise taxes, licence taxes, withholding taxes,
payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise,
severance, social security premiums, workers’ compensation premiums, employment
insurance or compensation premiums, stamp taxes, occupation taxes, premium
taxes, property taxes, windfall profits taxes, alternative or add-on minimum
taxes, goods and services tax, customs duties or other taxes, fees, imports,
assessments or charges of any kind whatsoever, together with any interest and
any penalties or additional amounts imposed by any taxing authority (domestic or
foreign) on such entity, and any interest, penalties, additional taxes and
additions to tax imposed with respect to the foregoing;
“Tax Returns” means all
returns, declarations, reports, information returns and statements required to
be filed with any taxing authority relating to Taxes;
“Third Party Expenses” means
all legal, accounting, financial advisory, investment banking, consulting and
all other fees and expenses of third parties incurred by a party in connection
with the negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby;
“Third Party Software” means
any software (including “Software”) that is not owned
by a Company but is licenced to the Company by another Person;
"Trading Day" means any day that the
NGM (or any other exchange on which Sonus Common Shares are listed for trading)
is open for trading;
“Tribunal” means:
|
|
(a)
|
any
court (including a court of
equity);
|
|
|
(b)
|
any
federal, provincial, state, county, municipal or other government or
governmental department, ministry, commission, board, bureau, agency or
instrumentality;
|
|
|
(c)
|
any
securities commission, stock exchange or other regulatory or
self-regulatory body;
|
|
|
(d)
|
any
board of trade, chamber of commerce or other business or professional
organization or association;
|
|
|
(e)
|
any
arbitrator or arbitration tribunal;
and
|
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-
|
|
(f)
|
any
other tribunal;
|
“UBC Shareholders Agreement”
means the amended and restated shareholders agreement dated for reference
September 24, 2003, as amended August 10, 2005, between OncoGenex, Ventures West
7 Limited Partnership, Ventures West 7 U.S. Limited Partnership, H.I.G. Horizon
Corp., Working Opportunity Fund (EVCC) Ltd., Business Development Bank of Canada
(as assigned to BDC), Milestone Medica Corporation, BC Advantage Funds (VCC)
Ltd., the University of British Columbia, WHI Morula Fund LLC and certain others
as further amended and restated from time to time;
“Use” means use, modify,
produce, distribute and license (including the right to
sublicense).
“Voting Agreement” means the
Voting Agreement in the form attached hereto as Exhibit E.
1.2 Interpretation Not Affected
by Headings, etc.
The
division of this Agreement into sections and other portions and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof. Unless otherwise indicated, all
references in this Agreement to a “Section” followed by a number and/or a letter
refer to the specified section of this Agreement, and all references in this
Agreement to an Exhibit followed by a letter refer to the specified Exhibit to
this Agreement. Unless otherwise indicated, the terms “this Agreement”,
“hereof’, “herein”, “hereunder” and “hereby” and similar expressions refer to
this Agreement (including the Exhibits hereto), as amended or supplemented from
time to time pursuant to the applicable provisions hereof, and not to any
particular section or other portion hereof.
1.3 Currency
Unless
otherwise indicated, all sums of money referred to in this Agreement are
expressed in lawful money of the United States of America.
1.4 Number,
etc.
Unless
the context otherwise requires, words importing the singular shall include the
plural and vice versa and words importing any gender shall include all
genders.
1.5 Date For Any
Action
In the
event that any date on which any action is required to be taken hereunder by any
of the parties hereto is not a Business Day, such action shall be required to be
taken on the next succeeding day which is a Business Day.
1.6 Entire
Agreement
This
Agreement and the agreements and other documents referred to herein constitute
the entire agreement between the parties with respect to the Arrangement and
other transactions contemplated hereby and supersede all other prior agreements,
understandings, negotiations and discussions, whether oral or written, between
the parties with respect thereto, other than the Confidentiality
Agreement.
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-
1.7 Accounting
Matters
Unless
otherwise indicated, all accounting terms used in this Agreement in respect of a
Company shall have the meanings attributable thereto under GAAP and all
determinations of an accounting nature in respect of the Company required to be
made shall be made in a manner consistent with GAAP and past
practice.
1.8 Construction
In this
Agreement, unless otherwise indicated:
|
(a)
|
the
words “include”, “including” or “in particular”, when following any
general term or statement, shall not be construed as limiting the general
term or statement to the specific items or matters set forth or to similar
items or matters, but rather as permitting the general term or statement
to refer to all other items or matters that could reasonably fall within
the broadest possible scope of the general term or
statement;
|
|
(b)
|
a
reference to a statute means that statute, as amended and in effect as of
the date of this Agreement, and includes each and every regulation and
rule made thereunder and in effect as of the date
hereof,
|
|
(c)
|
a
reference to an “approval”, “authorization”, “consent”, “designation”,
“notice” or “agreement” means an approval, authorization, consent,
designation, notice or agreement, as the case may be, in writing, signed
by an authorized representative of the party or parties
thereto;
|
|
(d)
|
the
phrase “ordinary course of business”, or any variation thereof, of any
Person refers to the business of such Person, carried on in the regular
and ordinary course including commercially reasonable and businesslike
actions that are in the regular and ordinary course of business for a
company operating in the industry in which such business is conducted
notwithstanding that similar actions may not have been undertaken before
by such Person and may be on a scale or in a quantum significantly greater
or different than the scale or quantum of similar actions undertaken by
such Person previously;
|
|
(e)
|
where
a word, term or phrase is defined, its derivatives or other grammatical
forms have a corresponding meaning;
|
|
(f)
|
time
is of the essence; and
|
|
(g)
|
references
to a “party” or “parties” are references to a party or parties to this
Agreement.
|
1.9 Knowledge
In this
Agreement, the phrase “to the knowledge of” any Person, “to the best knowledge
of” any Person, “known to” any Person, “of which it is aware” or any similar
phrase means, unless otherwise indicated, (i) with respect to any Person
who is an individual, the actual knowledge of such Person without enquiry,
(ii) with respect to OncoGenex, the actual knowledge of the Chief Executive
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-
Officer
and the Chief Financial Officer without enquiry, and such knowledge that a
Person acting in such capacity should have in the ordinary course of business,
and (iii) with respect to Sonus, the actual knowledge of the Chief
Executive Officer and the Chief Financial Officer without enquiry,
and such knowledge that a Person acting in such capacity should have in the
ordinary course of business.
1.10 Exhibits
The
following Exhibits are annexed to this Agreement and are hereby incorporated by
reference into this Agreement and form an integral part hereof:
Exhibit A - Appropriate
Regulatory Approvals
Exhibit B - Arrangement
Resolution
Exhibit C - Plan of
Arrangement
Exhibit
D Intentionally
omitted
Exhibit
E Voting
Agreements
|
2.
|
THE
ARRANGEMENT
|
2.1 Implementation Steps by
OncoGenex
OncoGenex
covenants in favour of Sonus that OncoGenex shall:
|
(a)
|
as
soon as reasonably practicable, apply in a manner acceptable to Sonus,
acting reasonably, under Section 192 of the CBCA for the Interim
Order, and thereafter proceed with and diligently pursue the obtaining of
the Interim Order;
|
|
(b)
|
subject
to Section 2.5, convene and hold the OncoGenex Meetings as promptly
as practicable, but in any event not later than 30 days after mailing of
the Proxy Statement to the Sonus Shareholders, for the purpose of
considering and, if deemed advisable, approving the Arrangement and the
transactions contemplated thereby by way of the Arrangement Resolution
(and for any other proper purpose as may be set out in the notice for such
meetings);
|
|
(c)
|
subject
to obtaining the approval(s) as are required by the Interim Order, proceed
with and diligently pursue the application to the Court for the Final
Order; and
|
|
(d)
|
subject
to obtaining the Final Order and the satisfaction or waiver of the other
conditions herein contained in favour of each party send to the Director,
for endorsement and filing by the Director, the Articles of Arrangement
and such other documents as may be required in connection therewith under
the CBCA to give effect to the
Arrangement.
|
2.2 Interim
Order
The
notice of motion for the application referred to in Section 2.1(a) shall
include a request that the Interim Order provide:
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-
|
(a)
|
for
the class of Persons to whom notice is to be provided in respect of the
Arrangement and the OncoGenex Meetings and for the manner in which such
notice is to be provided;
|
|
(b)
|
that
the requisite approval for the Arrangement Resolution shall be (i)(A)
two-thirds of the votes cast on the Arrangement Resolution by the holders
of OncoGenex Common Shares and the holders of OncoGenex Options present in
person or by proxy at the Meeting of Common Shareholders and
Optionholders, voting as a single class, such that each holder of
OncoGenex Common Shares is entitled to one vote for each OncoGenex Common
Share held and each holder of OncoGenex Options is entitled to one vote
for each OncoGenex Common Share such holder would have received on a valid
exercise of such OncoGenex Options; or (B) a written consent resolution
executed by each and every holder of OncoGenex Common Shares and each and
every holder of OncoGenex Options; (ii)(A) two-thirds of the votes cast on
the Arrangement Resolution by the holders of OncoGenex Class A Preferred
Shares present in person or by proxy at the Meeting of Class A
Shareholders, voting as a separate class; or (B) a written consent
resolution executed by each and every holder of OncoGenex Class A
Preferred Shares; (iii)(A) two-thirds of the votes cast on the Arrangement
Resolution by the holders of OncoGenex Class B Preferred Shares present in
person or by proxy at the Meeting of Class B Shareholders, voting as a
separate class; or (B) a written consent resolution executed by each and
every holder of OncoGenex Class B Preferred Shares; (iv)(A) two-thirds of
the votes cast on the Arrangement Resolution by the holders of OncoGenex
Series 1 Class A Preferred Shares present in person or by proxy at the
Meeting of Class A Shareholders, voting as a separate series; or (B) a
written consent resolution executed by each and every holder of OncoGenex
Series 1 Class A Preferred Shares; (v)(A) two-thirds of the votes cast on
the Arrangement Resolution by the holders of OncoGenex Series 2 Class A
Preferred Shares present in person or by proxy at the Meeting of Class A
Shareholders, voting as a separate series; or (B) a written consent
resolution executed by each and every holder of OncoGenex Series 2 Class A
Preferred Shares; (vi)(A) two-thirds of the votes cast on the Arrangement
Resolution by the holders of OncoGenex Series 1 Class B Preferred Shares
present in person or by proxy at the Meeting of Class B Shareholders,
voting as a separate series; or (B) a written consent resolution executed
by each and every holder of OncoGenex Series 1 Class B Preferred Shares;
(vii)(A) two-thirds of the votes cast on the Arrangement Resolution by the
holders of OncoGenex Series 2 Class B Preferred Shares present in person
or by proxy at the Meeting of Class B Shareholders, voting as a separate
series; or (B) a written consent resolution executed by each and every
holder of OncoGenex Series 2 Class B Preferred Shares; and (viii)(A) the
affirmative vote by those OncoGenex Debentureholders representing
three-quarters of the principal amount of the OncoGenex Debentures who
vote on the Arrangement Resolution in person or by proxy at the Meeting of
Debentureholders, voting as a separate class; or (B) a written consent
resolution executed by each and every OncoGenex
Debentureholder;
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(c)
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that,
in all other respects, the terms, restrictions and conditions of the
by-laws and articles of OncoGenex, including quorum requirements and all
other matters, shall apply in respect of the OncoGenex Meetings;
and
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(d)
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for
the grant of the Dissent Rights.
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2.3 Articles of
Arrangement
The
Articles of Arrangement shall, with such other matters as are necessary to
effect the Arrangement, and all as subject to the provisions of the Plan of
Arrangement, provide substantially as follows:
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(a)
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Subject
to Section 2.3(b), each of the OncoGenex Debentures (other than OncoGenex
Debentures held by Dissenting Securityholders who are ultimately entitled
to be paid fair value of the OncoGenex Debentures held by them) will be
transferred by the holder thereof, without any act or formality on its
part, to Sonus (or an Affiliate thereof) in exchange for (i) in the case
of the BC Advantage Debenture, that number of fully paid and
non-assessable Sonus Common Shares equal to the BC Advantage Shares
Issuable, and (ii) in the case of the Other Debentures, for each $1,000
principal amount of Other Debentures transferred, that number of fully
paid and non-assessable Sonus Common Shares equal to the Other Debenture
Exchange Ratio multiplied by the Other Debenture Shares Issuable;
provided, however, in no event shall Sonus be obligated to issue pursuant
to this Section 2.3(a) a number of Sonus Common Shares that exceeds the
number of Sonus Common Shares outstanding immediately prior to the
Effective Time (the "Share
Cap");
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(b)
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To
the extent that the Share Cap limits the number of Sonus Common Shares
otherwise issuable pursuant to Section 2.3(a) and notwithstanding Section
2.3(a), only that portion of the OncoGenex Debentures as is equal to the
Exchanged Portion shall be deemed to be transferred to Sonus and the
Remaining Portion shall be deemed to remain outstanding and be held by the
OncoGenex Debentureholders; and to the extent OncoGenex Debentures are
transferred to Sonus pursuant to Section 2.3(a) and (b), the name of each
such holder will be removed from the register of holders of OncoGenex
Debentures and added to the register of holders of Sonus Common Shares,
and Sonus will be recorded as the registered holder of OncoGenex
Debentures transferred and will be deemed to be the legal and beneficial
owner thereof. To the extent that there is a Remaining Portion,
the OncoGenex Debentureholders will continue to be recorded as the
registered holders of that portion of the OncoGenex Debentures that are
not transferred and will be deemed to be the legal and beneficial owners
thereof. For the purposes of Section 2.3(a) and this Section
2.3(b), the Other Debentures and BC Advantage Debenture shall rank
pari-passu with each other;
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(c)
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each
OncoGenex Share (other than OncoGenex Shares held by Dissenting
Securityholders who are ultimately entitled to be paid the fair value of
the OncoGenex Shares held by them) will be transferred by the holder
thereof, without any act or formality on its part, to Sonus in exchange
for that number of fully paid and non assessable Sonus Common Shares equal
to the Share Exchange Ratio, subject to Section 4; and the name of each
such holder will be removed from the register of holders of OncoGenex
Shares and added to the register of holders of Sonus Common Shares, and
Sonus will be recorded as the registered holder of such OncoGenex Shares
so exchanged and will be deemed to be the legal and beneficial owner
thereof; and
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(d)
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each
OncoGenex Option shall, without any act or formality, be exchanged by the
holder thereof for an option (an “Assumed Option”) to
purchase a number of Sonus Common Shares equal to the product of the Share
Exchange Ratio multiplied by the number of OncoGenex Common Shares subject
to such OncoGenex Option. Such Assumed Option shall provide for an
exercise price per Sonus Common Share equal to the exercise price per
share of such OncoGenex Option immediately prior to the Effective Time
divided by the Share Exchange Ratio and rounded up to the nearest one
hundredth of a cent. If the foregoing calculation results in an Assumed
Option being exercisable for a fraction of a Sonus Common Share, then the
number of Sonus Common Shares subject to such Assumed Option shall be
rounded down to the next whole number of Sonus Common
Shares. The term to expiry, conditions to and manner of
exercise, vesting schedule and other terms and conditions of each of the
Assumed Options shall be the same as the terms and conditions of the
OncoGenex Option for which it is exchanged (except as provided for in the
Assumption Agreement), and any document or agreement previously evidencing
an OncoGenex Option shall be deemed to be an agreement between Sonus and
the holder thereof evidencing such Assumed Option. Notwithstanding the
above, in the event a holder of an OncoGenex Option would be subject to
Section 409A of the Code as a result of the application of this Section
2.3(d) (but for this sentence), the determination of the exercise price
and number of Sonus Common Shares that constitute the Assumed Option shall
be adjusted as necessary such that the Assumed Option satisfies the
requirements of Treasury Regulation Section
1.409A-1(b)(5)(v)(D).
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2.4 OncoGenex Proxy
Circular
As
promptly as practicable after the execution and delivery of this Agreement,
OncoGenex shall prepare the Circular, together with any and all other documents
required by the CBCA or other applicable Laws in connection with the
Arrangement. As promptly as practicable after the completion of the Circular,
OncoGenex shall cause the Circular and all other documentation required in
connection with the OncoGenex Meetings to be sent to each OncoGenex
Securityholder and to be filed as may be required by the Interim Order and
applicable Laws.
2.5 Sonus Proxy Statement and
Meeting
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(a)
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As
soon as reasonably practicable after the execution and delivery of this
Agreement, Sonus shall prepare and file with the SEC the Proxy
Statement. Sonus shall use its best efforts to cause the Proxy
Statement to be mailed to Sonus Shareholders as promptly as
practicable. Sonus also shall take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or filing a general consent to service of process) required to
be taken under any applicable state securities laws in connection with the
issuance of Sonus Common Shares and Assumed Options and assumption of the
OncoGenex Stock Option Plan pursuant to the Arrangement and Sonus shall
furnish all information concerning Sonus and the holders of Sonus Common
Shares as may be reasonably requested in connection with any such
action. No filing of, or amendment or supplement to the Proxy
Statement (including, without limitation, any periodic report to be filed
under Section 13 of the Exchange Act which will be incorporated
therein by reference) or any response to SEC comments will be made by
Sonus without OncoGenex’s prior consent (which shall not be unreasonably
withheld, delayed or conditioned) and without
providing
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OncoGenex
the opportunity to review and comment thereon, except as may be permitted
pursuant to Section 5.5. Sonus shall advise OncoGenex, promptly
after it receives notice thereof, of the time when the issuance of any
stop order, the suspension of the qualification of Sonus Common Shares
issuable in connection with the Arrangement for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC
for additional information. Sonus shall advise OncoGenex,
promptly after it receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement or comments thereon and responses thereto
or requests by the SEC for additional information. Sonus shall, as
promptly as practicable after receipt thereof, provide OncoGenex with
copies of any written comments and advise OncoGenex of any oral consents
with respect to the Proxy Statement received from the SEC or any other
Governmental Authority. If at any time prior to the Effective
Time any information relating to Sonus or OncoGenex, or any of their
respective Affiliates, officers or directors, should be discovered by
Sonus or OncoGenex which should be set forth in an amendment or supplement
to the Proxy Statement, so that any of the Proxy Statement would not
include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto
and, to the extent required by law, an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and
disseminated to the shareholders of Sonus and
OncoGenex.
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(b)
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Sonus
shall, as promptly as practicable after the Proxy Statement
is approved by the SEC or review period expired, duly call,
give notice of, convene and hold the Sonus Meeting in accordance with
Delaware Law and its certificate of incorporation and bylaws for the
purpose of passing the Sonus Shareholder Resolutions and shall, through
its Board of Directors, recommend to its shareholders the Reverse Stock
Split, the Capital Adjustment, the Name Change, the election of directors
and the issuance of Sonus Common Shares and Assumed Options pursuant to
the Arrangement. Unless the Board of Directors of Sonus has
withdrawn its recommendation of this Agreement in compliance herewith,
Sonus shall use its best efforts to solicit from Sonus Shareholders
proxies in favor of the Sonus Shareholder Resolutions and to secure the
vote or consent of shareholders required to approve the Sonus Shareholder
Resolutions.
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2.6 Securities
Compliance
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(a)
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Sonus
shall use its best efforts to obtain all orders required from the
securities authorities of the Canadian Jurisdictions, on terms and
conditions acceptable to OncoGenex, acting reasonably, to permit the first
resale through the facilities of a stock exchange or market in the United
States or through the NGM or NCM (provided that such first resale is made
in accordance with the rules of the stock exchange or market upon which
the trade is made or the rules of the NGM or NCM in accordance with all
laws applicable to that stock exchange or market or applicable to the NGM
or NCM) of:
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(i)
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Sonus
Common Shares to be issued pursuant to the Arrangement;
and
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(ii)
|
Sonus
Common Shares to be issued from time to time upon the exercise of the
Assumed Options,
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in each
case without qualification with or approval of or the filing of any document,
including any prospectus or similar document, or the taking of any proceeding
with, or the obtaining of any further order, ruling or consent from, any
Canadian Governmental Entity or regulatory authority under any Canadian federal,
provincial or territorial securities or other Canadian Laws or pursuant to the
rules and regulations of any regulatory authority administering such Laws, or
the fulfillment of any other legal requirement in any such jurisdiction (other
than, with respect to such first resales, any restrictions on transfer by reason
of, among other things, a holder being a “control person” for the purposes of
Canadian federal, provincial or territorial securities Laws).
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(b)
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In
the event Sonus is unable to obtain the orders described in Section
2.6(a), Sonus shall (i) as expeditiously as reasonably practicable,
prepare and file under the applicable securities laws of a jurisdiction
listed in Appendix B to National Instrument 45-102 — Resale of Securities,
a preliminary prospectus and related documents and obtain a receipt for
such preliminary prospectus; (ii) use its best efforts to resolve as
expeditiously as reasonably practicable any comments with respect to the
preliminary prospectus made by the applicable securities regulatory
authority and receive confirmation from such securities regulatory
authority, prior to the Effective Date, that Sonus is clear to file under
the applicable securities laws of such jurisdiction a (final) prospectus;
(iii) prepare a (final) prospectus and related documents; and (iv) as soon
as possible after the Effective Time file under such applicable securities
laws such (final) prospectus and related documents and use its best
efforts to obtain, as expeditiously as reasonably practicable thereafter,
a receipt for the (final) prospectus from such securities regulatory
authority.
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(c)
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Sonus
shall use its best efforts to (i) through the Effective Time,
maintain the listing of Sonus Common Shares on the NGM unless concurrently
with the delisting of Sonus Common Shares from the NGM Sonus Common Shares
are listed on the NCM, (ii) promptly file with the Nasdaq Stock
Market an additional listing application or initial listing application,
as required by the Nasdaq Stock Market, for the listing of Sonus Common
Shares, including Sonus Common Shares to be issued pursuant to the
Arrangement and upon exercise of Assumed Options, (iii) cause Sonus
Common Shares, including Sonus Common Shares to be issued pursuant to the
Arrangement and upon exercise of Assumed Options, to be approved for
listing on the NGM or NCM prior to the Effective Time, such listing to be
effective at or prior to the Effective
Time.
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(d)
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Sonus
and OncoGenex shall each use their best efforts to cause the issuance of
Sonus Common Shares and Assumed Options pursuant to the Arrangement to be
exempt from the registration requirements of the Securities Act pursuant
to Section 3(a)(10) thereof.
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(e)
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Sonus
shall use its best efforts to cause Sonus Common Shares issuable upon
exercise of the Assumed Options to be registered as of the Effective Time
on a then effective Form S-8 promulgated by the SEC or to file a Form S-8
covering such Assumed
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Options
within three (3) Business Days of the Effective Time and shall use its
best efforts to maintain the effectiveness of such registration statement
or registration statements for so long as any Assumed Option remains
outstanding. Sonus shall give holders of Assumed Options notice
of their new options as soon as practicable after the Effective
Time.
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(f)
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If
requested by OncoGenex, Sonus shall use all reasonable commercial efforts
to cause Sonus Common Shares to be listed for trading on the Toronto Stock
Exchange prior to the Effective
Time.
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2.7 Preparation of
Filings
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(a)
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Sonus
and OncoGenex shall cooperate in:
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(i)
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the
preparation of such applications for the orders and the preparation of the
Circular, the Proxy Statement and such other documents reasonably deemed
by Sonus or OncoGenex to be necessary to discharge, in the manner
contemplated by Sections 2.4, 2.5 and 2.6, their respective obligations
under United States and Canadian federal, provincial, territorial or state
securities Laws in connection with the Arrangement and the other
transactions contemplated hereby;
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(ii)
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the
taking of all such action as may be required under any applicable United
States and Canadian federal, provincial, territorial or state securities
Laws (including “blue sky laws”), in connection with the issuance of Sonus
Common Shares in connection with the Arrangement or the issuance or
exercise of the Assumed Options, to the extent the same is contemplated by
Section 2.6; provided, however, that with respect to the United
States “blue sky” and Canadian provincial qualifications neither Sonus nor
OncoGenex shall be required to register or qualify as a foreign
corporation or to take any action that would subject it to service of
process in any jurisdiction where such entity is not now so subject,
except (A) as set forth in Section 2.6(b) and (B) as to
matters and transactions arising solely from the offer and sale of Sonus
Common Shares; and
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(iii)
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the
taking of all such action as may be required under the CBCA in connection
with the transactions contemplated by this Agreement and the Plan of
Arrangement.
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(b)
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Each
of Sonus and OncoGenex shall, on a timely basis, furnish to the other all
such information concerning it and its shareholders as may be required
(and, in the case of its shareholders, available to it) to effect the
actions described in Sections 2.4, 2.5 and 2.6 and the foregoing
provisions of this Section 2.7, and each covenants that no
information furnished by it (to its knowledge in the case of information
concerning its shareholders) in connection with such actions or otherwise
in connection with the consummation of the Arrangement and the other
transactions contemplated by this Agreement will contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in any such document or necessary in order
to
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make
any information so furnished for use in any such document not misleading
in the light of the circumstances in which it is furnished or to be
used.
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(c)
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Each
of Sonus and OncoGenex shall promptly notify the other if at any time
before or after the Effective Time it becomes aware that the Circular, the
Proxy Statement or an application for an order or a preliminary prospectus
or prospectus described in Section 2.6 contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made, or that
otherwise requires an amendment or supplement to the Circular, the Proxy
Statement or such application or preliminary prospectus or prospectus. In
any such event, Sonus and OncoGenex shall cooperate in the preparation of
a supplement or amendment to the Proxy Statement or the Circular or such
other document, as required and as the case may be, and, if required,
shall cause the same to be distributed to the OncoGenex Securityholders,
the Sonus Shareholders and/or filed with the relevant securities
regulatory authorities.
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(d)
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Each
of OncoGenex and Sonus shall ensure that the Circular complies with all
applicable Laws. Without limiting the generality of the foregoing, each of
OncoGenex and Sonus shall ensure that neither the Proxy Statement nor the
Circular contains any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances
in which they are made (other than, in the case of OncoGenex, with respect
to any information relating to and provided by Sonus and, in the case of
Sonus, with respect to information relating to and provided by OncoGenex
or any OncoGenex Securityholder) and shall ensure that the Circular
provides OncoGenex Securityholders with information in sufficient detail
to permit them to form a reasoned judgment concerning the matters to be
placed before them at the OncoGenex
Meetings.
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2.8 U.S. Tax
Treatment
The
Arrangement is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Code and the Treasury Regulations promulgated
thereunder, and this Agreement is intended to be a “plan of reorganization”
within the meaning of the Treasury Regulations promulgated under
Section 368 of the Code. Each party hereto agrees to treat the
Arrangement as a reorganization within the meaning of Section 368(a) of the
Code for all U.S. federal income tax purposes, and agrees to treat this
Agreement as a “plan of reorganization” within the meaning of the Treasury
Regulations promulgated under Section 368 of the Code, and to not take any
position on any Tax Return or otherwise take any Tax reporting position
inconsistent with such treatment, unless otherwise required by a “determination”
within the meaning of Section 1313 of the Code that such treatment is not
correct. Each party hereto agrees to act in good faith, consistent
with the intent of the parties and the intended treatment of the Arrangement as
set forth in this Section 2.8; provided, however, that Sonus
and its Affiliates make no representation or warranty concerning the Tax
treatment of the Arrangement or the transactions contemplated in
this Agreement, and, except as specifically provided in this Section
2.8 relating to the reporting of the Arrangement for Tax purposes, do not
covenant, represent or undertake to act or not act in any manner at any time to
facilitate any such Tax treatment. Without limiting the generality of
the foregoing, OncoGenex and the OncoGenex Securityholders shall rely on their
own Tax advisors in determining whether or not
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the
Arrangement and the transactions contemplated in this Agreement constitutes a
reorganization within the meaning of Section 368 of the Code.
2.9 Voting
Agreements
As an inducement for each party to
enter into this Agreement, each of the directors and certain of the officers and
principal stockholders of OncoGenex (the “OncoGenex Affiliated Stockholders”),
on the one hand, and each of the directors and executive officers of Sonus (the
“Sonus Affiliated Stockholders”), on the other hand, have executed and delivered
to Sonus and OncoGenex, respectively, Voting Agreements, providing that, among
other things, the OncoGenex Affiliated Stockholders and Sonus Affiliated
Stockholders will, subject to the terms and conditions therein, vote to approve
the Arrangement and the transactions contemplated thereby, as more specifically
set forth in the Arrangement Resolution and the Sonus Shareholder Resolutions,
as applicable.
2.10 Execution of Escrow
Agreements by Sonus
Sonus covenants in favour of OncoGenex
that, on or prior to the Effective Date and subject to the satisfaction or
waiver of the other conditions herein contained in favour of Sonus, to execute
and deliver the Escrow Agreements.
2.11 Executive Officers of
Sonus.
At the
Effective Time, the Chief Executive Officer and the Chief Financial Officer of
Sonus shall be Xxxxx Xxxxxxx and Xxxxx Xxxxxxxx, respectively, and the
employment of Xxxxxxx Xxxxxxx and Xxxx Xxxxxxx shall terminate. The
parties agree that the terminations of Xxxxxxx Xxxxxxx and Xxxx Xxxxxxx shall
constitute terminations pursuant to Section 1 of the Severance/Change in Control
Agreement dated January 4, 2008, with respect to Xxxxxxx Xxxxxxx, and the
Severance/Change in Control Agreement dated January 11, 2008, with respect to
Xxxx Xxxxxxx (collectively, the “Severance Agreements”). As a result
of the forgoing terminations, Xxxxxxx Xxxxxxx and Xxxx Xxxxxxx shall be paid
their current salaries and receive all benefits through their termination date,
and shall be entitled to receive the severance benefits specified in Section 2.1
of the Severance Agreements, subject to delivery of a release, as specified in
the Severance Agreements.
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3.
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REPRESENTATIONS AND
WARRANTIES
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3.1 Representations and
Warranties of OncoGenex
OncoGenex
hereby represents and warrants to and in favour of Sonus that each of the
following statements is true and correct, except as set forth in the OncoGenex
Disclosure Schedule, and further acknowledges that Sonus is relying upon such
representations and warranties in connection with the transactions herein
contemplated. The OncoGenex Disclosure Schedule shall be arranged by
specific Section references corresponding to the numbered and lettered Sections
in this Section 3.1, and the disclosure in any Section shall qualify (i) the
corresponding Section in this Section 3.1 and (ii) the other Sections in this
Section 3.1 to the extent reasonably clear from a reading of such disclosure
that it also qualifies or applies to such other Sections.
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3.1.1
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Incorporation and
Organization of OncoGenex
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OncoGenex
is a corporation duly incorporated under the CBCA, is validly subsisting, has
full corporate and legal power and authority to own, lease and operate the
properties currently owned, leased and operated by it and conduct its business
as currently conducted, is duly registered as an extra-provincial company under
the Business Corporations
Act (British Columbia), is in good standing with the Registrar of
Companies for the Province of British Columbia with respect to the filing of
annual reports and is in good standing with the Director with respect to the
filing of annual returns. OncoGenex is duly qualified or licenced to do business
and is in good standing as a foreign corporation or organization authorized to
do business in all jurisdictions in which the character of the properties owned,
leased or operated or the nature of the business conducted by it would make such
qualification or licencing necessary. No proceedings have been instituted or are
pending for the dissolution or liquidation of OncoGenex. True and complete
copies of the Articles, Articles of Amendment and by-laws of OncoGenex have been
provided to Sonus. OncoGenex is not in violation of any provision of its
articles or by-laws. No Articles of Amendment have been filed or authorized by
the shareholders of OncoGenex since September 19, 2007 and no by-laws have been
amended or enacted since February 8, 2002.
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3.1.2
|
Capitalization
|
The
authorized capital of OncoGenex consists of an unlimited number of OncoGenex
Common Shares, an unlimited number of OncoGenex Class A Preferred Shares,
an unlimited number of OncoGenex Class B Preferred Shares, and an unlimited
number of Class C Preferred Shares. As of the date hereof,
1,285,500 OncoGenex Common Shares, 848,804.8 OncoGenex Class A Preferred
Shares, 8,945,448 OncoGenex Class B Preferred Shares and no Class C
Preferred Shares or shares of restricted stock are issued and outstanding. No
OncoGenex Shares are held in treasury or authorized or reserved for issuance,
other than upon the exercise of the OncoGenex Options and the conversion of the
OncoGenex Preferred Shares and the OncoGenex Debentures. All outstanding
OncoGenex Shares have been duly authorized and are validly issued, and are fully
paid and non-assessable, were not issued in violation of the terms of any
agreement or other understanding binding upon OncoGenex at the time at which
they were issued and were issued in compliance with the articles and by-laws of
OncoGenex and all applicable Laws. Except as disclosed in Section 3.1.2 of the
OncoGenex Disclosure Schedule, there are, and have been, no registration rights,
redemption or repurchase rights, anti-dilutive rights, voting agreements, voting
trusts, preemptive rights or restrictions on transfer relating to any capital
stock of OncoGenex, other than the Voting Agreements, rights under the
Shareholders’ Agreement, the UBC Shareholders Agreement and the rights attaching
to the OncoGenex Shares, such rights having been either complied with or waived
or which will be complied with, waived or terminated prior to the Effective
Time. As of the date hereof, OncoGenex Options for the purchase of 1,489,047
OncoGenex Common Shares are outstanding and no Person other than (a) Sonus
under this Agreement, (b) the holders of OncoGenex Preferred Shares with
respect to their right or obligation to convert such shares to OncoGenex Common
Shares in accordance with the share rights attached to the OncoGenex Preferred
Shares or (c) the OncoGenex Debentureholders with respect to their right or
obligation to convert OncoGenex Debentures into OncoGenex Shares in accordance
with the terms of the OncoGenex Debentures, has any other agreement, option,
commitment, arrangement, or any other right or privilege (whether by Law,
pre-emptive or contractual) capable of becoming an agreement, option or
commitment (including any such right or privilege under convertible securities,
warrants or convertible obligations of any nature) for:
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(a)
|
the
purchase, subscription, allotment or issuance of, or conversion into, any
of the unissued shares or any other securities of OncoGenex;
or
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|
(b)
|
the
purchase or other acquisition from OncoGenex of any of its undertakings,
business or assets.
|
Other
than the OncoGenex Debentures, there are no outstanding bonds, debentures or
other evidences of indebtedness of OncoGenex having the right to vote (or that
are convertible for or exercisable into securities having the right to vote)
with the holders of the OncoGenex Shares on any matter. All
outstanding options, warrants, debentures, conversion privileges and other
rights, agreements, arrangements or commitments (contingent or otherwise)
obligating OncoGenex to issue or sell any shares or securities or obligations of
any kind convertible into or exchangeable for any shares of OncoGenex were
issued in compliance with the articles and by-laws of OncoGenex and all
applicable Laws, and any preemptive rights, rights of first refusal or similar
rights.
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3.1.3
|
Authority and No
Violation
|
|
(a)
|
OncoGenex
has all requisite corporate power and authority to enter into this
Agreement and the documents required to be executed by OncoGenex in
connection with the transactions contemplated herein, to perform its
obligations hereunder and, subject to obtaining the approval of the
OncoGenex Securityholders as contemplated by this Agreement, to consummate
the Arrangement and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement and such other documents by
OncoGenex and the consummation by OncoGenex of the transactions
contemplated by this Agreement and such other documents have been duly
authorized by the Board of Directors of OncoGenex and no other corporate
proceedings on its part are necessary to authorize this Agreement, the
Voting Agreements, or the transactions contemplated hereby or thereby,
other than:
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(i)
|
with
respect to the Circular and other matters relating solely thereto,
including the implementation of the Arrangement, the approval of the Board
of Directors of OncoGenex; and
|
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(ii)
|
with
respect to the completion of the Arrangement, the approval of the
OncoGenex Securityholders and such other corporate proceedings of
OncoGenex as may be required by the Interim
Order.
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(b)
|
This
Agreement has been duly executed and delivered by OncoGenex and, assuming
the due authorization, execution and delivery hereof by Sonus, constitutes
a legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other
similar Laws affecting creditors’ rights generally, and to general
principles of equity. All documents required to be executed by OncoGenex
in connection with the transactions contemplated herein will be duly
executed and delivered by OncoGenex on or before the Effective Date and,
when so executed and delivered, will constitute a legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency and other similar Laws affecting creditors’
rights generally, and to general principles of
equity.
|
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(c)
|
The
approval of this Agreement and the other documents required to be executed
by OncoGenex in connection with the transactions contemplated herein, the
execution and delivery by OncoGenex of this Agreement and such other
documents, and the performance by OncoGenex of its obligations hereunder
and the completion of the Arrangement and the transactions contemplated
thereby, will not, except as disclosed in Section 3.1.3(c) of the
OncoGenex Disclosure Schedule:
|
|
(i)
|
conflict
with, result in a violation or breach of or loss of any benefit under,
constitute a default or require any consent (other than such as has
already been obtained or will be obtained prior to the Effective Time) to
be obtained under, give rise to any termination rights or payment
obligation under, constitute a change of control or default (or an event
which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, vesting, amendment,
acceleration or cancellation of, or result in the creation of an
Encumbrance on any property or asset of OncoGenex or any of its
Subsidiaries pursuant to, any provision
of:
|
|
(A)
|
the
articles, by-laws or other charter documents of OncoGenex or any of its
Subsidiaries, including any unanimous shareholder agreement or any other
agreement or understanding with any party holding an ownership interest in
it;
|
|
(B)
|
any
shareholder, voting or other agreements to which OncoGenex is a
party;
|
|
(C)
|
any
resolutions of its Board of Directors (or any committee thereof) or
shareholders;
|
|
(D)
|
subject
to obtaining the Appropriate Regulatory Approvals relating to OncoGenex or
the transactions contemplated herein, any applicable Laws;
or
|
|
(E)
|
subject
to obtaining any consent, approval, permit or acknowledgement which may be
required thereunder in connection with the completion of the transactions
herein contemplated, details of which are set forth in Section 3.1.3
of the OncoGenex Disclosure Schedule, any license or registration or any
agreement, contract, franchise, permit or commitment, written or oral,
which OncoGenex or any of its Subsidiaries is a party to, bound by or
subject to;
|
|
(ii)
|
give
rise to any right of termination or acceleration of indebtedness, or cause
any third party indebtedness to come due before its stated maturity or
cause any available credit to cease to be
available;
|
|
(iii)
|
result
in the imposition of any Encumbrance upon any of OncoGenex’s or its
Subsidiaries’ assets, or restrict, hinder, impair or limit their ability
to carry on the OncoGenex Business as and where it is now being carried on
or as and where it may be carried on in the future;
or
|
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(iv)
|
result
in any Person becoming entitled to (A) any retirement, severance,
unemployment compensation, “golden parachute”, bonus or other such
payment, the acceleration of the vesting or time to exercise or payment of
any outstanding stock options or other Employee Benefits (including the
OncoGenex Options), (B) the forgiveness or postponement of payment of
any indebtedness owing to OncoGenex, or (C) receive any additional
payments or compensation under or in respect of any Employee Benefits
(including a “cash-out” of the OncoGenex Options as provided for in the
OncoGenex Stock Option Plan).
|
|
(d)
|
No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity or other Person is required to be
obtained by OncoGenex or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or any of the other documents
contemplated hereby, or the consummation by OncoGenex of the transactions
contemplated hereby or thereby, other
than:
|
|
(i)
|
any
approvals required by the Interim
Order;
|
|
(ii)
|
the
Final Order;
|
|
(iii)
|
notices
to and filings with the Director under the
CBCA;
|
|
(iv)
|
the
Appropriate Regulatory Approvals relating to
OncoGenex;
|
|
(v)
|
any
other consents, approvals, orders, authorizations, declarations or filings
of or with a Governmental Entity which, if not obtained, would not in the
aggregate have a Material Adverse Effect on OncoGenex;
and
|
|
(vi)
|
any
other consents or approvals set out in Section 3.1.3 of the OncoGenex
Disclosure Schedule.
|
|
3.1.4
|
No
Defaults
|
Neither
OncoGenex nor any of its Subsidiaries is in default under, and there exists no
event, condition or occurrence which, after notice or lapse of time or both,
would constitute such a default under, any contract, agreement, licence or
franchise to which it is a party which would, if terminated due to such default,
cause a Material Adverse Effect on OncoGenex.
|
3.1.5
|
Issued Shares and
Options
|
Section 3.1.5
of the OncoGenex Disclosure Schedule sets forth a true and complete list, as of
the date hereof, of all of the issued and outstanding OncoGenex Shares,
including the registered holders of all such shares, and all of the outstanding
and unexercised OncoGenex Options, including the name of each holder, dates of
grant, exercise prices, expiry dates and exercise or vesting dates of such
OncoGenex Options, whether and to what extent the exercisability of such
OncoGenex Options will be accelerated upon consummation of the transactions
contemplated by this Agreement or any termination of employment thereafter, and
the number of OncoGenex Shares which are the subject thereof. Except as
disclosed in Section 3.1.5 of the OncoGenex Disclosure Schedule, the
certificates evidencing the OncoGenex Shares bear no restrictive legends and
none of the articles or by-laws of
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OncoGenex,
the Shareholders’ Agreement or any other shareholder agreement or unanimous
shareholder agreement governing the affairs of OncoGenex or the relationship,
rights and duties of shareholders contains or provides for any restrictions or
restrictive legends with respect to the OncoGenex Shares or any of them, other
than restrictions contained in the Shareholders’ Agreement, which will terminate
as of the Effective Time.
|
3.1.6
|
Subsidiaries
|
|
(a)
|
Except
as disclosed in Section 3.1.6 of the Disclosure Schedule, neither
OncoGenex nor OncoGenexSub is the beneficial or registered owner of any
shares or other ownership interests in any Person, and neither holds any
securities or obligations of any kind convertible into or exchangeable for
shares or other ownership interests in any Person. All of the
issued and outstanding shares of capital stock of each of OncoGenex’s
Subsidiaries have been validly issued and are fully paid and
non-assessable. Neither OncoGenex nor OncoGenexSub is a party to any
agreement to acquire any shares or other ownership interests in any
Person.
|
|
(b)
|
OncoGenexSub
is a corporation duly incorporated under the laws of its jurisdiction of
incorporation, is validly subsisting, has full corporate and legal power
and authority to own, lease and operate the properties currently owned,
leased and operated by it and conduct its business as currently conducted,
and is in good standing under the laws of its jurisdiction of
incorporation. OncoGenexSub is duly qualified or licenced to do business
and is in good standing as a foreign corporation or organization
authorized to do business in all jurisdictions in which the character of
the properties owned, leased or operated or the nature of the business
conducted by it would make such qualification or licencing necessary. No
proceedings have been instituted or are pending for the dissolution or
liquidation of OncoGenexSub. True and complete copies of the articles,
bylaws or equivalent organizational documents of OncoGenexSub have been
provided to Sonus, and OncoGenexSub is not in material violation of any
provision of its organizational
documents.
|
|
(c)
|
Except
as disclosed in Section 3.1.6(c) of the OncoGenex Disclosure
Schedule, OncoGenex is the beneficial owner of all of the issued and
outstanding shares of OncoGenexSub free of any Encumbrance. No Person has
any other agreement, option, commitment, arrangement, or any other right
or privilege (whether by law, pre-emptive or contractual) capable of
becoming an agreement, option or commitment (including any such right or
privilege under convertible securities, warrants or convertible
obligations of any nature) for:
|
|
(i)
|
the
purchase, subscription, allotment or issuance of, or conversion into, any
of the issued or unissued shares or any other securities of OncoGenexSub;
or
|
|
(ii)
|
the
purchase or other acquisition from OncoGenexSub of any of its
undertakings, business or assets.
|
|
3.1.7
|
OncoGenex Financial
Statements
|
The
OncoGenex Financial Statements, copies of which have been provided to Sonus,
have been prepared in accordance with GAAP applied on a basis consistent with
those of previous years,
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the
requirements of applicable Laws, are correct and complete and present fairly, in
all material respects:
|
(a)
|
all
the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of OncoGenex as at the Financial
Year End; and
|
|
(b)
|
the
results of operations and cash flows of OncoGenex for the 12-month period
ended on the Financial Year End.
|
|
3.1.8
|
Interim
Statements
|
Except as
disclosed in Section 3.1.8 of the OncoGenex Disclosure Schedule, the
OncoGenex Interim Financial Statements, copies of which have been provided to
Sonus, have been prepared in accordance with GAAP applied on a basis consistent
with those of previous years, are correct and complete and present fairly, in
all material respects:
|
(a)
|
all
the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of OncoGenex on a consolidated
basis, as at March 31, 2008;
and
|
|
(b)
|
the
revenues, earnings, results of operations and cash flows of OncoGenex on a
consolidated basis, for the three-month period ended on March 31,
2008.
|
|
3.1.9
|
GAAP
Liabilities
|
OncoGenex
has no liability, indebtedness, obligation, expense, claim, deficiency, guaranty
or endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or otherwise (whether or not required to be reflected in financial
statements in accordance with GAAP), and has no knowledge of any potential
liabilities or obligations, other than:
|
(a)
|
liabilities
(including liabilities for unpaid Taxes) disclosed on, reflected in or
provided for in the OncoGenex Financial Statements or the OncoGenex
Interim Financial Statements;
|
|
(b)
|
liabilities
disclosed in Section 3.1.9 of the OncoGenex Disclosure Schedule or
provided for in the operating budget of OncoGenex for the financial year
ending December 31, 2008, a copy of which has been provided to
Sonus;
|
|
(c)
|
liabilities
incurred in the ordinary course of business and attributable to the period
since the date of the OncoGenex Interim Financial Statements, none of
which, individually or in the aggregate, has a Material Adverse Effect on
OncoGenex; and
|
|
(d)
|
liabilities
incurred in connection with this Agreement or the transactions
contemplated in this Agreement.
|
|
3.1.10
|
Debt
Instruments
|
Except
for the OncoGenex Debentures or as set forth and described in
Section 3.1.10 of the OncoGenex Disclosure Schedule, neither OncoGenex nor
any of its Subsidiaries is bound by or subject to:
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|
(a)
|
any
Debt Instrument; or
|
|
(b)
|
any
agreement, contract or commitment to create, assume or issue any Debt
Instrument;
|
and no
Debt Instrument or Encumbrance which OncoGenex or any of its Subsidiaries is
bound by or subject to is dependent upon the Guarantee of or any security
provided by any other Person.
|
3.1.11
|
Accounts
Receivable
|
All
accounts receivable of and book debts and other debts due to OncoGenex reflected
in the OncoGenex Financial Statements or which have come into existence since
the Financial Year End were created in the ordinary course of OncoGenex’s
business and, except to the extent that the same have been paid in the ordinary
course of its business since the Financial Year End, are valid and enforceable
and payable in full, without any right of set-off or counterclaim or any
reduction for doubtful accounts other than as reflected in the OncoGenex
Financial Statements and, in the case of accounts receivable which have come
into existence since the Financial Year End, other than a reasonable allowance
for doubtful accounts consistent with OncoGenex’s previous
practice.
|
3.1.12
|
Accuracy of Books and
Records
|
Except as
disclosed in Section 3.1.12 of the OncoGenex Disclosure Schedule, the books
and records, accounting, financial and otherwise, of OncoGenex fairly and
correctly set out and disclose in all material respects, in accordance with
GAAP, the financial position of OncoGenex as at the date hereof and all material
financial transactions of OncoGenex have been accurately recorded in such books
and records on a consistent basis and in conformity with GAAP. Except as
disclosed in Section 3.1.12 of the OncoGenex Disclosure Schedule, all
records, controls, data or information owned by OncoGenex and required to
operate the OncoGenex Business are in the full possession and control of
OncoGenex.
|
3.1.13
|
Guarantees
|
Except as
set forth and described in Section 3.1.13 of the OncoGenex Disclosure
Schedule, neither OncoGenex nor any of its Subsidiaries is a party to or bound
by or subject to any Guarantee of the indebtedness of any other Person and is
not a party to any Off-Balance Sheet Arrangement.
|
3.1.14
|
Inventories
|
Except as
disclosed in Section 3.1.14 of the OncoGenex Disclosure Schedule, the
inventories of OncoGenex and its Subsidiaries, if any:
|
(a)
|
consist
solely of items of tangible personal property of the kind and quality
regularly used or produced in its
business;
|
|
(b)
|
are
saleable or useable in the ordinary course of the OncoGenex Business for
the purpose for which they were
intended;
|
|
(c)
|
are
at a level consistent with the requirements of potential customers of the
OncoGenex Business, as reasonably anticipated by
OncoGenex;
|
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|
(d)
|
are
not obsolete; and
|
|
(e)
|
have
been valued in the OncoGenex Financial Statements in accordance with GAAP,
on a basis consistent with that of past
practice.
|
|
3.1.15
|
OncoGenex Business
Carried on in Ordinary
Course
|
The
OncoGenex Business has been carried on in the ordinary course since the
Financial Year End, and since the Financial Year End:
|
(a)
|
except
as disclosed in Section 3.1.15(a) of the OncoGenex Disclosure Schedule,
there has been no Material Adverse Change with respect to
OncoGenex;
|
|
(b)
|
there
has been no damage, destruction or loss of any material tangible assets
(including any medium in which OncoGenex’s Intellectual Property resides),
whether covered by insurance or not, that could reasonably be expected to
have a Material Adverse Effect on
OncoGenex;
|
|
(c)
|
there
has been no split, combination or reclassification of any of the
outstanding OncoGenex Shares, and OncoGenex has not declared or paid any
dividends on or made any other distributions (in either case, in stock or
property) on or in respect of the outstanding OncoGenex
Shares;
|
|
(d)
|
OncoGenex
has not allotted, reserved, set aside or issued, authorized or proposed
the allotment, reservation, setting aside or issuance of, or purchased or
redeemed or proposed the purchase or redemption of, any shares in its
capital stock or any class of securities convertible or exchangeable into,
or rights, warrants or options to acquire, any such shares or other
convertible or exchangeable securities, nor has OncoGenex agreed to do any
of the foregoing, except for:
|
|
(i)
|
the
issuance of OncoGenex Common Shares pursuant to (A) the exercise of
OncoGenex Options, which are or have become fully vested, (B) the
conversion of OncoGenex Preferred Shares and (C) the conversion of
OncoGenex Debentures;
|
|
(ii)
|
the
grant of OncoGenex Options to certain officers, directors, employees,
consultants and suppliers of OncoGenex since the Financial Year End;
and
|
|
(iii)
|
the
allotment and reservation for issuance of OncoGenex Common Shares pursuant
to OncoGenex Options granted since the Financial Year
End;
|
particulars
of which are set forth in Section 3.1.15(d) of the OncoGenex Disclosure
Schedule;
|
(e)
|
except
as disclosed in Section 3.1.15(e) of the OncoGenex Disclosure
Schedule, there has been no increase in the salary or other cash
compensation payable or to become payable by OncoGenex or any of its
Subsidiaries to any of their respective officers, directors, employees or
advisors, other than in the ordinary course of business, and there has
been no declaration, payment or commitment or obligation of any kind for
the payment or granting by OncoGenex or any of its Subsidiaries of a
bonus, stock
|
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-
|
|
option
or other additional salary or compensation to any such Person, or any
grant to any such Person of any increase in severance or termination pay,
nor has OncoGenex or any of its Subsidiaries agreed to do any of the
foregoing;
|
|
(f)
|
except
as disclosed in Section 3.1.15(f) of the OncoGenex Disclosure
Schedule, there has been no increase in or modification of any Employee
Benefits or agreement to increase or modify any Employee Benefits
(including, in either case, the granting of stock options, restricted
stock awards or stock appreciation rights) made to, for or with any of its
directors or officers, other than increases in salary or cash compensation
payable or to become payable by OncoGenex or any of its Subsidiaries to
any of their respective officers or directors, provided any such increase
is in the ordinary course of business of
OncoGenex;
|
|
(g)
|
except
as disclosed in Section 3.1.15(g) of the OncoGenex Disclosure
Schedule, neither OncoGenex nor any of its Subsidiaries has
(i) acquired or sold, pledged, leased, encumbered or otherwise
disposed of any material property or assets or agreed to do any of the
foregoing or (ii) incurred or committed to incur capital expenditures
in excess of $100,000, in the aggregate, or agreed to do any of the
foregoing;
|
|
(h)
|
except
as set forth in Section 3.1.15(h) of the OncoGenex Disclosure
Schedule, neither OncoGenex or any of its Subsidiaries has entered into
any material contract, agreement, licence, franchise, lease transaction,
commitment or other right or obligation and has not amended, modified,
relinquished, terminated or failed to renew any Material Agreement, other
than in the ordinary course of business of
OncoGenex;
|
|
(i)
|
there
has been no transfer (by way of a licence or otherwise) of or agreement to
transfer to any Person rights to any of
OncoGenex’s Intellectual Property, other than non-exclusive
licences in the ordinary course of
business;
|
|
(j)
|
OncoGenex
has not made any change in accounting policies, principles, methods,
practices or procedures (including for bad debts, contingent liabilities
or otherwise), respecting capitalization or expense of research and
development expenditures, depreciation or amortization rates or timing of
recognition of income and expense;
|
|
(k)
|
except
as set forth in Section 3.1.15(k) of the OncoGenex Disclosure
Schedule, there has been no notice delivered to OncoGenex or any of its
Subsidiaries of any claim of ownership by a third party of any OncoGenex
Intellectual Property owned or developed by OncoGenex or any of its
Subsidiaries, or of infringement by OncoGenex or any of its Subsidiaries
of any third party’s intellectual property
rights;
|
|
(l)
|
except
as set forth in Section 3.1.15(l) of the OncoGenex Disclosure
Schedule, there has been no amendment to the articles or by-laws of
OncoGenex or similar governing documents of any of its
Subsidiaries;
|
|
(m)
|
there
has been no disruption in the normal work of OncoGenex’s workforce or
claim of wrongful discharge or other unlawful labour practice in respect
of OncoGenex;
|
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|
(n)
|
there
has been no waiver by OncoGenex or any of its Subsidiaries of, or
agreement to waive, any right of substantial value, and neither OncoGenex
nor any of its Subsidiaries has entered into any commitment or transaction
not in the ordinary course of business where such right, commitment or
transaction is or would be material in relation to OncoGenex or the
OncoGenex Business; and
|
|
(o)
|
except
as set forth in Section 3.1.15(o) of the OncoGenex Disclosure
Schedule, there has been no creation, or agreement by OncoGenex or any of
its Subsidiaries to create any Encumbrance on any of its property or
assets (except for any lien for unpaid Taxes not yet
due).
|
|
3.1.16
|
Partnerships or Joint
Ventures
|
Except as
set forth in Section 3.1.16 of the OncoGenex Disclosure Schedule, neither
OncoGenex nor any of its Subsidiaries is a partner or participant in any
partnership, joint venture, profit-sharing arrangement or other business
combination of any kind and is not party to any agreement under which OncoGenex
agrees to carry on any part of its business or any other activity in such manner
or by which OncoGenex or any of its Subsidiaries agrees to share any revenue or
profit with any other Person other than royalty and milestone payments to its
licensors under licence agreements disclosed in Section 3.1.16 of the
OncoGenex Disclosure Schedule.
|
3.1.17
|
Minute Books and
Corporate Records
|
To the
knowledge of OncoGenex, the minute and record books of OncoGenex contain
complete and accurate minutes of all meetings of, and copies of all by-laws and
resolutions passed by, or consented to in writing by, the directors (and any
committees thereof) and shareholders of OncoGenex since its incorporation and
which are required to be maintained in such books under the CBCA; all such
meetings were duly called and held and all such by-laws and resolutions were
duly passed or enacted. The share certificate books, registers of
shareholders, registers of transfers, registers of directors, registers of
holders of Debt Instruments and other corporate registers of OncoGenex comply in
all material respects with the provisions of all applicable Laws and are
complete and accurate in all material respects. Except for the Shareholders’
Agreement and the UBC Shareholders Agreement, OncoGenex is not a party to or
bound by or subject to any shareholder agreement or unanimous shareholder
agreement governing the affairs of OncoGenex or the relationships, rights and
duties of shareholders and is not subject to a shareholder rights plan or
“poison pill” or similar plan.
|
3.1.18
|
Interested
Persons
|
|
(a)
|
Except
as set forth and described in Section 3.1.18 of the OncoGenex
Disclosure Schedule, since the Financial Year End, no payment has been
made or authorized by OncoGenex or any of its Subsidiaries to or for the
benefit of any Interested Person, except in the ordinary course of
business and at the regular rates, payable as Employee Benefits,
management and other similar fees, the reimbursement of expenses incurred
on behalf of OncoGenex or any Subsidiary, or
otherwise.
|
|
(b)
|
Except
as set forth and described in Section 3.1.18 of the OncoGenex
Disclosure Schedule, since the Financial Year End the aggregate amount of
Employee Benefits, management and other fees, reimbursement of expenses
incurred on behalf of
|
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-
|
|
OncoGenex
and its Subsidiaries or other payments in any such case made to an
Interested Person have been paid at rates no greater than those prevailing
at the Financial Year End.
|
|
(c)
|
Except
as set forth and described in Section 3.1.18 of the OncoGenex
Disclosure Schedule:
|
|
(i)
|
Neither
OncoGenex nor any of its Subsidiaries is a party to or bound by or subject
to any agreement, contract or commitment with any Interested Person,
except for contracts of employment or personal services contracts with
independent contractors;
|
|
(ii)
|
Neither
OncoGenex nor any of its Subsidiaries has any loan or indebtedness
outstanding (except for obligations incurred in the ordinary course of
business with respect to Employee Benefits, personal services contracts or
the reimbursement of expenses incurred on behalf of OncoGenex or a
Subsidiary or otherwise) to any Interested
Person;
|
|
(iii)
|
no
Interested Person owns, directly or indirectly, in whole or in part, any
property that OncoGenex or any of its Subsidiaries uses in the operation
of its business as heretofore carried on;
and
|
|
(iv)
|
no
Interested Person has any cause of action or other claim whatsoever
against, or owes any amount to, OncoGenex or any of its Subsidiaries in
connection with OncoGenex’s Business as heretofore carried on, except for
any liability reflected in the OncoGenex Financial Statements or the
OncoGenex Interim Financial Statements and claims in the ordinary course
of business such as, without limitation, for accrued vacation pay and
accrued benefits under the Employee
Benefits.
|
|
3.1.19
|
Directors and
Officers
|
Section 3.1.19
of the OncoGenex Disclosure Schedule sets forth the names and titles of all
directors and officers of OncoGenex and each of its Subsidiaries as at the date
of this Agreement.
|
3.1.20
|
Employment and
Employee Benefit Matters
|
|
(a)
|
As
at May 15, 2008, OncoGenex had fifteen full time and one permanent part
time employees, of which none are located in the United States and
OncoGenexSub had five full time employees and two permanent part time
employees, each of whom is located in the United States. The names of such
individuals, their years of service, their job titles and the Employee
Benefits to which they are entitled are set forth and described in
Section 3.1.20 of the OncoGenex Disclosure
Schedule. Section 3.1.20 also identifies each employee, if
any, who holds a temporary work authorization, including X-0X, X-0, X-0 or
J-1 visas or work authorizations (the “Work Permits”), and
shows for each such employee the type of Work Permit and the length of
time remaining on such Work Permit. To the knowledge of
OncoGenex, no employee intends to terminate his employment with OncoGenex
or any Subsidiary of
|
- 36
-
|
|
OncoGenex,
whether as a result of the transactions contemplated by this Agreement or
otherwise.
|
|
(b)
|
Section 3.1.20
of the OncoGenex Disclosure Schedule contains a complete list of
individuals who are not employees of OncoGenex, and who supply their
services to OncoGenex or any Subsidiary under personal services contracts
(whether written, oral or otherwise, and including independent
contractors, employees of agencies, secondees or leased employees and
consultants), specifying location, start and end date of engagement,
services supplied, supplying agency and fees and other amounts payable by
OncoGenex or any Subsidiary. There are no complaints, claims or charges
outstanding or, to the knowledge of OncoGenex, anticipated relating to the
engagement of such individuals.
|
|
(c)
|
Section 3.1.20
of the OncoGenex Disclosure Schedule lists each employee of OncoGenexSub
who is absent from active employment (i) due to short or long term
disability (ii) on a leave pursuant to the United States Family and
Medical Leave Act or a comparable state Law, (iii) on any other leave
or approved absence (together with the reason for each leave or absence)
or (iv) due to military service (under conditions that give the
employee rights to re-employment).
|
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(d)
|
Section 3.1.20
of the OncoGenex Disclosure Schedule contains a complete list of all
Employee Benefits maintained, or otherwise contributed to or required to
be contributed to, by OncoGenex for the benefit of employees or former
employees of OncoGenex or its Subsidiaries. OncoGenex has
delivered or made available to Sonus true, correct and complete copies of
all policies, handbooks and manuals relating to employment
matters. With respect to continuation rights rising under
federal or state Law as applied to employee benefit plans that are group
health plans (as defined in Section 601 et seq. of ERISA),
Section 3.1.20 of the OncoGenex Disclosure Schedule lists
(i) each employee, former employee or qualifying beneficiary who has
elected continuation coverage and (ii) each employee, former employee
or qualifying beneficiary who has not elected continuation coverage but is
still within the period in which such election may be
made.
|
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(e)
|
Except
as set forth and described in Section 3.1.20 of the OncoGenex
Disclosure Schedule:
|
|
(i)
|
Neither
OncoGenex nor any of its Subsidiaries is a party to or bound by or subject
to any agreement or arrangement with respect to Employee Benefits and no
such agreement or arrangement contains any specific provision as to notice
of termination of employment or severance pay in lieu
thereof;
|
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(ii)
|
Neither
OncoGenex nor any of its Subsidiaries has any obligations to amend any
Employee Benefit and no amendments will be made or promised prior to the
Effective Date, except with the prior written consent of
Sonus;
|
|
(iii)
|
all
material obligations of OncoGenex and its Subsidiaries with respect to
Employee Benefits are reflected in and have been fully accrued in the
OncoGenex Financial Statements or OncoGenex Interim Financial
Statements;
|
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(iv)
|
Neither
OncoGenex nor any of its Subsidiaries is a party to or bound by or subject
to any collective bargaining agreement or other similar arrangement with
any labour union or employee association nor has it made any commitment to
or conducted any negotiation or discussion with any labour union or
employee association with respect to any future agreement or arrangement
and, to the knowledge of OncoGenex, there is no current application for
certification or other attempt to organize or establish any labour union
or employee association with respect to employees of OncoGenex or any of
its Subsidiaries;
|
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(v)
|
Each
of OncoGenex and its Subsidiaries has, in all material respects, complied
with, and operated its business in accordance with, all applicable Laws
relating to employment and labour matters, including employment and labour
standards, occupational health and safety, employment equity, pay equity,
workers’ compensation, human rights and labour relations matters; there
are no current, pending or, to the knowledge of OncoGenex, threatened
claims, complaints or proceedings of any kind involving OncoGenex, its
Subsidiaries or to OncoGenex’s knowledge, any of their respective
employees before any Tribunal with respect to any of the above matters;
and there are no facts known to OncoGenex that could reasonably be
expected to give rise to any such claim, complaint or
proceeding;
|
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(vi)
|
there
are no existing or, to the knowledge of OncoGenex, threatened labour
strikes, slow downs, work stoppages or other similar labour troubles
affecting OncoGenex or any of its
Subsidiaries;
|
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(vii)
|
Neither
OncoGenex nor any of its Subsidiaries has made representations or
commitments to its employees with respect to future material increases in
wages or other compensation;
|
|
(viii)
|
to
the knowledge of OncoGenex, no employee of OncoGenex or any of its
Subsidiaries is bound by any confidentiality, non-solicitation or
non-competition agreement in favour of any Person other than OncoGenex or
one of its Subsidiaries which is material and relevant to the employment
of such employee by OncoGenex or such Subsidiary and which imposes
obligations on such employee greater than those owed by such employee
under common law;
|
|
(ix)
|
to
the knowledge of OncoGenex, no employee of OncoGenex or any of its
Subsidiaries is, in any material respect, in violation of any term of any
employment contract, non-disclosure agreement, non-competition agreement,
or any restrictive covenant to a former employer relating to the right of
any such employee to be employed by OncoGenex or such Subsidiary because
of the nature of the business conducted or presently proposed to be
conducted by it or to the use of trade secrets or proprietary information
of others;
|
|
(x)
|
Neither
OncoGenex nor any of its Subsidiaries is a party to any side letter or
other written or oral material commitment with any employee or
contractor;
|
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(xi)
|
all
accruals for unpaid vacation pay, premiums for employment insurance,
health premiums, Canada or Québec Pension Plan premiums, accrued wages,
salaries and commissions and other Employee Benefits have been reflected
in the books and records of OncoGenex;
and
|
|
(xii)
|
the
execution and delivery of this Agreement by OncoGenex does not, the
performance of this Agreement by OncoGenex will not, and the consummation
of the transactions contemplated by this Agreement will not, (i) entitle
any current or former employee or officer of OncoGenex, any of its
Subsidiaries or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation, due any such employee or
officer, or (iii) accelerate the vesting of any stock option or of any
shares of restricted stock or other securities of
OncoGenex.
|
|
3.1.21
|
Employee
Benefit Plans
|
|
(a)
|
Section 3.1.21
of the OncoGenex Disclosure Schedule sets forth a list of all OncoGenex
Benefit Plans (as defined below) that are sponsored, maintained,
contributed to or required to be maintained or contributed to by
OncoGenex, any of its Subsidiaries or any OncoGenex Commonly Controlled
Entity (as defined below). Each OncoGenex Benefit Plan intended
to be “qualified” within the meaning of Section 401(a) of the Code
has been determined by the United States Internal Revenue Service (“IRS”) to be so qualified
or has a document issued by the IRS confirming such qualification, and, to
the knowledge of OncoGenex, no circumstances exist that could reasonably
be expected by OncoGenex to result in the revocation of any such
determination. Each OncoGenex Benefit Plan is in compliance
with the applicable terms, if any, of the United States Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and the Code and
any other applicable laws, rules and regulations, except where the breach
or violation of which would not result in a Material Adverse Effect on
OncoGenex. Each OncoGenex Benefit Plan has been administered in
all material respects in accordance with the documents and instruments
governing such OncoGenex Benefit Plan. No litigation is pending
with regard to any OncoGenex Benefit Plan other than routine uncontested
claims for benefits, and no OncoGenex Benefit Plan is currently under
examination or audit by the Department of Labor or the
IRS.
|
|
(b)
|
Neither
OncoGenex nor any OncoGenex Commonly Controlled Entity (as defined below)
has ever sponsored or contributed to a defined benefit pension plan that
is subject to the funding obligations of Title IV of
ERISA.
|
|
(c)
|
No
OncoGenex Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA (a “Multiemployer Plan”).
Neither OncoGenex nor any OncoGenex Commonly Controlled Entity has
completely or partially withdrawn from any Multiemployer
Plan. No termination liability to the Pension Benefit Guaranty
Corporation or withdrawal liability to any Multiemployer Plan that is
material in the aggregate has been or is reasonably expected to be
incurred with respect to any Multiemployer Plan by OncoGenex or any
OncoGenex Commonly Controlled
Entity.
|
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(d)
|
Except
as set forth in Section 3.1.21 of the OncoGenex Disclosure Schedule,
no amount (whether in cash or property or the vesting of property) that
could be received by, or benefit provided to, any officer, director or
employee of OncoGenex or any of its affiliates who is a “disqualified
individual” (as such term is defined in proposed United States Treasury
Regulations Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Benefit Plan
currently in effect would be an “excess parachute payment” (as such term
is defined in Section 280G(b)(1) of the Code). Except as
set forth in Section 3.1.21 of the OncoGenex Disclosure Schedule, no
such Person is entitled to receive any additional payment from OncoGenex
or any other Person (a “OncoGenex Parachute Gross Up
Payment”) in the event that the excise tax of Section 4999(a)
of the Code is imposed on such Person. Except as set forth in
Section 3.15(d) of the OncoGenex Disclosure Schedule, the Board of
Directors of OncoGenex has not granted to any officer, director or
employee of OncoGenex or any OncoGenexSub any right to receive any
OncoGenex Parachute Gross Up
Payment.
|
|
(e)
|
(i) all
required material reports and descriptions, if any (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions),
have been filed or distributed appropriately with respect to each
OncoGenex Benefit Plan, and (ii) the requirements of Part 6 of
Subtitle B of Title 1 of ERISA and of Section 4980B of the Code
(“Cobra”) and the
Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) have been
satisfied in all material respects with respect to each OncoGenex Benefit
Plan.
|
|
(f)
|
No
OncoGenex Benefit Plan is an employee stock ownership plan or otherwise
invests in “employer securities” (as such term is defined in
Section 409(l) of the Code).
|
|
(g)
|
OncoGenex
has made all material contributions and other payments required by and due
under the terms of each OncoGenex Benefit Plan and has taken no action
(including, without limitation, actions required by Law) relating to any
OncoGenex Benefit Plan that will increase OncoGenex’s or any OncoGenex
Commonly Controlled Entity’s obligation under any OncoGenex Benefit
Plan.
|
|
(h)
|
Except
as set forth in Section 3.1.21 of the OncoGenex Disclosure Schedule,
no OncoGenex Benefit Plan is a “qualified foreign plan” (as such term is
defined in Section 404A of the Code), and no OncoGenex Benefit Plan
is subject to the laws of any jurisdiction other than the United States of
America or one of its political
subdivisions.
|
|
(i)
|
Except
as disclosed in Section 3.1.21(i) of the OncoGenex Disclosure Schedule, no
OncoGenex Benefit Plan promises or provides post-retirement medical life
insurance or other benefits due now or in the future to current, former or
retired employees of OncoGenex, any of its Subsidiaries or any OncoGenex
Common Controlled Entity other than benefits required pursuant to Cobra,
except in each case for benefits that, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on
OncoGenex.
|
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(j)
|
No
“pension plan”, as such term is defined in Section 3(2) of ERISA,
maintained by OncoGenex, any of its Subsidiaries or a OncoGenex Commonly
Controlled Entity, has been frozen or terminated (including partial
termination) in the last three (3) calendar
years.
|
|
(k)
|
As
used herein: (i) “Benefit Plans” means any
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation or bonus plans or
agreements or other incentive plans or agreements, all other employee
programs, arrangements or agreements and all other employee benefit plans
or fringe benefit plans, including, without limitation, all “employee
benefit plans” as that term is defined in Section 3(3) of ERISA;
(ii) “OncoGenex
Benefit Plans” means the Benefit Plans currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by
OncoGenex, any of its Subsidiaries or any OncoGenex Commonly Controlled
Entity for the benefit of present or former employees or directors of
OncoGenex and of OncoGenexSub or their beneficiaries, or providing
benefits to such persons in respect of services provided to any such
entity; (iii) “OncoGenex Commonly Controlled
Entity” means an entity required to be aggregated with OncoGenex
which is a member of the “controlled group of corporations” which includes
OncoGenex within the meaning of Section 414(b), (c) or (m) of the
Code; and (iv) “OncoGenex ERISA Plan”
means any OncoGenex Benefit Plan which is an “employee pension benefit
plan”, as that term is defined in Section 3(2) of
ERISA.
|
|
(l)
|
Section 3.1.21
of the OncoGenex Disclosure Schedule lists each corporation, trade or
business (separately for each category below that
applies): (i) that is (or was during the preceding five
years) a OncoGenex Commonly Controlled Entity, (ii) that is (or was
during the preceding five years) the legal employer of persons providing
services to OncoGenex as leased employees within the meaning of
Section 414(n) of the Code and (iii) with respect to which
OncoGenex or OncoGenexSub is a successor employer for purposes of group
health or other welfare plan continuation rights (including
Section 601 et
seq. of ERISA) or the United States Family and Medical Leave
Act.
|
|
(m)
|
OncoGenex
believes in good faith that any “nonqualified deferred compensation plan”
(as such term is defined under Section 409A(d)(1) of the Code and the
guidance thereunder) under which OncoGenex makes, is obligated to make or
promises to make, payments (each a “OncoGenex 409A Plan”) complies in all
material respects, in both form and operation, with the requirements of
Section 409A of the Code and the guidance thereunder. To
the knowledge of OncoGenex after reasonable investigation, no payment to
be made under any OncoGenex 409A Plan is, or will be, subject to the
penalties of Section 409A(a)(1) of the Code, whether pursuant to the
consummation of the transactions contemplated by this Agreement or
otherwise.
|
|
3.1.22
|
Real
Property
|
Neither
OncoGenex nor any of its Subsidiaries owns, nor is OncoGenex or any Subsidiary a
party to or bound by or subject to any agreement, contract or commitment, or any
option to purchase, any real or immovable property.
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3.1.23
|
Leases and Leased
Property
|
|
(a)
|
Neither
OncoGenex nor OncoGenexSub is a party to or bound by or subject to nor has
OncoGenex or OncoGenexSub agreed or become bound to enter into, any real
or personal property lease, sublease or other right of occupancy relating
to real property, whether as lessor or lessee, except for the OncoGenex
Leases described in Section 3.1.23 of the OncoGenex Disclosure
Schedule, copies of which have been provided to Sonus prior to the date
hereof. OncoGenex or OncoGenexSub occupies and has the exclusive right to
occupy and use all immovable OncoGenex Leased Property and has the
exclusive right to use all movable OncoGenex Leased
Property.
|
|
(b)
|
Each
of the OncoGenex Leases is valid and subsisting and in good standing, all
rental and other payments required to be paid by OncoGenex or OncoGenexSub
as lessee or sublessee and due and payable pursuant to each of the
OncoGenex Leases have been duly paid to date and neither OncoGenex nor
OncoGenexSub is otherwise in default in meeting its obligations under any
of the OncoGenex Leases and is entitled to all rights and benefits
thereunder. No event exists which, but for the passing of time or the
giving of notice, or both, would constitute a default by OncoGenex or
OncoGenexSub or, to the knowledge of OncoGenex, any other party to any of
the OncoGenex Leases and no party to any of the OncoGenex Leases is
claiming any such default or taking any action purportedly based upon any
such default. The completion of the transactions contemplated herein will
not, subject to obtaining any required consents set out in
Section 3.1.23 of the OncoGenex Disclosure Schedule, afford any of
the parties to any of the OncoGenex Leases or any other Person the right
to terminate any of the OncoGenex Leases nor will the completion of the
transactions contemplated herein result in any additional or more onerous
obligation on OncoGenex or OncoGenexSub under any of the OncoGenex
Leases.
|
|
3.1.24
|
Insurance
|
|
(a)
|
Each
of OncoGenex and its Subsidiaries maintains insurance covering its
property, assets and personnel and protecting its business against loss or
damage on a basis that is comparable to the insurance maintained by
reasonable Persons operating businesses similar to its business as
heretofore carried on. Section 3.1.24(a) of the OncoGenex Disclosure
Schedule sets forth a list of all insurance policies currently maintained
by OncoGenex and each of its Subsidiaries. Each of such insurance policies
is valid and subsisting and in good standing, there is no default, whether
as to the payment of premiums or otherwise, under any material term or
condition of such insurance policies, and, to the knowledge of OncoGenex,
each Person which is an insured party under any of such insurance policies
is entitled to all rights and benefits
thereunder.
|
|
(b)
|
There
are no pending claims under any such insurance policies. Neither OncoGenex
nor any of its Subsidiaries has failed to give any notice or present any
claim under any such insurance policies in due and timely fashion. To the
knowledge of OncoGenex, no circumstances have occurred which might entitle
OncoGenex or any of its Subsidiaries to make a claim under any such
insurance policies or which might be required under any such insurance
policies to be notified to the insurers
thereunder
|
- 42
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|
|
and
no material claim under any of such insurance policies has been made by
OncoGenex or any of its Subsidiaries since the Financial Year
End.
|
|
(c)
|
Except
as disclosed in Section 3.1.24(c) of the OncoGenex Disclosure
Schedule, none of such insurance policies is subject to any premium in
excess of the stipulated or normal
rate.
|
No notice
of cancellation of, material increase of premiums under, non-renewal with
respect to, or disallowance of any claim under, any such insurance policies has
been received by OncoGenex or any of its Subsidiaries.
|
3.1.25
|
Material
Agreements
|
Except
for the Material Agreements disclosed in Section 3.1.25 of the OncoGenex
Disclosure Schedule, neither OncoGenex nor any of its Subsidiaries is a party to
or bound by or subject to any of the following:
|
(a)
|
any
continuing contract for the purchase of materials, supplies, equipment or
services involving, in the case of any such contract, more than $10,000
over the life of the contract;
|
|
(b)
|
any
contract that expires, or may be renewed at the option of any Person other
than OncoGenex or one of its Subsidiaries so as to expire, more than one
year after the date of this
Agreement;
|
|
(c)
|
any
contract for capital expenditures in excess of $100,000 in the
aggregate;
|
|
(d)
|
except
as disclosed in Section 3.1.25(d) of the OncoGenex Disclosure Schedule,
any confidentiality, secrecy or non-disclosure
contract;
|
|
(e)
|
any
non-competition, non-solicitation, field restriction, territory
restriction, exclusivity or similar restrictions on OncoGenex or any of
its Subsidiaries, or which requires OncoGenex or any of its Subsidiaries
to offer products or services of any other Person on a priority or
exclusive basis;
|
|
(f)
|
any
leases of real or personal property, (including the OncoGenex Leases)
under which the obligations of OncoGenex or any of its Subsidiaries exceed
$25,000, on an annual basis;
|
|
(g)
|
any
contract pursuant to which OncoGenex or any of its Subsidiaries is a
lessor of any machinery, equipment, motor vehicles, office furniture,
fixtures or other personal property under which the obligations of
OncoGenex or any of its Subsidiaries exceed $10,000, on an annual
basis;
|
|
(h)
|
any
contract with any Person with whom OncoGenex or any of its Subsidiaries
does not deal at arm’s length within the meaning of the Income Tax Act
(Canada);
|
|
(i)
|
any
Guarantee or Off-Balance Sheet
Arrangement;
|
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(j)
|
any
licence, sublicence or other agreement pursuant to which any Person (other
than employees or independent contractors of OncoGenex or any of its
Subsidiaries for purposes of their employment or contract with OncoGenex
or such Subsidiary) has been or may be assigned, authorized to use, or
given access to any of OncoGenex’s Intellectual
Property;
|
|
(k)
|
any
license, sublicense or other agreement pursuant to which OncoGenex or any
of its Subsidiaries has been granted or may be assigned or authorized to
use, or has or may have incurred any obligation in connection with,
(i) any third party intellectual property that is incorporated in or
forms a part of any current or proposed OncoGenex Product or service or
(ii) any of OncoGenex’s Intellectual
Property;
|
|
(l)
|
any
employment contracts with employees and service contracts with independent
contractors, or any contract, agreement or arrangement that would entitle
any present or former director, officer employee or agent of OncoGenex or
any of its Subsidiaries to indemnification from OncoGenex or any of its
Subsidiaries;;
|
|
(m)
|
any
agreement to indemnify, hold harmless or defend any other Person with
respect to any assertion of personal injury, damage to property or
intellectual property infringement, misappropriation or violation or
warranting the lack thereof other than any licence of Third Party Software
that is not part of OncoGenex’s Intellectual Property and which relates to
software that is generally available to the public;
and
|
|
(n)
|
any
agreement that gives rise to any material payments or material benefits as
a result of the performance of this Agreement or any of the other
transactions contemplated hereby;
and
|
|
(o)
|
any
other agreement, indenture, contract, lease, deed of trust, licence,
option, instrument or other commitment which is or would reasonably be
expected to be material to the business, properties, assets, operations,
condition (financial or otherwise) or prospects of
OncoGenex;
|
whether
written or oral, and of any nature or kind whatsoever.
|
3.1.26
|
No Breach of Material
Agreements
|
Each of
OncoGenex and its Subsidiaries has performed all of the material obligations
required to be performed by it, and is entitled to all benefits under, and, to
the knowledge of OncoGenex, is not alleged to be in default in respect of, any
OncoGenex Material Agreement. Except as disclosed in Section 3.1.26 of the
OncoGenex Disclosure Schedule, each of the OncoGenex Material Agreements is in
full force and effect, unamended, and there exists no material breach thereof or
material default or event of material default or event, occurrence, condition or
act with respect to OncoGenex or any of its Subsidiaries, as the case may be,
or, to OncoGenex’s knowledge, with respect to the other contracting party or
otherwise that, with or without the giving of notice, the lapse of time or the
happening of any other event or conditions, would (A) become a default or
event of default under any OncoGenex Material Agreement, or (B) result in
the loss or expiration of any material right or option by OncoGenex (or the
material gain thereof by any third party) under any OncoGenex Material
Agreement. OncoGenex has delivered a true, correct and complete copy of each of
the OncoGenex Material Agreements to Sonus.
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3.1.27
|
OncoGenex
Business
|
The
OncoGenex Business consists primarily of the development and commercialization
of its pharmaceutical product candidates referred to as OGX-011, OGX-427 and
OGX-225.
|
3.1.28
|
Obligations to
Customers and Suppliers
|
Except as
set forth in Section 3.1.28 of the OncoGenex Disclosure Schedule, there are
no outstanding consulting contracts or other maintenance obligations with or to
customers or other users of the Products and services of OncoGenex or any of its
Subsidiaries, and neither OncoGenex nor any of its Subsidiaries is required to
provide any bonding or other financial security arrangements in connection with
any transactions with any customers, contractors, users or suppliers, whether or
not in the ordinary course of its business.
|
3.1.29
|
Legal
Proceedings
|
There are
no actions, suits, claims, investigations or proceedings (whether private,
governmental or otherwise, and whether or not purportedly on behalf of OncoGenex
or any of its Subsidiaries) in progress, pending, or to the knowledge of
OncoGenex, threatened, against or affecting OncoGenex or any of its Subsidiaries
(including actions, suits, investigations or proceedings against any of their
respective directors, officers or employees which relate to the business,
affairs, assets or operations of OncoGenex or any of its Subsidiaries), at law
or in equity, or before or by any Tribunal, or for which OncoGenex or any of its
Subsidiaries is obligated to indemnify a third party. There is no judgment,
decree, injunction, ruling, order or award of any Tribunal outstanding against
or affecting OncoGenex or any of its Subsidiaries. Except as set forth in
Section 3.1.29 of the OncoGenex Disclosure Schedule, OncoGenex is not aware
of any grounds on which any such action, suit, investigation or proceeding might
be commenced with any reasonable likelihood of success, and does not have any
present plans or intentions to initiate any litigation, arbitration or other
proceedings against any third party.
|
3.1.30
|
Banking
Information
|
Section 3.1.30
of the OncoGenex Disclosure Schedule sets forth and describes:
|
(a)
|
the
name and location (including municipal address) of each bank, trust
company or other institution in which OncoGenex or any of its Subsidiaries
has an account, money on deposit or a safety deposit box and the name of
each Person authorized to draw thereon or to have access thereto;
and
|
|
(b)
|
the
name of each Person holding a general or special power of attorney from
OncoGenex or any of its Subsidiaries and a summary of the terms
thereof.
|
|
3.1.31
|
Tax
Matters
|
|
(a)
|
Except
as disclosed in Section 3.1.31(a) of the OncoGenex Disclosure Schedule,
except in respect of the income tax return for the current taxation year
(which return is not yet due), and any income tax return which is required
to be filed as a result of or in connection with the transactions
contemplated herein, each of OncoGenex and its Subsidiaries has duly filed
in the prescribed manner and within the prescribed time all Tax Returns
required to be filed by it on or before the date hereof with any
taxing
|
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|
|
or
regulatory authority to which it is subject; such Tax Returns and the
material accompanying such Tax Returns are accurate and complete in all
material respects and each of OncoGenex and its Subsidiaries has provided
to Sonus true and complete copies of all Tax Returns filed by
it.
|
|
(b)
|
Each
of OncoGenex and its Subsidiaries has paid all Taxes that are due and
payable, and any interest, penalties and fines in connection therewith,
properly due and payable, and has paid all of same in connection with all
known assessments, reassessments and
adjustments.
|
|
(c)
|
Except
as set forth in the OncoGenex Financial Statements or the OncoGenex
Interim Financial Statements, and except for Taxes incurred in the
ordinary course of business or incurred or arising as a result of the
transactions contemplated herein which Taxes are not yet due and payable,
there are no Taxes or fines in respect of Taxes claimed by any
Governmental Entity against OncoGenex or any of its Subsidiaries or which
are known to OncoGenex or any of its Subsidiaries to be due and owing by
OncoGenex or any of its Subsidiaries and, to the knowledge of OncoGenex or
any of its Subsidiaries, there are no pending or threatened reassessments
by any Governmental Entity in respect of Taxes owing by OncoGenex or any
of its Subsidiaries, and there are no matters in dispute or under
discussion with or any audits being conducted by any Governmental Entity
relating to Taxes or fines in respect of Taxes asserted by such
Governmental Entity against OncoGenex or any of its
Subsidiaries.
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(d)
|
The
OncoGenex Financial Statements fully reflect accrued liabilities as at the
Financial Year End for all Taxes.
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(e)
|
Except
as set forth and described in Section 3.1.31 of the OncoGenex
Disclosure Schedule, there are no actions, suits, investigations, audits
or proceedings and no assessment, reassessment or request for information
in progress, pending or, to the knowledge of OncoGenex or any of its
Subsidiaries, threatened against or affecting OncoGenex or any of its
Subsidiaries in respect of Taxes nor are any issues under discussion with
any taxing authority relating to any matters which could result in claims
for additional Taxes or fines.
|
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(f)
|
There
are no agreements, waivers or other arrangements made by OncoGenex or any
of its Subsidiaries providing for an extension of time with respect to any
assessment or reassessment of Tax, the filing of any Tax Return or the
payment of any Tax by OncoGenex or any of its Subsidiaries, or the
provision of any documents or information currently under request by any
Governmental Entity.
|
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(g)
|
Except
as set forth in Section 3.1.31 of the OncoGenex Disclosure Schedule,
each of OncoGenex and its Subsidiaries has withheld the amount
of all Taxes and other deductions required under any applicable Laws to be
withheld from each payment made by it and has remitted all amounts
withheld which are due and payable before the date hereof and all
installments of Taxes which are due and payable before the date hereof to
the relevant taxing or other authority within the time prescribed under
any applicable Laws.
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(h)
|
OncoGenex
and each of its Subsidiaries have receipts or similar documentation
relating to all material non-US Taxes paid by OncoGenex or any of its
Subsidiaries.
|
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(i)
|
Neither
the OncoGenex nor any of its Subsidiaries is a party to, is bound by or
has any obligation under any material Tax sharing or Tax indemnity
agreement or similar contract or arrangement other than any agreement,
contract or other arrangement between the OncoGenex and its
Subsidiaries.
|
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(j)
|
Neither
OncoGenex nor any of its Subsidiaries have participated in any “reportable
transactions” within the meaning of Treasury Regulations Section 1.6011-4,
and neither OncoGenex nor any of its Subsidiaries have been a “material
advisor” to any such transactions within the meaning of Section 6111 of
the Code.
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(k)
|
Neither
the OncoGenex nor any of its Subsidiaries has distributed stock of another
Person, or has had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in
part by Section 355 or Section 361 of the
Code.
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(l)
|
Neither
OncoGenex nor any of its Subsidiaries is a party to any
contract or agreement that would result, separately or in the aggregate,
in the payment of any “excess parachute payments” within the meaning of
Section 280G of the Code, and the consummation of the transactions
contemplated by this Agreement will not be a factor causing payments to be
made by the Sonus that are not deductible (in whole or in part) as a
result of the application of Section 280G of the
Code.
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3.1.32
|
Compliance with
Applicable Laws
|
Each of
OncoGenex and its Subsidiaries (i) has conducted and is conducting its business
in compliance with all applicable Laws in each jurisdiction in which its
business is carried on, (ii) is not in breach of any of such Laws and (iii) is
duly licenced or registered in each jurisdiction in which it owns or leases its
property and assets or carries on its business, so as to enable its business to
be carried on as now conducted and its property and assets to be so owned or
leased, (iv) is in possession of all licences, permits, approvals, consents,
certificates, registrations, or authorizations (whether governmental, regulatory
or similar type and including, without limitation, all INDs and NDAs and other
authorizations under the FDCA) necessary to carry on its business as presently
carried on or to own or lease any of the property or the assets utilized by it
(collectively, the “OncoGenex
Licenses”), except with respect to clauses (i), (ii), (iii) and (iv) of
this Subsection 3.1.32 as would not, individually or in the aggregate, have a
Material Adverse Effect on OncoGenex. Section 3.1.32 of the OncoGenex Disclosure
Schedule sets out a complete and accurate list of all OncoGenex
Licenses. Each OncoGenex Licence is valid and subsisting and in good
standing and there is no default or breach of any OncoGenex Licence and, to the
best of the knowledge of OncoGenex, no proceeding is pending or threatened to
revoke or limit any OncoGenex Licence. Except as set forth in
Section 3.1.32 of the OncoGenex Disclosure Schedule, no OncoGenex License
requires the consent, approval, permit or acknowledgement of any Person in
connection with the completion of the transactions herein
contemplated.
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3.1.33
|
Consents and
Approvals
|
Except
for the Appropriate Regulatory Approvals, the Interim Order and the Final Order,
there is no requirement for OncoGenex, any of its Subsidiaries or, to the best
of OncoGenex’s knowledge, any other Person to make any filing with, give any
notice to or to obtain any licence, permit, certificate, registration,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation of the transactions contemplated by this Agreement or
the Plan of Arrangement, except for the filings, notifications, licences,
permits, certificates, registrations, consents and approvals which relate solely
to the identity of Sonus or which are of a purely administrative nature and
could be completed or obtained without adverse effect on OncoGenex or its
business immediately after the Effective Date.
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3.1.34
|
No Business
Restrictions
|
There is
no agreement (non-compete or otherwise), commitment, judgment, injunction, order
or decree to which OncoGenex or any of its Subsidiaries is party or which is
otherwise binding upon OncoGenex or any of its Subsidiaries which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of Sonus or OncoGenex, any acquisition of property (tangible
or intangible) by Sonus or OncoGenex or the conduct of business by Sonus or
OncoGenex, as currently conducted or proposed to be conducted by Sonus or
OncoGenex. Without limiting the foregoing, neither OncoGenex nor any of its
Subsidiaries has entered into any agreement under which Sonus or OncoGenex is
restricted from selling, licencing or otherwise distributing any of its Products
to any class of customers, in any geographic area, during any period of time or
in any segment of the market.
|
3.1.35
|
Environmental
Matters
|
|
(a)
|
Except
as disclosed in Section 3.1.35 of the OncoGenex Disclosure
Schedule: (i) each of OncoGenex and OncoGenexSub is and
has been at all times in compliance in all material respects with all
applicable Environmental Laws (as defined below); (ii) neither
OncoGenex nor OncoGenexSub has received any written communication that
alleges that OncoGenex or OncoGenexSub is not in compliance with
applicable Environmental Laws; (iii) all material permits and other
governmental authorizations currently held by OncoGenex and OncoGenexSub
pursuant to the Environmental Laws that are required for the occupation of
their facilities and the operation of their businesses (“OncoGenex Environmental
Permits”) are in full force and effect, OncoGenex and OncoGenexSub
are and have been at all times in compliance in all material respects with
all of the terms of such OncoGenex Environmental Permits, and no other
permits or other governmental authorizations are required by OncoGenex or
OncoGenexSub for the conduct of their respective businesses, except where
the failure to obtain such permits or government authorizations would not
reasonably be expected to result in a Material Adverse Effect on
OncoGenex; and (iv) the management, handling, storage,
transportation, treatment, and disposal by OncoGenex and OncoGenexSub of
any Hazardous Materials (as defined below) is and has been at all times in
compliance in all material respects with all applicable Environmental
Laws. OncoGenex has made available to Sonus true and complete
copies of all documents, reports, or analyses which are in the possession
of OncoGenex or its agents, relating to the presence or absence of
Hazardous Materials
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on,
at, under or migrating from or onto any real property currently or
previously owned or leased by OncoGenex or any of its
Subsidiaries.
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(b)
|
To
the knowledge of OncoGenex, there is no OncoGenex Environmental Claim
pending or threatened against or involving OncoGenex, OncoGenexSub or
against any Person whose liability for any environmental claim OncoGenex
or OncoGenexSub has or may have retained or assumed either contractually
or by operation of law.
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(c)
|
Except
as disclosed in Section 3.1.35(c) of the OncoGenex Disclosure Schedule,
except for matters which would not have a Material Adverse Effect on
OncoGenex, to the knowledge of OncoGenex, there are no past or present
actions or activities by OncoGenex, OncoGenexSub or any other Person
involving the storage, treatment, release, emission, discharge, disposal
or arrangement for disposal of any Hazardous Materials, that could
reasonably form the basis of any OncoGenex Environmental Claim against
OncoGenex or OncoGenexSub or against any Person whose liability for any
OncoGenex Environmental Claim OncoGenex or OncoGenexSub may have retained
or assumed either contractually or by operation of law. None of OncoGenex
or any of its Subsidiaries (i) has entered into or agreed to any consent
decree or order or is subject to an order relating to (A) compliance with
Environmental Laws or OncoGenex Environmental Permits or (B) the
investigation, sampling, monitoring, treatment, remediation, removal or
cleanup of Hazardous Materials and no investigation, litigation or other
proceeding is pending or, to OncoGenex’s knowledge, threatened with
respect thereto, or (ii) is an indemnitor in connection with any claim
threatened or asserted in writing by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous
Materials.
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3.1.36
|
Condition and
Sufficiency of Assets
|
All
facilities, machinery and equipment owned or used by each of OncoGenex and its
Subsidiaries that are material to its business are in good operating condition
and in a state of good repair and maintenance, reasonable wear and tear
excepted. Each of OncoGenex and its Subsidiaries owns or leases all of the
property and assets (excluding Intellectual Property, which is dealt with in
Section 3.1.37 below) used in or necessary for the conduct of its business
as it is currently being conducted with good and marketable title to all
property and assets which are owned by OncoGenex or any of its Subsidiaries,
free and clear of any and all Encumbrances other than Permitted Encumbrances or
as otherwise set forth in Section 3.1.36 of the OncoGenex Disclosure
Schedule. Since the incorporation of OncoGenex, there has not been any
significant interruption of operations, supplies, access or services by
contractors of OncoGenex’s business as heretofore carried on due to inadequate
maintenance of any of the property or assets owned and used by OncoGenex. With
the exception of assets which, by their nature, are portable and intended to be
used in different locations (such as notebook computers), all of the tangible
assets of OncoGenex and its Subsidiaries are situate at the locations specified
in Section 3.1.36 of the OncoGenex Disclosure Schedule.
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3.1.37
|
Intellectual
Property
|
|
(a)
|
Set
forth in Section 3.1.37(a) of the OncoGenex Disclosure Schedule is a true
and complete list of the OncoGenex Inventions and the OncoGenex
Trademarks. Except
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|
as
disclosed in Section 3.1.37 of the OncoGenex Disclosure Schedule or
the agreements referred to therein:
|
|
(i)
|
OncoGenex
or one of its Subsidiaries, as the case may be, (A) has the exclusive and
unrestricted right to Use all of the OncoGenex Intellectual Property (in
each case, free and clear of any Encumbrances, except for Permitted
Encumbrances), (B) or Isis Pharmaceuticals, Inc. or University of British
Columbia as the case may be, is listed in the records of the appropriate
United States, foreign or other registry as the sole and exclusive current
owner, or licensee of record for each patent, patent application and
trademark registration included in the OncoGenex Inventions or OncoGenex
Trademarks owned or licensed by OncoGenex or any of its Subsidiaries, as
the case may be, and (C) has not assigned, encumbered or granted any
license or other rights to commercialize the OncoGenex Inventions or
OncoGenex Trade-names to any other
Person;
|
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(ii)
|
Each
of OncoGenex and its Subsidiaries has made all necessary filings,
recordations and payments necessary to protect and maintain its interests
in all OncoGenex Inventions or OncoGenex Trademarks owned or licensed by
OncoGenex or any of its Subsidiaries, as the case may
be;
|
|
(iii)
|
Neither
OncoGenex nor any of its Subsidiaries is required to pay any royalty or
other fee to any Person in respect of the Use of any of the OncoGenex
Intellectual Property;
|
|
(iv)
|
Neither
OncoGenex nor any of its Subsidiaries has entered into, nor is subject to,
any order, indemnification, forbearance to xxx, settlement agreement,
license or other arrangement that (i) restricts OncoGenex’s or any of its
Subsidiaries’ right to use or exploit any OncoGenex Intellectual Property,
(ii) restricts OncoGenex’s or any of its Subsidiaries’ business in any
material manner in order to accommodate any third Person’s intellectual
property rights, or (iii) permits any Person to use any material OncoGenex
Intellectual Property except as expressly permitted under an OncoGenex IP
Contract (as defined in Section 3.1.37(d)
below);
|
|
(v)
|
each
of the OncoGenex Trademarks is in
use;
|
|
(vi)
|
to
the knowledge of OncoGenex, there is no and has not been any unauthorized
use, infringement or misappropriation of any of the OncoGenex Inventions
or OncoGenex Trademarks by any Person, whether directly or
indirectly;
|
|
(vii)
|
to
the knowledge of OncoGenex, neither OncoGenex nor any of its Subsidiaries
has received notice of pending or threatened claims or litigation
contesting the validity, ownership or right to use, sell, license or
dispose of any of the OncoGenex Intellectual Property and, to the best of
the knowledge of OncoGenex, there is no basis for such
claim;
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(viii)
|
to
the knowledge of OncoGenex, the OncoGenex Inventions were made only by the
individuals (the “OncoGenex Inventors”)
listed in Table 1 of Section 3.1.37 of the OncoGenex Disclosure
Schedule;
|
|
(ix)
|
the
OncoGenex Inventors have assigned all of their rights to the OncoGenex
Inventions to OncoGenex, the University of British Columbia, or Isis
Pharmaceuticals, Inc., as the case may be;
and
|
|
(x)
|
there
are no distributors, sales agents, representatives or any other Persons
who have rights to market or license the OncoGenex
Inventions;
|
|
(b)
|
Except
for third party software programs that are “shrink wrapped” (that is, not
customized for OncoGenex) and/or that are purchased off-the-shelf by
OncoGenex or any of its Subsidiaries, neither OncoGenex nor any of its
Subsidiaries owns or uses any software and no software has been licensed
by OncoGenex or any of its Subsidiaries to any third
parties.
|
|
(c)
|
To
the knowledge of OncoGenex, the conduct of the OncoGenex Business does not
infringe and the use of the OncoGenex Intellectual Property does not
misappropriate, infringe or otherwise violate, whether directly or
indirectly, any copyright, patent, trade-xxxx, trade name, industrial
design, trade secret or other intellectual property or proprietary right
of any other Person, and the conduct of the OncoGenex Business does not
include any activity which may constitute passing off. Neither
OncoGenex nor any of its Subsidiaries has received any written charge,
complaint, claim, demand or notice from any Person (i) alleging
misappropriation, infringement, or other violation by OncoGenex or any of
its Subsidiaries of any intellectual property or proprietary rights of any
Person, (ii) alleging that the use by OncoGenex or any of its Subsidiaries
of OncoGenex Intellectual Property licensed by OncoGenex or any of its
Subsidiaries is in breach of any applicable grant, license, agreement,
instrument or other arrangement pursuant to which OncoGenex or any
Subsidiary acquired the right to use such intellectual property, or (iii)
alleging misuse or antitrust violations arising from the use or other
exploitation of any OncoGenex Intellectual Property. No
OncoGenex Intellectual Property has been or is being used or enforced by
OncoGenex or any of its Subsidiaries or by any of their licensors, in a
manner that, individually or in the aggregate, is reasonably likely to
result in the cancellation, invalidity or unenforceability of such
OncoGenex Intellectual Property.
|
|
(d)
|
To
OncoGenex’s knowledge, the agreements under which OncoGenex or any of its
Subsidiaries has been granted rights in any intellectual property owned or
controlled by a third Person are valid and legally enforceable, and free
and clear of all Encumbrances, except for Permitted
Encumbrances. With respect to any OncoGenex Intellectual
Property which is held under sublicense, OncoGenex’s or its Subsidiaries’
rights, as the case may be, shall survive any termination of the
sublicensor’s rights from its licensor. None of the OncoGenex Intellectual
Property that is being licensed by OncoGenex or any of its Subsidiaries
shall be limited or their use thereof impaired, by the execution of this
Agreement and the consummation of the transactions contemplated
hereby. Each of OncoGenex and its Subsidiaries has made all
necessary filings, recordations and payments to comply in all material
respects with contractual obligations that it may have to third Persons,
if any, to
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protect
and maintain all intellectual property rights that are licensed to
OncoGenex or any of its Subsidiaries by such third
Persons. OncoGenex has provided Sonus with access to true and
complete copies of all agreements under which OncoGenex or any of its
Subsidiaries has obtained or granted any rights, title or interests in or
to, or which by their terms expressly restrict OncoGenex or any of its
Subsidiaries with respect to, any intellectual property (each, an “OncoGenex IP Contract”)
related to any or all of the OncoGenex Products, other than standard
license agreements for commercially-available, off-the-shelf software.
Except as provided in the OncoGenex IP Contracts, OncoGenex or one of its
Subsidiaries has the exclusive right to develop, commercialize,
manufacture, market, sell, import and otherwise exploit each of the
OncoGenex Products, and neither OncoGenex nor any of its Subsidiaries has
granted, assigned, licensed or otherwise transferred to any Person any
right, title or interest in or to any OncoGenex Intellectual Property
relating to any OncoGenex Product.
|
|
(e)
|
None
of OncoGenex nor OncoGenexSub, to the best of the knowledge of OncoGenex,
any employee of OncoGenex or OncoGenexSub is in violation in any material
respect of any term of any employment contract, general non-disclosure
agreement, non competition agreement or any other covenant or any other
common law obligation to a former employer or anyone else which relates to
the right of any such employee to be employed by OncoGenex or OncoGenexSub
or to the use of trade secrets or proprietary information of any third
party.
|
|
(f)
|
To
the best of the knowledge of OncoGenex, all technical information
developed by and belonging to OncoGenex or OncoGenexSub for which a
copyright has not been registered or for which a patent application has
not been made, which has not otherwise been deliberately or consciously
made public or disclosed pursuant to a written non-disclosure agreement,
has been kept confidential.
|
|
(g)
|
All
employees of OncoGenex and OncoGenexSub have entered into proprietary
rights or similar agreements with OncoGenex or OncoGenexSub pursuant to
which the employee assigns to OncoGenex or OncoGenexSub all OncoGenex
Intellectual Property, technical information and other information
developed and/or worked on by the employees while employed or engaged by
OncoGenex or OncoGenexSub.
|
|
(h)
|
All
employees and Persons having access to or knowledge of the OncoGenex
Intellectual Property through OncoGenex or OncoGenexSub of a confidential
nature that is necessary or required or otherwise used for or in
connection with the conduct or operation or proposed conduct or operation
of the OncoGenex Business have entered into appropriate non-disclosure
agreements with OncoGenex or
OncoGenexSub.
|
|
3.1.38
|
Information
Technology
|
|
(a)
|
OncoGenex
has taken reasonable steps and implemented reasonable procedures to ensure
that its internal operating business systems are free from disabling codes
or instructions, viruses and
contaminants.
|
|
(b)
|
OncoGenex
has in place disaster recovery plans, procedures and facilities and has
taken commercially reasonable steps to safeguard OncoGenex’s internal
operating
|
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systems
and to restrict unauthorized access thereto. OncoGenex believes that such
plans, procedures, facilities and steps are adequate given the size and
nature of OncoGenex and the OncoGenex
Business.
|
|
3.1.39
|
Unlawful
Payments
|
None of
OncoGenex, any OncoGenexSub, or any officer, director, employee, agent or
representative of OncoGenex or OncoGenexSub has made, directly or indirectly,
any bribe or kickback, illegal political contribution, payment from corporate
funds which was incorrectly recorded on the books and records of OncoGenex or
OncoGenexSub, unlawful payment from corporate funds to governmental or municipal
officials in their individual capacities for the purpose of affecting their
action or the actions of the jurisdiction which they represent to obtain
favorable treatment in securing business or licenses or to obtain special
concessions of any kind whatsoever, or illegal payment from corporate funds to
obtain or retain any business.
|
3.1.40
|
Regulatory
Compliance
|
|
(a)
|
OncoGenex
has previously made available to Sonus complete and accurate copies of all
OncoGenex Licenses and regulatory dossiers relating thereto, and all other
communications, documents and other information submitted to or received
from the U.S. Food and Drug Administration (the “FDA”), similar federal,
state or local Governmental Entities, and similar foreign Governmental
Entities having jurisdiction over its business or any of its assets or
properties (each, a “Regulatory Authority,”
and collectively, the “Regulatory
Authorities”), including inspection reports, warning letters,
deficiency letters, non-approvable letters/orders, withdrawal
letters/orders and similar documents, relating to OncoGenex or any of its
Subsidiaries, the conduct of their business, or OncoGenex’s Products that
are material to the business of OncoGenex and its Subsidiaries, taken as a
whole, as currently conducted (collectively, the “OncoGenex Regulatory
Correspondence”). OncoGenex shall promptly deliver to Sonus copies
of all OncoGenex Regulatory Correspondence received or reduced to written
form between the date of this Agreement and the Effective
Date. Each OncoGenex Licence from any Regulatory Authority
relating to OncoGenex or any of its Subsidiaries, OncoGenex Products,
and/or the conduct of their business is on file with the applicable
Regulatory Authorities and is in compliance in all material respects with
all formal filing and maintenance requirements. Each of OncoGenex and its
Subsidiaries has filed all required notices and responses to notices,
supplemental applications, reports and other information with each
applicable Regulatory Authority, except where the failure to so file,
individually or in the aggregate, has not had and would not have a
Material Adverse Effect on OncoGenex. No fines or penalties are
due and payable in respect of any such OncoGenex Licence or any violation
thereof.
|
|
(b)
|
Except
as set forth on Section 3.1.40 of the OncoGenex Disclosure Schedule, as to
each Product subject to the jurisdiction of the FDA under the United
States Federal Food, Drug and Cosmetic Act, as amended, and the
regulations thereunder (“FDCA”), or the United
States Public Health Services Act, as amended (“PHSA”), and the
regulations thereunder, and each product subject to the jurisdiction of
the United States Drug Enforcement Administration (“DEA”) under the United
States Controlled Substances Act, as amended, and United States Controlled
Substances
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|
Import
and Export Act, as amended (“CSA”), and the
regulations under each of the foregoing (each such product, a “Pharmaceutical Product”)
that is or has been manufactured, packaged, labeled, sold, distributed,
marketed, and/or tested by OncoGenex or OncoGenexSub or on behalf of
OncoGenex or OncoGenexSub by any third party (each such party, an “OncoGenex Partner”),
such Pharmaceutical Product is being or was manufactured, packaged,
labeled, sold, distributed, marketed, and/or tested by OncoGenex,
OncoGenexSub or an OncoGenex Partner in compliance with all applicable
requirements under FDCA, PHSA, CSA, and similar laws, rules, regulations,
and guidelines except where the failure to be in compliance would not have
a Material Adverse Effect on OncoGenex. Except as disclosed in
the Section 3.1.40 of the OncoGenex Disclosure Schedule, neither
OncoGenex nor OncoGenexSub has received any notice of adverse findings,
inspection report, warning letter, Section 305 notice, or other
communication from the FDA, DEA, or any other Governmental Entity
(i) contesting the premarket clearance, licensure, registration,
approval, use, distribution, manufacturing, testing, sale, labeling, or
promotion of any Pharmaceutical Product described in this
Section 3.1.40 or (ii) otherwise alleging any violation of any
laws, rules, regulations, or guidelines by OncoGenex, OncoGenexSub or any
OncoGenex Partner, and which would have a Material Adverse Effect on
OncoGenex or any Pharmaceutical
Product.
|
|
(c)
|
Except
as set forth on Section 3.1.40 of the OncoGenex Disclosure Schedule,
no Pharmaceutical Products of OncoGenex or OncoGenexSub have been
recalled, withdrawn, replaced, suspended or discontinued nor have any DEA
registrations been terminated by OncoGenex or OncoGenexSub in the United
States or outside the United States (whether voluntarily or otherwise)
which would have a Material Adverse Effect on
OncoGenex.
|
|
(d)
|
Neither
OncoGenex nor OncoGenexSub, nor any officer, employee or agent of
OncoGenex or OncoGenexSub, nor, to OncoGenex’s knowledge, any OncoGenex
Partner, has made any untrue statement of a material fact or fraudulent
statement to any Regulatory Authority, failed to disclose a fact required
to be disclosed to a Regulatory Authority, or committed an act, made a
statement, or failed to make a statement that, at the time such disclosure
was made, could reasonably be expected to provide a basis for the FDA or
any other Governmental Entity to invoke its policy respecting “Fraud,
Untrue Statements of Material Facts, Bribery, and Illegal Gratuities”, set
forth in 56 Fed. Reg. 46191 (September 10, 1991), and any amendments
thereto, or any similar policy. Neither OncoGenex, its
Subsidiaries nor, to OncoGenex’s knowledge, any OncoGenex Partner has
engaged in any activity prohibited under U.S. federal or state criminal or
civil health care laws (including without limitation the U.S. federal
Anti-Kickback Statute, Xxxxx Law, False Claims Act, Health Insurance
Portability and Accountability Act, and any comparable state laws), or the
regulations promulgated pursuant to such laws (each, a “Health Care
Law”). There is no civil, criminal, administrative or
other proceeding, notice or demand pending, received or, to OncoGenex’s
knowledge, threatened against OncoGenex, its Subsidiaries or OncoGenex
Partners, which relates to violation of any Health Care Law. Neither
OncoGenex nor OncoGenexSub nor any officer, employee, or agent of
OncoGenex or OncoGenex Sub, nor, to OncoGenex’s knowledge, any
OncoGenex Partner, has been convicted of any crime or engaged in any
conduct for which debarment is mandated by 21 U.S.C. sec. 335a(a) or any
similar law or
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authorized
by 21 U.S.C. sec. 335a(b) or any similar law. There are no
consent decrees (including plea agreements) or similar actions to which
OncoGenex, its Subsidiaries or, to OncoGenex’s knowledge, any OncoGenex
Partner, is bound or which relate to the OncoGenex Pharmaceutical
Products.
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(e)
|
Except
as set forth on Section 3.1.40 of the OncoGenex Disclosure Schedule,
neither OncoGenex nor OncoGenexSub has received any written notice that
the FDA or any other Governmental Entity has commenced, or threatened to
initiate, any action, including lawsuits, arbitrations, or legal or
administrative or regulatory proceedings, charges, complaints, or
investigations, nor are there any completed or pending efforts to withdraw
its approval of, request the recall of, suspension of, seizure of, change
the quotas for controlled substances, or change the controlled substances
schedules of any Pharmaceutical Product of OncoGenex or OncoGenexSub, or
commenced, or threatened to initiate, any action to impose a clinical hold
on any clinical investigation by OncoGenex or OncoGenexSub, withdraw
advertising or sales promotion materials, or any action to enjoin
production at, or suspend or revoke the DEA registration or any facility
of, or enter into a consent decree of permanent injunction with OncoGenex
or OncoGenexSub which would have a Material Adverse Effect on
OncoGenex.
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(f)
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The
development, manufacture and testing of OncoGenex Products, and all
required pre-clinical toxicology studies and OncoGenex-sponsored clinical
trials conducted or being conducted with respect thereto, by OncoGenex,
any of its Subsidiaries have been and are being conducted in compliance in
all material respects with applicable OncoGenex Licences and applicable
Law, including, without limitation, the applicable requirements of Good
Manufacturing Practices, Good Laboratory Practices, and Good Clinical
Practices. Except as disclosed in Section 3.1.40(f) of the
OncoGenex Disclosure Schedule, the results of any such studies, tests and
trials, and all other material information related to such studies, tests
and trials, have been made available to Sonus. Each clinical
trial with respect to Pharmaceutical Products of OncoGenex and
OncoGenexSub has been conducted in accordance with its clinical trial
protocol and OncoGenex or OncoGenexSub has filed all required notices (and
made available to Sonus copies thereof) of adverse drug experiences,
injuries or deaths relating to clinical trials of such Pharmaceutical
Products, and OncoGenex or OncoGenexSub has filed all required notices of
any such occurrence, except where the failure to be in compliance with the
protocol or relevant reporting requirements would not have a Material
Adverse Effect on OncoGenex.
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(g)
|
No
Person has filed a claim for loss or potential loss under any indemnity
covering participants in clinical trials of Pharmaceutical Products of
OncoGenex or OncoGenexSub.
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(h)
|
OncoGenex
has provided or made available to Sonus all documents in its possession or
the possession of the OncoGenexSub concerning communications to or from
the FDA or DEA, or prepared by the FDA or DEA which bear in any material
respect on compliance with FDA or DEA regulatory requirements, including
but not limited to, any deficiency letter, warning letter, non-approvable
letter/order, withdrawal letter/order, or similar
communications.
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3.1.41
|
Significant
Suppliers
|
Except as
set out in Section 3.1.41 of the OncoGenex Disclosure Schedule, none of the
suppliers of OncoGenex or any of its Subsidiaries is a sole supplier and the
products and services provided by each such supplier are available from other
suppliers.
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3.1.42
|
Government
Programs
|
Except as
set out in Section 3.1.42 of the OncoGenex Disclosure Schedule, no
agreements, loans, funding arrangements or assistance programs are outstanding
in favour of OncoGenex or any of its Subsidiaries from any Governmental Entity,
and, to the knowledge of OncoGenex, no basis exists for any Governmental Entity
to seek payment or repayment from OncoGenex or any of its Subsidiaries of any
amount or benefit received, or to seek performance of any obligation of
OncoGenex or any of its Subsidiaries, under any such program.
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3.1.43
|
GST
Registration
|
OncoGenex
is a registrant for the purposes of the Excise Tax Act (Canada).
|
3.1.44
|
Personal
Information
|
|
(a)
|
OncoGenex
has a written privacy policy which governs its collection, use and
disclosure of employee Personal Information applicable to the OncoGenex
Business and, since the date of adoption of such privacy policy, OncoGenex
is in compliance in all material respects with such privacy
policy.
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(b)
|
There
has not been any, and as of the date hereof, there is no complaint,
investigation, proceeding or action completed, resolved, pending, or to
the knowledge of OncoGenex, threatened against or involving in any way
OncoGenex or the OncoGenex Business under or in relation to the Personal Information
Protection and Electronic Documents Act S.C. 2000, c.5 or the Personal Information
Protection Act S.B.C. 2003
c.63.
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3.1.45
|
Advisory
Fees
|
Except as
set forth in Section 3.1.45 of the OncoGenex Disclosure Schedule, and
except for the accountants and lawyers of OncoGenex retained to negotiate,
advance, carry out and complete the transactions contemplated herein, there is
no investment banker, broker, finder or other intermediary or advisor that has
been retained by or is authorized to act on behalf of OncoGenex or any of its
directors, officers or shareholders who might be entitled to any fee, commission
or reimbursement of expenses from OncoGenex upon consummation of the
transactions contemplated by this Agreement.
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3.1.46
|
Other Negotiations:
Brokers; Third Party
Expenses
|
None of
OncoGenex, its Subsidiaries or, to the knowledge of OncoGenex, any of their
respective directors, officers or shareholders (nor any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of OncoGenex or at OncoGenex’s direction) (a) has entered
into any agreement that conflicts with any of the transactions contemplated by
this Agreement (except the Shareholders’ Agreement, which the parties thereto
have agreed to
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terminate
as of the Effective Time and in respect of which all consents required under
such agreement in respect of this Agreement and the transactions contemplated
herein have been obtained), or (b) has entered into any agreement or had
any discussions with any Person regarding any transaction involving OncoGenex or
any of its Subsidiaries which could reasonably be expected to result in Sonus,
OncoGenex, any of its Subsidiaries or any of their respective officers,
directors, employees, agents or shareholders of any of them being subject to any
claim for liability to such Person as a result of entering into this Agreement
or consummating the transactions contemplated hereby. Section 3.1.46 of the
OncoGenex Disclosure Schedule lists any agreement (other than any agreement with
Sonus or any of its Affiliates) with respect to, and a reasonable estimate of,
all Third Party Expenses which are reasonably expected to be incurred by
OncoGenex in connection with the negotiation and implementation of the terms and
conditions of this Agreement and the transactions contemplated
hereby.
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3.1.47
|
Disclosure
|
The
representations and warranties of OncoGenex contained in this Agreement and in
any agreement, certificate, affidavit, statutory declaration or other document
delivered or given pursuant to this Agreement, including the OncoGenex
Disclosure Schedule, are true and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained in such representations and
warranties not misleading to Sonus.
|
3.1.48
|
Approval of
Arrangement
|
|
(a)
|
The
Board of Directors of OncoGenex has determined
unanimously:
|
|
(i)
|
that
the Arrangement is fair to and in the best interests of the OncoGenex
Securityholders as a whole and is in the best interests of OncoGenex;
and
|
|
(ii)
|
to
recommend that the OncoGenex Securityholders vote in favour of the
Arrangement.
|
|
(b)
|
All
of OncoGenex’s directors have advised OncoGenex that they intend to vote
the securities of OncoGenex held directly by them in favour of the
Arrangement and will, accordingly, so represent in the
Circular.
|
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3.1.49
|
Working Capital
Position
|
As of the date of this Agreement, the
aggregate amount of OncoGenex’s (i) cash on hand, plus (ii) liquid investments
with a maturity of three year or less, plus (iii) accounts receivable, plus (iv)
interest receivable, minus (v) accounts payable, minus (vi) accrued liabilities
(excluding convertible debentures), plus (vii) an amount equal to fees and
expenses actually incurred in connection with the preparation and filing of a
prospectus in Canada pursuant to Section 2.6(b) of this Agreement and in
connection with listing for trading of Sonus Common Shares on the Toronto Stock
Exchange ((i) through (vii) “OncoGenex Current Working
Capital”) is at least US$4,145,000. OncoGenex owns all such
assets free and clear of all Encumbrances, other than Permitted Encumbrances. As
of the date of this Agreement, OncoGenex has no indebtedness except as reflected
in the OncoGenex Financial Statements, or as otherwise incurred in the ordinary
course of business.
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3.2
|
Representations and
Warranties of Sonus
|
Sonus
hereby represents and warrants to and in favour of OncoGenex that each of the
following statements is true and correct, except as set forth in the Sonus
Disclosure Schedule, and further acknowledges that OncoGenex is relying upon
such representations and warranties in connection with the transactions herein
contemplated. The Sonus Disclosure Schedule shall be arranged by
specific Section references corresponding to the numbered and lettered Sections
in this Section 3.2, and the disclosure in any Section shall qualify (i) the
corresponding Section in this Section 3.2 and (ii) the other Sections in this
Section 3.2 to the extent reasonably clear from a reading of such disclosure
that it also qualifies or applies to such other Sections.
|
3.2.1
|
Incorporation and
Organization of Sonus
|
Sonus has
been duly incorporated under the laws of the State of Delaware, is validly
subsisting, has full corporate or legal power and authority to own, lease and
operate the properties currently owned, leased and operated by it and conduct
its business as currently conducted, and is in good standing with the
appropriate Governmental Entity in its jurisdiction of incorporation with
respect to the filing of annual returns or equivalent documents. Sonus is duly
qualified or licenced to do business and is in good standing as a foreign
corporation or organization authorized to do business in the State of
Washington. There are no other jurisdictions in which the character
of the properties owned, leased or operated or the nature of the business
conducted by it would make such qualification or licencing necessary except
where the lack of such qualification or licencing would not have a Material
Adverse Effect on Sonus. No proceedings have been instituted or are pending for
the dissolution or liquidation of Sonus. True and complete copies of
Sonus’ certificate of incorporation and by-laws, together with all amendments,
have been provided to OncoGenex. Except for the Certificate of Amendment to be
filed prior to the Effective Date, no amendments to Sonus’ certificate of
incorporation have been filed or authorized by the shareholders of Sonus since
May 5, 2004, and no by-laws have been amended or enacted since December 4,
2007.
|
3.2.2
|
Capitalization
|
|
(a)
|
On
the date hereof and immediately prior to the filing of the Certificate of
Amendment, the authorized capital of Sonus consists of 75,000,000 Sonus
Common Shares and 5,000,000 Sonus Preferred Shares. As of the
date hereof, 37,062,049 Sonus Common Shares and no Sonus Preferred Shares
were issued and outstanding. All outstanding Sonus Common
Shares have been duly authorized and are validly issued, fully paid and
non-assessable and were issued in compliance with all applicable Laws,
Sonus’ certificate of incorporation and bylaws, and any preemptive rights,
rights of first refusal or similar rights. There are no outstanding bonds,
debentures, other evidences of indebtedness or other securities of Sonus
having the right to vote (or that are convertible for or exercisable into
securities having the right to vote) with the holders of Sonus Common
Shares on any matter. Except for the Voting Agreements and as
may be set forth in Section 3.2.2(a) the Sonus Disclosure Schedule,
there are no registration rights, redemption or repurchase rights,
anti-dilutive rights, voting agreements, voting trusts, preemptive rights
or restrictions on transfer with respect to any capital stock of
Sonus.
|
|
(b)
|
As
of April 30, 2008, except for (i) stock options granted by Sonus
pursuant to any of its 2007 Stock Incentive Plan, 2000 Stock Incentive
Plan, 1999 Nonqualified Stock
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|
|
Incentive
Plan, 1995 Stock Option Plan for Directors, and 1991 Incentive Stock
Option, Non-Qualified Stock Option and Restricted Stock Purchase Plan,
which are, when vested, exercisable to acquire up to 4,715,473 Sonus
Common Shares, (ii) warrants issued by Sonus which are exercisable to
acquire up to 4,080,533 Sonus Common Shares, (iii) the rights of
Sonus’ employees to participate in Sonus’ 2006 Employee Stock Sonus Plan,
and (iv) the matters disclosed in Section 3.2.2(b) of the Sonus
Disclosure Schedule, there are no options, warrants, conversion privileges
or other rights, agreements, arrangements or commitments (contingent or
otherwise) obligating Sonus to issue or sell any shares or securities or
obligations of any kind convertible into or exchangeable for any shares of
Sonus. All outstanding options, warrants, conversion privileges
and other rights, agreements, arrangements or commitments (contingent or
otherwise) obligating Sonus to issue or sell any shares or securities or
obligations of any kind convertible into or exchangeable for any shares of
Sonus were issued in compliance with all applicable Laws, Sonus’
certificate of incorporation and bylaws, and any preemptive rights, rights
of first refusal or similar rights. No Sonus Common Shares and
no Sonus Preferred Shares are held in treasury or authorized or reserved
for issuance, other than upon the exercise of the warrants, options and
purchase rights referred to above. Section 3.2.2(b) of the
Sonus Disclosure Schedule sets forth (i) for each outstanding stock
option, the name, address, current (or former, if applicable) position
with Sonus of the holder and the name of the plan under which the option
is granted and the date of grant, amount of Sonus Common Shares, exercise
price, vesting provisions and expiration date with respect to such option,
(ii) for each outstanding warrant, the name and address of
the holder and the date of grant, amount of Sonus Common Shares, exercise
price and expiration date with respect to such warrant, and (iii) the
particulars of each employee’s current participation in the 2006 Employee
Stock Sonus Plan. All outstanding stock options, warrants and
other rights to acquire securities of Sonus include provisions that will
result in such stock option, warrant or right, if still outstanding at the
effective time of the Reverse Stock Split, to adjust automatically in
accordance with the Reverse Split Ratio as to both exercise price and the
amount of Sonus Common Shares issuable thereunder. Except for
such adjustment and except as set forth in Section 3.2.2(b) of the
Sonus Disclosure Schedule, the consummation of the Arrangement and the
other transactions contemplated hereunder will not trigger any change of
control provision and will not result in any acceleration, termination,
payout or change under the terms of any of Sonus’ outstanding warrants,
stock options and other stock-based compensation plans and
arrangements.
|
|
3.2.3
|
Authority and No
Violation
|
|
(a)
|
Sonus
has all requisite corporate power and authority to enter into this
Agreement and the documents required to be executed by Sonus in connection
with the transactions contemplated herein, to perform its obligations
hereunder and, subject to obtaining the approval of the Sonus Shareholders
as contemplated by this Agreement, to consummate the Arrangement and the
other transactions contemplated by this Agreement. The execution and
delivery of this Agreement and such other documents by Sonus and the
consummation by Sonus of the transactions contemplated by this Agreement
and such other documents, including, but not limited to, the Reverse Stock
Split, the Capital Adjustment, the Name Change, and the filing of the
Certificate of Amendment, subject to further approval upon fixing the
Reverse Stock
|
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|
Split,
Capital Adjustment and other changes contemplated by this Agreement, have
been duly authorized by the Board of Directors of Sonus and no other
corporate proceedings on its part are necessary to authorize this
Agreement, the Escrow Agreements, the Voting Agreements, or the
transactions contemplated hereby or thereby, other
than:
|
|
(i)
|
with
respect to the Proxy Statement and other matters relating solely thereto,
including the implementation of the Arrangement, the approval of the Board
of Directors of Sonus; and
|
|
(ii)
|
with
respect to the completion of the Arrangement, the approval of the Sonus
Shareholder Resolutions.
|
|
(b)
|
This
Agreement has been duly executed and delivered by Sonus and, assuming the
due authorization, execution and delivery hereof by OncoGenex, constitutes
a legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other
similar Laws affecting creditors’ rights generally, and to general
principles of equity. All documents required to be executed by Sonus in
connection with the transactions contemplated herein will be duly executed
and delivered by Sonus on or before the Effective Date and, when so
executed and delivered, will constitute a legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency and other similar Laws affecting creditors’
rights generally, and to general principles of
equity.
|
|
(c)
|
The
approval of this Agreement and the other documents required to be executed
by Sonus in connection with the transactions contemplated herein, the
execution and delivery by Sonus of this Agreement and such other
documents, and the performance by Sonus of its obligations hereunder and
the completion of the Arrangement and the transactions contemplated
thereby, will not:
|
|
(i)
|
conflict
with, result in a violation or breach of or loss of any benefit under,
constitute a default or require any consent (other than such as has
already been obtained or will be obtained prior to the Effective Time) to
be obtained under, give rise to any termination rights or payment
obligation under, constitute a change of control or default (or an event
which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, vesting, amendment,
acceleration or cancellation of, or result in the creation of an
Encumbrance on any property or asset of Sonus or any of its Subsidiaries
pursuant to, any provision of:
|
|
(A)
|
the
certificate of incorporation, articles, by-laws or other charter documents
of Sonus or any of its Subsidiaries, including any unanimous shareholder
agreement or any other agreement or understanding with any party holding
an ownership interest in it;
|
|
(B)
|
any
material contract, agreement, licence, franchise or permit to which it
Sonus or any of its Subsidiaries is
bound;
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(C)
|
any
resolutions of its Board of Directors (or any committee thereof) or
shareholders; or
|
|
(D)
|
subject
to obtaining the Appropriate Regulatory Approvals relating to Sonus or the
transactions contemplated herein, any Laws, regulation, order, judgment or
decree;
|
|
(ii)
|
give
rise to any right of termination or acceleration of indebtedness, or cause
any third party indebtedness to come due before its stated maturity or
cause any available credit to cease to be
available;
|
|
(iii)
|
result
in the Sonus Shareholders having any appraisal or dissent
rights;
|
|
(iv)
|
result
in the imposition of any Encumbrance upon any of Sonus’ or its
Subsidiaries’ assets, or restrict, hinder, impair or limit their ability
to carry on the Sonus Business as and where it is now being carried on or
as and where it may be carried on in the future;
or
|
|
(v)
|
except
as set out in Section 3.2.3 of the Sonus Disclosure Schedule, result
in any Person becoming entitled to (A) any retirement, severance,
unemployment compensation, “golden parachute”, bonus or other such
payment, the acceleration of the vesting or time to exercise or payment of
any outstanding stock options or other Employee Benefits, (C) the
forgiveness or postponement of payment of any indebtedness owing to Sonus,
or (D) receive any additional payments or compensation under or in
respect of any Employee Benefits (including a “cash-out” of any stock
options).
|
|
(d)
|
No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity or other Person is required to be
obtained by Sonus or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or any of the other documents
contemplated hereby, or the consummation by Sonus of the transactions
contemplated hereby or thereby other
than:
|
|
(i)
|
the
Appropriate Regulatory Approvals relating to Sonus or the transactions
contemplated herein; and
|
|
(ii)
|
any
other consents, approvals, orders, authorizations, declarations or filings
of or with a Governmental Entity which, if not obtained, would not in the
aggregate have a Material Adverse Effect on
Sonus.
|
|
3.2.4
|
No
Defaults
|
Subject
to obtaining the Appropriate Regulatory Approvals relating to Sonus, neither
Sonus nor any of its Subsidiaries is in default under, and there exists no
event, condition or occurrence which, after notice or lapse of time or both,
would constitute such a default under, any contract, agreement, licence or
franchise to which it is a party which would, if terminated due to such default,
cause a Material Adverse Effect on Sonus.
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3.2.5
|
Subsidiaries
|
|
(a)
|
Except
as disclosed in Section 3.2.5 of the Disclosure Schedule, neither
Sonus nor SonusSub is the beneficial or registered owner of any shares or
other ownership interests in any Person, and neither holds any securities
or obligations of any kind convertible into or exchangeable for shares or
other ownership interests in any Person. All of the issued and outstanding
shares of capital stock of each of Sonus’ Subsidiaries have been validly
issued and are fully paid and non-assessable. Neither Sonus nor SonusSub
is a party to any agreement to acquire any shares or other ownership
interests in any Person.
|
|
(b)
|
SonusSub
is a corporation duly incorporated under the laws of its jurisdiction of
incorporation, is validly subsisting, has full corporate and legal power
and authority to own, lease and operate the properties currently owned,
leased and operated by it and conduct its business as currently conducted,
and is in good standing under the laws of its jurisdiction of
incorporation. SonusSub is duly qualified or licenced to do business and
is in good standing as a foreign corporation or organization authorized to
do business in all jurisdictions in which the character of the properties
owned, leased or operated or the nature of the business conducted by it
would make such qualification or licencing necessary. No proceedings have
been instituted or are pending for the dissolution or liquidation of
SonusSub. True and complete copies of the articles, bylaws or equivalent
organizational documents of SonusSub have been provided to OncoGenex, and
SonusSub is not in material violation of any provision of its
organizational documents.
|
|
(c)
|
Except
as disclosed in Section 3.2.5(c) of the Sonus Disclosure Schedule,
Sonus is the beneficial owner of all of the issued and outstanding shares
of SonusSub free of any Encumbrance. No Person has any other agreement,
option, commitment, arrangement, or any other right or privilege (whether
by law, pre-emptive or contractual) capable of becoming an agreement,
option or commitment (including any such right or privilege under
convertible securities, warrants or convertible obligations of any nature)
for:
|
|
(i)
|
the
purchase, subscription, allotment or issuance of, or conversion into, any
of the issued or unissued shares or any other securities of SonusSub;
or
|
|
(ii)
|
the
purchase or other acquisition from SonusSub of any of its undertakings,
business or assets.
|
|
3.2.6
|
Sonus Financial
Statements
|
The Sonus
Financial Statements, copies of which have been provided to OncoGenex, have been
prepared in accordance with GAAP applied on a basis consistent with those of
previous years, the requirements of applicable Laws, are correct and complete
and present fairly, in all material respects:
|
(a)
|
all
the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of Sonus as at the Financial Year
End; and
|
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(b)
|
the
results of operations and cash flows of Sonus for the 12-month period
ended on the Financial Year End.
|
|
3.2.7
|
Interim
Statements
|
Except as
disclosed in Section 3.2.7 of the Sonus Disclosure Schedule, the Sonus
Interim Financial Statements, copies of which have been provided to OncoGenex,
have been prepared in accordance with GAAP applied on a basis consistent with
those of previous years, are correct and complete and present fairly, in all
material respects:
|
(a)
|
all
the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of Sonus on a consolidated basis,
as at March 31, 2008; and
|
|
(b)
|
the
revenues, earnings, results of operations and cash flows of Sonus on a
consolidated basis, for the three-month period ended on March 31,
2008.
|
|
3.2.8
|
Liabilities
|
Sonus has
no liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or otherwise (whether or not required to be reflected in financial
statements in accordance with GAAP), and has no knowledge of any potential
liabilities or obligations, other than:
|
(a)
|
liabilities
(including liabilities for unpaid Taxes) disclosed on, reflected in or
provided for in the Sonus Financial Statements or the Sonus Interim
Financial Statements;
|
|
(b)
|
liabilities
disclosed in Section 3.2.8 of the Sonus Disclosure Schedule or
provided for in the operating budget of Sonus for the financial year
ending December 31, 2008, a copy of which has been provided to
OncoGenex;
|
|
(c)
|
liabilities
incurred in the ordinary course of business and attributable to the period
since the date of the Sonus Interim Financial Statements, none of which,
individually or in the aggregate, has a Material Adverse Effect on Sonus;
and
|
|
(d)
|
liabilities
incurred in connection with this Agreement or the transactions
contemplated in this Agreement.
|
|
3.2.9
|
Debt
Instruments
|
Except as
set forth and described in Section 3.2.9 of the Sonus Disclosure Schedule,
neither Sonus nor any of its Subsidiaries is bound by or subject
to:
|
(a)
|
any
Debt Instrument; or
|
|
(b)
|
any
agreement, contract or commitment to create, assume or issue any Debt
Instrument;
|
and no
Debt Instrument or Encumbrance which Sonus or any of its Subsidiaries is bound
by or subject to is dependent upon the Guarantee of or any security provided by
any other Person.
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3.2.10
|
Accounts
Receivable
|
All
accounts receivable of and book debts and other debts due to Sonus reflected in
the Sonus Financial Statements or which have come into existence since the
Financial Year End were created in the ordinary course of Sonus’ business and,
except to the extent that the same have been paid in the ordinary course of its
business since the Financial Year End, are valid and enforceable and payable in
full, without any right of set-off or counterclaim or any reduction for doubtful
accounts other than as reflected in the Sonus Financial Statements and, in the
case of accounts receivable which have come into existence since the Financial
Year End, other than a reasonable allowance for doubtful accounts consistent
with Sonus’ previous practice.
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3.2.11
|
Accuracy of Books and
Records
|
Except as
disclosed in Section 3.2.11 of the Sonus Disclosure Schedule, the books and
records, accounting, financial and otherwise, of Sonus fairly and correctly set
out and disclose in all material respects, in accordance with GAAP, the
financial position of Sonus as at the date hereof and all material financial
transactions of Sonus have been accurately recorded in such books and records on
a consistent basis and in conformity with GAAP. Except as disclosed in
Section 3.2.11 of the Sonus Disclosure Schedule, all records, controls,
data or information owned by Sonus and required to operate the Sonus Business
are in the full possession and control of Sonus.
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3.2.12
|
Guarantees
|
Except as
set forth and described in Section 3.2.12 of the Sonus Disclosure Schedule,
neither Sonus nor any of its Subsidiaries is a party to or bound by or subject
to any Guarantee of the indebtedness of any other Person and is not a party to
any Off-Balance Sheet Arrangement.
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3.2.13
|
Inventories
|
Except as
disclosed in Section 3.2.13 of the Sonus Disclosure Schedule, the
inventories of Sonus and its Subsidiaries, if any:
|
(a)
|
consist
solely of items of tangible personal property of the kind and quality
regularly used or produced in its
business;
|
|
(b)
|
are
saleable or useable in the ordinary course of the Sonus Business for the
purpose for which they were
intended;
|
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(c)
|
are
at a level consistent with the requirements of potential customers of the
Sonus Business, as reasonably anticipated by
Sonus;
|
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(d)
|
are
not obsolete; and
|
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(e)
|
have
been valued in the Sonus Financial Statements in accordance with GAAP, on
a basis consistent with that of past
practice.
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3.2.14
|
Sonus Business Carried
on in Ordinary Course
|
The Sonus
Business has been carried on in the ordinary course since the Financial Year
End, and since the Financial Year End:
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(a)
|
there
has been no Material Adverse Change with respect to
Sonus;
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(b)
|
there
has been no damage, destruction or loss of any material tangible assets
(including any medium in which Sonus’ Intellectual Property resides),
whether covered by insurance or not, that could reasonably be expected to
have a Material Adverse Effect on
Sonus;
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(c)
|
there
has been no split, combination or reclassification of any of the
outstanding Sonus Common Shares, and Sonus has not declared or paid any
dividends on or made any other distributions (in either case, in stock or
property) on or in respect of the outstanding Sonus Common
Shares;
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(d)
|
Sonus
has not allotted, reserved, set aside or issued, authorized or proposed
the allotment, reservation, setting aside or issuance of, or purchased or
redeemed or proposed the purchase or redemption of, any shares in its
capital stock or any class of securities convertible or exchangeable into,
or rights, warrants or options to acquire, any such shares or other
convertible or exchangeable securities, nor has Sonus agreed to do any of
the foregoing, except for:
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(i)
|
the
issuance of Sonus Common Shares pursuant to (A) the exercise of stock
options, which are or have become fully vested and (B) the exercise
of warrants to purchase Sonus Common Shares and (C) Sonus’ employee
share purchase plan;
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(ii)
|
the
grant of Sonus stock options to certain officers, directors, employees,
consultants and suppliers of Sonus since the Financial Year End;
and
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(iii)
|
the
allotment and reservation for issuance of Sonus Common Shares pursuant to
Sonus stock options granted since the Financial Year
End;
|
particulars
of which are set forth in Section 3.2.14(d) of the Sonus Disclosure
Schedule;
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(e)
|
except
as disclosed in Section 3.2.14(e) of the Sonus Disclosure Schedule,
there has been no increase in the salary or other cash compensation
payable or to become payable by Sonus or any of its Subsidiaries to any of
their respective officers, directors, employees or advisors, other than in
the ordinary course of business, and there has been no declaration,
payment or commitment or obligation of any kind for the payment or
granting by Sonus or any of its Subsidiaries of a bonus, stock option or
other additional salary or compensation to any such Person, or any grant
to any such Person of any increase in severance or termination pay, nor
has Sonus or any of its Subsidiaries agreed to do any of the
foregoing;
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(f)
|
except
as disclosed in Section 3.2.14(f) of the Sonus Disclosure Schedule,
there has been no increase in or modification of any Employee Benefits or
agreement to increase or modify any Employee Benefits (including, in
either case, the granting of stock options, restricted stock awards or
stock appreciation rights) made to, for or with any of its directors or
officers, other than increases in salary or cash compensation payable or
to become payable by Sonus or any of its Subsidiaries
to
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any
of their respective officers or directors, provided any such increase is
in the ordinary course of business of
Sonus;
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(g)
|
except
as disclosed in Section 3.2.14(g) of the Sonus Disclosure Schedule,
neither Sonus nor any of its Subsidiaries has (i) acquired or sold,
pledged, leased, encumbered or otherwise disposed of any material property
or assets or agreed to do any of the foregoing or (ii) incurred or
committed to incur capital expenditures in excess of $100,000, in the
aggregate, or agreed to do any of the
foregoing;
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(h)
|
except
as set forth in Section 3.2.14(h) of the Sonus Disclosure Schedule,
neither Sonus nor any of its Subsidiaries has entered into any material
contract, agreement, licence, franchise, lease transaction, commitment or
other right or obligation and has not amended, modified, relinquished,
terminated or failed to renew any Sonus Material Agreement, other than in
the ordinary course of business of
Sonus;
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(i)
|
except
as set forth in Section 3.2.14(i) of the Sonus Disclosure Schedule, there
has been no transfer (by way of a licence or otherwise) of or agreement to
transfer to any Person rights to any of Sonus’ Intellectual Property,
other than non-exclusive licences in the ordinary course of
business;
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(j)
|
Sonus
has not made any change in accounting policies, principles, methods,
practices or procedures (including for bad debts, contingent liabilities
or otherwise), respecting capitalization or expense of research and
development expenditures, depreciation or amortization rates or timing of
recognition of income and expense;
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(k)
|
except
as set forth in Section 3.2.14(k) of the Sonus Disclosure Schedule,
there has been no notice delivered to Sonus or any of its Subsidiaries of
any claim of ownership by a third party of any Sonus Intellectual Property
owned or developed by Sonus or any of its Subsidiaries or of infringement
by Sonus or any of its Subsidiaries of any third party’s intellectual
property rights or any offer by a third party to license intellectual
property to Sonus;
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(l)
|
except
as set forth in Section 3.2.14(l) of the Sonus Disclosure Schedule,
there has been no amendment to the articles or by-laws of Sonus or similar
governing documents of any of its
Subsidiaries;
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(m)
|
there
has been no disruption in the normal work of Sonus’ workforce or claim of
wrongful discharge or other unlawful labour practice in respect of
Sonus;
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(n)
|
there
has been no waiver by Sonus or any of its Subsidiaries of, or agreement to
waive, any right of substantial value, and neither Sonus nor any of its
Subsidiaries has entered into any commitment or transaction not in the
ordinary course of business where such right, commitment or transaction is
or would be material in relation to Sonus or the Sonus Business;
and
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(o)
|
except
as set forth in Section 3.2.14(o) of the Sonus Disclosure Schedule,
there has been no creation, or agreement by Sonus or any of its
Subsidiaries to create any Encumbrance on any of its property or assets
(except for any lien for unpaid Taxes not yet
due).
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3.2.15
|
Partnerships or Joint
Ventures
|
Except as
set forth in Section 3.2.15 of the Sonus Disclosure Schedule, neither Sonus
nor any of its Subsidiaries is a partner or participant in any partnership,
joint venture, profit-sharing arrangement or other business combination of any
kind and is not party to any agreement under which Sonus agrees to carry on any
part of its business or any other activity in such manner or by which Sonus or
any of its Subsidiaries agrees to share any revenue or profit with any other
Person other than royalty payments to its licensors under licence agreements
disclosed in Section 3.2.15 of the Sonus Disclosure Schedule.
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3.2.16
|
Minute Books and
Corporate Records
|
To the
knowledge of Sonus, the minute and record books of Sonus contain complete and
accurate minutes of all meetings of, and copies of all by-laws and resolutions
passed by, or consented to in writing by, the directors (and any committees
thereof) and shareholders of Sonus since its incorporation and which are
required to be maintained in such books under the laws of the State of Delaware;
all such meetings were duly called and held and all such by-laws and resolutions
were duly passed or enacted. The share certificate books, registers
of shareholders, registers of transfers, registers of directors, registers of
holders of Debt Instruments and other corporate registers of Sonus comply in all
material respects with the provisions of all applicable Laws and are complete
and accurate in all material respects. Sonus is not a party to or
bound by or subject to any shareholder agreement or unanimous shareholder
agreement governing the affairs of Sonus or the relationships, rights and duties
of shareholders and, except as set forth in Section 3.2.16 of the Sonus
Disclosure Schedule, is not subject to a shareholder rights plan or “poison
pill” or similar plan.
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3.2.17
|
Interested
Persons
|
|
(a)
|
Except
as set forth and described in Section 3.2.17 of the Sonus Disclosure
Schedule, since the Financial Year End, no payment has been made or
authorized by Sonus or any of its Subsidiaries to or for the benefit of
any Interested Person, except in the ordinary course of business and at
the regular rates, payable as Employee Benefits, management and other
similar fees, the reimbursement of expenses incurred on behalf of Sonus or
any of Subsidiary, or otherwise.
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(b)
|
Except
as set forth and described in Section 3.2.17 of the Sonus Disclosure
Schedule, since the Financial Year End the aggregate amount of Employee
Benefits, management and other fees, reimbursement of expenses incurred on
behalf of Sonus or any of its Subsidiaries or other payments in any such
case made to an Interested Person have been paid at rates no greater than
those prevailing at the Financial Year
End.
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(c)
|
Except
as set forth and described in Section 3.2.17 of the Sonus Disclosure
Schedule:
|
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(i)
|
Neither
Sonus nor any of its Subsidiaries is a party to or bound by or subject to
any agreement, contract or commitment with any Interested Person, except
for contracts of employment or personal services contracts with
independent contractors;
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(ii)
|
Neither
Sonus nor any of its Subsidiaries has any loan or indebtedness outstanding
(except for obligations incurred in the ordinary course of business with
respect to Employee Benefits, personal services contracts or the
reimbursement of expenses incurred on behalf of Sonus or a Subsidiary or
otherwise) to any Interested
Person;
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(iii)
|
no
Interested Person owns, directly or indirectly, in whole or in part, any
property that Sonus or any of its Subsidiaries uses in the operation of
its business as heretofore carried on;
and
|
|
(iv)
|
no
Interested Person has any cause of action or other claim whatsoever
against, or owes any amount to, Sonus or any of its Subsidiaries in
connection with the Sonus Business as heretofore carried on, except for
any liability reflected in the Sonus Financial Statements or the Sonus
Interim Financial Statements and claims in the ordinary course of business
such as, without limitation, for accrued vacation pay and accrued benefits
under the Employee Benefits.
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3.2.18
|
Directors and
Officers
|
Section 3.2.18
of the Sonus Disclosure Schedule sets forth the names and titles of all
directors and officers of Sonus as at the date of this Agreement.
|
3.2.19
|
Employment and
Employee Benefit Matters
|
|
(a)
|
As
of the date hereof, Sonus had 26 full time, 4 part time employees and 1
temporary employee, all of whom are located in the United States and
SonusSub had no full time employees. The names of such individuals, their
years of service, their job titles and the Employee Benefits to which they
are entitled are set forth and described in Section 3.2.20 of the
Sonus Disclosure Schedule. Section 3.2.19 also identifies
each employee, if any, who holds a temporary work authorization, including
X-0X, X-0, X-0 or J-1 visas or work authorizations (the “Work
Permits”), and shows for each such employee the type of Work Permit and
the length of time remaining on such Work Permit. To the
knowledge of Sonus, no employee intends to terminate his or her employment
with Sonus, whether as a result of the transactions contemplated by this
Agreement or otherwise.
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(b)
|
Section 3.2.19
of the Sonus Disclosure Schedule contains a complete list of individuals
who are not employees of Sonus, and who supply their services to Sonus or
any of its Subsidiaries under personal services contracts (whether
written, oral or otherwise, and including independent contractors,
employees of agencies, secondees or leased employees and consultants),
specifying location, start and end date of engagement, services supplied,
supplying agency and fees and other amounts payable by Sonus or any
Subsidiary. There are no complaints, claims or charges outstanding or, to
the knowledge of Sonus, anticipated relating to the engagement of such
individuals.
|
|
(c)
|
Section 3.2.19
of the Sonus Disclosure Schedule lists each employee of Sonus who is
absent from active employment (i) due to short or long term
disability (ii) on a leave
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pursuant
to the United States Family and Medical Leave Act or a comparable state
Law, (iii) on any other leave or approved absence (together with the
reason for each leave or absence) or (iv) due to military service
(under conditions that give the employee rights to
re-employment).
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(d)
|
Section 3.2.19
of the Sonus Disclosure Schedule contains a complete list of all Employee
Benefits maintained, or otherwise contributed to or required to be
contributed to, by Sonus for the benefit of employees or former employees
of Sonus or any of its Subsidiaries, and lists all policies, handbooks and
manuals relating to employment matters. With respect to
continuation rights rising under federal or state Law as applied to
employee benefit plans that are group health plans (as defined in
Section 601 et seq. of ERISA), Section 3.2.19 of the Sonus
Disclosure Schedule lists (i) each employee, former employee or
qualifying beneficiary who has elected continuation coverage and
(ii) each employee, former employee or qualifying beneficiary who has
not elected continuation coverage but is still within the period in which
such election may be made.
|
|
(e)
|
Except
as set forth and described in Section 3.2.19 of the Sonus Disclosure
Schedule:
|
|
(i)
|
Neither
Sonus nor any of its Subsidiaries is a party to or bound by or subject to
any agreement or arrangement with respect to Employee Benefits and no such
agreement or arrangement contains any specific provision as to notice of
termination of employment or severance pay in lieu
thereof;
|
|
(ii)
|
Neither
Sonus nor any of its Subsidiaries has any obligations to amend any
Employee Benefit and no amendments will be made or promised prior to the
Effective Date, except with the prior written consent of
OncoGenex;
|
|
(iii)
|
all
material obligations of Sonus and its Subsidiaries with respect to
Employee Benefits are reflected in and have been fully accrued in the
Sonus Financial Statements or Sonus Interim Financial
Statements;
|
|
(iv)
|
Neither
Sonus nor any of its Subsidiaries is a party to or bound by or subject to
any collective bargaining agreement or other similar arrangement with any
labour union or employee association nor has it made any commitment to or
conducted any negotiation or discussion with any labour union or employee
association with respect to any future agreement or arrangement and, to
the knowledge of Sonus, there is no current application for certification
or other attempt to organize or establish any labour union or employee
association with respect to employees of
Sonus;
|
|
(v)
|
Each
of Sonus and its Subsidiaries has, in all material respects, complied
with, and operated its business in accordance with, all applicable Laws
relating to employment and labour matters, including employment and labour
standards, occupational health and safety, employment equity, pay equity,
workers’ compensation, human rights and labour relations matters; there
are no current, pending or, to the knowledge of Sonus, threatened claims,
complaints or proceedings of any kind involving Sonus,, its Subsidiaries,
or to Sonus’ knowledge, any of their employees before any Tribunal
with
|
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|
respect
to any of the above matters; and there are no facts known to Sonus that
could reasonably be expected to give rise to any such claim, complaint or
proceeding;
|
|
(vi)
|
there
are no existing or, to the knowledge of Sonus, threatened labour strikes,
slow downs, work stoppages or other similar labour troubles affecting
Sonus or any of its Subsidiaries;
|
|
(vii)
|
Neither
Sonus nor any of its Subsidiaries has made any material representations or
commitments to its employees with respect to future material increases in
wages or other compensation;
|
|
(viii)
|
to
the knowledge of Sonus, no employee of Sonus or any of its Subsidiaries is
bound by any confidentiality, non-solicitation or non-competition
agreement in favour of any Person other than Sonus which is material and
relevant to the employment of such employee by Sonus or such Subsidiary
and which imposes obligations on such employee greater than those owed by
such employee under common law;
|
|
(ix)
|
to
the knowledge of Sonus, no employee of Sonus or any of its Subsidiaries
is, in any material respect, in violation of any term of any employment
contract, non-disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any
such employee to be employed by Sonus or such Subsidiary because of the
nature of the business conducted or presently proposed to be conducted by
it or to the use of trade secrets or proprietary information of
others;
|
|
(x)
|
Neither
Sonus nor any of its Subsidiaries is a party to any side letter or other
written or oral material commitment with any employee or
contractor;
|
|
(xi)
|
all
accruals for unpaid vacation pay, premiums for employment insurance,
health premiums, accrued wages, salaries and commissions and other
Employee Benefits have been reflected in the books and records of Sonus;
and
|
|
(xii)
|
the
execution and delivery of this Agreement by Sonus does not, the
performance of this Agreement by Sonus will not, and the consummation of
the transactions contemplated by this Agreement will not, (i) entitle
any current or former employee or officer of Sonus, any of its
Subsidiaries or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, (ii) accelerate the time of
payment or vesting, or increase the amount of compensation, due any such
employee or officer, or (iii) accelerate the vesting of any stock
option or of any shares of restricted stock or other securities of
Sonus.
|
|
3.2.20
|
Employee Benefit
Plans
|
|
(a)
|
Section 3.2.20
of the Sonus Disclosure Schedule sets forth a list of all Sonus Benefit
Plans (as defined below) that are sponsored, maintained, contributed to or
required to
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|
Section 3.2.20
of the Sonus Disclosure Schedule sets forth a list of all Sonus Benefit
Plans (as defined below) that are sponsored, maintained, contributed to or
required to
|
|
(b)
|
Neither
Sonus nor any Sonus Commonly Controlled Entity (as defined below) has ever
sponsored or contributed to a defined benefit pension plan that is subject
to the funding obligations of Title IV of
ERISA.
|
|
(c)
|
No
Sonus Benefit Plan is or has been a Multiemployer Plan. Neither Sonus nor
any Sonus Commonly Controlled Entity has completely or partially withdrawn
from any Multiemployer Plan. No termination liability to the
Pension Benefit Guaranty Corporation or withdrawal liability to any
Multiemployer Plan that is material in the aggregate has been or is
reasonably expected to be incurred with respect to any Multiemployer Plan
by Sonus or any Sonus Commonly Controlled
Entity.
|
|
(d)
|
Except
as set forth in Section 3.2.20 of the Sonus Disclosure Schedule, no
amount (whether in cash or property or the vesting of property) that could
be received by, or benefit provided to, any officer, director or employee
of Sonus or any of its Affiliates who is a “disqualified individual” (as
such term is defined in proposed United States Treasury Regulations
Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in
effect would be an “excess parachute payment” (as such term is defined in
Section 280G(b)(1) of the Code). Except as set forth in
Section 3.2.20 of the Sonus Disclosure Schedule, no such Person is
entitled to receive any additional payment from Sonus or any other Person
(a “Sonus Parachute Gross
Up Payment”) in the event that the excise tax of
Section 4999(a) of the Code is imposed on such
Person. Except as set forth in Schedule 3.15(d) of the Sonus
Disclosure Schedule, the Board of Directors of Sonus has not granted to
any officer, director or employee of Sonus any right to receive any Sonus
Parachute Gross Up Payment.
|
|
(e)
|
(i) all
required material reports and descriptions, if any (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions),
have been filed or distributed appropriately with respect to each Sonus
Benefit Plan, and (ii) the requirements of Part 6 of Subtitle B of
Title 1 of ERISA and of Cobra and HIPAA have been satisfied in all
material respects with respect to each Sonus Benefit
Plan.
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(f)
|
Except
as set forth in Section 3.2.20 of the Sonus Disclosure Schedule, no
Sonus Benefit Plan is an ESOP or otherwise invests in “employer
securities” (as such term is defined in Section 409(l) of the
Code).
|
|
(g)
|
Sonus
has made all material contributions and other payments required by and due
under the terms of each Sonus Benefit Plan and has taken no action
(including, without limitation, actions required by Law) relating to any
Sonus Benefit Plan that will increase Sonus’ or any Sonus Commonly
Controlled Entity’s obligation under any Sonus Benefit
Plan.
|
|
(h)
|
Except
as set forth in Section 3.2.20 of the Sonus Disclosure Schedule, no
Sonus Benefit Plan is a “qualified foreign plan” (as such term is defined
in Section 404A of the Code), and no Sonus Benefit Plan is subject to
the laws of any jurisdiction other than the United States of America or
one of its political subdivisions.
|
|
(i)
|
No
Sonus Benefit Plan promises or provides post-retirement medical life
insurance or other benefits due now or in the future to current, former or
retired employees of Sonus, any of its Subsidiaries or any Sonus Common
Controlled Entity other than benefits required pursuant to Cobra, except
in each case for benefits that, individually or in the aggregate, have not
had and would not have a Material Adverse Effect on
Sonus.
|
|
(j)
|
Except
as set forth in Section 3.2.20 of the Sonus Disclosure Schedule, no
“pension plan”, as such term is defined in Section 3(2) of ERISA,
maintained by Sonus or a Sonus Commonly Controlled Entity, has been frozen
or terminated (including partial termination) in the last three (3)
calendar years.
|
|
(k)
|
As
used herein: (i) “Benefit Plans” means any
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation or bonus plans or
agreements or other incentive plans or agreements, all other employee
programs, arrangements or agreements and all other employee benefit plans
or fringe benefit plans, including, without limitation, all “employee
benefit plans” as that term is defined in Section 3(3) of ERISA;
(ii) “Sonus Benefit
Plans” mean the Benefit Plans currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by Sonus, any of its
Subsidiaries or any Sonus Commonly Controlled Entity for the benefit of
present or former employees or directors of Sonus and of SonusSub or their
beneficiaries, or providing benefits to such persons in respect of
services provided to any such entity; (iii) “Sonus Commonly Controlled
Entity” means an entity required to be aggregated with Sonus which
is a member of the “controlled group of corporations” which includes Sonus
within the meaning of Section 414(b), (c) or (m) of the Code; and
(iv) “Sonus ERISA
Plan” means any Sonus Benefit Plan which is an “employee pension
benefit plan”, as that term is defined in Section 3(2) of
ERISA.
|
|
(l)
|
Section 3.2.20
of the Sonus Disclosure Schedule lists each corporation, trade or business
(separately for each category below that
applies): (i) that is (or was during the preceding five
years) a Sonus Commonly Controlled Entity, (ii) that is (or was
during the preceding five years) the legal employer of persons providing
services to Sonus as leased employees within the meaning of
Section 414(n) of the Code and
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(iii) with
respect to which Sonus is a successor employer for purposes of group
health or other welfare plan continuation rights (including
Section 601 et
seq. of ERISA) or the United States Family and Medical Leave
Act.
|
|
(m)
|
Sonus
believes in good faith that any “nonqualified deferred compensation plan”
(as such term is defined under Section 409A(d)(1) of the Code and the
guidance thereunder) under which Sonus makes, is obligated to make or
promises to make, payments (each a “Sonus 409A Plan”) complies in all
material respects, in both form and operation, with the requirements of
Section 409A of the Code and the guidance thereunder. To
the knowledge of Sonus after reasonable investigation, no payment to be
made under any Sonus 409A Plan is, or will be, subject to the penalties of
Section 409A(a)(1) of the Code, whether pursuant to the consummation
of the transactions contemplated by this Agreement or
otherwise.
|
|
3.2.21
|
Real
Property
|
Neither
Sonus nor any of its Subsidiaries owns, nor is Sonus or any of its Subsidiaries
a party to or bound by or subject to any agreement, contract or commitment, or
any option to purchase, any real or immovable property.
|
3.2.22
|
Leases and Leased
Property
|
|
(a)
|
Neither
Sonus nor SonusSub is a party to or bound by or subject to nor has Sonus
or SonusSub agreed or become bound to enter into, any real or personal
property lease, sublease or other right of occupancy relating to real
property, whether as lessor or lessee, except for the Sonus Leases
described in Section 3.2.22 of the Sonus Disclosure Schedule, copies
of which have been provided to OncoGenex prior to the date hereof. Sonus
or SonusSub occupies and has the exclusive right to occupy and use all
immovable Sonus Leased Property and has the exclusive right to use all
movable Sonus Leased Property.
|
|
(b)
|
Each
of the Leases is valid and subsisting and in good standing, all rental and
other payments required to be paid by Sonus or SonusSub as lessee or
sublessee and due and payable pursuant to each of the Sonus Leases have
been duly paid to date and neither Sonus nor SonusSub is otherwise in
default in meeting its obligations under any of the Sonus Leases and is
entitled to all rights and benefits thereunder. No event exists which, but
for the passing of time or the giving of notice, or both, would constitute
a default by Sonus or SonusSub or, to the knowledge of Sonus, any other
party to any of the Sonus Leases and no party to any of the Sonus Leases
is claiming any such default or taking any action purportedly based upon
any such default. The completion of the transactions contemplated herein
will not, subject to obtaining any required consents set out in
Section 3.2.22 of the Sonus Disclosure Schedule, afford any of the
parties to any of the Sonus Leases or any other Person the right to
terminate any of the Sonus Leases nor will the completion of the
transactions contemplated herein result in any additional or more onerous
obligation on Sonus or SonusSub under any of the Sonus
Leases.
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3.2.23
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Insurance
|
|
(a)
|
Each
of Sonus and its Subsidiaries maintains insurance covering its property,
assets and personnel and protecting its business against loss or damage on
a basis that is comparable to the insurance maintained by reasonable
Persons operating businesses similar to its business as heretofore carried
on. Section 3.2.23(a) of the Sonus Disclosure Schedule sets forth a
list of all insurance policies currently maintained by Sonus and each of
its Subsidiaries. Each of such insurance policies is valid and subsisting
and in good standing, there is no default, whether as to the payment of
premiums or otherwise, under any material term or condition of such
insurance policies, and, to the knowledge of Sonus, each Person which is
an insured party under any of such insurance policies is entitled to all
rights and benefits thereunder.
|
|
(b)
|
There
are no pending claims under any such insurance policies. Neither Sonus nor
any of its Subsidiaries has failed to give any notice or present any claim
under any such insurance policies in due and timely fashion. To the
knowledge of Sonus, no circumstances have occurred which might entitle
Sonus or any of its Subsidiaries to make a claim under any such insurance
policies or which might be required under any such insurance policies to
be notified to the insurers thereunder and no material claim under any of
such insurance policies has been made by Sonus or any of its Subsidiaries
since the Financial Year End.
|
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(c)
|
Except
as disclosed in Section 3.2.23(c) of the Sonus Disclosure Schedule,
none of such insurance policies is subject to any premium in excess of the
stipulated or normal rate.
|
No notice
of cancellation of, material increase of premiums under, non-renewal with
respect to, or disallowance of any claim under, any such insurance policies has
been received by Sonus or any of its Subsidiaries.
|
3.2.24
|
Material
Agreements
|
Except
for the Sonus Material Agreements disclosed in Section 3.2.24 of the Sonus
Disclosure Schedule, neither Sonus nor any of its Subsidiaries is a party to or
bound by or subject to any of the following:
|
(a)
|
any
continuing contract for the purchase of materials, supplies, equipment or
services involving, in the case of any such contract, more than $10,000
over the life of the contract;
|
|
(b)
|
any
contract that expires, or may be renewed at the option of any Person other
than Sonus or one of its Subsidiaries so as to expire, more than one year
after the date of this Agreement;
|
|
(c)
|
any
contract for capital expenditures in excess of $100,000 in the
aggregate;
|
|
(d)
|
any
confidentiality, secrecy or non-disclosure
contract;
|
|
(e)
|
any
non-competition, non-solicitation, field restriction, territory
restriction, exclusivity or similar restrictions on Sonus or any of its
Subsidiaries, or which
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requires
Sonus or any of its Subsidiaries to offer products or services of any
other Person on a priority or exclusive
basis;
|
|
(f)
|
any
leases of any real or personal property (including the Sonus Leases) under
which the obligations of Sonus or any of its Subsidiaries exceed $25,000,
on an annual basis;
|
|
(g)
|
any
contract pursuant to which Sonus or any of its Subsidiaries is a lessor of
any machinery, equipment, motor vehicles, office furniture, fixtures or
other personal property under which the obligations of Sonus or any of its
Subsidiaries exceed $10,000, on an annual
basis;
|
|
(h)
|
any
contract with any Person with whom Sonus or any of its Subsidiaries does
not deal at arm’s length within the meaning of the Income Tax Act
(Canada);
|
|
(i)
|
any
Guarantee or Off-Balance Sheet
Arrangement;
|
|
(j)
|
any
licence, sublicence or other agreement to which any Person (other than
employees or independent contractors of Sonus or any of its Subsidiaries
for purposes of their employment or contract with Sonus or such
Subsidiary) has been or may be assigned, authorized to use, or given
access to any of Sonus’ Intellectual
Property;
|
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(k)
|
any
licence, sublicence or other agreement pursuant to which Sonus or any of
its Subsidiaries has been granted or may be assigned or authorized to use,
or has or may have incurred any obligation in connection with,
(i) any third party intellectual property that is incorporated in or
forms a part of any current or proposed Sonus Product or service or
(ii) any of Sonus’ Intellectual
Property;
|
|
(l)
|
any
employment contracts with employees and service contracts with independent
contractors, or any contract, agreement or arrangement that would entitle
any present or former director, officer employee or agent of Sonus or any
of its Subsidiaries to indemnification from Sonus or any of its
Subsidiaries;
|
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(m)
|
any
agreement to indemnify, hold harmless or defend any other Person with
respect to any assertion of personal injury, damage to property or
intellectual property infringement, misappropriation or violation or
warranting the lack thereof other than any licence of Third Party Software
that is not part of Sonus’ Intellectual Property and which relates to
software that is generally available to the public;
and
|
|
(n)
|
any
agreement that gives rise to any material payments or material benefits as
a result of the performance of this Agreement or any of the other
transactions contemplated hereby;
|
|
(o)
|
any
other agreement, indenture, contract, lease, deed of trust, licence,
option, instrument or other commitment which is or would reasonably be
expected to be material to the business, properties, assets, operations,
condition (financial or otherwise) or prospects of
Sonus;
|
whether
written or oral, and of any nature or kind whatsoever.
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3.2.25
|
No Breach of Material
Agreements
|
Each of
Sonus and its Subsidiaries has performed all of the material obligations
required to be performed by it, and is entitled to all benefits under, and, to
the knowledge of Sonus, is not alleged to be in default in respect of, any Sonus
Material Agreement. Except as disclosed in Section 3.2.25 of the Sonus
Disclosure Schedule, each of the Sonus Material Agreements is in full force and
effect, unamended, and there exists no material breach thereof or material
default or event of material default or event, occurrence, condition or act with
respect to Sonus or any of its Subsidiaries, as the case may be, or, to Sonus’
knowledge, with respect to the other contracting party or otherwise that, with
or without the giving of notice, the lapse of time or the happening of any other
event or conditions, would (A) become a default or event of default under
any Sonus Material Agreement, or (B) result in the loss or expiration of
any material right or option by Sonus (or the material gain thereof by any third
party) under any Sonus Material Agreement. Sonus has delivered a true, correct
and complete copy of each of the Sonus Material Agreements to
OncoGenex.
|
3.2.26
|
Sonus
Business
|
The Sonus
Business is as described in Sonus’ Annual Report on Form 10-K for the fiscal
year ended December 31, 2007, and as described in other Sonus SEC Documents
filed by Sonus from time to time since December 31, 2007.
|
3.2.27
|
Obligations to
Customers and Suppliers
|
Except as
set forth in Section 3.2.27 of the Sonus Disclosure Schedule, there are no
outstanding consulting contracts or other maintenance obligations with or to
customers or other users of the Products and services of Sonus or any of its
Subsidiaries, and neither Sonus nor any of its Subsidiaries is required to
provide any bonding or other financial security arrangements in connection with
any transactions with any customers, users or suppliers, whether or not in the
ordinary course of its business.
|
3.2.28
|
Legal
Proceedings
|
There are
no actions, suits, claims, investigations or proceedings (whether private,
governmental or otherwise, and whether or not purportedly on behalf of Sonus or
any of its Subsidiaries) in progress, pending, or to the knowledge of Sonus,
threatened, against or affecting Sonus or any of its Subsidiaries (including
actions, suits, investigations or proceedings against any of their respective
directors, officers or employees which relate to the business, affairs, assets
or operations of Sonus or any of its Subsidiaries), at law or in equity, or
before or by any Tribunal, or for which Sonus or any of its Subsidiaries is
obligated to indemnify a third party. There is no judgment, decree, injunction,
ruling, order or award of any Tribunal outstanding against or affecting Sonus or
any of its Subsidiaries. Except as set forth in Section 3.1.28 of the Sonus
Disclosure Schedule, Sonus is not aware of any grounds on which any such action,
suit, investigation or proceeding might be commenced with any reasonable
likelihood of success, and does not have any present plans or intentions to
initiate any litigation, arbitration or other proceedings against any third
party.
|
3.2.29
|
Banking
Information
|
Section 3.2.29
of the Sonus Disclosure Schedule sets forth and describes:
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(a)
|
the
name and location (including municipal address) of each bank, trust
company or other institution in which Sonus or any of its Subsidiaries has
an account, money on deposit or a safety deposit box and the name of each
Person authorized to draw thereon or to have access thereto;
and
|
|
(b)
|
the
name of each Person holding a general or special power of attorney from
Sonus or any of its Subsidiaries and a summary of the terms
thereof.
|
|
3.2.30
|
Tax
Matters
|
|
(a)
|
Except
in respect of the income tax return for the current taxation year (which
return is not yet due), and any income tax return which is required to be
filed as a result of or in connection with the transactions contemplated
herein, each of Sonus and its Subsidiaries has duly filed in the
prescribed manner and within the prescribed time all Tax Returns required
to be filed by it on or before the date hereof with any taxing or
regulatory authority to which it is subject; such Tax Returns and the
material accompanying such Tax Returns are accurate and complete in all
material respects and each of Sonus and its Subsidiaries has provided to
OncoGenex true and complete copies of all Tax Returns filed by
it.
|
|
(b)
|
Each
of Sonus and its Subsidiaries has paid all Taxes that are due and payable,
and any interest, penalties and fines in connection therewith, properly
due and payable, and has paid all of same in connection with all known
assessments, reassessments and
adjustments.
|
|
(c)
|
Except
as set forth in the Sonus Financial Statements or the Sonus Interim
Financial Statements, and except for Taxes incurred in the ordinary course
of business or incurred or arising as a result of the transactions
contemplated herein which Taxes are not yet due and payable, there are no
Taxes or fines in respect of Taxes claimed by any Governmental Entity
against Sonus or any of its Subsidiaries or which are known to Sonus or
any of its Subsidiaries to be due and owing by Sonus or any of its
Subsidiaries and, to the knowledge of Sonus or any of its Subsidiaries,
there are no pending or threatened reassessments by any Governmental
Entity in respect of Taxes owing by Sonus or any of its Subsidiaries, and
there are no matters in dispute or under discussion with or any audits
being conducted by any Governmental Entity relating to Taxes or fines in
respect of Taxes asserted by such Governmental Entity against Sonus or any
of its Subsidiaries.
|
|
(d)
|
The
Sonus Financial Statements fully reflect accrued liabilities as at the
Financial Year End for all Taxes.
|
|
(e)
|
Except
as set forth and described in Section 3.2.30 of the Sonus Disclosure
Schedule, there are no actions, suits, investigations, audits or
proceedings and no assessment, reassessment or request for information in
progress, pending or, to the knowledge of Sonus or any of its
Subsidiaries, threatened against or affecting Sonus or any of its
Subsidiaries in respect of Taxes nor are any issues under discussion with
any taxing authority relating to any matters which could result in claims
for additional Taxes or fines.
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(f)
|
There
are no agreements, waivers or other arrangements made by Sonus or any of
its Subsidiaries providing for an extension of time with respect to any
assessment or reassessment of Tax, the filing of any Tax Return or the
payment of any Tax by Sonus or any of its Subsidiaries, or the provision
of any documents or information currently under request by any
Governmental Entity.
|
|
(g)
|
Except
as set forth in Section 3.2.30 of the Sonus Disclosure Schedule, each
of Sonus and its Subsidiaries has withheld the amount of all Taxes and
other deductions required under any applicable Laws to be withheld from
each payment made by it and has remitted all amounts withheld which are
due and payable before the date hereof and all installments of Taxes which
are due and payable before the date hereof to the relevant taxing or other
authority within the time prescribed under any applicable
Laws.
|
|
(h)
|
Neither
Sonus nor any of its Subsidiaries has participated in any “reportable
transactions” within the meaning of Treasury Regulations Section 1.6011-4,
and neither the Sonus nor any of its Subsidiaries has been a “material
advisor” to any such transactions within the meaning of Section 6111 of
the Code.
|
|
(i)
|
Neither
the Sonus nor any of its Subsidiaries is a party to, is bound by or has
any obligation under any material Tax sharing or Tax indemnity agreement
or similar contract or arrangement other than any agreement, contract or
other arrangement between the Sonus and its
Subsidiaries.
|
|
(j)
|
Neither
Sonus nor any of its Subsidiaries has distributed stock of another Person,
or has had its stock distributed by another Person, in a transaction that
was purported or intended to be governed in whole or in part by Section
355 or Section 361 of the Code.
|
|
3.2.31
|
Compliance with
Applicable Laws
|
Each of
Sonus and its Subsidiaries (i) has conducted and is conducting its business in
compliance with all applicable Laws in each jurisdiction in which its business
is carried on, (ii) is not in breach of any of such Laws and (iii) is duly
licenced or registered in each jurisdiction in which it owns or leases its
property and assets or carries on its business, so as to enable its business to
be carried on as now conducted and its property and assets to be so owned or
leased, (iv) is in possession of all licences, permits, approvals, consents,
certificates, registrations, or authorizations (whether governmental, regulatory
or similar type and including, without limitation, all INDs and NDAs and other
authorizations under the FDCA) necessary to carry on its business as presently
carried on or to own or lease any of the property or the assets utilized by it
(collectively, the “Sonus Licenses”),
except with respect to clauses (i), (ii), (iii) and (iv) of this Subsection
3.2.31 as would not, individually or in the aggregate, have a Material Adverse
Effect on Sonus. Section 3.2.31 of the Sonus Disclosure Schedule sets out a
complete and accurate list of all Sonus Licenses. Each Sonus Licence
is valid and subsisting and in good standing and there is no default or breach
of any Sonus Licence and, to the best of the knowledge of Sonus, no proceeding
is pending or threatened to revoke or limit any Sonus Licence. Except as set
forth in Section 3.2.31 of the Sonus Disclosure Schedule, no Sonus License
requires the consent, approval, permit or acknowledgement of any Person in
connection with the completion of the transactions herein
contemplated.
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3.2.32
|
Consents and
Approvals
|
Except
for the Appropriate Regulatory Approvals, the Interim Order and the Final Order,
there is no requirement for Sonus, any of its Subsidiaries, or, to the best of
Sonus’ knowledge, any other Person to make any filing with, give any notice to
or to obtain any licence, permit, certificate, registration, authorization,
consent or approval of, any Governmental Entity as a condition to the lawful
consummation of the transactions contemplated by this Agreement or the Plan of
Arrangement, except for the filings, notifications, licences, permits,
certificates, registrations, consents and approvals which relate solely to the
identity of OncoGenex or which are of a purely administrative nature and could
be completed or obtained without adverse effect on Sonus or its business
immediately after the Effective Date.
|
3.2.33
|
No Business
Restrictions
|
There is
no agreement (non-compete or otherwise), commitment, judgment, injunction, order
or decree to which Sonus or any of its Subsidiaries is party or which is
otherwise binding upon Sonus or any of its Subsidiaries which has or reasonably
could be expected to have the effect of prohibiting or impairing any business
practice of Sonus or OncoGenex, any acquisition of property (tangible or
intangible) by Sonus or OncoGenex or the conduct of business by Sonus or
OncoGenex, as currently conducted or proposed to be conducted by Sonus or
OncoGenex. Without limiting the foregoing, neither Sonus nor any of its
Subsidiaries has entered into any agreement under which Sonus or OncoGenex is
restricted from selling, licencing or otherwise distributing any of its Products
to any class of customers, in any geographic area, during any period of time or
in any segment of the market.
|
3.2.34
|
Environmental
Matters
|
|
(a)
|
Except
as disclosed in Section 3.2.34 of the Sonus Disclosure
Schedule: (i) each of Sonus and SonusSub is and has been
at all times in compliance in all material respects with all applicable
Environmental Laws; (ii) neither Sonus nor SonusSub has received any
written communication that alleges that Sonus or SonusSub is not in
compliance with applicable Environmental Laws; (iii) all material
permits and other governmental authorizations currently held by Sonus and
SonusSub pursuant to the Environmental Laws that are required for the
occupation of their facilities and the operation of their businesses
(“Sonus Environmental
Permits”) are in full force and effect, and Sonus and SonusSub are
and have been at all times in compliance in all material respects with all
of the terms of such Sonus Environmental Permits, and no other permits or
other governmental authorizations are required by Sonus or SonusSub for
the conduct of its respective business except where the failure to obtain
such permits or government authorizations would not reasonably be expected
to result in a Material Adverse Effect on Sonus; and (iv) the
management, handling, storage, transportation, treatment, and disposal by
Sonus and SonusSub of any Hazardous Materials is and has been at all times
in compliance in all material respects with all applicable Environmental
Laws. Sonus has made available to OncoGenex true and complete
copies of all documents, reports, or analyses which are in the possession
of Sonus or its agents, relating to the presence or absence of Hazardous
Materials on, at, under or migrating from or onto any real property
currently or previously owned or leased by Sonus or any of its
Subsidiaries.
|
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(b)
|
To
the knowledge of Sonus, there is no Sonus Environmental Claim pending or
threatened against or involving Sonus or SonusSub or against any Person
whose liability for any Sonus Environmental Claim Sonus or SonusSub has or
may have retained or assumed either contractually or by operation of
law.
|
|
(c)
|
Except
for matters which would not have a Material Adverse Effect on Sonus, to
the knowledge of Sonus, there are no past or present actions or activities
by Sonus, SonusSub or any other Person involving the storage, treatment,
release, emission, discharge, disposal or arrangement for disposal of any
Hazardous Materials, that could reasonably form the basis of any Sonus
Environmental Claim against Sonus or SonusSub or against any Person whose
liability for any Sonus Environmental Claim Sonus or SonusSub may have
retained or assumed either contractually or by operation of law. None of
Sonus or any of its Subsidiaries (i) has entered into or agreed to any
consent decree or order or is subject to an order relating to (A)
compliance with Environmental Laws or Sonus Environmental Permits or (B)
the investigation, sampling, monitoring, treatment, remediation, removal
or cleanup of Hazardous Materials and no investigation, litigation or
other proceeding is pending or, to Sonus’ knowledge, threatened with
respect thereto, or (ii) is an indemnitor in connection with any claim
threatened or asserted in writing by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous
Materials.
|
|
3.2.35
|
Condition and
Sufficiency of Assets
|
All
facilities, machinery and equipment owned or used by each of Sonus and its
Subsidiaries that are material to its business are in good operating condition
and in a state of good repair and maintenance, reasonable wear and tear
excepted. Each of Sonus and its Subsidiaries owns or leases all of the property
and assets (excluding Intellectual Property, which is dealt with in
Section 3.2.36 below) used in or necessary for the conduct of its business
as it is currently being conducted with good and marketable title to all
property and assets which are owned by Sonus or any of its Subsidiaries, free
and clear of any and all Encumbrances, other than Permitted Encumbrances or as
otherwise set forth in Section 3.2.35 of the Sonus Disclosure Schedule.
Since the incorporation of Sonus there has not been any significant interruption
of operations, supplies, access or services by contractors of Sonus’ business as
heretofore carried on due to inadequate maintenance of any of the property or
assets owned and used by Sonus. With the exception of assets which, by their
nature, are portable and intended to be used in different locations (such as
notebook computers), all of the tangible assets of Sonus and its Subsidiaries
are situate at the locations specified in Section 3.2.35 of the Sonus
Disclosure Schedule.
|
3.2.36
|
Intellectual
Property
|
|
(a)
|
Set
forth in Section 3.2.36(a) of the Sonus Disclosure Schedule is a true and
complete list of the Sonus Inventions and the Sonus
Trademarks. Except as disclosed in Section 3.2.36 of the
Sonus Disclosure Schedule or the agreements referred to
therein:
|
|
(i)
|
Sonus
or one of its Subsidiaries, as the case may be, (A) has the exclusive and
unrestricted right to Use all of the Sonus Intellectual Property (in each
case, free and clear of any Encumbrances, except for Permitted
Encumbrances),
|
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|
(B)
is listed in the records of the appropriate United States, foreign or
other registry as the sole and exclusive current owner, or licensee of
record for each patent, patent application and trademark registration
included in the Sonus Inventions or Sonus Trademarks owned or licensed by
Sonus or any of its Subsidiaries, as the case may be, and (C) has not
assigned, encumbered or granted any license or other rights to
commercialize the Sonus Inventions or Sonus Trade-names to any other
Person;
|
|
(ii)
|
Each
of Sonus and its Subsidiaries has made all necessary filings, recordations
and payments necessary to protect and maintain its interests in all Sonus
Inventions or Sonus Trademarks owned or licensed by Sonus or any of its
Subsidiaries, as the case may be;
|
|
(iii)
|
Neither
Sonus nor any of its Subsidiaries is required to pay any royalty or other
fee to any Person in respect of the Use of any of the Sonus Intellectual
Property;
|
|
(iv)
|
Neither
Sonus nor any of its Subsidiaries has entered into, nor is subject to, any
order, indemnification, forbearance to xxx, settlement agreement, license
or other arrangement that (i) restricts Sonus’ or any of its Subsidiaries’
right to use or exploit any Sonus Intellectual Property, (ii) restricts
Sonus’ or any of its Subsidiaries’ business in any material manner in
order to accommodate any third Person’s intellectual property rights, or
(iii) permits any Person to use any material Sonus Intellectual Property
except as expressly permitted under an Sonus IP Contract (as defined in
Section 3.2.36(d) below);
|
|
(v)
|
None
of the Sonus Trademarks is in use;
|
|
(vi)
|
to
the knowledge of Sonus, there is no and has not been any unauthorized use,
infringement or misappropriation of any of the Sonus Inventions or Sonus
Trademarks by any Person, whether directly or
indirectly;
|
|
(vii)
|
to
the knowledge of Sonus, neither Sonus nor any of its Subsidiaries has
received notice of pending or threatened claims or litigation contesting
the validity, ownership or right to use, sell, license or dispose of any
of the Sonus Intellectual Property and, to the best of the knowledge of
Sonus, there is no basis for such
claim;
|
|
(viii)
|
to
the knowledge of Sonus, the Sonus Inventions were made only by the
individuals (the “Sonus
Inventors”) listed in Section 3.2.36 of the Sonus Disclosure
Schedule;
|
|
(ix)
|
the
Sonus Inventors have assigned all of their rights to the Sonus Inventions
to Sonus; and
|
|
(x)
|
there
are no distributors, sales agents, representatives or any other Persons
who have rights to market or license the Sonus
Inventions;
|
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(b)
|
Except
for third party software programs that are “shrink wrapped” (that is, not
customized for Sonus) and/or that are purchased off-the-shelf by Sonus or
any of its Subsidiaries, neither Sonus nor any of its Subsidiaries owns or
uses any software and no software has been licensed by Sonus or any of its
Subsidiaries to any third parties.
|
|
(c)
|
Except
as disclosed in Section 3.2.36 of the Sonus Disclosure Schedule, to the
knowledge of Sonus, the conduct of the Sonus Business does not infringe
and the use of the Sonus Intellectual Property does not misappropriate,
infringe or otherwise violate, whether directly or indirectly, any
copyright, patent, trade-xxxx, trade name, industrial design, trade secret
or other intellectual property or proprietary right of any other Person,
and the conduct of the Sonus Business does not include any activity which
may constitute passing off. Neither Sonus nor any of its
Subsidiaries has received any written charge, complaint, claim, demand or
notice from any Person (i) alleging misappropriation, infringement, or
other violation by Sonus or any of its Subsidiaries of any intellectual
property or proprietary rights of any Person, (ii) alleging that the use
by Sonus or any of its Subsidiaries of Sonus Intellectual Property
licensed by Sonus or any of its Subsidiaries is in breach of any
applicable grant, license, agreement, instrument or other arrangement
pursuant to which Sonus or any Subsidiary acquired the right to use such
intellectual property, or (iii) alleging misuse or antitrust violations
arising from the use or other exploitation of any Sonus Intellectual
Property. No Sonus Intellectual Property has been or is being
used or enforced by Sonus or any of its Subsidiaries or by any of their
licensors, in a manner that, individually or in the aggregate, is
reasonably likely to result in the cancellation, invalidity or
unenforceability of such Sonus Intellectual
Property.
|
|
(d)
|
To
Sonus’ knowledge, the agreements under which Sonus or any of its
Subsidiaries has been granted rights in any intellectual property owned or
controlled by a third Person are valid and legally enforceable, and free
and clear of all Encumbrances, except for Permitted
Encumbrances. With respect to any Sonus Intellectual Property
which is held under sublicense, Sonus’ or its Subsidiaries’ rights, as the
case may be, shall survive any termination of the sublicensor’s rights
from its licensor. None of the Sonus Intellectual Property that is being
licensed by Sonus or any of its Subsidiaries shall be limited or their use
thereof impaired, by the execution of this Agreement and the consummation
of the transactions contemplated hereby. Each of Sonus and its
Subsidiaries has made all necessary filings, recordations and payments to
comply in all material respects with contractual obligations that it may
have to third Persons, if any, to protect and maintain all intellectual
property rights that are licensed to Sonus or any of its Subsidiaries by
such third Persons. Sonus has provided OncoGenex with access to
true and complete copies of all agreements under which Sonus or any of its
Subsidiaries has obtained or granted any rights, title or interests in or
to, or which by their terms expressly restrict Sonus or any of its
Subsidiaries with respect to, any intellectual property (each, an “Sonus IP Contract”)
related to any or all of the Sonus Products, other than standard license
agreements for commercially-available, off-the-shelf software. Except as
provided in the Sonus IP Contracts, (i) Sonus or one of its Subsidiaries
has the exclusive right to develop, commercialize, manufacture, market,
sell, import and otherwise exploit each of the Sonus Products, and (ii)
neither Sonus nor any of its Subsidiaries has granted, assigned, licensed
or otherwise transferred to any Person any right, title or interest in or
to any Sonus Intellectual Property relating to any Sonus
Product.
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(e)
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None
of Sonus, SonusSub, nor, to the best of the knowledge of Sonus, any
employee of Sonus or SonusSub is in violation in any material respect of
any term of any employment contract, general non-disclosure agreement, non
competition agreement or any other covenant or any other common law
obligation to a former employer or anyone else which relates to the right
of any such employee to be employed by Sonus or SonusSub or to the use of
trade secrets or proprietary information of any third
party.
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(f)
|
To
the best of the knowledge of Sonus, all technical information developed by
and belonging to Sonus or SonusSub for which a copyright has not been
registered or for which a patent application has not been made, which has
not otherwise been deliberately or consciously made public or disclosed
pursuant to a written non-disclosure agreement, has been kept
confidential.
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(g)
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All
employees of Sonus and SonusSub have entered into proprietary rights or
similar agreements with Sonus or SonusSub pursuant to which the employee
assigns to Sonus or SonusSub all Sonus Intellectual Property, technical
information and other information developed and/or worked on by the
employees while employed or engaged by Sonus or
SonusSub.
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(h)
|
All
employees and Persons having access to or knowledge of the Sonus
Intellectual Property through Sonus or SonusSub of a confidential nature
that is necessary or required or otherwise used for or in connection with
the conduct or operation or proposed conduct or operation of the Sonus
Business have entered into appropriate non-disclosure agreements with
Sonus or SonusSub.
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3.2.37
|
Regulatory
Compliance
|
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(a)
|
Sonus
has previously made available to OncoGenex complete and accurate copies of
all Sonus Licenses and regulatory dossiers relating thereto, and all other
communications, documents and other information submitted to or received
from the FDA and other Regulatory Authorities, including inspection
reports, warning letters, deficiency letters, non-approvable
letters/orders, withdrawal letters/orders and similar documents, relating
to Sonus or any of its Subsidiaries, the conduct of their business, or
Sonus’ Products that are material to the business of Sonus and its
Subsidiaries, taken as a whole, as currently conducted (collectively, the
“Sonus Regulatory
Correspondence”). Sonus shall promptly deliver to OncoGenex copies
of all Sonus Regulatory Correspondence received or reduced to written form
between the date of this Agreement and the Effective Date. Each
Sonus Licence from any Regulatory Authority relating to Sonus or any of
its Subsidiaries, Sonus Products, and/or the conduct of their business is
on file with the applicable Regulatory Authorities and is in compliance in
all material respects with all formal filing and maintenance requirements.
Each of Sonus and its Subsidiaries has filed all required notices and
responses to notices, supplemental applications, reports and other
information with each applicable Regulatory Authority, except where the
failure to so file, individually or in the aggregate, has not had and
would not have a Material Adverse Effect on Sonus. No fines or
penalties are due and payable in respect of any such Sonus Licence or any
violation thereof.
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(b)
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Except
as set forth on Section 3.2.37 of the Sonus Disclosure Schedule, as to
each Pharmaceutical Product subject to the jurisdiction of the FDA under
the FDCA or the PHSA, and the regulations thereunder, and each product
subject to the jurisdiction of the DEA under the CSA, and the regulations
under each of the that is or has been manufactured, packaged, labeled,
sold, distributed, marketed, and/or tested by Sonus or SonusSub or on
behalf of Sonus or SonusSub by any third party (each such party, an “Sonus Partner”), such
Pharmaceutical Product is being or was manufactured, packaged, labeled,
sold, distributed, marketed, and/or tested by Sonus, SonusSub or an Sonus
Partner in compliance with all applicable requirements under FDCA, PHSA,
CSA, and similar laws, rules, regulations, and guidelines except where the
failure to be in compliance would not have a Material Adverse Effect on
Sonus. Except as disclosed in the Section 3.2.37 of the
Sonus Disclosure Schedule, neither Sonus nor SonusSub has received any
notice of adverse findings, inspection report, warning letter, Section 305
notice, or other communication from the FDA, DEA, or any other
Governmental Entity (i) contesting the premarket clearance,
licensure, registration, approval, use, distribution, manufacturing,
testing, sale, labeling, or promotion of any Pharmaceutical Product
described in this Section 3.2.37 or (ii) otherwise alleging any
violation of any laws, rules, regulations, or guidelines by Sonus,
SonusSub or any Sonus Partner, and which would have a Material Adverse
Effect on Sonus or any Pharmaceutical
Product.
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(c)
|
Except
as set forth on Section 3.2.37 of the Sonus Disclosure Schedule, no
Pharmaceutical Products of Sonus or SonusSub have been recalled,
withdrawn, replaced, suspended or discontinued nor have any DEA
registrations been terminated by Sonus or SonusSub in the United States or
outside the United States (whether voluntarily or otherwise) which would
have a Material Adverse Effect on
Sonus.
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(d)
|
Neither
Sonus nor SonusSub, nor any officer, employee or agent of Sonus or
SonusSub, nor, to Sonus’ knowledge, any Sonus Partner, has made any untrue
statement of a material fact or fraudulent statement to any Regulatory
Authority, failed to disclose a fact required to be disclosed to a
Regulatory Authority, or committed an act, made a statement, or failed to
make a statement that, at the time such disclosure was made, could
reasonably be expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting “Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities”, set forth
in 56 Fed. Reg. 46191 (September 10, 1991), and any amendments thereto, or
any similar policy. Neither Sonus, its Subsidiaries nor, to
Sonus’ knowledge, any Sonus Partner, has engaged in any activity
prohibited under any Health Care Law. There is no civil,
criminal, administrative or other proceeding, notice or demand pending,
received or, to Sonus’ knowledge, threatened against Sonus, its
Subsidiaries or Sonus Partners, which relates to violation of any Health
Care Law. Neither Sonus nor SonusSub nor any officer, employee, or agent
of Sonus or Sonus Sub, nor, to Sonus’ knowledge, any Sonus
Partner, has been convicted of any crime or engaged in any conduct for
which debarment is mandated by 21 U.S.C. sec. 335a(a) or any similar law
or authorized by 21 U.S.C. sec. 335a(b) or any similar
law. There are no consent decrees (including plea agreements)
or similar actions to which Sonus, its Subsidiaries or, to Sonus’
knowledge, any Sonus Partner, is bound or which relate to the Sonus
Pharmaceutical Products.
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(e)
|
Except
as set forth on Section 3.2.37 of the Sonus Disclosure Schedule,
neither Sonus nor SonusSub has received any written notice that the FDA or
any other Governmental Entity has commenced, or threatened to initiate,
any action, including lawsuits, arbitrations, or legal or administrative
or regulatory proceedings, charges, complaints, or investigations, nor are
there any completed or pending efforts to withdraw its approval of,
request the recall of, suspension of, seizure of, change the quotas for
controlled substances, or change the controlled substances schedules of
any Pharmaceutical Product of Sonus or SonusSub, or commenced, or
threatened to initiate, any action to impose a clinical hold on any
clinical investigation by Sonus or SonusSub, withdraw advertising or sales
promotion materials, or any action to enjoin production at, or suspend or
revoke the DEA registration or any facility of, or enter into a consent
decree of permanent injunction with Sonus or SonusSub which would have a
Material Adverse Effect on Sonus.
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(f)
|
The
development, manufacture and testing of Sonus Products, and all required
pre-clinical toxicology studies and Sonus-sponsored clinical trials
conducted or being conducted with respect thereto, by Sonus or any of its
Subsidiaries have been and are being conducted in compliance in all
material respects with applicable Sonus Licences and applicable Law,
including, without limitation, the applicable requirements of Good
Manufacturing Practices, Good Laboratory Practices, and Good Clinical
Practices. The results of any such studies, tests and trials,
and all other material information related to such studies, tests and
trials, have been made available to OncoGenex. Each clinical
trial with respect to Pharmaceutical Products of Sonus and SonusSub has
been conducted in accordance with its clinical trial protocol and Sonus or
SonusSub has filed all required notices (and made available to OncoGenex
copies thereof) of adverse drug experiences, injuries or deaths relating
to clinical trials of such Pharmaceutical Products, and Sonus or SonusSub
has filed all required notices of any such occurrence, except where the
failure to be in compliance with the protocol or relevant reporting
requirements would not have a Material Adverse Effect on
Sonus.
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3.2.38
|
Unlawful
Payments
|
None of
Sonus, SonusSub, or any officer, director, employee, agent or representative of
Sonus or SonusSub has made, directly or indirectly, any bribe or kickback,
illegal political contribution, payment from corporate funds which was
incorrectly recorded on the books and records of Sonus or SonusSub, unlawful
payment from corporate funds to governmental or municipal officials in their
individual capacities for the purpose of affecting their action or the actions
of the jurisdiction which they represent to obtain favorable treatment in
securing business or licenses or to obtain special concessions of any kind
whatsoever, or illegal payment from corporate funds to obtain or retain any
business.
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3.2.39
|
Significant
Suppliers
|
Except as
set out in Section 3.2.39 of the Sonus Disclosure Schedule, none of the
suppliers of Sonus or any of its Subsidiaries is a sole supplier and the
products and services provided by each such supplier are available from other
suppliers.
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3.2.40
|
Government
Programs
|
Except as
set out in Section 3.2.40 of the Sonus Disclosure Schedule, no agreements,
loans, funding arrangements or assistance programs are outstanding in favour of
Sonus or any of its Subsidiaries from any Governmental Entity, and, to the
knowledge of Sonus, no basis exists for any Governmental Entity to seek payment
or repayment from Sonus or any of its Subsidiaries of any amount or benefit
received, or to seek performance of any obligation of Sonus or any of its
Subsidiaries, under any such program.
|
3.2.41
|
Personal
Information
|
|
(a)
|
Sonus
has a written privacy policy which governs its collection, use and
disclosure of employee Personal Information applicable to the Sonus
Business and, since the date of adoption of such privacy policy, Sonus is
in compliance in all material respects with such privacy
policy.
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(b)
|
There
has not been any, and as of the date hereof, there is no complaint,
investigation, proceeding or action completed, resolved, pending, or to
the knowledge of Sonus, threatened against or involving in any way Sonus
or the Sonus Business under or in relation to Laws relating to the
protection of personal privacy.
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3.2.42
|
Advisory
Fees
|
Except as
set forth in Section 3.1.42 of the Sonus Disclosure Schedule, and except
for the accountants and lawyers of Sonus retained to negotiate, advance, carry
out and complete the transactions contemplated herein, there is no investment
banker, broker, finder or other intermediary or advisor that has been retained
by or is authorized to act on behalf of Sonus or any of its directors, officers
or shareholders who might be entitled to any fee, commission or reimbursement of
expenses from Sonus upon consummation of the transactions contemplated by this
Agreement.
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3.2.43
|
Other
Negotiations: Brokers; Third Party
Expenses
|
None of
Sonus, its Subsidiaries or, to the knowledge of Sonus, any of its directors,
officers or shareholders (nor any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf of
Sonus or at Sonus’ direction) (a) has entered into any agreement that
conflicts with any of the transactions contemplated by this Agreement, or
(b) has entered into any agreement or had any discussions with any Person
regarding any transaction involving Sonus or any of its Subsidiaries which could
reasonably be expected to result in OncoGenex, Sonus or any of their officers,
directors, employees, agents or shareholders of any of them being subject to any
claim for liability to such Person as a result of entering into this Agreement
or consummating the transactions contemplated hereby. Section 3.2.43 of the
Sonus Disclosure Schedule lists any agreement (other than any agreement with
OncoGenex or any of its Affiliates) with respect to, and a reasonable estimate
of, all Third Party Expenses which are reasonably expected to be incurred by
Sonus in connection with the negotiation and implementation of the terms and
conditions of this Agreement and the transactions contemplated
hereby.
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3.2.44
|
Disclosure
|
The
representations and warranties of Sonus contained in this Agreement and in any
agreement, certificate, affidavit, statutory declaration or other document
delivered or given pursuant to this Agreement, including the Sonus Disclosure
Schedule, are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained in such representations and warranties not
misleading to OncoGenex.
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3.2.45
|
Approval of
Arrangement
|
|
(a)
|
The
Board of Directors of Sonus has determined that the transactions
contemplated by this Agreement are advisable and in the best interests of
Sonus and its shareholders and has resolved to recommend to such
shareholders that they vote in favor of this Agreement and the
transactions contemplated by this Agreement, and approve the issuance of
Sonus Common Shares pursuant to this
Agreement.
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|
(b)
|
All
of Sonus’ directors have advised Sonus that they intend to vote the
securities of Sonus held by them (or that the shareholder on whose behalf
they act as nominee intends to vote the securities of Sonus held by it) in
favour of this Agreement and the transactions contemplated by this
Agreement and will, accordingly, so represent in the Proxy
Statement.
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|
3.2.46
|
Public Company
Matters
|
|
(a)
|
Since
January 1, 2006, Sonus has filed on a timely basis all Sonus SEC Documents
required to be filed by it. As of their respective filing
dates, all Sonus SEC Documents filed by Sonus since January 1, 2006
complied in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder, as the case may be, and none of the Sonus SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were
made, not misleading, except to the extent such Sonus SEC Documents have
been corrected, updated or superseded by a document subsequently filed
with the SEC prior to the date hereof. Except as set forth in the Sonus
Disclosure Schedule, the financial statements of Sonus, including the
notes thereto, included in the Sonus SEC Documents comply as to form in
all material respects with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q under the
Exchange Act) and present fairly the consolidated financial position of
Sonus at the dates thereof and the consolidated results of its operations
and cash flows for the periods then ended (subject, in the case of
unaudited financial statements, to normal year-end
adjustments).
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|
(b)
|
Sonus
is exempt from the registration requirements of the Investment Company Act
of 1940, as amended, pursuant to Rule 3a-8
thereunder.
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(c)
|
Sonus
is not, nor has it at any time previously been, a “shell company”, as
defined in Rule 405 under the Securities Act or Rule 12b-2 under the
Exchange Act, nor will any Person who acquires Sonus Common Shares
pursuant to the Arrangement or upon exercise of Assumed Options be subject
to the resale restrictions set forth in Rule 145 under the Securities Act
or prevented, by virtue of Rule 144(i) under the Securities Act, from
relying upon Rule 144 under the Securities Act with respect to resales of
such securities that are otherwise in compliance with Rule 144 under the
Securities Act.
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(d)
|
None
of Sonus, its predecessors or affiliates have been subject to any order,
judgment or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining such Person for failure to comply
with Rule 503 under the Securities
Act.
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|
(e)
|
As
of the date hereof, no amendments or prospectus supplements are required
to be filed by the Sonus with respect to any registration statement that
has been filed by Sonus under the Securities Act and is presently
effective, nor, excepting the Form S-8 registration statements
contemplated by this Agreement, is Sonus required by Law or contract to
file or seek the effectiveness of any additional registration
statements. Sonus has not received any comments or inquiries
from the SEC’s staff with respect to any registration statement or other
Sonus SEC Document filed by Sonus, except those which have been fully
resolved to the satisfaction of the SEC’s staff. The SEC has
not issued any stop order or other order suspending the effectiveness of
any registration statement filed by
Sonus.
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|
(f)
|
Except
as set forth in Section 3.2.46(f) of the Sonus Disclosure Schedule,
Sonus is on the date hereof in compliance with each of the continued
listing requirements of the NGM and each of the initial listing
requirements of the NCM.
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|
(g)
|
Sonus
has previously provided or made available to OncoGenex true and correct
copies of all corporate governance policies of Sonus currently in effect,
including, but not limited to, policies relating to xxxxxxx xxxxxxx,
related party transactions, non-discrimination, whistleblowers, disclosure
controls, records retention, contract approvals, codes of ethics, and the
charters of all committees of the Board of Directors of Sonus and of all
other committees (such as disclosure committees) of
Sonus.
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|
3.2.47
|
Sonus Common
Shares
|
|
(a)
|
The
Sonus Common Shares and Assumed Options to be issued pursuant to the
Arrangement and Sonus Common Shares to be issued upon exercise from time
to time of the Assumed Options, will, when issued and delivered in
accordance with the terms of this Agreement and the Plan of Arrangement or
the applicable terms attaching to the Assumed Options respectively, be
duly and validly issued by Sonus on their respective dates of issue, in
the case of Sonus Common Shares as fully paid and non-assessable shares
and will not be issued in violation of the terms of any agreement or other
understanding binding upon Sonus at the time that such securities are
issued and will be issued in compliance with the constating documents of
Sonus and all applicable Laws.
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(b)
|
Assuming
and subject to the satisfaction of all conditions precedent set forth in
Sections 5.1 and 5.2, the issuance of Sonus Common Shares to be issued on
the Effective Date pursuant to this Agreement and the Plan of Arrangement
and the assumption and conversion of each OncoGenex Option into Assumed
Options shall be exempt from the registration requirements of the Securities Act by
virtue of the exemption provided in Section 3(a)(10) thereunder. The
resale of Sonus Common Shares issued in exchange for OncoGenex Shares
under the Arrangement will be exempt from the registration requirements of
the Securities
Act, except that Sonus Common Shares held by persons who are
Affiliates of Sonus after the Arrangement may be resold by them only in
compliance with the resale provisions of Rule 144 under the
Securities Act or as otherwise permitted under the Securities
Act. Upon the filing with the SEC of a registration
statement on Form S-8 under the Securities Act with
respect to Sonus Common Shares issuable upon exercise of the Assumed
Options, the sale of Sonus Common Shares upon exercise of the Assumed
Options will be registered under the Securities
Act.
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|
(c)
|
The
issuance of Sonus Common Shares and Assumed Options on the Effective Date
pursuant to this Agreement and the Plan of Arrangement will be exempt from
the prospectus and dealer registration requirements under the applicable
securities laws of the Canadian Jurisdictions. The issuance of Sonus
Common Shares upon the exercise of Assumed Options from time to time in
accordance with their terms, will be exempt from the prospectus and dealer
registration requirements under the applicable securities laws of the
Canadian Jurisdictions. Subject to the terms of any orders described in
Section 2.6(a), and subject to Sonus obtaining such orders prior to
the Effective Date, the “prospectus requirement” (within the meaning of
applicable securities laws of the Canadian Jurisdictions will not apply to
the first trade of Sonus Common Shares (i) issued pursuant to the
Arrangement; or (ii) issued upon exercise of Assumed Options from
time to time in accordance with their terms (collectively, in this
section, the “Transaction
Securities”). In the event that Sonus is unable to obtain the order
referred to in Section 2.6(a) prior to the Effective Date and in the
event that Sonus obtains the receipt (the “Prospectus Receipt”) for
the (final) prospectus contemplated in Section 2.6(b) after the
Effective Date, the first trade of Transaction Securities, from time to
time, after the date on which Sonus obtains the Prospectus Receipt will
not be or deemed to be a “distribution” (within the meaning of applicable
securities laws of the Canadian Jurisdictions provided
that:
|
|
(i)
|
Sonus
is a reporting issuer in a jurisdiction of Canada at the time of the
trade;
|
|
(ii)
|
the
trade is not a “control distribution” as defined in National Instrument
45-102 – Resale of Securities;
|
|
(iii)
|
no
unusual effort is made to prepare the market or to create a demand for the
securities that are the subject of the
trade;
|
|
(iv)
|
no
extraordinary commission or consideration is paid to a person or company
in respect of the trade; and
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(v)
|
if
the selling security holder is an insider or officer of Sonus, the selling
security holder has no reasonable grounds to believe that Sonus is in
default of securities legislation.
|
The
foregoing representation is based on Laws in effect or as proposed as of the
date hereof and assuming that such Laws are not amended prior to the date of any
particular trade referred to above and is also based on the qualification that
no “cease-trade” or similar order restricting trades in any of the Transaction
Securities is in effect at such time.
|
3.2.48
|
Other
Transactions
|
As at the
date hereof, Sonus is not in any discussions to acquire any third party other
than OncoGenex.
|
3.2.49
|
Intentionally
deleted
|
|
3.2.50
|
Working Capital
Position
|
As of the
date of this Agreement, the aggregate amount of (i) Sonus’ cash on hand,
plus (ii) liquid investments of Sonus with a maturity of three year or
less, plus (iii) accounts receivable, plus (iv) interest receivable,
minus (v) accounts payable, minus (vi) accrued liabilities (excluding
deferred rent), plus (vii) a reserve for any severance paid or payable with
respect to the termination of the Sonus CEO and Sonus CFO, plus (viii) an amount
equal to fees and expenses actually incurred in connection with the preparation
and filing of a prospectus in Canada pursuant to Section 2.6(b) of this
Agreement and in connection with listing for trading of Sonus Common Shares on
the Toronto Stock Exchange ((i) through (viii) “Sonus Current Working
Capital”) is at least $23.1 million. As of the date of this
Agreement, Sonus has no indebtedness except as reflected in the audited
consolidated financial statements of Sonus included in Sonus’ Annual Report on
Form 10-K for the fiscal year ended December 31, 2007, as reflected in any
Sonus SEC Document filed since December 31, 2007, or as otherwise incurred in
the ordinary course of business.
|
3.2.51
|
Disclosure
Controls
|
Except as
disclosed on Section 3.2.51 of the Sonus Disclosure Schedule, Sonus has
established and maintains adequate disclosure controls and procedures and
internal controls over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by
Rule 13a-15 under the Exchange Act. Sonus’
disclosure controls and procedures are reasonably designed to ensure that all
material information required to be disclosed by Sonus in the reports that it
files or furnishes under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC, and that all such material information is
accumulated and communicated to Sonus’ management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications required
pursuant to SEC regulation.
|
3.2.52
|
Disclosure of Material
Weaknesses
|
Sonus has
disclosed, based on its evaluation for the fiscal year ended December 31,
2007, to its outside auditors and the audit committee of its Board of Directors
(i) all significant deficiencies
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and
material weaknesses, if any, in the design or operation of internal control over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are
reasonably likely to materially affect Sonus’ ability to record, process,
summarize and report financial data and (ii) any fraud, whether or not
material, known to management that involves management or other employees who,
in each case, have a significant role in Sonus’ internal control over financial
reporting.
3.3 Non-Waiver
No
investigations made by or on behalf of any of the parties at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by any other party herein or pursuant hereto,
unless disclosure of the fact at issue is expressly made in writing in this
Agreement, including the OncoGenex Disclosure Schedule (in the case of
OncoGenex) and the Sonus Disclosure Schedule (in the case of Sonus) prior to the
execution hereof and such disclosure contains no material untrue statement.
Notwithstanding anything else in this Agreement, the OncoGenex Disclosure
Schedule or the Sonus Disclosure Schedule, any matter disclosed or described in
any appropriate representation or warranty of a Company contained in this
Agreement or in any appropriate section of the OncoGenex Disclosure Schedule or
the Sonus Disclosure Schedule shall be deemed to have been disclosed and
described in all related representations and warranties of OncoGenex or Sonus
and sections of the OncoGenex Disclosure Schedule or Sonus Disclosure Schedule,
as the case may be.
3.4 Survival
For
greater certainty, the representations and warranties of OncoGenex and Sonus
contained herein shall survive the execution and delivery of this Agreement and
shall terminate on the earlier of the termination of this Agreement in
accordance with its terms and the Effective Time on the Effective
Date.
|
4.
|
ESCROW
PROVISIONS
|
4.1 Establishment of the
Escrow
From the
total number of Sonus Common Shares issuable to each OncoGenex Shareholder
pursuant to Section 2.3(c), Sonus shall, at or promptly after the Effective
Time, deduct and cause to be deposited, without any act or formality on the part
of the OncoGenex Shareholder, that number of Sonus Common Shares as is equal to
the number of OncoGenex Shares held by the OncoGenex Shareholder immediately
prior to the Effective Time multiplied by the Escrow Ratio. All Sonus
Common Shares deposited with the Escrow Agent shall be governed by the terms set
forth in the Escrow Agreements. Pursuant to the terms of the Escrow
Agreements, and subject to the provisions thereof, the Deposited Securities
shall be released to the OncoGenex Shareholders in the amounts set forth
opposite, and upon the achievement of, the milestones set forth on Schedule A to
the Escrow Agreements.
4.2 Return to Treasury of
Unreleased Deposited Securities
Any
Deposited Securities that have not been released to the Escrow Shareholders
pursuant to the Escrow Agreements prior to the Expiration Date shall be
delivered by the Escrow Agent to Sonus for cancellation, as soon as practicable
after the Expiration Date.
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5.
|
ADDITIONAL
COVENANTS
|
5.1 Retention of
Goodwill
During
the Pre-Effective Date Period, OncoGenex and Sonus will, subject to the fact
that the Arrangement and related transactions are contemplated hereby, continue
to carry on business in the ordinary course, working to preserve the attendant
goodwill of the Companies and to contribute to retention of that goodwill to and
after the Effective Date. The following provisions of this Section 5 are
intended to be in furtherance of this general commitment, subject to the fact
that the Arrangement and related transactions are contemplated
hereby.
5.2 Covenants of
OncoGenex
|
(a)
|
OncoGenex
covenants and agrees that, until the Effective Date or the earlier
termination of this Agreement in accordance with Section 7, except (i)
with the consent of Sonus to any deviation therefrom, (ii) with respect to
any matter contemplated by this Agreement or the Plan of Arrangement, or
(iii) as set forth in Section 5.2 of the OncoGenex Disclosure Schedule,
OncoGenex will and will cause its Subsidiaries, as applicable,
to:
|
|
(i)
|
carry
on the OncoGenex Business in the ordinary course consistent with past
practice, except for changes which are a result of the Arrangement and the
transactions contemplated by this Agreement and use all reasonable efforts
to preserve intact its present business organization and keep available
the services of its present officers and employees and others having
business dealings with it to the end that its goodwill and business shall
be maintained;
|
|
(ii)
|
not
commence to undertake a substantial or unusual expansion of its business
facilities or an expansion that is out of the ordinary course of business
in light of current market and economic conditions, or make any capital
expenditures other than capital expenditures in the ordinary and usual
course of business consistent with past
practice;
|
|
(iii)
|
not
split, combine or reclassify any of the outstanding OncoGenex Shares, nor
declare or pay any dividends on or make any other distributions (in either
case, in stock or property) on or in respect of the outstanding OncoGenex
Shares;
|
|
(iv)
|
not
amend or change its articles or by-laws, except as contemplated by the
Arrangement;
|
|
(v)
|
not
allot, reserve, set aside or issue, authorize or propose the allotment,
reservation, setting aside or issuance of, or purchase or redeem or
propose the purchase or redemption of, any shares in its capital stock or
any class of securities convertible or exchangeable into, or rights,
warrants or options to acquire, any such shares or other convertible or
exchangeable securities, except for (A) the issuance of OncoGenex
Common Shares pursuant to the exercise of fully vested OncoGenex Options
granted prior to the date hereof and (B) the issuance of OncoGenex
Common Shares to holders of
|
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|
OncoGenex
Preferred Shares upon the exercise by the holders thereof of the right of
conversion attached to such shares and (C) the issuance of OncoGenex
Shares to holders of OncoGenex Debentures upon the exercise by the holders
thereof of the right to convert OncoGenex
Debentures;
|
|
(vi)
|
not,
whether through its Board of Directors or otherwise, accelerate, or permit
to be accelerated, the vesting of any unvested OncoGenex Options or
otherwise amend, vary or modify, or take any other action under the
OncoGenex Stock Option Plan other than as contemplated in this Agreement
or Section 3.1.3(c)(iv) of the OncoGenex Disclosure
Schedule;
|
|
(vii)
|
not
acquire or agree to acquire any OncoGenex Shares or other of its
outstanding securities, whether by public or private transaction, or
otherwise;
|
|
(viii)
|
not
reorganize, amalgamate or merge OncoGenex with any other Person, nor
acquire or agree to acquire by amalgamating, merging or consolidating
with, purchasing a majority of the voting securities of, or purchasing
substantially all of the assets of, or by any other means, any business of
any Person;
|
|
(ix)
|
not
loan any money, guarantee the payment of indebtedness or incur
indebtedness for money borrowed or issue or sell any debt securities,
other than in the ordinary course of
business;
|
|
(x)
|
other
than in the ordinary course of business or as specifically contemplated in
this Agreement, or except to the minimum extent required to comply with
applicable Law or to the minimum extent required in order to avoid adverse
treatment under Section 409A of the Code, but subject to restrictions set
out elsewhere in this Agreement, not enter into or modify any employment,
severance, collective bargaining or other Employee Benefits, policies or
arrangements with, or grant any bonuses, salary increases, stock options,
restricted stock, pension or supplemental pension benefits, profit
sharing, retirement allowances, deferred compensation, incentive
compensation, severance or termination pay to, or make any loan to, any
officers, directors or employees of
OncoGenex;
|
|
(xi)
|
not,
except in the ordinary course of
business:
|
|
(A)
|
satisfy
or settle any claims or liabilities prior to the same being due, except
such as have been reserved against in the OncoGenex Financial Statements
or the OncoGenex Interim Financial Statements, which are, individually or
in the aggregate, material; or
|
|
(B)
|
grant
any waiver, exercise any option or relinquish any contractual rights which
are, individually or in the aggregate,
material;
|
|
(xii)
|
use
its reasonable commercial efforts to cause its current insurance (or
re-insurance) policies not to be cancelled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance and
re-insurance
|
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|
|
companies
of nationally recognized standing providing coverage equal to or greater
than the coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and
effect;
|
|
(xiii)
|
not
waive, release, assign, settle or compromise any material claims, or any
material litigation for an amount in excess of $25,000, individually, or
$100,000 in the aggregate, or which would impose any material restriction
on the business of OncoGenex or Sonus or any of their Subsidiaries or
would reasonably be expected to create precedent for claims that are
reasonably likely to be material to OncoGenex or Sonus or any of their
Subsidiaries;
|
|
(xiv)
|
not
forgive any loans to directors, officers or employees of OncoGenex or any
of its Subsidiaries, nor settle or compromise any claim brought by any
present, former or purported holder of any of its securities in connection
with the transactions contemplated by this Agreement or the Arrangement
prior to the Effective Date;
|
|
(xv)
|
make
any material tax election, settle or compromise any material liability for
Taxes, amend any Tax Return or file any refund for Taxes, other than in
the ordinary course of business or as may be required by a Governmental
Entity;
|
|
(xvi)
|
not
enter into any material contract, agreement, licence, franchise, lease
transaction, commitment or other right or obligation that would constitute
an OncoGenex Material Agreement if entered into or otherwise relates to
the development or commercialization of any pharmaceutical or medical
device product, or amend, modify, relinquish, terminate or fail to renew
in any material respect any OncoGenex Material Agreement, all other than
in the ordinary course of business;
|
|
(xvii)
|
(A) not
acquire or sell, pledge, license, guarantee, encumber or otherwise dispose
of, or authorize any of the foregoing with respect to, any material
property or assets (including any OncoGenex Intellectual Property), except
for the sale of inventory in the ordinary course of business;
or
|
|
(B)
|
not
incur or commit to incur capital expenditures prior to the Effective Date,
other than in the ordinary course of business, and not, in any event,
exceeding $50,000;
|
|
(xviii)
|
take
all action necessary or advisable to protect or maintain the OncoGenex
Intellectual Property owned by OncoGenex or any of its Subsidiaries that
is material to the conduct of the OncoGenex Business as currently
conducted and currently proposed to be conducted, including the
prosecution of all pending applications for patents and trademarks, the
filing of any documents or other information or the payment of any
maintenance or other fees related
thereto;
|
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(xix)
|
not
make any material changes to existing accounting practices relating to
OncoGenex, except as required by applicable Law or required by GAAP or
make any material tax election inconsistent with past practice;
and
|
|
(xx)
|
authorize
or enter into any contract or otherwise make any commitment to do any of
the foregoing; and
|
|
(xxi)
|
promptly
advise Sonus in writing:
|
|
(A)
|
of
any event occurring subsequent to the date of this Agreement, other than
in the ordinary course of business, that would render any representation
or warranty of OncoGenex contained in this Agreement (except any such
representation or warranty which speaks as of a date prior to the date of
this Agreement), if made on or as of the date of such event or the
Effective Date, untrue or inaccurate in any material
respect;
|
|
(B)
|
of
any Material Adverse Change in respect of OncoGenex other than a Material
Adverse Change specifically authorized by this Agreement;
and
|
|
(C)
|
of
any breach by OncoGenex of any covenant or agreement contained in this
Agreement.
|
|
(b)
|
OncoGenex
shall perform all obligations required or desirable to be performed by
OncoGenex under this Agreement and shall do all such other acts and things
as may be necessary or desirable in order to consummate and make
effective, as soon as reasonably practicable, the transactions
contemplated in this Agreement and, without limiting the generality of the
foregoing, OncoGenex shall:
|
|
(i)
|
use
all reasonable efforts to obtain the approvals of the OncoGenex
Securityholders to the Arrangement at the OncoGenex Meetings or by consent
resolution, as provided for in Section 2.2(b) and in the Interim
Order, subject, however, to the exercise by the Board of Directors of
OncoGenex of its fiduciary duties as provided
herein;
|
|
(ii)
|
apply
for and use all reasonable efforts to obtain all Appropriate Regulatory
Approvals set out in Part II of Exhibit A and, in doing so, to keep
Sonus reasonably informed as to the status of the proceedings relating to
obtaining the Appropriate Regulatory Approvals, including providing Sonus
with copies of all related applications and notifications, in draft form,
in order for Sonus to provide its reasonable
comments;
|
|
(iii)
|
use
reasonable efforts to cause to be voted in favour of the Sonus Shareholder
Resolutions at the Sonus Meeting all proxies granted to officers of
OncoGenex under the Voting Agreements executed by the Sonus Affiliated
Stockholders, to the maximum extent that such officers are authorized or
permitted to do so under such proxies and under applicable
Law;
|
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(iv)
|
apply
for and use all reasonable efforts to obtain the Interim Order and the
Final Order;
|
|
(v)
|
carry
out the terms of the Interim Order and Final Order applicable to it and
use its reasonable efforts to comply promptly with all requirements which
applicable Laws may impose on OncoGenex with respect to the transactions
contemplated hereby and by the
Arrangement;
|
|
(vi)
|
defend
all lawsuits or other legal, regulatory or other proceedings challenging
or affecting this Agreement or the consummation of the transactions
contemplated hereby;
|
|
(vii)
|
use
all reasonable efforts to have lifted or rescinded any injunction or
restraining order or other order relating to OncoGenex which may adversely
affect the ability of the parties to consummate the transactions
contemplated hereby;
|
|
(viii)
|
on
or before the Effective Date, effect all necessary registrations, filings
and submissions of information required by Governmental Entities from
OncoGenex relating to the transactions contemplated
herein;
|
|
(ix)
|
in
connection with the Arrangement and other transactions contemplated
herein, use its reasonable efforts to obtain, before the Effective Date,
all necessary waivers, consents and approvals required to be obtained by
OncoGenex from other parties pursuant to the Material
Agreements;
|
|
(x)
|
execute
and deliver to Sonus, on or before the Effective Date, the Assumption
Agreement;
|
|
(xi)
|
deliver
to Sonus on or before the Effective Date evidence, in a form acceptable to
Sonus acting reasonably, of the termination of the Shareholders’ Agreement
and termination of the UBC Shareholders
Agreement;
|
|
(xii)
|
deliver
to Sonus, not less than 12 Business Days prior to the Effective Date, a
certificate duly executed by two directors or senior officers of OncoGenex
setting forth the aggregate number of OncoGenex Shares issued and
outstanding as at the date of such certificate (which shall also be the
number of such shares outstanding as at the Effective Date) and the
aggregate number of OncoGenex Shares which are or may at any future time
become issuable upon the exercise in full of all OncoGenex Options
outstanding as at the Effective Date, including all OncoGenex Options
which are not fully vested or immediately exercisable as at the Effective
Date (which shall also be the number of such shares issuable thereunder as
at the Effective Date), and certifying that there are no further rights,
agreements or arrangements of any nature or kind then outstanding for the
acquisition of further OncoGenex Shares, or securities convertible into or
exchangeable for OncoGenex Shares;
|
|
(xiii)
|
not,
notwithstanding any other provision of this Agreement (including the
Exhibits hereto and the OncoGenex Disclosure Schedule), allot, issue or
grant
|
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|
|
any
OncoGenex Shares, OncoGenex Options or other securities convertible into
or exchangeable for OncoGenex Shares, or enter into any agreements or
arrangements relating thereto, to or with any Person or for any reason
between the date of the certificate referred to in
Section 5.2(b)(xii) and the Effective
Date;
|
|
(xiv)
|
subject
to the Plan of Arrangement, use all reasonable efforts to assist all
OncoGenex Securityholders who are not residents of Canada for purposes of
the Income Tax
Act (Canada) to obtain appropriate clearance certificates pursuant
to Section 116 of such Act;
|
|
(xv)
|
use
all reasonable efforts to obtain Major Investor Approval (as defined in
the share rights attaching to the OncoGenex Preferred Shares (the “OncoGenex Preferred Share
Rights”)) to exclude the Arrangement and the transactions
contemplated by this Agreement as a Liquidation Event (as defined in the
OncoGenex Preferred Share Rights) and to approve the transactions
contemplated by this Agreement;
|
|
(xvi)
|
use
all reasonable efforts to cause the Escrow Shareholders or the Escrow
Shareholders' Agent to execute, on or before the Effective Date, the
Escrow Agreements; and
|
|
(xvii)
|
not
approve or register the transfer of any OncoGenex Shares which are subject
to the provisions of the Voting Agreements executed by OncoGenex
Affiliated Shareholders, except as expressly permitted by such Voting
Agreements.
|
|
(c)
|
OncoGenex
shall not, directly or indirectly, through any officer, director,
employee, representative or agent of
OncoGenex:
|
|
(i)
|
solicit,
initiate or knowingly encourage (including by way of furnishing
information or entering into any form of agreement, arrangement or
understanding) the initiation of any inquiries or proposals regarding an
Acquisition Proposal;
|
|
(ii)
|
participate
in any discussions or negotiations regarding any Acquisition
Proposal;
|
|
(iii)
|
withdraw
or modify in a manner adverse to Sonus the approval of the Board of
Directors of OncoGenex of the transactions contemplated
hereby;
|
|
(iv)
|
approve
or recommend any Acquisition Proposal;
or
|
|
(v)
|
enter
into any agreement, arrangement or understanding related to any
Acquisition Proposal.
|
OncoGenex
agrees that it will immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties regarding any
Acquisition Proposal. OncoGenex shall ensure that its officers,
directors and employees and any financial advisors or other advisors,
representatives or agents
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retained
by it are aware of the provisions of this Section 5.2(c), and it shall be
responsible for any breach of this Section 5.2(c) by any such
Person.
5.3 Covenants of
Sonus
|
(a)
|
Sonus
covenants and agrees that, until the Effective Date or the earlier
termination of this Agreement in accordance with Section 7, except (i)
with the consent of OncoGenex to any deviation therefrom, (ii) with
respect to any matter contemplated by this Agreement or the Plan of
Arrangement, or (iii) as set forth in Section 5.3 of the Sonus Disclosure
Schedule, Sonus will and will cause its Subsidiaries, as applicable,
to:
|
|
(i)
|
carry
on the Sonus Business in the ordinary course consistent with past
practice, except for changes which are as a result of the Arrangement and
the transactions contemplated by this Agreement and use all reasonable
efforts to preserve intact its present business organization and keep
available the services of its present officers and employees and others
having business dealings with it to the end that its goodwill and business
shall be maintained;
|
|
(ii)
|
not
commence to undertake a substantial or unusual expansion of its business
facilities or an expansion that is out of the ordinary course of business
in light of current market and economic conditions, or make any capital
expenditures other than capital expenditures in the ordinary and usual
course of business consistent with past
practice;
|
|
(iii)
|
not,
except as contemplated by the Reverse Stock Split, split, combine or
reclassify any of the outstanding Sonus Common Shares, nor declare or pay
any dividends on or make any other distributions (in either case, in stock
or property) on or in respect of the outstanding Sonus Common
Shares;
|
|
(iv)
|
not
amend its certificate of incorporation or by-laws, except by filing the
Certificate of Amendment;
|
|
(v)
|
not
allot, reserve, set aside or issue, authorize or propose the allotment,
reservation, setting aside or issuance of, or purchase or redeem or
propose the purchase or redemption of, any shares in its capital stock or
any class of securities convertible or exchangeable into, or rights,
warrants or options to acquire, any such shares or other convertible or
exchangeable securities, except for (A) the issuance of Sonus Common
Shares pursuant to the exercise of fully vested stock options granted
prior to the date hereof and disclosed in Section 3.2.2 of the Sonus
Disclosure Schedule and (B) the issuance of Sonus Common Shares to
holders of warrants disclosed in Section 3.2.2 of the Sonus
Disclosure Schedule upon the exercise by the holders
thereof;
|
|
(vi)
|
not,
whether through its Board of Directors or otherwise, amend, vary, modify,
accelerate, or permit to be amended, varied, modified or accelerated, any
stock options, restricted stock or other stock based compensation awards
or otherwise amend, vary or modify, or take any other action under any
of
|
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|
|
Sonus’
stock-based compensation plans other than as contemplated in this
Agreement or Section 3.2.3(c)(iv) of the Sonus Disclosure
Schedule;
|
|
(vii)
|
not
acquire or agree to acquire any Sonus Common Shares or other of its
outstanding securities, whether by public or private transaction, or
otherwise;
|
|
(viii)
|
not
reorganize, amalgamate or merge Sonus with any other Person, nor acquire
or agree to acquire by amalgamating, merging or consolidating with,
purchasing a majority of the voting securities of or purchasing
substantially all of the assets of, or by any other means, any business of
any Person;
|
|
(ix)
|
not
loan any money, guarantee the payment of indebtedness or incur
indebtedness for money borrowed or issue or sell any debt securities other
than in the ordinary course of
business;
|
|
(x)
|
other
than in the ordinary course of business or as specifically contemplated in
this Agreement, or except to the minimum extent required to comply with
applicable Law or to the minimum extent required in order to avoid adverse
treatment under Section 409A of the Code, but subject to restrictions set
out elsewhere in this Agreement, not enter into or modify any employment,
severance, collective bargaining or other Employee Benefits, policies or
arrangements with, or grant any bonuses, salary increases, stock options,
restricted stock, pension or supplemental pension benefits, profit
sharing, retirement allowances, deferred compensation, incentive
compensation, severance or termination pay to, or make any loan to, any
officers, directors or employees of
Sonus;
|
|
(xi)
|
not,
except in the ordinary course of
business:
|
|
(A)
|
satisfy
or settle any claims or liabilities prior to the same being due, except
such as have been reserved against in the Sonus Financial Statements or
the Sonus Interim Financial Statements, which are, individually or in the
aggregate, material; or
|
|
(B)
|
grant
any waiver, exercise any option or relinquish any contractual rights which
are, individually or in the aggregate,
material;
|
|
(xii)
|
use
its reasonable commercial efforts to cause its current insurance (or
re-insurance) policies not to be cancelled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance and
re-insurance companies of nationally recognized standing providing
coverage equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar premiums are in
full force and effect;
|
|
(xiii)
|
not
waive, release, assign, settle or compromise any material claims, or any
material litigation for an amount in excess of $25,000, individually, or
$100,000 in the aggregate, or which would impose any material restriction
on the business of OncoGenex or Sonus or any of their Subsidiaries or
would
|
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-
|
|
reasonably
be expected to create precedent for claims that are reasonably likely to
be material to OncoGenex or Sonus or any of their
Subsidiaries;
|
|
(xiv)
|
not
forgive any loans to directors, officers or employees of Sonus or any of
its Subsidiaries, nor settle or compromise any claim brought by any
present, former or purported holder of any of its securities in connection
with the transactions contemplated by this Agreement or the Arrangement
prior to the Effective Date;
|
|
(xv)
|
make
any material tax election, settle or compromise any material liability for
Taxes, amend any Tax Return or file any refund for Taxes, other than in
the ordinary course of business or as may be required by a Governmental
Entity;
|
|
(xvi)
|
not
enter into any material contract, agreement, licence, franchise, lease
transaction, commitment or other right or obligation that would constitute
a Sonus Material Agreement if entered into or otherwise relates to the
development or commercialization of any pharmaceutical or medical device
product, or amend, modify, relinquish, terminate or fail to renew in any
material respect any Sonus Material Agreement, all other than in the
ordinary course of business;
|
|
(xvii)
|
(A)
|
not
acquire or sell, pledge, license, guarantee, encumber or otherwise dispose
of, or authorize any of the foregoing with respect to, any material
property or assets (including any Sonus Intellectual Property), except for
the sale of inventory in the ordinary course of business;
or
|
|
(B)
|
not
incur or commit to incur capital expenditures prior to the Effective Date,
other than in the ordinary course of business, and not, in any event,
exceeding $50,000;
|
|
(xviii)
|
take
all action necessary or advisable to protect or maintain the Sonus
Intellectual Property owned by Sonus or any of its Subsidiaries that is
material to the conduct of the Sonus Business as currently conducted and
currently proposed to be conducted, including the prosecution of all
pending applications for patents and trademarks, the filing of any
documents or other information or the payment of any maintenance or other
fees related thereto;
|
|
(xix)
|
not
make any material changes to existing accounting practices relating to
Sonus, except as required by applicable Law or required by GAAP or make
any material tax election inconsistent with past
practice;
|
|
(xx)
|
authorize
or enter into any contract or otherwise make any commitment to do any of
the foregoing;
|
|
(xxi)
|
promptly
advise OncoGenex in writing:
|
|
(A)
|
of
any event occurring subsequent to the date of this Agreement, other than
in the ordinary course of business, that would render
any
|
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-
|
|
representation
or warranty of Sonus contained in this Agreement (except any such
representation or warranty which speaks as of a date prior to the date of
this Agreement), if made on or as of the date of such event or the
Effective Date, untrue or inaccurate in any material
respect;
|
|
(B)
|
of
any Material Adverse Change in respect of Sonus other than a Material
Adverse Change specifically authorized by this Agreement;
and
|
|
(C)
|
of
any breach by Sonus of any covenant or agreement contained in this
Agreement; and
|
|
(xxii)
|
not
allow any stock options to be exchanged for cash or other property of
Sonus.
|
|
(b)
|
Sonus
shall perform all obligations required or desirable to be performed by
Sonus under this Agreement and shall do all such other acts and things as
may be necessary or desirable in order to consummate and make effective,
as soon as reasonably practicable, the transactions contemplated in this
Agreement and, without limiting the generality of the foregoing, Sonus
shall:
|
|
(i)
|
use
all reasonable efforts to obtain the approvals of the Sonus Shareholders
to the Sonus Shareholder Resolutions at the Sonus Meeting, as provided for
in Section 2.5(b), subject, however, to the exercise by the Board of
Directors of Sonus of its fiduciary duties as provided
herein;
|
|
(ii)
|
apply
for and use all reasonable efforts to obtain all Appropriate Regulatory
Approvals set out in Part I of Exhibit A and, in doing so, to keep
OncoGenex reasonably informed as to the status of the proceedings relating
to obtaining the Appropriate Regulatory Approvals, including providing
OncoGenex with copies of all related applications and notifications, in
draft form, in order for OncoGenex to provide its reasonable
comments;
|
|
(iii)
|
use
reasonable efforts to cause to be voted in favour of the Arrangement at
the OncoGenex Meetings all proxies granted to officers of Sonus under the
Voting Agreements executed by the OncoGenex Affiliated Shareholders, to
the maximum extent that such officers are authorized or permitted to do so
under such proxies and under applicable
Law;
|
|
(iv)
|
in
the event Sonus is unable to obtain the orders described in
Section 2.6(a) on or before June 27, 2008, Sonus shall forthwith take
the actions specified in
Section 2.6(b);
|
|
(v)
|
carry
out the terms of the Interim Order and Final Order applicable to it and
use its reasonable efforts to comply promptly with all requirements which
applicable Laws may impose on Sonus with respect to the transactions
contemplated hereby and by the
Arrangement;
|
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|
(vi)
|
defend
all lawsuits or other legal, regulatory or other proceedings challenging
or affecting this Agreement or the consummation of the transactions
contemplated hereby;
|
|
(vii)
|
use
all reasonable efforts to have lifted or rescinded any injunction or
restraining order or other order relating to Sonus which may adversely
affect the ability of the parties to consummate the transactions
contemplated hereby;
|
|
(viii)
|
on
or before the Effective Date, effect all necessary registrations, filings
and submissions of information required by Governmental Entities from
Sonus relating to the transactions contemplated
herein;
|
|
(ix)
|
in
connection with the Arrangement and other transactions contemplated
herein, use its reasonable efforts to obtain, before the Effective Date,
all necessary waivers, consents and approvals required to be obtained by
Sonus from other parties pursuant to the Material
Agreements;
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(x)
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reserve
a sufficient number of Sonus Common Shares for issuance upon the
completion of the Arrangement and the exercise from time to time of
Assumed Options; and
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(xi)
|
use
all reasonable efforts to obtain authorization for listing on the NGM or
NCM of Sonus Common Shares issuable: (A) pursuant to the
Arrangement, and (B) upon exercise of the Assumed Options from time
to time;
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(xii)
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cause
the Board of Directors of Sonus to be established at seven (7)
directors;
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(xiii)
|
use
all reasonable efforts to obtain, on or before the Effective Date, written
resignations, effective as at the Effective Time, from directors of Sonus
such that three (3) directors of Sonus remain and, effective as at the
Effective Time, to cause the appointment of the Appointed Directors to
fill the vacancies created thereby;
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(xiv)
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execute
and deliver to OncoGenex, on or before the Effective Date, the Assumption
Agreement;
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(xv)
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deliver
to OncoGenex, not less than 12 Business Days prior to the Effective Date,
a certificate duly executed by two directors or senior officers of Sonus
setting forth the aggregate number of Sonus Common Shares issued and
outstanding as at the date of such certificate (which shall also be the
number of such shares outstanding as at the Effective Date) and the
aggregate number of Sonus Common Shares which are or may at any future
time become issuable upon the exercise in full of all warrants to purchase
Sonus Common Shares and Sonus stock options outstanding as at the
Effective Date, including all Sonus stock options which are not fully
vested or immediately exercisable as at the Effective Date (which shall
also be the number of such shares issuable thereunder as at the Effective
Date), in each case, on both a pre-Reserve Stock Split basis and a
post-Reserve Stock Split basis, and certifying that there are no further
rights, agreements or arrangements of
any
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nature
or kind then outstanding for the acquisition of further Sonus Common
Shares, or securities convertible into or exchangeable for Sonus Common
Shares;
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(xvi)
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not,
notwithstanding any other provision of this Agreement (including the
Exhibits hereto and the Sonus Disclosure Schedule), allot, issue or grant
any Sonus Common Shares, Sonus stock options or other securities
convertible into or exchangeable for Sonus Common Shares, or enter into
any agreements or arrangements relating thereto, to or with any Person or
for any reason between the date of the certificate referred to in
Section 5.3(b)(xiv) and the Effective Date;
and
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(xvii)
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not
approve or register the transfer of any Sonus Shares which are subject to
the provisions of the Voting Agreements executed by Sonus Affiliated
Stockholders, except as expressly permitted by such Voting
Agreements.
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(c)
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Intentionally
deleted; and
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(d)
|
Sonus
covenants and agrees to make all arrangements for the issuance of Sonus
Common Shares required to be issued as contemplated pursuant to the Plan
of Arrangement and make all arrangements for the issuance of Sonus Common
Shares issuable upon the exercise from time to time of Assumed Options in
accordance with their terms, and otherwise be bound by the provisions of
the Plan of Arrangement upon the Plan of Arrangement becoming
effective.
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5.4 Applications for Regulatory
Approvals
Each of
OncoGenex and Sonus covenant and agree to use all reasonable efforts required to
apply for and obtain the Appropriate Regulatory Approvals, and shall proceed
diligently with respect to such applications, in a coordinated and expeditious
manner.
5.5 Covenants Regarding
Non-Solicitation
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(a)
|
Subject
to this Section 5.5 and Section 5.6, Sonus shall not, directly or
indirectly, through any officer, director, employee, representative or
agent of Sonus:
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(i)
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solicit,
initiate or knowingly encourage (including by way of furnishing
information or entering into any form of agreement, arrangement or
understanding) the initiation of any inquiries or proposals regarding an
Acquisition Proposal;
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(ii)
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participate
in any discussions or negotiations regarding any Acquisition
Proposal;
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(iii)
|
withdraw
or modify in a manner adverse to OncoGenex the approval of the Board of
Directors of Sonus of the transactions contemplated
hereby;
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(iv)
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approve
or recommend any Acquisition Proposal;
or
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(v)
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enter
into any agreement, arrangement or understanding related to any
Acquisition Proposal.
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Notwithstanding
the preceding part of this Section 5.5(a) and any other provision of this
Agreement, nothing shall prohibit the Board of Directors or representatives of
Sonus from (subject to compliance with Section 5.6 hereof) (A) furnishing
information to, or engaging in discussions or negotiations with, any Person in
response to an unsolicited bona fide written Acquisition Proposal; or
(B) recommending such an unsolicited bona fide written Acquisition Proposal
to Sonus Shareholders, if, and only to the extent that, (w) the Board of
Directors of Sonus concludes in good faith (after consultation with its
financial advisors) that such Acquisition Proposal would reasonably be expected
to constitute, or lead to, a Superior Proposal, (x) the Board of Directors
of Sonus determines in good faith (after consultation with outside legal
counsel) that the failure to take such action would result in a breach by the
Board of Directors of Sonus of its fiduciary duties to Sonus Shareholders under
applicable law, (y) prior to furnishing such information to, or entering
into discussions or negotiations with, such Person Sonus provides prompt written
notice to OncoGenex to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such Person (which notice shall
identify the nature and material terms of the proposal), and (z) prior to
providing any information or data to any Person in connection with an
Acquisition Proposal by any such Person, the Board of Directors of Sonus
receives from such Person an executed confidentiality agreement with provisions
no less favorable to Sonus than the Confidentiality Agreement.
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(b)
|
Sonus
agrees that it will immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any parties
regarding any Acquisition Proposal. Sonus shall promptly provide OncoGenex
with a copy of any written Acquisition Proposal received and a written
statement with respect to any nonwritten Acquisition Proposal received,
which statement shall include the identity of the Person making the
Acquisition Proposal and the material terms thereof. Sonus shall inform
OncoGenex promptly of any change in the price, structure, form of
consideration or material terms and conditions regarding the Acquisition
Proposal and shall promptly provide to OncoGenex all written materials
received by Sonus with respect thereto. Sonus agrees to keep OncoGenex
fully and timely informed of the status of any discussions, negotiations,
furnishing of non-public information, or other activities relating to an
Acquisition Proposal. Sonus shall promptly provide to OncoGenex any
non-public information concerning Sonus provided to any other person in
connection with any Acquisition Proposal which was not previously provided
to OncoGenex.
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(c)
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Nothing
contained in this Section 5.5 shall prohibit Sonus from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act or from making any disclosure to Sonus
Shareholders which, in the good faith judgment of the Board of Directors
of Sonus based on the advice of outside counsel, is required under
applicable law; provided that in any such cases Sonus does not withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Arrangement or Sonus Shareholder Resolutions or approve or recommend, or
propose to approve or recommend, an Acquisition Proposal
unless
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Sonus
and its Board of Directors have complied with all the provisions of this
Section 5.5.
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|
(d)
|
Sonus
shall ensure that its officers, directors and employees and any financial
advisors or other advisors, representatives or agents retained by it are
aware of the provisions of this Section 5.5, and it shall be
responsible for any breach of this Section 5.5 by any such
Person.
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5.6 Notice by Sonus of
Superior Proposal
Determination
Notwithstanding
Sections 5.5(a), (b) and (d), Sonus may accept, approve, recommend or enter into
any agreement, understanding or arrangement in respect of a Superior Proposal
if, and only if:
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(a)
|
it
has provided OncoGenex with a copy of the material terms of the Superior
Proposal and otherwise be in compliance with this
Agreement;
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(b)
|
five
Business Days shall have elapsed from the later of the date OncoGenex
received written notice advising OncoGenex that Sonus' Board of Directors
has resolved, subject only to compliance with this Section 5.6 and
termination of this Agreement, to accept, approve, recommend or enter into
an agreement in respect of such Superior Proposal, specifying the terms
and conditions of such Superior Proposal and identifying the Person making
such Superior Proposal, and the date OncoGenex received a copy of such
Superior Proposal; and
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(c)
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it
has previously or concurrently will
have:
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(i)
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paid
to OncoGenex the break fee, if any, payable under Section 7.5;
and
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(ii)
|
terminated
this Agreement pursuant to Section
7.3.
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Any
information provided by Sonus to OncoGenex pursuant to this Section 5.6 or pursuant
to Section 5.7 shall constitute “Information” under Section 5.7(b).
During
such five Business Day period, Sonus agrees that OncoGenex shall have the right,
but not the obligation, to offer to amend the terms of this Agreement. The Board
of Directors of Sonus will review any offer by OncoGenex to amend the terms of
this Agreement in good faith in order to determine, in its discretion in the
exercise of its fiduciary duties, whether OncoGenex’s offer upon acceptance by
Sonus would result in such Superior Proposal ceasing to be a Superior Proposal.
If the Board of Directors of Sonus so determines, it will enter into an amended
agreement with OncoGenex reflecting OncoGenex’s amended proposal. If the Board
of Directors of Sonus continues to believe, in good faith and after consultation
with financial advisors and outside legal counsel, that such Superior Proposal
remains a Superior Proposal and therefor rejects OncoGenex’s amended proposal,
Sonus may terminate this Agreement pursuant to Section 7.3(j); provided,
however, that Sonus must concurrently therewith pay to OncoGenex the break fee,
if any, payable to OncoGenex under Section 7.5 and must concurrently with such
termination enter into a definitive agreement with respect to such Acquisition
Proposal. Sonus acknowledges and agrees that payment of the break fee, if any,
payable under Section 7.5 is a condition to valid termination of this Agreement
under Section 7.3(j) and this Section 5.6.
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Sonus
also acknowledges and agrees that each successive material modification of any
Acquisition Proposal shall constitute a new Acquisition Proposal for purposes of
the requirement under clause (b) of this Section 5.6 to initiate an
additional five Business Day notice period.
5.7 Access to
Information
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(a)
|
During
the Pre-Effective Date Period, at the request of OncoGenex or Sonus,
acting reasonably, the other party will execute or cause to be executed
such consents, authorizations and directions as may be necessary to enable
the requesting party or its officers, employees, counsel, accountants and
other authorized representatives and advisors (the “Representatives”) to
obtain full access to all files and records relating to the other party or
its assets maintained by any Governmental
Entity.
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(b)
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Without
limiting the Confidentiality Agreement, each of Sonus and OncoGenex
acknowledges that certain information to be provided to it under
Section 5.7(a) above, or provided to it prior to the execution of
this Agreement, will be confidential, non-public and/or proprietary in
nature (the “Information”). Except as
permitted below, each of Sonus and OncoGenex will keep the Information
confidential and will not, without the prior written consent of the other,
disclose it, in any manner whatsoever, in whole or in part, to any other
Person, and will not use it for any purpose other than to evaluate the
transactions contemplated by this Agreement. Each of Sonus and OncoGenex
will make all reasonable, necessary and appropriate efforts to safeguard
the Information from disclosure to anyone other than as permitted hereby
and to control the copies, extracts or reproductions made of the
Information. The Information may be provided to the Representatives of
each of Sonus and OncoGenex who require access to the same to assist it in
proceeding in good faith with the transactions contemplated by this
Agreement, and whose assistance is required for such purposes, provided
that it has first informed such Representatives to whom Information is
provided that the Representative has the same obligations, including as to
confidentiality, restricted use and otherwise, that it has with respect to
such Information. This provision shall not apply to such portions of the
Information that:
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|
(i)
|
are
or become generally available to the public otherwise than as a result of
disclosure by a party or its Representatives;
or
|
|
(ii)
|
become
available to a party on a non-confidential basis from a source other than,
directly or indirectly, the other party or its Representatives, provided
that such source is not, to the knowledge of the first party, upon
reasonable enquiry, prohibited from transmitting the information by a
contractual, legal or fiduciary obligation;
or
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|
(iii)
|
were
known to a party or were in its possession on a non-confidential basis
prior to being disclosed to it by the other party or by someone on its
behalf; or
|
|
(iv)
|
are
required by applicable Laws or court order to be disclosed, provided that
if a party or any of its representatives (the “Compelled Party”) is
required to disclose any such information, the Compelled Party gives the
other parties (the “Other
Parties”) prior written notice of such disclosure as soon
as
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practicable,
so that the Other Parties will have an opportunity to seek a protective
order or to take other appropriate
action.
|
Where
this Agreement is terminated for any reason then all Information of the
disclosing party (including all paper and electronic copies thereof) shall be
immediately returned to the disclosing party or destroyed as directed by the
disclosing party.
The
provisions of this Section 5.7(b) shall survive the termination of this
Agreement.
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(c)
|
The
parties acknowledge that certain Information may be competitively
sensitive and that disclosure thereof shall be limited to that which is
reasonably necessary for the purpose
of:
|
|
(i)
|
preparing
submissions or applications in order to obtain the Appropriate Regulatory
Approvals; and
|
|
(ii)
|
preparing
the Circular and Proxy Statement.
|
|
(d)
|
In
the case of any conflict between subsections (b) or (c) of this
Section 5.7 and the Confidentiality Agreement, the terms of the
Confidentiality Agreement shall
govern.
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5.8 Covenant Regarding
Representations and Warranties
Each of
OncoGenex and Sonus covenants that it will use all reasonable efforts to ensure
that the representations and warranties given by it and contained in
Section 3 are true and correct in all material respects on and as at the
Effective Date (except to the extent such representations and warranties speak
as of a specified date or except as affected by transactions contemplated or
permitted by this Agreement or in the ordinary course of business or otherwise
consented to by the other parties hereto).
5.9 Closing
Matters
Each of
Sonus and OncoGenex shall deliver, at the closing of the Arrangement and other
transactions contemplated hereby, such customary certificates (including
“bring-down” certificates), resolutions, opinions (including appropriate legal
opinions of Sonus’ Canadian and U.S. legal counsel opining upon the issuance and
resale of Sonus Common Shares) and other closing documents as may be required by
the other party, acting reasonably. The closing of the Arrangement and the
transactions contemplated hereby will take place at 11:00 a.m. (Pacific Time) on
the Effective Date at the offices of Xxxxxx and Xxxxxxx LLP in Seattle,
Washington, or such other place as may be agreed by Sonus and
OncoGenex.
5.10 Directors and Officers
Insurance.
For a
period of six (6) years after the Effective Date, Sonus shall maintain in effect
directors and officers liability insurance on terms no less favorable and in an
amount not less than the amount of directors and officers liability insurance
covering each present and former director and officer of Sonus or of any Sonus
Subsidiary (collectively, the “Indemnified Parties”) under the Sonus directors
and officers liability insurance policy on the date hereof, and shall purchase a
“tail” insurance policy prior to the Effective Date for such
purpose. After the Effective Date, Sonus will continue to fulfill
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and honor
in all respects the obligations of Sonus pursuant to indemnification agreements
with Sonus’ officers, directors and key employees in existence on the Effective
Date. Such indemnification agreements have been made available to
OncoGenex. This Section 5.10 is intended to be for the benefit of,
and shall be enforceable by, the Indemnified Parties and their heirs and
personal representatives and shall be jointly and severally binding on Sonus and
its successors and assigns and shall survive the Effective Date.
|
6.
|
CONDITIONS
|
6.1 Mutual Conditions
Precedent
The
respective obligations of the parties to complete the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the
Effective Date, of the following conditions precedent, each of which may only be
waived by the mutual consent of Sonus and OncoGenex:
|
(a)
|
the
Arrangement shall have been approved at the OncoGenex Meetings in the
manner contemplated by
Section 2.2;
|
|
(b)
|
the
Arrangement shall have been approved by the OncoGenex Securityholders in
accordance with any conditions in addition to those set out in
Section 6.1(a) which may be imposed by the CBCA or the Interim
Order;
|
|
(c)
|
the
Interim Order and the Final Order shall each have been obtained in form
and terms satisfactory to each of OncoGenex and Sonus, acting reasonably,
and shall not have been set aside or modified in a manner unacceptable to
such parties, acting reasonably, on appeal or
otherwise;
|
|
(d)
|
this
Agreement and the Sonus Shareholder Resolutions shall have been approved
at the Sonus Meeting in accordance with Delaware Law and Sonus’
certificate of incorporation and
by-laws;
|
|
(e)
|
the
Proxy Statement shall have been approved by the SEC under the Securities
Act prior to the mailing of the Proxy Statement by Sonus to the Sonus
Shareholders and no stop order suspending the effectiveness of the Proxy
Statement shall have been issued by the SEC and no proceedings for that
purpose shall have been initiated or, to the knowledge of Sonus or
OncoGenex, threatened by the SEC;
|
|
(f)
|
the
Reverse Stock Split, the Capital Adjustment and the Name Change shall have
been effected;
|
|
(g)
|
the
issuance of Sonus Common Shares and Assumed Options pursuant to the
Arrangement shall be exemption from registration pursuant to
Section 3(a)(10) of the Securities
Act;
|
|
(h)
|
there
shall not be in force any order or decree restraining or enjoining the
consummation of the transactions contemplated by this Agreement and there
shall be no proceeding (other than an appeal made in connection with the
Arrangement), of a judicial or administrative nature or otherwise, in
progress or threatened that relates to or results from the transactions
contemplated by this Agreement that would, if
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|
successful,
result in an order or ruling that would preclude completion of the
transactions contemplated by this Agreement in accordance with the terms
hereof or would otherwise be inconsistent with the Appropriate Regulatory
Approvals which have been obtained;
|
|
(i)
|
this
Agreement shall not have been terminated pursuant to Section 7;
and
|
|
(j)
|
all
consents, waivers, permits, orders and approvals of any Governmental
Entity (including the Appropriate Regulatory Approvals other than, in the
case of the Sonus, the orders or receipts set forth in Section 2.6(a)
or (b) or notice pursuant to Section 12 of the Investment Canada Act),
and the expiry of any waiting periods, in connection with, or required to
permit, the consummation of the Arrangement, the failure of which to be
obtained or the non-expiry of which would constitute a criminal offense,
or would have a Material Adverse Effect on Sonus or OncoGenex, as the case
may be, shall have been obtained or received on terms that will not have a
Material Adverse Effect on Sonus and/or OncoGenex and there shall not be
pending or threatened any suit, action or proceeding by any Governmental
Entity, in each case that has a reasonable likelihood of
success,
|
|
(i)
|
seeking
to prohibit or restrict the acquisition by Sonus or any of its
Subsidiaries of any OncoGenex Shares, seeking to restrain or prohibit the
consummation of the Plan of Arrangement or seeking to obtain from
OncoGenex or Sonus any damages that are material in relation to OncoGenex
and Sonus, taken as a whole;
|
|
(ii)
|
seeking
to prohibit or materially limit the ownership or operation by Sonus or any
of its Subsidiaries of any material portion of the business or assets of
OncoGenex or to compel Sonus or any of its Subsidiaries to dispose of or
hold separate any material portion of the business or assets of
OncoGenex;
|
|
(iii)
|
seeking
to impose limitations on the ability of Sonus or any of its Subsidiaries
to acquire or hold, or exercise full rights of ownership of, any OncoGenex
Shares, including the right to vote the OncoGenex Shares on all matters
properly presented to the shareholders of
OncoGenex;
|
|
(iv)
|
seeking
to prohibit Sonus or any of its Subsidiaries from effectively controlling
in any material respect the business or operations of OncoGenex;
or
|
|
(v)
|
which
otherwise is reasonably likely to have a Material Adverse Effect on
OncoGenex or Sonus.
|
6.2 Additional Conditions
Precedent to the Obligations of Sonus
The
obligations of the Sonus Parties to complete the transactions contemplated by
this Agreement shall also be subject to the fulfillment of each of the following
conditions precedent (each of which is for Sonus’ exclusive benefit and may be
waived by Sonus and any one or more of which, if not satisfied or waived, will
relieve Sonus of any obligation under this Agreement):
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(a)
|
all
covenants and agreements of OncoGenex under this Agreement to be performed
or observed on or before the Effective Date shall have been duly performed
and observed by OncoGenex in all material
respects;
|
|
(b)
|
the
representations and warranties of OncoGenex contained in this Agreement
shall be true and correct in all material respects as of the Effective
Date as if made on and as of such date (except to the extent such
representations and warranties speak as of a specified date which is
earlier than the date of this Agreement, in which event such
representations and warranties shall be true and correct in all material
respects as of such earlier specified date, or except as affected by
transactions or changes in the ordinary course of business or otherwise
contemplated or permitted by this Agreement or otherwise consented to by
Sonus) and Sonus shall have received a certificate of OncoGenex addressed
to Sonus and dated the Effective Date, signed on behalf of OncoGenex by
two senior executive officers of OncoGenex, confirming the same as at the
Effective Date;
|
|
(c)
|
between
the date hereof and the Effective Date, there shall not have occurred, in
the judgment of Sonus, acting reasonably, a Material Adverse Change to
OncoGenex;
|
|
(d)
|
Sonus
shall have received from OncoGenex evidence, in form and content
acceptable to Sonus, acting reasonably, of (i) the termination of the
Shareholders' Agreement and the UBC Shareholders Agreement, such
terminations to be effective as at the Effective Time, and (ii) consent to
the Arrangement from UBC under the terms of the OncoGenex license
agreements with UBC;
|
|
(e)
|
holders
of more than 2% of the issued and outstanding OncoGenex Shares shall not
have exercised the Dissent Rights in respect of the Arrangement;
and
|
|
(f)
|
each
of the Voting Agreements executed by the OncoGenex Affiliated Shareholders
shall be and remain in full force and effect, unamended, and each of the
parties thereto (other than Sonus) shall be, in all material respects, in
full compliance with their respective obligations
thereunder.
|
Sonus may
not rely on the failure to satisfy any of the above conditions precedent as a
basis for a non-compliance by them with their obligations under this Agreement
if the condition precedent would have been satisfied but for a material default
by Sonus in complying with its obligations hereunder.
6.3 Additional Conditions
Precedent to the Obligations of OncoGenex
The
obligations of OncoGenex to complete the transactions contemplated by this
Agreement shall also be subject to the following conditions precedent (each of
which is for the exclusive benefit of OncoGenex and may be waived by OncoGenex
and any one or more of which, if not satisfied or waived, will relieve OncoGenex
of any obligation under this Agreement):
|
(a)
|
all
covenants of Sonus under this Agreement to be performed on or before the
Effective Date shall have been duly performed by Sonus in all material
respects;
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(b)
|
all
representations and warranties of Sonus contained in this Agreement shall
be true and correct in all material respects as of the Effective Date as
if made on and as of such date (except to the extent such representations
and warranties speak as of a specified date which is earlier than the date
of this Agreement, in which event such representations and warranties
shall be true and correct in all material respects as of such earlier
specified date, or except as affected by transactions or changes in the
ordinary course of business or otherwise contemplated or permitted by this
Agreement) and OncoGenex shall have received a certificate of Sonus
addressed to OncoGenex and dated the Effective Date, signed on behalf of
Sonus by two senior executive officers of Sonus, confirming the same as at
the Effective Date;
|
|
(c)
|
between
the date hereof and the Effective Date, there shall not have occurred, in
the judgment of OncoGenex, acting reasonably, a Material Adverse Change to
Sonus;
|
|
(d)
|
the
receipt by Sonus of written resignations of directors of Sonus such that
three (3) directors of Sonus remain and the Board of Directors of Sonus
shall have appointed the Appointed Directors to fill the vacancies created
thereby;
|
|
(e)
|
Sonus
shall have either (i) obtained the order described in
Section 2.6(a) or (ii) filed and obtained a receipt for a
preliminary prospectus, resolved any comments with respect to such
preliminary prospectus made by the applicable securities regulatory
authority and received confirmation from such securities regulatory
authority that Sonus is clear to file a final prospectus and shall have
prepared a final prospectus, all as contemplated pursuant to
Section 2.6(b);
|
|
(f)
|
Sonus
Common Shares issuable (i) pursuant to the Arrangement and
(ii) upon exercise of the Assumed Options from time to time, shall
have been authorized for listing on any stock exchange or trading market
on which Sonus Common Shares are then listed for
trading;
|
|
(g)
|
Sonus
shall have delivered to OncoGenex satisfactory evidence of the filing of
the Certificate of Amendment;
|
|
(h)
|
each
of the Voting Agreements executed by the Sonus Affiliated Stockholders
shall be and remain in full force and effect, unamended, and each of the
parties thereto (other than OncoGenex) shall be, in all material respects,
in full compliance with their respective obligations thereunder;
and
|
|
(i)
|
Sonus
shall have provided OncoGenex with an updated certificate containing
true and accurate facts regarding certain matters completed and signed by
a director or officer of Sonus and addressed to Working Opportunity Fund
(EVCC) Ltd. and the administrator under the Employee Investment Act
(British Columbia) in the form previously delivered to
Sonus.
|
OncoGenex
may not rely on the failure to satisfy any of the above conditions precedent as
a basis for noncompliance by OncoGenex with its obligations under this Agreement
if the condition precedent would have been satisfied but for a material default
by OncoGenex in complying with its obligations hereunder.
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6.4 Notice and Cure
Provisions
Sonus and
OncoGenex will give notice to the other, promptly after discovery, of the
occurrence, or failure to occur, at any time from the date hereof until the
Effective Date, of any event or state of facts which occurrence or failure
would, or would be likely to:
|
(a)
|
cause
any of the representations or warranties of the other contained herein to
be untrue or inaccurate in any material respect on the date hereof or on
the Effective Date (except to the extent such representations and
warranties speak as of a specified date or except as affected by
transactions or changes in the ordinary course of business or otherwise
contemplated or permitted by this Agreement);
or
|
|
(b)
|
result
in the failure to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by the other hereunder prior to
the Effective Date.
|
Neither
Sonus nor OncoGenex may elect not to complete the transactions contemplated
hereby pursuant to the conditions precedent contained in Sections 6.1, 6.2 and
6.3, or exercise any termination right arising therefrom, unless forthwith and
in any event prior to the filing of the Articles of Arrangement with the
Director, Sonus or OncoGenex, as the case may be, has delivered a written notice
to the other specifying in reasonable detail all breaches of covenants,
representations and warranties or other matters which Sonus or OncoGenex, as the
case may be, are asserting as the basis for the non-fulfillment of the
applicable condition precedent or the exercise of the termination right, as the
case may be. If any such notice is delivered, provided that Sonus or OncoGenex,
as the case may be, are proceeding diligently to cure such matter, if such
matter is susceptible to being cured, the other may not terminate this Agreement
until the earlier of September 30, 2008 and the expiration of a period of 30
days from such notice. If such notice has been delivered prior to the
making of the application for the Final Order or the filing of the Articles of
Arrangement with the Director, such application and such filing shall be
postponed until the expiry of such period. For greater certainty, in the event
that such matter is cured within the time period referred to herein, this
Agreement may not be terminated as a result of the occurrence of that
matter.
6.5 Satisfaction of
Conditions
The
conditions precedent set out in Sections 6.1, 6.2 and 6.3 shall be conclusively
deemed to have been satisfied, waived or released when, with the approval of
Sonus and OncoGenex, a certificate of arrangement in respect of the Arrangement
is issued by the Director.
|
7.
|
AMENDMENT AND
TERMINATION
|
7.1 Amendment
This
Agreement may, at any time and from time to time before or after the holding of
the OncoGenex Meetings and Sonus Meeting but not later than the Effective Date,
be amended by mutual written agreement of the parties hereto, and any such
amendment may, without limitation:
|
(a)
|
change
the time for performance of any of the obligations or acts of the
parties;
|
|
(b)
|
waive
any inaccuracies or modify any representation contained herein or in any
document delivered pursuant hereto;
|
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|
(c)
|
waive
compliance with or modify any of the covenants herein contained and waive
or modify performance of any of the obligations of the parties;
and
|
|
(d)
|
waive
compliance with or modify any conditions precedent herein contained,
provided, however, that any such change, waiver or modification does not
invalidate any required approval of the OncoGenex Securityholders to the
Arrangement or any required approval of the Sonus Shareholders of the
Sonus Shareholder Resolutions.
|
7.2 Mutual Understanding
Regarding Amendments
The
parties agree that if the Sonus or OncoGenex, as the case may be, propose any
amendment or amendments to this Agreement or to the Plan of Arrangement, the
other will act reasonably in considering such amendment and if the other and its
security holders are not prejudiced by reason of any such amendment the other
will co-operate in a reasonable fashion with the Sonus or OncoGenex, as the case
may be, so that such amendment can be effected subject to applicable Laws and
the rights of the security holders.
7.3 Termination
The right
of any party hereto to terminate this Agreement pursuant to this
Section 7.3 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, or any of their
respective officers, directors, representatives or agents, whether prior to or
after the execution of this Agreement. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after holding of the
OncoGenex Meetings and the Sonus Meeting:
|
(a)
|
by
mutual consent of OncoGenex and
Sonus;
|
|
(b)
|
by
OncoGenex, (i) upon a breach of any covenant or agreement on the part
of Sonus set forth in this Agreement, or (ii) if any representation
or warranty of Sonus shall have become untrue, in either case such that
the conditions set forth in Section 6.1 or Section 6.3 would not
be satisfied (a “Terminating Sonus
Breach”); subject to the notice and cure provisions in
Section 6.4;
|
|
(c)
|
by
Sonus, (i) upon breach of any covenant or agreement on the part of
OncoGenex set forth in this Agreement, or (ii) if any representation
or warranty of OncoGenex shall have become untrue, in either case such
that the conditions set forth in Section 6.1 or Section 6.2
would not be satisfied (a “Terminating OncoGenex
Breach”); subject to the notice and cure provisions in
Section 6.4;
|
|
(d)
|
by
either OncoGenex or Sonus, if there shall be any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity which is final and nonappealable
preventing the consummation of the transactions contemplated by this
Agreement; provided, that the party seeking to terminate this Agreement
pursuant to this Section 7.3(d) shall have used reasonable efforts to
cause any such decree, permanent injunction, judgment or other order to be
vacated or lifted;
|
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|
(e)
|
by
either OncoGenex or Sonus, if the Arrangement shall not have been
consummated on or before September 30, 2008; provided, further, that the
right to terminate this Agreement under this Section 7.3(e) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of the failure of the Arrangement to
occur on or before such date;
|
|
(f)
|
by
either OncoGenex or Sonus, if the Sonus Shareholder Resolutions shall not
have been approved at the Sonus Meeting (including any adjournment or
postponement thereof); provided, that the right to terminate this
Agreement under this Section 7.3(f) shall not be available to Sonus
if Sonus has not complied with its obligations under this
Agreement;
|
|
(g)
|
by
either Sonus or OncoGenex, if the Arrangement Resolution shall not have
been approved at the OncoGenex Meetings (including any adjournment or
postponement thereof); provided, that the right to terminate this
Agreement under this Section 7.3(g) shall not be available to
OncoGenex if OncoGenex has not complied with its obligations under this
Agreement;
|
|
(h)
|
by
OncoGenex, if (i) the Board of Directors of Sonus withdraws or
modifies its recommendation of this Agreement or the Sonus Shareholder
Resolutions or shall have resolved or publicly announced its intention to
do any of the foregoing or the Board of Directors of Sonus shall have
agreed to accept an Acquisition Proposal or recommended to the Sonus
Shareholders any Acquisition Proposal or resolved to do so; or (ii) a
tender offer or exchange offer for twenty percent (20%) or more of the
outstanding shares of Sonus Common Shares is commenced or a registration
statement with respect thereto shall have been filed and the Board of
Directors of Sonus, within ten (10) Business Days after such tender offer
or exchange offer is so commenced or such registration statement is so
filed, either fails to recommend against acceptance of such tender or
exchange offer by its shareholders or takes no position with respect to
the acceptance of such tender or exchange offer by its
shareholders;
|
|
(i)
|
intentionally
omitted;
|
|
(j)
|
by
Sonus, if the Board of Directors of Sonus shall have determined to
recommend an Acquisition Proposal to its shareholders after determining,
pursuant to Section 5.5, that such Acquisition Proposal constitutes a
Superior Proposal, and Sonus complies with
Section 5.6;
|
|
(k)
|
intentionally
omitted;
|
|
(l)
|
by
OncoGenex, if there shall have occurred one or more events which shall
have caused a Material Adverse Effect on Sonus which Material Adverse
Effect shall have remained uncured (to the extent curable) after the
notice and cure period specified in
Section 6.4;
|
|
(m)
|
by
Sonus, if there shall have occurred one or more events which shall have
caused a Material Adverse Effect on OncoGenex which Material Adverse
Effect shall have
|
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-
|
|
remained
uncured (to the extent curable) after the notice and cure period specified
in Section 6.4;
|
|
(n)
|
by
OncoGenex, if the Sonus Current Working Capital on the day immediately
prior to the proposed Effective Date is less than $21.2 million if the
Effective Date is on or before June 30, 2008; $19.4 million if the
Effective Date is after June 30, 2008 and on or before July 31, 2008;
$18.4 million if the Effective Date is after July 31, 2008 and on or
before August 31, 2008; or $17.2 million if the Effective Date is after
August 31, 2008; or
|
|
(o)
|
by
Sonus, if the OncoGenex Current Working Capital on the day immediately
prior to the proposed Effective Date is
negative.
|
7.4 Effect Of
Termination
Except as
provided in Section 7.5, in the event of the termination of this Agreement
pursuant to Section 7.3, this Agreement shall forthwith become void, there
shall be no liability on the part of OncoGenex or Sonus or any of their
respective officers, directors, shareholders or agents to the other, and all
rights and obligations of any party hereto shall cease, except that nothing
herein shall relieve any party from liability for any willful breach by a party
of any of its representations, warranties, covenants or agreements in this
Agreement; and provided that the provisions of Sections 5.7 and 7.5 will remain
in full force and effect and survive any termination of this
Agreement.
7.5 Expenses
|
(a)
|
Except
as otherwise set forth in this Agreement, all costs and expenses incurred
by the parties hereto shall be borne solely and entirely by the party
which has incurred such costs and expenses, whether or not the Arrangement
is consummated.
|
|
(b)
|
If
OncoGenex terminates this Agreement pursuant to Section 7.3(h) or
Sonus terminates this Agreement pursuant to Section 7.3(j), then
Sonus shall pay to OncoGenex the sum of $500,000 plus out of pocket
expenses of up to $350,000 in immediately available funds. Such
payment shall be made within 5 Business Days after termination of this
Agreement.
|
7.6 Liquidated
Damages
Each of
the parties acknowledges that the damages set forth in this Section 7 are a
genuine pre-estimate of the damages which the other will suffer or incur as a
result of the event giving rise to those damages and are not penalties. Each of
the parties irrevocably waives any right it may have to raise as a defense in
any proceedings that any such damages are abusive.
7.7 Remedies
Subject
to Section 7.8, the parties hereto acknowledge and agree that an award of
money damages would be inadequate for any breach of this Agreement by any party
or its representatives and any such breach would cause the non-breaching party
irreparable harm. Accordingly, the parties hereto agree that, in the event of
any breach or threatened breach of this Agreement by one of the parties, the
non-breaching party will also be entitled, without the requirement of posting a
bond or other security, to equitable relief, including injunctive relief and
specific performance. Such remedies
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-
will not
be the exclusive remedies for any breach of this Agreement but will be in
addition to all other remedies available at law or equity to the
parties.
7.8 Effect of Break Fee
Payment
Nothing
in this Agreement shall preclude a party from seeking damages in respect of
losses incurred or suffered by such party as a result of any breach of this
Agreement by the other party, seeking injunctive relief to restrain any breach
or threatened breach of the covenants or agreements set forth in this Agreement
or the Confidentiality Agreement or otherwise, or seeking specific performance
of any of such covenants or agreements, without the necessity of posting bond or
security in connection therewith. Notwithstanding Section 7.7,
payment of the fee set forth in Section 7.5 shall be the exclusive remedy in the
event of termination pursuant to 7.3(h) or 7.3(j).
|
8.
|
GENERAL
|
8.1 Notices
All
notices and other communications which may or are required to be given pursuant
to any provision of this Agreement shall be given or made in writing and shall
be deemed to be validly given if served personally or by telecopy, in each case
addressed to the particular party at:
|
(a)
|
If
to OncoGenex:
|
OncoGenex
Technologies Inc.
400 –
0000 Xxxx Xxxxxxxx
Xxxxxxxxx,
XX X0X 0X0
Attention: President
and Chief Executive Officer
Facsimile:
(000) 000-0000
with a
copy to:
DuMoulin
Black LLP
10th
Floor, 000 Xxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
Attention: J.
Xxxxxxx Xxxxxxx
Facsimile:
(000) 000-0000
and
to:
Xxxxxx
&Whitney LLP
U.S. Bank
Centre
0000
Xxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
XX 00000-0000
Attention: Xxxxxx
Xxxxx
Facsimile: (000)
000-0000
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-
|
(b)
|
If
to a Sonus Party:
|
Sonus
Pharmaceuticals, Inc.
0000
000xx Xxxxx XX
Xxxxx
000
Xxxxxxx,
XX 00000
Attention: Chief
Executive Officer
Facsimile:
000-000-0000
with a
copy to:
Fasken
Xxxxxxxxx & XxXxxxxx LLP
2900 –
000 Xxxxxxx Xxxxxx
Bentall
5, Box 29
Vancouver,
British Columbia V6C 0A3
Attention: Xxxx
Xxxx
Facsimile:
(000) 000-0000
and
to:
Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx
Orange
County Xxxxxx
000
Xxxxxxx Xxxxxx Xxxxx
Xxxxx
0000
Xxxxxxx
Xxxxx, XX 00000
Attention: Xxxxxxxxxxx
Xxxx
Facsimile:
(000) 000-0000
or at
such other address of which any party may, from time to time, advise the other
parties by notice in writing given in accordance with the foregoing. The date of
receipt of any such notice shall be deemed to be the date of delivery or
telecopying thereof.
8.2 Assignment
No party
hereto may assign its rights or obligations under this Agreement or the
Arrangement.
8.3 Binding
Effect
This
Agreement and the Arrangement shall be binding upon and shall enure to the
benefit of the parties hereto and their respective successors. For greater
certainty, regardless of whether the Arrangement Resolution has been passed and
regardless of whether the Interim Order or the Final Order has been granted,
Sonus will not have any right pursuant to this Agreement or the Plan of
Arrangement, in equity or otherwise, whether absolutely or contingently, to, or
to acquire, OncoGenex Shares or OncoGenex Debentures prior to the Effective
Time, and any such right will only come into existence when the Plan of
Arrangement becomes effective and binding at the Effective Time.
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-
8.4 Waiver and
Modification
OncoGenex
and Sonus may waive or consent to the modification of, in whole or in part, any
inaccuracy of any representation or warranty made to them hereunder or in any
document to be delivered pursuant hereto and may waive or consent to the
modification of any of the covenants herein contained for their respective
benefit or waiver or consent to the modification of any of the obligations of
the other parties hereto. Any waiver or consent to the modification of any of
the provisions of this Agreement, to be effective, must be in writing executed
by the party granting such waiver or consent.
8.5 No Personal
Liability
|
(a)
|
No
director or officer of Sonus shall have any personal liability whatsoever
to OncoGenex under this Agreement, or any other document delivered in
connection with the Arrangement by or on behalf of
Sonus.
|
|
(b)
|
No
director or officer of OncoGenex shall have any personal liability
whatsoever to Sonus under this Agreement, or any other document delivered
in connection with the Arrangement by or on behalf of
OncoGenex.
|
8.6 Further
Assurances
Each
party hereto shall, from time to time, and at all times hereafter, at the
request of the other parties hereto, but without further consideration, do all
such further acts and things and execute and deliver all such further documents
and instruments as shall be reasonably required in order to fully perform and
carry out the terms and intent hereof.
8.7 Consultation
Sonus and
OncoGenex agree to consult with each other as to the general nature of any news
releases or public statements with respect to this Agreement or the Arrangement,
and to use their respective reasonable efforts not to issue any news releases or
public statements inconsistent with the results of such consultations. Subject
to applicable Laws, each party shall use its reasonable efforts to enable the
other parties to review and comment on all such news releases prior to the
release thereof. The parties agree to issue jointly a news release with respect
to this Arrangement as soon as practicable following the execution of this
Agreement.
8.8 Governing
Laws
This
Agreement shall be governed by and construed in accordance with the laws of the
Province of British Columbia and the laws of Canada applicable therein and shall
be treated in all respects as a British Columbia contract.
8.9 Severability
If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall in such event negotiate in good faith
to modify the Agreement to preserve each party’s anticipated benefits under this
Agreement.
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-
8.10 Counterparts
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be un original, but all of which together shall constitute one and the
same instrument.
8.11 Withholding
Rights
Sonus, or
its paying agent, shall be entitled to deduct and withhold from the amounts
otherwise payable pursuant to this Agreement or the Arrangement such amounts as
Sonus or its agent is required to deduct and withhold with respect to the making
of such payment under the Code, the Income Tax Act (Canada) or any provision of
state, or local or other law. To the extent that amounts are so
withheld by Sonus or its agent, such withheld amounts shall be treated for all
purposes of this Agreement and the Arrangement as having been paid to the
OncoGenex Shareholders.
[SIGNATURE
PAGE FOLLOWS]
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-
IN
WITNESS WHEREOF the parties hereto have executed this Agreement as of the date
first written above.
|
SONUS
PHARMACEUTICALS, INC.
By:
ONCOGENEX
TECHNOLOGIES INC.
By:
|
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-
EXHIBIT
A
APPROPRIATE
REGULATORY APPROVALS
PART I
To
be obtained or filed by Sonus
|
·
|
exemption
orders from the Ontario Securities Commission, the British Columbia
Securities Commission and the Alberta Securities Commission from the
prospectus requirements with respect to resale of Sonus Common Shares as
described in Section 2.6(a)
|
|
·
|
if
Sonus is unable to obtain the orders described in Section 2.6(a), filing a
preliminary prospectus and final prospectus and obtaining receipts
therefore as described in Section
2.6(b)
|
|
·
|
if
Sonus Common Shares are then listed on the NGM or NCM, authorization for
listing of Sonus Common Shares issuable in connection with the Arrangement
and upon exercise of the Replacement Options on the NGM or NCM, subject to
the official notice of issuance
|
|
·
|
amendments
to Sonus’ Form S8 and any prospectus relating thereto on file with the
SEC
|
Such
other material authorizations, orders or consents of or, registration,
declaration or filing with, any Governmental Entities as required by or with
respect to Sonus in connection with the execution and delivery by Sonus of this
Agreement or the Arrangement or any other documents and agreements to be
delivered under this Agreement, or consummation by Sonus of the transactions
contemplated by this Agreement or the Arrangement.
PART II
To
be obtained or filed by OncoGenex
|
·
|
notice
to the Director of the application for the Interim
Order
|
|
·
|
notice
to the Director of the application for the Final
Order
|
|
·
|
filing
of the Articles of Arrangement with the Director under the CBCA upon
receipt of the Final Order
|
|
·
|
in
the event any OncoGenex Securityholders exercise Dissent Rights,
application to Court to fix a fair value for the shares and debentures of
any such OncoGenex Securityholder who fails to accept an offer by
OncoGenex to pay an amount considered by the directors of OncoGenex to be
the fair value for such shares
|
Such
other material authorizations, orders or consents of or, registration,
declaration or filing with, any Governmental Entities as required by or with
respect to OncoGenex in connection with the execution and delivery by OncoGenex
of this Agreement or the Arrangement or any other documents and agreements to be
delivered under this Agreement, or consummation by OncoGenex of the transactions
contemplated by this Agreement or the Arrangement.
EXHIBIT
B
ARRANGEMENT
RESOLUTION
SPECIAL
RESOLUTION OF
THE
ONCOGENEX TECHNOLOGIES INC. SECURITYHOLDERS
IT WAS
RESOLVED that:
|
1.
|
The
arrangement (the "Arrangement") under Section 192 of the Canada Business Corporations
Act (the "CBCA") involving OncoGenex Technologies Inc. (the
"Corporation"), as more particularly described and set forth in the
management proxy circular (the "Circular") of the Corporation accompanying
the notice of this meeting dated , 2008 (as the Arrangement may be
modified or amended), is hereby authorized, approved and
adopted.
|
|
2.
|
The
plan of arrangement (the "Plan of Arrangement") involving the Corporation,
the full text of which is set out as Exhibit C to the Arrangement
Agreement made as of May 27, 2008 between Sonus Pharmaceuticals, Inc. and
the Corporation (the "Arrangement Agreement") (as the Plan of Arrangement
may be or may have been amended), is hereby approved and
adopted.
|
|
3.
|
The
Arrangement Agreement, the actions of the directors of the Corporation is
approving the Arrangement and the actions of the directors and officers of
the Corporation in executing and delivering the Arrangement Agreement are
hereby ratified, authorized, approved and
adopted.
|
|
4.
|
Notwithstanding
that this resolution has been passed (and the Arrangement adopted) by the
shareholders, debentureholders and optionholders of the Corporation or
that the Arrangement has been approved by the Supreme Court of British
Columbia, the directors of the Corporation are hereby authorized and
empowered (i) to amend the Arrangement Agreement, or the Plan of
Arrangement to the extent permitted thereby, and (ii) not to proceed with
the Arrangement without further approval of the shareholders,
debentureholders and optionholders of the Corporation, but only if the
Arrangement Agreement is terminated in accordance with Article 7
thereof.
|
|
5.
|
Any
officer or director of the Corporation is hereby authorized and directed
for and on behalf of the Corporation to execute, under the seal of the
Corporation or otherwise, and to deliver articles of arrangement and such
other documents as are necessary or desirable to the Director under the
CBCA in accordance with the Arrangement Agreement for
filing.
|
|
6.
|
Any
officer or director of the Corporation is hereby authorized and directed
for and on behalf of the Corporation to execute or cause to be executed,
under the seal of the Corporation or otherwise, and to deliver or cause to
be delivered, all such other documents and instruments and to perform or
cause to be performed all such other acts and things as in such person's
opinion may be necessary or desirable to give full effect to the foregoing
resolution and the matters authorized thereby, such termination to be
conclusively evidenced by the execution and delivery of such document,
agreement or instrument or the doing of any such act or
thing.
|
Index of
Schedules*
OncoGenex
Disclosure Schedule
|
3.1.2
|
Capitalization
|
|
3.1.3
|
Authority
and No Violation
|
|
3.1.5
|
Issued
Shares and Options
|
|
3.1.6
|
Subsidiaries
|
|
3.1.7
|
OncoGenex
Financial Statements
|
|
3.1.8
|
Interim
Statements
|
|
3.1.12
|
Accuracy
of Books and Records
|
|
3.1.15
|
OncoGenex
Business Carried on in Ordinary
Course
|
|
3.1.16
|
Partnerships
or Joint Ventures
|
|
3.1.18
|
Interested
Persons
|
|
3.1.19
|
Directors
and Officers
|
|
3.1.20
|
Employment
and Employee Benefit Matters
|
|
3.1.21
|
Employee
Benefit Plans
|
|
3.1.23
|
Leases
and Leased Property
|
|
3.1.24
|
Insurance
|
|
3.1.25
|
Material
Agreements
|
|
3.1.29
|
Legal
Proceedings
|
|
3.1.30
|
Banking
Information
|
|
3.1.31
|
Tax
Matters
|
|
3.1.32
|
Compliance
with Applicable Laws
|
|
3.1.35
|
Environmental
Matters
|
|
3.1.36
|
Condition
and Sufficiency of Assets
|
|
3.1.37
|
Intellectual
Property
|
|
3.1.40
|
Regulatory
Compliance
|
|
3.1.41
|
Significant
Suppliers
|
|
3.1.46
|
Other
Negotiations: Brokers; Third Party
Expenses
|
Sonus
Disclosure Schedule
|
3.2.2
|
Capitalization
|
|
3.2.3
|
Authority
and No Violation
|
|
3.2.5
|
Subsidiaries
|
|
3.2.8
|
Liabilities
|
|
3.2.9
|
Debt
Instruments
|
|
3.2.12
|
Guarantees
|
|
3.2.14
|
Sonus
Business Carried on in Ordinary
Course
|
|
3.2.16
|
Minute
Books and Corporate Records
|
|
3.2.18
|
Directors
and Officers
|
|
3.2.19
|
Employment
and Employee Benefit Matters
|
|
3.2.20
|
Employee
Benefit Plans
|
|
3.2.22
|
Leases
and Leased Property
|
|
3.2.23
|
Insurance
|
|
3.2.24
|
Material
Agreements
|
|
3.2.29
|
Banking
Information
|
|
3.2.31
|
Compliance
with Applicable Laws
|
|
3.2.34
|
Environmental
Matters
|
|
3.2.35
|
Condition
and Sufficiency of Assets
|
|
3.2.36
|
Intellectual
Property
|
|
3.2.39
|
Significant
Suppliers
|
|
3.2.41
|
Personal
Information
|
|
3.2.42
|
Advisory
Fees
|
|
3.2.43
|
Other
Negotiations: Brokers; Third Party
Expenses
|
|
3.2.46
|
Public
Company Matters
|
|
3.2.52
|
Disclosure
of Material Weaknesses
|
|
5.3
|
Covenants
|
*
Exhibits and schedules to the Agreement and Plan of Merger are not being filed
herewith. The Registrant undertakes to furnish supplementally a copy of any
omitted exhibit or schedule to the Commission upon request, pursuant to Item
601(b)(2) of Regulation S-K.
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2 -
