EXHIBIT 7.03
ESCROW
AGREEMENT
THIS
AGREEMENT made as of the 20th day of
August, 2008
AMONG:
SONUS PHARMACEUTICALS, INC.,
to be renamed OncoGenex
Pharmaceuticals, Inc., a corporation existing under the laws of the State
of Delaware
(hereinafter
referred to as “Purchaser” or
“Sonus”)
AND:
COMPUTERSHARE TRUST COMPANY OF
CANADA, a trust company existing under the laws of Canada
(hereinafter
referred to as the “Escrow
Agent”)
AND:
WORKING OPPORTUNITY FUND (EVCC)
LTD., the registered or beneficial owner of the Escrow Securities (as
defined herein) as of the Effective Time (as defined herein) (hereinafter
referred to as the “Shareholder”) or, if
applicable, Howard Riback, as agent for and on behalf of the Shareholder
(hereinafter referred to as the “Shareholder’s Agent”)
WHEREAS:
A. Pursuant
to an arrangement agreement (the “Arrangement Agreement”) dated
as of May 27, 2008, as amended, among the Purchaser and OncoGenex Technologies
Inc. (the “OncoGenex”)
and the statutory plan of arrangement contemplated thereby (the “Plan of Arrangement”), the
Purchaser will acquire all of the issued and outstanding securities of OncoGenex
from the securityholders of OncoGenex in exchange for securities of the
Purchaser.
B. In
connection with the completion of the Plan of Arrangement, an aggregate of up to
1,388,889 common shares of the Purchaser (the “Milestone Shares”) that may be
issued to certain securityholders of OncoGenex (the “Escrow Shareholders”) have
been or will be deposited with the Escrow Agent to be held in escrow pursuant to
escrow agreements (collectively, the “Escrow Agreements”) having
terms and conditions identical to those set forth in this
Agreement.
C. In
connection with the completion of the Plan of Arrangement, the Shareholder is
entitled to receive up to 193,823 Milestone Shares (the “Escrow Securities”), which are
being deposited with the Escrow Agent to be held in escrow pursuant to the terms
of this Agreement.
D. In the
event that this Agreement has been executed by the Shareholder’s Agent in lieu
of the Shareholder itself, under the terms of the Arrangement Agreement and the
Plan of Arrangement the Shareholder is deemed to have irrevocably appointed and
authorized the Shareholder’s Agent as the agent of the Shareholder, to enter
into and act under this Agreement on its behalf as described in Section 10
below.
NOW
THEREFORE in consideration of the respective covenants and agreements in this
Agreement and for other valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the parties hereby covenant and agree as
follows:
1.0 DEFINITIONS AND
INTERPRETATION
1.1 Each term
denoted in this Agreement by initial capital letters and not otherwise defined
herein shall have the meaning ascribed thereto in the Arrangement Agreement or
the Plan of Arrangement, unless the context otherwise requires. The
Purchaser shall provide the Escrow Agent with true and complete copies of the
Arrangement Agreement and the Plan of Arrangement for its records and
reference.
1.2 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. Unless otherwise indicated,
the terms “this Agreement”, “hereof”, “herein”, “hereunder” and “hereby” and
similar expressions refer to this Agreement, 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 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.
1.4 If any
date on which any action is required to be taken hereunder is not a Business
Day, such action shall be required to be taken on the next succeeding Business
Day.
2.0 ESCROW AND ESCROW
SECURITIES
2.1. The
Purchaser and the Shareholder appoint the Escrow Agent to act as escrow agent
under this Agreement in respect of the Escrow Securities. The Escrow
Agent accepts such appointment, subject to the terms and conditions set forth in
this Agreement.
2.2. At or
promptly after the Effective Time, the Purchaser shall deposit, or cause to be
deposited, on behalf of the Shareholder, with the Escrow Agent the Escrow
Securities to be held in escrow under this Agreement. In connection
therewith the Purchaser shall deliver, or cause to be delivered, to the Escrow
Agent any share certificates representing the Escrow Securities or other
evidence of these securities.
2.3. In the
event of a subdivision of the Purchaser’s share capital that correspondingly
results in the subdivision of the Escrow Securities that have not been released
from escrow at the time of such subdivision, any additional common shares of the
Purchaser to which the Shareholder is entitled as a result of the subdivision of
such Escrow Securities shall be deposited with the Escrow Agent to be held in
escrow pursuant to the terms of this Agreement. All such additional
shares shall thereafter be treated as Escrow Securities for the purposes of this
Agreement.
2.4. The
Purchaser and the Shareholder direct the Escrow Agent to hold the Escrow
Securities in escrow until they are released from escrow pursuant to the terms
of this Agreement.
3.0 RELEASE OF ESCROW
SECURITIES
3.1. Subject
to any other release or cancellation under this Agreement, the Escrow Securities
are to be released from escrow upon the achievement of certain milestones by the
Purchaser (the “Milestones”). Schedule
“A” to this Agreement sets forth the applicable Milestones and the percentage or
number of Escrow Securities to be released from escrow upon the achievement of
each such Milestone. In Schedule “A”, the percentage figure for the
percent of Escrow Securities to be released from escrow upon the achievement of
a particular Milestone represents the percent of the original number of Escrow
Securities (as may be adjusted from time to time to account for any subdivision,
consolidation, stock dividend, reclassification, or other like change affecting
the Purchaser’s common share capital subsequent to the Effective Time (each such
change, a “Capital
Change”)) as opposed to the percent of the Escrow Securities remaining in
escrow at the time of achievement of such Milestone. In respect of
the release from escrow pursuant to the Escrow Agreements of any Milestone
Shares, whether upon the Achievement of any Milestone or otherwise, the
Milestone Shares shall be released from escrow to the Escrow Holders (including
the Shareholder) on a pro-rata basis. Notwithstanding the occurrence
of any or all of the Milestones, in no event shall the number of Milestone
Shares releasable in the aggregate to all Escrow Shareholders exceed 1,388,889
(subject to adjustment from time to time to account for any Capital
Change).
3.2. For the
purposes of this Agreement and the release from escrow of the Escrow Securities,
the board of directors of the Purchaser shall have the sole responsibility of
determining whether or not a Milestone has been achieved, subject to the rights
of the Escrow Shareholders described in section 3.9. The Purchaser
shall make any such determination acting reasonably and in good
faith. Until the earlier to occur of (i) such time as all of the
Escrow Securities have been released from escrow, or (ii) the Expiration Date
(as defined below), the Purchaser agrees to use, and to cause its Affiliates to
use, reasonable efforts and devote a reasonable amount of resources (such
efforts and resources are collectively referred to herein as the “Agreed Resources”) in order to
achieve, in the ordinary course of business, Milestones one (1) through nine (9)
set forth on Schedule “A”. Notwithstanding anything herein to the
contrary, the Purchaser and the Shareholder acknowledge and agree that, in the
event that the Purchaser’s board of directors acting in good faith determines
that it is in the best interests of the Purchaser and all of its stockholders to
reduce or suspend the Agreed Resources, and that the failure to take such action
could reasonably be determined to result in or lead to a breach of the fiduciary
duties of the Purchaser’s board of directors, then the Purchaser may reduce or
suspend, as the case may be, the Agreed Resources until such time and by such
amount as the board of directors determines to be reasonably necessary in light
of the circumstances under which such action is taken. The Purchaser
shall resume providing the Agreed Resources as soon as the continuation of
providing such Agreed Resources could not reasonably be determined to result in
or lead to a breach of the fiduciary duties of the Purchaser’s board of
directors.
3.3. Upon the
Purchaser having determined that a Milestone has been achieved, the Purchaser
shall forthwith provide the Escrow Agent (with a copy to the Shareholder and, if
applicable, the Shareholder’s Agent) with written notice (a “Release Notice”): (a)
confirming that such Milestone has been achieved and the date (a “Release Date”) such Milestone
has been achieved; and, subject to section 3.8, (b) providing an irrevocable
direction to release a specified percentage or number of Escrow Securities to
the Shareholder. A Release Notice must be signed by the Chief
Executive Officer and the Chief Financial Officer of the Purchaser.
3.4. In the
event that a Capital Change occurs subsequent to the Effective Time and prior to
six years after the Effective Date of the Arrangement (the “Expiration Date”), the
Purchaser shall ensure that: (a) the percentage or number of Escrow Securities
to be released from escrow on a Release Date takes into account the change in
number of Escrow Securities that occurred as a result of such Capital
Change
and is adjusted, where necessary, such that the number of Escrow Securities
released from escrow on a Release Date is equal to that number of Escrow
Securities that would be eligible for release had such Capital Change been given
effect immediately prior to the Effective Time; and (b) the applicable Release
Notice sets out the Purchaser’s calculations in this regard.
3.5. Irrespective
of when a Release Notice is delivered by the Purchaser or received by the Escrow
Agent, the Release Date specified in such Release Notice shall be deemed to be
the date on which the Escrow Securities covered by such Release Notice were
released from escrow under this Agreement.
3.6. The
Purchaser and the Escrow Agent acknowledge and agree that on the basis that all
of the Milestone Shares are to be held in escrow by the Escrow Agent pursuant to
terms and conditions identical to this Agreement, the Purchaser may, for each
Milestone that is achieved, provide a single Release Notice covering all Escrow
Shareholders and their respective portion of the Milestone Shares in lieu of
providing the Escrow Agent with a separate Release Notice for each Escrow
Shareholder.
3.7. Upon
receipt of a Release Notice, the Escrow Agent shall deliver to the Shareholder,
within three (3) Business Days, a share certificate registered in the name of
the Shareholder evidencing the Escrow Securities released from escrow in
connection with such Release Notice. If, on a date that Escrow
Securities are to be released, the Escrow Agent holds a share certificate or
other evidence representing more Escrow Securities than are to be released, the
Escrow Agent shall deliver the share certificate or other evidence to the
Purchaser or its transfer agent and request replacement share certificates or
other evidence in denominations necessary to allow for: (a) the delivery to the
Shareholder of the number of Escrow Securities so released; and (b) the balance
of the Escrow Securities to remain in escrow with the Escrow
Agent. After the Escrow Agent receives the replacement share
certificates or other evidence, the Escrow Agent will send to the Shareholder
the replacement share certificate or other evidence of the Escrow Securities
released.
3.8. As
provided for in the Plan of Arrangement, the Purchaser is entitled to withhold
from any consideration issuable or payable pursuant to the Plan of Arrangement
to the Shareholder (including the Escrow Securities), provided that the
Shareholder is not a Canadian Resident, such amounts as the Purchaser is
required to deduct and withhold with respect to such issuance or payment, as the
case may be, under Section 116 of the Income Tax Act
(Canada). Notwithstanding that the Purchaser has determined
that Escrow Securities are eligible for release from escrow pursuant to section
3.3 hereof, the Purchaser shall not be obligated to deliver a Release Notice in
respect of such determination until the Shareholder has (a) satisfied all
amounts owing to the Purchaser under section 4.8 of the Plan of Arrangement and
(b) complied with the requirements of section 4.9 of the Plan of
Arrangement.
3.9. The
Purchaser shall, on a semi-annual basis commencing on the day that is six-months
from the Effective Date, provide the Escrow Shareholders with a written update
(a “Milestone Update”)
on the status of the achievement of Milestones one (1) through eight (8) set
forth in Schedule “A”. The initial Milestone Update shall set out in
reasonable detail the then current status of achievement of the relevant
Milestones while all subsequent Milestone Updates shall describe the progress in
respect of each Milestone since the previous Milestone Update.
If, at
any time, the Purchaser receives, from Escrow Shareholders holding in the
aggregate not less than two-thirds (2/3) of the Milestone Shares then remaining
in escrow pursuant to the Escrow Agreements, a written request (a “Clarification Request”) to provide a
detailed account of the status of achievement of any Milestone, the Purchaser
shall within 10 Business Days of the receipt of such Clarification Request
provide a written response (a “Clarification Response”) to
the Escrow Shareholders setting out a detailed account of the status of
achievement of such Milestone. A Clarification Request must: (a)
identify the Escrow Shareholder(s) who are providing such Clarification
Request;
and (b) set out the specific Milestone or Milestones in respect of which the
Escrow Shareholders are requesting clarification. For greater
certainty, a particular Clarification Request may take the form of a single
document submitted to the Purchaser on behalf of multiple Escrow Shareholders or
multiple documents each submitted to the Purchaser on behalf of one or more
Escrow Shareholders provided that such documents shall only collectively be
treated as one Clarification Request if they all relate to the same Milestone or
Milestones, as the case may be.
If,
within 15 Business Days of the delivery of a Clarification Response (or, if a
Clarification Response is not delivered within the required 10 Business Day
period, then within 25 Business Days of the delivery of the Clarification
Request), the Purchaser receives, from Escrow Shareholders holding in the
aggregate not less than two-thirds (2/3) of the Milestone Shares then remaining
in escrow pursuant to the Escrow Agreements, a written notice (a “Dispute Notice”) that said
Escrow Shareholders (the “Disputing Shareholders”)
dispute the Purchaser’s position that any one or more of the Milestones
identified in the corresponding Clarification Request has not been achieved, the
matter (a “Dispute”)
shall be resolved in accordance with the provisions of Schedule
“C”. For greater certainty, a particular Dispute Notice may take the
form of a single document submitted to the Purchaser on behalf of multiple
Escrow Shareholders or multiple documents each submitted to the Purchaser on
behalf of one or more Escrow Shareholders provided that such documents shall
only collectively be treated as one Dispute Notice if they all relate to the
same Milestone or Milestones, as the case may be.
If, upon
following the procedures set forth in Schedule “C”, it is determined that a
particular Milestone has in fact been achieved, the Purchaser shall forthwith
provide a Release Notice to the Escrow Agent in respect of such
Milestone.
Notwithstanding the Purchaser’s
obligation to provide the Milestone Updates and, if applicable, a Clarification
Response, the Purchaser shall in no manner be obligated to disclose to the
Escrow Shareholders in any such document, or otherwise, any undisclosed material
information (as such term is commonly defined under applicable securities laws)
in respect of the business and affairs of the Purchaser (“Undisclosed
Information”). In the event of a Dispute, if any Undisclosed
Information is provided by the Purchaser to the Disputing Shareholders for the
purpose of settling such Dispute, such information shall only be provided to the
Disputing Shareholders on the condition that the Disputing Shareholders agree to
treat such information as confidential and agree not to trade in any securities
of the Purchaser until such time that the Undisclosed Information is made
public.
4.0 CANCELLATION OF ESCROW
SECURITIES
4.1. Subject
to the Purchaser having complied with its obligations under this Agreement and
not otherwise being in material breach of the terms of this Agreement, effective
as of the Expiration Date the Shareholder shall cease to be the registered and
beneficial owner of, and shall have no further rights and obligations in respect
of, any Escrow Securities and any dividends or distributions received thereon,
that have not, as of the Expiration Date, been released from escrow to the
Shareholder in accordance with the terms of this Agreement (collectively, the
“Unreleased Escrow
Holdings”).
4.2. Subject
to the Purchaser having complied with its obligations under this Agreement and
not otherwise being in material breach of the terms of this Agreement, any
Unreleased Escrow Holdings shall be delivered by the Escrow Agent to the
Purchaser as soon as practicable after the Expiration Date.
4.3. With
respect to the transfer of Unreleased Escrow Holdings from the Escrow Agent to
the Purchaser pursuant to sections 4.1 and 4.2, the Shareholder hereby
irrevocably constitutes and appoints the Purchaser the true and lawful agent,
attorney and attorney in fact of the Shareholder with respect to the Unreleased
Escrow Holdings, with full power of substitution (such power of attorney, being
coupled
with an
interest, being irrevocable) to execute and deliver such instruments and
documents as are necessary to carry out such transfer or other action in respect
thereof.
5.0 DEALING WITH ESCROW
SECURITIES
5.1. For
greater certainty, the provisions of Part 5 of this Agreement only apply to
those Escrow Securities that remain in escrow under this
Agreement. The provisions of Part 5 of this Agreement shall
immediately cease to apply to any Escrow Securities once they have been released
from escrow under this Agreement.
5.2. Unless
expressly permitted by this Agreement, the Shareholder shall not sell, transfer,
assign, mortgage, enter into a derivative transaction concerning, or otherwise
deal in any way with the Escrow Securities or any related share certificates or
other evidence of the Escrow Securities. The Shareholder may transfer
all or a portion of the Escrow Securities pursuant to a Permitted Transfer (as
defined in Schedule “B”) provided that any transferee of the Escrow Securities
must become a party to this Agreement and any purported transfer of Escrow
Securities to a person that does not become a party hereto shall be null and
void ab
initio. Each certificate representing Escrow Securities held
in escrow shall have the following legend noted conspicuously
thereon:
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THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF THAT CERTAIN ESCROW AGREEMENT DATED AUGUST 20, 2008 BY AND AMONG SONUS
PHARMACEUTICALS, INC., COMPUTERSHARE TRUST COMPANY OF CANADA, AS ESCROW
AGENT, AND THE SHAREHOLDER, OR, IF APPLICABLE, HOWARD RIBACK, AS
SHAREHOLDER’S AGENT. THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ON TRANSFER UNTIL RELEASED FROM SUCH RESTRICTIONS IN
ACCORDANCE WITH THE TERMS OF SUCH ESCROW
AGREEMENT
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5.3. Any
dividend or other distribution on the Escrow Securities shall be deposited with
the Escrow Agent to be held in escrow along with the corresponding Escrow
Securities. Any such dividend or other distribution shall be released
from escrow in conjunction with the release from escrow of the corresponding
Escrow Securities and the Purchaser shall direct the Escrow Agent to do the same
in the applicable Release Notice. If the Escrow Securities are
reclassified or changed into other securities or property pursuant to a merger,
consolidation or other reorganization of Purchaser after the Effective Time that
does not otherwise constitute a Business Combination (as defined in Schedule
“A”) the occurrence of which constitutes the achievement of Milestone 10 set
forth in Schedule “A”, then such reclassified shares or other securities or
property, as the case may be, shall be deposited with the Escrow Agent to be
held in escrow and released from escrow in conjunction with the terms of this
Agreement as if such merger, consolidation or other reorganization had been
given effect immediately prior to the Effective Time.
5.4. With
respect to the voting rights attached to the Escrow Securities, the Shareholder
hereby irrevocably constitutes and appoints the Purchaser the true and lawful
agent, attorney and attorney in fact of the Shareholder with respect to the
Escrow Securities, with full power of substitution (such power of attorney,
being coupled with an interest, being irrevocable) to execute and deliver such
instruments of proxy, authorizations or consents, and to exercise such other
similar rights of the Shareholder, in respect of the Escrow Securities at any
annual, special or adjourned meeting of the shareholders of the Purchaser, or of
any class of shareholders of the Purchaser, and in any written consent in lieu
of any such meeting. The Purchaser agrees to act in such capacity and
to vote the Escrow Securities on any matter for which the Escrow Securities are
eligible to vote such that the votes attached to the Escrow Securities are voted
in a manner consistent with the voting of all common shares of the Purchaser,
excluding Milestone Shares, that were eligible to vote and for which votes were
cast in respect
of such
matter. For example, if in respect of a particular matter: (a) 75% of
the common shares of the Purchaser, excluding Milestone Shares, that were
eligible to vote and for which votes were cast in respect of such matter voted
in favour of such matter; and (b) 25% of the common shares of the Purchaser,
excluding Milestone Shares, that were eligible to vote and for which votes were
cast in respect of such matter voted against such matter, the Purchaser shall
cause 75% of the Escrow Securities to be voted in favour of the matter and 25%
of the Escrow Securities to be voted against such matter.
6.0 CONCERNING THE ESCROW
AGENT
6.1. The
Escrow Agent accepts its duties and responsibilities under this Agreement, and
the Escrow Securities and any share certificates or other evidence of these
securities, solely as a custodian, bailee and agent. No trust is intended to be,
or is or will be, created hereby and the Escrow Agent shall owe no duties
hereunder as a trustee.
6.2. The
Escrow Agent will not be responsible or liable in any manner whatever for the
sufficiency, correctness, genuineness or validity of any Escrow Securities
deposited with it.
6.3. The
Escrow Agent will have no responsibility for seeking, obtaining, compiling,
preparing or determining the accuracy of any information or document, including
the representative capacity in which a party purports to act, that the Escrow
Agent receives as a condition to a release from escrow or a transfer of Escrow
Securities within escrow under this Agreement.
6.4. The
Escrow Agent will have no responsibility for Escrow Securities that it has
released to the Shareholder according to this Agreement.
6.5. The
Purchaser hereby agrees to indemnify and hold harmless the Escrow Agent, its
affiliates, and their current and former directors, officers, employees and
agents from and against any and all claims, demands, losses, penalties, costs,
expenses, fees and liabilities, including, without limitation, legal fees and
expenses, directly or indirectly arising out of, in connection with, or in
respect of, this Agreement, except where same result directly and principally
from gross negligence, wilful misconduct or bad faith on the part of the Escrow
Agent. This indemnity survives the release of the Escrow Securities, the
resignation or termination of the Escrow Agent and the termination of this
Agreement.
6.6. The
Escrow Agent will be protected in acting and relying reasonably upon any notice,
direction, instruction, order, certificate, confirmation, request, waiver,
consent, receipt, statutory declaration or other paper or document (collectively
referred to as “Documents”) furnished to it
and purportedly signed by any officer or person required to or entitled to
execute and deliver to the Escrow Agent any such Document in connection with
this Agreement, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth or accuracy of any
information therein contained, which it in good faith reasonably believes to be
genuine.
6.7. The
Escrow Agent will not be bound by any notice of a claim or demand with respect
thereto, or any waiver, modification, amendment, termination or rescission of
this Agreement unless received by it in writing, and signed by the other parties
including the Escrow Agent, as applicable, and, if the duties or indemnification
of the Escrow Agent in this Agreement are affected, unless it has given its
prior written consent.
6.8. The
Escrow Agent may consult with or retain such legal counsel and advisors as it
may reasonably require for the purpose of discharging its duties or determining
its rights under this Agreement and may rely and act upon the advice of such
counsel or advisor. The Escrow Agent will give written notice to the
Purchaser as soon as practicable that it has retained legal counsel or other
advisors. The
Purchaser
will pay or reimburse the Escrow Agent for any reasonable fees, expenses and
disbursements of such counsel or advisors, upon delivery of a reasonably
itemized invoice setting forth the services performed by such counsel or
advisors.
6.9. In the
event of any disagreement arising under the terms of this Agreement, the Escrow
Agent will be entitled, at its option, to refuse to comply with any and all
demands whatsoever until the dispute is settled either by a written agreement
among the parties or by a court of competent jurisdiction.
6.10. The
Escrow Agent will have no duties or responsibilities except as expressly
provided in this Agreement and will have no duty or responsibility under the
Arrangement Agreement or the Plan of Arrangement or arising under any other
agreement, including any agreement referred to in this Agreement, to which the
Escrow Agent is not a party.
6.11. The
Escrow Agent will have the right not to act and will not be liable for refusing
to act unless it has received clear and reasonable documentation that complies
with the terms of this Agreement. Such documentation must not require the
exercise of any discretion or independent judgment.
6.12. The
Escrow Agent is authorized to cancel any share certificate delivered to it and
hold the Escrow Securities in electronic, or uncertificated form only, pending
release of such securities from escrow.
6.13. The
Escrow Agent will have no responsibility with respect to any Escrow Securities
in respect of which no share certificate or other evidence or electronic or
uncertificated form of these securities has been delivered to it, or otherwise
received by it.
6.14. The
Escrow Agent will not be liable to any of the parties hereunder for any action
taken or omitted to be taken by it under or in connection with this Agreement,
except for losses directly, principally and immediately caused by its bad faith,
wilful misconduct or gross negligence. Under no circumstances will the Escrow
Agent be liable for any special, indirect, incidental, consequential, exemplary,
aggravated or punitive losses or damages hereunder, including any loss of
profits, whether foreseeable or unforeseeable. Notwithstanding the foregoing or
any other provision of this Agreement, in no event will the collective liability
of the Escrow Agent under or in connection with this Agreement to any one or
more parties, except for losses directly caused by its bad faith or willful
misconduct, exceed the amount of its annual fees under this Agreement or the
amount of three thousand dollars ($3,000.00), whichever amount shall be
greater.
6.15. The
Escrow Agent shall retain the right not to act and shall not be liable for
refusing to act if, due to a lack of information or for any other reason
whatsoever, the Escrow Agent reasonably determines that such an act might cause
it to be in non-compliance with any applicable anti-money laundering or
anti-terrorist legislation, regulation or guideline. Further, should
the Escrow Agent reasonably determine at any time that its acting under this
Agreement has resulted in it being in non-compliance with any applicable
anti-money laundering or anti-terrorist legislation, regulation or guideline,
then it shall have the right to resign on 10 days written notice to the
Purchaser, provided: (i) that the Escrow Agent’s written notice shall describe
the circumstances of such non-compliance; and (ii) that if such circumstances
are rectified to the Escrow Agent’s satisfaction within such 10 day period, then
such resignation shall not be effective. For greater certainty,
section 8.1 shall not apply to a resignation of the Escrow Agent in these
circumstances.
6.16. The
parties acknowledge that federal, provincial or state legislation that addresses
the protection of individual’s personal information (collectively, “Privacy Laws”) applies to
obligations and activities under this Agreement. Despite any other
provision of this Agreement, no party will take or
direct
any action that would contravene, or cause another to contravene, applicable
Privacy Laws. The Purchaser will, prior to transferring or causing to
be transferred personal information to the Escrow Agent, obtain and retain
required consents of the relevant individuals to the collection, use and
disclosure of their personal information, or will have determined that such
consents either have previously been given upon which the parties can rely or
are not required under the Privacy Laws. The Escrow Agent will use
commercially reasonable efforts to ensure that its services hereunder comply
with Privacy Laws.
6.17. With
respect to any cash balances held in escrow by the Escrow Agent pursuant to
section 5.3, the Escrow Agent may hold such cash balances in an account
established for such purposes with the Escrow Agent’s financial
institution.
6.18. The
Escrow Agent shall not be required to expend or risk its own funds or otherwise
incur financial liabilities in the performance of any of its duties hereunder,
or in the exercise of any of its rights and powers hereunder.
7.0 COMPENSATION
7.1. The
Purchaser agrees to pay the Escrow Agent reasonable compensation for all of the
services rendered by it under this Agreement and will reimburse the Escrow Agent
for all reasonable expenses (including taxes other than taxes based on the net
income of the Escrow Agent) and disbursements, including the cost and expense of
any suit or litigation of any character and any proceedings before any
governmental agency reasonably incurred by the Escrow Agent in connection with
its duties under this Agreement; provided that Purchaser shall have no
obligation to reimburse the Escrow Agent for any expenses or disbursements paid,
incurred or suffered by the Escrow Agent in any suit or litigation in which the
Escrow Agent is determined to have acted fraudulently, in bad faith or with
gross negligence or wilful misconduct. Any amount due under this
Section and unpaid 30 days after request for such payment, will bear interest
from the expiration of 30 days and a rate per annum equal to the then current
rate charged by the Escrow Agent from time to time.
8.0 RESIGNATION AND REMOVAL OF
THE ESCROW AGENT
8.1. The
Escrow Agent may resign as Escrow Agent at any time with or without cause by
giving not less than 20 days prior written notice to the Purchaser and the
Shareholder, such resignation to be effective 20 days following the date such
notice is given. In addition, subject to the Escrow Agent being
concurrently and similarly removed and replaced in respect of all of the Escrow
Agreements, the Purchaser and the Shareholder may jointly remove the Escrow
Agent as escrow agent at any time with or without cause, by an instrument
executed by the Purchaser and the Shareholder (which may be executed in
counterparts) given to the Escrow Agent, which instrument shall designate the
effective date of such removal. In no event shall any such
resignation or removal become effective until the appointment of a successor
escrow agent, to be appointed by the Purchaser and the Shareholder by mutual
agreement and the Purchaser and the Shareholder shall use their best efforts to
mutually agree upon a successor agent within 20 days after receiving such
notice. If the parties fail to agree upon a successor escrow agent within such
time, the Purchaser, with the consent of the Shareholder, which shall not be
unreasonably withheld, shall have the right to appoint a successor escrow agent.
The successor escrow agent selected in the such manner shall execute and deliver
an instrument accepting such appointment and it shall thereupon be deemed the
Escrow Agent hereunder and it shall without further acts be vested with all the
estates, properties, rights, powers, and duties of the predecessor Escrow Agent
as if originally named as the Escrow Agent. If no successor escrow agent is
named in the event of the Escrow Agent’s resignation, the Escrow Agent may apply
to a court of competent jurisdiction for the appointment of a successor escrow
agent. Thereafter, the predecessor Escrow Agent shall be discharged from any
further duties and liabilities under this Agreement.
9.0 TERMINATION
9.1. The
escrow created by this Agreement shall continue until the earliest to occur of
the following events:
|
(a)
|
all
Escrow Securities having been released to the
Shareholder;
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|
(b)
|
the
Escrow Agent having delivered all remaining Escrow Securities to the
Purchaser in accordance with section 4.2;
or
|
|
(c)
|
the
Purchaser and the Shareholder agreeing in writing to terminate such
escrow, in which case the Escrow Agent shall distribute the Escrow
Securities in accordance with the written instructions of the Purchaser
and the Shareholder.
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10.0 SHAREHOLDER’S
AGENT
10.1. Pursuant
to the Arrangement Agreement and the Plan of Arrangement, in the event that this
Agreement has been executed by the Shareholder’s Agent in lieu of the
Shareholder itself, the Shareholder is deemed to have irrevocably appointed and
authorized the Shareholder’s Agent as the agent of the Shareholder, to enter
into and act under this Agreement on its behalf.
10.2. In the
event that this Agreement has been executed by the Shareholder’s Agent in lieu
of the Shareholder:
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(a)
|
a
decision, act, consent or instruction of the Shareholder’s Agent shall
constitute a decision of the Shareholder and shall be final, binding and
conclusive upon the Shareholder, and the Escrow Agent and the Purchaser
may rely upon any such decision, act, consent or instruction of the
Shareholder’s Agent as being the decision, act, consent or instruction of
the Shareholder and any notice or communications to or from the
Shareholder’s Agent shall constitute notice to or from the
Shareholder;
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(b)
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the
Escrow Agent and the Purchaser are hereby relieved from any liability to
any person for any acts done by them in accordance with any decision, act,
consent or instruction of the Shareholder’s
Agent;
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(c)
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the
Shareholder’s Agent shall not be liable for any act done or omitted under
this Agreement as agent of the Shareholder while acting in good faith, or
acting on the advice of counsel;
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(d)
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the
Shareholder’s Agent shall have no duty, obligation or responsibility to
expend his personal funds in support of his activities as agent of the
Shareholder; and
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(e)
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the
Purchaser shall indemnify and hold harmless the Shareholder’s Agent
against all claims, losses, damages, reasonable costs, penalties, fines
and reasonable expenses (including reasonable expenses of the
Shareholder’s Agent’s legal counsel) which, without fraud, negligence,
recklessness, wilful misconduct or bad faith on the part of the
Shareholder’s Agent, may be paid, incurred or suffered by the
Shareholder’s Agent by reason or as a result of the performance by the
Shareholder’s Agent of its obligations set out in this
Agreement.
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11.0 GENERAL
11.1. If any
term or other provisions of this Agreement is invalid, illegal or incapable of
being enforced by any rule or law, or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated by
this Agreement is not affected in any manner materially adverse to any party.
Upon the determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties to this Agreement will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the fullest extent
possible.
11.2. This
Agreement shall be binding upon and enure to the benefit of the parties hereto
and their respective successors and permitted assigns.
11.3. All
notices and other communications between the parties to this Agreement shall be
in writing and shall be deemed to have been given if delivered personally, sent
by registered mail or delivered by facsimile to the parties at the following
addresses (or at such other address for any such party as shall be specified in
like notice):
1522
217th Place SE, Suite 100
Bothell,
WA, USA, 98021
Attention: Chief
Executive Officer
Facsimile: 425-686-1600
3rd
Floor, 510 Burrard Street
Vancouver,
BC, Canada, V6C 3B9
Attention: Manager,
Corporate Trust
Facsimile: 604-661-9403
2600 -
1055 West Georgia Street
Vancouver,
BC, Canada, V6E 3R5
Attention: Mr. Pat Brady
Facsimile: 604-669-7605
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(d)
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to
the Shareholder’s Agent (if
applicable):
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Suite
2500, 1066 West Hastings Street
Vancouver,
BC, Canada, V6E 3X1
Attention: Howard
Riback
Facsimile: 604-687-2145
Any
notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by facsimile shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business
Day.
11.4. This
Agreement may only be amended by written agreement of the parties. No
Escrow Agreement (including, without limitation, this Agreement) may be amended
unless the same amendment is offered to all other Escrow Shareholders in respect
of their respective Escrow Agreement. Each Escrow Shareholder shall
have 30 days to either accept or decline the proposed amendment to their
respective Escrow Agreement after which the Escrow Agreements for all those
accepting the proposed amendment shall be amended accordingly. No
Escrow Holder shall have a veto over whether or not a proposed amendment is
given effect.
11.5. Each of
the parties, upon the request of any other party, shall do, execute, acknowledge
and deliver or cause to be done, executed, acknowledged or delivered all such
further acts, deeds, documents, assignments, transfers, conveyances and
assurances as may be reasonably necessary or desirable to effect complete
consummation of the transactions contemplated by this Agreement.
11.6. This
Agreement shall be construed and enforced in accordance with the laws of British
Columbia and the federal laws of Canada applicable therein.
11.7. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. This Agreement and any counterpart thereof may be executed by
telecopy and when delivered shall be deemed to be an original.
[Signature
Page Follows]
IN
WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
|
SONUS
PHARMACEUTICALS INC.
Per:
Authorized
Signatory
|
|
COMPUTERSHARE
TRUST COMPANY OF CANADA
Per:
Authorized
Signatory
Per:
Authorized
Signatory
|
|
|
|
|
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WORKING
OPPORTUNITY FUND (EVCC) LTD.
Per:
Authorized
Signatory
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SCHEDULE
“A”
MILESTONES
AND RELEASE SCHEDULE
Further
to section 3.1 of the Agreement, the Milestones and corresponding percentage or
number of Escrow Securities to be released upon the achievement thereof are set
forth in the table below. The percentage figures represent the
percent of the original number of Escrow Securities (as may be adjusted to
account for any subdivision or consolidation of the Escrow
Securities). The percentage figures are not cumulative.
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|
Milestone
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Escrow
Securities to be Released
|
|
1.
|
The
completion of the planned patient enrolment (as specified in the last
submission to the regulatory authorities prior to the dosing of the first
patient enrolled in the trial) in the Supportive Clinical Trial with
OGX-011.
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50%
|
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2.
|
The
completion of a SPA on the patient population, study design, trial
endpoints, statistical analyses and size of a registration clinical trial
with OGX-011.
|
25%
|
|
3.
|
Achievement
of a survival advantage of 2 months or more in the OGX-011 randomized
Phase 2a trial referred to as clinical trial OGX-011-03.
|
50%
|
|
4.
|
The
enrolment of a first patient in a phase 2 clinical trial with
OGX-427.
|
25%
|
|
5.
|
The
completion of the planned patient enrolment (as specified in the last
submission to the regulatory authorities prior to the dosing of the first
patient enrolled in the trial) in the first phase 2 clinical trial with
OGX-427.
|
50%
|
|
6.
|
Following
a Type B Meeting with FDA and: (a) the confirmation from the FDA in such
meeting of the use of pain palliation as an appropriate endpoint to
support a product marketing approval in prostate cancer; and (ii) FDA
guidance as to acceptable means of evaluating and analyzing pain
palliation for a registration trial.
|
25%
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|
7.
|
If:
(a) the average closing share price for the Purchaser’s common shares on
the NASDAQ Global Market (or such other stock market on which the common
shares are then listed) for a period of ten consecutive trading days is at
least 50% above the closing share price of common shares on the NASDAQ
Global Market on the Announcement Date (adjusted for stock splits,
consolidations and other capital changes since the Announcement Date); and
(b) there has been a prior release of at least 50% of the Escrowed
Securities.
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All
remaining escrow shares
|
|
8.
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Enrolment
of a first patient in a randomized registration trial for either OGX-011
or OGX-427.
|
100%
|
|
9.
|
The
signing of a partnering or licensing agreement with a pharmaceutical or
biotechnology company, as approved by the board of directors of the
Purchaser, for the development of OGX-011, OGX-427 or
OGX-225.
|
100%
|
|
10.
|
The
occurrence of a Business Combination in which the value per share of the
consideration received by the holders of the Purchaser’s common shares as
a result of the Business Combination equals or exceeds 150% of the average
closing sale prices of the Purchaser’s common shares, as reported on the
NASDAQ Global Market (or such other stock market on which the common
shares are then listed), for the ten trading days both immediately prior
to and immediately following the Announcement Date. In the
event the consideration received includes property other than cash, the
value of such property, including securities, shall be the fair market
value of such property as determined in good faith by the board of
directors of the Purchaser.
|
100%
|
For the
purposes of this Schedule, the following terms shall have the following
meanings:
“Business Combination” means
any (i) merger, reverse merger, reorganization, consolidation, share exchange,
recapitalization, business combination, liquidation, dissolution, arrangement or
other similar
transaction
involving the Purchaser, except for any such transaction in which the holders of
the outstanding voting securities of the Purchaser immediately prior to such
transaction continue to hold, in the aggregate, securities possessing more than
fifty percent (50%) of the total combined voting power of all outstanding voting
securities of the Purchaser or of the surviving entity (or the parent of the
surviving entity) immediately after such transaction; or (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of, all or
substantially all of the assets of the Purchaser, in a single transaction or
series of related transactions; or (iii) the sale, transfer, issuance or other
disposition of, or the acquisition by any person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) of, the beneficial ownership of fifty
percent (50%) or more of the total combined voting power of all outstanding
equity securities of the Purchaser or any of its subsidiaries, in a single
transaction or series of related transactions.
Notwithstanding
the foregoing, in no event shall a Business Combination be deemed to have
occurred upon the consummation of any transaction entered into primarily for
financing purposes.
“FDA” means the United States
Food and Drug Administration.
“SPA” means a Special Protocol
Assessment as agreed by the Purchaser and the FDA in respect of the design and
size of a clinical trial.
“Supportive Clinical Trial”
means a randomized clinical trial in patients with hormone refractory prostate
cancer that will serve to support the registration trial(s) in a New Drug
Application filing with the FDA and market approval.
“Type B Meeting” means a
meeting between the Purchaser and the FDA that is for the purpose of eliciting
responses from FDA to specific issues raised by a sponsor.
SCHEDULE
“B”
PERMITTED
TRANSFERS OF ESCROW SECURITIES
For the
purposes of section 5.2 of the Agreement, each of the following shall be
classified as a “Permitted
Transfer”:
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(i)
|
Sale to a Controlled
Corporation – The Shareholder may from time to time Transfer (as
defined below) all or any part of its Escrow Securities to a corporation
which is under the Control (as defined below) of the Shareholder provided
that such corporation agrees as a condition of the Transfer to Transfer
back such Escrow Securities to the Shareholder in the event that such
corporation ceases to be under control of the
Shareholder.
|
|
(ii)
|
Family, RSP Sales - A
Shareholder may from time to time Transfer all or any part of its Escrow
Securities to:
|
|
|
A.
|
a
trust for the benefit of the Shareholder or his or her immediate
family;
|
|
|
B.
|
a
registered retirement savings plan of the Shareholder or his or her
spouse; and
|
|
|
C.
|
provided
that if such transferee (both legal and beneficial transferees in the case
of a trust) is required to become a party to this Agreement, such
transferees (if more than one) shall designate the Shareholder to
represent all of the transferees and such representative will remain a
party to and bound by this Agreement for and on behalf of such transferees
and the Shareholder shall be deemed to be the legal and beneficial owner
of such transferred Escrow Securities for the purposes of this
Agreement.
|
|
(iii)
|
Death - Upon the death
of the Shareholder, the Escrow Securities may be Transferred in accordance
with a probated will of the deceased or by operation of laws for the
administration of estates upon intestacy, provided that each such
transferee enters into an agreement under which the transferee becomes
party to and bound by this
Agreement.
|
|
(iv)
|
Investor Exemptions –
If the Shareholder is an Investor (as defined below) it may Transfer the
whole or any part of its Escrow
Securities:
|
|
|
A.
|
if
it is required by law to do so;
|
|
|
B.
|
if
it resolves to Transfer all or substantially all of its assets or if the
Transfer is part of a portfolio sale of its
assets;
|
|
|
C.
|
to
any person, where the Transfer is in connection with a reorganization of
the Investor;
|
|
|
D.
|
if
the Transfer is to any manager, general partner, affiliate or associate of
the Investor or affiliate or associate of such manager or general
partner;
|
|
|
E.
|
to
any corporation or other form of entity whose senior officers are, or
which is managed by a corporate manager whose senior officers are, common
officers of the Investor, the Investor’s manager or the Investor’s general
partner, as the case may be, as at the date of the
Transfer;
|
|
|
F.
|
to
any limited partnership the general partner of which is Controlled,
directly or indirectly, by the Investor, the manager or general partner of
the Investor, or an affiliate or associate of the Investor, or its manager
or general partner as at the date of the
Transfer;
|
|
|
G.
|
to
any persons who are bona fide investors (including limited partners, the
general partner or fund manager, as the case may be, or directors,
officers, or employees who are participants in an incentive program) in
the Investor who are entitled to participate in a distribution of the
assets of the Investor upon winding-up, liquidation or dissolution where
the Escrowed Securities are distributed to them on such occurrence;
provided that if such investors are required to become parties to this
Agreement, such investors (if more than one) shall designate one person to
represent all such investors and such representative will become party to
and bound by this Agreement for and on behalf of such investors and the
representative shall be deemed to be the legal and beneficial owner of
such Transferred Escrow Securities for the purposes of this
Agreement;
|
|
|
H.
|
in
respect of Ventures West 7 Limited Partnership (“Ventures West Canada”)
and Ventures West 7 U.S. Limited Partnership (“Ventures West U.S.”),
without limiting any of the foregoing, to (i) any limited partner of
Ventures West Canada or Ventures West U.S., (ii) Ventures West Capital
Ltd., any subsidiary thereof, or any corporation whose senior officers are
common officers of Ventures West Capital Ltd., or (iii) any fund managed
by Ventures West Capital Ltd. or any subsidiary thereof;
or
|
|
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I.
|
in
respect of Working Opportunity Fund (EVCC) Ltd., without limiting any of
the foregoing, to any member of the GrowthWorks Group (as defined
below)
|
provided
that each such transferee enters into an agreement under which the transferee
becomes party to and bound by this Agreement.
Defined
Terms:
In this
Schedule “B”, the following terms shall have the following
meanings:
|
|
“affiliate” means with
respect to any person:
|
|
|
(i)
|
any
corporation which is directly or indirectly Controlled by that
person;
|
|
|
(ii)
|
if
a corporation, any corporation which Controls that person, and any
corporation which is directly or indirectly Controlled by a corporation
which Controls that corporate person;
and
|
|
|
(iii)
|
if
a partnership or limited partnership, any partner of the partnership or
any corporation which Controls that partner and any corporation which is
directly or indirectly Controlled by a corporation that Controls that
partner.
|
“associate” has the same
meaning as has been designated to that term in the Canada Business Corporations
Act (Canada), as amended from time to time.
|
|
“Control”, “Controls” or “Controlled” means, in
relation to a corporation:
|
|
|
(i)
|
the
right to cast a majority of the votes which may be cast at a general
meeting of that corporation; or
|
|
|
(ii)
|
the
right to elect or appoint, directly or indirectly, a majority of the
directors of that corporation.
|
|
|
“GrowthWorks Group”
means:
|
|
|
(i)
|
Growth
Works Capital Ltd. (“GrowthWorks”);
|
|
|
(ii)
|
any
investment fund (whether corporation, limited partnership, trust or other
entity) to which GrowthWorks or any affiliate or associate of GrowthWorks
provides management or investment advisory services;
or
|
|
|
(iii)
|
any
affiliate or an associate of the
foregoing.
|
“Investors” means Ventures
West Canada, Ventures West US, H.I.G. Horizon Corp., Working Opportunity Fund
(EVCC) Ltd., Business Development Bank of Canada, Milestone Medica Corporation
and WHI Morula Fund, LLC and “Investor” means any one of
them.
“Transfer” includes any sale,
exchange, assignment, gift, bequest, disposition, mortgage, charge, pledge,
encumbrance, grant of a security interest or other arrangement by which
possession, legal title or beneficial ownership passes from one person to
another, or to the same person in a different capacity, whether or not
voluntarily and whether or not for value, and any agreement to effect any of the
foregoing; and the words “Transferred”, “Transferring” and similar
words have corresponding meanings.
SCHEDULE
“C”
RESOLUTION
OF DISPUTES
|
1.
|
Appointment
of Shareholder Representative
|
In the
event of a Dispute under section 3.9 of the Agreement, within three (3) Business
Days of the Purchaser’s receipt of a Dispute Notice, the Purchaser shall provide
written confirmation (a “Dispute Confirmation”) to the
Disputing Shareholders that it has received such Dispute
Notice. Within ten (10) Business Days of the delivery of the Dispute
Confirmation: (a) the Disputing Shareholders must appoint a representative (a
“Shareholder
Representative”) to act on behalf of all of the Disputing Shareholders in
all matters related to the settling of the Dispute; and (b) the Shareholder
Representative must confirm in writing to the Purchaser its appointment and the
fact that it has the full power and authority to act on behalf of all of the
Disputing Shareholders in respect of the settlement of the
Dispute. The Disputing Shareholders shall use whatever procedures
they deem appropriate to appoint a Shareholder Representative provided that such
appointment is duly and validly made and the Shareholder Representative is
granted the full power and authority to act on behalf of all of the Disputing
Shareholders in respect of the settlement of the Dispute.
|
2.
|
Reasonable
Commercial Efforts to Settle
Disputes.
|
The
Shareholder Representative (on behalf of the Disputing Shareholders) and the
Purchaser shall use all reasonable commercial efforts to settle the
Dispute. To this end, they shall consult and negotiate with each
other in good faith and understanding of their mutual interests to reach a just
and equitable solution satisfactory to the Disputing Shareholders and the
Purchaser.
If the
Disputing Shareholders and the Purchaser do not reach a solution pursuant to
Section 2 of this Schedule “C” within a period of 20 Business Days following the
delivery of the Dispute Confirmation, then upon written notice (an “Arbitration Notice”) by either
the Shareholder Representative or the Purchaser to the other, the Dispute shall
be finally settled by arbitration in accordance with the provisions of the Commercial Arbitration Act
(British Columbia),
as amended or replaced based upon the following:
|
(a)
|
the
arbitration tribunal shall consist of one arbitrator appointed by mutual
agreement of the Shareholder Representative and the Purchaser, or in the
event of failure to agree within ten (10) Business Days following the
delivery of the Arbitration Notice, either the Shareholder Representative
or the Purchaser may apply to a judge of the Supreme Court of British
Columbia to appoint an arbitrator. The arbitrator shall be
qualified by education and training to pass upon the particular matter to
be decided;
|
|
(b)
|
the
arbitrator shall be instructed that time is of the essence in the
arbitration proceeding and, in any event, the arbitration award must be
made within 30 days of the appointment of the
arbitrator;
|
|
(c)
|
after
an Arbitration Notice is given, the Shareholder Representative and the
Purchaser will meet within 15 Business Days of delivery of the Arbitration
Notice and will negotiate in good faith to agree upon the rules and
procedures for the arbitration, in an effort to expedite the process and
otherwise ensure that the process is appropriate
given
|
|
|
the
nature of the Dispute and the values at risk, failing which, the rules and
procedures for the arbitration shall be determined by the
arbitrator;
|
|
(d)
|
the
arbitration shall take place in Vancouver, British
Columbia;
|
|
(e)
|
the
arbitration award shall be given in writing shall provide reasons for the
decision, and shall be final and binding on the Disputing Shareholders and
the Purchaser, not subject to any appeal. The arbitration award
shall be limited to a determination by the arbitrator of whether or not
the Milestone that is the subject of the Dispute has in fact been achieved
(or in the case of a Dispute involving more than one Milestone, whether or
not each such Milestone has in fact been
achieved);
|
|
(f)
|
the
fees and other costs of the arbitration associated with the arbitrator and
the Shareholder Representative shall be paid by the Disputing Shareholders
provided that should the arbitrator rule in favour of the Disputing
Shareholders (i.e. should the arbitrator rule that any one or more of the
Milestones that is the subject of the Dispute has in fact been achieved),
the Purchaser shall pay all fees and other costs of the arbitration
associated with the arbitrator and the Shareholder Representative and
shall reimburse any such fees and costs previously paid by the Disputing
Shareholders;
|
|
(g)
|
all
Disputes referred to arbitration (including without limitation the scope
of the agreement to arbitrate, any statute of limitations, conflict of
laws rules, tort claims and interest claims) shall be governed by the
substantive Law of British Columbia and the federal laws of Canada
applicable therein; and
|
|
(h)
|
the
Disputing Shareholders, the Shareholder Representative and the Purchaser
shall agree that the arbitration shall be kept confidential and that the
existence of the proceeding and any element of it (including any
pleadings, briefs or other documents submitted or exchanged, any testimony
or other oral submissions and any awards) shall not be disclosed beyond
the arbitrator, the parties to the arbitration, their counsel and any
person necessary to the conduct of the proceeding, except as may lawfully
be required in judicial proceedings relating to the arbitration or
otherwise.
|