Khiron Life Sciences Corp. — M&A Activity 2023

Jul 28, 2023

SHARE PURCHASE AGREEMENT

BETWEEN

KHIRON LIFE SCIENCES CORP.

AND

2518542 ALBERTA LTD.

DATED AS OF JULY 28, 2023

	Article 1 Interpretation	1
1.1	Definitions	1
1.2	Articles, Sections and Headings	1
1.3	Extended Meanings	1
1.4	Accounting Principles	1
1.5	Currency	2
1.6	Calculation of Time	2
1.7	Exhibits and Schedules	2
A	Definitions	2
B	Form of D&O Resignation and Mutual Release	2
C	Form of Vendor Release	2
D	Share Transfer Form (United Kingdom)	2
E	German Transfer Agreement	2
F	Share Transfer Procedure (Spain)	2
G	Management Agreement	2
H	Form of Option Agreement	2
I	Operating Plan	2
	Article 2 Purchase and Sale	3
2.1	Purchase and Sale of Purchased Shares	3
2.2	Purchase Price	3
2.3	Pre-Closing Purchase Price Adjustments	3
2.4	Deposit	4
2.5	Payment of Purchase Price	4
2.6	Post-Closing Purchase Price Adjustments	4
2.7	Pharmadrug Regulatory Approval	6
2.8	Management Agreement	6
2.9	Subsidiary Growth Capital	6
	Article 3 Representations and Warranties	7
3.1	Representations and Warranties of the Vendor and the Subject Subsidiaries	7
3.2	Representations and Warranties of the Purchaser	7
3.3	Investigation	7
3.4	Disclosure	7
3.5	Survival of Representations and Warranties	8
Article 4 Covenants9
4.1	Access for Due Diligence	9
4.2	Privileged Communications	9
4.3	Indemnification of Directors and Officers	10
4.4	Operation of Business	10
4.5	Cooperation of the Subject Subsidiaries	14
4.6	Standstill	14
4.7	Covenants of the Vendor	15
4.8	Restrictive Covenants	16
4.9	Notice of Certain Matters	17
4.10	Confidentiality and Non-Disclosure	17

	Article 5 Conditions Precedent	18
5.1	Conditions Precedent in favour of the Purchaser	18
5.2	Conditions Precedent in favour of the Vendor	19
5.3	Mutual Conditions Precedent	20
	Article 6 Closing Arrangements	21
6.1	Closing	21
6.2	Joint Actions Relating to the German Transfer Agreement	21
6.3	Vendor's First Closing Deliveries	21
6.4	Purchaser's First Closing Deliveries	22
6.5	Notification to Notary –German Transfer Agreement	23
6.6	Vendor's Second Closing Date Deliveries	23
6.7	Purchaser's Second Closing Date Deliveries	25
	Article 7 Indemnification	25
7.1	Indemnification by the Vendor	25
7.2	Indemnification by the Purchaser	26
7.3	Satisfaction and Order of Indemnity Claims	27
7.4	Direct Claims	27
7.5	Notice of Third Party Claims	27
7.6	Defence of Third Party Claims	28
7.7	Defence of Third Party Claims for Taxes	29
7.8	Assistance for Third Party Claims	29
7.9	Failure to Give Timely Notice	30
7.10	Payment and Interest	30
7.11	Materiality	30
7.12	Amount Limitations on Indemnification Obligations	30
7.13	Other Rules Relating to Indemnification Obligations	30
	Article 8 Termination	31
8.1	Termination	31
	Article 9 General	33
9.1	Further Assurances	33
9.2	No Waiver	33
9.3	Cost and Expenses	34
9.4	Public Announcements	34
9.5	Successors, Assigns and Assignments	34
9.6	Entire Agreement	34
9.7	Amendments and Waivers	34
9.8	Notices	35
9.9	Governing Law	35
9.10	Dispute Resolution	35
9.11	Severability	36
9.12	Specific Performance and other Discretionary Rights	36
9.13	Third Party Beneficiaries	36
9.14	Counterparts	36

THIS SHARE PURCHASE AGREEMENT is made as of July 28, 2023.

BETWEEN: KHIRON LIFE SCIENCES CORP.

(the "Vendor")

AND: 2518542 ALBERTA LTD.

(the "Purchaser")

WHEREAS the Vendor, indirectly through the Subject Subsidiaries, carries on the business of selling and distributing medical cannabis products (the "Business");

WHEREAS the Vendor is the owner, beneficially and of record, of all the Purchased Shares (as defined herein);

WHEREAS the Purchaser desires to purchase, and the Vendor desires to sell, all of the Purchased Shares, subject to the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), the Parties agree as follows:

ARTICLE 1 INTERPRETATION

1.1 Definitions

The capitalized words and expressions used in this Agreement or in its Schedules shall have the meaning ascribed to them in Exhibit A.

1.2 Articles, Sections and Headings

The division of this Agreement into Articles, Sections, Exhibits and Schedules and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Agreement. The terms "hereof", "hereunder", "herein" and similar expressions refer to this Agreement as a whole and not to any particular Article, Section, Exhibit, Schedule or other portion hereof. References herein to Articles, Sections, Exhibits or Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement or of the Exhibits and Schedules hereto unless otherwise expressly stated herein.

1.3 Extended Meanings

In this Agreement, words importing the singular number also include the plural and vice versa and words importing any gender include all genders. The term "including" means "including, without limiting the generality of the foregoing".

1.4 Accounting Principles

Except as expressly provided herein, wherever in this Agreement reference is made to a calculation to be made or an action to be taken in accordance with generally accepted accounting principles, such reference will be deemed to be made to International Financial Reporting Standards, applicable as at the date on which such calculation or action is made or taken or required to be made or taken in accordance with International Financial Reporting Standards, consistently applied.

1.5 Currency

Except as expressly provided herein, all references to currency contained herein are to lawful money of Canada.

1.6 Calculation of Time

• 1.6.1 Time. Time is of the essence of this Agreement.
• 1.6.2 Calculation of Time. Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends. Where the last day of any such time period is not a Business Day, such time period shall be extended to the next Business Day following the day on which it would otherwise end.
• 1.6.3 Business Days. Whenever any action to be taken or payment to be made pursuant to this Agreement would otherwise be required to be made on a day that is not a Business Day, such action shall be taken or such payment shall be made on the first Business Day following such day.
• 1.6.4 Time of Day. All references to times of the day are to the times of the day in Calgary, Alberta.

1.7 Exhibits and Schedules

The following Exhibits and Schedules attached hereto are incorporated by reference and deemed to be part hereof:

Exhibits

• A Definitions
• B Form of D&O Resignation and Mutual Release
• C Form of Vendor Release
• D Share Transfer Form (United Kingdom)
• E German Transfer Agreement
• F Share Transfer Procedure (Spain)
• G Management Agreement
• H Form of Option Agreement
• I Operating Plan

Schedules

• 2.1 Purchased Shares
• 3.1(A) Representations and warranties of Vendor
• 3.1(B) Representations and warranties with respect to the Subject Subsidiaries
• 3.2 Representations and warranties of Purchaser
• 6.3 Spain First Closing Deliverables and Action Items
• 9.8 Addresses for Notices

ARTICLE 2 PURCHASE AND SALE

2.1 Purchase and Sale of Purchased Shares

Upon and subject to the terms and conditions hereof, the Vendor shall sell to the Purchaser, and the Purchaser shall purchase from the Vendor with good and marketable title and free from all Encumbrances:

• (a) on the First Closing Date, all of the issued and outstanding shares in the capital of the Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK (collectively, the "First Closing Shares"); and
• (b) on the Second Closing Date, all of the issued and outstanding shares in the capital of Pharmadrug (the "Pharmadrug Shares"),

such shares thereof are set forth in Schedule 2.1 hereto (collectively, the First Closing Shares and Pharmadrug Shares, the "Purchased Shares").

2.2 Purchase Price

Subject to the adjustments provided in Sections 2.3 and 2.6, the aggregate purchase price payable by the Purchaser to the Vendor for the Purchased Shares (the "Purchase Price") shall be equal to:

• (a) a fixed amount of Three Million Dollars ($3,000,000) (the "Base Purchase Price");
• (b) minus the Deposit;
• (c) minus the Closing Working Capital;
• (d) minus the amount of Closing Indebtedness.
• 2.2.2 Save as expressly provided otherwise in this Agreement, the Purchase Price (including as adjusted in accordance with this Agreement) shall be allocated to the respective transfers of the shares in the capital of the respective Subject Subsidiaries, in accordance with Schedule 2.1.

2.3 Pre-Closing Purchase Price Adjustments

• 2.3.1 Estimated Purchase Price Statement. The Parties acknowledge that it is not possible to determine the definitive Purchase Price until the Pharmadrug Regulatory Approval is obtained. Accordingly, no later than the third (3rd) Business Day prior to the First Closing Date, the Vendor has delivered to the Purchaser a detailed statement (the "Estimated Purchase Price Statement") containing its good faith estimate (with reasonable supporting information) of:
  • (a) the amount of the Closing Cash (the "Estimated Closing Cash");
  • (b) the amount of the Closing Indebtedness (the "Estimated Closing Indebtedness");
  • (c) the amount by which the Closing Working Capital is less than the Target Working Capital (the "Estimated Closing Working Capital");

(d) an estimate of the Purchase Price based on (a) to (c) above (the "Estimated Purchase Price"). The Vendor will consider any reasonable comments of the Purchaser on the Estimated Purchase Price Statement.

Such Estimated Purchase Price Statement represents a mutually agreed upon estimate amongst the Parties of the Estimated Purchase Price at Closing.

2.4 Deposit

2.4.1 In accordance with the Letter of Intent, the Purchaser has previously paid the amount of Five Hundred Thousand Dollars ($500,000.00) (the "Deposit") by wire transfer to the Vendor which is to be credited on account of the Purchase Price on First Closing on the terms set out herein.

2.5 Payment of Purchase Price

• 2.5.1 Closing Payments. On the First Closing Date, the Purchaser shall pay the Vendor the Estimated Purchase Price as follows:
  • (a) Deposit. The Purchaser shall be deemed to have paid to the Vendor $500,000 in cash, represented by the Deposit; and
  • (b) VTB Note. The remainder of the Estimated Purchase Price shall be satisfied by the Purchaser providing the Vendor with the VTB Note,

which shall be allocated by the Vendor in accordance with Schedule 2.1.

2.6 Post-Closing Purchase Price Adjustments

• 2.6.1 Post-Closing Adjustments. No later than ninety (90) days after the earlier of the Outside Date and the Second Closing, the Purchaser may, in its sole discretion, acting reasonably, deliver to the Vendor a closing purchase price statement (the "Closing Purchase Price Statement"), including (i) the Closing Cash, Closing Indebtedness and the Closing Working Capital; and (ii) the calculation of the Purchase Price, which shall be adjusted only as follows:
  • (a) If the Closing Cash is less than the Estimated Closing Cash, the Estimated Purchase Price shall be decreased by the amount by which the Estimated Closing Cash exceeds the Closing Cash. If the Closing Cash is greater than the Estimated Closing Cash, the Estimated Purchase Price shall be increased by the amount by which the Closing Cash exceeds the Estimated Closing Cash.
  • (b) If the Closing Indebtedness exceeds the Estimated Closing Indebtedness, the Estimated Purchase Price shall be decreased by an amount equal to the amount by which the Closing Indebtedness exceeds the Estimated Closing Indebtedness. If the Closing Indebtedness is less than the Estimated Closing Indebtedness, the Estimated Purchase Price shall be increased by an amount equal to the amount by which the Estimated Closing Indebtedness exceeds the Closing Indebtedness.
  • (c) If the Closing Working Capital is less than the Estimated Closing Working Capital, the Estimated Purchase Price shall be decreased by an amount equal to the amount by which the Estimated Closing Working Capital exceeds the Closing Working Capital. If the Closing Working Capital exceeds the Estimated

Closing Working Capital, the Estimated Purchase Price shall be increased by an amount equal to the amount by which the Closing Working Capital exceeds the Estimated Closing Working Capital.

(d) The Vendor may notify the Purchaser that it accepts or disputes the Closing Purchase Price Statement at any time within 10 Business Days after receiving it, but will be deemed to have accepted it on the 11th Business Day after receipt unless it delivers a written notice signed by the Vendor (the "Dispute Notice") to the Purchaser of a dispute (the "Closing Purchase Price Dispute") within that 11 Business Day notice period. On the date of the Vendor's deemed acceptance, or any earlier date upon which the Purchaser receives notice of the Vendor's acceptance, the Closing Purchase Price Statement will be conclusive and binding on the Purchaser and the Vendor. The Purchaser will, and will cause the Subject Subsidiaries to make available to the Vendor reasonable supporting calculations in respect of the Closing Purchase Price Statement, including all information, records, data and working papers of the Purchaser and the Subject Subsidiaries and access to personnel of the Purchaser and the Subject Subsidiaries, in each case as the Vendor may reasonably request for the purpose of reviewing the Closing Purchase Price Statement and preparing a Dispute Notice, but only to the extent: (i) relating to the preparation of the Closing Purchase Price Statement; and (ii) that access does not unreasonably interfere with the normal business operations of the Purchaser or the Subject Subsidiaries.

Any Dispute Notice must set out the reasons for the Closing Purchase Price Dispute, the amounts in dispute, and reasonable details of the calculation of those amounts. The Purchaser and the Vendor will attempt, in good faith, to resolve the Closing Purchase Price Dispute within 10 Business Days after the Purchaser's receipt of the Dispute Notice. Any Closing Purchase Price Dispute not resolved by the Purchaser and the Vendor within that period will be submitted to the dispute resolution procedure set forth in Section 9.10.

• (e) Upon an agreement of the Purchaser and the Vendor or resolution of a Closing Purchase Price Dispute, if any, the Purchase Price will be adjusted as follows:
  • (i) if the Estimated Purchase Price is decreased in accordance with (a) through (c), the principal amount owing pursuant to the VTB Note shall be decreased accordingly on a dollar-for-dollar basis and in accordance with its terms;
  • (ii) if the Estimated Purchase Price is increased in accordance with (a) through (c), the principal amount owing pursuant to the VTB Note shall be increased accordingly on a dollar-for-dollar basis and in accordance with its terms; and
  • (iii) in the event the principal amount owing pursuant to the VTB Note is decreased to zero, the estimated purchase price for the Option shall be further decreased by an amount equal to the amount by which the Estimated Purchase Price decrease exceeds the principal amount owing pursuant to the VTB Note prior to such adjustments on a dollarfor-dollar basis.

2.7 Pharmadrug Regulatory Approval

• 2.7.1 On or before the Second Closing Date, if the Pharmadrug Regulatory Approval is rejected or otherwise not obtained or granted as of the Outside Date, the Purchase Price shall be adjusted as follows:
  • (a) the VTB Note shall be reduced to zero;
  • (b) the Base Purchase Price shall be reduced to Five Hundred Thousand Dollars ($500,000);
  • (c) the Purchase Price shall be allocated by the Vendor to the Subject Subsidiaries, other than Pharmadrug, in accordance with Schedule 2.1; and
  • (d) the estimated purchase price for the Option shall be further decreased on a dollar-for-dollar basis by an amount equal to the amount by which the Purchase Price decrease in accordance with this Section and Section 2.6.1(a) through (c) exceeds the principal amount owing pursuant to the VTB Note prior to such adjustment as set forth at Section 2.6.1(a) (the "Option Purchase Price Deduction").
  • (e) The Vendor shall, and shall cause Pharmadrug to, cancel, forgive, waive or transfer, in its entirety, all loans, advances and other amounts, including all interest and other expenses thereon, owing by Khiron Europe, Zerenia UK, Khiron Spain or Khiron UK to Pharmadrug, and shall provide the Purchaser an acknowledgment, waiver and such other evidence form and substance satisfactory to Purchaser, evidencing such cancellation, forgiveness, waiver or transfer.

2.8 Management Agreement

Concurrently with the execution of this Agreement, the Vendor shall deliver or cause to be delivered to the Purchaser the Management Agreement duly executed by the Vendor and each Subject Subsidiary, substantially in the form and substance as set forth at Exhibit G.

2.9 Subsidiary Growth Capital

• 2.9.1 Purchaser, in its capacity as manager and pursuant to the Management Agreement, shall advance to counsel of the Vendor the Subsidiary Growth Capital within 2 Business Days of the date of this Agreement and, in any event, no later than July 28, 2023, the amount of which shall be further disbursed to the Subject Subsidiaries as contemplated by the Operating Plan unless otherwise agreed to by the Purchaser in its sole discretion. The Vendor covenants and agrees that none of the Subsidiary Growth Capital will be used in any manner whatsoever to repay or satisfy any amounts which constitute Intercompany Debts.

• 2.9.2 Notwithstanding the foregoing, the Purchaser shall only advance the Subsidiary Growth Capital upon the Vendor delivering to the Purchaser:

  • (a) evidence in form and substance satisfactory to Purchaser that all loans and advances made by or to any Subject Subsidiary, on the one hand, to or by any Related Parties, together with all interests thereon, if applicable, have been reimbursed or cancelled, including that all Intercompany Debt has been forgiven or cancelled;

• (b) an irrevocable direction to pay addressed to the Purchaser and Vendor's counsel, in the form and substance satisfactory to the Purchaser, in its sole discretion, duly executed by the Vendor and providing for: (i) $950,000 being directed to the Subject Subsidiaries; and (ii) $50,000 being retained by Vendor's counsel;

• (c) a receipt duly executed by Vendor's counsel, in the form and substance satisfactory to the Purchaser, in its sole discretion, acknowledging receipt of the Subsidiary Growth Capital; and

• (d) evidence satisfactory to the Purchaser that the Subsidiary Growth Capital comprises the Security.

• 2.9.3 The Parties agree that the Subsidiary Growth Capital is advanced as a loan pursuant to the Management Agreement and shall at no time form part of the Purchase Price consideration pursuant to Section 2.5.

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Vendor and the Subject Subsidiaries

The Vendor represents and warrants to and in favour of the Purchaser, except as set out in the disclosure schedules attached: (i) as set forth in Schedule 3.1(A) and Schedule 3.1(B) hereof on the date hereof; and (ii) as of the Second Closing Date as set forth in Schedule 3.1(A) and, only with respect to Pharmadrug, Schedule 3.1(B), and acknowledges that the Purchaser is relying upon such representations and warranties in entering into this Agreement and purchasing the Purchased Shares.

3.2 Representations and Warranties of the Purchaser

The Purchaser represents and warrants to and in favour of the Vendor as set forth in Schedule 3.2 hereof and acknowledges that the Vendor is relying upon such representations and warranties in entering into this Agreement.

3.3 Investigation

No investigations, inspections, surveys or tests made by or on behalf of any Party at any time shall affect, mitigate, waive, diminish the scope of or otherwise affect any representation or warranty made by any other Party in or pursuant to this Agreement.

3.4 Disclosure

• 3.4.1 Each exception to the representations and warranties that is set out in the disclosure schedules of the Vendor and the Subject Subsidiaries is identified by reference to one or more specific individual Sections of this Agreement, and any information disclosed in any portion of such disclosure schedules will not be deemed to be disclosed and incorporated in any other portion of the disclosure schedules to the extent that the relevance of that disclosure to that other portion is readily apparent.
• 3.4.2 The exceptions to representations and warranties set out in the disclosure schedules of the Vendor and the Subject Subsidiaries are intended only to qualify and limit the representations and warranties of the Subject Subsidiaries and the Vendor, and will not be construed to expand in any way the scope or effect of any of those representations and warranties, and will not be construed to constitute a new

representation, warranty or covenant of any Subject Subsidiary or the Vendor. The disclosure of any matter in the disclosure schedules will not be construed as an admission or indication that the matter is material or that the matter is necessarily required to be disclosed in order for any representation or warranty in this Agreement to be true and correct, and will not be construed as an admission of any obligation or liability to any third party. No disclosure in the disclosure schedules relating to any possible breach or violation of any contract or law will be construed as an admission or indication that any breach or violation exists or has actually occurred.

3.5 Survival of Representations and Warranties

• 3.5.1 All representations and warranties made by the Vendor in this Agreement shall survive the Closing as follows:
  • (a) the representations and warranties set forth in Sections 1.1.1 (Capacity and No Violation of Vendor), 1.1.2 (Approvals and Consents) and 1.1.3 (Title to Purchased Shares) of Schedule 3.1(A) (collectively, the "Vendor's Fundamental Representations") shall survive the Closing without time limit;
  • (b) the representations and warranties set forth in Sections 1.1.5 (Organization), 1.1.6 (Capitalization), 1.1.8 (Non-Reporting Issuer Status), 1.1.9 (Capacity and No Violation of the Subject Subsidiaries) and 1.1.42 (No Broker) of Schedule 3.1(B) (collectively, the "Subject Subsidiary Fundamental Representations") shall survive the Closing without time limit;
  • (c) the representations and warranties set forth in Section 1.1.32 (Tax Matters) of Schedule 3.1(B) with respect to Tax matters shall survive the Closing and continue for a period ending ninety (90) days following the last day on which a notice of assessment or reassessment can be issued by a Tax Authority to any Subject Subsidiary in respect of the taxation year or period to which such representations and warranties extend, taking into account any agreement, waiver or similar document extending such period and any entitlement of a Tax Authority to assess or reassess any Subject Subsidiary, including in the event of fraud or misrepresentation attributable to intentional misconduct; and
  • (d) all of the other representations and warranties of the Vendor in this Agreement shall survive the Closing and continue for a period of twenty-four (24) months from the Closing Date.

After such periods, the Vendor shall have no further liability hereunder with respect to such representations and warranties except with respect to Claims made within such periods in accordance with the terms of this Agreement.

• 3.5.2 All representations and warranties made by the Purchaser in this Agreement shall survive the Closing as follows:
  • (a) the representations and warranties set forth in Sections 1.2.1 (Organization) and 1.2.2 (Authority and No Violation) of Schedule 3.2 (the "Purchaser Fundamental Representations") shall survive the Closing without time limit; and
  • (b) all of the other representations and warranties of the Purchaser in this Agreement shall survive the Closing and continue for a period of twenty-four (24) months from the Closing Date.

After such periods, the Purchaser shall have no further liability hereunder with respect to such representations and warranties except with respect to Claims made within such periods in accordance with the terms of this Agreement.

• 3.5.3 The covenants, obligations and agreements of each Party contained in this Agreement shall survive the Closing and continue without time limit until performed.
• 3.5.4 Notwithstanding anything herein contained to the contrary, in the case of any breach by a Party of any representation or warranty involving fraud, intentional or gross fault, there shall be no time limitation on the right of the other Parties to bring any Claim in respect of such breach and to be indemnified in respect thereof.

ARTICLE 4 COVENANTS

4.1 Access for Due Diligence

From the date hereof until: (i) the First Closing Date with respect to each of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date with respect to Pharmadrug, the Vendor shall (a) cause the Subject Subsidiaries to give to the Purchaser and its accountants, legal advisers and other representatives, full access to its Books and Records, Constating Records, Tax Returns and Contracts, and (b) provide the Purchaser with such information relating to the Subject Subsidiaries and their properties and assets and the Business as the Purchaser may reasonably request. At the request of the Purchaser, acting reasonably, the Vendor and any Subject Subsidiary will execute or cause to be executed, such consents, authorizations and directions as may be necessary to enable the Purchaser and its representatives to obtain access to all files and records maintained by Governmental Authorities or other Persons in respect of the Purchased Shares, the Subject Subsidiaries, their properties and assets and the Business.

4.2 Privileged Communications

• 4.2.1 All solicitor-client privilege resulting from Gowling WLG (Canada) LLP representing the Vendor in connection with the transactions contemplated by this Agreement:
  • (a) will survive the Closing;
  • (b) is not waived by the completion of the transactions contemplated by this Agreement and will remain in effect; and
  • (c) is assigned to and will be controlled by the Vendor.
• 4.2.2 Without limiting the privilege referred to in Section 4.2.1, all communications up to and including the Closing involving solicitor-client confidences between Gowling WLG (Canada) LLP and the Vendor relating to the negotiation, documentation and consummation of the transactions contemplated by this Agreement ("Privileged Communications"), are deemed to be the property of the Vendor, not of any Subject Subsidiary, and are subject to the solicitor-client privilege referred to in Section 4.2.1;
• 4.2.3 Neither the Purchaser nor any Subject Subsidiary may use or rely on the Privileged Communications in any suit, action, claim or proceeding against or involving any of the Parties after the Closing;
• 4.2.4 As soon as possible following the Closing, the Purchaser will cause the Subject Subsidiaries to make reasonable efforts to locate and destroy any Privileged Communications known to be in the possession of the Subject Subsidiaries, and to

promptly destroy any Privileged Communications that may later be discovered to be in the possession of the Subject Subsidiaries, in each case without retaining any copies or records of those Privileged Communications.

4.2.5 Following the Closing, Gowling WLG (Canada) LLP will have no duty or obligation of any kind to reveal or disclose any Privileged Communications or related files or records to the Subject Subsidiaries by reason of any solicitor-client relationship between Gowling WLG (Canada) LLP and the Vendor.

Provided, however that this Section 4.2 shall not extend to: (i) any portion of any communications, file or record that does not involve or pertain to such solicitor-client confidences; and (ii) to the extent any Privileged Communications or related files or records is necessary to manage the operations, assets and liabilities of the Subject Subsidiaries post-Closing.

4.3 Indemnification of Directors and Officers

• 4.3.1 From and after the Closing, the Purchaser will cause the Subject Subsidiaries (and their successors) to fulfill and honour in all respects the obligations of the Subject Subsidiaries under any written indemnification agreements between the Subject Subsidiaries and their past and present directors and officers that remain in effect on the date of this Agreement, and any indemnification provisions under the constating documents of the Subject Subsidiaries as in effect on the date of this Agreement.
• 4.3.2 The provisions of this Section 4.3 are intended for the benefit of, and will be enforceable by, each insured or indemnified person referred to in this Section 4.3 and that person's successors, and, for that purpose, the Vendor confirms that it is acting as agent and trustee on their behalf.

4.4 Operation of Business

• 4.4.1 General Terms. The Vendor hereby covenants and agrees from the date hereof until: (i) the First Closing Date with respect to each of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date with respect to Pharmadrug, and save as expressly permitted or otherwise required by this Agreement, that it shall cause the Subject Subsidiaries to carry on the Business only in the Ordinary Course and in compliance with all applicable Laws.

• 4.4.2 Negative Covenants. Without limiting the foregoing, the Vendor hereby covenants and agrees that it shall cause the Subject Subsidiaries not to do or attempt to do any of the following, without the Purchaser's prior written consent:

  • (a) permit any Subject Subsidiary to proceed with any merger, amalgamation, plan of arrangement, reorganization or other business combination or similar transaction or the acquisition of all or a material portion of the shares, assets or business of the Subject Subsidiary;
  • (b) reduce the stated capital of any Subject Subsidiary;
  • (c) sell, lease, transfer, create or allow any Encumbrance to affect, or otherwise dispose of, any of the assets of any Subject Subsidiary;
  • (d) proceed with any joint venture, strategic alliance, non-competition or similar restrictive covenant or other transaction;

• (e) permit or have any acceleration or discounting in the collection of the Accounts Receivable, or any delay in the payment of Accounts Payable, it being understood that the collection and payment of such accounts respectively shall at all times be made in the Ordinary Course;

• (f) change any accounting methods, principles, practices or policies or any business practices or policies relating to any Subject Subsidiary;

• (g) permit or have any material change in the operation of the Business;

• (h) make any loans, advances or capital contributions to, or make any other investment in, any other Person, or issue or sell any debt securities;

• (i) declare or pay any dividend or declare, authorize or make any distribution of, on or in respect of any of its securities;

• (j) amend any of the Constating Records of any Subject Subsidiary;

• (k) split, combine or reclassify any shares of a Subject Subsidiary's share capital or allot, reserve, set aside, issue, authorize, purchase, redeem, deliver, create an Encumbrance or dispose of any shares in the share capital of any Subject Subsidiary and any of its securities;

• (l) except as required to comply with applicable Laws and this Agreement, establish, terminate, or materially amend any Employee Plan;

• (m) enter into any transaction, understanding or arrangement with any Person with whom a Subject Subsidiary is not dealing at arm's length;

• (n) effect any capital expenditure or commitment to make a capital expenditure;

• (o) enter into, amend, revise, renew or terminate any Material Contract or enter into: (i) any Contracts which contain liquidated damage or penalty provisions, or (ii) obligations under commodity purchase or option agreements or other commodity price hedging arrangements (whether contingent or matured) or Derivative Contracts;

• (p) proceed with any liquidation, consolidation, recapitalization or other restructuring of any Subject Subsidiary;

• (q) pay or agree to pay to any Person or any Employees: (i) any increase in compensation (in excess of the amount required to compensate for inflation), benefits, severance or termination pay, or (ii) any bonus, severance amounts for termination or termination packages;

• (r) hire, terminate or enter into any employment agreement with any Employee;

• (s) commence, settle or compromise any Claim (subject to the obligations of the Vendor pursuant to Section 4.7.1(h));

• (t) except as required by applicable Laws, make any change in its Tax or financial accounting policies, practices, principles, methods or procedures;

• (u) except as required by applicable Laws: (i) make, change or rescind any Tax election, information schedule, Tax Return or designation, (ii) settle or

compromise any Tax Claim, assessment, reassessment, liability, proceeding or controversy, (iii) file any amended Tax Return, (iv) enter into any material agreement with a Governmental Authority with respect to Taxes, (v) enter into any or change any Tax sharing, Tax advance pricing agreement, Tax allocation or Tax indemnification agreement, (vi) surrender any right to claim a Tax abatement, reduction, deduction, exemption, credit or refund, (vii) consent to the extension or waiver of the limitation period applicable to any Tax matter, (viii) make a request for a Tax ruling to any Governmental Authority or (ix) materially amend or change any its methods for reporting income, deductions or accounting for income Tax purposes;

• (v) take any action or fail to take any action that would, or would reasonably be expected to in the aggregate (i) cause the Tax attributes of its assets or the amount of its Tax loss carry forwards to materially and adversely change from what is reflected in its most recent Tax Returns; or (ii) render such Tax loss carry-forwards unusable (in whole or in part) by it or any successor; or
• (w) enter into any agreement or other commitment whatsoever to do any of the foregoing.

4.4.3 Positive Covenants.

• (a) The Vendor hereby further covenants and agrees that from the date hereof until: (i) the First Closing Date with respect to each of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date with respect to Pharmadrug, it shall cause the Subject Subsidiaries to:

  • (i) (I) duly and timely file with the appropriate Governmental Authority all Tax Returns required to be filed, which shall be correct and complete, (II) consult with the Purchaser with respect to the discretionary deductions to be claimed in respect of any such Tax Return where claiming such discretionary deductions would otherwise give rise to a non-capital loss for Tax purposes and (III) pay, withhold, collect and remit to the appropriate Governmental Authority in a timely fashion all amounts required to be so paid, withheld, collected or remitted;
  • (ii) maintain the coverage under all policies listed on Schedule 1.1.41 of the Disclosure Schedule (as defined in Schedule 3.1(B)) in full force and effect until the Second Closing Date;
  • (iii) preserve intact the respective business organizations and goodwill of the Subject Subsidiaries and keep available in all material respects the services of the Subject Subsidiaries' officers and Employees and maintain in all material respects satisfactory relationships with suppliers, distributors, customers and others with whom any Subject Subsidiary has business relationships;
  • (iv) maintain and preserve all assets of the Subject Subsidiaries and keep such assets in good repair, working order and condition;
  • (v) confer with the Purchaser prior to implementing operational decisions of a material nature;

• (vi) use its best efforts to cause all Third Party Consents, other than the Pharmadrug Regulatory Approval, to be satisfied on or prior to the First Closing Date;

• (vii) effect all necessary registrations, filings and submissions of information required by in connection with the Third Party Consents, other than the Pharmadrug Regulatory Approval;

• (viii) comply promptly with all requirements which applicable Laws may impose on any Subject Subsidiary with respect to any Third Party Consent, other than the Pharmadrug Regulatory Approval;

• (ix) use its best efforts to cause the Pharmadrug Regulatory Approval to be satisfied on or prior to the Outside Date;

• (x) effect all necessary registrations, filings and submissions of information required by in connection with the Pharmadrug Regulatory Approval;

• (xi) comply promptly with all requirements which applicable Laws may impose on Pharmadrug with respect to the Pharmadrug Regulatory Approval;

• (xii) defend all Claims and use its best efforts to lift or rescinded any injunction or restraining order or other order relating to any Subject Subsidiary, challenging or affecting this Agreement, the Closing Documents or the consummation of the transactions contemplated hereby or thereby, including any Third Party Consent;

• (xiii) take, when required, on or prior to the First Closing Date, all necessary steps and proceedings to permit the First Closing Shares to be duly and regularly transferred to and registered in the name of the Purchaser, including the delivery to and acceptance from a German notary of a notarized certificate regarding the corporate existence of the Vendor and the necessary powers of attorney required to effect the transfer of the First Closing Shares; and

• (xiv) take, when required, on or prior to the Second Closing Date, all necessary steps and proceedings to permit the Pharmadrug Shares to be duly and regularly transferred to and registered in the name of the Purchaser, including the delivery to and acceptance from a German notary of a notarized certificate regarding the corporate existence of the Vendor and the necessary powers of attorney required to effect the transfer of the Pharmadrug Shares.

• (b) The Vendor hereby covenants and agrees that from the date hereof until the Second Closing Date it shall promptly notify the Purchaser in writing of any material change in any representation or warranty provided by the Vendor in this Agreement and shall in good faith discuss with the Purchaser any material change in circumstances (actual, anticipated, contemplated or, to the knowledge of the Vendor, threatened) which could reasonably be expected to result in such a notice being required.

4.5 Cooperation of the Subject Subsidiaries

• 4.5.1 Without limiting the foregoing, the Vendor hereby covenants and agrees that from the date hereof until: (i) the First Closing Date with respect to each of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date with respect to Pharmadrug, it shall, and it shall cause the Subject Subsidiaries to:
  • (a) permit the Purchaser and its Representatives to have complete and unfettered access to the Business, to the Constating Records and to the Books and Records, including all customer and supplier files, price lists, claim files, litigation files and Employee files related to the Business and to management of the Subject Subsidiaries, provided that access to any files shall be in compliance with Data Protection Laws; and
  • (b) promptly provide to the Purchaser such financial and operating data and other information with respect to the Business as the Purchaser shall from time to time reasonably request. At the Purchaser's request, the Vendor shall, and shall cause the Subject Subsidiaries to, cooperate with the Purchaser in arranging such meetings as the Purchaser may reasonably request with Employees (including management), suppliers, clients, auditors, solicitors and consultants of the Subject Subsidiaries.
• 4.5.2 Notwithstanding the foregoing, each of the Subject Subsidiaries and the Vendor shall, until the Pharmadrug Regulatory Approval is obtained, have no obligation to disclose Pharmadrug's trade or company secrets, insofar as these secrets refer to PharmaDrug developing, manufacturing or marketing cannabidiol, including its precursors and active ingredients, or possessing a corresponding licence under pharmaceuticals law, or otherwise disclose information to the Purchaser where this would be prohibited under sec. 15 para. 4 no. 3 AWG.

4.6 Standstill

• 4.6.1 Until the earlier of: (i) the First Closing Date with respect to each of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date with respect to Pharmadrug; or (iii) such time as this Agreement is validly terminated pursuant to Article 8, the Vendor shall not, and shall cause the Subject Subsidiaries and each Representative of the Vendor or such Subject Subsidiary not to, directly or indirectly, solicit, initiate, encourage or entertain any inquiries or proposals from, discuss or negotiate with, provide any non-public information to or consider the merits of any inquiries or proposals from any Person (other than the Purchaser) which may lead, directly or indirectly, to (i) a sale or disposition of any Subject Subsidiary, any assets thereof or any Subject Subsidiary's Business, (ii) a sale of the Purchased Shares or any other equity or ownership interest in any Subject Subsidiary (or any right to acquire the same), or (iii) a merger with or acquisition of a Subject Subsidiary or other restructuring, recapitalization or reorganization involving any Subject Subsidiary or the Purchased Shares (each of the above described operations being hereinafter referred to as a "Competing Transaction"). The Vendor hereby confirms that it has previously terminated, and has caused the Subject Subsidiaries to previously terminate, any and all negotiations relating to any Competing Transaction with all Persons other than the Purchaser.
• 4.6.2 From the date hereof until: (i) the First Closing Date with respect to each of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date with respect to Pharmadrug, the Vendor shall notify the Purchaser promptly of any offer or proposal and the terms thereof related to the Purchased Shares, the assets of the Subject Subsidiaries or any other proposed direct or indirect Competing Transaction,

within twenty-four (24) hours of receipt or awareness of the same by the Vendor or such Subject Subsidiary. Notwithstanding any and all other rights of the Purchaser pursuant to this Agreement, in the event this Section 4.6 is breached: (i) prior to the First Closing, then the Purchaser shall be entitled to claim, as liquidated damages, from the Vendor an amount of Four Million Dollars ($4,000,000); and (ii) prior to the Second Closing, then the Purchaser shall be entitled to claim, as liquidated damages, from the Vendor an amount of Two Million Five Hundred Thousand Dollars ($2,500,000). No separate proof of the costs and expenses actually incurred by the Purchaser or its Affiliates shall be required.

4.7 Covenants of the Vendor

• 4.7.1 Covenants of the Vendor. Without limiting the foregoing, the Vendor shall, and shall cause the Subject Subsidiaries to:

  • (a) perform all obligations required to be performed by such Party under this Agreement and the applicable Closing Documents, and shall do all such other acts and things not expressly referenced herein as may be commercially reasonable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated hereby and thereby and shall not take any action that will have the effect of delaying, impairing or impeding the Closing or the receipt of any authorizations, consents, orders or approvals to be sought pursuant to this Agreement or pursuant to any Closing Documents;
  • (b) not enter into any transaction or perform any act or omit to perform any act which would (i) interfere or be inconsistent with the successful completion of the transactions contemplated in this Agreement or in any Closing Documents in accordance with the terms hereof or thereof, (ii) render untrue or incorrect any of the representations and warranties of such Party set forth in this Agreement or in any Closing Documents if such representations and warranties were made at a date subsequent to the execution hereof and all references to the date hereof were to such later date, or (iii) adversely affect the ability of such Party to perform and comply with its covenants and agreements under this Agreement or any Closing Documents;
  • (c) promptly advise the other Parties in writing of (i) any fact, event or any change occurring after the date hereof that would render any representation or warranty of such Party contained in this Agreement, if made on or as of the date of such event or the Closing Documents, untrue or incorrect or would result in any condition precedent in favour of the other Parties not being met, (ii) any Material Adverse Change, (iii) any breach by such Party of any covenant, undertaking or agreement contained in this Agreement or in any Closing Documents, or (iv) any actual or potential death, disability, resignation, termination of employment or other departure of any Employee of any Subject Subsidiary;
  • (d) use their best efforts to cause the conditions set forth in Sections 5.1.1(b) to 5.1.1(f), inclusively, to be satisfied on or prior to the applicable Closing Date;
  • (e) cause the conditions set forth in Section 5.1.1(a) to be satisfied on or prior to the applicable Closing Date;
  • (f) effect all necessary registrations, filings and submissions of information required by Governmental Authorities from the Vendor or any Subject Subsidiary;

• (g) comply promptly with all requirements which applicable Laws may impose on the Vendor or any Subject Subsidiary with respect to the transactions contemplated in this Agreement or in any Closing Document;

• (h) defend all Claims and use their best efforts to lift or rescinded any injunction or restraining order or other order relating to the Vendor or any Subject Subsidiary challenging or affecting this Agreement or the Closing Documents or the consummation of the transactions contemplated hereby or thereby; and

• (i) take all necessary steps and proceedings to permit the Purchased Shares to be duly and regularly transferred to and registered in the name of the Purchaser.

4.8 Restrictive Covenants

• 4.8.1 Non-Competition. The Vendor hereby agrees and undertakes in favour of each of the Purchaser, the Subject Subsidiaries, as well as their respective successors and assigns (collectively, the "Beneficiaries"), for a one (1) year term following the Second Closing Date (as the case may be, the "Restricted Period") to refrain from directly or indirectly performing services for, owning or having an interest in, managing, operating, participating with or assisting in any way in, any Person, or allowing their name to be used by a Person that, directly or indirectly, is engaged in the cultivation, sale or distribution of medical cannabis products (a "Competing Business"), anywhere within the territory of Europe.
• 4.8.2 Non-solicitation – Employees. As a separate and independent covenant, throughout the Restricted Period, the Vendor hereby agrees and undertakes in favour of the Beneficiaries that it shall not, directly or indirectly, hire or solicit, or in any way entice any employee or consultant of a Subject Subsidiary to leave his or her employment with, or otherwise amend or terminate the terms of its relationship with, any Subject Subsidiary.
• 4.8.3 Non-Solicitation – Suppliers. As a separate and independent covenant, throughout the Restricted Period, the Vendor hereby agrees and undertakes in favour of the Beneficiaries that it shall not, directly or indirectly, take any action whatsoever that would cause a supplier to reduce, curtail or terminate, in whole or in part, its relationship with any Subject Subsidiary.
• 4.8.4 Acknowledgement of Vendor. The Vendor acknowledges that the covenants of the Vendor set forth in this Section 4.8 are an essential element of this Agreement and that, but for the agreement of the Vendor to comply with these covenants, the Purchaser would not have entered into this Agreement. The Vendor further expressly acknowledges hereby that: (i) it fully understands the terms of this Section 4.8 and the restrictive and binding effect of such terms, and has reviewed them with legal counsel and thereby addressed the reasonableness of the geographic region within which the non-competition covenant operates, the time period during which the restrictive covenants is to remain in effect and the scope of activities restricted hereby; (ii) the restrictive covenants contained in this Section 4.8 are both necessary and reasonable for the protection of the legitimate business interests of the Beneficiaries, and will not in themselves impair the financial opportunity of the Vendor, and (iii) the execution of this Section 4.8 reflects the desire and intent of the Parties that such provisions be upheld in their entirety and that the Beneficiaries have the full benefit of same.
• 4.8.5 Tax Election. The Vendor and the Purchaser hereby acknowledge and agree that no portion of the Purchase Price is allocated, considered or regarded as a consideration for the undertakings contained in this Agreement. The Parties acknowledge and agree

that the undertakings set forth at Sections 4.8.1 to 4.8.3 aim, amongst others, to maintain and protect the fair market value of the Purchased Shares and that it is intended by the Parties such provisions under applicable Law apply with respect to the undertakings described in Sections 4.8.1 to 4.8.3 to the extent those subsections apply to such undertakings. The Parties acknowledge that the Purchaser assumes no liability in favour of the Vendor if any provisions under applicable Law are not applicable to the Vendor or if an election is not filed or is not filed in a timely fashion.

4.9 Notice of Certain Matters

4.9.1 From the date hereof until the Second Closing Date, the Vendor shall promptly notify the Purchaser in writing of (a) the occurrence or existence of any event, circumstance, condition, development, state of facts, occurrence, change or effect that has or could result in any representation or warranty made by Vendor in this Agreement or in any schedule hereto becoming untrue or inaccurate in any material respect, (b) any material failure on the part of Vendor to comply with or satisfy any act, undertaking, obligation, agreement or covenant to be complied with or satisfied by the Vendor, or (c) the occurrence or non-occurrence of any event, circumstance, condition, development, state of facts, occurrence, change or effect which has or could cause any condition set forth in Sections 5.1 or 6.3 not to be satisfied. No disclosure by the Vendor pursuant to this Section 4.9 or otherwise shall be deemed to amend or supplement the representations and warranties of the Vendor contained in Schedule 3.1(A) or Schedule 3.1(B), as the case may be, or any other schedule or any document referred to therein, or to prevent or cure any breach of any representation, warranty, covenant or agreement contained herein, including without limitation for purposes of Section 5.1, Section 6.3, Article 7 or Article 8, or to limit the Purchaser's ability to make a claim for indemnification hereunder, whether before or after the Second Closing Date.

4.10 Confidentiality and Non-Disclosure

4.10.1 Each of the Vendor and the Purchaser hereby agrees and undertakes that it shall not, at any time henceforth, directly or indirectly disclose to any Person, any Confidential Information relating to the other Party, any Subject Subsidiary or the Business. Each of the Vendor and the Purchaser shall take all reasonable precautions to preserve the confidential, proprietary and secret nature of all Confidential Information which is disclosed to or otherwise in the possession of the Vendor or the Purchaser in connection with the other Party, any Subject Subsidiary or the Business. Each of the Vendor's and the Purchaser's obligations hereunder shall not apply to any Confidential Information which it can reasonably demonstrate through documentation has become generally known to the trade or the public, through no fault or action on its part, prior to or subsequent to the disclosure, or was required by law to be disclosed by court order or other lawful process. In this last situation, each of the Vendor and the Purchaser will disclose Confidential Information only to the extent required to fulfill such purpose or legal requirement. In the event the Vendor or the Purchaser becomes legally compelled to disclose any Confidential Information, they will promptly notify the other Party of such fact so that the other Party may seek an appropriate remedy to prevent such production, and request the person demanding such production to allow the other Party a reasonable period of time to seek such remedy.

4.11 Tax Matters

4.11.1 Tax Returns. The Vendor will cause to be prepared and filed in a manner that complies with applicable Laws or the past practices of each Subject Subsidiary and on a timely basis, all Tax Returns of each Subject Subsidiary for any Pre-Closing Tax Period applicable to the relevant Subject Subsidiary and for which Tax Returns have not been filed as of the Closing Date applicable to the relevant Subject Subsidiary, at the Vendor's sole expense. For such purposes, the Vendor and the Purchaser acknowledge that the Vendor shall not make an election pursuant to applicable tax Law without the consent of the Purchaser. The Vendor shall provide to the Purchaser for its review a draft of each such Tax Return no later than thirty (30) days prior to the due date for filing such Tax Return with the appropriate Tax Authority. The Purchaser shall have the right to review the draft of the Tax Returns by the Vendor and the Vendor shall consider in good faith any reasonable changes as are requested by the Purchaser, provided that such changes are not contrary to applicable Laws. The Purchaser shall be responsible for filing all Tax Returns of any Subject Subsidiary other than Tax Returns of each Subject Subsidiary for any Pre-Closing Tax Period applicable to the relevant Subject Subsidiary.

• 4.11.2 Payment of Pre-Closing Taxes. Upon the filing of any Tax Return for a Pre-Closing Tax Period (and, in any event, no later than ten (10) days prior to such Taxes being due by the relevant Subject Subsidiary), the Vendor shall, as a downward adjustment to the Purchase Price, promptly pay to the Purchaser an amount equal to the Taxes shown as owing on the Tax Returns referred to in section 4.11.1 payable with respect thereto and that are in excess of the amount of such Taxes that were already taken into account in the Estimated Closing Working Capital. Upon the filing of any Tax Return for a Pre-Closing Tax Period (if any), the Vendor shall, as a downward adjustment to the Purchase Price, promptly pay to the Purchaser an amount equal to the amount of the Taxes, if any, payable in excess of the amount of such Taxes that were already taken into account in the Closing Purchase Price Statement.
• 4.11.3 Assistance on Tax Matters. The Vendor, the Purchaser and the Subject Subsidiaries will co-operate fully with each other and make available to each other in a timely fashion, all data and other information as may reasonably be required for the preparation of all Tax Returns referred to in this Section 4.11 and in connection with any audit, litigation or other proceeding with respect to Taxes.

ARTICLE 5 CONDITIONS PRECEDENT

5.1 Conditions Precedent in favour of the Purchaser

• 5.1.1 Conditions. The obligations of the Purchaser to purchase the Purchased Shares shall be subject to the satisfaction, on or before: (i) the First Closing Date with respect to the First Closing Shares; and (ii) the Second Closing Date with respect to the Pharmadrug Shares, of each of the following conditions precedent (each of which is for the Purchaser's exclusive benefit and may be waived by the Purchaser, in whole or in part at its option):
  • (a) each of the acts, undertakings, obligations, agreements and covenants of the Vendor and the Subject Subsidiaries under this Agreement or under any Closing Document to be performed or complied with on or before the applicable Closing Date shall have been duly performed or complied with in all material respects, and the Purchaser shall have received a certificate of the Vendor and the Subject Subsidiaries addressed to the Purchaser and dated as of the applicable Closing Date confirming same;
  • (b) each of the representations and warranties made in favour of the Purchaser pursuant to this Agreement shall have been true and correct in all respects on the date of execution of this Agreement and shall be true and correct in all material respects (except that (i) those representations and warranties which are qualified as to material, materiality, Material Adverse Change or similar

expressions, or are subject to the same or similar type exceptions and (ii) the Vendor's Fundamental Representations and the Subject Subsidiary Fundamental Representations, shall be true, complete and correct in all respects) on the Closing Date as if made on and as of such date, and the Purchaser shall have received a certificate of the Vendor addressed to the Purchaser and dated as of the Closing Date confirming same;

• (c) the Purchaser shall have completed its investigation into the Subject Subsidiaries, the Business and all other matters it has deemed relevant and such investigation shall not have disclosed any matter which Purchaser, acting reasonably, believes to be materially adverse to its decision to acquire the Purchased Shares;
• (d) there shall not have occurred, in the judgment of the Purchaser, acting reasonably, a Material Adverse Change since the execution of this Agreement;
• (e) the continued employment of Franziska Katterbach;
• (f) no Claim or Threatened Claim shall have been taken, made, threatened or instituted, whether or not having the force of Law, and no Law or Order shall have been proposed, enacted, promulgated, issued or applied: (i) to prohibit or impose any limitation or condition on the completion of the transactions contemplated herein or the right of the Purchaser to own, exercise full rights of ownership of all, or sell all of the Purchased Shares; (ii) which, if the transactions contemplated herein were completed, could in Purchaser's reasonable judgment result in a Material Adverse Change or prevent any Subject Subsidiary from carrying on the Business as presently carried on; or (iii) to prohibit or restrict the completion of the transactions contemplated in this Agreement or in any Closing Document in accordance with the provisions herein or therein; and
• (g) no later than the third (3rd) Business Day prior to the First Closing Date, the delivery by the Vendor to the Purchaser, and the acceptance thereof by the Purchaser, of the Estimated Purchase Price Statement pursuant to Section 2.3.1.
• 5.1.2 Non-Fulfilment. In the event that one or more of the conditions set forth in this Section 5.1 is not fulfilled on or before the Outside Date and the Purchaser does not waive such condition pursuant to this Section 5.1, the Purchaser may, in its discretion and upon delivery of written confirmation thereof to the Vendor: (i) elect to terminate this Agreement subject to the provisions of, and in accordance with, Section 8.1.4; or (ii) grant to the Vendor an extension period to fulfill such condition. However, in the event that one or more of the conditions set forth in this Section 5.1 is not fulfilled on or before the extended date, the date agreed upon by the Parties or, at the latest, the Outside Date and the Purchaser does not waive such condition pursuant to this Section 5.1, the Purchaser may elect to terminate this Agreement subject to the provisions of, and in accordance with, Section 8.1.4.

5.2 Conditions Precedent in favour of the Vendor

5.2.1 Conditions. The obligations of the Vendor to complete the transactions hereunder shall be subject to the satisfaction, on or before: (i) the First Closing Date with respect to the First Closing Shares; and (ii) the Second Closing Date with respect to the Pharmadrug Shares, of each of the following conditions precedent (each of which is for the Vendor's exclusive benefit and may be waived by the Vendor, in whole or in part at its option):

• (a) each of the acts, undertakings, obligations, agreements and covenants of the Purchaser under this Agreement or under any Closing Document to be performed or complied with on or before the applicable Closing Date shall have been duly performed or complied with in all material respects, and the Vendor shall have received a certificate of the Purchaser addressed to the Vendor and dated as of the applicable Closing Date confirming same;
• (b) each of the representations and warranties made in favour of the Vendor pursuant to this Agreement shall have been true and correct in all respects on the date of execution of this Agreement and shall be true and correct in all material respects (except that (i) those representations and warranties which are qualified as to material, materiality, Material Adverse Change or similar expressions, or are subject to the same or similar type exceptions and (ii) the Purchaser's Fundamental Representations shall be true, complete and correct in all respects) on the applicable Closing Date as if made on and as of such date, and the Vendor shall have received a certificate of the Purchaser addressed to the Vendor and dated as of the applicable Closing Date confirming same; and
• (c) the Subsidiary Growth Capital shall have been advanced by Purchaser in accordance with Section 2.9.

5.3 Mutual Conditions Precedent

5.3.1 Conditions. The obligations of each of the Purchaser and the Vendor to complete the transactions hereunder shall be subject to all Third Party Consents having been obtained, including: (i) on or prior to the First Closing Date, the TSXV Approval in respect of the sale of the First Closing Shares; and (ii) on or prior to the Second Closing Date, the TSXV Approval in respect of the sale of the Pharmadrug Shares and the Pharmadrug Regulatory Approval, each upon terms and conditions acceptable to each of the Purchaser and the Vendor, acting reasonably (each of which may be waived by the Vendor and the Purchaser, as the case may be, in whole or in part at its option).

For greater certainty, the Pharmadrug Regulatory Approval shall have been obtained meaning that the German Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz):

• (a) issued a clearance decision (Freigabe) pursuant to sec. 58a para. 1 German Foreign Trade and Payments Regulation (Außenwirtschaftsverordnung – "AWV") ("Clearance Certificate") for the transfer of Pharmadrug Shares to the Purchaser; or
• (b) within two months after receipt of a due application for a Clearance Certificate neither issued a Clearance Certificate nor initiated formal investigations pursuant to sec. 55 para. 1, 3 AWV, sec. 14a para. 1 no. 1, para. 3 German Foreign Trade and Payments Act ("AWG") for the transfer of Pharmadrug Shares to the Purchaser; or
• (c) in the event of formal investigations within the periods specified in sec. 59 para. 1 AWV, sec. 14a para. 1 no. 2, para. 4 to 7 AWG failed to prohibit the transfer of Pharmadrug Shares to the Purchaser or to issue binding orders (Anordnungen) or other restrictions or obligations in relation thereto; or
• (d) within the time period set out in Sec. 14a AWG, issued binding orders (Anordnungen) or any other restrictions or obligations in relation to the transfer

of Pharmadrug Shares to the Purchaser and the Purchaser notifies the Vendor in writing within 10 Business Days of receipt of the relevant administrative decision (Verwaltungsakt) or of signing of a respective public contract (öffentlich-rechtlicher Vertrag) that it is prepared to comply with such orders and still wish to consummate this Share Purchase Agreement; or

(e) declared in writing that the transfer of Pharmadrug Shares to the Purchaser does not fall within the scope of the German foreign investment regime or may be consummated despite pending proceedings under AWG and AWV.

ARTICLE 6 CLOSING ARRANGEMENTS

6.1 Closing

The transactions contemplated herein shall be completed at 11 a.m. ET on the applicable Closing Date by way of electronic closing.

6.2 Joint Actions Relating to the German Transfer Agreement

The Parties shall procure that, on the date of this Agreement, duly authorized representatives of the Vendor and the Purchaser shall have entered into the German Transfer Agreement in front of a German notary public in the notary public's office in Germany.

6.3 Vendor's First Closing Deliveries

• 6.3.1 Vendor's Deliveries. At the First Closing, the Vendor shall deliver or cause to be delivered to the Purchaser the following documents:

  • (a) appropriate approval of the Subject Subsidiaries the Vendor, and shareholders of the Subject Subsidiaries, in each case where applicable, authorizing the entering into of this agreement and each of the First Closing Documents and the performance of their respective obligations thereunder, in each case, duly certified by an officer of the Subject Subsidiaries or the Vendor, where applicable;
  • (b) the certificate of a senior officer of the Vendor, acting as an officer and without personal liability, confirming as of the First Closing Date the representations, warranties and covenants of the Vendor as set out in Sections 5.1.1(a) and 5.1.1(b) of this Agreement, in form and substance satisfactory to the Purchaser;
  • (c) evidence in form and substance satisfactory to the Purchaser, acting reasonable, that the Third Party Consents other than the Pharmadrug Regulatory Approval have been obtained;
  • (d) certificate of compliance or good standing as applicable for each Subject Subsidiary;
  • (e) the VTB Note duly executed by the Vendor;
  • (f) the Option duly executed by the Vendor;

• (g) employment agreement(s), in the form and substance satisfactory to the Purchaser, in its sole discretion, duly executed by the Key Employee and Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK, as applicable;

• (h) resignations and mutual releases from each director or officer designated by the Purchaser, in its sole discretion, of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK from their respective positions with such Subject Subsidiary substantially in the form attached hereto as Exhibit B;

• (i) evidence in form and substance satisfactory to Purchaser that all Contracts between or among any of Khiron Europe, Zerenia UK, Khiron Spain or Khiron UK, on the one hand, and the Vendor or Representatives of any such Subject Subsidiary or the Vendor, on the other hand (other than any employment agreements) have been terminated, without any penalty, obligations or other liability imposed on such Subject Subsidiary;

• (j) the duly executed mutual release by the Vendor, Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK, respectively, substantially in the form attached hereto as Exhibit C;

• (k) all share certificates representing the First Closing Shares, except as for the shares in Khiron Europe, duly endorsed for transfer or accompanied by stock transfer powers of attorney duly executed by the applicable Vendor, including, as applicable, transfers in the forms attached hereto as Exhibit F and D;

• (l) a power of attorney and other documentation requested by and satisfactory to the Purchaser and its counsel evidencing that the transfer of the shares of Pharmadrug to the Purchaser will be effected automatically upon receipt of the Pharmadrug Regulatory Approval without payment of any additional consideration and without further action on the part of the Purchaser;

• (m) all Books and Records of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK and the Business and the originals of the Constating Records of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK;

• (n) if requested by the Purchaser, a waiver or other instrument, in form and substance satisfactory to Purchaser, evidencing the cancellation, forgiveness waiver or transfer, in its entirety, of any loans, advances and other amounts, including all interest and other expenses thereon, owing by Khiron Europe, Zerenia UK, Khiron Spain or Khiron UK, to Pharmadrug; and

• (o) all such other assurances, consents, agreements, instruments and First Closing Documents as may be reasonably required by the Purchaser to complete the transactions provided for in this Agreement, including, without limitation, such other deliverables and action items set forth at Schedule 6.3, all of which shall be in form and substance satisfactory to the Purchaser, acting reasonably.

6.4 Purchaser's First Closing Deliveries

• 6.4.1 Purchaser Deliveries. At the First Closing, the Purchaser shall deliver or cause to be delivered to the Vendor the following documents and payments:

  • (a) the payment of the amounts set out in Section 2.5.1;

• (b) the VTB Note duly executed by the Purchaser;

• (c) the Option duly executed by the Purchaser;

• (d) appropriate approval of the Purchaser authorizing the entering into of this Agreement and each of the First Closing Documents and the performance of its respective obligations thereunder, duly certified by an officer of the Purchaser;

• (e) the certificate of a senior officer of the Purchaser, acting as an officer and without personal liability, confirming as of the First Closing Date the representations, warranties and covenants of the Purchaser as set out in Sections 5.2.1(a), 5.2.1(b) and 5.2.1(c) of this Agreement, in form and substance satisfactory to the Purchaser;

• (f) an acknowledgment and evidence satisfactory to the Vendor, acting reasonably, of the termination of the share pledge agreement dated June 30, 2023 in respect of the shares of Zerenia UK comprising the Security, pursuant to which, and to the extent that, the Vendor pledged all of the shares of Zerenia UK owned by the Vendor to the Purchaser, and the discharge of any Personal Property Security Act registrations in connection therewith;

• (g) an acknowledgment and evidence satisfactory to the Vendor, acting reasonably, of the termination of the Vendor's obligations pursuant to the Management Agreement, including, for greater certainty, the guarantee and indemnification provided thereunder, in respect of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and

• (h) all such other assurances, consents, agreements, instruments and First Closing Documents as may be reasonably required by the Vendor to complete the transactions provided for in this Agreement, all of which shall be in form and substance satisfactory to the Vendor, acting reasonably.

6.5 Notification to Notary – German Transfer Agreement

6.5.1 Immediately after all First Closing Documents and deliveries as set forth herein have been duly effected by the Vendor and by the Purchaser, respectively, the Purchaser (or its authorized representatives) or the Vendor (or its authorized representatives) shall provide the acting notary of the German Transfer Agreement with a notification that the First Closing has occurred in relation to the shares of Khiron Europe. The acting notary shall submit a revised shareholder list of Khiron Europe which reflects the transfer of the shares of Khiron Europe to the Purchaser to the commercial register of Khiron Europe together with the certification pursuant to Section 40(2) of the German Limited Liability Companies Act.

6.6 Vendor's Second Closing Date Deliveries

• 6.6.1 Vendor's Deliveries. On or before the earlier of (i) the Second Closing Date, and (ii) twenty Business Days after the First Closing Date, the Vendor shall deliver or cause to be delivered to the Purchaser the following documents (except for those documents which be there nature cannot be delivered in advance of the Second Closing Date):
  • (a) the certificate of a senior officer of the Vendor, acting as an officer and without personal liability, confirming as of the Second Closing Date the representations, warranties and covenants of the Vendor as set out in

Sections 5.1.1(a) and 5.1.1(b) of this Agreement, in form and substance satisfactory to the Purchaser;

• (b) certificate of compliance or good standing as applicable for Pharmadrug;
• (c) the employment agreement(s), in the form and substance satisfactory to the Purchaser, in its sole discretion, duly executed by the Key Employee and Pharmadrug, as applicable;
• (d) resignations and mutual releases from each director or officer of Pharmadrug designated by the Purchaser, in its sole discretion, from their respective positions with such Subject Subsidiary substantially in the form attached hereto as Exhibit B;
• (e) evidence in form and substance satisfactory to Purchaser that all Contracts between or among Pharmadrug, on the one hand, and the Vendor or Representatives of Pharmadrug or the Vendor, on the other hand (other than any employment agreements) have been terminated, without any penalty, obligations or other liability imposed on Pharmadrug;
• (f) evidence in form and substance satisfactory to Purchaser, acting reasonably, that all loans and advances made by or to Pharmadrug, on the one hand, to any Related Parties, together with all interests thereon, if applicable, have been reimbursed or cancelled;
• (g) evidence in form and substance satisfactory to Purchaser, acting reasonably, that all Intercompany Debt has been forgiven or cancelled;
• (h) the duly executed mutual release by the Vendor and Pharmadrug substantially in the form attached thereto as Exhibit C;
• (i) all Books and Records of Pharmadrug and, to the extent not already provided under Section 6.3.1(m), the Business and the originals of Pharmadrug's Constating Records;
• (j) all such other assurances, consents, agreements, instruments and Second Closing Documents as may be reasonably required by the Purchaser to complete the transactions provided for in this Agreement, all of which shall be in form and substance satisfactory to the Purchaser, acting reasonably.
• 6.6.2 Deliveries prior to Second Closing Date. In the event that any of the deliverables set forth in Section 6.6.1 are delivered prior to the Second Closing Date, such deliverables shall be held in trust by counsel to the Purchaser and released automatically upon receipt of the Pharmadrug Regulatory Approval to effect the Second Closing, or returned to the Vendor if the Second Closing Date does not occur by the Outside Date.
• 6.6.3 Notification Notary – German Transfer Agreement. Immediately after all Second Closing Documents and deliveries as set forth herein have been duly effected by the Vendor and by the Purchaser, respectively, the Purchaser (or its authorized representatives) shall provide the acting notary of the German Transfer Agreement with a notification that the Second Closing has occurred in relation to the Pharmadrug Shares. The acting notary shall submit a revised shareholder list of Pharmadrug which reflects the transfer of the Pharmadrug to the Purchaser to the commercial register of Pharmadrug together with the certification pursuant to Section 40(2) sent. 2 German Limited Liability Companies Act.

6.7 Purchaser's Second Closing Date Deliveries

• 6.7.1 Purchaser Deliveries. At the Second Closing, the Purchaser shall deliver or cause to be delivered to the Vendor the following documents and payments:
  • (a) appropriate approval of the Purchaser authorizing the entering into of each of the Second Closing Documents and the performance of its respective obligations thereunder, duly certified by an officer of the Purchaser;
  • (b) the certificate of a senior officer of the Purchaser, acting as an officer and without personal liability, confirming as of the Second Closing Date the representations, warranties and covenants of the Purchaser as set out in Sections 5.2.1(a) and 5.2.1(b) of this Agreement, in form and substance satisfactory to the Purchaser;
  • (c) an acknowledgment and evidence satisfactory to the Vendor, acting reasonably, of the termination of the share pledge agreement dated June 30, 2023 in respect of the Pharmadrug Shares comprising the Security, pursuant to which, and to the extent that, the Vendor pledged all of the Pharmadrug Shares owned by the Vendor to the Purchaser, and the discharge of any Personal Property Security Act registrations in connection therewith;
  • (d) evidence satisfactory to the Vendor, acting reasonably, of the termination of the general security agreement between the Purchaser and the Vendor dated May 31, 2023 comprising the Security and the discharge of any Personal Property Security Act registrations in connection therewith
  • (e) an acknowledgment and evidence satisfactory to the Vendor, acting reasonably, of the termination of the Vendor's obligations pursuant to the Management Agreement, including, for greater certainty, the guarantee and indemnification provided thereunder, in respect of Pharmadrug; and
  • (f) all such other assurances, consents, agreements, instruments and Second Closing Documents as may be reasonably required by the Vendor to complete the transactions provided for in this Agreement, all of which shall be in form and substance satisfactory to the Vendor, acting reasonably.

ARTICLE 7 INDEMNIFICATION

7.1 Indemnification by the Vendor

• 7.1.1 Vendor Liability. Subject to Section 3.5.1, the Vendor shall indemnify, defend and save harmless the Purchaser and each of the Purchaser's Representatives and after: (i) the First Closing Date, the members of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK; and (ii) the Second Closing Date, the members of Pharmadrug from and against any and all Losses suffered or incurred by the Purchaser or any of the Purchaser's Representatives or any Subject Subsidiary, at the applicable time, as a direct or indirect result of or arising in connection with or related in any manner whatsoever to:
  • (a) any inaccuracy, misrepresentation or breach of any representation or warranty made or given by the Subject Subsidiaries in Sections 1.1.1 to 1.1.4 of Schedule 3.1(A) and Sections 1.1.5 to 1.1.43 of Schedule 3.1(B) in this

Agreement, and in the officer certificate delivered pursuant to Sections 6.3.1(b) and 6.6.1(a);

• (b) any failure by the Vendor to observe or perform any covenant or obligation contained in this Agreement, the VTB Note, the Management Agreement or the Option;
• (c) any Claim against any Subject Subsidiary for Taxes (other than in respect of Ordinary Course Taxes relating to, and that accrued during, the period ending on the Closing), including any penalties or interest thereon, relating to any Pre-Closing Tax Period, except to the extent provided for in the Closing Purchase Price Statement;
• (d) any Claims against: (i) any of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK in respect of any matter occurring prior to the First Closing; and (ii) Pharmadrug prior to the Second Closing (including in each case any Claim listed in Schedule 1.1.30 of the Disclosure Schedule), whether or not such Claim is disclosed herein;
• (e) any Claim, liability or obligation of any Subject Subsidiary, including Taxes, in respect of the cancellation of the debts pursuant to Subsection 2.9.2(a) hereof.
• (f) any liability or obligation of (i) any of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK existing or relating to any period (or portions thereof) ending on or before the First Closing; and (ii) Pharmadrug existing or relating to any period (or portions thereof) ending on or before the Second Closing, in each case which is not disclosed in this Agreement, including any liability for Taxes, any violation of applicable Law, any violation, contravention or breach of any contract, undertaking or agreement to which any Subject Subsidiary is a party or any of the assets may be bound, and any liability for products sold or services provided by (i) any of Khiron Europe, Zerenia uk, Khiron Spain and Khiron UK at any time prior to the First Closing; and (ii) Pharmadrug at any time prior to the Second Closing;
• (g) any Claim against any Subject Subsidiary for any infringement, violation, or misappropriation by any Subject Subsidiary of the Intellectual Property rights of a third party as well as their successors and licensees; or
• (h) any depletion of Cash or any Indebtedness or other liability of any nature whatsoever (whether contingent or otherwise) incurred, or any transfer or disposition of assets, by (i) any of Khiron Europe, Zerenia UK, Khiron Spain and Khiron UK during the period ending on the First Closing; and (ii) Pharmadrug during the period ending on the Second Closing.

7.2 Indemnification by the Purchaser

• 7.2.1 Purchaser Liability. Subject to Sections 3.5.2, the Purchaser shall indemnify, defend and save harmless the Vendor and each of the Vendor's Representatives from and against any and all Losses suffered or incurred by the Vendor or any of the Vendor's Representatives as a direct or indirect result of or arising in connection with or related in any manner whatsoever to:
  • (a) any inaccuracy, misrepresentation or breach of any representation or warranty made or given by the Purchaser in Sections 1.2.1 to 1.2.5 of Schedule 3.2 in

this Agreement, and in the officer certificate delivered pursuant to Section 6.4.1(e);

• (b) any failure by the Purchaser to observe or perform any covenant or obligation contained in this Agreement; and
• (c) any failure by the Purchaser to observe or perform any covenant or obligation contained in the VTB Note or the Management Services Agreement.

7.3 Satisfaction and Order of Indemnity Claims

• 7.3.1 Subject to the limitations contained in this Article 7, from and after the First Closing and Second Closing, respectively, any Loss under Section 7.1.1(a) suffered by any of the Purchaser's Representatives shall be satisfied:
  • (a) first, from the VTB Note, until the principal amount owing under the VTB Note is zero; and
  • (b) second, and only to the extent such Loss is not covered by 7.3.1(b), from the Option as a dollar-for-dollar reduction to the purchase price set forth in accordance therewith.
• 7.3.2 Subject to the limitations contained in this Article 7, any Loss under Section 7.2.1(a) suffered by any of the Vendor's Representatives will constitute an increase to the Purchase Price.

7.4 Direct Claims

Any Direct Claim shall be asserted by giving the Indemnifier reasonably prompt written notice thereof, but in any event not later than ninety (90) days after the Indemnified Party becomes aware of acts, omissions or facts that may give rise to such Direct Claim. Such notice to the Indemnifier shall describe the Direct Claim in reasonable detail and shall indicate, if reasonably practicable, the estimated amount of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifier shall then have a period of thirty (30) days within which to respond in writing to such Direct Claim (the "Response Period"). If the Indemnifier does not so respond within the Response Period, the Indemnifier shall be deemed to have rejected such Claim, and in such event the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party. If the Indemnifier agrees prior to the expiration of the Response Period as to the validity of the Direct Claim, the Indemnifier shall promptly pay to the Indemnified Party the amount of such Direct Claim forthwith upon such amount being quantified. If the Parties fail to agree as to the validity of the Direct Claim or its amount, any Party may exercise all remedies as may be available to such Party.

7.5 Notice of Third Party Claims

If an Indemnified Party receives notice of the commencement or assertion of any Third Party Claim, the Indemnified Party shall give the Indemnifier reasonably prompt notice thereof, but in any event no later than thirty (30) days after receipt of such notice of such Third Party Claim. Such notice to the Indemnifier shall describe the Third Party Claim in reasonable detail and shall indicate, if reasonably practicable, the estimated amount of the Loss that has been or may be sustained by the Indemnified Party.

7.6 Defence of Third Party Claims

• 7.6.1 Defence by Indemnifier. Subject to Sections 7.6.2 and 7.7, the Indemnifier may participate in or, assume the defence of any Third Party Claim by giving notice to that effect to the Indemnified Party not later than thirty (30) days after receiving notice of that Third Party Claim (the "Notice Period") provided the Indemnifier concurrently (i) furnishes satisfactory evidence to the Indemnified Party of its financial ability to indemnify the Indemnified Party and (ii) irrevocably acknowledges in writing complete responsibility for, and agrees to indemnify the Indemnified Party in respect of, such Third Party Claim. The Indemnifier's right to do so shall be subject to the rights of any insurer or other party who has potential liability in respect of that Third Party Claim. The Indemnifier agrees to pay all of its own expenses of participating in or assuming such defence. The Indemnified Party shall cooperate in good faith in the defence of each Third Party Claim, even if the defence has been assumed by the Indemnifier, and may participate in such defence assisted by counsel of its own choice at the cost and expense of the Indemnifier, provided that the Indemnifier and its legal counsel shall lead the defence. The Indemnifier shall not enter into any compromise or settlement of any Third Party Claim without obtaining the prior written consent of the Indemnified Party.
• 7.6.2 Defence by Indemnified Party. If the Indemnified Party has not received the notice, satisfactory evidence of financial ability and the acknowledgement, within the Notice Period that the Indemnifier has elected to assume the defence of such Third Party Claim, the Indemnified Party may, at its option, elect to settle or compromise the Third Party Claim or assume such defence, assisted by counsel of its own choosing and the Indemnifier shall be liable for all reasonable costs and expenses paid or incurred in connection therewith and any Loss suffered or incurred by the Indemnified Party with respect to such Third Party Claim. In addition, if at any time, the Indemnifier fails to take reasonable steps necessary to defend diligently a Third Party Claim, the Indemnified Party may, within thirty (30) days after giving notice that the Indemnified Party bona fide believes on reasonable grounds that the Indemnifier has failed to take such steps, at its option, elect to assume the defence of and to compromise or settle the Third Party Claim assisted by counsel of its own choosing and the Indemnifier shall be liable for all reasonable costs and expenses paid or incurred in connection therewith. Furthermore, the Indemnifier may not assume and conduct the defence of any Third Party Claim if such Third Party Claim seeks any non-monetary relief; provided, further, that the Indemnified Party may elect to assume the defence or otherwise deal with any (or any part of) such Third Party Claim at the Indemnifier's expense if (i) the Indemnified Party's counsel advises that a conflict of interest exists or may arise in the event the Indemnifier elects to control or defend any Third Party Claim, (ii) the Claim relates to or arises in connection with any criminal proceeding, (iii) the Claim involves a dispute with a material supplier or insurance provider of any Subject Subsidiary; or (iv) the Indemnified Party's counsel advises that the Claim would reasonably be expected to result in liability in excess of the maximum amount for which the Indemnifier is liable with regard to such Claim.
• 7.6.3 Seizure. The Purchaser and the Vendor shall cooperate in a good faith manner in respect of any purported, alleged or valid Third Party Claim that could result in a seizure of the Purchased Shares or any other assets of the Purchaser or any Subject Subsidiary after the Closing Date and shall keep each other informed of the status and progress thereof. If for any reason the Purchased Shares or any other assets of the Purchaser, the Vendor or the Subject Subsidiaries are the subject of a seizure after the Closing Date due to an alleged, purported or valid Third Party Claim, the Purchaser shall immediately inform the Vendor in writing of such seizure and require that the Vendor use commercially reasonable efforts to lift and cancel the seizure as soon as practicable, and in no case later than three (3) Business Days, from the receipt of such

notice. The Purchaser and the Vendor shall cooperate in good faith in the defence of the seizure. Should the Vendor be unable to lift and cancel the seizure within the aforesaid time period (either by paying the Claim, posting an adequate bond or obtaining a judgment), the Purchaser shall be entitled to take such steps as it determines, in its sole discretion, are necessary to lift and cancel the seizure without prejudice to its right to make a Direct Claim against the Vendor for any Loss suffered or incurred by it in respect of the seizure and the lifting and cancellation of the seizure. The Purchaser shall advise the Vendor in writing of the steps it was required to take to lift and cancel the seizure. The Purchaser shall be entitled to assert a Claim against the Vendor by way of Direct Claim in order to recover any and all Losses incurred in respect of the seizure and the lifting and cancellation of the seizure, the whole in accordance with Section 7.2 hereof.

7.7 Defence of Third Party Claims for Taxes

7.7.1 Notwithstanding Section 7.6, before an Indemnifier can either (i) require that any Subject Subsidiary defend a Claim from any Tax Authority relating to Taxes (a "Tax Claim"), or (ii) participate in or assume the defense of any such Tax Claim, the Indemnifier shall reimburse such Subject Subsidiary with all funds that such Subject Subsidiary is required to deposit or pay under any Law in order to defend against such Tax Claim or is required to pay notwithstanding the ongoing defense of the Tax Claim. The funds provided by the Indemnifier, which may represent, among other amounts and without limitation, all or part of the Tax Claim, shall be provided to such Subject Subsidiary on an interest-free basis. If such Subject Subsidiary does not receive sufficient funds within a thirty (30) day period following the sending of a notice of a Tax Claim to entitle it to fulfill all legal prerequisites necessary to contest a Tax Claim or to pay the Tax Claim, the Subject Subsidiary shall be entitled to settle the Tax Claim and the Indemnifier shall be required to indemnify the Subject Subsidiary pursuant to the terms of this Agreement. To the extent that the required funds have been provided by the Indemnifier and the contestation of the Tax Claim has resulted in a final determination by the competent Governmental Authority or court rejecting the Tax Claim in its entirety, the Subject Subsidiary shall release and pay the funds received from the Indemnifier back to the Indemnifier within the five (5) Business Days following the receipt of the funds from the third party or the application of the funds to other Tax obligations of any Subject Subsidiary. To the extent that the Tax Claim has been either wholly or partially upheld by the final determination of the competent Governmental Authority or the court, the Subject Subsidiary shall release and pay back to the Indemnifier the amount, if any, by which the funds provided by the Indemnifier and that are described in this Section 7.7 exceed the amount that must be paid by any Subject Subsidiary, pursuant to the final determination of the Tax Claim within the five (5) Business Days following the receipt of the funds from the third party or the application of the funds to other Tax obligations of any Subject Subsidiary. If the amount of funds that is reimbursed pursuant to the final determination of the Tax Claim to the Subject Subsidiary includes an amount of interest, the Subject Subsidiary shall pay to the Indemnifier within the five (5) Business Days following the receipt of the funds from the third party or the application of the funds to other Tax obligations of any Subject Subsidiary an amount equal to the interest received on the funds that were paid or deposited, less an amount equal to the amount, as determined by the Subject Subsidiary, that any Subject Subsidiary shall pay to any Governmental Authority as Taxes on the interest or shall be paying if it had sufficient income for the year.

7.8 Assistance for Third Party Claims

7.8.1 The Indemnifier and the Indemnified Party shall use all reasonable efforts to make available to the Party which is undertaking and controlling the defence of any Third Party Claim (the "Defending Party"):

• (a) those employees whose assistance, testimony or presence is necessary to assist the Defending Party in evaluating and in defending any Third Party Claim; and
• (b) all documents, records and other materials in the possession of such Party reasonably required by the Defending Party for its use in defending any Third Party Claim.
• 7.8.2 Each of them shall otherwise cooperate with the Defending Party. The Indemnifier shall be responsible for all expenses associated with making such documents, records and materials available and for all reasonable expenses of any employees made available by the Indemnified Party to the Indemnifier hereunder.

7.9 Failure to Give Timely Notice

A failure to give timely notice as provided in this Article 7 shall not affect the rights or obligations of any Party except and only to the extent that, as a result of such failure, any Party which was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or otherwise sustained a Loss as a result of such failure.

7.10 Payment and Interest

All Losses shall bear interest at a rate per annum equal to the Prime Rate, calculated and payable monthly, both before and after judgment, from the date on which notice of Claim was given to the Indemnifier, to the date of payment by the Indemnifier to the Indemnified Party.

7.11 Materiality

In the case of an Indemnity Claim by the Purchaser under this Article 7 for breach by the Vendor or the Subject Subsidiaries or any of them of a representation or warranty that is qualified by materiality or Material Adverse Change, the Purchaser will be entitled to claim the full amount of the Loss resulting from that breach without regard to the materiality or Material Adverse Change qualifier. However, the determination under this Article 7 of whether there has been a breach of a representation or warranty that is qualified by materiality or Material Adverse Change will be made having regard to the materiality or Material Adverse Change qualifier.

7.12 Amount Limitations on Indemnification Obligations

• 7.12.1 Except with respect to the indemnification obligations of the Vendor under Subsection 7.1.1(e) which shall be unlimited, the indemnification obligations of the Vendor under this Article 7 is limited in the aggregate to the sum of $1,500,000.
• 7.12.2 The indemnification obligations of the Purchaser under this Article 7 is limited in the aggregate to the sum of $500,000.
• 7.12.3 The Vendor or the Purchaser, as the case may be, will not be required to indemnify the Purchaser or any of the Purchaser's Representatives, or the Vendor or any of the Vendor's Representatives, respectively, under this Article 7 unless the aggregate of all Losses under the Indemnity Claims made exceeds $100,000, in which case the Vendor or the Purchaser, as the case may be, will only be obligated to pay the amount owing by it under this Article 7 in respect of those Losses in excess of that first $100,000.

7.13 Other Rules Relating to Indemnification Obligations

The following will apply to the indemnification obligations under this Article 7.

• 7.13.1 No Double Recovery. No Indemnified Party is entitled to double recovery for any Indemnity Claim even though the Claim may have resulted from the breach or inaccuracy of more than one of the representations, warranties, covenants and obligations of the Indemnifier under this Agreement. No Indemnifier has any liability or obligation for indemnification under this Article 7 to the extent that the relevant Loss has been taken into account in the determination of the Estimated Closing Working Capital or the Closing Working Capital and the related adjustments to the Purchase Price have been paid.
• 7.13.2 Remoteness and Mitigation. Despite any other provision of this Article 7, the principles of remoteness of damages and duty to mitigate will be applied in determining the quantum of Losses that can be recovered by an Indemnified Party.
• 7.13.3 Exclusive Remedy.
  • (a) Subject to Section 9.10 and Section 7.13.3(b), the rights of indemnity in this Article 7 will be the sole and exclusive remedy of any Indemnified Party or any third party beneficiary under Section 4.3 (Indemnification and Directors' and Officers' Insurance) for any breach of a representation or warranty, or nonperformance of any covenant or agreement, contained in this Agreement, and each Indemnified Party waives any other recourse or remedy it may have in contract, tort or otherwise.
  • (b) Nothing in this Section 7.13.3 will limit or restrict an Indemnified Party from seeking equitable remedies or any remedies that may be available to an Indemnified Party in the case of intentional misrepresentation or fraud.

ARTICLE 8 TERMINATION

8.1 Termination

• 8.1.1 Mutual Termination. This Agreement may be terminated by the mutual written agreement of the Parties at any time prior to the First Closing.
• 8.1.2 Outside Date. This Agreement may be terminated by the Purchaser if the First Closing or Second Closing has not occurred prior to or on the Outside Date.
• 8.1.3 Third Party Consents. This Agreement may be terminated by the Purchaser if the Third Party Consents, including the Pharmadrug Regulatory Approval, has not occurred prior to or on the Outside Date.
• 8.1.4 Termination by the Purchaser. The Purchaser, when not in default in any material respect in the performance of its obligations under this Agreement, may elect, without prejudice to any other rights, to terminate this Agreement at any time prior to:
  • (a) the First Closing by written notice to the Vendor if: (i) any act, undertaking, obligation, agreement and covenant of the Vendor or any Subject Subsidiary under this Agreement or under any First Closing Document which is required to be performed or complied with on or before the First Closing Date has not been duly performed or complied with in all respects, such that the condition contained in Section 5.1.1(a) would not be satisfied (or it becomes apparent that such condition cannot be satisfied on the First Closing Date), (ii) any of the representations and warranties in respect of the Vendor or any Subject Subsidiary shall have been at the date hereof untrue or incorrect, or shall have

become untrue or incorrect on or at any time prior to the First Closing Date, such that the condition contained in Section 5.1.1(b) would not be satisfied (or it becomes apparent that such condition cannot be satisfied on the Closing Date), or (iii) any other condition contained in Section 5.1 is not fulfilled, waived or satisfied in accordance with Section 5.1.2 (or it becomes apparent that such condition cannot be satisfied on the First Closing Date); or

• (b) the Second Closing by written notice to the Vendor if: (i) any act, undertaking, obligation, agreement and covenant of the Vendor or Pharmadrug under this Agreement or under any Pharmadrug Closing Document which is required to be performed or complied with on or before the Second Closing Date has not been duly performed or complied with in all respects, such that the condition contained in Section 5.1.1(a) would not be satisfied (or it becomes apparent that such condition cannot be satisfied on the Second Closing Date), (ii) any of the representations and warranties in respect of the Vendor or Pharmadrug shall have been at the date hereof untrue or incorrect, or shall have become untrue or incorrect on or at any time prior to the Second Closing Date, such that the condition contained in Section 5.1.1(b) would not be satisfied (or it becomes apparent that such condition cannot be satisfied on the Closing Date), or (iii) any other condition contained in Section 5.1 is not fulfilled, waived or satisfied in accordance with Section 5.1.2 (or it becomes apparent that such condition cannot be satisfied on the Second Closing Date).

• 8.1.5 Effect of Termination. In the case of any termination of this Agreement pursuant to this Article 8, this Agreement shall be of no further force and effect provided, however:

  • (a) In the event this Agreement is terminated prior to the First Closing Date:
    • (i) The Vendor shall return the entirety of the Deposit by wire transfer to the Purchaser within 30 days of the date of termination;
    • (ii) If advanced by the Purchaser, the Vendor shall return the entirety of the Subsidiary Growth Capital by wire transfer to the Purchaser without set-off or deduction within 30 days of the date of termination;
    • (iii) the Purchaser and Vendor shall have no further obligations with respect to completing the Closing and all such terms and conditions in accordance therewith, other than Sections 4.10, 9.3, 9.4, 9.6, 9.8 and 9.9, shall be of no further force and effect provided; and
    • (iv) that if it is terminated by a Party as a result of a breach of any representation or warranty of the other Party, or the failure of the other Party to perform a covenant, obligation or undertaking to be performed by such Party or because one or more or the conditions to the terminating Party's obligations under this Agreement are not satisfied as a result of the other Party's failure to comply with this Agreement, then such termination shall not prejudice such terminating Party's right to pursue their remedies available at Law against the other Party with respect to such breach or failure. The Parties agree that they will have no further rights or remedies against the other with respect to termination pursuant to Sections 8.1.1 and 8.1.2 (provided that there has been no breach by the non-terminating Party).
  • (b) In the event this Agreement is terminated subsequent to the First Closing and prior to the Second Closing Date:

• (i) the principal amount owing under the VTB Note shall be reduced to zero;

• (ii) at the Purchaser's option, the Purchase Price payable for the First Closing Shares pursuant to Section 2.2 shall be a fixed amount of Five Hundred Thousand Dollars ($500,000) deemed paid to the Vendor as the Deposit and allocated by the Vendor in accordance with Schedule 2.1, or alternatively, the Deposit shall be refunded to the Purchaser without set-off of deduction within 30 calendar days of termination;

• (iii) the Vendor shall return the entirety of the Subsidiary Growth Capital by wire transfer to the Purchaser without set-off or deduction within 30 days of the date of termination;

• (iv) The Vendor shall, and shall cause Pharmadrug to, cancel, forgive or waive all loans, advances and other amounts, including all interest and other expenses thereon, owing by a Subject Subsidiary, other than Pharmadrug, to Pharmadrug, in its entirety and shall provide the Purchaser an acknowledgment, waiver and such other evidence form and substance satisfactory to Purchaser, evidencing such cancellation, forgiveness or waiver; and

• (v) the Purchaser and Vendor shall have no further obligations with respect to completing the Second Closing and all such terms and conditions in accordance therewith, other than Sections 4.10, 9.3, 9.4, 9.6, 9.8 and 9.9, shall be of no further force and effect; provided that if it is terminated by a Party as a result of a breach of any representation or warranty of the other Party, or the failure of the other Party to perform a covenant, obligation or undertaking to be performed by such Party or because one or more or the conditions to the terminating Party's obligations under this Agreement are not satisfied as a result of the other Party's failure to comply with this Agreement, then such termination shall not prejudice such terminating Party's right to pursue their remedies available at Law against the other Party with respect to such breach or failure. The Parties agree that they will have no further rights or remedies against the other with respect to termination pursuant to Sections 8.1.1 and 8.1.2 (provided that there has been no breach by the non-terminating Party).

ARTICLE 9 GENERAL

9.1 Further Assurances

Each of the Parties hereto shall from time to time execute and deliver all such further documents and instruments and do all acts and things as another Party may, either before or after the Closing Date, reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.

9.2 No Waiver

Failure of a Party to insist upon the strict performance of any term or condition of this Agreement or to exercise any right, remedy or recourse hereunder shall not be construed as a waiver or relinquishment of any such term and condition.

9.3 Cost and Expenses

Each of the Parties shall be responsible for and pay their respective legal, financial advisory and accounting costs and expenses incurred in connection with the consummation of the transactions contemplated herein, including the preparation, execution and delivery of this Agreement and the Closing Documents, and any other costs and expenses whatsoever and howsoever incurred in connection herewith and/or therewith. For greater certainty, the Vendor shall assume all costs and expenses incurred by the Subject Subsidiaries in connection with this Agreement and the consummation of the transactions provided herein; provided, however, that any costs incurred in connection with effecting the transfer of the Purchased Shares, including notarizing and legalizing powers of attorney prepared by counsel to the Purchaser and counsel to the Vendor, shall be borne by the Purchaser.

9.4 Public Announcements

No Party shall issue any press release or otherwise make public statements or filings with respect to this Agreement or the Closing Documents, or the transactions contemplated herein or therein, without the consent of the other Parties which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, each Party shall have the right to override such obligation in order to make any disclosure or filing required under applicable Laws, in which case the Party making any such disclosure shall use commercially reasonable efforts to give prior oral or written notice to the other Parties and reasonable opportunity for the other Parties to review or comment on the disclosure or filing (other than with respect to confidential information contained in such disclosure or filing), and if such prior notice is not possible, to give such notice immediately following the making of any such disclosure or filing.

9.5 Successors, Assigns and Assignments

This Agreement will enure to the benefit of and be binding upon the respective successors (including any successor by reason of the amalgamation or statutory arrangement of any Party) and permitted assigns of the Parties. This Agreement may not be assigned by any Party without the prior written consent of the other Parties, except that the Purchaser may, without the prior written consent of the other Parties, assign all or part of its rights and/or obligations under this Agreement to (i) an Affiliate of the Purchaser or (ii) to the subsequent purchaser of (a) the shares of the members of the Subject Subsidiaries or (b) all or a substantially all of their assets or of the Business or (iii) to credit institutions of the Purchaser or any of its Affiliates financing the transactions contemplated hereunder.

9.6 Entire Agreement

This Agreement and the Closing Documents constitute the entire agreement between the Parties with respect to the subject matters hereof and thereof and cancels and supersedes any prior understandings, agreements, negotiations and discussions between the Parties with respect thereto including the Letter of Intent. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the Parties other than as expressly set forth in this Agreement.

9.7 Amendments and Waivers

No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by all the Purchaser and Vendor. No waiver of any breach of any provision of this Agreement or any waiver or consent to depart from the requirements of this Agreement shall be effective or binding unless made in writing and signed by the Party purporting to give the same and, unless otherwise provided, will be limited to the specific breach waived.

9.8 Notices

• 9.8.1 Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing and will be given by personal delivery, by registered mail, by courier services or e-mail (followed by receipt by registered mail or courier services within two Business Days) addressed to each Party as set forth in Schedule 9.8 or to other coordinates that have been designated by notice by any recipient Party to the others, to such other coordinates.
• 9.8.2 Any demand, notice or other communication given by personal delivery or courier services shall be conclusively deemed to have been given on the day of actual delivery thereof and, if given by registered mail, on the third (3rd) Business Day following the deposit thereof in the mail and, if given by e-mail (followed by receipt by registered mail or courier services within two Business Days), on the day of transmittal thereof if given during the normal business hours of the recipient on a Business Day and on the next Business Day if not given during such hours. If the Party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such demand, notice or other communication may not be mailed but must be given by personal delivery or by e-mail (followed by receipt by registered mail or courier services within two Business Days).

9.9 Governing Law

This Agreement shall be governed by and construed in accordance with the Laws of the Province of Alberta and the Laws of Canada applicable therein (excluding any conflict of laws rule or principle, foreign or domestic, which might refer such interpretation to the laws of another jurisdiction).

9.10 Dispute Resolution

• 9.10.1 The Parties covenant and agree to negotiate in good faith upon a request by a Party in writing to settle any dispute, controversy or Claim arising out of or relating to the matters of this Agreement, other than any dispute under Section 4.11.1 (collectively, a "Dispute").
• 9.10.2 All Disputes which the Parties are unable to resolve themselves shall be referred to and settled by arbitration pursuant to the rules of the Arbitration Act (Alberta) (the "Arbitration Rules"). If a binding settlement of a Dispute has not been finalized by the Parties within the 30 day period after which a Party has first requested in writing to the other Parties to the Dispute that the matter be resolved by negotiation pursuant to Section 9.10.1 any Party to the Dispute may thereafter initiate proceedings to settle the Dispute by arbitration in accordance with the Arbitration Rules.
• 9.10.3 In addition to the Arbitration Rules, the following provisions shall govern the arbitration: (i) the arbitral tribunal shall consist of a single arbitrator; (ii) the Parties to the Dispute shall attempt to agree upon a single arbitrator, but if they are unable to do so within 15 Business Days of the date of the notice initiating settlement by arbitration, either Party to the Dispute may thereafter apply to the Court of King's Bench of Alberta for an order that determines the arbitrator; (iii) the place of arbitration shall be Calgary, Alberta; (iv) the language of the arbitration, including the hearings, documentation, and award, shall be in English; (v) the arbitration procedures, hearings, documents and award shall remain strictly confidential between the parties; (vi) the Parties shall equally share the fees of the arbitrator and the facility fees and shall each bear their own legal costs and expenses of the arbitration; (vii) the governing law of the arbitration shall be laws of the Province of Alberta and the federal laws of Canada applicable therein; and (viii) all

other procedural and substantive matters related to the arbitration shall be determined by the arbitrator.

9.10.4 Any decision of the arbitrator shall be final and binding on the Parties and there shall be no right to appeal such decision, whether on a question of law, a question of fact, or a mixed question of fact and law.

9.11 Severability

If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct.

9.12 Specific Performance and other Discretionary Rights

Each of the Parties acknowledges and agrees that a breach by a Party of any obligation in this Agreement shall cause the other Party to sustain injury for which it would not have an adequate remedy at Law for money damages. Therefore, each of the Parties agrees that in the event of any such breach, the aggrieved Party shall be entitled to specific performance of such obligation and provisional interlocutory and permanent injunctive relief and other discretionary remedies in addition to any other remedy to which it may be entitled and the Parties further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive relief or other equitable remedies.

9.13 Third Party Beneficiaries

This Agreement is not intended to, and does not, confer any rights or remedies on any Person other than the Parties (and their respective successors) and the Indemnified Parties, except as set out in Section 4.3 (Indemnification of Directors and Officers).

9.14 Counterparts

This Agreement may be executed in one or more counterparts, each of which shall conclusively be deemed to be an original but all of which taken together shall be deemed to constitute one and the same agreement. A facsimile or electronic transmission of the Agreement bearing a signature on behalf of a Party shall be legal and binding on such Party.

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(signature page to Share Purchase Agreement)

IN WITNESS WHEREOF the Parties have executed this Agreement on the date first written hereinabove.

KHIRON LIFE SCIENCES CORP.

Per: (Signed) "Alvaro Francisco Torres" Name: Alvaro Francisco Torres Title: Chief Executive Officer

2518542 ALBERTA LTD.

Per: (Signed) "Michael Steele" Name: Michael Steele Title: Chief Executive Officer

EXHIBIT A DEFINITIONS

1.1 Definitions

• 1.1.1 "ABCA" means the Business Corporations Act (Alberta), as now in effect and as may be amended from time to time prior to the Closing Date;

• 1.1.2 "Accounting Principles" has the meaning ascribed thereto in Section 1.4;

• 1.1.3 "Accounts Payable" means the trade accounts payable of the Business incurred on or before the end of business by the Subject Subsidiaries (except for Pharmadrug) on the First Closing Date and by Pharmadrug on the Second Closing Date (including those for which invoices are received after the First Closing Date by the Subject Subsidiaries other than Pharmadrug and after the Second Closing Date by Pharmadrug), that remain unpaid as at the end of business on the First Closing Date by the Subject Subsidiaries other than Pharmadrug and on the Second Closing Date by Pharmadrug but relate to products purchased or services performed prior to the end of business on the First Closing Date by the Subject Subsidiaries other than Pharmadrug and on the Second Closing Date by Pharmadrug, as the case may be;

• 1.1.4 "Accounts Receivable" means all accounts receivable, trade accounts, notes receivable, book debts and other debts (other than cash on hand and deposit accounts held with banks and other financial institutions) of the Business due, accruing and payable to any Subject Subsidiary which arise from services performed and sales made by any Subject Subsidiary in the Ordinary Course on or before the end of business on the First Closing Date with respect to the Subject Subsidiaries other than Pharmadrug and on the Second Closing Date by Pharmadrug as the case may be;

• 1.1.5 "Affiliate" has the meaning ascribed thereto in the ABCA;

• 1.1.6 "Agreement" means this agreement, its recital, together with its Schedules and Exhibits and all amendments made hereto by written agreement between the Parties;

• 1.1.7 "AWG" means the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG);

• 1.1.8 "Base Purchase Price" has the meaning ascribed thereto in Section 2.2(a);

• 1.1.9 "Beneficiarie(s)" has the meaning ascribed thereto in Section 4.8.1;

• 1.1.10 "Books and Records" means any books, records and accounts of the Subject Subsidiaries (originals, to the extent they exist, or, if originals do not exist, copies thereof) related to the Business, the Purchased Shares and the Employees of any Subject Subsidiary including, without limitation, databases, documents, forms, advertising material, brochures, books and records relating to the purchase of materials and supplies, the services performed or provided, dealings with customers, invoices, customer lists, mailing lists, suppliers lists, telephone numbers, financial records, personnel records (to the extent permitted by Law) and Taxes;

• 1.1.11 "Buildings" means all plants, buildings, structures, erections, improvements, appurtenances and fixtures (including fixed machinery and fixed equipment), including those under construction, situate on or forming part of the Lands or the Leased Real Property;

• 1.1.12 "Business" has the meaning ascribed thereto in the preamble hereof;

• 1.1.13 "Business Day" means any day on which Canadian chartered banks are generally open for business in Calgary, Alberta, other than a Saturday or a Sunday;

• 1.1.14 "Capital Lease" means any lease of any property by any Subject Subsidiary as lessee that would be required to be classified and accounted for as a capital lease on a balance sheet of such Person;

• 1.1.15 "Cash" means, with respect to any particular Subject Subsidiary, cash and cash equivalents, including term deposits, guaranteed investment certificates and similar readily liquid instruments, deposits in transit and uncleared cheques, but excluding the Subsidiary Growth Capital, outstanding cheques and cash as a result of any shareholder loans;

• 1.1.16 "Claims" includes claims, notices, demands, requests, complaints, proceedings, actions, applications, arbitrations, suits, causes of action, appeals, audits, hearings, investigations, inquiries, assessments or reassessments (including claims, assessments and reassessments for Tax), charges, judgments, grievances, or hearings;

• 1.1.17 "Closing" means the completion on: (i) the First Closing Date of the First Closing; and (ii) on the Second Closing Date of the Second Closing, in each case including the completion of all other transactions contemplated by this Agreement which are to occur concurrently with the purchase and sale of the Purchased Shares;

• 1.1.18 "Closing Cash" means the Cash as at the end of business on the First Closing Date for the Subject Subsidiaries other than Pharmadrug, and means the Cash as at the end of business on the earlier of the Outside Date or Second Closing Date with respect to Pharmadrug, as determined in accordance with the Accounting Principles. An illustrative calculation of Closing Cash has been included in calculating the Estimated Purchase Price;

• 1.1.19 "Closing Date" means the First Closing Date and Second Closing Date, as applicable;

• 1.1.20 "Closing Document" means the First Closing Documents and Second Closing Documents, as applicable;

• 1.1.21 "Closing Indebtedness" means the Indebtedness as at the end of business on the First Closing Date for the Subject Subsidiaries other than Pharmadrug, and means the Indebtedness as at the end of business on the earlier of the Outside Date or Second Closing Date with respect to Pharmadrug, as applicable (except for Indebtedness in respect of non-Ordinary Course Taxes). An illustrative calculation of Closing Indebtedness has been included in calculating the Estimated Purchase Price;

• 1.1.22 "Closing Purchase Price Statement" has the meaning ascribed thereto in Section 2.6.1;

• 1.1.23 "Closing Working Capital" means the Working Capital as at the end of business on the First Closing Date for the Subject Subsidiaries other than Pharmadrug, and means the Working Capital as at the end of business on the earlier of the Outside Date or Second Closing Date with respect to Pharmadrug, in accordance with the Accounting Principles. An illustrative calculation of Closing Working Capital has been included in calculating the Estimated Purchase Price;

• 1.1.24 "Collective Agreement" means any collective agreement, letters of understanding or letters of intent with any trade union or association which may qualify as a trade union, which would cover any Employee;

• 1.1.25 "Competing Business" has the meaning ascribed thereto in Section 4.8.1;

• 1.1.26 "Competing Transaction" has the meaning ascribed thereto in Section 4.6;

• 1.1.27 "Competition Act" means the Competition Act (Canada);

• 1.1.28 "Computer Systems" means all hardware, software, networks and communications systems used by any Subject Subsidiary to operate the Business and to receive, store, process or transmit data related to the Business;

• 1.1.29 "Confidential Information" means the whole or any portion of any knowledge, data or information relating to either the Purchaser, Vendor or a Subject Subsidiary, its assets, businesses, affairs, finances, operations and general activities, including but not limited to financial information and data current or proposed business and financing plans, budgets, markets, customers, suppliers, distributors and sub-contractor information as well as its technology, information, know-how, trade secrets and other similar Intellectual Property.

• 1.1.30 "Constating Records" means, in respect of any entity, the corporate and constating records of such entity, including (a) all articles, constituting and organizational documents and by-laws (including any partnership agreement, deed of trust or other); (b) all shareholders agreements affecting such entity, (c) all minutes of meetings and resolutions of shareholders and directors (and any committees); and (d) the share certificate books, securities register, register of transfers and register of directors;

• 1.1.31 "Contract" means any and all written or oral contracts and agreements (including quotations, orders and rebates), work in progress, Derivative Contracts, leases (including Capital Leases and Real Property Leases), insurance policies, deeds, indentures, instruments, entitlements, warranties and warranty rights, commitments, indemnities, guarantees, undertakings and orders made by or to which any Subject Subsidiary is a party or by which any Subject Subsidiary is bound or under which any Subject Subsidiary has, or will have, any rights or obligations and includes rights to use, franchises, license and sub-licences agreements and agreements for the purchase and sale of assets or shares;

• 1.1.32 "Data Protection Laws" means all Laws and all guidance and findings published or issued by any Governmental Authority or industry group or association related to the collection, use, disclosure, storage and other processing of Personal Data, data protection, data privacy, data security, financial security, breach notification, consumer marketing, consumer protection, misleading advertising and cross-border data transfer that apply to any Subject Subsidiary or to the Business. Without limitation, the foregoing Data Protection Laws include: (i) the European Union General Data Protection Regulation; (ii) the United Kingdom General Data Protection Regulation; and (iii) all other similar international, federal, state, provincial, and local applicable Laws;

• 1.1.33 "Defending Party" has the meaning ascribed thereto in Section 7.8;

• 1.1.34 "Derivative Contracts" means all Contracts involving foreign exchange, forward contracts, swaps, risk management contracts or any other form of derivative instruments used by or binding any Subject Subsidiary;

• 1.1.35 "Direct Claim" means any Claim by an Indemnified Party against an Indemnifier which does not result from a Third Party Claim;

• 1.1.36 "Employee Plans" means each and every retirement, pension, supplemental pension (including any pension plan), savings, retirement savings, bonus or incentive, profit sharing, deferred compensation, severance or termination pay (including any redundancy policy), change of control, life insurance, medical, hospital, dental care, vision care, drug, sick leave, short term or long term disability, salary continuation, unemployment benefits, supplemental income, vacation, incentive, compensation, stock purchase, stock option, phantom stock, share appreciation rights, fringe benefit or other employee benefit plan, program, agreement, arrangement, policy or practice whether written or oral, formal or informal, funded or unfunded, registered or unregistered, bargained or not bargained, insured or self-insured that is administered, maintained, sponsored or otherwise funded or contributed to, or required to be funded or contributed to, by or on behalf of any Subject Subsidiary, or under which any Subject Subsidiary pays premiums or benefits or has any liability whatsoever whether absolute or contingent, relating to or available to any Employees or former employees of any Subject Subsidiary for the benefit of any consultant or other independent contractor who currently provides or formerly provided services to any Subject Subsidiary, except that the term "Employee Plan" shall not included any statutory plans with which any Subject Subsidiary is required to comply;

• 1.1.37 "Employees" means all of the employees of the Subject Subsidiaries, a complete and accurate list of which is attached as Schedule 1.1.34 of the Disclosure Schedule, and, for greater certainty, includes (a) employees employed on an hourly or salaried basis, (b) part-time employees, and (c) employees receiving short-term or long-term disability benefits or payments or workmen's compensation and employees on an ongoing leave of absence, including but not limited to sick leave, or parental leave;

• 1.1.38 "Encumbrances" means pledges, liens (statutory or otherwise), charges, security interests, leases, offers to lease, pledges, privileges, license agreements, title retention agreements, mortgages, hypothecs, trust deeds, trust or deemed trust (whether contractual, statutory or otherwise arising), assignments by way of security, security interests, conditional sales contracts or other title retention agreements, or other similar interests or instruments charging, or creating a security interest in, or against title, restrictions, development or similar agreements, easements, servitudes, rights-of-way (registered or unregistered), restrictive covenants, contamination notice, title defects, restrictions, executions, tax arrears, permissions, options or adverse claims, encroachments or burden or any other right or claim or encumbrances of any kind or character whatsoever or however arising, or any agreement to enter into or create any of the foregoing, on or affecting all or any part of the Purchased Shares or any of the assets of the Subject Subsidiaries or any interest therein, or any direct or indirect interest in any of the Subject Subsidiaries, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, encumbrances of mechanics, labourers, workmen, builders, contractors, suppliers of material or architects or other similar encumbrances incidental to construction, maintenance or repair operations and other similar liens, legal hypothecs and encumbrances;

• 1.1.39 "Environment" means the environment or natural environment as defined in Environmental Laws and includes soil, air, surface water, ground water, land surface, subsurface strata and any sewer system; for greater certainty, the interacting natural systems that include components referred to above or any combination or part thereof are included in the definition of "Environment"; and "Environmental" shall have the correlative meaning;

• 1.1.40 "Environmental Authorizations" means certificates of authorization, environmental compliance approvals, permits, Orders, consents, agreements (including any sewer surcharge or discharge agreement), instructions, directions, authorizations or registrations issued, granted, conferred or required by a Governmental Authority with respect to any Environmental Law;

• 1.1.41 "Environmental Laws" means all applicable Laws relating to the Environment, pollution, the health or safety of Persons or the public, including such Laws relating to the withdrawal, contamination and use of groundwater and surface water, to management, excavation and soil contamination, the delivery of authorizations and Permits or to inspections and surveys, remedial actions and rehabilitation in connection with any presence, emission, discharge, emission, generation, holding, handling, labelling, abatement, management, control, monitoring, existence, escape or disposal or threat of same of any Hazardous Material, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Materials, or to the release, threatened release or arranging for the transportation of any Hazardous Materials;

• 1.1.42 "Estimated Closing Cash" has the meaning ascribed thereto in Section 2.3.1(a);

• 1.1.43 "Estimated Closing Indebtedness" has the meaning ascribed thereto in Section 2.3.1(b);

• 1.1.44 "Estimated Closing Working Capital" has the meaning ascribed thereto in Section 2.3.1(c);

• 1.1.45 "Estimated Purchase Price" has the meaning ascribed thereto in Section 2.3.1(d);

• 1.1.46 "Estimated Purchase Price Statement" has the meaning ascribed thereto in Section 2.3.1;

• 1.1.47 "Operating Plan" means the interim operating plan for the Subject Subsidiaries attached hereto as Exhibit I;

• 1.1.48 "First Closing" means the completion of the sale to, and purchase by, the Purchaser of the First Closing Shares, including the completion of all other transactions contemplated by this Agreement which are to occur concurrently with the purchase and sale of the First Closing Shares;

• 1.1.49 "First Closing Date" means the date on which the Parties complete the First Closing; provided however that such date can be no later than the 5th Business Day after the TSXV Approval in respect of the sale of the First Closing Shares has been received or duly waived, or such other later date as determined by the Purchaser, acting reasonably;

• 1.1.50 "First Closing Document" means any agreement, assignment, instrument, undertaking, resolution, share certificate, certificate or any other document delivered in relation to the First Closing;

• 1.1.51 "First Closing Shares" has the meaning ascribed thereto in Section 2.1(a);

• 1.1.52 "Fixed Assets" means the fixed assets and tangible moveable or personal property, machinery, equipment, computers, networking equipment, fixtures, furniture, furnishings, vehicles, material handling equipment, implements, parts, tools, machine tools, jigs, dies, molds, patterns and tooling, spare parts furniture, supplies,

photocopiers and office equipment owned, held or used by any Subject Subsidiary in connection with the Business, wherever located;

• 1.1.53 "German Transfer Agreement" means the German local share transfer agreement regarding the share transfer of Pharmadrug and Khiron Europe;
• 1.1.54 "Governing Body" means, with respect to any Person, (i) the board of directors of such Person, and (ii) any Person or group of Persons exercising a similar authority;
• 1.1.55 "Governmental Authority" means any (i) multinational, federal, provincial, state, territorial, regional, municipal, local, governmental or public department, ministry, central bank, court, tribunal, arbitral body, commission, agency board or bureau, domestic or foreign, (ii) any subdivision, agent, commission, board or authority of any of the foregoing, (iii) any quasi-governmental or private body exercising any regulatory, administrative, expropriation or Tax Authority under or for the account of any of the foregoing, including any private body having received a mandate to perform public services, and (iv) any judiciary or quasi-judiciary tribunal, court or body;
• 1.1.56 "Hazardous Material" means any material or substance, including an odour, a sound or a vibration, that is listed, defined, designated, regulated or classified as, or otherwise determined to be, hazardous, radioactive explosive, gaseous, flammable, toxic, corrosive, oxidizing or leachable or a pollutant, a substance or a contaminant defined or regulated under applicable Environmental Laws, including any mixture thereof;
• 1.1.57 "Indebtedness" means, in relation to the Subject Subsidiaries, any liability, debt or other obligation, including the following:
  • (a) all indebtedness, obligations and liabilities of whatsoever nature and kind of any Subject Subsidiary for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit, note purchase obligations and bankers' acceptances, whether or not matured but only to the extent drawn upon) and including any short term portion of long term indebtedness and any shareholders' loans or advances;
  • (b) all Taxes accrued or payable by any Subject Subsidiary (net of any income Tax credits or refunds, overpayments and similar adjustments of income Taxes received or receivable – each as determined net of any Taxes applicable thereon in any Tax period), in respect of a Pre-Closing Tax Period, whether or not due or received on or prior to the Closing;
  • (c) all fees and expenses incurred, payable or reimbursable by any Subject Subsidiary in connection with the preparation, negotiation, execution and delivery of this Agreement or the transactions contemplated hereby, including:
    • (i) fees and expenses payable to all attorneys, accountants, consultants, professionals or other advisors, and bankers', brokers' or finders' fees, to the extent unpaid at the time of Closing; and
    • (ii) all obligations for, or with respect to, transaction bonuses, change in control payments, retention payments or severance payments pursuant to any Contract due as of the Closing or in connection with the transactions contemplated under this Agreement and any contractual severance obligations or commitments to former employees (including the employee and employer portion of any

payroll, social security, unemployment or similar Taxes attributable to any payments referenced in this clause);

• (d) all indebtedness of any Subject Subsidiary created or arising under any conditional sale, other title retention agreements with respect to acquired property or pursuant to deferred purchase price obligations;
• (e) all indebtedness, obligations and liabilities of any Subject Subsidiary resulting from any subsidy agreement, contribution agreement or similar agreement between any Subject Subsidiary and any Governmental Authority;
• (f) all obligations guaranteeing or providing indemnification or insurance with respect to any indebtedness or other obligation of any Person (other than an obligation by a Subject Subsidiary to guarantee or provide indemnification for the obligations of another Subject Subsidiary);
• (g) any deferred revenue received in cash of any Subject Subsidiary, only to the extent not included in Closing Working Capital;
• (h) all accrued interest relating to any indebtedness of the type referred to in any of the items of this definition;
• (i) all prepayment penalties or break-up fees of any nature relating to any indebtedness of the type referred to in any of the items of this definition which is being repaid on or immediately after Closing;
• (j) the Subsidiary Growth Capital; and
• (k) all unpaid trade accounts payables to the extent overdue as at Closing and to the extent not included in Working Capital,

notwithstanding the foregoing, Indebtedness shall not include any amount included in the calculation of the Closing Working Capital;

• 1.1.58 "Indemnified Party" means the Purchaser or the Vendor, as the case may be, when entitled to indemnification under this Agreement;
• 1.1.59 "Indemnifier" means the Vendor or the Purchaser, as the case may be, when obligated to provide indemnification under this Agreement;
• 1.1.60 "Indemnity Claim" means any Direct Claim or any Third Party Claim;
• 1.1.61 "Individual" means any natural and physical Person, excluding any Employee;
• 1.1.62 "Intellectual Property" means any or all intellectual property rights, whether registered or not, including those rights arising out of or related to: (i) all domestic and foreign patents and applications therefore and all re-examinations, reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all trade-marks, trade names, service marks, service names, certification marks, brands, logos, trade dresses, domain names and social media identifiers, together with the goodwill associated therewith; (iii) all copyrights, data rights, integrated circuit topographies and protected plant varieties; (iv) all industrial designs, CAD designs and works protected by copyright including computer software, documentation, designs, schematics, specifications or records; (v) all inventions (whether or not patentable); and (vi) all proprietary and confidential business and technical information including

technical data, trade secrets, ideas, formulae, algorithms, methods, techniques, processes, research and development and technology know-how, databases, data compilations and collections and technical data; including, in the case of each of clauses (i) through (v), inclusively, whether such rights are registered or not and, in the case of each of clauses (i) through (vi), exclusively, any and all registrations, applications, recordings, common-law rights and Contracts, all rights of privacy or moral rights, however denominated, throughout the world and in all media now known, and all rights to sue at law or in equity for any past infringement or other impairment of any and all of the foregoing, including the right to receive all proceeds and damages therefrom, where applicable at Law;

• 1.1.63 "Intercompany Debts" means the intercompany debt owed to the Vendor by the Subject Subsidiaries, and amongst the Subject Subsidiaries;

• 1.1.64 "Inventories" or "Inventory" means all inventories of the Subject Subsidiaries on the date hereof and as at the end of business on Closing and related to the Business including all finished goods, work in progress, raw materials, ingredients, packaging materials, production and shipping supplies, spare parts, maintenance items and advertising materials, in each case on hand, in transit, ordered but not delivered, warehoused or wherever situated whether or not on consignment;

• 1.1.65 "Investment Canada Act" means the Investment Canada Act (Canada);

• 1.1.66 "Key Employee" means Franziska Katterbach;

• 1.1.67 "Key Intellectual Property" has the meaning attributed to this term in Section 1.1.40 of Schedule 3.1(B);

• 1.1.68 "Khiron Colombia" means Khiron Colombia S.A.S.;

• 1.1.69 "Khiron Europe" means Khiron Europe GmbH;

• 1.1.70 "Khiron Spain" means Khiron Life Sciences Spain SL;

• 1.1.71 "Khiron UK" means Khiron Life Sciences UK Limited;

• 1.1.72 "Lands" means all of the lands of which any Subject Subsidiary is the registered or beneficial owner;

• 1.1.73 "Laws" means all laws (including common law, civil law and equity), statutes, codes, ordinances, decrees, rules, regulations, by-laws, statutory rules, principles of law, published or unpublished policies and guidelines, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards and terms and conditions of any grant of approval, permission, authority or Permit of any Governmental Authority, self-regulatory authority or statutory body 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 or claiming to exercise legal jurisdiction over the Person or Persons or its or their business, undertaking, property or securities;

• 1.1.74 "Leased Real Properties" means the lands and Buildings which are subject to the Real Property Leases, together with all licenses, rights and appurtenances relating to the foregoing, a complete list of which is attached hereto as Schedule 1.1.39 of the Disclosure Schedule;

• 1.1.75 "Letter of Intent" means the second amended and restated letter of intent between the Purchaser and the Vendor dated June 16, 2023;

• 1.1.76 "Lien" means any mortgage, charge, security agreement, security interest, assignment, pledge, lien, builders' lien or other encumbrance of whatsoever kind or nature, regardless of form and whether consensual or arising by law (statutory or otherwise), that secures the payment of any indebtedness or liability or the observance or performance of any obligation;

• 1.1.77 "Loss" means any and all loss (excluding consequential, indirect or special damages, such as loss of profits and loss of value), liability, debt, Tax, damage, cost, expense, charge, fine, penalty or assessment, including the costs and expenses incurred in investigating, pursuing or settling a Claim and all interest, punitive or exemplary damages, fines, penalties and reasonable fees and expenses of attorneys and experts incurred in connection therewith;

• 1.1.78 "Malicious Code" means any malicious code, malware, mobile code or virus, program, or sub-program that: (a) is designed to or would disrupt, disable, harm, or otherwise impede in any manner, including aesthetic disruptions or distortions, the operation of any Computer Systems (sometimes referred to as "viruses" or "worms"); (b) is designed to or would disable or impair any Computer Systems in any way where such disablement or impairment is caused by the passage of time, exceeding an authorized number of copies, advancement to a particular date or other numeral (sometimes referred to as "time bombs," "time locks" or "drop dead" devices); (c) is designed to or would permit any Individual to access any Computer Systems in any unauthorized manner, including to cause such disablement or impairment (sometimes referred to as "traps," "access codes" or "trap door" devices); (d) contains any other similar harmful, malicious or hidden procedures, routines or mechanisms which is designed to or would cause any Computer Systems to cease functioning or to damage or corrupt data, storage media, programs, equipment or communications or otherwise interfere with operations; or (e) contains any "back door," "malware," "spyware" or similar device or code;

• 1.1.79 "Management Agreement" means the management services agreement in the form attached as Exhibit G;

• 1.1.80 "Material Adverse Change" means any change, effect, event or occurrence that, individually or in the aggregate with all other changes, effects, events or occurrences: (i) is or is reasonably likely to have a material and adverse effect upon any of the Business, operations, affairs, assets, liabilities, capitalization, results of operations, cash flows, condition, prospects, Permits, rights or privileges of any Subject Subsidiary, or (ii) would reasonably be expected to materially impair or delay the ability of any of the Vendor or any Subject Subsidiary to perform its obligations under this Agreement; other than any change, effect, event, occurrence or state of facts resulting from or arising in connection with:

  • (a) any change affecting the industry of the Business generally;
  • (b) any change in generally accepted accounting principles, Taxes or Laws, or in their interpretation, application or non-application by any Governmental Authority;
  • (c) any change in general economic or political conditions;

• (d) any change in financial, credit, currency exchange, commodities or securities markets in general;

• (e) the announcement of this Agreement;

• (f) any natural disaster or calamity;

• (g) any pandemic, epidemic or similar health emergency;

• (h) war, armed hostilities or acts of terrorism; or

• (i) any action taken (or omitted to be taken) by the Vendor or any Subject Subsidiary that is required to be taken (or omitted to be taken) under this Agreement or that is consented to by the Purchaser in writing,

unless in the case of clauses (a), (b), (c) or (d) it relates primarily to (or has the effect of relating primarily to) the Vendor or any Subject Subsidiary, or adversely affects the Vendor or any Subject Subsidiary disproportionately, compared to other businesses of a similar size operating in the same industry and geographic areas as the Vendor or Subject Subsidiary;

1.1.81 "Material Contract" means any:

• (a) Contract involving aggregate payments in any year to or by any Subject Subsidiary of an amount or value in excess of $50,000 (other than those disclosed at (b) below);

• (b) existing order or prospective customer Contract of an amount or value in excess of $50,000;

• (c) Contract between any Subject Subsidiary and an insurance provider;

• (d) Contract between any Subject Subsidiary and any Related Party, including another Subject Subsidiary or the Vendor;

• (e) Contract not entered into in the Ordinary Course and that involves expenditures or receipts of any Subject Subsidiary in excess of $50,000;

• (f) lease, rental or occupancy agreement (including each Real Property Lease), license (other than a license agreement for commercially available software sold through retailers), instalment and conditional sale agreement, and other Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property;

• (g) Contract with respect to Intellectual Property or which is a Derivative Contract (other than a license agreement for commercially available software sold through retailers);

• (h) Contract containing covenants that in any way restrict or purport to restrict the business activity of any Subject Subsidiary to engage in any business or to compete with any Person;

• (i) power of attorney of any Subject Subsidiary that is currently effective and outstanding;

• (j) warranty, guarantee, support, bond, indemnification, assumption or other similar commitment with respect to the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of any Person other than (i) in the Ordinary Course and (ii) tenders from Governmental Authorities entered into in the Ordinary Course;

• (k) Contract which concerns any joint venture, partnership or other Contract (however named) involving a sharing of profits, losses, costs, or liabilities by any Subject Subsidiary;

• (l) Contract relating to or creating any trust indenture, mortgage, hypothec, promissory note, bond, loan agreement or other contract for the borrowing of money or otherwise evidencing any Indebtedness of any Subject Subsidiary;

• (m) Contract containing liquidated damages or penalty provisions (other than tenders from Governmental Authorities) entered into in the Ordinary Course; or

• (n) amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing;

• 1.1.82 "Notice Period" has the meaning ascribed thereto in Section 7.6 hereof;

• 1.1.83 "Option" means the option to be granted by the Vendor and Khiron Colombia pursuant to the Option Agreement, whereby the Vendor and Khiron Colombia shall grant an irrevocable, assignable option to the Purchaser to purchase all of the issued and outstanding shares of Zerenia Colombia from the Vendor (as to 80%) and Khiron Colombia (as to 20%) for a period of two years following the earlier of: (i) the Second Closing Date; and (ii) the Outside Date, for an aggregate purchase price of no more than $8.0 million (on a cash-free and debt-free basis and assuming Zerenia Colombia has working capital of no less than zero dollars, subject to customary adjustments) less the Option Purchase Price Deduction (if any) which may be paid in cash or shares of a publicly listed affiliate of the Purchaser, subject to the approval of the TSXV and shareholders of the Vendor, as and if required pursuant to applicable laws;

• 1.1.84 "Option Agreement" means the option agreement in the form attached as Exhibit H;

• 1.1.85 "Option Purchase Price Deduction" has the meaning ascribed thereto in Section 2.7.1(d);

• 1.1.86 "Order" means any final and enforceable order or any judgment, injunction, decree, ruling, stipulation, award or writ of any court, tribunal, arbitrator or other Governmental Authority;

• 1.1.87 "Ordinary Course" means, when used in relation to the conduct of the Business, any action which: (i) is consistent in nature, scope and magnitude with the past practices of each Subject Subsidiary and is taken in the ordinary course of the normal day-today operations of such Person; and (ii) is similar in nature, scope and magnitude to actions customarily taken in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as each Subject Subsidiary;

• 1.1.88 "Outside Date" means November 30, 2023;

• 1.1.89 "Parties" means the Vendor and the Purchaser, and "Party" means any one of them;

• 1.1.90 "Permits" means all permits, certificates, certificates of authorization, certificates of compliance, authorizations, consents, licenses, concessions, franchises, approvals of and registrations with any Governmental Authority or pursuant to any Laws used or held in connection with the Business;

• 1.1.91 "Permitted Encumbrances" means (a) statutory encumbrances relating to obligations not due and payable; and (b) the Encumbrances listed in Schedule 1.1.91 of the Disclosure Schedule;

• 1.1.92 "Person" includes any individual, trust, trustee, executor, administrator, legal personal representative, estate, firm, partnership, joint venture, venture capital fund, joint stock company, association, body corporate, corporation, unincorporated association or organization, Governmental Authority, syndicate or other entity, whether or not having legal status;

• 1.1.93 "Personal Data" means: (a) any information that identifies or, alone or in combination with any other information, could reasonably be used to identify, locate, or contact an Individual, trust, trustee, executor, administrator, legal personal representative, estate, firm, partnership, joint venture, venture capital fund, joint stock company, association, body corporate, corporation, unincorporated association or organization, Governmental Authority, syndicate or other entity, whether or not having legal status; (b) any other information that is considered "personally identifiable information," "personal information," or "personal data" under Data Protection Laws; and (c) all data associated with any of the foregoing that are or could reasonably be used to develop a profile or record of the activities of an Individual or Employee across multiple websites or online services, to predict or infer the preferences, interests, or other characteristics of an Individual or Employee, or to target advertisements or other content to an Individual or Employee;

• 1.1.94 "Pharmadrug" means PharmaDrug Production GmbH;

• 1.1.95 "Pharmadrug Regulatory Approval" means approval of the transfer of Pharmadrug Shares to the Purchaser pursuant to the German Foreign Trade and Payments Act and the German Foreign Trade and Payments Regulation;

• 1.1.96 "Pharmadrug Shares" has the meaning ascribed thereto in Section 2.1(b);

• 1.1.97 "Pre-Closing Tax Period" means any Tax period of any Subject Subsidiary ending on or before the Closing Date;

• 1.1.98 "Prime Rate" means, on any day, the rate of interest, expressed as an annual rate, in effect from time to time, announced in Canada by the Royal Bank of Canada as its prime rate with respect to commercial loans in Canadian dollars made in Canada to its Canadian commercial borrowers;

• 1.1.99 "Privacy Requirements" has the meaning ascribed thereto in Section 1.1.38(e) of Schedule 3.1(B);

• 1.1.100 "Purchase Price" has the meaning ascribed thereto in Section 2.2 hereof;

• 1.1.101 "Purchased Shares" has the meaning ascribed thereto in Section 2.1;

• 1.1.102 "Purchaser" has the meaning ascribed thereto in the preamble hereof;

• 1.1.103 "Purchaser Fundamental Representations" has the meaning ascribed thereto in Section 3.5.2(a);

• 1.1.104 "Real Properties" means the Leased Real Properties;

• 1.1.105 "Real Property Leases" means the leases, subleases and other agreements or arrangements in the nature of a lease or right of occupancy of real property to which any Subject Subsidiary is a party, whether lessor or lessee, a complete and accurate list of which is attached as Schedule 1.1.39 of the Disclosure Schedule;

• 1.1.106 "Related Party" means (a) the Vendor, or (b) any Affiliate of the Vendor (c) any partner, shareholder, director, officer, trust, trustee or similar fiduciary, of the Vendor or any Subject Subsidiary or any of their respective Affiliates, or (d) any Person not acting at arm's length (within the meaning of the Income Tax Act (Canada)) with any Subject Subsidiary or the Vendor;"Representatives" means, with respect to any Person, the Affiliates, officers, directors, employees and agents of such Person;

• 1.1.108 "Response Period" has the meaning ascribed thereto in Section 7.4;

• 1.1.109 "Restricted Period" has the meaning ascribed thereto in Section 4.8.1;

• 1.1.110 "Second Closing" means the completion of the sale to, and purchase by, the Purchaser of the Pharmadrug Shares, including the completion of all other transactions contemplated by this Agreement which are to occur concurrently with the transfer of the Pharmadrug Shares;

• 1.1.111 "Second Closing Date" means the date on which, provided the Pharmadrug Regulatory Approval is obtained, the Parties complete the Second Closing; provided however that such date can be no later than the 3rd Business Day after Pharmadrug Regulatory Approval is obtained, or such other later date as determined by the Purchaser, acting reasonably;

• 1.1.112 "Second Closing Document" means any agreement, assignment, instrument, undertaking, resolution, share certificate, certificate or any other document delivered in relation to the Second Closing;

• 1.1.113 "Security" means the general security agreement between the Purchaser and the Vendor dated May 31, 2023, the share pledge agreements between the Vendor and the Purchaser in respect of the shares of Zerenia UK and Pharmadrug, any amendments or supplements from time to time thereto provided to the Purchaser by the Vendor under the Letter of Intent and extended to the Management Agreement, securing or intended to secure payment and performance of any obligation of the Vendor or a Subject Subsidiary, and the Liens constituted by any of the foregoing;

• 1.1.114 "Security Incident" means (a) any act or omission that compromises the security, integrity, or confidentiality of Personal Data or (b) any data breach, security breach, or other security incident that has resulted in or presents a risk of unauthorized access, acquisition, disclosure, use, denial of use, alteration, corruption, destruction, or loss of such Personal Data or that has caused or would reasonably be expected to cause a disruption to the conduct of the business of the Subject Subsidiaries;

• 1.1.115 "Software" means all software computer programs used by any Subject Subsidiary including all versions thereof and all related documentation, manuals, source code and object code, program files, data files, libraries, computer related data, field and data designations and relationships, data definition specifications, data models, program

and system logic, interfaces, program modules, routines, sub-routines, algorithms, program architecture, design concepts, system designs, program structure, sequences and organization, screen displays and report layouts;

• 1.1.116 "Subject Subsidiaries" has the meaning ascribed thereto in the preamble;

• 1.1.117 "Subsidiary Growth Capital" means, collectively: (i) Nine Hundred Fifty-Thousand Dollars ($950,000) to be advanced by the Manager (as such term is defined in the Management Agreement) to the Vendor subject to and in accordance the Management Agreement; and (ii) Fifty-Thousand Dollars ($50,000) to be advanced by the Purchaser, on behalf of the Vendor, to Vendor's counsel. For greater certainty, the Subsidiary Growth Capital shall be secured by the Security and form part of the Indebtedness;

• 1.1.118 "Target Working Capital" means zero Dollars ($0);

• 1.1.119 "Tax" and "Taxes" includes any taxes, imposts, rates, duties, fees, premiums, assessments, levies and other charges of any kind whatsoever and wheresoever imposed by any Governmental Authority, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Authority in respect thereof, and including those levied on, or measured by, or referred to as, income, gross income, receipts, profits, net worth, inventory, escheat, activity, capital, capital stock, diverted, transfer, land transfer, mutation duties, property, real property, local, municipal, county, regional, water, development, occupancy, business, sales, goods and services, harmonized sales, use, value-added, excise, stamp, documentary, deed, withholding, license, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping, all license agreements, franchise and registration fees and all employment insurance, unemployment, health insurance and other Governmental Authority pension plan premiums or contributions and for greater certainty, all contributions and other obligations of the same or similar nature payable under any tax Laws, all withholdings on amounts paid to or by the relevant Person, and any liability for any of the foregoing as transferee, successor, guarantor or by contract or by operation of any Laws or otherwise;

• 1.1.120 "Tax Authority" means any national, state, local, provincial, territorial or other Governmental Authority responsible for the administration, implementation, assessment, determination, enforcement, compliance, collection or other imposition of any Taxes;

• 1.1.121 "Tax Claim" has the meaning ascribed in Section 7.7;

• 1.1.122 "Tax Returns" means any and all returns, reports, declarations, statements, information, estimates, rebates or credits, elections, designations, schedules, filings or other documents (including any related or supporting information) relating to Taxes filed or required to be filed by any Tax Authority or pursuant to any Law relating to Taxes or in fact filed with any Tax Authority, including all information returns, Claims for refund, amended returns, declarations of estimated Taxes, and requests for extensions of time to file any of the preceding items and all amendments, attachments or supplement thereto, whether in tangible or electronic form;

• 1.1.123 "Third Party Claim" means any Claim asserted against an Indemnified Party or any Subject Subsidiary, that is paid or payable to, or claimed by, any Person who is not a Party or an Affiliate of a Party;

• 1.1.124 "Third Party Consents" means any authorization, licence, permit, consent, release, waiver or other approval of any Governmental Authority, including, without limitation, the Pharmadrug Regulatory Approval and TSXV Approval;

• 1.1.125 "Threatened Claim" means a Claim or other matter deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead to a prudent Person to conclude that such a Claim or matter is likely to be asserted, commenced, taken or otherwise pursued in the future;

• 1.1.126 "TSXV" means TSX Venture Exchange;

• 1.1.127 "TSXV Approval" means the conditional and final approvals of the transactions contemplated by this Agreement;

• 1.1.128 "Vendor" has the meaning ascribed thereto in the preamble;

• 1.1.129 "Vendor's Fundamental Representations" has the meaning ascribed thereto in Section 3.5.1(a);

• 1.1.130 "VTB Note" means the three-year non-interest bearing vendor take-back note to be provided by the Vendor to the Purchaser in partial satisfaction of the Purchase Price for the Purchased Shares;

• 1.1.131 "Working Capital" means, on the consolidated basis, the current assets of the Subject Subsidiaries, including Cash, Accounts Receivable, inventory and prepaid expenses of the Subject Subsidiaries, minus the current liabilities, Indebtedness of the Subject Subsidiaries, Accounts Payable and accrued liabilities, deferred revenue to the extent not received;

• 1.1.132 "Zerenia Colombia" means Zerenia S.A.S.; and

• 1.1.133 "Zerenia UK" means Zerenia Clinics Limited.

SCHEDULE 2.1

PURCHASED SHARES

SubjectSubsidiaries	All issued andoutstanding shares ofthe Subject Subsidiariesas of the ApplicableClosing Date	ClosingPurchasePrice Allocation(AssumingPharmadrugRegulatory Approval)	Closing PurchasePrice Allocation(Assuming NoPharmadrugRegulatory Approval)
Pharmadrug	100 common shares	83.4% $ 2,500,000	0% $0
Khiron Europe	1 common share	4.17% and $ 125,000	25% and $ 125,000
Zerenia UK	152,183 common shares	4.17% and $ 125,000	25% and $ 125,000
Khiron Spain	3000 common shares	4.17% and $ 125,000	25% and $ 125,000
Khiron UK	772,833 common shares	4.17% and $ 125,000	25% and $ 125,000
Total	928,117 common shares	100% and $3.0 million	100% and $500,000

SCHEDULE 3.1(A)

REPRESENTATIONS AND WARRANTIES OF VENDOR

Representations in respect the Vendor

• 1.1.1 Capacity and No Violation of Vendor
  • (a) The Vendor (i) has been duly incorporated, is validly organized and subsisting and is in good standing under the Laws of its jurisdiction of incorporation; (ii) it has full corporate or legal power and authority to own and lease its assets and carry on its business as currently owned and carried on; (iii) it is duly registered, licensed or qualified to carry on business in each jurisdiction in which the nature of the business now being carried on or the property owned or leased by it makes such registration, licensing or qualification necessary; and (iv) no resolution has been adopted providing for the dissolution or winding up of the Vendor that is a corporation or other legal entity.
  • (b) There has been no formal request for the winding or the dissolution of the Vendor or for the appointment of a receiver or trustee or any similar person or entity to manage any of their affairs, nor has any petition been filed with any competent authority requesting the initiation of any restructuring or liquidation procedures with respect to the Vendor. The Vendor has not been declared unable to meet its, his or her debts as they become due, and there is no valid basis currently existing upon which it could be reasonably expected that a third party require the dissolution or winding up of the Vendor that is not an individual.
  • (c) The Vendor has all necessary power, capacity and authority to execute and deliver this Agreement and each Closing Document to which the Vendor is a party and to perform the Vendor's obligations hereunder and thereunder.
  • (d) The execution of this Agreement and the execution of the Closing Documents by, and the consummation of the transactions contemplated hereby and thereby, has been duly authorized by the Governing Body of the Vendor that is not an individual.
  • (e) This Agreement has been and each of the Closing Documents to which the Vendor is a party will on Closing have been duly executed by the Vendor and this Agreement constitutes and each Closing Document to which the Vendor is a party will, at Closing, constitute a valid and binding obligation, enforceable against the Vendor in accordance with their terms, subject to bankruptcy, insolvency and other similar Laws affecting creditors' rights generally.
  • (f) The approval of this Agreement and each of the Closing Documents to which the Vendor is a party, the execution by the Vendor of this Agreement and of each of the Closing Documents to which the Vendor is a party and the performance by the Vendor of its obligations hereunder and thereunder and the completion of the transactions contemplated herein and in the Closing Documents, will not result in:
    • (i) a violation of, default under or breach of, require any consent to be obtained under or give rise to any termination rights by a third party, payment obligation by the Vendor or rights of a third party the exercise

of which would result in any breach or default under any provision of or the acceleration of any obligation under: (i) any Constating Records of the Vendor, (ii) any Contract or Permit to which the Vendor is party or by which the Vendor (or the Purchased Shares) are bound, or by which the Vendor is subject or is the beneficiary, (iii) any shareholders' agreement, or (iv) any Laws, or

• (ii) result in the creation or imposition of any Encumbrance upon the Purchased Shares.
• 1.1.2 Approvals and Consents. Other than the TSXV Approval, the Pharmadrug Regulatory Approval, and any other Third Party Consents, including any approval by a Governmental Authority of the German Transfer Agreement or notarization or legalization of any power of attorney required to effect the transfer of the First Closing Shares on the First Closing and the Pharmadrug Shares on the Second Closing, no consent, approval, notice, Order, authorization, registration, declaration, filing, submission of information, waiver, sanction, license, exemption or Permit is necessary or otherwise required to be obtained by the Vendor from any Governmental Authority or Person or pursuant to any Law in connection with the execution of this Agreement or any Closing Document to which the Vendor is a party or the consummation by the Vendor of the transactions contemplated hereby or thereby.
• 1.1.3 Title to Purchased Shares. The Vendor is, and will be at First Closing and Second Closing respectively, the beneficial owner of, and have, and will have at First Closing and Second Closing respectively, good and marketable title to all of the First Closing Shares and Pharmadrug Shares, respectively, each as set forth at Schedule 2.1, free and clear of all Encumbrances.
• 1.1.4 Residency. The Vendor is not a "non-resident" of Canada for the purposes of the Income Tax Act (Canada).

SCHEDULE 3.1(B) REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE SUBJECT SUBSIDIARIES

References in this Schedule 3.1(B) to Schedules of the "Disclosure Schedule" are references to Schedules of a disclosure schedule dated as of July 28, 2023, delivered by the Vendor to the Purchaser concurrently upon the signing of the Agreement, unless otherwise expressly stated herein.

Representations in respect of the Subject Subsidiaries

1.1.5 Organization. Each Subject Subsidiary has been duly incorporated, is validly organized and subsisting and is in good standing under the Laws of its jurisdiction of incorporation. Each Subject Subsidiary has full corporate or legal power and authority to own and lease its assets and carry on its businesses as currently owned and carried on. Each Subject Subsidiary is duly registered, licensed or qualified to carry on business in each jurisdiction in which the nature of the business now being carried on or the property owned or leased by it makes such registration, licensing or qualification necessary, all of which are set forth in Schedule 1.1.6 of the Disclosure Schedule. No resolution has been adopted providing for the dissolution or winding up of any Subject Subsidiary. There has been no formal request for the winding up or the dissolution of any Subject Subsidiary or for the appointment of a receiver or trustee or any similar person or entity to manage any of their affairs, nor has any petition been filed with any competent authority requesting the initiation of any restructuring or liquidation procedures with respect to any Subject Subsidiary. No Subject Subsidiary has been declared unable to meet its debts as they fall due, and there is no valid basis currently existing upon which it could be reasonably expected that a third party could require the dissolution or winding up of any Subject Subsidiary.

1.1.6 Capitalization

• (a) Schedule 1.1.6 of the Disclosure Schedule contains a complete and accurate list of each Subject Subsidiary showing: (i) legal name, trade names, jurisdiction of incorporation or formation, the jurisdiction in which it is authorized to do business, (ii) each Subject Subsidiaries' authorized as well as issued and outstanding share capital, securities or other ownership interests (together with the holders thereof), and (iii) the directors and officers of each Subject Subsidiary. No Subject Subsidiary holds any direct or indirect interest in any Person.

• (b) All of the outstanding share capital, securities and other ownership interests of each Subject Subsidiary are set forth in Schedule 1.1.6 of the Disclosure Schedule and all have been duly authorized, are validly issued, fully paid and were not repaid and non-assessable and except as set out in Schedule 1.1.6 of the Disclosure Schedule, all such share capital, securities and, other ownership interests are owned directly or indirectly by the Vendor, free and clear of all Encumbrances. There are no obligations to make further contributions regarding the share capital. All securities of each Subject Subsidiary have been issued in compliance with all applicable securities Laws and all securities to be issued upon exercise of any such options, rights and other convertible or exchangeable securities will be issued in compliance with all applicable securities Laws.

• (c) There is no:

• (i) outstanding security held by any Person which is convertible or exchangeable into shares, securities or rights in the capital of any Subject Subsidiary;

• (ii) outstanding subscription, option, warrant, call, pre-emptive right, commitment or agreement of any nature whatsoever, written or oral (other than this Agreement) obligating any Subject Subsidiary to issue, sell, redeem, purchase or transfer shares or securities which in any way relate to the authorized or issued capital of any Subject Subsidiary;

• (iii) agreement, commitment or understanding of any nature whatsoever, written or oral (other than this Agreement) which grants to any Person the right to purchase or otherwise acquire or have a Claim against issued and outstanding shares or securities of any Subject Subsidiary;

• (iv) shareholders' agreement, voting trust, voting agreement, pooling agreement or proxy with respect to any shares, securities or other ownership interests of any Subject Subsidiary; or

• (v) partnership, trust, joint venture, association or similar jointly owned business undertaking of whatsoever nature involving any Subject Subsidiary.

• (d) No dividends or distributions have been declared or paid by any Subject Subsidiary.

• (e) The Subject Subsidiaries have never adopted, sponsored or maintained any stock option plan or any other plan or agreement providing for equity compensation to any Person.

• 1.1.7 Constating Records. The Constating Records of each Subject Subsidiary are complete and accurate, and are maintained in accordance with all applicable Laws and contain copies of all Constating Records and material resolutions passed by the respective shareholders and directors of each such Subject Subsidiary since the date of their incorporation or formation. Copies of the Constating Records of each Subject Subsidiary which reflect all amendments made thereto have been delivered to the Purchaser. No Subject Subsidiary is in default under, or in violation of, any provision of Constating Records documents or by-laws.

• 1.1.8 Non-Reporting Issuer Status. Each Subject Subsidiary is not a "reporting issuer" as defined in Canadian securities Laws or other equivalent and applicable Law.

• 1.1.9 Capacity and No Violation of the Subject Subsidiaries

  • (a) Each Subject Subsidiary has the necessary power, capacity and authority to enter into this Agreement and each Closing Document to which it is a party and to execute and perform each of its obligations hereunder and thereunder.
  • (b) The execution and delivery of this Agreement and the execution and delivery of the Closing Documents by each Subject Subsidiary which is a party thereto, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by the Governing Body of each Subject Subsidiary.

• (c) This Agreement has been and each of the Closing Documents to which any Subject Subsidiary is a party will, on Closing, have been duly executed and delivered by such Subject Subsidiary and the Agreement constitutes and each Closing Document to which a Subject Subsidiary is a party will, at Closing, constitute a valid and binding obligation, enforceable against each Subject Subsidiary in accordance with their terms, subject to bankruptcy, insolvency and other similar Laws affecting creditors' rights generally.

• (d) Except for the Pharmadrug Regulatory Approval, the approval of this Agreement and each of the Closing Documents to which any Subject Subsidiary is a party, the execution and delivery by any Subject Subsidiary of this Agreement and of each of the Closing Documents to which it is a party and the performance by each Subject Subsidiary of its respective obligations hereunder and thereunder and the completion of the transactions contemplated herein and in the Closing Documents, will not result in:

  • (i) a violation of, default under or breach of, require any consent to be obtained under or give rise to any termination rights by a third party (with or without the giving of notice or lapse of time), or both, payment obligation by any Subject Subsidiary or rights of a third party the exercise of which would result in any breach or default under any provision of or the acceleration of any obligation under: (i) any Constating Records of any Subject Subsidiary, (ii) any Contract or Permit to which any Subject Subsidiary is party or by which any Subject Subsidiary (or their respective assets or securities) are bound, or by which any Subject Subsidiary is subject or is the beneficiary, (iii) any shareholders' agreement binding upon any Subject Subsidiary, or (iv) any Laws;
  • (ii) the creation or imposition of any Encumbrance upon the securities or the assets of any Subject Subsidiary, or otherwise restrict, hinder, impair or limit the ability of any Subject Subsidiary to carry on the Business as and where it is now being carried on or as and where it may be carried on in the future.

• 1.1.10 Approvals and Consents. Other than the Pharmadrug Regulatory Approval and any other Third Party Consents, including any approval by a Governmental Authority of the German Transfer Agreement or notarization or legalization of any power of attorney required to effect the transfer of the First Closing Shares on the First Closing and the Pharmadrug Shares on the Second Closing, no consent, approval, notice, Order, registration, declaration, filing, submission of information, waiver, sanction, license, exemption or Permit is necessary or otherwise required to be obtained by a Subject Subsidiary from any Governmental Authority or Person or pursuant to any Law in connection with the execution and delivery of this Agreement or any Closing Document to which any Subject Subsidiary is a party or the consummation by any Subject Subsidiary of the transactions contemplated hereby or thereby or the conduct by any Subject Subsidiary of the Business following the Closing as conducted on the date hereof.

• 1.1.11 Subsidiaries and Investments. No Subject Subsidiary is a member of or participant in any partnership, joint venture or similar Person. No Subject Subsidiary is subject to any obligation or requirement to provide funds to or make any investment in any business or Person by way of loan, capital contribution or otherwise.

• 1.1.12 Investment Canada Act. No Subject Subsidiary is engaged in any of the activities described in section 14.1(5) of the Investment Canada Act (Canada).

• 1.1.13 Compliance with Laws. Each Subject Subsidiary has complied in all material respects with and is not in violation of any applicable Laws or received any notice, written or oral, of any violation under or material non compliance with any applicable Law and there is no basis therefor. There is no investigation, request for information, or other proceeding by any Governmental Authority pending or Threatened against any Subject Subsidiary.

• 1.1.14 Absence of Questionable Payments. No Subject Subsidiary, director, officer, employee, agent, sales representative, distributor or other Person acting on behalf of any Subject Subsidiary, has used any Subject Subsidiary's funds or made unlawful contributions, payments, gifts, entertainment or made unlawful expenditures relating to domestic or foreign government officials or others; no current or former director, officer, employee, agent, sales representative, distributor or other Person acting on behalf of any Subject Subsidiary or the Vendor, has accepted or received any unlawful contributions, payments, gifts, entertainment or expenditures; the Subject Subsidiaries have at all times complied in all material respects with and are in compliance in all material respects with all applicable provisions of the Corruption of Foreign Public Officials Act and applicable Laws relating to prevention of corrupt practices in similar matters under the Criminal Code of Canada and any similar legislation in foreign jurisdictions.

• 1.1.15 Permits. All Permits that each Subject Subsidiary is required to obtain that are related to the Business or the ownership or operation of its properties and assets have been obtained, are listed in Schedule 1.1.15 of the Disclosure Schedule and are currently valid, in full force and effect and in good standing. Other than as set forth in Schedule 1.1.15 of the Disclosure Schedule, there is no Permit required to carry on the Business as presently carried on or as proposed to be carried on after the Closing. No Subject Subsidiary has violated the terms or conditions of any such Permits and there is no reason why any of the Permits should be suspended, cancelled, revoked or not renewed on the same terms.

• 1.1.16 Privacy Compliance. To the extent applicable, each Subject Subsidiary has commercially reasonable physical, technical, organizational, and administrative security measures and policies in place to protect such personally identifiable information and health related data information from unauthorized access, use, or disclosure. All such policies, programs, procedures, and systems are sufficient to comply with all applicable privacy Laws. To the extent applicable, each Subject Subsidiary is in compliance with all applicable privacy Laws. No Subject Subsidiary is aware of any incident reports or allegations that a Subject Subsidiary has violated any applicable privacy Laws. To the extent applicable, each Subject Subsidiary has maintained an accounting of all required disclosures under any applicable privacy Laws.

• 1.1.17 Restrictions on Business Activities. Except as set out in Schedule 1.1.17 of the Disclosure Schedule, there is no Contract or Order binding upon any Subject Subsidiary that has or could reasonably be expected to have the effect of prohibiting, restricting or impairing any business practice of any Subject Subsidiary, any acquisition of property by any Subject Subsidiary or the conduct of the Business as currently conducted.

• 1.1.18 Absence of Certain Changes or Events. Except as set out in Schedule 1.1.18 of the Disclosure Schedule, each Subject Subsidiary has conducted its business only in the Ordinary Course and there has not occurred:

• (a) any Material Adverse Change or any damage, destruction or loss to the assets of any Subject Subsidiary, whether covered by insurance or not;

• (b) any redemption, repurchase or other acquisition of shares or securities by any Subject Subsidiary or any declaration of, payment of or agreement to pay any dividend, or the declaration or authorization of any other distribution of, on or in respect of any of its securities whether payable in cash, securities or otherwise;

• (c) any (i) material increase in or modification of any Employee Plan or any compensation paid or payable to any of the directors, officers or Employees of any Subject Subsidiary, or (ii) removal of directors or termination of officers of any Subject Subsidiary;

• (d) any acquisition, lease, sale, Encumbrance (other than a Permitted Encumbrance) or other disposition of property or assets;

• (e) any failure to pay or otherwise satisfy any Accounts Payable, liabilities or obligations when due and payable, or any alteration of the practices and policies relating to the payment and collection of Accounts Payable and/or Accounts Receivable;

• (f) (i) any incurrence, creation, assumption or guarantee by any Subject Subsidiary of any debt for borrowed money or of any Encumbrance on any asset, (ii) any issuance or sale of any securities convertible into or exchangeable for debt securities of any Subject Subsidiary, or (iii) any issuance or sale of options or other rights to acquire from any Subject Subsidiary debt securities or any securities convertible into or exchangeable for any such debt securities;

• (g) any entering into, amendment, or relinquishment, termination or non-renewal by any Subject Subsidiary of any Material Contract;

• (h) any waiver or cancellation of any Claim, Account Receivable, or right;

• (i) any labour or employment dispute or charge of unfair labour practice involving any Subject Subsidiary or any termination or closure of any facility, business or operation;

• (j) any loss of any customer or supplier nor have the Subject Subsidiaries received information to the effect that any of them will lose any customer or supplier;

• (k) any change in the accounting methods, principles or practices or in the pricing, promotion or warranty policies and practices of any Subject Subsidiary;

• (l) a split, combination or reclassification of any of the outstanding shares or securities of any Subject Subsidiary;

• (m) any writing up or writing down of any of the assets or re-evaluation of inventory of any Subject Subsidiary;

• (n) any Contract to take any action which, if taken prior to the date hereof, would have made any representation or warranty set forth in this Agreement or any

Closing Document untrue, misleading or incorrect as of the date when made; or

• (o) any agreement or commitment to do any of the foregoing.

• 1.1.19 Contracts

  • (a) Schedule 1.1.19 of the Disclosure Schedule sets forth a list of the Material Contracts. Complete and accurate copies of the Material Contracts (and written summaries setting forth the terms and conditions of each oral Material Contract) have been delivered to the Purchaser.
  • (b) To the knowledge of the Vendor, each Material Contract is a legal, valid and binding obligation of each Person party thereto, enforceable by or against each such Person in accordance with its terms, and is in full force and effect.
  • (c) Except as otherwise set out in Schedule 1.1.19 of the Disclosure Schedule, all obligations of each Subject Subsidiary under each of the Material Contracts have been performed, and there are no defaults, events of default or violations (or which with or without notice, lapse of time or both, could reasonably be expected to, individually or in the aggregate, result in a default, event of default or violation) under any of the Material Contracts on the part of any Subject Subsidiary or on the part of the other party (or parties) to such Contract. No Subject Subsidiary and no other party (or parties) to any Contract has repudiated any Material Contract.
  • (d) No notice of termination of a Material Contract has been received or served by any Subject Subsidiary and there are no grounds for termination, resiliation, rescission, avoidance or repudiation of any such contract.

• 1.1.20 Major Suppliers, Customers and Insurance Providers. Schedule 1.1.20 of the Disclosure Schedule contains a complete and accurate list, as of the date hereof, of the ten (10) most important suppliers of goods and services to each Subject Subsidiary in the last two years, of the ten (10) most important customers for each of the last two years and of the ten (10) most important insurance providers of the Subject Subsidiaries for each of the last two years. The relationships of the Subject Subsidiaries with such customers, insurance providers and suppliers are good commercial working relationships. Except as otherwise set out in Schedule 1.1.20 of the Disclosure Schedule, no such supplier, insurance provider or customer notified any Subject Subsidiary of its intention to change its relationship or the terms upon which it conducts business with them (including, in the case of suppliers, the payment and credit terms extended to the Subject Subsidiary and, in the case of customers, the rate or amount of sales or purchases or the non-renewal or cancellation of any Contract set to expire) and there is no basis for such change. No Subject Subsidiary has any reason to believe that any such supplier, insurance provider or customer would change the terms upon which it conducts business with each Subject Subsidiary (including the payment and credit terms extended to them or the non-renewal or cancellation of any Contract set to expire) as a result of the consummation of the transactions contemplated by this Agreement or otherwise.

• 1.1.21 Capital Expenditures. Since December 31, 2022, each Subject Subsidiary has made capital expenditures only in the Ordinary Course and to the extent reasonably necessary to operate and maintain the Business and has not delayed or cancelled any previously scheduled capital expenditures.

• 1.1.22 Grants and Subsidies. No Subject Subsidiary has applied for or received any grant, subsidy, payment or allowance from any Governmental Authority, or has any present indebtedness, obligation or liability of whatsoever nature and kind resulting from any subsidy agreement, contribution agreement or similar agreement between any Subject Subsidiary and any Governmental Authority.

• 1.1.23 Bank Accounts and Related Powers of Attorney. Schedule 1.1.23 of the Disclosure Schedule sets forth (i) the name of each Person with whom each Subject Subsidiary maintains a bank account or safety deposit box and the names of all Persons authorized to draw thereon or to have access thereto; and (ii) the name of each Person holding a general or special power of attorney from any Subject Subsidiary for banking purposes and a summary of the terms thereof.

• 1.1.24 Accounts Receivable. Except as set out in Schedule 1.1.24 of the Disclosure Schedule, to the knowledge of the Vendor, the Accounts Receivable of the Subject Subsidiaries have arisen only from bona fide transactions in the Ordinary Course, there is no fact or circumstance generally (other than general economic conditions) which could result in any increase in the non-collectability of the Accounts Receivable as a class in excess of the reserves therefore (if any) set forth in the Financial Statements, and all Accounts Receivable are fully and validly due and owing to a Subject Subsidiary and are good and fully collectible within 180 days of the date of their issuance, subject to the reserve for bad debts recorded in the Books and Records. To the knowledge of the Vendor, the Accounts Receivable constitute, and will constitute at Closing, only valid, undisputed claims of the Subject Subsidiaries not subject to valid claims of setoff or other defences or counterclaims other than normal cash discounts accrued in the Ordinary Course.

• 1.1.25 Inventories. All Inventories are and will consist at Closing of a quality saleable and usable in each case in the Ordinary Course.

• 1.1.26 Sufficiency of Assets. Except as otherwise set out in Schedule 1.1.26 of the Disclosure Schedule, the assets of the Subject Subsidiaries are adequate and sufficient to operate the Business immediately following the Closing in substantially the same manner as currently carried on.

• 1.1.27 Title to Assets.

  • (a) Each Subject Subsidiary is the legal and beneficial owner of, and has good and marketable title to, or (in the case of property held under a lease) an enforceable lease with respect to, or (in the case of property held under another Contract) an enforceable interest in or right to use, all the assets used by such Subject Subsidiary in connection with the Business free and clear of all Encumbrances (other than Permitted Encumbrances).
  • (b) The Subject Subsidiaries own and are in possession of each of the assets shown or reflected on the Financial Statements or otherwise on the books of the Subject Subsidiary (except only those assets which have been disposed of in the Ordinary Course since the dates thereof) and all other assets acquired since the dates thereof with good and marketable title, free and clear of all Encumbrances (other than Permitted Encumbrances). No Subject Subsidiary has received in respect of its assets or any of them any notice of conflict with the asserted rights of any other Person.

• 1.1.28 Condition of Assets. The assets of the Subject Subsidiaries (including, without limitation, the Fixed Assets) are in good condition, repair and (where applicable) proper working order, subject to normal wear and tear and having regard to their use and age

and such assets have been and are properly and regularly maintained and are adequate and suitable for their present and intended uses and are sufficient to conduct the Business as it is currently conducted.

• 1.1.29 Books and Records. The Books and Records of each Subject Subsidiary (i) have been maintained in accordance with applicable Laws and good business practices on a basis consistent with prior years, (ii) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of such Subject Subsidiary, and (iii) accurately and fairly reflect the basis for the Financial Statements.
• 1.1.30 Litigation. Except as set out in Schedule 1.1.30 of the Disclosure Schedule, there is no Claim, Order or investigation pending or Threatened against any Subject Subsidiary or affecting any of the Purchased Shares or any Permits, assets or business practices of any Subject Subsidiary before any Governmental Authority, nor is any Subject Subsidiary aware of any facts which should, or could, form the basis of any such Claim, Order, investigation.
• 1.1.31 Environmental Matters:
  • (a) Each Subject Subsidiary, the Business and the Real Properties are and have been in compliance with all Environmental Laws including but not limited to all Environmental Authorizations, in all material respects.
  • (b) There are no: (i) Hazardous Materials present at any property adjacent to any of the Real Properties; (ii) risks of any Hazardous Materials migrating onto, into, under or toward any Real Property; or (iii) Hazardous Material in excess of the generic standards prescribed for permissible levels of Hazardous Materials by any Governmental Authority either: (A) present at the limits of any Real Property; or (B) that represents a risk of migration on or from any Real Property.
  • (c) There are no pending Claims or Threatened Claims or restrictions of any nature arising, resulting under or pursuant to any Environmental Laws or otherwise relating to the Environment with respect to or affecting any Subject Subsidiary or any of the Real Properties. No Subject Subsidiary and none of their respective directors or officers has been charged with or convicted of an offense for non-compliance with Environmental Laws, been fined or received a penalty for non-compliance with Environmental Laws or settled a lawsuit relating to non-compliance with Environmental Laws.
  • (d) The Subject Subsidiaries have not received and has no basis to expect the receipt of any directive, inquiry, notice, Order, warning or other communication from any Governmental Authority or other Persons that relates to any Hazardous Material or to any offence or failure or any non-compliance real, alleged or potential in connection with any applicable Environmental Laws or in relation to the substantial alteration or revocation of any Environmental Authorization, and there is no basis for receiving any such directive, inquiry, notice, Order, warning or other communication.
  • (e) The Subject Subsidiaries have provided the Purchaser with complete and accurate copies of all documents and information in their possession or control relating to the environmental condition of the Real Properties and any communications with any Person including Governmental Authorities regarding any alleged or actual non-compliance with Environmental Laws and complaints regarding Environmental matters.

1.1.32 Tax Matters

• (a) Except as otherwise set out in Schedule 1.1.32 of the Disclosure Schedule, each Subject Subsidiary has duly and timely made or prepared or caused to be made or prepared and filed all Tax Returns required to be filed by it prior to the applicable Closing Date with the appropriate Governmental Authorities and has duly, completely and correctly reported to such appropriate Governmental Authorities all material income and all other amounts and information required to be reported thereon and all such Tax Returns continue to be true, correct and complete in all material respects.
• (b) Except as listed in Schedule 1.1.32 of the Disclosure Schedule, each Subject Subsidiary has duly and timely paid all Taxes, whether or not reported on any Tax Return, including all instalments on account of Taxes for the current year, that are due and payable by it whether or not assessed by the appropriate Governmental Authority and there are no Taxes that would be due if asserted by any Governmental Authority. Except as listed in Schedule 1.1.32 of the Disclosure Schedule, each Subject Subsidiary has established reserves that are reflected on its Books and Records and they will establish such reserves that are adequate for the payment by each Subject Subsidiary of all Taxes that are not yet due and payable (and that will not be due and payable by the Closing Date) and that relate to periods ending on or prior to the Closing Date or after the Closing Date, but only, in this latter situation, for such period up to the Closing Date, and such reserves are, and shall be, at least equal to their respective liability for Taxes. Except as listed in Schedule 1.1.32 of the Disclosure Schedule, no Subject Subsidiary is liable for any Tax at the date hereof, no deficiencies for any Taxes have been asserted in writing or assessed against any Subject Subsidiary which remain unpaid, except for deficiencies which are being contested in good faith.
• (c) All Tax credits claimed by each Subject Subsidiary were claimed in accordance with applicable tax Law and each Subject Subsidiary has satisfied at all times the relevant criteria and conditions entitling it to such Tax credits. All refunds of Tax credits received or receivable by any Subject Subsidiary were claimed in accordance with applicable tax Law and each Subject Subsidiary satisfied at all times the relevant criteria and conditions entitling it to a refund of such Tax credits.
• (d) To the knowledge of the Vendor, no Tax Authority has challenged the income allocation of any Subject Subsidiary and no Subject Subsidiary has received any written claim from any Tax Authority in any jurisdiction in which any such Subject Subsidiary does not file a Tax Return that any Subject Subsidiary is or may be subject to Tax, or otherwise required to file Tax Returns, in that jurisdiction.
• (e) Further to any audits or examinations that might have been conducted on any Subject Subsidiary, no Tax Authority has challenged their respective residency for Tax purposes and there are no valid grounds for such challenge.
• (f) No Subject Subsidiary has had a permanent establishment, as defined in any applicable Tax treaty or convention, or another place of business in a jurisdiction other than Spain, Germany or the United Kingdom.
• (g) No Subject Subsidiary has acquired property or services from, or disposed of property or provided services to, a Person with whom it does not deal at arm's length (within the meaning of applicable tax Law), including any direct or

indirect shareholders, for an amount that is other than the fair market value of such property or services, nor has any Subject Subsidiary been deemed to have done so for purposes of applicable tax Law.

• (h) No Subject Subsidiary has, nor had, any obligation to file on or prior to the Closing Date any Tax Return required to be made, prepared or filed under the applicable Law of any jurisdiction other than its jurisdiction of incorporation in respect of any Taxes and no Subject Subsidiary has any outstanding liability on account of any failure to comply with any such obligation.

• (i) No Subject Subsidiary has requested or entered into any agreement or other arrangement or executed any waiver providing for any extension of time within which (i) to file any Tax Return covering any Taxes for which any Subject Subsidiary is or may be liable; (ii) to file any elections, designations or similar filings relating to Taxes for which any Subject Subsidiary is or may be liable; (iii) any Subject Subsidiary is required to pay or remit any Taxes or amounts on account of Taxes; or (iv) any Governmental Authority may assess or collect Taxes for which any Subject Subsidiary is or may be liable and no notices of determination of a loss from any Tax Authority have been requested by or issued form any Subject Subsidiary. No Subject Subsidiary has any application pending with any Tax Authority requesting permission for any change in accounting method.

• (j) No Subject Subsidiary has requested, received or entered into any advance income tax ruling, private letter ruling, technical advice memoranda, advance pricing agreements or voluntary disclosure agreement with any Tax Authority.

• (k) There are no reassessments of Taxes that have been issued and are outstanding. There are no Claims now pending or Threatened against any Subject Subsidiary in respect of any Tax Return or of any Taxes and there are no matters under discussion, audit, examination, objection or appeal with any Governmental Authority relating to Taxes. More specifically, but without limiting the generality of the foregoing, no Tax Authority is now asserting or threatening to assert against any Subject Subsidiary any deficiency or Claim for additional Taxes and there are no such deficiencies or potential Claims for additional Taxes and there are no requests for information currently outstanding that could affect the Taxes of any Subject Subsidiary. No Subject Subsidiary has knowledge that a Tax Authority has proposed any adjustment or change in accounting method with respect to any Subject Subsidiary.

• (l) With respect to any period for which Tax Returns are not yet required to be filed or for which Taxes are not yet due and payable, each Subject Subsidiary has only incurred liabilities for Taxes in the Ordinary Course.

• (m) No Subject Subsidiary is required to include in income for a period ending on or after the Closing Date (i) items in respect of any change in accounting principles or methods, or (ii) any instalment sale gain, where the inclusion in income would result in a Tax liability in excess of the reserves therefore or any prepaids received on or prior to Closing, and no Subject Subsidiary has claimed, and no Subject Subsidiary will claim, any amount as reserve and if any such amount could be included in the income of any Subject Subsidiary for a period ending on or after the Closing Date.

• (n) There has never been an acquisition of control nor change of control of any Subject Subsidiary for the purposes of applicable tax Law.

• (o) All of the non-capital losses, as defined in applicable tax Law, of each Subject Subsidiary for taxation years ending on or before the Closing Date were incurred in carrying on a business which has not, at any point in time, been discontinued and each such business is still carried on by the relevant Subject Subsidiary.

• (p) All transactions between any Subject Subsidiary and any Person with whom such Subject Subsidiary was not dealing at arm's length (within the meaning of applicable tax Law or any other applicable Law) during a taxation year ending on or before the Closing Date has been effected in accordance with all applicable transfer pricing Laws and regulations, and are supported by contemporaneous transfer pricing documentation that meet the requirements of applicable tax Law.

• (q) Each Subject Subsidiary has duly and timely withheld from any amount paid or credited, or deemed paid or credited, by it to or for the account or benefit of any Person, including any Employees, officers or directors and any nonresident Person, the amount of all Taxes and other deductions required by any Laws to be withheld from any such amount and has duly and timely remitted the same to the appropriate Governmental Authority. Each Subject Subsidiary has remitted all pension plan contributions, employment insurance premiums, employer health Taxes and other Taxes payable by each of them in respect of their Employees and have remitted such amounts to the proper Governmental Authority within the time required by applicable Laws.

• (r) Each Subject Subsidiary required by applicable Law to be registered under applicable valued-added or sales tax Law and is duly registered under such Law. Each Subject Subsidiary has timely collected paid and remitted to the appropriate Governmental Authorities when required by Law to do so, all amounts required to be collected, deemed to have been collected by it or that should have been collected or paid on account of all Taxes with respect to the value-added or sales tax Law.

• (s) All input tax credits or refunds claimed by all members of the Subject Subsidiaries pursuant to applicable Law with respect to the value-added or sales tax Law have been properly and correctly calculated and documented in accordance with the requirements of such Laws and the regulations thereto.

• (t) There is no existing tax allocation or tax sharing agreement that may or will require that any payment be made by or to any Subject Subsidiary on or after the Closing Date.

• (u) Schedule 1.1.32 of the Disclosure Schedule accurately sets out the status of the following tax accounts of each Subject Subsidiary as of the Closing Date: (i) the adjusted cost base of the shares of its Subject Subsidiaries, if any, (ii) the paid-up capital for purposes of applicable tax Law of its issued and outstanding shares (by class and series) and (iii) all the Tax elections in prescribed forms, designations and elections made and filed by each Subject Subsidiary for every taxation years ended on or prior to the Closing Date to the extent that these elections and designations are relevant in any taxation year commencing after the Closing Date.

• (v) None of the Subject Subsidiary owns any property that is a "tax shelter investment" for purposes of applicable tax Law.

• (w) There are no Encumbrances with respect to Taxes, other than Permitted Encumbrances, upon any of the properties or assets, real or personal, immoveable or moveable, tangible or intangible, of any Subject Subsidiary.

• (x) The representations and warranties in this Section 1.1.32 which refer to applicable tax Law or any provision thereof are true and correct with respect to the same or equivalent provisions, if any, of any other provincial or other jurisdiction's Laws relating to Taxes.

• (y) No Subject Subsidiary is nor has been a party to any "reportable transaction" as defined in applicable tax Law.

• (z) The Purchased Shares are not "taxable Canadian property" as defined in applicable tax Law.

• 1.1.33 Related Party Transactions. Schedule 1.1.33 of the Disclosure Schedule sets forth a complete and accurate list (including the name of the parties) of all Contracts between (i) any Subject Subsidiary with any other Subject Subsidiary or the Vendor, (ii) any Subject Subsidiary and any Related Party. Originals of complete and accurate copies (or a detailed summary in the case of any oral agreement) of each such Contract (and, where no originals are available, copies of such Contracts) were delivered to the Purchaser.

• 1.1.34 Employee Matters

  • (a) Schedule 1.1.34 of the Disclosure Schedule contains a complete and accurate list of: (i) all Employees, as well as all consultants, sales representatives, agents or directors employed or engaged by the Subject Subsidiaries showing, for each such Person, the name, the employer, his/her start date, his/her title, any annual vacation entitlements, his/her status (unionized or non-unionized, employee, contractor, as applicable), current annual remuneration and any other entitlement or benefit, and (ii) particulars of all other material terms and conditions of employment or engagement of the Employees (including any rights of any such Employee with respect to any particular contractual entitlement on, or notice of, termination in excess of those to which such Employee would be entitled under applicable Law), and (iii) all Persons to whom offers of employment or engagement under an employment, consultancy or service agreement has been made by any Subject Subsidiary that has not yet been accepted, or which has been accepted but where the employment or engagement has not yet started.
  • (b) Schedule 1.1.34 of the Disclosure Schedule also contains, separately, a complete and accurate list of all written individual employment, management, consulting or agency Contracts, any written employee or human resources personnel policies, handbooks or manuals of any Subject Subsidiary, any change of control agreement, indemnity agreement, agreement as to the length of notice of termination of employment, and any severance, retention or separation Contracts. Complete and accurate copies of such Contracts have been delivered to the Purchaser and complete and accurate copies of policies, handbooks or manuals have been made available to the Purchaser.
  • (c) Schedule 1.1.34 of the Disclosure Schedule also contains, separately, the names of all non-active Employees, the reason they are non-active Employees, whether they are expected to return to work and, if so, when, and the nature of any benefits to which such non-active Employees are entitled from the Subject Subsidiaries;

• (d) Except as set forth in Schedule 1.1.34 of the Disclosure Schedule, no Subject Subsidiary is bound to any employment or service contract (whether written or oral) with any Employee, consultant or other Person which is not terminable on the giving of reasonable notice in accordance with applicable Law, nor are there any management agreements, retention bonuses or employment contracts providing for cash or other compensation or benefits upon the consummation of the transaction contemplated by this Agreement.

• (e) The Subject Subsidiaries are not, nor have they been, a party, either directly or by operation of law, to any Collective Agreement. No trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the Employees by way of certification, interim certification, voluntary recognition, or successor rights, or has applied or threatened to apply to be certified as the bargaining agent of any of the Employees. There are no Threatened or pending union organizing activities involving the Employees.

• (f) Except as set forth in Schedule 1.1.34 of the Disclosure Schedule, each Subject Subsidiary has complied with all applicable employment Contracts, written employee or human resources personnel policies (to the extent they contain enforceable obligations), handbooks or manuals relating to the Subject Subsidiaries (to the extent they contain enforceable obligations), any severance or separation Contracts, Collective Agreements, codes of conduct or practice, customs and practices and all applicable Laws relating to employment matters, including any provision thereof relating to wages, salary or other compensation, pension provisions, the payment of employee benefits including any bonus under the relevant bonus scheme, hours of work or other employment standards, immigration, data protection, occupational health and safety, workers' compensation, labour relations, collective bargaining, human rights, unfair labour practices, employee privacy, pay equity or provisions relating to termination of employment, and there are no payments due thereunder which have not been paid.

• (g) Schedule 1.1.34 of the Disclosure Schedule contains all accruals for unpaid vacation pay or other paid leaves or benefits, premiums for employment insurance, premiums, accrued wages, salaries, bonuses, incentive payments, lieu-time and commissions and employee benefit plan payments and there is no fact that indicates that such accruals are understated. There is no commitment or agreement to increase wages or to modify the terms and conditions of employment of any Employee.

• (h) No Subject Subsidiary has or has any reason to expect any labour problems, and there is no reason to believe that the consummation of the transactions contemplated by this Agreement will result in a disruption in, or change in the quality of, current labour relations. There is no strike or lock-out occurring or Threatened. No Subject Subsidiary has suffered during the past thirty-six (36) months any strike, lock-out, work stoppage, or other labour dispute.

• (i) No liability has been incurred by any Subject Subsidiary for breach of any contract of service or for services or for compensation for wrongful or unfair dismissal or discrimination or for failing to comply with any order for the reinstatement or re-engagement of any employee or for failure to comply with a tribunal or court order, decision, binding recommendation or determination relating to an employee or former employee. No material gratuitous payment has been made or promised by any Subject Subsidiary in connection with the termination or proposed termination of the employment of any present or

former director or employee. There is no person previously employed by any Subject Subsidiary who now has or may have a right to return to work or a right to be re-instated or be re-engaged by any Subject Subsidiary.

1.1.35 Employee Plans

• (a) Schedule 1.1.35 of the Disclosure Schedule lists each and every Employee Plan. Copies of each written Employee Plan, as amended to the date of this Agreement, as well as summary descriptions of the Employee Plans provided to current and former employees of the Subject Subsidiaries, the most recent actuarial reports, annual information reports and investment reports and any Employee Plan financial statements and statements of investment policies and procedures have been provided to or made available to the Purchaser. In the case of each unwritten Employee Plan, a written description thereof that accurately describes all material provisions of that Employee Plan has been provided to or made available to the Purchaser. There have been no promised improvements, increases or changes to the benefits provided under any Employee Plan.

• (b) No Subject Subsidiary has a pension plan, registered or unregistered, under which the employees of the Subject Subsidiary accrue pension benefits and under which benefits are provided to former employees of the Subject Subsidiaries.

• (c) Each Employee Plan has been administered in compliance with applicable Laws.

• (d) Where applicable Laws require an Employee Plan to be funded or insured, each such Employee Plan is fully funded or fully insured on both an on going and solvency basis.

• (e) There is no investigation, examination, Claim or legal proceeding (other than routine Claims for benefits) pending or threatened involving any Employee Plan, and no facts exist which presently or after notice or lapse of time or both could reasonably be expected to give rise to any such investigation, examination, Claim or legal proceeding (other than routine Claims for benefits).

• (f) No event has occurred regarding any Employee Plan which would entitle any regulator to require the wind up or termination of any Employee Plan, in whole or in part.

• (g) All employee data necessary to administer each Employee Plan is in the possession or control of the Subject Subsidiaries, and is complete, correct and in a form which is sufficient for the lawful administration of the Employee Plans.

• (h) None of the Employee Plans provides post-retirement benefits.

• (i) None of the Employee Plans requires or permits a retroactive increase in premiums or payments, and the level of insurance reserves, if any, under any insured or self-insured Employee Plan is reasonable and sufficient to provide for all incurred but unreported claims.

• (j) Neither the execution of this Agreement nor the completion of any of the transactions contemplated by this Agreement will:

• (i) result in any payment (including bonus, golden parachute, retirement, severance, unemployment compensation, or other benefit or enhanced benefit) becoming payable under any Employee Plan;

• (ii) increase any benefits otherwise payable under any Employee Plan;

• (iii) entitle any employee to any job security or similar benefit or any enhanced benefits; or

• (iv) result in the acceleration of the time of payment or vesting of any benefits otherwise payable under any Employee Plan, or result in any Employee Plan becoming terminable other than at the sole and unfettered discretion of the Subject Subsidiaries.

• 1.1.36 Occupational Health and Safety. The Subject Subsidiaries have provided the Purchaser with all inspection reports under any occupational health and safety Laws relating to the Subject Subsidiaries. There are no outstanding inspection Orders nor any pending or threatened charges made under any occupational health and safety Laws relating to the Subject Subsidiaries, or the Business. There have been no fatal or critical accidents within the last three years which might lead to charges involving the Subject Subsidiaries under occupational health and safety Laws. The Subject Subsidiaries have complied in all respects with any Orders issued under occupational health and safety Laws. There are no appeals of any Orders under occupational health and safety Laws relating to the Subject Subsidiaries which are currently outstanding.

• 1.1.37 Workers' Compensation. There are no notices of assessment, provisional assessment, reassessment, supplementary assessment, penalty assessment or increased assessment (collectively, "Assessments") or any other communications related thereto which the Subject Subsidiaries have received from any workers' compensation or workplace safety and insurance board or similar authorities in any jurisdictions where the Business is carried on. There are no Assessments which have not been paid in full and there are no facts or circumstances which may result in an increase in liability to the Subject Subsidiaries from any applicable workers' compensation or workplace safety and insurance legislation, regulations or rules after the Closing. The Subject Subsidiaries' accident cost experience relating to the Business is such that there are not pending or possible assessments and there are no claims or potential claims which may adversely affect the Subject Subsidiaries' accident cost experience.

• 1.1.38 Computer Systems and Privacy and Data Security.

  • (a) Each Subject Subsidiary takes commercially reasonable steps to ensure that the Computer Systems are secure and free of any bugs, disabling codes, spyware, Trojan horses, worms or Malicious Code that would have a material impact on the operation or use of the Computer Systems.
  • (b) Each Subject Subsidiary has an appropriate data back-up system, written business continuity plan, and written disaster recovery plan in respect of the Computer Systems.
  • (c) Each Subject Subsidiary owns, leases, or otherwise has rights to access or use the Computer Systems as necessary for the operation of the Business as currently conducted or proposed to be conducted. The capability, functionality and performance of each Computer System, and the Computer Systems as a whole, are sufficient for the Business as it is conducted as of the date of this Agreement. The Computer Systems function, operate, process and compute,

in all material respects, in accordance with all applicable Laws, industry standards and trade practices, and with their documentation and functional specifications. The Computer Systems have not materially malfunctioned or failed so as to result in material losses or claims in connection with the operation of the Business.

• (d) All Personal Data collected, used, disclosed, stored or otherwise processed by or on behalf of the Subject Subsidiaries:
  • (i) has been collected, used, disclosed, stored and otherwise processed in accordance with Data Protection Laws, in all material respects, and with the requisite consent or authorization of each Individual to which such Personal Data relates (if such consent was required under Data Protection Laws) or in circumstances in which consent may, under Data Protection Laws, be lawfully implied; and
  • (ii) has been used only for the purposes for which the Personal Data was initially collected or for a subsequent reasonable purpose for which consent in the lawfully prescribed form was subsequently obtained or as otherwise permitted under Data Protection Laws.
• (e) Each Subject Subsidiary is, and has been, in compliance, in all material respects, with (i) all Data Protection Laws; (ii) all contractual commitments the Subject Subsidiaries have entered into with respect to privacy, Personal Data, data security and information handling; (iii) each Subject Subsidiary's own policies, procedures, notices and communications to third parties related to privacy, Personal Data, data security and information handling; (iv) each Subject Subsidiary's own policies and procedures related to sending or causing or permitting to be sent to an electronic address a commercial electronic message; (v) rules of self-regulatory organizations; and (vi) industry standards, guidelines, and best practices (collectively, the "Privacy Requirements").
• (f) Each Subject Subsidiary has at all times implemented and maintains all commercially reasonable and, at a minimum, industry standard security measures, plans, procedures, controls, and programs to: (i) identify and address internal and external risks to the privacy and security of Personal Data in their possession or control; (ii) implement, monitor, and improve adequate and effective organizational, administrative, technical and physical safeguards to ensure that all Personal Data that it collects, uses, stores, communicates to third parties or otherwise processes, or that is otherwise under its control is protected against Loss, theft and unauthorized access, disclosure, copying, use or modification; and (iii) provide notifications in compliance with Data Protection Laws in the case of any Security Incident. Such safeguards are appropriate to the sensitivity of the Personal Data collected, used, disclosed, stored and otherwise processed by or on behalf of the Subject Subsidiaries, as well as the amount, distribution, format and method of storage of such Personal Data.
• (g) Each Subject Subsidiary contractually requires all third parties, including vendors, processors, and other Individuals providing services to the Subject Subsidiaries that, in each case, have access to Personal Data from or on behalf of the Subject Subsidiaries, to: (i) comply with all Data Protection Laws; (ii) take reasonable steps designed to ensure that all Personal Data in such third parties' possession or control is protected against damage and loss, and

against unauthorized access, acquisition, use, modification, disclosure or other misuse; and (iii) restrict use of, or access to, Personal Data solely to those authorized or required under the servicing, outsourcing or other arrangement.

• (h) No Subject Subsidiary has received (i) any subpoenas, demands, or other written notices from any Governmental Authority investigating, inquiring into, or otherwise relating to any actual or potential violation of any Data Protection Law; (ii) any Claim or complaint from any Person regarding any Subject Subsidiary's collection, use, disclosure, protection or other processing of Personal Data or compliance with the Privacy Requirements or Data Protection Laws. There is no reasonable basis for any such subpoena, demand, notice or Claim.

• (i) There have not been any Security Incidents related to information shared through the Business, including any Personal Data collected, used, disclosed, stored or otherwise processed by any Subject Subsidiary or any vendors, processors, or other third parties acting for or on behalf of any Subject Subsidiary. At no time has any Subject Subsidiary notified, and there have been no facts or circumstances that would require any Subject Subsidiary to notify, any Governmental Authority or other Individual of any Security Incident.

• (j) Each Subject Subsidiary provides regular training to its employees on privacy and data security and maintains documentation of such training.

• (k) Each Subject Subsidiary has regularly (and at least annually) performed a security risk assessment and a privacy impact assessment and obtained an independent vulnerability assessment performed by a recognized third-party audit firm, in each case to the extent required by Data Protection Laws or industry standards. Each Subject Subsidiary has used reasonable efforts to address and remediate all critical or high-risk threats and deficiencies identified in each such assessment.

• (l) At all times, each Subject Subsidiary has maintained a cyber-insurance policy that is adequate and suitable for the nature and volume of Personal Data processed by or on behalf of each Subject Subsidiary in the conduct of its business and is sufficient for compliance with all Data Protection Laws and Privacy Requirements to which each Subject Subsidiary is a party or by which it is bound.

• (m) The consummation of the transactions contemplated by this Agreement will not (i) conflict with or result in a violation of any of the Privacy Requirements or Data Protection Laws; or (ii) require the Subject Subsidiaries to provide any notice to, or seek any consent from, any Person as it relates to Personal Data, except for any notice requirement under applicable Law. Except for any restrictions set forth in Data Protection Laws or the Subject Subsidiaries' privacy policies or contracts, complete and accurate copies of which have been disclosed to Purchaser, there shall be no restriction on the use by Purchaser of any Personal Data collected by or on behalf of the Subject Subsidiaries prior to the date of this Agreement. The manner in which the Personal Data has been obtained by the Subject Subsidiaries complies with the Privacy Requirements.

• 1.1.39 Real Property Leases and Real Properties

  • (a) No Subject Subsidiary owns or has ever owned any land or buildings.

• (b) Schedule 1.1.39 of the Disclosure Schedule contains a complete and accurate list of all of the Real Property Leases setting out, in respect of each Real Property Lease, the identity of the lessor and of the lessee, a description of the Leased Real Property (by municipal address), the term of the Real Property Lease (specifying the current expiration date), the space occupied, any security deposit, any rights of renewal or termination and the terms thereof, any "continuous operation" requirements and any restrictions on use of any leased property or on assignment or change of control of the lessee. Complete and accurate copies of the Real Property Leases including all amendments, modifications, notices or memoranda of lease, all estoppel certificates or subordinations, non-disturbance and attornment agreements, if any, and other documents related thereto have been delivered to the Purchaser.

• (c) All rental to be paid and other payments required to be made by any Subject Subsidiary pursuant to the Real Property Leases have been duly paid or made to date, and no Subject Subsidiary is otherwise in default in meeting its obligations under any of the Real Property Leases. The Subject Subsidiaries are not party to any lease or sub-lease as lessor or sub-lessor. None of the lessors under any of the Real Property Leases is in default in meeting any of its obligations under any of the Real Property Leases. Except as set out in Schedule 1.1.39 of the Disclosure Schedule, none of the other parties to the Real Property Leases is in default in meeting any of its obligations under its respective Real Property Leases. No situation exists which, by reason of the passage of time or the giving of notice, or both, would constitute a default by any party to any of the Real Property Leases and no party to any Real Property Lease is claiming any such default or taking any action purportedly based upon such default.

• (d) Each of the Real Property Leases covers the entire estate it purports to cover and following the Closing, for Real Property Leases pursuant to which any Subject Subsidiary is a lessee, will continue to entitle such Subject Subsidiary to the use, occupancy and possession of the leased properties specified in the Real Property Leases for the purposes for which such property is currently used.

• (e) No Subject Subsidiary has waived, or omitted to take any action in respect of, any of its rights under any Real Property Lease.

• (f) No Subject Subsidiary is aware of any non-disturbance agreements, lessor forbearance agreements, lessor waiver agreements or similar agreements affecting any of the Real Property Leases.

• (g) The Real Properties constitute all of the real and immovable property interests held for use, or used, by the Subject Subsidiaries.

• (h) The heating, ventilating, plumbing, drainage, electrical and air conditioning systems used in the Real Property are in working order and free of material defect, except for ordinary, routine maintenance and repairs.

• (i) Complete and accurate copies of all Real Property Leases have been provided to the Purchaser.

1.1.40 Intellectual Property Rights.

• (a) Schedule 1.1.40 of the Disclosure Schedule contains a complete and accurate list of (i) all registered Intellectual Property of each Subject Subsidiary; (ii) all pending applications for Intellectual Property; (iii) all domain names and social media identifiers that are owned in connection with the business of the Subject Subsidiaries; (iv) all trade-marks and trade names used and owned by the Subject Subsidiaries that have not been registered or applied for (indicating for each trade-mark or trade name the relevant products, services and activities); (v) all Software owned by the Subject Subsidiaries; (vi) any other Intellectual Property owned by the Subject Subsidiaries that is necessary and important for its activities, products and services as they stand at the date of Closing (hereinafter collectively the "Key Intellectual Property"). The Subject Subsidiaries are the exclusive owners of each item of Key Intellectual Property, free and clear of all Encumbrances.
• (b) Each item of registered or applied for Intellectual Property listed in Schedule 1.1.40 of the Disclosure Schedule: (i) is validly existing, subsisting and in full force and effect, is not subject to cancellation for failure to use or unauthorized use by third parties, (ii) was validly registered or issued or, in the case of an application, was applied for in compliance with applicable legislation, (iii)was renewed or extended to the full extent permitted by applicable law, (iv) will be valid, subsisting and in full force and effect on identical terms immediately following Closing, and (v) is not subject to any maintenance fees or Taxes or actions falling due within ninety (90) days following the Closing, save as specifically set forth in Schedule 1.1.40 of the Disclosure Schedule. Nothing has been done or not been done as a result of which any Intellectual Property has ceased or might cease to be valid, subsisting and in full force and effect.
• (c) There are no, and there is no basis for, any Claims of adverse ownership, invalidity, absence of a right to register or apply for or other opposition to or conflict with any of the Intellectual Property of the Subject Subsidiaries.
• (d) No third party (i) infringes, nor has infringed in the three (3) year period prior to Closing, any Intellectual Property of the Subject Subsidiaries or (ii) is committing, nor has committed in the three (3) year period prior to Closing, any misappropriation, passing off or actionable illegal acts in connection with the Intellectual Property of the Subject Subsidiaries.
• (e) Except as listed in Schedule 1.1.40 of the Disclosure Schedule, the activities, products and services of the Subject Subsidiaries: (i) have not infringed, do not infringe and are not likely to infringe the Intellectual Property of any third party; (ii) have not constituted, do not constitute and are not likely to constitute any breach of confidence, passing off or actionable act of unfair competition or other illegal acts in connection with the Intellectual Property of a third party; and (iii) have not given and do not give rise to any obligation to pay any royalty, fee, compensation or any other sum whatsoever in connection with the Intellectual Property of a third party.
• (f) (i) No other Person has the right to use any Intellectual Property owned by the Subject Subsidiaries and (ii) no Subject Subsidiary has granted any license or other rights to any other Person with respect to its Intellectual Property.
• (g) Each Subject Subsidiary has taken all commercially reasonable steps (including measures to protect secrecy and confidentiality) to protect its

respective right, title and interest in its Intellectual Property, including, without limitation, by registering Intellectual Property, by contractual means, by physical means and by electronic means. All Employees and Representatives of the Subject Subsidiaries who have had access to confidential or proprietary information relating to any Subject Subsidiary have a legal obligation of confidentiality to such Subject Subsidiary with respect to such information. There has been no unauthorized disclosure of such Intellectual Property made in a manner that would prevent any Subject Subsidiary or a successor in interest from obtaining a right in respect of any such Intellectual Property that would otherwise be susceptible to obtain.

• (h) All of the Intellectual Property developed by the Subject Subsidiaries or on their behalf is and has been developed by Employees or independent contractors of the Subject Subsidiaries during the time they were employed or engaged by the Subject Subsidiaries, in each case without violation or contravention of any rights of any former employer or customer. Subject to and in compliance with applicable Laws, each current and former Employee and independent contractor of the Subject Subsidiaries, has assigned to the applicable Subject Subsidiary or a member thereof all Intellectual Property conceived or reduced to practice during the course of such Employee's and independent contractor's employment or engagement with the Subject Subsidiaries and has waived (or has obtained the waiver of) all non-assignable rights (including moral rights) therein. A Subject Subsidiary has in its possession all tools, specifications and documentation required in order to market the Intellectual Property developed by the Subject Subsidiaries or on their behalf. Subject to and in compliance with applicable Laws, no current or former officer, Employee or independent contractor of any Subject Subsidiary owns or has claimed an interest in any of the Intellectual Property of the Subject Subsidiaries, nor has any right to a royalty or other consideration as a result of its marketing, licensing or assignment.
• (i) No Governmental Authority has funded or contributed to the development of Intellectual Property of any Subject Subsidiary so as to grant this authority or institution a right of ownership or a property interest in this Intellectual Property or a right to control, limit or require any payment in connection with the exercise of the activities of the Subject Subsidiaries or the assignment of the Intellectual Property of the Subject Subsidiaries.
• (j) The activities, products and services of the Subject Subsidiaries: (i) have not infringed, do not infringe and are not likely to infringe the Intellectual Property of any third party; (ii) have not constituted, do not constitute and are not likely to constitute any breach of confidence, passing off or actionable act of unfair competition or other illegal acts in connection with the Intellectual Property of a third party; and (iii) have not given and do not give rise to any obligation to pay any royalty, fee, compensation or any other sum whatsoever in connection with the Intellectual Property of a third party.
• (i) The Subject Subsidiaries have the full right and authority to use the Computer Systems (either as owner or licensee of each element of the Computer Systems) and all such use is within the scope of such right and authority. The Software owned by the Subject Subsidiaries does not contain, in whole or in part, any open source, public source or freeware software or any software which is subject to any Contract, agreement or understanding that would oblige the Subject Subsidiaries to grant rights in such software to any other Person or to assign or license to any other Person any rights in such software or derivatives thereof. No Person is in possession, or has any right to possess

(including through escrow or through the effect of any open source license), the source code of the Software.

• 1.1.41 Insurance.
  • (a) Each Subject Subsidiary maintains such policies of insurance, issued by reputable insurers, as is appropriate adequate and sufficient for the conduct of business, in such amounts and covering such risks and with such thresholds as are generally maintained by like businesses.
  • (b) Schedule 1.1.41 of the Disclosure Schedule contains a complete and accurate list of all fidelity bonds and insurance policies currently maintained by or for any Subject Subsidiary, as well as all self-insurance arrangements (including reserves established thereunder) and includes a brief description of each such policy or arrangement, including details of the aggregate coverage amount, type of insurance (including whether such coverage is on a per occurrence or claims-made basis, where applicable), annual premium amount, expiration date and applicable thresholds under each such policy or arrangement. Such policies and arrangements, including the coverage thereunder: (i) are in full force and effect; (ii) are sufficient for compliance with all requirements of Law and all agreements to which any Subject Subsidiary is a party, and (iii) will not in any way be affected by reason of the consummation of the transactions contemplated by this Agreement. Complete and accurate copies of all such policies and arrangements have been delivered to the Purchaser.
  • (c) No Subject Subsidiary is in default under any provision of any such policy or arrangement and has not received notice of cancellation or non-renewal of any such policy or arrangement, and no misstatement or misrepresentation has been made by any Subject Subsidiary in any application for any policy of insurance. There is no Claim by any Subject Subsidiary pending under any of such policies or arrangements as to which coverage has been questioned, denied or disputed by the underwriters or carriers of such policies and there is no basis for denial of any claim under any such policy. All claims, occurrences, litigation and circumstances that could lead to a claim that would be covered by insurance policies of the Subject Subsidiaries have been properly reported to and accepted by the applicable insurer.
  • (d) Except as listed in Schedule 1.1.41 of the Disclosure Schedule, there are no state of facts, or of the occurrence of any event, which the Subject Subsidiaries are aware or have reason to believe might reasonably result in a material increase in insurance premiums of any Subject Subsidiary. Schedule 1.1.41 of the Disclosure Schedule sets forth any amendments of a material nature to the coverage provided by the insurance policies of any Subject Subsidiary during the past five (5) years. Except as set out in the Schedule 1.1.41 of the Disclosure Schedule, no Subject Subsidiary has received any notice from or on behalf of any insurance carrier issuing such policies that any policy will be amended or that any modification of any of the methods of doing business by any Subject Subsidiary, or any assets thereof, will be required or suggested.
• 1.1.42 No Broker. The Subject Subsidiaries do not have any liability of any kind to any broker, intermediary, agent or any similar Person for or on account of the transactions contemplated herein.
• 1.1.43 Material Facts Disclosed. No representation or warranty in this Agreement or in any Closing Document contains any untrue statement of a material fact and the representations and warranties contained in this Agreement and in any Closing

Document do not omit to state any material fact necessary to make any of the representations or warranties contained herein not misleading to a prospective purchaser of the Purchased Shares seeking full information as to the Purchased Shares, the Subject Subsidiaries, the Business and their assets. Without limiting the foregoing, the Subject Subsidiaries are not aware of any change, event or occurrence that has taken place or is pending that causes, or in the future could cause, a Material Adverse Change, or which could materially increase the costs incurred in operating the Business subsequent to the Closing Date (including any pending or present change in any applicable Law or other requirement, including the obtaining or maintenance of Permits or approvals).

SCHEDULE 3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER

Representations in respect of the Purchaser

1.2.1 Organization. The Purchaser has been duly incorporated or otherwise formed, is organized and validly subsisting and in good standing under the Laws of its jurisdiction of incorporation or formation. The Purchaser has full corporate or legal power and authority to own and lease its properties and carry on its businesses as currently owned and carried on.

1.2.2 Authority and No Violation

• (a) The Purchaser has all necessary power, capacity and authority to execute this Agreement and each Closing Document to which it is a party and to perform its obligations hereunder and thereunder. The execution of this Agreement by the Purchaser and of each Closing Document to which it is a party and the consummation by it of the transactions contemplated by this Agreement and each Closing Document to which it is a party have been duly authorized by the Governing Body of the Purchaser.
• (b) This Agreement has been and each Closing Document to which it is a party will, on Closing, have been duly executed by the Purchaser and this Agreement constitutes and each Closing Document to which the Purchaser is a party will, at Closing, constitute a valid and binding obligations, enforceable against it in accordance with their terms, subject to bankruptcy, insolvency and other similar Laws affecting creditors' rights generally.
• (c) The approval of this Agreement and each Closing Document to which it is a party, the execution by the Purchaser of this Agreement and each Closing Document to which it is a party and the performance by the Purchaser of its obligations hereunder and thereunder and the completion of the transactions contemplated herein and thereby, will not result in a violation of, default under or breach of, require any consent to be obtained under or give rise to any termination rights by a third party (with or without the giving of notice or lapse of time or both), payment obligation or rights of a third party under any provision of or the acceleration of any obligation under:
  • (i) its Constating Records, or
  • (ii) any Laws.
• 1.2.3 Investment Canada Act. The Purchaser is a Canadian within the meaning of the Investment Canada Act.
• 1.2.4 Competition Act. The Purchaser and its Affiliates have assets in Canada with an aggregate value of less than $92,000,000, and annual gross revenues from sales in, from or into Canada with an aggregate value of less than $92,000,000, in each case as determined in accordance with the Competition Act.
• 1.2.5 Approvals and Consents. Other than the Pharmadrug Regulatory Approval, no consent, approval, notice, Order, authorization registration, declaration, filing, submission of information, waiver, sanction, license, exemption or Permit is required to be obtained by the Purchaser from any Governmental Authority or Person or

pursuant to any Law in connection with the execution and delivery of this Agreement or any Closing Documents to which it is a party or the consummation by the Purchaser of the transactions contemplated hereby or thereby.

SCHEDULE 6.3

FIRST CLOSING DELIVERABLES AND ACTION ITEMS

Khiron Spain

On the First Closing Date, at the applicable time and Spanish notary's office, as set by the Purchaser, the Vendor and the Purchaser shall meet and deliver or carry out, or cause to be delivered or carried out, the following documents and actions:

• (i) The Purchaser shall furnish the Vendor and the Spanish notary with the original powers of attorney duly executed and satisfactory to the Vendor, its counsel and the Spanish notary, necessary to execute and deliver all documents, perform all actions and comply with all obligations set out in this Schedule and in Exhibit F.

• (ii) The Vendor shall furnish the Purchaser and the Spanish notary with the original powers of attorney duly executed and satisfactory to the Purchaser, its counsel and the Spanish notary, necessary to execute and deliver all documents, perform all actions and comply with all obligations set out in this Schedule and in Exhibit F.

• (iii) The Vendor shall furnish the Spanish notary with a certificate issued by the management body of Khiron Spain stating that (a) the Vendor owns all of the issued and outstanding shares in the capital of Khiron Spain, (b) all requirements established in the applicable law and in Khiron Spain's bylaws for the sale and transfer of all of the issued and outstanding shares in the capital of Khiron Spain have been met, and (c) all of the issued and outstanding shares in the capital of Khiron Spain are free of Encumbrances.

• (iv) The Purchaser and the Vendor shall execute the Share Transfer Form/Procedure attached to the Agreement as Exhibit F before the Spanish notary.

• (v) The Vendor shall furnish the Spanish notary with the title to all of the issued and outstanding shares in the capital of Khiron Spain so that the Spanish notary records the transfer in such title.

• (vi) The Vendor shall furnish the Spanish notary with a foreign divestment declaration form D1B concerning the sale of all of the issued and outstanding shares in the capital of Khiron Spain by the Vendor.

• (vii) The Purchaser shall furnish the Spanish notary with a foreign investment declaration form D1A concerning the acquisition of all of the issued and outstanding shares in the capital of Khiron Spain by the Purchaser.

• (viii) The Vendor shall cause Khiron Spain to record the transfer of all of the issued and outstanding shares in the capital of Khiron Spain to the Purchaser in its shares' ledger.

• (ix) The Purchaser, as new sole shareholder of Khiron Spain, shall (a) acknowledge the resignation tendered by the director or officer designated by the Purchaser, in its sole discretion, of Khiron Spain, (b) change the structure of Khiron Spain's management body to a sole director, and (c) appoint a new sole director of Khiron Spain.

• (x) The Purchaser shall furnish the Spanish notary with a certificate of the corporate resolutions referred to above.

• (xi) The Purchaser shall furnish the Spanish notary with an acceptance letter signed by the now sole director of Khiron Spain (signature to be authenticated by a notary) and effective on the First Closing Date.

• (xii) The Purchaser shall cause Khiron Spain to declare the new ultimate beneficial owner (UBO) by executing a public deed before the Spanish notary (acta de titularidad real).

• (xiii) The Purchaser shall cause Khiron Spain to declare that the Purchaser became its sole shareholder by executing a public deed before the Spanish notary.

• (xiv) The Purchaser shall cause Khiron Spain to notarize the corporate resolutions referred to above before the Spanish notary.

• (xv) The Vendor shall furnish the Purchaser with the waivers of the relevant counterparties under the Material Agreements and with other required third-party consents in respect of the change of control arising at the First Closing and satisfactory to the Purchaser and its counsel.

SCHEDULE 9.8

ADDRESSES

Addressed to	With a copy to
Vendor	Gowlings WLG (Canada) LLP
2300 -	100 King St W Suite 1600,
500 Burrard Street	Toronto, Ontario, M5X 1G5
Vancouver, British Columbia, V6C 2B5	Attention: Peter Simeon
Attention: Alvaro Torres	E-mail:
Email: [redacted]	[redacted]
Purchaser	Dentons Canada LLP
P.O. Box 8 Caledon East	1500-850 2nd St SW
Caledon, Ontario, L7C 3L8	Calgary, Alberta, T2P 0R8
Attention: Michael Steele	Attention: James O'Sullivan
Email:	E-mail:
[redacted]	[redacted]