EXHIBIT 10.1
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
ASPREVA PHARMACEUTICALS CORPORATION
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TABLE OF CONTENTS
1. INTERPRETATION................................................................................ 2
1.1 Definitions.......................................................................... 2
1.2 Other Words and Phrases.............................................................. 8
1.3 Currency............................................................................. 9
1.4 Number and Gender.................................................................... 9
1.5 Headings............................................................................. 9
1.6 Cross References..................................................................... 9
1.7 Accounting Terms..................................................................... 9
1.8 Schedules............................................................................ 9
2. SCOPE, EFFECT AND PARTIES..................................................................... 9
2.1 Shareholders to Act in Support of Terms.............................................. 9
2.2 Removal of Directors who Fail to Act in accordance with Terms........................ 9
2.3 Directors Acknowledgement............................................................ 10
2.4 Terms to Prevail over Constating Documents........................................... 10
2.5 Agreement to Cover at Least 80% of Votes............................................. 10
2.6 Application.......................................................................... 10
2.7 Ceasing to be a Party................................................................ 10
3. CONDUCT OF THE AFFAIRS OF THE CORPORATION..................................................... 10
3.1 Composition of the Board of Directors and Certain Committees......................... 10
3.2 Meetings of the Board of Directors................................................... 11
3.3 Quorum for Board Meetings............................................................ 12
3.4 Specific Major Matters Requiring Board and Shareholder Approval...................... 12
3.5 Board Approval of Major Matters undertaken by Subsidiaries........................... 14
3.6 Remuneration to Directors............................................................ 14
3.7 Observers............................................................................ 14
3.8 Indemnity for Directors and Others................................................... 15
3.9 Protection of Proprietary Rights..................................................... 15
3.10 Shareholders' Meetings............................................................... 15
3.11 Quorum for Shareholder Meetings...................................................... 16
3.12 Deposit of Proxies................................................................... 16
3.13 Accounting Systems................................................................... 16
3.14 Amendment to Articles................................................................ 16
3.15 Amendment to Bylaws.................................................................. 16
4. INFORMATION RIGHTS............................................................................ 17
4.1 Reporting Requirements of Additional Investors and Series A Investors................ 17
4.2 Reporting Requirements of Series A Shareholders...................................... 17
5. INSURANCE POLICIES............................................................................ 17
5.1 Key Person Insurance................................................................. 17
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5.2 General Insurance.................................................................... 17
5.3 Directors' and Officers' Liability Insurance......................................... 18
5.4 Limitation on Insurance Encumbrances................................................. 18
6. ISSUE OF ADDITIONAL EQUITY SECURITIES......................................................... 18
6.1 Treasury Offerings................................................................... 18
6.2 Offerings to be made Pro-Rata on a Fully Converted Basis............................. 18
6.3 Permitted Non-Pro Rata Offerings..................................................... 20
6.4 Waiver of Rights..................................................................... 20
6.5 Execute Agreement.................................................................... 20
7. SHARE TRANSFERS............................................................................... 21
7.1 Transfers Restricted................................................................. 21
7.2 Permitted Transfers.................................................................. 21
7.3 Right of First Offer in favour of Corporation and all Shareholders................... 22
7.4 Mandatory Disposition for Founders................................................... 24
7.5 Right of First Offer of Founder Shares in favour of Series A Investors............... 27
7.6 Co-Sale Rights on Change of Control: Shareholder Sales............................... 30
7.7 Co-Sale Rights on Change of Control: Shareholder Purchase............................ 32
7.8 Drag Along Rights.................................................................... 34
7.9 Involuntary Transfers on Bankruptcy.................................................. 34
7.10 Recognition of Transfers............................................................. 35
7.11 Endorsement on Share Certificates.................................................... 35
7.12 Waiver of Rights..................................................................... 35
7.13 Transfer of Agreement Rights......................................................... 36
7.14 No Pledging of Shares................................................................ 36
8. AMENDMENT AND TERMINATION..................................................................... 36
8.1 Amendments........................................................................... 36
8.2 Termination Events................................................................... 36
8.3 Surviving Obligations................................................................ 36
8.4 Determination........................................................................ 37
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS..................................... 37
9.1 Representations, Warranties and Covenants............................................ 37
10. CONFIDENTIALITY............................................................................... 38
10.1 Definition of Confidential Information............................................... 38
10.2 Obligation of Confidentiality........................................................ 39
10.3 Permitted Disclosures for Directors and Officers..................................... 39
10.4 Obligations Survive.................................................................. 40
10.5 Remedies............................................................................. 40
11. TAX........................................................................................... 40
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12. GENERAL PROVISIONS............................................................................ 42
12.1 No Partnership....................................................................... 42
12.2 Time of the Essence.................................................................. 42
12.3 Further Acts......................................................................... 42
12.4 Parties of Interest.................................................................. 42
12.5 Share Reorganizations................................................................ 42
12.6 Governing Law........................................................................ 43
12.7 Entire Agreement..................................................................... 43
12.8 Notices.............................................................................. 43
12.9 Waiver............................................................................... 44
12.10 Severability......................................................................... 44
12.11 Arbitration.......................................................................... 44
12.12 Successors and Assigns............................................................... 44
12.13 Independent Legal Advice............................................................. 44
12.14 Counterparts......................................................................... 45
12.15 Amending and Restating of Original Shareholders' Agreement........................... 45
12.16 Aspreva Certificate.................................................................. 45
12.17 Expenses............................................................................. 45
12.18 Market Standoff Agreement............................................................ 46
SCHEDULE A LIST OF SHAREHOLDERS
SCHEDULE B CONSENT AND ACKNOWLEDGEMENT
SCHEDULE C SERIES A INVESTORS
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
THIS AGREEMENT dated for reference March 5, 2004
AMONG:
ASPREVA PHARMACEUTICALS CORPORATION, a corporation incorporated
under the laws of Canada and having its head office at Suite 1201,
4464 Markham Street, Victoria, B.C., Canada, V8Z 7X8, Facsimile No.
250.744.2498 (the "CORPORATION")
AND:
THE PARTIES LISTED IN SCHEDULE A HERETO (each a "SHAREHOLDER" and
together, the "SHAREHOLDERS")
AND:
OTHER SHAREHOLDERS WHO FROM TIME TO TIME AGREE TO BE BOUND
WHEREAS:
A. The Corporation and the Series A Investors (as defined herein) have
entered into an Investment Agreement (the "Investment Agreement") of even
date herewith pursuant to which the Corporation has agreed to sell to the
Series A Investors and the Series A Investors have agreed to purchase from
the Corporation shares of the Preferred shares, Series A in the capital of
the Corporation (the "Series A Preferred Shares").
B. A condition to the Series A Investors' obligations under the Investment
Agreement is that the Corporation, the Series A Investors, and the other
parties hereto enter into this Agreement to establish certain rights and
obligations in respect of the conduct of the affairs of the Corporation,
the holding and sale of their respective shares, and certain other
matters.
C. Concurrently with the closing of the transactions contemplated by the
Investment Agreement, and in complete fulfillment of the obligations of
the Corporation under the Notes, the holders of the Notes shall receive
that number of Common Shares set forth opposite each such holder's name in
Schedule A hereto.
D. The parties to this Agreement other than the Corporation are the legal and
beneficial owners of shares in the capital of the Corporation in the
proportions set out in Schedule A attached hereto.
E. The parties wish to amend and restate in its entirety the Original
Shareholders' Agreement (as defined herein) and enter into this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises,
the mutual covenants and agreements set forth in this Agreement and other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by each of the parties), the parties hereby agree as follows:
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1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless otherwise provided:
(a) "67% SHAREHOLDER APPROVAL" means the approval, whether given in
writing or at a meeting of shareholders, of representatives of the
Shareholders constituting not less than 67% of the Common Shares
collectively owned by the Shareholders on a Fully Converted Basis
(it being understood that for the purposes of this test, all shares
held by Aspreva Funding shall be deemed held by the Series A
Investors (who shall be entitled to give approval with respect
thereto) in proportion to their respective proportionate equity
ownership interests in Aspreva Funding);
(b) "80% & 5% COVERAGE" has the meaning given to it in Section 2.5;
(c) "ADDITIONAL INVESTORS" means any party to this Agreement other than
a Founder, the Corporation or a Series A Shareholder;
(d) "ADDITIONAL VENDOR" has the meaning given to it in Section 7.6(c) or
Section 7.7(c), as applicable;
(e) "AFFILIATE" means an affiliate as defined in the Bank Act;
(f) "AGREEMENT" means this shareholders' agreement, together with any
amendments to or replacements of this shareholders' agreement;
(g) "AMENDING INSTRUMENT" has the meaning given to it in Section 8.1;
(h) "ASPREVA FUNDING" means Aspreva Investors Funding SRL, a society
with restricted liability organized under the laws of Barbados;
(i) "ASPREVA HOLDINGS" means Aspreva Investors Holdings SRL, a society
with restricted liability organized under the laws of Barbados;
(j) "ASSOCIATE" has the same meaning as has been designated to that term
in the CBCA;
(k) "BANK ACT" means the Bank Act (Canada), S.C. 1991, c. 46, as
amended;
(l) "BOARD" means the board of Directors of the Corporation;
(m) "BUSINESS DAY" means any day of the year other than a Saturday,
Sunday or any day on which banks are required to close in Vancouver,
British Columbia;
(n) "BUYER" has the meaning given to it in Section 7.7(b);
(o) "CANADIAN GAAP" means those accounting principles which are
recognized as being generally accepted in Canada from time to time
as set forth in the Handbook published by The Canadian Institute of
Chartered Accountants (as revised from time to time);
(p) "CBCA" means the Canada Business Corporations Act, R.S.C. 1985 c.
C-44, as amended from time to time, and every statute that may be
substituted therefor, and in
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the case of any such amendment or substitution, any reference in
this Agreement to the CBCA shall be read as referring to the amended
or substituted provisions therefor;
(q) "CLOSING" means the closing of the subscription, purchase and
issuance of Series A Preferred Shares to the Series A Investors
pursuant to the Investment Agreement;
(r) "COMMON SHARES" means the shares of any class of common shares in
the share capital of the Corporation;
(s) "CONFIDENTIAL INFORMATION" has the meaning given to it in Section
10.1;
(t) "CONSTATING DOCUMENTS" means the Articles and By-laws of the
Corporation, as amended, supplemented or replaced from time to time;
(u) "CONTROL" or "CONTROLS" means, in relation to a corporation:
(1) the right to cast a majority of the votes which may be
cast at a general meeting of the shareholders of that
corporation; or
(2) the right to elect or appoint, directly or indirectly, a
majority of the directors of that corporation;
(v) "CONTROL NOTICE" has the meaning given to it in Section 7.6(b) or
Section 7.7(b), as applicable;
(w) "CONTROL PRICE" has the meaning given to it in Section 7.6(d) or
Section 7.7(d), as applicable;
(x) "CONTROL SHARES" has the meaning given to it in Section 7.6(b) or
Section 7.7(b), as applicable;
(y) "CORPORATION" means Aspreva Pharmaceuticals Corporation and includes
any successor resulting from any amalgamation, merger, arrangement
or other reorganization of or including the Corporation or any
continuance under the laws of another jurisdiction;
(z) "CO-SALE RIGHT" has the meaning given to it in Section 7.6(c) or
Section 7.7(c), as applicable;
(aa) "DELINQUENT HOLDERS" has the meaning given to it in Section 7.8;
(bb) "DEPARTING FOUNDER" has the meaning given to it in Section 7.4;
(cc) "DIRECTORS" means the persons who are, from time to time, elected or
appointed directors of the Corporation and a "Director" means any
one of them;
(dd) "DRAG ALONG OFFER" has the meaning given to it in Section 7.8(b);
(ee) "EMPLOYEE STOCK OPTION PLAN" means the stock option plan adopted and
amended by the Board from time to time;
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(ff) "EMPLOYEE STOCK PURCHASE PLAN TRUST AGREEMENT" means the Employee
Stock Purchase Plan Trust Agreement between Richard M. Glickman and
the Corporation dated as of the date hereof;
(gg) "EQUITY SECURITIES" means:
(1) Shares or any other security of the Corporation that carries
the residual right to participate in the earnings of the
Corporation and, on liquidation, dissolution or winding-up, in
the assets of the Corporation, whether or not the security
carries voting rights;
(2) any warrants, options or rights entitling the holders thereof
to purchase or acquire any such securities; or
(3) any securities issued by the Corporation which are convertible
or exchangeable into such securities;
(hh) "EXTERNAL PERSON" has the meaning given to it in Section 7.7(b);
(ii) "FOUNDER" means any of:
(1) Richard M. Glickman, including where the context
requires, the Founders' Shares held by the Glickman
Family Trust and Richard M. Glickman and Michelle L.
Smith, jointly;
(2) Noel Hall, including where the context requires, the
Founders' Shares held by Hall MacPherson Family Trust
and Noel Hall and Sandra MacPherson, jointly; and
(3) Michael Hayden, including where the context requires,
the Founders' Shares held by Sandy Hayden, Genworks Inc.
and the Hayden Family Trust;
(or their permitted assigns) and "Founders" means all of them,
provided that if any Founder ceases to be a party to this
Agreement without assignee then "Founders" or "Founder" means
the remaining parties or party alone;
(jj) "FOUNDER OFFEROR" has the meaning given to it in Section 7.5(b);
(kk) "FOUNDER'S OFFER" has the meaning given to it in Section 7.5(b);
(ll) "FOUNDERS' NOMINEES" means the nominees of the Founders elected or
appointed as Directors pursuant to Section 3.1;
(mm) "FOUNDER'S LAST REMAINING SALEABLE SECURITIES" has the meaning given
to it in Section 7.5(d)(4);
(nn) "FOUNDER'S REMAINING SALEABLE SECURITIES" has the meaning given to
it in Section 7.5(d)(3);
(oo) "FOUNDER'S SALEABLE SECURITIES" has the meaning given to it in
Section 7.5(b);
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(pp) "FOUNDERS' SHARES" means:
(1) in the case of Richard M. Glickman, the Shares held by: (A)
Richard M. Glickman, (B) Glickman Family Trust and (C) Richard
M. Glickman and Michelle L. Smith, jointly that were issued at
a price of $0.0001 each;
(2) in the case of Noel Hall, the Shares held by: (A) Noel Hall,
(B) Hall MacPherson Family Trust and (C) Noel Hall and Sandra
MacPherson, jointly that were issued at a price of $0.0001
each; and
(3) in the case of Michael Hayden, the Shares held by: (A) Michael
Hayden, (B) Sandy Hayden, (C) Genworks Inc. and (D) the Hayden
Family Trust that were issued at a price of $0.0001 each;
(qq) "FOUNDER'S SECOND OFFER" has the meaning given to it in Section
7.5(d)(3);
(rr) "FOUNDER'S SUBSEQUENT OFFER" has the meaning given to it in Section
7.5(d)(4)(C);
(ss) "FOUNDER'S THIRD OFFER" has the meaning given to it in Section
7.5(d)(4);
(tt) "FULLY CONVERTED BASIS" at any time means that the Shares of any
series in the capital of the Corporation outstanding at that time
shall be deemed to have been fully converted in accordance with the
Share Rights and Restrictions, into Common Shares in the capital of
the Corporation and the Common Shares issuable as a result thereof
shall be deemed to have been issued and to form part of the holdings
of the Person(s) entitled to receive such Common Shares;
(uu) "FULLY DILUTED BASIS" at any time means that all options, warrants
or other rights of any kind to acquire Common Shares and all
securities convertible, exchangeable or otherwise exercisable into
Common Shares outstanding at that time shall be deemed to have been
fully exercised, converted or exchanged, as the case may be, and the
Common Shares issuable as a result thereof shall be deemed to have
been fully issued and to form part of the holdings of the Person(s)
entitled to receive such Common Shares;
(vv) "HBM INVESTOR" means HBM BioVentures (Cayman) Ltd.;
(ww) "INITIAL ACCEPTANCE PERIOD" has the meaning given to it in Section
6.2(b);
(xx) "INITIAL PUBLIC OFFERING" means an initial public offering of the
Shares pursuant to a prospectus filed with the applicable securities
regulatory authorities in Canada or pursuant to a registration
statement filed with the applicable securities regulatory
authorities in the United States, in each case, together with the
concurrent listing or quotation of such Shares on a stock exchange
or over the counter market;
(yy) "INSOLVENT SHAREHOLDER" has the meaning given to it in Section
7.9(a);
(zz) "INTERWEST INVESTORS" means InterWest Investors VIII, L.P.,
InterWest Investors Q VIII, L.P., InterWest Partners VIII, L.P.,
InterWest Partners VII, L.P. and InterWest Investors VII, L.P.;
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(aaa) "INVESTMENT AGREEMENT" has the meaning given to it in Recital A;
(bbb) "KEY EMPLOYEES" means the then chief executive officer, president,
chief financial officer and Chair of the Medical Advisory Board of
the Corporation in office from time to time;
(ccc) "MANDATORY OFFER" has the meaning given to it in Section 7.4(b);
(ddd) "NOTES" means the convertible promissory notes issued by the
Corporation dated September 18, 2003, October 24, 2003 and November
4, 2003;
(eee) "OBSERVERS" means the individuals who are, from time to time,
entitled to act as observers in accordance with Section 3.7 and an
"OBSERVER" means any one of them;
(fff) "OFFER" has the meaning given to it in Section 7.3(b);
(ggg) "OFFEROR" has the meaning given to it in Section 7.3(b);
(hhh) "ORIGINAL SHAREHOLDERS' AGREEMENT" means the shareholders' agreement
dated for reference as of the 16th day of January, 2003 among the
Corporation, the Founders and the shareholders a party thereto;
(iii) "ORIGINAL VESTED FOUNDER'S SHARES" has the meaning given to it in
Section 7.4(b);
(jjj) "OTHER OFFEREES" has the meaning given to it in Section 7.3(b);
(kkk) "OTHER SHAREHOLDERS" has the meaning given to it in Section 7.8(b);
(lll) "PERSON" means any individual, partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or
without share' capital, trust, trustee, executor, administrator, or
other legal personal representatives, regulatory body or agency,
government or governmental agency, authority or entity howsoever
designated or constituted;
(mmm) "PURCHASE NOTICE" has the meaning given to it in Section 7.3(d);
(nnn) "PURCHASER" has the meaning given to it in Section 7.8(a);
(ooo) "PREFERRED SHARES" means the shares of any class of preferred shares
in the share capital of the Corporation;
(ppp) "REMAINING EQUITY SECURITIES" has the meaning given to it in Section
6.2(e);
(qqq) "REMAINING FOUNDERS" has the meaning given to it in Section 7.4(b);
(rrr) "REMAINING SALEABLE SECURITIES" has the meaning given to it in
Section 7.3(e)(3);
(sss) "REMAINING SUBJECT FOUNDER'S SHARES" has the meaning given to it in
Section 7.4(d)(3);
(ttt) "SALEABLE SECURITIES" has the meaning given to it in Section 7.3(b);
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(uuu) "SECOND MANDATORY OFFER" has the meaning given to it in Section
7.4(d)(3);
(vvv) "SECOND MANDATORY ROUND OFFEREES" has the meaning given to it in
Section 7.4(d)(3);
(www) "SECOND OFFER" has the meaning given to it in Section 7.3(e);
(xxx) "SECOND ROUND SERIES A OFFEREES" has the meaning given to it in
7.5(d)(3);
(yyy) "SECOND TIER OFFEREES" has the meaning given to it in Section
6.2(e);
(zzz) "SELLING SHAREHOLDERS" has the meaning given to it in Section
7.8(a);
(aaaa) "SENIOR SECURITIES EXCHANGE" means the Toronto Stock Exchange, the
New York Stock Exchange, the American Stock Exchange, the NASDAQ
National Market Quotation System or a successor to any of the
foregoing;
(bbbb) "SERIES A INVESTORS" means the parties listed in Schedule C;
(cccc) "SERIES A INVESTORS' NOMINEES" means the nominees of the Series A
Investors elected or appointed as Directors pursuant to Section
3.1;
(dddd) "SERIES A OFFEREES" has the meaning given to it in Section 7.5(b);
(eeee) "SERIES A PREFERRED SHARES" has the meaning given to it in Recital
A;
(ffff) "SERIES A SHAREHOLDERS" means Persons who hold Series A Preferred
Shares and a "Series A Shareholder" means any one of them;
(gggg) "SERIES A SHAREHOLDER APPROVAL" means the approval, whether given
in writing or at a meeting of shareholders, representing the
approval of a simple majority of the number of Series A Preferred
Shares held by the Series A Shareholders or as otherwise required
by the CBCA (it being understood that for the purposes of this
test, all shares held by Aspreva Funding shall be deemed held by
the Series A Investors (who shall be entitled to give approval
with respect thereto) in proportion to their respective
proportionate equity interests in Aspreva Funding);
(hhhh) "SHAREHOLDER TRANSFEROR" has the meaning given to it in Section
7.2(a);
(iiii) "SHAREHOLDERS" means the Persons who hold Equity Securities of the
Corporation who have executed this Agreement or have agreed to be
bound by this Agreement (or their respective heirs, executors,
administrators, successors or permitted assigns), and a
"Shareholder" means any one of them;
(jjjj) "SHARES" means shares of any class in the share capital of the
Corporation;
(kkkk) "SHARE RIGHTS AND RESTRICTIONS" means the rights, privileges,
restrictions and conditions attached to the Shares set out in the
Articles of Incorporation of the Corporation, as amended from time
to time;
(llll) "SPECIFIED SECURITIES" has the meaning given to it in Section
7.8(b);
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(mmmm) "SPROUT INVESTORS" means each of Sprout Entrepreneurs Fund, L.P.,
Sprout Capital IX, L.P., James Niedel and Andrew Ferlik;
(nnnn) "SUBJECT FOUNDER'S SHARES" has the meaning given to it under
Section 7.4(b);
(oooo) "SUBSEQUENT MANDATORY OFFER" has the meaning given to it in
Section 7.4(d)(1);
(pppp) "SUBSIDIARY" means a subsidiary within the meaning of the CBCA and
"SUBSIDIARIES" means more than one subsidiary;
(qqqq) "SUBSEQUENT OFFER" has the meaning given to it in Section
7.3(e)(3)(C)
(rrrr) "SUBSTANTIAL INTEREST" of a Person means the direct or indirect
beneficial ownership of at least 5% of the Common Shares, on a
Fully Converted Basis, by that Person and its Affiliates;
(ssss) "THIRD OFFER" has the meaning given to it in Section 7.3(e)(3);
(tttt) "THIRD-PARTY BUYER" has the meaning given to it in Section 7.6(b);
(uuuu) "THIRD ROUND OFFEREES" has the meaning given to it in Section
7.3(e)(3);
(vvvv) "THIRD ROUND SERIES OFFER" has the meaning given to it in Section
7.5(d)(4);
(wwww) "TRANSFER" includes any sale, exchange, assignment, gift, bequest,
disposition, mortgage, charge, pledge, encumbrance, grant of a
security interest or other arrangement by which possession, legal
title or beneficial ownership passes from one Person to another,
or to the same Person in a different capacity, whether or not
voluntarily and whether or not for value, and any agreement to
effect any of the foregoing; and the words "Transferred",
Transferring" and similar words have corresponding meanings;
(xxxx) "TREASURY OFFEREES" has the meaning given to it in Section 6.2 and
"Treasury Offeree" is the singular;
(yyyy) "TRIGGERING EVENT" has the meaning given to it in Section 7.4(b);
(zzzz) "TW INVESTOR" means Thomas Weisel Healthcare Venture Partners,
L.P;
(aaaaa) "US GAAP" means those accounting principles which are recognized
as being generally accepted in the United States of America from
time to time;
(bbbbb) "US INVESTORS" means those parties listed on Schedule D;
(ccccc) "VENDING SHAREHOLDER" has the meaning given to it in Section
7.6(b).
1.2 OTHER WORDS AND PHRASES
Any words or phrases defined elsewhere in this Agreement shall have the
particular meaning assigned thereto.
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1.3 CURRENCY
All references to currency are deemed to mean lawful money of Canada (unless
expressed to be in some other currency).
1.4 NUMBER AND GENDER
Words (including defined terms) using or importing the singular number include
the plural and vice versa and words importing one gender only shall include all
genders and words importing persons in this Agreement shall include individuals,
partnerships, corporations and any other entities, legal or otherwise.
1.5 HEADINGS
The headings used in this Agreement are for ease of reference only and shall not
affect the meaning or the interpretation of this Agreement.
1.6 CROSS REFERENCES
All references to Article, Section and Subsection numbers refer, unless
expressly stated otherwise, to the Articles, Sections and Subsections in this
Agreement having those numbers.
1.7 ACCOUNTING TERMS
All accounting terms not defined in this Agreement shall have the meanings
generally ascribed to them under GAAP.
1.8 SCHEDULES
The schedules attached to this Agreement shall form part of this Agreement.
2. SCOPE, EFFECT AND PARTIES
2.1 SHAREHOLDERS TO ACT IN SUPPORT OF TERMS
The Shareholders shall at all times promptly:
(a) vote their respective voting Shares (or if more convenient execute
written shareholder consent resolutions provided they are executed
by all shareholders of the Corporation); and
(b) take all such steps as may be reasonably within their powers;
so as to cause the Corporation to act in the manner contemplated by this
Agreement and so as to fully implement the terms of this Agreement and, to the
extent permitted by law, shall cause their respective nominees as Directors to
so act.
2.2 REMOVAL OF DIRECTORS WHO FAIL TO ACT IN ACCORDANCE WITH TERMS
If a Director refuses to exercise his discretion to vote and act as a Director
(other than a Director abstaining from voting as required by law or voting in
accordance with the requirements of the CBCA) so as to fully carry out the terms
of this Agreement, then the Shareholders shall, on the request of a Shareholder,
promptly procure all necessary proceedings and vote their respective voting
Shares to
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remove such Director from the Board and to elect a replacement Director in
accordance with Section 3.1 who shall choose to exercise his discretion to vote
and act as a Director so as to fully carry out the terms of this Agreement.
2.3 DIRECTORS ACKNOWLEDGEMENT
The Corporation covenants and agrees that it shall cause all Directors, and any
Person who becomes a Director from time to time, to execute and deliver an
Acknowledgement in the form attached hereto as Schedule B.
2.4 TERMS TO PREVAIL OVER CONSTATING DOCUMENTS
In the event of any conflict between the provisions of this Agreement and the
Corporation's Constating Documents or any agreement to which the Corporation or
a Shareholder is or becomes a party, the provisions of this Agreement shall
prevail and govern to the extent permitted by law. The Shareholders shall
promptly procure all necessary proceedings and vote their respective voting
Shares so as to cause the Corporation's Constating Documents to be amended in
order to resolve such conflict in favour of the provisions of this Agreement to
the extent permitted by law.
2.5 AGREEMENT TO COVER AT LEAST 80% OF VOTES
The parties to this Agreement shall take all steps necessary to ensure that the
parties to this Agreement at all times represent at least 80% of the votes
capable of being cast at any general meeting of the shareholders of the
Corporation and that any shareholder of the Corporation who holds, at any time,
more than 5% of the votes capable of being cast at any general meeting of the
shareholders of the Corporation becomes a party to this Agreement (the "80% & 5%
Coverage"). Without limiting the generality of the foregoing, the Corporation
and the Shareholders shall when issuing, selling or Transferring Shares cause
the purchaser of such Shares to become a party to and be bound by this Agreement
if this is necessary to maintain 80% & 5 % Coverage.
2.6 APPLICATION
This Agreement shall apply mutatis mutandis to all Equity Securities now owned
by the Shareholders and all Equity Securities that may hereafter be acquired by
the Shareholders, or any of them.
2.7 CEASING TO BE A PARTY
If a Person who was a Shareholder no longer holds any Equity Securities of the
Corporation and is owed no monies by the Corporation or any of its Subsidiaries,
then from that point forward that Person shall be deemed to no longer be a party
to this Agreement; provided, however, such Person shall continue to be bound by
the rights and obligations which arose hereunder in respect of matters occurring
prior to such Person ceasing to be a party to this Agreement.
3. CONDUCT OF THE AFFAIRS OF THE CORPORATION
3.1 COMPOSITION OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Shareholders shall cause the Board to at all times consist of not more than
eight Directors, consisting of the following:
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(a) three nominees selected by the Founders, one of whom shall be the
chief executive officer of the Corporation, provided that a Founder
shall only be entitled to participate in the selection of a nominee
if the Founders' Shares held by such Founder are not less than 5% of
the issued and outstanding Common Shares on a Fully Converted Basis.
The initial Founders' Nominees shall be Richard Glickman, Noel Hall
and Michael Hayden;
(b) three nominees selected by the Series A Shareholders as contemplated
in the Share Rights and Restrictions, consisting of:
(1) one nominee of the HBM Investor, who shall be an Industry
Expert and shall be acceptable to each of Richard Glickman and
Noel Hall, which nominee when appointed shall replace R.
Hector MacKay-Dunn, Q.C. who shall remain on the Board only
until the date of such nominee's appointment;
(2) one nominee of the Sprout Investors, who shall initially be
Ronald M. Hunt; and
(3) one nominee of the InterWest Investors, who shall initially be
Arnold Oronsky; and
(c) two Independent nominees selected by the Founders' Nominees and the
Series A Investors' Nominees, one of whom shall be suitable to be
the chair of the Corporation's audit committee and one of whom shall
have significant industry experience.
For the purposes of this Section, "Independent" means a person who is not a
director, officer, employee or "major shareholder" of a Shareholder or the
Corporation, as the case may be, or an "affiliate" or an "associate" of such
person, or an "associate" of the Founders, as the case may be, and the terms
"major shareholder", "affiliate" and "associate" shall have the meanings
ascribed to them in the Employee Investment Act (British Columbia).
For the purposes of this Section, "Industry Expert" means an individual with
extensive senior management experience within the pharmaceutical industry as it
relates to pharmaceutical sales and marketing, clinical development/regulatory
and/or medical affairs. The individual must be recognized as an industry expert
by his or her peers.
If a Director ceases to be a Director for any reason, the vacancy on the Board
shall promptly be filled in a manner which ensures that the Board composition
referred to above is maintained. The parties agree that the nominee of the
Sprout Investors may only be removed by the Sprout Investors, the nominee of the
InterWest Investors may only be removed by the InterWest Investors, and the
nominee of the HBM Investor may only removed by the HBM Investor.
Either Arnold Oronsky or Ronald Hunt shall be a member of the Compensation
Committee of the Board, and either Arnold Oronsky or Ronald Hunt shall be a
member of the Audit Committee of the Board.
3.2 MEETINGS OF THE BOARD OF DIRECTORS
The Board shall meet at least quarterly. At least two Board meetings shall be
held at the Corporation's head office located in Victoria, British Columbia. The
balance of the Board Meetings shall be held at such place as the Board may
determine from time to time, making reasonable efforts to select a location that
is mutually convenient for all Directors for a significant number of such Board
Meetings. The Corporation shall provide reasonable (being in any case, not less
than two days, exclusive of the day on which notice is delivered or faxed, but
inclusive of the day for which notice is given) notice in writing of
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any meeting of Directors, unless waived in writing by all Directors. The
Directors may participate in any Board meeting by telephone conference call or
in any manner by which all participants in the meeting can hear one another, and
any Director so participating shall be considered to be present for the purposes
of quorum and voting at such meeting. The Corporation shall provide each
Director with copies of the minutes of each Board meeting within 60 days of each
such meeting.
3.3 QUORUM FOR BOARD MEETINGS
A quorum for the transaction of business at any meeting of the Board shall be a
majority of Directors. If a quorum is not present at the commencement of a Board
meeting, then the Directors present may not transact any business, the meeting
shall be adjourned for not less than 72 hours and, at the adjourned meeting,
those directors present shall constitute a quorum.
3.4 SPECIFIC MAJOR MATTERS REQUIRING BOARD AND SHAREHOLDER APPROVAL
The Corporation shall only undertake or proceed with any of the following
matters with the prior approval of the majority of the Board (which, for the
purposes of the matters set forth in paragraphs (b), (c), (d), (g), (h), (i),
(q) and (r) shall only be effective with 67% Shareholder Approval) and which, in
addition, for the purposes of the matters set forth in paragraphs (b), (c), (d),
(g), (n), (dd) and (ee) shall, for so long as in excess of 1,000,000 Series A
Preferred Shares remain outstanding, only be effective with Series A Shareholder
Approval:
(a) grant, allot or issue any additional Equity Securities (other than
pursuant to the Employee Stock Option Plan or in accordance with the
Share Rights and Restrictions);
(b) increase or decrease the authorized capital of the Corporation or
alter the share capital of the Corporation;
(c) purchase, redeem or otherwise acquire any Equity Securities (other
than as provided for under this Agreement or in accordance with the
Share Rights and Restrictions);
(d) declare or pay dividends on any Equity Securities (other than as
required under the Share Rights and Restrictions);
(e) loan any money to, provide a guarantee of, or assume liability for
the debts or obligations of any other Person, except for (i) loans
made from time to time to employees of the Corporation which loans
shall not exceed $5,000 per loan or $10,000 in aggregate in any
fiscal year of the Corporation, (ii) loans or advances to any
Subsidiary for the payment of expenses incurred in the ordinary
course of business, and (iii) loans or advances to any Subsidiary
incurred outside of the ordinary course of business, which loans or
advances shall not exceed $25,000 in aggregate in any fiscal year of
the Corporation;
(f) borrow money on the credit of the Corporation;
(g) amend the Corporation's Constating Documents;
(h) change the nature of the Corporation's business;
(i) amalgamate, consolidate or merge or enter into an agreement to
amalgamate, consolidate or merge the Corporation with any Person;
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(j) enter into any joint venture or partnership with any corporation,
partnership, joint venture, firm or Person, except for
collaborations, joint ventures or research and development
agreements under which the Corporation's financial commitment is
less than $50,000;
(k) make any payments with respect to or amend the terms of any loan
made to the Corporation by a shareholder of the Corporation or a
Person related to a shareholder other than in accordance with an
agreement respecting such loan previously approved by the Board;
(l) enter into any material agreement with a Person with whom the
Corporation does not deal at arm's length in excess of $100,000;
(m) amend the Employee Stock Option Plan or the Stock Purchase Plan
Trust Agreement;
(n) make any proceedings for the bankruptcy, insolvency, receivership,
or a reorganization in respect of the Corporation's creditors, or
for the winding-up, liquidation or dissolution of the Corporation;
(o) make any sale, lease, exchange, mortgage or other disposition of all
or substantially all of the Corporation's assets or of any plans,
patents, trademarks, processes, licenses, distribution rights or
other industrial or intellectual property of the Corporation;
(p) amend any devotion of time, non-competition, non-disclosure
agreements or proprietary rights agreements between the Corporation
and any of its Directors, Key Employees and other senior officers,
or consultants;
(q) adopt any shareholders' agreement other than this Agreement or an
amendment to this Agreement;
(r) continue the Corporation under the laws of another jurisdiction;
(s) allow any Equity Securities to be qualified for distribution to the
public or listed for trading on a recognized securities exchange;
(t) in any fiscal year, make any capital expenditures or leasing
commitments which are not included in the capital budget for that
year previously approved by the Board exceeding $100,000;
(u) pay any remuneration, compensation, drawings or other payments to
Key Employees and other senior officers of the Corporation, or
Persons related to Key Employees and other senior officers of the
Corporation other than pursuant to the terms of a written employment
contract;
(v) enter into or amend employment or consulting contracts with senior
officers of the Corporation;
(w) incorporate, purchase, acquire, fund, sell, or dispose of any
Subsidiary, whether wholly or partially owned by the Corporation;
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(x) sell, lease, exchange or otherwise dispose of or distribute any of
the property of the Corporation outside of the ordinary course of
business of the Corporation;
(y) make a proposal to the Corporation's shareholders to change the
Corporation's auditors;
(z) make any significant change to the Corporation's accounting
policies;
(aa) make any distribution of monies or assets of the Corporation outside
of the ordinary course of the business of the Corporation (other
than as provided for under this Agreement or required in accordance
with the Share Rights and Restrictions);
(bb) make the Corporation's annual budget or any amendments thereto
resulting in an aggregate variance of more than 10%;
(cc) transfer, assign or otherwise dispose of any assets to a Subsidiary
or joint venture partner;
(dd) authorize or create (by amendment of the articles of the
Corporation, reclassification, redesignation or otherwise) any new
class or series of shares having rights, preferences or privilege
senior to or on a parity with the Series A Preferred Shares; or
(ee) change the number of Directors or the number of Series A Investors'
Nominees.
3.5 BOARD APPROVAL OF MAJOR MATTERS UNDERTAKEN BY SUBSIDIARIES
The Corporation shall ensure that all of its Subsidiaries only undertake or
proceed with transactions referred to in Section 3.4 (as adjusted to relate to
similar actions of such Subsidiary) with the prior approval of the majority of
the Board (which, for the purposes of the matters set forth in paragraphs (b),
(c), (d), (g), (h), (i), (q) and (r) shall only be effective with 67%
Shareholder Approval and which, for the purposes of the matters set forth in
paragraphs (b), (c), (d), (g), (n), (dd) and (ee) shall, for so long as in
excess of 1,000,000 Series A Preferred Shares remain outstanding, only be
effective with Series A Shareholder Approval.
3.6 REMUNERATION TO DIRECTORS
The terms and conditions applicable to the remuneration payable to the Directors
shall be as follows:
(a) any Director who is an officer or an employee of the Corporation
shall not be entitled to receive remuneration or compensation from
the Corporation in his capacity as a Director;
(b) any Director who is not an officer or an employee of the Corporation
shall be entitled to receive remuneration or compensation from the
Corporation on a basis which is acceptable to the Board; and
(c) all Directors shall be reimbursed for reasonable expenses incurred
with respect to acting as a Director, including attendance at
Directors' meetings and committee meetings of the Board and other
expenses incurred in conjunction with Corporation business on a
basis acceptable to the Chief Executive Officer.
3.7 OBSERVERS
Each of the HBM Investor, the TW Investor, BioAsia Investments IV, LLC and Axiom
Venture Partners III, LP shall be entitled to have an individual (who may change
from time to time) (an "Observer") attend
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Board meetings (and meetings of the board of any of the Subsidiaries) from time
to time. The Observer shall have the right to receive and review the same
information and materials as are provided to Directors for such meetings, or
meetings of the Subsidiaries, and to speak thereat but shall not be entitled to
vote.
3.8 INDEMNITY FOR DIRECTORS AND OTHERS
Subject to the limitations set forth in the CBCA or otherwise at law, and in
addition to any existing provisions which may be contained in the Corporation's
Constating Documents, the Corporation shall to the fullest extent possible
indemnify any Director or officer of the Corporation or Observer, a former
Director or officer of the Corporation or former Observer, or any person who
acts or has acted at the Corporation's request as a director or officer of a
body corporate, or an individual acting in a similar capacity, and his heirs and
other personal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by the individual in respect of any civil, criminal, administrative,
investigative or other proceeding in which the individual is involved because of
that association with the Corporation or other entity, if:
(a) the individual acted honestly and in good faith with a view to the
best interests of the Corporation, or, as the case may be, to the
best interests of the other entity for which the individual acted as
director or officer or in a similar capacity at the Corporation's
request; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, the individual had
reasonable grounds for believing that the individual's conduct was
lawful.
Nothing in this Section shall limit the right of any person entitled to claim
any indemnity apart from the provisions of this Section. If the Corporation is
required to seek out approval for any such indemnity, it shall do so promptly at
its own expense.
3.9 PROTECTION OF PROPRIETARY RIGHTS
The Corporation covenants and agrees that:
(a) it shall cause the assignment to the Corporation and any Subsidiary,
as applicable, by all employees of the Corporation and any
Subsidiary or any consultants as may from time to time be engaged by
the Corporation or any Subsidiary, as applicable, of any and all
patents, trademarks, copyrights, inventions and other intellectual
property arising out of the work of such employees or consultants or
arising out of the use of funds, materials or facilities of the
Corporation and the waiver of all moral rights with respect to such
intellectual property; and
(b) it shall cause all employees of the Corporation and any Subsidiary,
as applicable and all consultants engaged by the Corporation or any
Subsidiary, as applicable, having confidential knowledge of the
intellectual property of the Corporation or any Subsidiary to sign
confidentiality, non-competition and proprietary rights agreements
with the Corporation and any Subsidiary, as applicable.
3.10 SHAREHOLDERS' MEETINGS
The Corporation shall provide each of the Shareholders with notice in writing of
any meeting of the shareholders of the Corporation in accordance with the CBCA,
and the Corporation shall, within 60 days
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of the date of any such meeting, cause minutes of all proceedings at the meeting
to be forwarded to the Shareholders.
3.11 QUORUM FOR SHAREHOLDER MEETINGS
A quorum for the transaction of business at any meeting of the shareholders of
the Corporation shall be a minimum of two shareholders present in person or by
proxy representing at least 50% of the then issued and outstanding shares. If a
quorum is not present at the opening of a meeting of the shareholders of the
Corporation, then the shareholders of the Corporation present or represented by
proxy may not transact any other business and such shareholders of the
Corporation shall be deemed, provided such meeting was otherwise duly
constituted, to have adjourned such meeting to the same time and place on the
same day the following week. If a quorum is not present at such adjourned
meeting, then the shareholders of the Corporation who are present and entitled
to vote at the meeting shall be deemed to be a quorum and may transact all
business which a full quorum might have transacted with respect to the items set
forth in the notice (or accompanying documentation) provided to the shareholders
of the Corporation in connection with the originally scheduled meeting of the
shareholders of the Corporation.
3.12 DEPOSIT OF PROXIES
A Shareholder may deposit a proxy and the power of attorney, appointment of
authorized representative or other authority, if any, under which it is duly
signed at any time before the proper commencement of the shareholders' meeting
to which the proxy relates and any such proxy shall be so deposited with the
Chairperson of such meeting. A proxy deposited in accordance with this Section
shall be accepted as valid.
3.13 ACCOUNTING SYSTEMS
No later than December 31, 2004, the Corporation shall and shall cause its
Subsidiaries to set up and maintain, in accordance with US GAAP, accounting
systems and books of account which are acceptable to the audit committee and all
transactions shall be accounted for according to US GAAP, consistently applied.
3.14 AMENDMENT TO ARTICLES
The Corporation agrees to submit to the Shareholders at the 2004 annual meeting
of Shareholders an amendment to the Articles of the Corporation to revise the
class rights of the Preferred Shares in order to eliminate the class right of
redemption at the option of the Corporation and the requirement to attach
pre-emptive rights to each series of Preferred shares in the Articles. Each of
the Founders and the Series A Shareholders agrees to vote their Common Shares
and Series A Preferred Shares in favour of such amendment at such annual
meeting.
3.15 AMENDMENT TO BYLAWS
On or before the Closing, the Corporation agrees to amend the Bylaws of the
Corporation to delete Section 4.4 thereof and replace it with a bylaw that is
consistent with the terms of this Agreement that relate to the removal of
directors, and the Corporation further agrees to submit such amendment at the
2004 annual meeting of Shareholders. Each of the Founders and the Series A
Shareholders agrees to vote their Common Shares and Series A Preferred Shares in
favour of such amendment at such annual meeting.
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4. INFORMATION RIGHTS
4.1 REPORTING REQUIREMENTS OF ADDITIONAL INVESTORS AND SERIES A INVESTORS
The Corporation shall furnish to the Additional Investors and the Series A
Investors:
(a) within 30 days of each fiscal quarter, a balance sheet and statement
of operations and cash flow for the Corporation and each of the
Subsidiaries on a consolidated basis, together with a report of the
chief financial officer of the Corporation and each of the
Subsidiaries thereon, and within 30 days of each six month period, a
report of the CEO;
(b) annually within 90 days of the end of each fiscal year, the
Corporation's audited consolidated financial statements (including
the Corporation's balance sheet, statement of earnings, retained
earnings and changes in financial position) and auditor's report
thereon, prepared in accordance with US GAAP by a major accounting
firm selected by the Board, provided that such statements may be
prepared in accordance with Canadian GAAP for the year ended
December 31, 2003;
(c) such progress reports as are provided to Directors and the
Corporation's shareholders; and
(d) any information relevant to significant operational and strategic
issues.
4.2 REPORTING REQUIREMENTS OF SERIES A SHAREHOLDERS
The Corporation shall furnish, in addition to the reporting requirements set out
in Section 4.1, to the Series A Investors:
(a) within 30 days of the end of each month, monthly financial
information (including but not limited to the Corporation's profit
and loss statement, balance sheet, actual versus plan, statement of
operations and cash flow, compliance analysis of bank loan
covenants, if any);
(b) within 30 days of the end of each fiscal quarter, a variance
commentary; and
(c) at least 30 days before the end of each prior fiscal year, an annual
budget and operating plan for the next fiscal year.
5. INSURANCE POLICIES
5.1 KEY PERSON INSURANCE
Unless otherwise agreed to in writing by the Investors and provided such
insurance is available at reasonable rates, the Corporation shall use
commercially reasonable efforts to obtain and maintain a key man insurance
policy in the minimum amount of $1,000,000 on its chief executive officer and
its president, in each case with the Corporation as the sole beneficiary. The
Corporation shall pay all applicable premiums thereunder.
5.2 GENERAL INSURANCE
The Corporation shall maintain, and shall ensure that its Subsidiaries maintain,
insurance policies with sufficient coverage to allow replacement of any of their
respective insurable properties that might be
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damaged or destroyed and insurance policies for comprehensive general liability
insurance (including bodily injury, death and property damage) for amounts which
meet commercially reasonable standards.
5.3 DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
Once the Corporation has a product in a clinical trial, the Corporation shall
use reasonable commercial efforts to maintain directors' and officers' liability
insurance in a minimum amount of $5,000,000 for the Directors and senior
officers of the Corporation with coverage comparable to that available to
companies of a similar size and stage of development as the Corporation, on
reasonable commercial terms as determined by the Board. Prior to the Corporation
having a product in a clinical trial, the Corporation shall maintain such
directors' and officers' liability insurance in such amount and upon such terms
as the Board may determine, provided that the cost of such insurance is
reasonable in the sole discretion of the Board.
5.4 LIMITATION ON INSURANCE ENCUMBRANCES
The Corporation shall not grant a security interest in, borrow on the security
of, hypothecate, assign or dispose of any of the insurance policies referred to
in this Article or any part thereof except to the extent that such policies are
charged or encumbered from time to time by security instruments granted by the
Corporation in good faith to its lenders for genuine corporate borrowing
purposes approved by the Board in accordance with the terms hereof.
6. ISSUE OF ADDITIONAL EQUITY SECURITIES
6.1 TREASURY OFFERINGS
Except as otherwise agreed to by the parties hereto, each offering by the
Corporation of additional Equity Securities shall be made in accordance with
this Article.
All Series A Investors and each holder of Common Shares which have a Substantial
Interest shall have a right and be entitled to participate pro-rata in offerings
in accordance with this Article.
For the purposes of this Section 6, each Series A Investor shall be deemed to be
a Shareholder and to own a number of Series A Preferred Shares equal to the
proportion of the Series A Preferred Shares held by Aspreva Funding that
corresponds to such Series A Investor's proportionate equity ownership interest
in Aspreva Funding.
6.2 OFFERINGS TO BE MADE PRO-RATA ON A FULLY CONVERTED BASIS
Subject to Section 6.3, before the Corporation offers, allots, issues or sells
any Equity Securities of the Corporation (including any resale by the
Corporation of any Equity Securities of the Corporation previously repurchased
by the Corporation), whether directly or indirectly and whether by option,
warrant, right or privilege which is capable of becoming an offer, allotment,
issuance or sale of any Equity Securities, the Corporation shall ensure that the
Equity Securities are first offered (the "Treasury Offer") by written notice to
all Series A Investors and to each holder of Common Shares holding a Substantial
Interest (collectively the "Treasury Offerees" and individually a "Treasury
Offeree") and sold on the following basis:
(a) Pro Rata Portions - the number of Equity Securities a particular
Treasury Offeree shall be offered and may purchase shall be the
number determined by applying the following formula:
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Number of Equity Number of Common Shares held by the Treasury Total number of
Securities which the = Offeree on a Fully Converted Basis X additional Equity
Treasury Offeree shall immediately prior to the Treasury Offer Securities being
be offered and may -------------------------------------------- offered
purchase Number of Common Shares held by all Treasury
Offerees on a Fully Converted Basis
immediately prior to the Treasury Offer
(b) Notice & Acceptance Period - the written notice concerning the
Treasury Offer shall set out the number of Equity Securities offered
to the Treasury Offeree, the price payable per Equity Security and
other applicable terms and conditions and shall remain open for
acceptance in writing by each Treasury Offeree until the end of a
period (the "Initial Acceptance Period") of 15 days following
receipt thereof by the Treasury Offeree. If such written notice is
mailed by first class mail to the address for the Treasury Offeree
shown on the Corporation's register of shareholders, that Treasury
Offeree shall be deemed to have received the notice 7 days
thereafter. If a Treasury Offeree does not accept the Treasury Offer
before expiration of the Initial Acceptance Period, then such
Treasury Offeree shall be deemed to have refused the Treasury Offer;
(c) Acceptance - acceptance of a Treasury Offer by a Treasury Offeree
shall be made by written notice to the Corporation, which acceptance
notice may also specify any additional portion of the Equity
Securities ("Specified Additional Equity Securities") offered for
sale that the Treasury Offeree is prepared to purchase in the event
that any of the other Treasury Offerees fail to fully accept their
offered portion of the Treasury Offer;
(d) No Acceptances - if all Treasury Offerees decline in writing to
accept the Treasury Offer, the Initial Acceptance Period shall be
deemed to have ended on the earlier of the end of the Initial
Acceptance Period and the date the last such decline in writing is
received by the Corporation;
(e) Offer of any Remaining Equity Securities - to the extent that the
Treasury Offer has not been accepted in its entirety by the Treasury
Offerees within the Initial Acceptance Period, such of the Treasury
Offerees as have in their notice of acceptance of the Treasury Offer
indicated a preparedness to purchase Specified Additional Equity
Securities (collectively the "Second Tier Offerees" and individually
a "Second Tier Offeree") shall be forthwith notified (the "Second
Tier Notice") of this fact by the Corporation and shall be entitled
to accept the remaining portion of the additional Equity Securities
(the "Remaining Equity Securities") offered under the Treasury Offer
as is then available by written notice to the Corporation given
within 5 days after delivery of the Second Tier Notice. The
Remaining Equity Securities shall be divided among the Second Tier
Offerees in such manner as may be agreed among them, and failing
such agreement, the Remaining Equity Securities shall be divided pro
rata among the Second Tier Offerees in accordance with their
respective holdings of Common Shares on a Fully Converted Basis,
except that no Second Tier Offeree shall be required to accept more
than his Specified Additional Equity Securities. In the event that
the pro rata share of a Second Tier Offeree is limited by his
Specified Additional Equity Securities as aforesaid, that portion of
his pro rata share of the Remaining Equity Securities in excess of
his Specified Additional Equity Securities shall be divided among
the remaining Second Tier Offerees whose pro rata shares do not
exceed their Specified Additional Equity Securities;
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(f) Sale to Third Party - the Corporation shall be entitled to allot,
issue or sell the balance of any Equity Securities which are not
purchased by the Treasury Offerees under a Treasury Offer to any
Person, other than a Treasury Offeree who did not accept the
Treasury Offer, provided that such allotment, issuance or sale shall
not be effected at a price which is less than the price or on terms
and conditions which are more favourable (from the purchaser's
perspective) than those set forth in the written notice to the
Treasury Offerees concerning the Treasury Offer and provided that
such allotment, issuance or sale shall be effected within a 3 month
period following the expiration of the Initial Acceptance Period;
and
(g) Expiry of Third Party Sale Period - if the Corporation has not
effected the allotment, issuance or sale of the balance of any
Equity Securities not purchased by Treasury Offerees under the
Treasury Offer within such 3 month period, then the Corporation
shall be required, before allotting, issuing or selling any Equity
Securities, to again comply with this Section.
6.3 PERMITTED NON-PRO RATA OFFERINGS
The Corporation may directly allot, issue or sell Equity Securities without
complying with Section 6.2 in the following circumstances:
(a) the Equity Securities are being issued pursuant to a stock dividend
on Shares or a subdivision;
(b) the Equity Securities are being issued as required in accordance
with the Share Rights and Restrictions;
(c) the Equity Securities are being issued pursuant to a duly approved
grant or exercise of options under the Employee Stock Option Plan
approved by the Board or in accordance with the terms of the Notes
or the warrants issued in connection with the issuance of the Notes;
(d) the Equity Securities are being issued pursuant to a duly approved
Initial Public Offering;
(e) the Equity Securities are being issued pursuant to an acquisition,
strategic alliance or to a strategic industry investor approved by
the Board; or
(f) the Equity Securities are being issued pursuant to the Investment
Agreement.
6.4 WAIVER OF RIGHTS
Notwithstanding any other provision of this Article 6, any shareholder may waive
his rights with respect to any particular offer given under Article 6 by notice
in writing to the Corporation.
6.5 EXECUTE AGREEMENT
No Equity Securities shall be sold or issued:
(a) to a Person (other than a Shareholder or the Corporation) pursuant
to Subsection 6.2(f); or
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(b) to any Person pursuant to Sections 6.3(a) to 6.3(c) inclusive and
Section 6.3(e), Section 7.2(b), Section 7.3(g), Section 7.4(b),
Section 7.5(f), Section 7.6(e) or Section 7.7(c) of this Agreement,
unless and until the Person enters into an agreement pursuant to which such
Person has agreed to be bound by the provisions of this Agreement as a
Shareholder.
7. SHARE TRANSFERS
7.1 TRANSFERS RESTRICTED
Except as expressly permitted by the terms of this Agreement, or as required by
the Share Rights and Restrictions or as consented to by all parties hereto, and
except for the Series A Shareholders to whom this Section 7.1 shall not apply
provided that Sections 7.6, 7.7 and 7.8 are complied with, a Shareholder shall
not, directly or indirectly, Transfer any Equity Securities (including but not
restricted to any disposition by agreement, option, right or privilege capable
of becoming an agreement or option).
7.2 PERMITTED TRANSFERS
Sections 7.1 and 7.3 do not apply to the following Transfers of Equity
Securities:
(a) Transfers to an Affiliate - A Shareholder (a "Shareholder
Transferor") shall be entitled at all times and from time to time to
Transfer all or any part of its Equity Securities to an Affiliate
provided that:
(1) the Affiliate enters into an agreement under which it becomes
party to and bound by this Agreement;
(2) prior to the Affiliate ceasing to be an Affiliate, the
Affiliate agrees to Transfer the Equity Securities back to the
Shareholder Transferor, or to another Affiliate of the
Shareholder Transferor;
(3) the Shareholder Transferor agrees to be jointly and severally
liable with the Affiliate for all obligations and liabilities
of the Affiliate assumed under this Agreement, provided that
this condition shall not apply to a Transfer within 60 days of
Closing from the HBM Investor to any Affiliate of the HBM
Investor if prior to or contemporaneously with such Transfer
such transferee has become a party to this Amended and
Restated Shareholders' Agreement and there is no violation of
Section 9(g) or Article 11 hereof as a result of such
Transfer; and
(4) such transfer is in compliance with all applicable securities
laws, including any applicable exemption.
For the purposes of this Agreement, any notice required to be given
to a Shareholder Transferor and its Affiliate need only be given to
the Shareholder Transferor, any Shares held by any such Affiliate
shall be deemed for all purposes of this Agreement to be held by the
Shareholder Transferor, any rights or obligations of such Affiliate
shall be deemed to be those of the Shareholder Transferor and all
actions taken by the Shareholder Transferor in connection therewith
shall be effective and binding upon such Affiliate as if made by it.
Nothing herein contained shall restrict the ability of any
Shareholder Transferor, on the one hand, and its Affiliate, on the
other hand, from entering into such
-22-
agreements consistent with the requirements of this Agreement as
they may determine to be necessary or desirable to govern, as
between themselves, the matters arising from the operation of this
Agreement.
(b) Other Exemptions -- Subject to Section 6.5 and notwithstanding any
other provisions of this Agreement to the contrary, a Shareholder
may Transfer Equity Securities if:
(1) it exercises its Co-Sale Right under Section 7.6 or Section
7.7;
(2) it is required by law;
(3) it is pursuant to a testamentary disposition or intestacy;
(4) the Transfer is pursuant to the terms of the Employee Stock
Purchase Plan Trust Agreement; or
(5) the Transfer is pursuant to Section 7.3, Section 7.4 or
Section 7.5.
7.3 RIGHT OF FIRST OFFER IN FAVOUR OF CORPORATION AND ALL SHAREHOLDERS
Subject to Sections 7.2, 7.4 and 7.5:
(a) For the purposes of this Section 7.3, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A
Preferred Shares equal to the proportion of the Series A Preferred
Shares held by Aspreva Funding that corresponds to such Series A
Investor's proportionate equity ownership interest in Aspreva
Funding.
(b) Make Offer - if any Shareholder other than a Series A Shareholder or
Series A Investor to whom this Section 7.3 shall not apply, or a
Founder to whom Sections 7.4 and 7.5, as the case may be, shall
apply (the "Offeror") wishes to sell any of his, her or its Equity
Securities (the "Saleable Securities"), then the Offeror shall first
offer (the "Offer") to the Corporation and the other Shareholders
(the "Other Offerees") by notice in writing the prior right to
purchase, receive or acquire the Saleable Securities;
(c) Notice Contents - the Offer shall identify the number and kind of
Saleable Securities, the price per share expressed in cash or cash
equivalent the Offeror is prepared to sell for, and whether or not
the Offeror has received a third party offer to purchase the
Saleable Securities (in which case the third party offer shall be
attached to the Offer and shall constitute the terms of the Offer);
(d) Corporation First Right - upon notice being given in accordance with
(b) above, the Corporation shall have the first right to accept the
Offer and purchase all or a portion of the Saleable Securities
offered for sale; the Corporation shall have 15 days after the
receipt of the Offer by the Corporation within which to give to the
Offeror a notice (the "Purchase Notice") that it agrees to purchase
all or a portion of such securities on the same terms and conditions
as are contained in the Offer and deliver a copy of the Purchase
Notice to each of the Other Offerees. If the Corporation does not
accept the Offer before the expiration of such 15 day period, then
the Corporation shall be deemed to have refused the Offer;
-23-
(e) Offerees Second Right - upon notice being given in accordance with
(b) above, if upon the expiry of the 15 day period the Corporation
has not delivered a Purchase Notice or has delivered a Purchase
Notice which specifies a lesser number of Saleable Securities than
the Offeror is prepared to sell, then the Offeror shall immediately
make a written offer (the "Second Offer") to each of the Other
Offerees on the following basis:
(1) Pro Rata Portions - the Second Offer shall state that each of
the Other Offerees is entitled to purchase up to that number
of the Saleable Securities mutually agreed upon by the Other
Offerees or, failing such mutual agreement, as determined by
application of the following formula:
Number of Saleable = Number of Common Shares held by such Other X Total Number of
Securities which a Offeree on a Fully Converted Basis Saleable
particular Other immediately prior to the Second Offer Securities minus
Offeree may purchase ------------------------------------------ number of shares
Number of Common Shares held by all Other Corporation to
Offerees on a Fully Converted Basis purchase
immediately prior to the Second Offer
(2) Acceptance Period - the Second Offer shall remain open for
acceptance by each Other Offeree until the end of a period of
15 days following receipt of the Second Offer by such Other
Offeree (if an Other Offeree does not accept the Second Offer
before the expiration of such 15 day period, then such Other
Offeree shall be deemed to have refused the Second Offer);
(3) Offer of any Remaining Securities - if the Second Offer has
been accepted by one or more, but not all, of the Other
Offerees at the expiration of the Offer, then the Offeror
shall be required to immediately make a written offer (the
"Third Offer") to each of the Other Offerees (the "Third Round
Offerees") who accepted the Second Offer, to sell to each of
the Third Round Offerees a portion of the unaccepted Saleable
Securities (the "Remaining Saleable Securities") on the
following basis:
(A) the Third Offer shall state that each of the Third Round
Offerees is entitled to purchase up to that number of
the Remaining Saleable Securities mutually agreed upon
by the Third Round Offerees or, failing such mutual
agreement, as determined by application of the following
formula:
Number of = Number of Common Shares held by such Third X Total Number of
Remaining Saleable Round Offeree on a Fully Converted Remaining
Securities which a Basis immediately prior to the Third Offer Saleable
particular Third ------------------------------------------ Securities
Round Offeree Number of Common Shares held by all Third
may purchase Round Offerees on a Fully Converted Basis
immediately prior to the Third Offer
(B) the Third Offer shall remain open for acceptance by each
Third Round Offeree for a period of 5 Business Days
following receipt of the Third Offer by such Third Round
Offeree (if a Third Round Offeree does not accept the
Third Offer within such 5 day period, then such Third
Round Offeree shall be deemed to have refused the Third
Offer);
-24-
(C) if at the expiration of such 5 day period the Third
Offer has not been accepted in full by all of the Third
Round Offerees, then the procedure described in this
paragraph (C) (a "Subsequent Offer") shall be repeated
with the next written offer being made only to those of
the Third Round Offerees who accepted the Third Offer,
with the appropriate adjustments to the formula
described in clause (e)(iii)(A) above, as the case may
be, and so on and so forth until one or more of the
Third Round Offerees has agreed to purchase the
unaccepted Remaining Saleable Securities or until no
Third Round Offeree wishes to purchase such unaccepted
Remaining Saleable Securities;
(f) Closing - the closing of the purchase of the Saleable Securities by
the Corporation and the Other Offerees hereunder shall take place at
the principal office of the Corporation on the later of the
following dates:
(1) the closing date specified in the Offer, the Second Offer, the
Third Offer or any Subsequent Offer, as the case may be; and
(2) the 5th Business Day following the acceptance of the Offer,
the Second Offer, the Third Offer or any Subsequent Offer, as
the case may be;
(g) Sale to Third Party - subject to Section 6.5, if any of the
Remaining Saleable Securities still remain unaccepted after the
expiration of the Second Offer, the Third Offer and (if applicable)
any Subsequent Offers, the Offeror may, for 90 days thereafter,
offer the Remaining Saleable Securities offered but not subscribed
for to a third party at a price and on terms and conditions no more
favourable (from a purchaser's perspective) than the terms and
conditions set forth in the Offer;
(h) Expiry of Third Party Sale Period - if the Offeror has not completed
the sale of all of the Saleable Securities to the third party in
accordance with paragraph (g) above within 90 days following the
expiration of the latest of:
(1) the Offer, the Second Offer, the Third Offer or the last of
any Subsequent Offers, as the case may be; and
(2) if applicable, completion of the last applicable step under
the Co-Sale Right under Section 7.6;
then the right of the Offeror under paragraph (g) above to sell the Saleable
Securities to the third party shall terminate and the Offeror shall be required
to again comply with this Section before Transferring any of his Equity
Securities to the third party or any other Person.
7.4 MANDATORY DISPOSITION FOR FOUNDERS
(a) For the purposes of this Section 7.4, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A
Preferred Shares equal to the proportion of the Series A Preferred
Shares held by Aspreva Funding that corresponds to such Series A
Investor's proportionate equity ownership interest in Aspreva
Funding.
(b) Mandatory Disposition - notwithstanding Sections 7.1, 7.3 and 7.5,
if a Founder (the "Departing Founder"):
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(1) is employed by the Corporation and resigns or is terminated
for "Cause" (as defined in such Founder's Executive Employment
Agreement with the Corporation);
(2) is employed by a consultant to the Corporation (the
"Consultant") and the consulting agreement with respect
thereto is terminated by the Consultant or is terminated by
the Corporation for "cause" (as defined in such consulting
agreement);
(each, a "Triggering Event") at any time prior to the expiration of
36 months from January 16, 2003, the Departing Founder shall be
deemed, without any further action on the part of the Departing
Founder or his legal representatives, to have then offered (the
"Mandatory Offer") to the remaining Founders (the "Remaining
Founders") the right to purchase 75% of the Founders' Shares owned
by such Departing Founder at the time of the Triggering Event (the
"Original Vested Founder's Shares"), less the number of Founders'
Shares that is equal to 1/36 of the number of the Original Vested
Founder's Shares for each full month that has elapsed from January
16, 2003 to the date of the Triggering Event (the "Subject Founder's
Shares"), at a price per Subject Founder's Share equal to the price
per Subject Founder's Share paid to the Corporation by the Departing
Founder.
(c) Secretary to Provide Notice - If a Triggering Event occurs pursuant
to Subsection (b) above, the Secretary of the Corporation shall
provide, on behalf of the Departing Founder, written notice to the
Remaining Founders of any Mandatory Offer to which they are
entitled, including the number and kind of Subject Founder's Shares
and the price per share.
(d) Remaining Founders' First Right - upon notice being given in
accordance with Subsection (c) above, the Remaining Founders shall
have the first right to accept such Mandatory Offer and purchase all
or a portion of the Subject Founder's Shares offered for sale on the
following basis:
(1) Pro Rata Portions - each of the Remaining Founders shall be
entitled to purchase up to that number of the Subject
Founder's Shares mutually agreed upon by the Remaining
Founders or, failing such mutual agreement, as determined by
application of the following formula:
Number of Subject = Number of Common Shares held by such Remaining X Total Number of
Founder's Shares Founder on a Fully Converted Basis Subject
which a particular immediately prior to the Mandatory Offer Founder's
Remaining Founder may ----------------------------------------------- Shares
purchase Number of Common Shares held by all Remaining
Founders on a Fully Converted Basis immediately
prior to the Mandatory Offer
(2) Acceptance Period - such Mandatory Offer shall remain open for
acceptance by each Remaining Founder until the end of a period
of 15 days following receipt of such Mandatory Offer by such
Remaining Founder (if a Remaining Founder does not accept such
Mandatory Offer before the expiration of such 15 day period,
then such Remaining Founder shall be deemed to have refused
the Mandatory Offer);
-26-
(3) Offer of any Remaining Securities - if such Mandatory Offer
has been accepted by one or more, but not all, of the
Remaining Founders at the expiration of such Mandatory Offer,
then the Secretary of the Corporation shall, on behalf of the
Departing Founder, immediately provide notice (the "Second
Mandatory Offer") to each of the Remaining Founder (the
"Second Mandatory Round Offerees") who accepted the Mandatory
Offer, stating that they may purchase a portion of the
unaccepted Subject Founder's Shares (the "Remaining Subject
Founder's Shares") on the following basis:
(A) up to that number of the Remaining Subject Founder's
Shares mutually agreed upon by the Second Mandatory
Round Offerees or, failing such mutual agreement, as
determined by application of the following formula:
Number of Remaining = Number of Common Shares held by such Second X Total Number of
Subject Founder's Mandatory Round Offeree on a Fully Converted Remaining Subject
shares which a Basis immediately prior to the Mandatory Offer Founder's Shares
particular Second ----------------------------------------------
Mandatory Round Number of Common Shares held by all Second
Offeree may purchase Mandatory Round Offerees on a Fully Converted
Basis immediately prior to the Mandatory Offer
(B) the Second Mandatory Offer shall remain open for
acceptance by each Second Mandatory Round Offeree for a
period of 5 Business Days following receipt of the
Second Mandatory Offer by such Second Mandatory Round
Offeree (if a Second Mandatory Round Offeree does not
accept the Second Mandatory Offer within such 5 day
period, then such Second Mandatory Round Offeree shall
be deemed to have refused the Second Mandatory Offer);
(C) if at the expiration of such 5 day period the Second
Mandatory Offer has not been accepted in full by all of
the Second Mandatory Round Offerees, then the procedure
described in this paragraph (C) (a "Subsequent Mandatory
Offer") shall be repeated with the next written offer
being made only to those of the Second Mandatory Round
Offerees who accepted the Second Mandatory Offer, with
the appropriate adjustments to the formula described in
clause (d)(iii)(A) above, as the case may be, and so on
and so forth until one or more of the Second Mandatory
Round Offerees has agreed to purchase the unaccepted
Remaining Subject Founder's Shares or until no Second
Mandatory Round Offeree wishes to purchase such
unaccepted Remaining Subject Founder's Shares;
(e) Closing - the closing of the purchase of the Subject Founder's
Shares by the Remaining Founders shall take place at the principal
office of the Corporation on the later of the following dates:
(1) the closing date specified in the Mandatory Offer, the Second
Mandatory Offer, or any Subsequent Mandatory Offer, as the
case may be; and
-27-
(2) the 5th Business Day following the acceptance of the Mandatory
Offer, the Second Mandatory Offer or any Subsequent Mandatory
Offer, as the case may be.
7.5 RIGHT OF FIRST OFFER OF FOUNDER SHARES IN FAVOUR OF SERIES A INVESTORS
Notwithstanding Section 7.3 but subject to Section 7.4:
(a) For the purposes of this Section 7.5, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A
Preferred Shares equal to the proportion of the Series A Preferred
Shares held by Aspreva Funding that corresponds to such Series A
Investor's proportionate equity ownership interest in Aspreva
Funding.
(b) Make Offer - if a Founder (the "Founder Offeror") wishes to sell any
of his Equity Securities (the "Founder's Saleable Securities"), then
the Founder Offeror shall first offer (the "Founder's Offer") to the
Series A Investors (the "Series A Offerees") by notice in writing
the prior right to purchase, receive or acquire the Founder's
Saleable Securities;
(c) Notice Contents - the Founder's Offer shall identify the number and
kind of Founder's Saleable Securities, the price per share expressed
in cash or cash equivalent the Founder Offeror is prepared to sell
for, and whether or not the Founder Offeror has received a third
party offer to purchase the Founder's Saleable Securities (in which
case the third party offer shall be attached to the Founder's Offer
and shall constitute the terms of the Founder's Offer);
(d) Series A Shareholders' First Right - the Founder's Offer shall make
a written offer to each of the Series A Offerees on the following
basis:
(1) Pro Rata Portions - the Founder's Offer shall state that each
of the Series A Offerees is entitled to purchase up to that
number of the Founder's Saleable Securities mutually agreed
upon by the Series A Offerees or, failing such mutual
agreement, as determined by application of the following
formula:
Number of Founder's = Number of Common Shares held by such Series A X Total Number of
Saleable Securities Offeree on a Fully Converted Basis Founder's
which a particular immediately prior to the Founder's Offer Saleable
Series A Offeree may --------------------------------------------- Securities
purchase Number of Common Shares held by all Series A
Offerees on a Fully Converted Basis
immediately prior to the Founder's Offer
(2) Acceptance Period - the Founder's Offer shall remain open for
acceptance by each Series A Offeree until the end of a period
of 15 days following receipt of the Founder's Offer by such
Series A Offeree. If a Series A Offeree does not accept the
Founder's Offer before the expiration of such 15 day period,
then such Series A Offeree shall be deemed to have refused the
Founder's Offer;
(3) Offer of any Remaining Securities - if the Founder's Offer has
been accepted by one or more, but not all, of the Series A
Offerees at the expiration of the Offer, then the Founder
Offeror shall be required to immediately make a written offer
(the "Founder's Second Offer") to each of the Series A
Offerees (the "Second Round Series A Offerees") who accepted
the Founder's Offer, to sell to each of the Second Round
Series A Offerees a portion of the unaccepted Founder's
-28-
Saleable Securities (the "Founder's Remaining Saleable
Securities") on the following basis:
(A) the Founder's Second Offer shall state that each of the
Second Round Series A Offerees is entitled to purchase
up to that number of the Founder's Remaining Saleable
Securities mutually agreed upon by the Second Round
Series A Offerees or, failing such mutual agreement, as
determined by application of the following formula:
Number of Founder's = Number of Common Shares held by such Second X Total Number of
Remaining Saleable Round Series A Offeree on a Fully Converted Founder's
Securities which a Basis immediately prior to the Founder's Second Offer Remaining
particular Second -------------------------------------------- Saleable
Round Series A Offeree Number of Common Shares held by all Second Securities
may purchase Round Series A Offerees on a Fully Converted
Basis immediately prior to the Founder's
Second Offer
(B) the Founder's Second Offer shall remain open for
acceptance by each Second Round Series A Offeree for a
period of 5 Business Days following receipt of the
Second Round Series A Offer by such Second Round Series
A Offeree. If a Second Round Series A Offeree does not
accept the Second Round Series A Offer within such 5 day
period, then such Second Round Series A Offeree shall be
deemed to have refused the Second Round Series A Offer;
(4) Offer of any Remaining Securities - if the Founder's Second
Offer has been accepted by one or more, but not all, of the
Second Round Series A Offerees at the expiration of the
Founder's Offer, then the Founder Offeror shall be required to
immediately make a written offer (the "Founder's Third Offer")
to each of the Second Round Series A Offerees who accepted the
Founder's Second Offer (the "Third Round Series A Offerees")
to sell to each of the Third Round Series A Offerees a portion
of the unaccepted Founder's Remaining Saleable Securities (the
"Founder's Last Remaining Saleable Securities") on the
following basis:
(A) the Founder's Third Offer shall state that each of the
Third Round Series A Offerees is entitled to purchase up
to that number of the Founder's Last Remaining Saleable
Securities mutually agreed upon by the Third Round
Series A Offerees or, failing such mutual agreement, as
determined by application of the following formula:
Number of Founder's = Number of Common Shares held by such Third X Total Number of
Last Remaining Round Series A Offeree on a Fully Converted Founder's Last
Saleable Securities Basis immediately prior to the Founder's Third Offer Remaining
which a particular ---------------------------------------------------- Saleable
Third Round Series A Number of Common Shares held by all Third Securities
Offeree may purchase Round Series A Offerees on a Fully Converted
Basis immediately prior to the Founder's
Third Offer
(B) the Founder's Third Offer shall remain open for
acceptance by each Third Round Series A Offeree for a
period of 5 Business Days following
-29-
receipt of the Founder's Third Offer by such Third Round
Series A Offeree. If a Third Round Series A Offeree does
not accept the Third Offer within such 5 day period,
then such Third Round Series A Offeree shall be deemed
to have refused the Founder's Third Offer;
(C) if at the expiration of such 5 day period the Founder's
Third Offer has not been accepted in full by all of the
Third Round Series A Offerees, then the procedure
described in this paragraph (C) (a "Founder's Subsequent
Offer") shall be repeated with the next written offer
being made only to those of the Third Round Series A
Offerees who accepted the Founder's Third Offer, with
the appropriate adjustments to the formula described in
clause 7.5(d)(4)(A) above, as the case may be, and so on
and so forth until one or more of the Third Round Series
A Offerees has agreed to purchase the unaccepted
Founder's Last Remaining Saleable Securities or until no
Third Round Series A Offeree wishes to purchase such
unaccepted Founder's Last Remaining Saleable Securities;
(e) Closing - the closing of the purchase of the Founder's Saleable
Securities by and the Series A Offerees hereunder shall take place
at the principal office of the Corporation on the later of the
following dates:
(1) the closing date specified in the Founder's Offer, the
Founder's Second Offer, the Founder's Third Offer or any
Founder's Subsequent Offer, as the case may be; and
(2) the 5th Business Day following the acceptance of the Founder's
Offer, the Founder's Second Offer, the Founder's Third Offer
or any Founder's Subsequent Offer, as the case may be;
(f) Sale to Third Party - subject to Section 6.5, if any of the
Founder's Last Remaining Saleable Securities still remain unaccepted
after the expiration of the Founder's Second Offer, the Founder's
Third Offer and (if applicable) any Founder's Subsequent Offers, the
Founder Offeror may, for 90 days thereafter, offer the Founder's
Last Remaining Saleable Securities offered but not subscribed for to
a third party at a price and on terms and conditions no more
favourable (from a purchaser's perspective) than the terms and
conditions set forth in the Founder's Offer;
(g) Expiry of Third Party Sale Period - if the Founder Offeror has not
completed the sale of all of the Founder's Saleable Securities to
the third party in accordance with paragraph (e) above within 90
days following the expiration of the latest of:
(1) the Founder's Offer, the Founder's Second Offer, the Founder's
Third Offer or the last of any Founder's Subsequent Offers, as
the case may be; and
(2) if applicable, completion of the last applicable step under
the Co-Sale Right under Section 7.6;
then the right of the Founder Offeror under paragraph (f) above to
sell the Founder's Saleable Securities to the third party shall
terminate and the Founder Offeror shall be
-30-
required to again comply with this Section before Transferring any
of his Equity Securities to the third party or any other Person.
7.6 CO-SALE RIGHTS ON CHANGE OF CONTROL: SHAREHOLDER SALES
Without limiting the provisions of Sections 7.1, 7.3 and 7.5:
(a) For the purposes of this Section 7.6, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A
Preferred Shares equal to the proportion of the Series A Preferred
Shares held by Aspreva Funding that corresponds to such Series A
Investor's proportionate equity ownership interest in Aspreva
Funding.
(b) Change of Control Co-Sale Notice - If any Shareholder or
Shareholders (the "Vending Shareholder") becomes entitled to
transfer Equity Securities (the "Control Shares") to a person who is
not a party to this Agreement (the "Third-Party Buyer" and, for
greater clarity, a Third-Party Buyer shall not include Aspreva
Funding) pursuant to Subsection 7.3(g) or 7.5(g) (or, in the case of
a Series A Shareholder not being bound by Section 7.3 or 7.5, by
virtue of Section 7.1) and the Third-Party Buyer, together with the
Third-Party Buyer's Associates and Affiliates, is already entitled
or would thereafter be entitled to exercise in excess of 50% of the
votes at a general meeting of the shareholders of the Corporation
(determined on a Fully Diluted Basis), the Vending Shareholder
shall, at least 21 days prior to the date of the intended sale,
deliver a written notice of the intended sale (the "Control Notice")
to the other Shareholders, which Control Notice shall specify the
terms of the intended sale, including, without limitation:
(1) Name. The name and address of the Third-Party Buyer;
(2) Number of Shares Held. The number and class of Equity
Securities owned by the Third-Party Buyer and the Third-Party
Buyer's Associates and Affiliates;
(3) Price. The purchase price and other terms and conditions for
the sale of the Control Shares;
(4) Date. The date on or about which the sale is intended to be
made;
(5) Number of Shares to be Sold. The number and class of Shares to
be sold; and
(6) Previous Details. Details of any previous transactions by
which the Vending Shareholder has sold any Equity Securities
since the date of this Agreement.
(c) Piggyback - Each of the Shareholders (other than the Vending
Shareholder) shall have the right (the "Co-Sale Right"), within 21
days from the date of receipt of the Control Notice to sell to the
Third-Party Buyer all of their Equity Securities at a price per
Equity Security equal to the Control Price (defined below) and
otherwise on the same terms and conditions set forth in the Control
Notice. If any Shareholder (the "Additional Vendor") so elects to
sell its Equity Securities to the Third-Party Buyer, it shall so
inform both the Third-Party Buyer and the Vending Shareholder in
writing not more than 21 days after receipt of the Control Notice.
The sale by all Additional Vendor(s) shall take place coincidentally
with the sale of the Control Shares, and the Vending Shareholder
shall not complete its sale unless all transactions between the
Third-Party Buyer and any Additional Vendor(s) are similarly
completed. If the Third-Party Buyer shall not purchase
-31-
the Equity Securities of the Additional Vendor(s) on the sale date,
the proposed sale by the Vending Shareholder as described in the
Control Notice shall not be made. If the Vending Shareholder
completes its sale to the Third-Party Buyer without the Third-Party
Buyer also purchasing the Equity Securities of the Additional
Vendor(s), contrary to the Vending Shareholder's obligations in the
preceding sentence, the Additional Vendor(s) shall have the right to
put (by notice in writing) their Equity Securities to the Vending
Shareholder and the Vending Shareholder shall forthwith purchase
such Equity Securities at the Control Price.
(d) Definition of Control Price - The price (the "Control Price") that
the Third Party Buyer must pay to the Additional Vendors for their
respective Equity Securities shall be further adjusted or derived in
accordance with the following rules:
(1) the price per Share for a class of Shares shall be the greater
of:
(A) the price payable per Share for that class of Shares, as
specified in the Control Notice; and
(B) the average price per Share of that class paid any time
within the previous two (2) years by the Third-Party
Buyer or any of the Third-Party Buyer's Associates or
Affiliates to the Vending Shareholder;
(2) if the price specified in the Control Notice is for Common
Shares only, the price per Share for any Preferred Shares of
the Corporation in respect of which the Co-Sale Right is
exercised by an Additional Vendor shall be computed as if such
Preferred Shares were converted into Common Shares in
accordance with their terms;
(3) if the price specified in the Control Notice is for Preferred
Shares only, the price per Share for any Common Shares in
respect of which the Co-Sale Right is exercised by an
Additional Vendor shall be computed on the basis of a reverse
conversion of Common Shares to Preferred Shares;
(4) if the price specified in the Control Notice does not include
a price for a class of Equity Securities which entitle the
holder thereof to acquire Common Shares, such class of Equity
Securities shall be priced as if such securities were fully
exercised, converted or exchanged (as the case may) into
Common Shares (net of any amounts payable by the holder on
such exercise, conversion or exchange); and
(5) if the price specified in the Control Notice does not include
a price for a class of Equity Securities which entitle the
holder thereof to acquire Preferred Shares, such class of
Equity Securities shall be priced as if such securities were
fully exercised, converted or exchanged (as the case may) into
Preferred Shares (net of any amounts payable by the holder on
such exercise, conversion or exchange).
(e) Sale to Third-Party Buyer - Subject to Sections 6.5, and subject to
compliance with Sections 7.6(b), (c) and (d) hereof (if applicable),
the Vending Shareholder may sell the Shares offered for sale to the
Third-Party Buyer at the price and on the terms specified in the
Control Notice. If the Vending Shareholder has not sold the Control
Shares offered for sale within 120 days after the mailing of the
Control Notice to the Shareholders, the
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Vending Shareholder shall not sell the Control Shares offered for
sale without again complying with the terms of Sections 7.6(b), (c)
and (d).
7.7 CO-SALE RIGHTS ON CHANGE OF CONTROL: SHAREHOLDER PURCHASE
Without limiting the provisions of Sections 7.1, 7.3 and 7.5:
(a) For the purposes of this Section 7.7, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A
Preferred Shares equal to the proportion of the Series A Preferred
Shares held by Aspreva Funding that corresponds to such Series A
Investor's proportionate equity ownership interest in Aspreva
Funding.
(b) Change of Control Co-Sale Notice - If any Shareholder, other than
Aspreva Funding, (the "Buyer") proposes to purchase Equity
Securities (the "Control Shares") from a Person not a party to this
Agreement (the "External Person") and the Buyer, together with the
Buyer's Associates and Affiliates, is already entitled or would
thereafter be entitled to exercise in excess of 50% of the votes at
a general meeting of the shareholders of the Corporation (determined
on a Fully Diluted Basis), the Buyer shall, at least 30 days prior
to the date of the intended sale, deliver a written notice of the
intended sale (the "Control Notice") to the other Shareholders,
which Control Notice shall specify the terms of the intended sale,
including, without limitation:
(1) Name. The name and address of the External Person;
(2) Number of Shares Held. The number and class of Equity
Securities owned by the Buyer and the Buyer's Associates and
Affiliates;
(3) Price. The purchase price and other terms and conditions for
the sale of the Control Shares;
(4) Date. The date on or about which the sale is intended to be
made;
(5) Number of Shares to be Sold. The number and class of Control
Shares to be sold; and
(6) Previous Details. Details of any previous transactions by
which the Buyer and its Associates and Affiliates purchased
Equity Securities since the date of this Agreement.
(c) Piggyback - Subject to Section 6.5, each of the Shareholders (other
than the External Person) shall have the right (the "Co-Sale
Right"), within 21 days from the date of receipt of the Control
Notice, to sell to the Buyer all of their Equity Securities at a
price per Equity Security equal to the Control Price (defined below)
and otherwise on the same terms and conditions set forth in the
Control Notice. If any Shareholder (the "Additional Vendor") so
elects to sell its Equity Securities to the Buyer, it shall so
inform both the Buyer and the External Person in writing not more
than 21 days after receipt of the Control Notice. The sale by all
Additional Vendor(s) shall take place coincidentally with the sale
of the Control Shares, and the External Person shall not complete
its sale unless all transactions between the Buyer and any
Additional Vendor(s) are similarly completed. If the Buyer shall not
purchase the Equity Securities of the Additional Vendor(s) on the
sale date, the proposed sale by the External Person as described in
the Control Notice
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shall not be made. If the External Person completes its sale to the
Buyer without the Buyer also purchasing the Equity Securities of the
Additional Vendor(s), contrary to the External Person's obligations
in the preceding sentence, the Additional Vendor(s) shall have the
right to put (by notice in writing) their Equity Securities to the
Buyer and the Buyer shall forthwith purchase such Equity Securities
at the Control Price.
(d) Definition of Control Price - The price (the "Control Price") that
the Buyer must pay to the Additional Vendors for their respective
Equity Securities shall be further adjusted or delivered in
accordance with the following rules:
(1) the price per Share for a class of Shares shall be the greater
of:
(A) the price payable per Share for that class of Shares, as
specified in the Control Notice; and
(B) the average price per Share of that class paid any time
within the previous two (2) years by the Buyer or any of
the Buyer's Associates or Affiliates to the External
Person;
(2) if the price specified in the Control Notice is for Common
Shares only, the price per Share for any Preferred Shares of
the Corporation in respect of which the Co-Sale Right is
exercised by an Additional Vendor shall be computed as if such
Preferred Shares were converted into Common Shares in
accordance with their terms;
(3) if the price specified in the Control Notice is for Preferred
Shares only, the price per Share for any Common Shares in
respect of which the Co-Sale Right is exercised by an
Additional Vendor shall be computed on the basis of a reverse
conversion of Common Shares to Preferred Shares;
(4) if the price specified in the Control Notice does not include
a price for a class of Equity Securities which entitle the
holder thereof to acquire Common Shares, such class of Equity
Securities shall be priced as if such securities were fully
exercised, converted or exchanged (as the case may) into
Common Shares (net of any amounts payable by the holder on
such exercise, conversion or exchange); and
(5) if the price specified in the Control Notice does not include
a price for a class of Equity Securities which entitle the
holder thereof to acquire Preferred Shares, such class of
Equity Securities shall be priced as if such securities were
fully exercised, converted or exchanged (as the case may) into
Preferred Shares (net of any amounts payable by the holder on
such exercise, conversion or exchange). If the Buyer shall not
purchase an Additional Vendor's Equity Securities on a Fully
Diluted Basis from an Additional Vendor on the terms and
conditions provided for herein, then the Transfer of the
Equity Securities from the External Person to the Buyer shall
not be made. If the External Person completes the Transfer of
all or part of the Equity Securities to the Buyer in violation
of the foregoing, then the Additional Vendor shall have, in
addition to any other rights or remedies the Additional Vendor
may have at law or equity, the right to put (by notice in
writing) the Additional Vendor's Equity Securities to the
Buyer at the price(s) determined hereunder.
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7.8 DRAG ALONG RIGHTS
Notwithstanding anything in this Section but subject to Sections 7.3, 7.5, 7.6
and 7.7, if:
(a) Shareholders (the "Selling Shareholders") have agreed to Transfer to
a Person, or Persons acting in concert, (a "Purchaser"), Equity
Securities representing more than 80% of the Common Shares of the
Corporation (calculated on a Fully Converted Basis, provided that
the term Fully Converted Basis for the purposes of this Subsection
shall not include any Equity Securities which, if converted, would
put the holder thereof in a worse economic position given the
purchase prices payable by the Purchaser to the Selling
Shareholders); and
(b) the Purchaser offers to each of the other Shareholders (the "Other
Shareholders") to purchase the remaining Equity Securities of
particular kinds or classes (the "Specified Securities") on
equivalent terms and conditions, mutatis mutandis, as those agreed
to by the Selling Shareholders, all of which terms and conditions
are set out in writing and promptly delivered to the Other
Shareholders (the "Drag Along Offer");
then the Other Shareholders shall be required to sell all of their Specified
Securities to the Purchaser in accordance with the terms and conditions of the
Drag Along Offer.
If any of the Other Shareholders (the "Delinquent Holders") fail to sell their
Specified Securities to the Purchaser in accordance with the terms and
conditions of the Drag Along Offer, the Purchaser shall have the right to
deposit the applicable purchase price for those Specified Securities of the
Delinquent Holders in a special account at any financial institution in Canada,
to be paid proportionately with interest, to the respective Delinquent Holders
upon presentation and surrender to such financial institution of the
certificates or documents representing such holders' Specified Securities duly
endorsed for transfer to the Purchaser. Upon such deposit being made, the
Specified Securities in respect of which the deposit was made shall hereby
automatically (without any further action of any kind on the part of the
Delinquent Holders or the Purchaser, as the case may be) be transferred to and
purchased by the Purchaser, and shall be transferred on the books of the
Corporation to the Purchaser, and the rights of the Delinquent Holders in
respect of those Specified Securities after such deposit shall hereby be limited
to receiving, with interest, their respective portion of the total amount so
deposited against presentation and surrender of the certificates or documents
representing their respective Specified Securities duly endorsed for transfer to
the Purchaser.
7.9 INVOLUNTARY TRANSFERS ON BANKRUPTCY
The following terms and conditions shall also apply to Transfers of Equity
Securities by Shareholders:
(a) Bankruptcy or Insolvency - In the event that any Shareholder (an
"Insolvent Shareholder") makes an assignment for the benefit of
creditors or is the subject of any proceedings under any bankruptcy
or insolvency law and such assignment or proceedings have not been
terminated or resolved and settled in favour of the Insolvent
Shareholder without any adverse financial result to the Insolvent
Shareholder within 60 days from the date of such event, the
Corporation shall, upon written notice to the Insolvent Shareholder
or his/her personal representative, have the right to purchase from
such Insolvent Shareholder all of the Equity Securities owned by
such Insolvent Shareholder at a price equal to the "fair market
value" of such Equity Securities (as calculated in accordance with
Section 7.9(b)). For the purposes of this Section 7.9, a
determination by a majority of the Board that an Insolvent
Shareholder has become insolvent or bankrupt
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shall be final and binding, subject to the right of arbitration set
out in Section 11.11. The Corporation shall be entitled to assign to
the other Shareholders its right to purchase the Equity Securities
of the Insolvent Shareholder, in whole or in part, in which event
the provisions of Section 7.3 and 7.5 shall apply to the extent
applicable (except that the price shall be "fair market value" as
referred to above). If the Corporation and/or the other Shareholders
decide to purchase the Equity Securities, the price shall be paid in
cash on the closing of the transaction and such transaction shall
close within sixty (60) days from the date that the "fair market
value" of such Equity Securities has been determined.
(b) Fair Market Value - For the purposes of this Section 7.9, "fair
market value" of the Equity Securities means the en bloc fair market
value of those Equity Securities being the highest price, expressed
in money or money's worth, available in an open and unrestricted
market between informed and willing parties acting at arm's length
and under no compulsion to act, determined in accordance with
generally accepted valuation practices. Such value shall be
determined on a going concern basis, unless inappropriate in light
of circumstances, and shall not take into account that the Equity
Securities may represent a majority or minority interest in the
Corporation. To determine fair market value, the Board shall
determine, in good faith, the amount of the fair market value as of
the end of the month in which the event referred to in Section
7.9(a) has occurred or as of the end of the month in which the
Corporation exercises its right to purchase under Section 7.9(a).
If, within 30 days after the determination of the fair market value
by the Board, any party disputes such value, then upon request by
such party the fair market value shall be determined by the auditors
of the Corporation, and the party disputing the Board's
determination shall pay all costs of the determination of the
auditors. The amount of the fair market value determined by the
auditors shall be final and binding.
7.10 RECOGNITION OF TRANSFERS
The Corporation shall not recognize any Transfers of Equity Securities made in
violation of this Agreement.
7.11 ENDORSEMENT ON SHARE CERTIFICATES
Any and all certificates representing Shares now or hereafter owned by
Shareholders during the currency of this Agreement (whether such Shares are
issued initially or with respect to Transfer or otherwise) shall have endorsed
thereon in bold type the following legends:
"This certificate is issued subject to and the securities represented
hereby may not be sold, transferred, pledged, hypothecated or otherwise
disposed of, except in compliance with the terms of the Shareholders'
Agreement made as of March 5, 2004."
7.12 WAIVER OF RIGHTS
Notwithstanding any other provision of this Article 7, any Shareholder may waive
his rights with respect to any particular offer given under Article 7 by notice
in writing to the Corporation and the Offeror or Vending Shareholder, as the
case may be. For the purposes of this Section 7.12, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A Preferred Shares
equal to the proportion of the Series A Preferred Shares held by Aspreva Funding
that corresponds to such Series A Investor's proportionate equity ownership
interest in Aspreva Funding.
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7.13 TRANSFER OF AGREEMENT RIGHTS
The Transfer of Equity Securities by a Shareholder pursuant to the provisions of
Article 7 may include the transfer of such Shareholders' rights under this
Agreement.
7.14 NO PLEDGING OF SHARES
No Shareholder shall mortgage, pledge, charge, hypothecate or otherwise encumber
its Shares or any part thereof without the prior written consent thereto of the
other Shareholders, which consent may be arbitrarily withheld without giving any
reason therefor.
8. AMENDMENT AND TERMINATION
8.1 AMENDMENTS
No term or provision hereof may be amended except by an instrument in writing
(the "Amending Instrument") duly signed by the Corporation and the Shareholders
owning not less than 75% of the Common Shares (on a Fully Converted Basis) that
are subject to this Agreement; provided however, that if the amendment affects
the rights, restrictions or obligations of the Shareholders only, the
Corporation need not execute the Amended Instrument. Notwithstanding the
foregoing sentence, an amendment of a term or provision hereof shall be binding
upon those Shareholders, if any, who did not execute the Amending Instrument
providing for such amendment only upon providing notice thereof to such
Shareholders. For the purposes of this Section 8.1, each Series A Investor shall
be deemed to be a Shareholder and to own a number of Series A Preferred Shares
equal to the proportion of the Series A Preferred Shares held by Aspreva Funding
that corresponds to such Series A Investor's proportionate equity ownership
interest in Aspreva Funding.
8.2 TERMINATION EVENTS
This Agreement shall terminate, except as provided in Section 8.3, if:
(a) the Corporation and Shareholders owning not less than 75% of the
Common Shares (on a Fully Converted Basis) that are subject to this
Agreement so agree (for the purposes of this paragraph (a), each
Series A Investor shall be deemed to be a Shareholder and to own a
number of Series A Preferred Shares equal to the proportion of the
Series A Preferred Shares held by Aspreva Funding that corresponds
to such Series A Investor's proportionate equity ownership interest
in Aspreva Funding);
(b) the Corporation is dissolved, liquidated or formally wound-up;
(c) one Shareholder acquires all Shares;
(d) a duly approved Initial Public Offering is completed on a Senior
Stock Exchange.
8.3 SURVIVING OBLIGATIONS
The termination of this Agreement shall not affect the right of any party to
whom money is owed hereunder at the time of termination to receive that money
according to the provisions hereof or affect any other rights or obligations
which arose hereunder in respect of matters occurring prior to such termination.
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8.4 DETERMINATION
Subject to Section 8.3 and on-going obligations (if any) under Subsection
7.2(a)(ii), this Agreement shall terminate in respect of any party who ceases
for any reason to be a Shareholder, and the Agreement shall remain in full force
and effect with respect to the remaining Shareholders. For the purposes of this
Section 8.4, each Series A Investor shall be deemed to be a Shareholder and to
own a number of Series A Preferred Shares equal to the proportion of the Series
A Preferred Shares held by Aspreva Funding that corresponds to such Series A
Investor's proportionate equity ownership interest in Aspreva Funding.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Shareholder (except, with respect to paragraphs (b) and (d), for agreements
and arrangements previously disclosed to the Corporation by Aspreva Funding)
hereby, separately and severally and with respect to itself and its own Shares
only, represents and warrants to each other Shareholder and to the Corporation
that as of the date of this Agreement it:
(a) is acquiring and shall hold its Shares as sole principal and for
investment purposes only, and not with a view to the distribution
thereof and not in trust for or on behalf of any other person or
persons;
(b) is neither a party to or bound by any other agreement regarding the
ownership of its Shares;
(c) is not a party to, bound by or subject to any indenture, mortgage,
lease, agreement, instrument, charter, Articles, by-laws or
constating documents, order, judgment, decree, or, to the best
knowledge of the Shareholder law, statute or regulation which would
be violated, contravened, or breached by, or under which any default
would occur as a result of, the execution and delivery by such
Shareholder of this Agreement or the performance by such Shareholder
of any of the terms hereof;
(d) has not created any mortgage, lien or encumbrance or security
interest upon any of its Shares, and is not subject to or bound by
any agreement under which any mortgage, encumbrance, lien or
security interest may be created upon any of its Shares;
(e) if a corporation or a partnership, that it was duly incorporated,
formed or created, as applicable and is validly existing under the
laws of its jurisdiction of incorporation, formation or creation, as
applicable, and that it has the corporate or legal power and
capacity to own its assets and to enter into and perform its
obligations pursuant to this Agreement;
(f) the TW Investor hereby represents and warrants (the "TW
Representation") that none of its direct partners is a natural
person that is a citizen or resident of the United States for United
States federal income tax purposes, and pursuant to the provisions
of the limited partnership agreement of the TW Investor, upon the
liquidation of the TW Investor, its general partner is entitled to
retain aggregate distributions with respect to its investment in the
Corporation (in addition to any distributions received by the
general partner in connection with its contribution to the TW
Investor) not in excess of 20% of the excess of all distributions
made by the TW Investor with respect to its investment in the
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Corporation over all contributions to the TW Investor with respect
to its investment in the Corporation, plus (in certain
circumstances) distributions approximately equal to $1.5 million.
The TW Investor covenants and agrees that if at any time after the
date hereof the TW Investor becomes aware of any fact, event,
development, occurrence or circumstance that either individually or
in the aggregate is reasonably likely to result in the TW
Representation becoming untrue in any respect (as if the TW
Representation were made as of such date), such TW Investor shall
(i) give prompt written notice thereof to the Corporation and to
Sprout Capital IX, L.P. and (ii) cooperate with the other US
Investors and use all commercially reasonable efforts to prevent the
ownership (including an indirect ownership and an ownership by
attribution) of the Corporation (or any of its subsidiaries) by
United States persons as defined in the United States Internal
Revenue Code of 1986, as amended from exceeding 49% of the total
outstanding Common Shares (assuming conversion of all outstanding
Preferred Shares or other convertible securities) of the Corporation
(or equivalent securities of any of its subsidiaries);
(g) the HBM Investor hereby represents and warrants (the "HBM
Representation") that (i) it is 100% indirectly owned by HBM
BioVentures Ltd., a Swiss corporation (the "Swiss Parent"), which is
widely held, and (ii) if any shares of Swiss Parent are owned by an
individual that is a citizen or resident of the United States for
federal income tax purposes, such ownership, if any, shall not
exceed 1% of the total outstanding shares of Swiss Parent. The HBM
Investor covenants and agrees that if at any time after the date
hereof the HBM Investor becomes aware of any fact, event,
development, occurrence or circumstance that either individually or
in the aggregate is reasonably likely to result in the HBM
Representation becoming untrue in any respect (as if the HBM
Representation were made as of such date), the HBM Investor shall
(i) give prompt written notice thereof to the Corporation and to
Sprout Capital IX, L.P. and (ii) cooperate with the other US
Investors and use all commercially reasonable efforts to prevent the
ownership (including an indirect ownership and an ownership by
attribution) of the Corporation (or any of its subsidiaries) by
United States persons as defined in the United States Internal
Revenue Code of 1986, as amended from exceeding 49% of the total
outstanding Common Shares (assuming conversion of all outstanding
Preferred Shares or other convertible securities) of the Corporation
(or equivalent securities of any of its subsidiaries).
10. CONFIDENTIALITY
10.1 DEFINITION OF CONFIDENTIAL INFORMATION
For the purposes of this Agreement, "Confidential Information" means:
(a) all information, knowledge, or data pertaining to the business and
affairs of the Corporation or of its Subsidiaries including, without
limitation, financial information, marketing, manufacturing and
commercial strategies, the terms and conditions of any contracts or
agreements, (including this Agreement), actual or prospective
business relationships to the extent not publicly disclosed;
(b) all information, knowledge or data of an intellectual, technical,
scientific or industrial nature in which the Corporation or its
Subsidiaries has a proprietary or ownership interest or has a legal
duty to protect, including, without limitation, laboratory
procedures and techniques, biochemical strategies and know-how,
technical data, drawings, photographs, specifications, standards,
manuals, reports, formulas, compilations, formulations,
compositions, compounds, processes, information, lists, research
data, trade secrets,
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biochemical and other scientific strategies and concepts,
inventions, designs, know-how, methods and technical information,
whether furnished or prepared before or after the date of this
Agreement;
(c) all copies and tangible embodiments of the foregoing, in whatever
form or medium; and
(d) that is commercially valuable and not generally known.
Notwithstanding the foregoing, Confidential Information shall not include the
U.S. tax treatment and the U.S. tax structure of the transaction contemplated by
this Agreement.
10.2 OBLIGATION OF CONFIDENTIALITY
No Shareholder shall disclose any Confidential Information to any Person who is
not a Shareholder at the time of disclosure at any time while it is a
Shareholder or at any time thereafter. The foregoing obligations of
confidentiality shall not apply to Confidential Information that:
(a) is in the public domain other than through a breach of this Section;
(b) is or was obtained from sources other than the Corporation or a
Subsidiary without breach of any duty of confidentiality;
(c) is required to be disclosed pursuant to applicable laws, or
policies. or regulations of any regulatory authority;
(d) is disclosed in any legal proceeding to which the Shareholder, the
Shareholder's Director nominees and Observers, if any, is a party
under this Agreement;
(e) is disclosed with the permission of the Corporation;
(f) is disclosed to the directors, officers, employees, managers,
professional advisers and consultants of a Shareholder on a need to
know basis; or
(g) is disclosed pursuant to Section 10.3.
10.3 PERMITTED DISCLOSURES FOR DIRECTORS AND OFFICERS
Notwithstanding Section 10.2, either a Director who is an Investor Nominee
pursuant to Section 3.1 or a Shareholder whose nominee is a Director or officer
of the Corporation or any Subsidiary may disclose to any Person who is not a
Shareholder at the time of disclosure such Confidential Information as is
consistent with the promotion or advancement of the Corporation or Subsidiary,
provided that such disclosure:
(a) is made on a strictly confidential basis; and
(b) is consistent with the fiduciary, statutory and contractual duties
of the Director or the Shareholder in its capacity as a director or
officer of the Corporation or the Subsidiary.
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10.4 OBLIGATIONS SURVIVE
The obligations and rights of the Shareholders under this Article 10 shall
survive any termination of this Agreement and shall continue even after a
Shareholder shall have transferred or disposed of all of its Shares or shall
otherwise cease to be a Shareholder.
10.5 REMEDIES
In the event that any Shareholder uses, discloses, divulges or communicates to
any Person any Confidential Information in breach of this Article 10 or
otherwise breaches any provision of this Article 10, or if the Corporation has
reasonable grounds for believing a Shareholder may use, disclose, divulge or
communicate to any Person any Confidential Information in breach of this Article
10 or otherwise breach any provision of this Article 10, then the Corporation
shall be entitled, in addition to other remedies and damages available, to seek
an interlocutory and permanent injunction whereby the Shareholder shall be
ordered to respect and comply with the covenants and agreements contained in
this Agreement.
11. TAX
(a) No party hereto shall, and the Corporation shall not permit the
shareholders of the Corporation to, without the prior written consent of
either Sprout Capital IX, L.P. or InterWest Partners VIII, L.P. (each an
"Appointed Investor"), directly or indirectly issue or transfer stock
(including options, warrants or similar rights to acquire stock and
convertible notes) in the Corporation (or any of its subsidiaries) to any
investor (1) if such issuance or transfer would result in an increase in
the ownership (including an indirect ownership and an ownership by
attribution) of the Corporation (or any of its subsidiaries) by United
States persons as defined in the United States Internal Revenue Code of
1986, as amended (the "Code") so as to cause such ownership to exceed the
greater of (i) 40% of the total outstanding Common Shares (assuming
conversion of all outstanding Preferred Shares or other convertible
securities) of the Corporation (or equivalent securities of any of its
subsidiaries) and (ii) such percentage as exists on the date of such
issuance or transfer, or (2) if, in the reasonable determination of
counsel or accountants for an Appointed Investor, such issuance or
transfer would cause the Corporation (or any of its subsidiaries) to be a
"Controlled Foreign Corporation" or a "Foreign Personal Holding Company"
(each as defined in the Code); provided, however, that the foregoing
obligation shall not apply to the TW Investor if at any time after the
date hereof there exists any fact, event, development, occurrence or
circumstance that either individually or in the aggregate is reasonably
likely to result in the TW Representation becoming untrue in any respect
(as if the TW Representation were made as of such date), and the TW
Investor complies with its obligations under Section 9.1(f) hereof;
provided, further that the foregoing obligation shall not apply to the HBM
Investor if at any time after the date hereof there exists any fact,
event, development, occurrence or circumstance that either individually or
in the aggregate is reasonably likely to result in the HBM Representation
becoming untrue in any respect (as if the HBM Representation were made as
of such date), and the HBM Investor complies with its obligations under
Section 9.1(g) hereof. No later than two (2) months following the end of
each Corporation taxable year, the Corporation shall provide the following
information to the US Investors: (i) the Corporation's (and, if different,
its subsidiaries') capitalization table as of the end of the last day of
such taxable year and (ii) a report regarding the Corporation's (and, if
different, its subsidiaries') status as a Controlled Foreign Corporation
or a Foreign Personal Holding Company; provided, however that unless the
Corporation receives any information from any US Investor regarding any
change in its ownership in the Corporation or its own ownership structure,
in preparing a report described in (ii), the Corporation shall assume that
the US Investor's ownership in the Corporation is the same as the
ownership as of the date of the Closing. In addition, the Corporation
shall provide the US
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Investors with access to such other information as may be reasonably
required by such US Investors to determine the Corporation's (and
its subsidiary's) status as a Controlled Foreign Corporation or a
Foreign Personal Holding Company to determine whether each such US
Investor is required to report its pro rata portion of the
Corporation's (or its subsidiaries') "Subpart F income" (as defined
in Section 952 of the Code) on its United States federal income tax
return, and to allow such US Investors to otherwise comply with
applicable Untied States federal income tax laws.
(b) In the event that counsel or accountants for an Appointed Investor
reasonably determines that there is a significant risk either that
the Corporation (or any of its subsidiaries) is a Controlled Foreign
Corporation or that the Corporation has met or shall meet the stock
ownership requirement under Section 552(a)(2) (the "Foreign Personal
Holding Company Ownership Test") (or any successor thereto) at any
time, the Corporation shall (and shall cause such subsidiary to) use
all commercially reasonable efforts to avoid generating (i) for any
taxable year in which the Corporation (or such subsidiary) is a
Controlled Foreign Corporation (or in which there is such risk),
Subpart F income, and (ii) for any taxable year in which the
Corporation (or such subsidiary) has met (or shall meet) the Foreign
Personal Holding Company Ownership Test (or in which there is such
risk), "Foreign Personal Holding Company Income," as such term is
defined in Section 553 of the Code. Without limiting the generality
of the foregoing, unless and until counsel or accountants for an
Appointed Investor reasonably determines that there is no risk that
the Corporation (or any of its subsidiaries) would meet the Foreign
Personal Holding Company Ownership Test, the Corporation shall not
(and shall cause its subsidiaries not to) enter into a transaction
or take an action or inaction (including, without limitation,
dividend distributions and making or maintaining inter-company
loans) that may cause the Corporation or any of its subsidiaries to
earn any Foreign Personal Holding Company Income (including
dividends, interest, rents and royalties), unless there is no risk
that such income would, directly or indirectly, cause the
Corporation or the subsidiary, as the case may be, to meet the gross
income requirement under Section 522(a)(1) of the Code. In the event
that the Corporation (or any of its subsidiaries) is reasonably
determined by counsel or accountants for an Appointed Investor to be
either a Controlled Foreign Corporation or a Foreign Personal
Holding Company (or any successor thereto) with respect to the
securities held by any US Investor, the Corporation agrees, to the
extent permitted by law, to annually make dividend distributions to
each US Investor (including to any intermediary entity through which
any US Investor holds securities in the Corporation) in an amount
equal to 50% of any income deemed distributed to such US Investor
pursuant to the foregoing provisions, unless such distributions are
explicitly waived by US Investors holding, directly or indirectly, a
majority of the outstanding Common Shares (assuming conversion of
all outstanding Preferred Shares or other convertible securities)
then held by all US Investors.
(c) The Corporation shall (and shall cause each of its subsidiaries to)
use all commercially reasonable efforts to avoid being a "Passive
Foreign Investment Company" within the meaning of Section 1297 of
the Code (or any successor thereto). No later than two (2) months
following the end of each Corporation taxable year, the Corporation
shall provide a report regarding the Corporation's (and, each of its
subsidiaries') status as a Passive Foreign Investment Company. If a
"Qualified Electing Fund" election is made by any US Investor
pursuant to Section 1295 of the Code (or any successor thereto) with
respect to the Corporation or any of its subsidiaries, the
Corporation shall provide annual financial information to the US
Investor in the form attached hereto as Schedule E and shall provide
the US Investor with reasonable access to such other information as
may be reasonably required for purposes of filing U.S. federal
income tax returns in connection with such Qualified Electing Fund
election. In the event that a US Investor that has made a Qualified
Electing Fund election must include in its gross income for a
particular taxable year its pro rata share of the Corporation's (or
any of its subsidiaries') earnings and profits pursuant to Section
-42-
1293 of the Code (or any successor thereto), the Corporation agrees
to make a dividend distribution to such US Investor (no later than
90 days following the end of the Investor's taxable year) in an
amount equal to 50% of the amount so included by the US Investor,
unless such distribution is explicitly waived by such US Investor.
(d) Without limiting any of the foregoing, during the taxable year
ending on December 31, 2004, the Corporation shall (and shall cause
each of its subsidiaries to) use all commercially reasonable efforts
to manage its operations and activities (including inter-company
distributions and payments) so as not to create any net positive
earnings and profits (computed for purposes of Section 1293 of the
Code assuming for this purpose a Qualified Electing Fund election is
made) or any net positive "undistributed foreign personal holding
company income" (as defined in Section 556 of the Code, assuming for
this purpose the Corporation is a Foreign Personal Holding Company).
12. GENERAL PROVISIONS
12.1 NO PARTNERSHIP
Nothing in this Agreement or in the relationship of the parties hereto shall be
construed as in any sense creating a partnership among or between the parties or
as giving to any party any of the rights or subjecting any party to any of the
creditors of the other party.
12.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
12.3 FURTHER ACTS
Each of the parties to this Agreement shall at the request of any other party,
and at the expense of the Corporation, execute and deliver any further documents
and do all acts and things as that party may reasonably require in order to
carry out the true intent and meaning of this Agreement.
12.4 PARTIES OF INTEREST
This Agreement and the rights of such party hereunder shall enure to the benefit
of and be binding upon the parties hereto, their permitted assigns and their
personal representatives, administrators, heirs and successors.
12.5 SHARE REORGANIZATIONS
The provisions of this Agreement relating to Shares shall also apply, with the
necessary changes, to the following:
(a) any Shares or securities into which such Shares may be converted,
changed, reclassified, redivided, redesignated, redeemed, subdivided
or consolidated;
(b) any Shares or securities that are received by the shareholders of
the Corporation as a stock dividend or distribution payable in
Shares or securities of the Corporation; and
(c) any Shares or securities of the Corporation or of any successor or
continuing corporation to the Corporation that may be received by
the shareholders of the Corporation on a reorganization,
amalgamation, consolidation or merger or otherwise.
-43-
12.6 GOVERNING LAW
This Agreement shall be exclusively construed and governed by the laws in force
in British Columbia without regard to its conflicts of laws principles and the
laws of Canada applicable thereto and the courts of British Columbia (and the
Supreme Court of Canada, if necessary) shall have exclusive jurisdiction to hear
and determine all disputes arising hereunder. Each of the parties hereto
irrevocably attorns to the jurisdiction of said courts and consents to the
commencement of proceedings in such courts. This paragraph shall not be
construed to affect the rights of a party to enforce a judgment or award outside
said province, including the right to record and enforce a judgment or award in
any other jurisdiction.
12.7 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties to this
Agreement with respect to the subject matter hereof and supersedes all prior
negotiations, proposals and agreements, whether oral or written, with respect to
the subject matter of this Agreement. The parties hereto hereby terminate all
other shareholders' agreements between or among them which govern the voting,
holding or sale of Shares of the Corporation or the management of the affairs of
the Corporation.
12.8 NOTICES
All notices, demands and payments required or permitted under this Agreement
must be in writing and may be delivered in person or by courier or by facsimile
transmission to Shareholders at the addresses as first written above or on the
other document by which a Person became party hereto, to Series A Investors at
the addresses set forth on Schedule C, and if:
(a) to the Corporation, with a copy to:
Farris, Vaughan, Wills & Murphy
2600 - 700 West Georgia Street
Vancouver, British Columbia, V7Y 1B3
Fax: (604) 661-9349
Attention: R. Hector MacKay-Dunn, Q.C.
(b) to the Sprout Investors, with a copy to each of:
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, California, 94025
Fax: (605) 463-2600
Attention: Michael W. Hall
Nicholas S. O'Keefe
-44-
Bull, Housser & Tupper
3000 - 1055 West Georgia Street
PO Box 11130
Vancouver, British Columbia, V6E 3R3
Fax: (604) 641-4949
Attention: Grant K. Weaver
or such other addresses as may from time to time be notified in writing by the
parties. Any such notice shall be considered to have been given when personally
delivered or upon receipt of acknowledgement of receipt if sent by courier, fax
or other recorded communication.
12.9 WAIVER
Failure by any party hereto to insist in any one or more instances upon the
strict performance of any one of the covenants contained herein shall not be
construed as a waiver or relinquishment of such covenant. No waiver by any party
hereto of any such covenant shall be deemed to have been made unless expressed
in writing and signed by the waiving party.
12.10 SEVERABILITY
The unlawfulness or invalidity or unenforceability of any provision in this
Agreement or of any covenant herein contained on the part of any party shall not
affect the validity or enforceability of any other provision or covenant hereof
or herein contained and the parties hereby undertake to renegotiate in good
faith, with a view to concluding arrangements as nearly as possible the same as
those herein contained.
12.11 ARBITRATION
In the event of a dispute hereunder which does not involve a party seeking a
court injunction, that dispute shall promptly be referred to a single arbitrator
under the provisions of the Commercial Arbitration Act (British Columbia) for
decision within 45 days of such referral and the decision of the arbitrator
shall be final and binding upon the parties hereto.
12.12 SUCCESSORS AND ASSIGNS
Except as provided in Section 7.2 and except for the Series A Shareholders and
Series A Investors who shall not be so restricted, no party shall be entitled to
assign his, her or its rights under this agreement to any Person without the
prior written approval of the other parties, provided that such consent shall
not be unreasonably with held. This Agreement shall be binding upon the
successors and permitted assigns of the parties.
12.13 INDEPENDENT LEGAL ADVICE
Each of the parties to this Agreement acknowledges and agrees that Bull, Housser
& Tupper has acted as counsel only to the Sprout Investors and that Farris,
Vaughn, Wills & Murphy has acted as counsel only to the Corporation and that
neither Bull, Housser & Tupper nor Farris, Vaughn, Shall & Murphy are protecting
the rights or interests of any other party to this Agreement. The other parties
to this Agreement acknowledge and agree that each of the Corporation, the Sprout
Investors, Bull, Housser & Tupper and Farris, Vaughn, Wills & Murphy has given
them the opportunity to seek, and have recommended that such parties obtain,
independent legal advice with respect to the subject matter of this Agreement
and,
-45-
further, each of the other parties hereby represents and warrants to the
Corporation, Bull, Housser & Tupper and Farris, Vaughn, Wills & Murphy that such
other party has sought independent legal advice or waives such advice.
12.14 COUNTERPARTS
This Agreement may be executed in several counterparts (including by facsimile),
each of which when so executed shall be deemed to be an original and shall have
the same force and effect as an original but such counterparts together shall
constitute but one and the same instrument.
12.15 AMENDING AND RESTATING OF ORIGINAL SHAREHOLDERS' AGREEMENT
The parties hereby amend and restate the Original Shareholders' Agreement in its
entirety.
12.16 ASPREVA CERTIFICATE
For purposes of this Agreement, including without limitation Sections 6 and 11
and subsections 3.4, 7.3, 7.4, 7.5, 7.6, 7.7, 7.12, 8.1, 8.2(a) and 8.4, the
Corporation shall be entitled to rely upon the information set out in Schedule C
hereto setting forth the name and address of each Series A Investor and each
such Series A Investor's proportionate equity ownership interest in Aspreva
Funding. Aspreva Funding agrees to provide to the Corporation a certificate
signed by an officer or director of Aspreva Funding promptly following any
change to the information set out in Schedule C or upon the reasonable request
of the Corporation.
12.17 EXPENSES
The Corporation shall pay to Aspreva Funding a maximum of US$15,000 per year on
account of the expenses incurred by each of Aspreva Funding and Aspreva Holdings
to maintain their respective Barbados organizational structures (including
without limitation expenses associated with corporate filings, payment to
directors, the preparation of financial statements and the preparation and
filing of tax returns), until the earlier of (i) five years from the date hereof
and (ii) the occurrence of an Initial Public Offering. Aspreva shall pay such
amount within 15 days after request by Aspreva Funding, which request shall
contain reasonably satisfactory evidence of such expenses. Each of the Series A
Investors shall, promptly on request, pay any amounts owing for the foregoing in
excess of such US$15,000 in proportion to their respective equity ownership
interests in Aspreva Holdings.
-46-
12.18 MARKET STANDOFF AGREEMENT
Each Shareholder holding, directly or indirectly, in excess of 2% of the Common
Shares on a Fully Converted Basis acknowledge and agree to be bound by Section
1.13 of the Registration Rights Agreement dated the date hereof among the
Corporation and each of the Series A Investors.
IN WITNESS WHEREOF the parties have caused this Amended and Restated
Shareholders' Agreement to be executed on the day, month and year first above
written.
ASPREVA PHARMACEUTICALS CORPORATION
By: /s/ RICHARD M. GLICKMAN
-----------------------------------------------------
Name: Richard M. Glickman
Title: Chief Executive Officer
/s/ RICHARD M. GLICKMAN
- ---------------------------------------------------------
RICHARD M. GLICKMAN
GLICKMAN FAMILY TRUST
By: /s/ T.M. GLICKMAN
-----------------------------------------------------
Name: T.M. Glickman
Title: Trustee
/s/ MICHELLE L. SMITH
- ---------------------------------------------------------
MICHELLE L. SMITH
/s/ NOEL HALL
- ---------------------------------------------------------
NOEL HALL
/s/ SANDRA MACPHERSON
- ---------------------------------------------------------
SANDRA MACPHERSON
HALL MACPHERSON FAMILY TRUST
By: /s/ NOEL HALL
-----------------------------------------------------
Name: Noel Hall
Title: Trustee
/s/ MICHAEL HAYDEN
- ---------------------------------------------------------
MICHAEL HAYDEN
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/s/ S. HAYDEN
- ---------------------------------------------------------
SANDY HAYDEN
HAYDEN FAMILY TRUST
By: /s/ S. HAYDEN
-----------------------------------------------------
Name: Sandy Hayden
Title: Trustee
GENWORKS INC.
By: /s/ MICHAEL HAYDEN
-----------------------------------------------------
Name: Michael Hayden
Title:
/s/ ERICH MOHR
- ---------------------------------------------------------
ERICH MOHR
GUNDYCO
In Trust For Shelley Mohr
By: /s/ RANDY CLOWES
-----------------------------------------------------
Name: Randy Clowes
Title: Associate Portfolio Manager/Investment Advisor
/s/ CHRIS WAGNER
- ---------------------------------------------------------
CHRIS WAGNER
/s/ KATHLEEN HILDEBRAND
- ---------------------------------------------------------
KATHLEEN HILDEBRAND
/s/ TOBIAS GLICKMAN
- ---------------------------------------------------------
TOBIAS GLICKMAN
UNIVERSITY TECHNOLOGIES 1 (VCC) LTD.
By: /s/ M. SANDS
-----------------------------------------------------
Name: Melissa Sands
Title: Director
-48-
NEO VENTURES INC.
By: /s/ PETER G. BERRANG
-----------------------------------------------------
Name: Peter G. Berrang
Title: Director
QWEST EMERGING BIOTECH (VCC) LTD.
By: /s/ JIM HEPPELL
-----------------------------------------------------
Name: Jim Heppell
Title: President & Chief Executive Officer
QUIMBY INVESTMENTS (VCC) LTD.
By: /s/ PAUL GEYER
-----------------------------------------------------
Name: Paul Geyer
Title: President, Director
ASPREVA INVESTORS FUNDING SRL
By: /s/ RONALD M. HUNT
-----------------------------------------------------
Name: Ronald M. Hunt, its President
SPROUT ENTREPRENEURS FUND, L.P.
BY DLJ CAPITAL CORPORATION, ITS GENERAL PARTNER
By: /s/ RONALD M. HUNT
-----------------------------------------------------
Name: Ronald M. Hunt, its Director
SPROUT CAPITAL IX, L.P.
BY DLJ CAPITAL CORPORATION, ITS GENERAL PARTNER
By: /s/ RONALD M. HUNT
-----------------------------------------------------
Name: Ronald M. Hunt, its Director
/s/ JAMES NIEDEL
- ---------------------------------------------------------
JAMES NIEDEL
/s/ ANDREW FIRLIK
- ---------------------------------------------------------
ANDREW FIRLIK
-49-
INTERWEST INVESTORS VIII, L.P.
BY INTERWEST MANAGEMENT PARTNERS VIII, LLC, ITS GENERAL PARTNER
By: /s/ ARNOLD L. ORONSKY
--------------------------------------------
Name: Arnold L. Oronsky
Title: Managing Director
INTERWEST INVESTORS Q VIII, L.P.
BY INTERWEST MANAGEMENT PARTNERS VIII, LLC, ITS GENERAL PARTNER
By: /s/ ARNOLD L. ORONSKY
--------------------------------------------
Name: Arnold L. Oronsky
Title: Managing Director
INTERWEST PARTNERS VIII, L.P.
BY INTERWEST MANAGEMENT PARTNERS VIII, LLC, ITS GENERAL PARTNER
By: /s/ ARNOLD L. ORONSKY
--------------------------------------------
Name: Arnold L. Oronsky
Title: Managing Director
INTERWEST PARTNERS VII, L.P.
BY INTERWEST MANAGEMENT PARTNERS VII, LLC, ITS GENERAL PARTNER
By: /s/ ARNOLD L. ORONSKY
--------------------------------------------
Name: Arnold L. Oronsky
Title: Managing Director
INTERWEST INVESTORS VII, L.P.
BY INTERWEST MANAGEMENT PARTNERS VII, LLC, ITS GENERAL PARTNER
By: /s/ ARNOLD L. ORONSKY
--------------------------------------------
Name: Arnold L. Oronsky
Title: Managing Director
THOMAS WEISEL HEALTHCARE VENTURE PARTNERS, L.P.
BY: THOMAS WEISEL HEALTHCARE VENTURE PARTNERS LLC
ITS GENERAL PARTNER
BY: THOMAS WEISEL CAPITAL PARTNERS LLC
ITS MANAGING MEMBER
By: /s/ RICHARD SPALDING
--------------------------------------------
Name: Richard Spalding
Title: Partner
-50-
BIOTECHNOLOGY DEVELOPMENT FUND IV, L.P.
By: /s/ FRANK KUNG
--------------------------------------------
Name: Frank Kung, Managing Member, BioAsia Investments IV, LLC
General Partner of Biotechnology Development Fund IV, L.P.
BIOTECHNOLOGY DEVELOPMENT FUND IV AFFILIATES, L.P.
By: /s/ FRANK KUNG
--------------------------------------------
Name: Frank Kung, Managing Member, BioAsia Investments IV, LLC
General Partner of Biotechnology Development Fund IV Affiliates, L.P.
AXIOM VENTURE PARTNERS III, L.P.
By: /s/ ALAN MENDELSON
--------------------------------------------
Name: Alan Mendelson, its General Partner
THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JUNIOR UNIVERSITY
By: /s/ TYLER EDELSTEIN
--------------------------------------------
Name: Tyler Edelstein, its Managing Director, Separate Investments
HBM BIOVENTURES (CAYMAN) LTD.
By: /s/ JOHN ARNOLD
--------------------------------------------
Name: John Arnold
Title: Chairman & Managing Director
SCHEDULE A
LIST OF SHAREHOLDERS
NAME AND ADDRESS OF SHAREHOLDER NUMBER AND DESIGNATION OF SHARES
- ------------------------------- --------------------------------
Richard M. Glickman 96,117
70,589
Richard M. Glickman and Michelle L. Smith, jointly 1,526,216
Glickman Family Trust 300,000
Richard M. Glickman, Trustee for the 2002 Aspreva 320,000
Incentive Stock Purchase Plan Trust
Noel Hall 40,733
Noel Hall and Sandra MacPherson, jointly 1,822,333
Hall MacPherson Family Trust 100,000
Michael Hayden 455,584
24,222
Sandy Hayden 455,583
Hayden Family Trust 455,583
Genworks Inc. 455,583
396314 BC Ltd. 150,000
401502 BC Ltd. 100,000
Carey Adirim 22,388
Maurice Bloch 52,238
BMO Nesbitt Burns ITF #805-99171 100,000
Ian Booth 37,313
Building Biotech (VCC) Ltd. 37,313
Wayne International Holding Ltd. 40,000
Barry Glickman 45,000
Jeff Glickman 22,925
Tobias Glickman 50,000
Kathleen Hildebrand 37,314
Barry Lando 74,627
NBCN Cleaning Inc. ITF Edwin Levy, 37,314
Account No. 3PD756E
-2-
NAME AND ADDRESS OF SHAREHOLDER NUMBER AND DESIGNATION OF SHARES
- ------------------------------- --------------------------------
Neo Ventures Inc. 150,000
Qsero Network Systems 74,700
Qwest Emerging Biotech (VCC) Fund Ltd. 186,567
Quimby Investments (VCC) Ltd. 150,000
Raymond James Ltd. in trust for A/C No. 102R4A2 45,000
Robert W. Rieder 14,925
Rix Venture Capital (VCC) Corp. 149,254
Rufus Research Inc. 37,500
Ryco 2001 Family Trust 74,627
University Technologies 1 (VCC) Inc. 186,567
Lee A. Weber 57,328
BJS Holdings Ltd. 37,314
Bosa Venture Capital Corp. 186,567
Lorin Charlton 15,000
Gundyco in trust for Shelly Mohr 250,000
Al Hakimzadeh 37,500
Peter Lando 25,000
Erich Mohr 500,000
Nina Vellani 15,000
Chris Wagner 150,000
Aspreva Investors Funding SRL 8,755,483
HBM BioVentures (Cayman) Ltd. 1,117,721
SCHEDULE B
CONSENT AND ACKNOWLEDGEMENT
TO: ASPREVA PHARMACEUTICALS CORPORATION (the "Corporation")
Consent to Act as a Director
I hereby certify that:
(a) I am not less than eighteen years of age;
(b) I am not of unsound mind and have not been so found by a court in
Canada or elsewhere; and
(c) I do not have the status of a bankrupt.
I hereby:
1. consent to my election or appointment from time to time as a director of
the Corporation and consent to the holding of meetings of directors or any
committees of directors of which I am a member by means of such telephone
or other communications facilities as permit all persons participating in
the meetings to hear each other;
2. acknowledge and declare that I am a resident of Canada;
3. undertake to advise the Corporation in writing of any change in my status
as a resident of Canada;
Acknowledgement
Whereas:
A. The Corporation has entered into to a Shareholders' Agreement as amended
or replaced from time to time, (the "Shareholders' Agreement") dated as of
-, 2004 among the Corporation, the Founders, the Series A Investors and
certain other Shareholders of the Corporation;
B. The Founders and the Series A Investors have invested in the Corporation
on the basis that the business and affairs of the Corporation shall be
conducted in accordance with the provisions of the Shareholders'
Agreement;
C. The Corporation, the Founders and the Series A Investors wish to ensure
that all directors of the Corporation acknowledge the framework
established by the Shareholders' Agreement for the conduct of the
Corporation's business and affairs;
Therefore, I hereby acknowledge that I have read and am familiar with the terms
and conditions of the Shareholders' Agreement.
This consent and acknowledgement is effective until I resign in writing from the
Corporation or otherwise cease to be a director of the Corporation.
-2-
Signed, sealed and delivered by the undersigned on this _______ day of
__________, 200___.
__________________________________
PRINT NAME
Address:
SCHEDULE C
SERIES A INVESTORS
PROPORTIONATE EQUITY OWNERSHIP INTEREST
NAME AND ADDRESS OF SHAREHOLDER IN ASPREVA FUNDING
- ------------------------------- ---------------------------------------
Sprout Entrepreneurs Funds, L.P. 0.2%
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
Sprout Capital IX, L.P. 48.7%
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
James Niedel 0.4%
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
Andrew Firlik 0.2%
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
InterWest Investors VIII, L.P. 0.1%
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Investors Q VIII, L.P. 0.2%
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Partners VIII, L.P. 8.6%
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Partners VII, L.P. 19.9%
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Investors VII, L.P. 1.0%
-2-
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
HBM BioVentures (Cayman) Ltd. 0%
Unit 10 Eucalyptus Building
Crewe Road
PO Box 30852 SMB
Grand Cayman, Cayman Islands
Thomas Weisel Healthcare Venture Partners, L.P. 10.6%
c/o Thomas Weisel Partners LLC
One Montgomery Street, Suite 3700
San Francisco, CA 94104
Biotechnology Development Fund IV, L.P. 5.9%
c/o BioAsia Investments
575 High Street, Suite 201
Palo Alto, CA 94301
Biotechnology Development Fund IV Affiliates, L.P. 0.1%
c/o BioAsia Investments
575 High Street, Suite 201
Palo Alto, CA 94301
Axiom Venture Partners III, L.P. 4.0%
CityPlace II - 17th Floor
185 Asylum Street
Hartford, CT 06103
The Board of Trustees of the Leland Stanford Junior University 0.1%
C/o Stanford Management Company
2770 Sand Hill Road
Menlo Park, CA 94025
TOTAL: 100%
SCHEDULE D
Sprout Entrepreneurs Funds, L.P.
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
Sprout Capital IX, L.P.
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
James Niedel
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
Andrew Firlik
c/o Sprout Group
11 Madison Avenue, 26th Floor
New York, New York 10010
InterWest Investors VIII, L.P.
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Investors Q VIII, L.P.
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Partners VIII, L.P.
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Partners VII, L.P.
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
InterWest Investors VII, L.P.
c/o InterWest Partners
2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025
-2-
Thomas Weisel Healthcare Venture Partners, L.P.
c/o Thomas Weisel Partners LLC
One Montgomery Street, Suite 3700
San Francisco, CA 94104
Biotechnology Development Fund IV, L.P.
c/o BioAsia Investments
575 High Street, Suite 201
Palo Alto, CA 94301
Biotechnology Development Fund IV Affiliates, L.P.
c/o BioAsia Investments
575 High Street, Suite 201
Palo Alto, CA 94301
Axiom Venture Partners III, L.P.
CityPlace II - 17th Floor
185 Asylum Street
Hartford, CT 06103
The Board of Trustees of the Leland Stanford Junior University
C/o Stanford Management Company
2770 Sand Hill Road
Menlo Park, CA 94025
SCHEDULE E
PFIC EXHIBIT
ANNUAL QUESTIONNAIRE
(1) This questionnaire applies to the taxable year of Aspreva Pharmaceuticals
Corporation ("the Corporation") and its subsidiaries beginning on January
1, 200__, and ending on December 31, 200__.
(2) Please check here if 75% or more of the Corporation's gross income
constitutes passive income. [ ].
Please check here if 75% or more of any of the subsidiaries gross income
constitutes passive income, and specify such subsidiary. [ ]
Passive Income: For purposes of this test, passive income includes:
- Dividends, interests, royalties, rents and annuities, excluding,
however, rents and royalties which are received from an unrelated
party in connection with the active conduct of a trade or business.
- Net gains from the sale or exchange of property --
- which gives rise to dividends, interest, rents or annuities
(excluding, however, property used in the conduct of a banking
finance or similar business, or in the conduct of an insurance
business);
- which is an interest in a trust, partnership, or REMIC; or
- which does not five rise to income.
- Net gains from transactions in commodities.
- Net foreign currency gains.
- Any income equivalent to interest.
Look-through rule: if the Corporation owns, directly or indirectly, 25% of
the stock by value of another corporation, the Corporation must take into
account its proportionate share of the income received by such other
corporation. The revenue received pursuant to the CellCept Collaboration
and Promotion Agreement, among Aspreva Pharmaceuticals GmbH, Hoffmann-La
Roche Inc. and F. Hoffman-La Roche Ltd. is not deemed to constitute
passive income.
(3) Please check here if the average fair market value during the taxable year
of passive assets held by the Corporation (or any of its subsidiaries)
equals 50% or more of the average fair market value of all of the
Corporation's assets. [ ]
Note: This test is applied on a gross basis; no liabilities are taken into
account.
Passive Assets: For purposes of this test, "passive assets" are those
assets which generate (or are reasonably expected to generate) passive
income (as defined above). Assets which generate partly passive and partly
non-passive income are considered passive assets to the extent of the
relative proportion of passive income (compared to non-passive income)
generated in a particular taxable year by such assets. Please note the
following:
- A trade or service receivable is non-passive if it results
from sales or services provided in the ordinary course of
business.
-2-
- Intangible assets that produce identifiable items of income,
such as patents or licenses, are characterized in terms of the
type of income produced.
- Goodwill and going concern value must be identified to a
specific income producing activity and are characterized in
accordance with the nature of that activity.
- Cash and other assets easily convertible into cash are passive
assets, even when used as working capital.
- Stock and securities (including tax-exempt securities) are
passive assets, unless held by a dealer as inventory.
Average Value: For purposes of this test, "average fair market value"
equals the average quarterly fair market value of the assets for the
relevant taxable year.
Look-through rule: if the Corporation owns, directly or indirectly, 25% of
the stock by value of another corporation, the Corporation must take into
account its proportionate share of the passive assets of such other
corporation.
(4) If (2) or (3) above is checked, please provide the information in the
following pages (titled "PFIC Annual Information").
-3-
PFIC ANNUAL STATEMENT
Pursuant to the U.S. Treasury Regulations section 1.1295-1(g)(1), the
Corporation provides the following information:
(i) The first and the last days of the taxable year of the Corporation (or the
relevant subsidiary) to which this statement applies:
(ii) [Each US Investor] has the following pro-rata share of the ordinary
earnings and net capital gain of the Corporation (or the relevant
subsidiary, if any) as determined under U.S. income tax principles for the
taxable year:
Ordinary Earnings: ______________ (as determined under U.S. income tax
principles)
Net Capital Gain: ______________ (as determined under U.S. income tax
principles)
Pro Rata Share: For purposes of the foregoing, the shareholder's pro rata
share equals the amount that would have been distributed with respect to
the shareholder's stock if, on each day during the taxable year of the
Corporation (or the subsidiary), it had distributed to each shareholder
its pro rata share of that day's ratable share (determined by allocating
to each day of the year, an equal amount of its aggregate ordinary
earnings and aggregate net capital gain for such year) of its ordinary
earnings and net capital gain for such year. Determination of a
shareholder's pro rata share will require reference to the corporate
charter, certificate of incorporation, articles of association or other
comparable governing document.
(iii) The amount of cash and fair market value of other property distributed or
deemed distributed by the Corporation to [US Investor] during the taxable
year specified in paragraph 1, is as follows:
Cash:
Fair Market Value of Property:
(iv) The Corporation will permit (and will cause its subsidiaries to permit)
[US Investor] to inspect and copy the Corporation's (and the
subsidiaries') permanent books of account, records, and such other
documents as may be maintained by the Corporation (and the subsidiaries)
that are necessary to establish that PFIC ordinary earnings and net
capital gain, as provided in Section 1293(e) of the U.S. Internal Revenue
Code of 1986, as amended (or any successor provision thereto), are
computed in accordance with U.S. income tax principles, and to verify
these amounts and the investor's pro rata share thereof.
To the best of the Corporation's knowledge, the foregoing representations
are true and accurate as of the date hereof. If the Corporation becomes aware of
any such representation that ceases to be true and accurate, the Corporation
shall give immediate notice of such fact to [US Investor].
Aspreva Pharmaceuticals Corporation
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _____________________________