Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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ARBUTUS BIOPHARMA CORPORATION
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed estimated aggregate value of transaction:
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5
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Total Fee Paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule, or Registration Statement No.:
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Filing Party:
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4
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Date Filed:
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1.
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PROPOSAL NO. 1 - APPROVAL OF THE SECOND TRANCHE OF THE PRIVATE PLACEMENT.
To approve the issuance by the Company to Roivant Sciences Ltd. (“Roivant”) of a second tranche of 664,000 series A participating convertible preferred shares of the Company (the “Preferred Shares”) at a price of $100 per share for gross proceeds to the Company of $66.4 million (the “Second Tranche”), and common shares, no par value, issuable upon conversion of the Preferred Shares, pursuant to the Subscription Agreement between the Company and Roivant dated October 2, 2017 (the “Subscription Agreement”), as part of a larger subscription by Roivant under the Subscription Agreement for an aggregate of 1,164,000 Preferred Shares for gross proceeds to the Company of $116.4 million (the “Private Placement”).
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2.
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PROPOSAL NO. 2 - APPROVAL OF AN AMENDMENT TO PART 27 OF ARBUTUS’ ARTICLES.
To approve an amendment to Part 27 of Arbutus’ Articles of Incorporation (“Articles”) to extend the period during which certain decisions of the Board of Directors of the Company (the "Board") require approval of at least 70% of the directors from March 4, 2018 to October 16, 2021.
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3.
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PROPOSAL NO. 3 - APPROVAL OF AN AMENDMENT TO PART 28 OF ARBUTUS’ ARTICLES.
To approve an amendment to Part 28 of Arbutus’ Articles pursuant to which: (i) Roivant would have the right until October 16, 2021, subject to certain conditions, to nominate up to three members of the Board (at least one of whom must be "independent" within the meaning of the Articles, if Roivant has three nominees), and (ii) for so long as Roivant has such nomination rights, the total number of directors of Arbutus would not, without the prior written consent of Roivant, be permitted to exceed seven directors, the majority of whom would be required to be "independent".
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4.
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PROPOSAL NO. 4 - ANY OTHER BUSINESS.
To transact such other business as may properly come before the Meeting, or at any adjournments or postponements thereof.
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YOUR VOTE IS VERY IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE REVIEW THE PROXY MATERIALS CAREFULLY AND VOTE AS PROMPTLY AS POSSIBLE. PLEASE REFER TO THE SECTION ENTITLED “QUESTIONS ABOUT VOTING” ON PAGE [1] OF THE MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT FOR A DESCRIPTION OF HOW TO VOTE YOUR SHARES.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [ ], [ ] [ ], 2017
This Notice of the Special Meeting of Shareholders and the Management Proxy Circular and Proxy Statement are available at
http://investor.arbutusbio.com/financials.cfm
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You are a Registered Shareholder if your Common Shares are registered in your name;
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You are a Beneficial Shareholder if your shares are held on your behalf by an Intermediary. This means the shares are registered in your Intermediary’s name, and you are the beneficial owner. “Intermediaries” refers to brokers, investment firms, clearing houses and similar entities that own securities on behalf of Beneficial Shareholders.
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To vote over the Internet
, go to
www.astvotemyproxy.com
and follow the online voting instructions and refer to your holder account number and proxy access number provided on the enclosed proxy card. To vote via the Internet, you will need to use the control number appearing on your proxy card. Internet voting is available 24 hours a day.
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To vote in person at the Meeting
, please come to the Meeting with personal identification and proof of ownership and we will give you an attendance card when you arrive.
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To vote by mail
, please promptly complete, sign and return your enclosed proxy card to our transfer agent to ensure that it is received prior to the closing of the polls at the Meeting: AST Trust Company (Canada): PO Box 721, Agincourt, ON M1S 0A1 (mail) or 1600-1066 West Hastings St., Vancouver, BC V6E 3X1.
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To vote by telephone
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call 1-888-489-5760 (toll free in North America) and follow the instructions and refer to your holder account number and proxy access number provided on the enclosed proxy card.
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To vote by facsimile
, fax your completed and signed proxy card to 1-866-781-3111 (toll free in North America) or 1-416-368-2502.
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To vote by email
, send your completed and signed proxy card to
proxy@canstockta.com
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1.
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Proposal No. 1: To approve the issuance by the Company to Roivant Sciences Ltd. (“Roivant”) of a second tranche of 664,000 series A participating convertible preferred shares of the Company (the “Preferred Shares”) at a price of $100 per share for gross proceeds to the Company of $66.4 million (the “Second Tranche”), and Common Shares issuable upon conversion of the Preferred Shares, pursuant to the Subscription Agreement between the Company and Roivant dated October 2, 2017 (the “Subscription Agreement”), as part of a larger subscription by Roivant under the Subscription Agreement for an aggregate of 1,164,000 Preferred Shares for gross proceeds to the Company of $116.4 million (the “Private Placement”). See
“Proposal No. 1 - Approval of the Second Tranche of the Private Placement”
below.
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2.
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Proposal No. 2: To approve an amendment to Part 27 of Arbutus’ Articles of Incorporation ("Articles") to extend the period during which certain decisions of the board of directors of the Company (the “Board of Directors” or the “Board”) require approval of at least 70% of the directors from March 4, 2018 to October 16, 2021. See
“Proposal No. 2 - Approval an Amendment to Part 27 of Arbutus’ Articles”
below.
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3.
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Proposal No. 3: To approve an amendment to Part 28 of Arbutus’ Articles pursuant to which: (i) Roivant would have the right until October 16, 2021, subject to certain conditions, to nominate up to three members of the Board (at least one of whom must be "independent" within the meaning of the Articles, if Roivant has three nominees), and (ii) for so long as Roivant has such nomination rights, the total number of directors of Arbutus would not, without the prior written consent of Roivant, be permitted to exceed seven directors, the majority of whom would be required to be "independent". See
“Proposal No. 3 - Approval of an Amendment to Part 28 of Arbutus’ Articles”
below.
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4.
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Proposal No. 4: To transact such other business as may properly come before the Meeting, or at any adjournments or postponements thereof. As of the date of this Proxy Statement/Circular, the Board is not aware of any such other matters.
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Name of Beneficial Owner
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Amount and Nature of Beneficial Ownership (1)
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Percent of Class
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Officers and Directors
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Mark Murray
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872,729
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1.6
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%
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Bruce Cousins
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301,667
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*
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Elizabeth Howard
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81,667
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*
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Michael Sofia
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1,758,148
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3.2
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%
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Peter Lutwyche
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143,785
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*
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William Symonds
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264,660
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*
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Vivek Ramaswamy (2)
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91,915
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*
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Frank Karbe
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79,500
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*
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Herbert Conrad
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52,000
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*
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Richard Henriques
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53,000
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*
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Keith Manchester
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91,915
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*
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Daniel Burgess
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22,000
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*
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All current directors and executive officers as a group (12 persons)
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3,812,986
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6.9
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%
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5% Shareholders Not Listed Above
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Roivant Sciences Ltd. (3)
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16,013,540
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29.1
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%
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PRIMECAP Management Company (4)
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3,935,000
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7.2
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%
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RTW Investments, LP (5)
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2,770,284
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5.0
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%
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Name
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Number of Common
Shares Beneficially Owned
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Percentage of
Outstanding Common Shares
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Roivant Sciences Ltd.
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16,013,540
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29.1% (1)
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(1)
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upon closing of the First Tranche, the Company: (i) amended its Articles to add a new Part 26A to provide for the special rights and restrictions attaching to the Preferred Shares (see “
The Private Placement
- Preferred Share Rights and Restrictions
”); (ii) entered into an Amended and Restated Governance Agreement (as defined below) pursuant to which the Company provided certain board nomination rights to Roivant (see “
The Private Placement - Amended and Restated Governance Agreement
”); (iii) entered into the Amended Registration Rights Agreement (as defined below) pursuant to which the Company provided registration rights to Roivant with respect to the Underlying Common Shares (see “
The Private Placement - Amendment to Registration Rights Agreement
”); (iv) entered into the Amended and Restated Standstill Agreement (as defined below) pursuant to which Roivant has agreed, subject to certain limitations, not to acquire Common Shares if such acquisition, taken together with the Underlying Common Shares, would cause it to own more than 49.99% of the Company’s outstanding Common Shares (see “
The Private Placement - Amended and Restated Standstill Agreement and Amended and Restated Lock-Up Agreement
”); and (v) entered into the Amended and Restated Lock-Up Agreement (as defined below), pursuant to which Roivant agreed, subject to certain exceptions, to not sell, pledge, or otherwise transfer or dispose of Common Shares or the Preferred Shares or enter into, sell or otherwise dispose of any swap, option, future forward or similar agreement with respect to Common Shares, the Preferred Shares or the Underlying Common Shares (see “
The Private Placement - Amended and Restated Standstill Agreement and Amended and Restated Lock-Up Agreement
”); and
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(2)
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the Company agreed to use commercially reasonable efforts to cause: (i) an amendment to Part 27 of the Company’s Articles, pursuant to which the period during which certain decisions of the Board require the approval of at least 70% of the members of the Board would be extended from its current expiry date of March 4, 2018 to October 16, 2021 (being four years from the closing of the First Tranche); and (ii) the Board Nomination Articles Amendment (as defined below) pursuant to which: (A) Roivant would have the right until October 16, 2021, subject to certain conditions, to nominate up to three members of the Board (at least one of whom must be "independent" within the meaning of the Articles, if Roivant has three nominees), and (B) for so long as Roivant has such nomination rights, the total number of directors of Arbutus would not, without the prior written consent of Roivant, be permitted to exceed seven directors, the majority of whom would be required to be
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•
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consider and respond to all aspects of any Potential Strategic Investment, including reviewing the terms of such Potential Strategic Investment, and proposing any amendments thereto, if deemed appropriate;
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consider other potential alternative equity financing structures;
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deal with or authorize or direct management of the Company, and the financial, legal and other advisors of the Company in dealing with all matters relating to any Potential Strategic Investment;
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provide advice and guidance to the Board as to:
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whether a Potential Strategic Investment is in the best interest of the Company, taken as a whole, and fair to Shareholders, having regard to all relevant stakeholders and considerations;
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the content of resolutions and other actions reasonably desirable to give effect to any Potential Strategic Investment; and
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matters considered by the Special Committee to be reasonably ancillary to any Potential Strategic Investment;
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make such recommendations to the Board and Shareholders as the Special Committee considered advisable, including, without limitation, ensuring, if applicable, that Shareholders are provided with sufficient information with respect to a Potential Strategic Investment, and the business and affairs of the Company, so as to enable them to make an informed decision with respect to a Potential Strategic Investment;
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review and comment upon, in the course of preparation thereof, (i) all relevant and related subscription agreements and other related agreements and ancillary documents in connection with any Potential Strategic Investment, and (ii) if applicable, all circulars or documents to be mailed or delivered to Shareholders in connection with a Potential Strategic Investment, and, in particular, to approve those portions of such circulars and documents which pertain to the Special Committee, including the recommendations of the Special Committee to the Board and of the Board to the Shareholders; and
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if a Potential Strategic Investment is approved, to maintain on behalf of the Board a review of its implementation.
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Second Tranche is Part of a Larger Financing With Attractive Terms
- The Second Tranche is part of a larger Private Placement, which includes both the $50 million in gross proceeds received from the First Tranche and the $66.4 million in gross proceeds to be received from the Second Tranche. The Private Placement of $116.4 million, including the Second Tranche, was undertaken following an assessment of certain potential alternative equity financing structures that might be available to the Company. In particular, with the assistance of its financial advisors, the Special Committee reviewed the terms of comparable convertible preferred share offerings against the terms of the Private Placement and the potential terms, including indicative price, size and discount ranges, of a traditional public equity offering or PIPE (private investment in a public entity) transaction. The Special Committee concluded, following the receipt of advice from its legal and financial advisors that the Private Placement offered the best opportunity to expeditiously complete a much larger equity financing, on more attractive terms, and with greater closing and pricing certainty, in each case than would likely otherwise be obtained in a public offering or PIPE transaction.
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Development of HBV Pipeline
- If completed, the net proceeds from the Second Tranche will provide the Company with significant additional resources to continue the development of the Company’s clinical and pre-clinical HBV pipeline programs (the “HBV Pipeline”).
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Certainty of Closing
- The First Tranche has already been completed. The obligation of Roivant to complete the Second Tranche is subject only to a limited number of closing conditions, as provided for in the Subscription Agreement. In particular, there is no right to terminate the Subscription Agreement due to a “material adverse effect” occurring with respect to the Company.
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Shareholder Approval
- The Second Tranche must receive minority Shareholder approval in accordance with the Canadian Related Party Rules. See “Proposal No. 1 - Approval of the Second Tranche”.
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Private Placement Further Establishes Roivant as a Committed Long-Term Strategic Investor
- Although Roivant currently holds a 39.8% equity interest in the Company (on a partially-diluted basis assuming conversion of the 500,000 Preferred Shares issued to Roivant in connection with the First Tranche), following the closing of the Second Tranche, Roivant would hold a significantly larger equity interest of approximately 49.9% (on a partially diluted basis assuming conversion of the 1,164,000 Preferred Shares that would then be held by Roivant). The Special Committee believes that this level of ownership will lead to an even stronger commitment from Roivant to the long-term success of the Company, particularly given that, until October 16, 2021:
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subject to the occurrence of certain limited events set forth in the Preferred Share Articles Amendment, the Preferred Shares will not convert into Common Shares;
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pursuant to the terms of the Amended and Restated Standstill Agreement, Roivant has agreed, until the earlier of (i) 48 months following the First Closing, and (ii) when Roivant no longer has the right to nominate one or more directors under the Board Nomination Articles Amendment (together, the "Outside Date"), other than pursuant to certain customary exceptions, not to acquire additional Common Shares if such acquisition would result in Roivant owning an amount of Common Shares that, taken together with the Underlying Common Shares, would exceed 49.99% of the outstanding Common Shares , or take certain other actions related to the calling of meetings, proxies, proposals and other actions of the Shareholders; and
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◦
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pursuant to the terms of the Amended and Restated Lock-Up Agreement, Roivant has agreed, until the Outside Date, other than pursuant to certain customary exceptions, not to sell, pledge, or otherwise transfer or dispose of any Common Shares or the Preferred Shares.
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•
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Potential Strategic Opportunities with Roivant
- The opportunity to explore with Roivant various potential strategic opportunities, including the potential to: (i) leverage Roivant’s infrastructure to more efficiently develop the Company’s HBV Pipeline; (ii) expand the Company’s geographic footprint in HBV drug development; and (iii) to maximize the value of the Company’s non-HBV assets, including the Company’s LNP and GalNAc platforms for the delivery of novel therapeutic modalities, such as RNA interference, mRNA, and gene editing technologies. For further information on these platforms, see the Company's current Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
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Independent Financial Advisors
- The Special Committee received and considered financial advice provided by MTS Securities, LLC with respect to the Private Placement, including a review of certain potential alternative equity financing structures that might be available to the Company, as discussed above.
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Management Input
- The Special Committee received and considered input from the Company’s management on the benefits and risks associated with the Private Placement, as well as with respect to other potential alternative equity financing structures that might be available to the Company, as discussed above.
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(a)
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the Company be and is hereby authorized and directed to issue pursuant to the terms of the Subscription Agreement (i) the Second Tranche Preferred Shares, (ii) up to 13,025,536 Underlying Common Shares upon conversion of the Second Tranche Preferred Shares and (iii) such additional Common Shares as may become issuable upon conversion of the Second Tranche Preferred Shares pursuant to the rights attached thereto, all as more particularly described in the Company’s Management Proxy Statement/Circular dated [ ] [ ], 2017, and such resolution is hereby confirmed, approved and adopted in all respects;
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(b)
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any officer or director of the Company is hereby authorized, acting for, in the name of and on behalf of the Company, to execute, under the seal of the Company or otherwise, and to deliver or cause to be delivered, all such documents, agreements and instruments, and to do or cause to be done all such other acts and things, as such officer or director determines to be necessary or desirable in order to carry out the intent of the foregoing paragraph of this resolution and
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(c)
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notwithstanding that the foregoing resolution has been duly passed by the Shareholders, the directors of the Company be and are hereby authorized and empowered, without further notice to, or approval of, the Shareholders, to (a) decide on the timing of closing of the Second Tranche; or (b) decide not to proceed with all or any part of the Second Tranche and revoke the whole or part of these resolutions before they are acted on; and
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(d)
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these approvals are given for all purposes under the rules of The Nasdaq Stock Market LLC and under Multilateral Instrument 61-101.”
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(a)
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the existing Articles of the Company be amended to extend the period during which certain decisions of the Board require approval of at least 70% of the directors from March 4, 2018 to October 16, 2021 by deleting Part 27 thereof in its entirety and replacing it with the amended text of Part 27 substantially in the form attached as Exhibit B to the Company’s Management Proxy Statement/Circular dated [ ] [ ], 2017, and such resolution is hereby confirmed, approved and adopted in all respects;
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(b)
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pursuant to Section 259 of the
Business Corporations Act
(British Columbia), the alteration of Part 27 of the Articles of the Company approved by the foregoing resolution shall not take effect until a copy of these resolutions are received for deposit at the Company’s records office and a Notice of Alteration identifying the date of this resolution has been filed with the British Columbia Registrar of Companies;
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(c)
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any officer or director of the Company is hereby authorized, acting for, in the name of and on behalf of the Company, to execute, under the seal of the Company or otherwise, and to deliver or cause to be delivered, all such documents, agreements and instruments, and to do or cause to be done all such other acts and things, as such officer or director determines to be necessary or desirable in order to carry out the intent of the foregoing paragraph of this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing; and
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(d)
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notwithstanding that the foregoing resolution has been duly passed by the Shareholders, the directors of the Company be and are hereby authorized and empowered, without further notice to, or approval of, the Shareholders, to (a) decide on the timing of the implementation of all or any part of the amendment to Part 27 of the Articles, or (b) decide not to proceed with the foregoing amendment to Part 27 of the Articles of the Company and revoke the whole or part of these resolutions before they are acted on.”
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(a)
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the existing Articles of the Company be amended by deleting Part 28 thereof in its entirety and replacing it with the amended text of Part 28 substantially in the form attached as Exhibit B to the Company’s Management Proxy Statement/Circular dated [ ] [ ], 2017 pursuant to which: (i) Roivant would have the right until October 16, 2021, subject to certain conditions, to nominate up to three members of the Board (at least one of whom must be "independent" within the meaning of the Articles, if Roivant has three nominees), and (ii) for so long as Roivant has such nomination rights, the total number of directors of the Company would not, without the prior written consent of Roivant, be permitted to exceed seven directors, the majority of whom would be required to be "independent", and such resolution is hereby confirmed, approved and adopted in all respects;
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(b)
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pursuant to Section 259 of the
Business Corporations Act
(British Columbia), the alteration of Part 28 of the Articles of the Company approved by the foregoing resolution shall not take effect until a copy of these resolutions are received for deposit at the Company’s records office and a Notice of Alteration identifying the date of this resolution has been filed with the British Columbia Registrar of Companies;
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(c)
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any officer or director of the Company is hereby authorized, acting for, in the name of and on behalf of the Company, to execute, under the seal of the Company or otherwise, and to deliver or cause to be delivered, all such documents, agreements and instruments, and to do or cause to be done all such other acts and things, as such officer or director determines to be necessary or desirable in order to carry out the intent of the foregoing paragraph of this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing; and
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(d)
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notwithstanding that the foregoing resolution has been duly passed by the Shareholders, the directors of the Company be and are hereby authorized and empowered, without further notice to, or approval of, the Shareholders, to (a) decide on the timing of the implementation of all or any part of the amendment to Part 28 of the Articles, or (b) decide not to proceed with the foregoing amendment to Part 28 of the Articles of the Company and revoke the whole or part of these resolutions before they are acted on.”
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(i)
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the Private Placement is a distribution of securities of the Company to Roivant for cash consideration;
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(ii)
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neither the Company, nor, to the knowledge of the Company after reasonable inquiry, Roivant had knowledge of any material information concerning the Company or its securities that had not been generally disclosed at the time the Subscription Agreement was agreed to; and
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(iii)
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a description of the effect of the issuance of Preferred Shares on the direct or indirect voting interest of Roivant in the Company are set forth above under the heading “The Private Placement - Reasons for the Private Placement”.
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(a)
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our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 22, 2017, as amended on Form 10-K/A on May 17, 2017; and
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(b)
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, filed on May 4, 2017; June 30, 2017, filed on August 3, 2017; and September 30, 2017, filed on November 2, 2017.
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Roivant Sciences Ltd.
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Number of Tier 1 Preferred Shares:
500,000
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(Name of Subscriber)
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Tier 1 Subscription Amount: $50,000,000
(calculated as number of Tier 1 Preferred Shares divided by Subscription Price)
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Number of Tier 2 Preferred Shares:
664,000
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Account Reference (if applicable):
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By:
/s/Marianne L. Romeo
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Tier 2 Subscription Amount: $66,400,000
(calculated as number of Tier 2 Preferred Shares divided by Subscription Price)
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Authorized Signature
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Head, Global Transactions & Risk Management
(Official Capacity or Title - if the Subscriber is not an individual)
(Name of individual whose signature appears above if different than the name of the subscriber printed above.)
Suite 1, 3rd Floor, 11-12 St. James Square
(Subscriber’s Address, including Municipality and State)
London, SW1Y 4LB, United Kingdom
info@roivant.com
(Telephone Number)(Email Address)
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Account Registration Information
:
(Name)
(Account Reference, if applicable)
(Address, including Postal Code)
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Delivery Instructions as set forth below
:
(Name)
(Account Reference, if applicable)
(Address)
(Contact Name)(Telephone Number)
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Number and kind of securities of the Company held, directly or indirectly, if any:
16,013,540 Common Shares
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(a)
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The Subscriber hereby commits, subject only to the satisfaction or written waiver by the Subscriber of the conditions precedent set forth in Section 4.2, to subscribe for and purchase the Tier 1 Preferred Shares from the Company for the Tier 1 Subscription Amount payable as described in Section 3.3(a), which, upon acceptance by the Company, will constitute a binding commitment by the Company, subject only to the satisfaction or written waiver by the Company of the conditions precedent set forth in Section 4.3, to issue to the Subscriber the Tier 1 Preferred Shares, all on the terms and subject to the conditions set out in this Subscription Agreement.
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(b)
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The Tier 1 Preferred Shares will be issued and registered in the name of the Subscriber as per the instructions on page 1 of this Subscription Agreement without registration of the Tier 1 Preferred Shares under the U.S. Securities Act or qualified by prospectus under any Securities Law.
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(a)
|
The Subscriber hereby commits, subject only to the satisfaction or written waiver by the Subscriber of the conditions precedent set forth in Section 4.5, to subscribe for and purchase the Tier 2 Preferred Shares from the Company for the Tier 2 Subscription Amount payable as described in Section 3.3(b), which, upon acceptance by the Company, will constitute a binding commitment by the Company, subject only to the satisfaction or written waiver by the Company of the conditions precedent set forth in Section 4.6, to issue to the Subscriber the Tier 2 Preferred Shares, all on the terms and subject to the conditions set out in this Subscription Agreement.
|
(b)
|
If the conditions for the purchase and sale of the Tier 2 Preferred Shares are satisfied (or waived by the Party entitled to do so), the Tier 2 Preferred Shares will be issued and registered in the name of the Subscriber as per the instructions on page 1 of this Subscription Agreement without registration of the Tier 1 Preferred Shares under the U.S. Securities Act or qualified by prospectus under any Securities Law.
|
(a)
|
The Tier 1 Subscription Amount shall be paid at the Tier 1 Closing Time by a direct funds transfer or a wire transfer to the Company arranged with the Company in advance.
|
(b)
|
The Tier 2 Subscription Amount shall be paid at the Tier 2 Closing Time by a direct funds transfer or a wire transfer to the Company arranged with the Company in advance.
|
(a)
|
the Subscriber shall have received a written waiver from the Company of the provisions of the Standstill Agreement that would otherwise prohibit the execution of this Subscription Agreement or the consummation of the transactions contemplated hereby, including the Subscriber’s acquisition of the Tier 1 Preferred Shares;
|
(b)
|
the Subscriber having received evidence, in a form satisfactory to the Subscriber and its legal counsel, acting reasonably, of the alteration to the Company’s constating documents to reflect the Preferred Shares rights and restrictions substantially as set out in Schedule “B”;
|
(c)
|
the Subscriber having received an opinion from the Company’s counsel as to the matters set out in Schedule “C”;
|
(d)
|
the Subscriber and its legal counsel receiving a certificate from the Company, in form and substance acceptable to the Subscriber and its legal counsel, acting reasonably, dated the Tier 1 Closing Date signed by the Chief Executive Officer or Chief Financial Officer (or such other officer(s) acceptable to the Subscriber) certifying:
|
i.
|
the constating documents of the Company;
|
ii.
|
the resolutions of the Company Board and the
ad hoc
independent committee of the Company Board (comprised of all of the members of the Audit Committee of the Company) and any other corporation authorization related to the Offering, the allotment and sale of the Tier 1 Preferred Shares, the reservation of the Underlying Common Shares, the authorization of this Subscription Agreement, the Amending Agreements and the other agreements and transactions contemplated by this Subscription Agreement; and
|
iii.
|
the incumbency and signatures of signing officers of the Company;
|
(e)
|
the Subscriber and its legal counsel receiving certificates of good standing and/or compliance (or the equivalent) from the Company with respect to the Company and each Subsidiary, in each case dated no earlier than two (2) Business Days prior to the Tier 1 Closing Date;
|
(f)
|
the Subscriber and its legal counsel receiving confirmation from the Company's duly appointed registrar and transfer agent for the Common Shares dated no earlier than two (2) Business Days prior to the Tier 1 Closing Date as to the issued and outstanding Common Shares;
|
(g)
|
all covenants, agreements and conditions contained in this Subscription Agreement to be performed by the Company on or prior to the Tier 1 Closing Date shall have been performed or complied with in all material respects, and the Subscriber and its legal counsel shall have received a certificate from the Company in form and substance acceptable to the Subscriber and its legal counsel, acting reasonably, dated the applicable date signed by the Chief Executive Officer and the Chief Financial Officer of the Company in each case certifying for and on behalf of the Company, as the case may be, and not in their personal capacities, after having made due inquiries, with respect to the following matters:
|
i.
|
the Company having complied with all the covenants in all material respects (or, if qualified by materiality, in all respects) and satisfied all the terms and conditions of this Subscription Agreement on its part to be complied with and satisfied at or prior to the Tier 1 Closing Time;
|
ii.
|
there being no Order having the effect of prohibiting the sale of the Tier 1 Preferred Shares or any of the Company’s issued securities, and no proceeding for such purpose being pending or, to the Company’s knowledge, threatened under any applicable Securities Laws; and
|
iii.
|
the representations and warranties of the Company contained in this Subscription Agreement and in any certificates of the Company delivered pursuant to or in connection with this Subscription Agreement being true and correct in all material respects (or, if qualified by materiality, in all respects) at the Tier 1 Closing Time, with the force and effect as if made on and as at such Tier 1 Closing Time, except for such representations and warranties which are in respect of a specific date in which case such representations and warranties shall be true and correct, in all material respects (or, if qualified by materiality, in all respects), as of such date;
|
(h)
|
the Subscriber not having exercised any rights of termination set forth in Sections 8.1 or 8.3 hereof;
|
(i)
|
there being no Order having the effect of prohibiting the sale of the Tier 1 Preferred Shares or any of the Company’s issued securities, and no proceeding for such purpose being pending or, to the Company’s knowledge, threatened under any applicable Securities Laws; and
|
(j)
|
the Company having obtained all necessary approvals and consents required for the Company to consummate the transactions contemplated herein to be consummated at the Tier 1 Closing, including from NASDAQ with respect to the listing of the Underlying Common Shares on such exchange, all of which shall be and remain so long as necessary in full force and effect.
|
(a)
|
the (i) sale of the Tier 1 Preferred Shares by the Company to the Subscriber being exempt from the requirements as to the filing of a prospectus and as to the preparation of an offering memorandum or similar document contained in any applicable Securities Laws or upon the issuance of such Orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or delivering an offering memorandum or similar document and (ii) offer and sale of the Tier 1 Preferred Shares being exempt from the registration requirements of the U.S. Securities Act and applicable Securities Laws;
|
(b)
|
the sale of the Tier 1 Preferred Shares by the Company to the Subscriber being exempt from the formal valuation and minority approval requirements set out in MI 61-101;
|
(c)
|
there being no Order having the effect of prohibiting the sale of the Tier 1 Preferred Shares or any of the Company’s issued securities, and no proceeding for such purpose being pending or, to the Company’s knowledge, threatened under any applicable Securities Laws;
|
(d)
|
all covenants, agreements and conditions contained in this Subscription Agreement to be performed by the Subscriber on or prior to the Tier 1 Closing Date shall have been performed or complied with in all material respects;
|
(e)
|
the Company not having exercised any rights of termination set forth in Sections 8.2 or 8.3 hereof;
|
(f)
|
the Subscriber having delivered to the Company payment by direct funds transfer or wire transfer in satisfaction of the Tier 1 Subscription Amount for the Tier 1 Preferred Shares and having properly completed, signed and delivered any further documentation as required under the Securities Laws, which the Subscriber covenants and agrees to do on or prior to the Tier 1 Closing Time on the Tier 1 Closing Date upon the prior written request by the Company; and
|
(g)
|
the Company having obtained all necessary approvals and consents required for the Company to consummate the transactions contemplated herein to be consummated at the Tier 1 Closing, including from NASDAQ to the extent required with respect to the listing of the Underlying Common Shares on such exchange, all of which shall be and remain so long as necessary in full force and effect.
|
(a)
|
the Subscriber receiving a written waiver from the Company of the provisions of the Standstill Agreement that would otherwise prohibit the execution of this Subscription Agreement or the consummation of the transactions contemplated hereby, including the Subscriber’s acquisition of the Tier 2 Preferred Shares;
|
(b)
|
the Company obtaining the Company Shareholder Approval at the Company Meeting;
|
(c)
|
the Company adopting and filing the Articles of Amendment with the applicable Governmental Entity;
|
(d)
|
the Subscriber receiving an opinion from the Company’s counsel as to the matters set out in Schedule “C”;
|
(e)
|
the Subscriber and its legal counsel receiving a certificate from the Company, in form and substance acceptable to the Subscriber and its legal counsel, acting reasonably, dated the Tier 2 Closing Date signed by the Chief Executive Officer or Chief Financial Officer (or such other officer(s) acceptable to the Subscriber) certifying:
|
(i)
|
the constating documents of the Company;
|
(ii)
|
the resolutions of the Company Board and the
ad hoc
independent committee of the Company Board (comprised of all of the members of the Audit Committee of the Company) and any other corporation authorization related to the Offering, the allotment and sale of the Tier 2 Preferred Shares, the reservation of the Underlying Common Shares, the authorization of this Subscription Agreement, and the other agreements and transactions contemplated by this Subscription Agreement; and
|
(iii)
|
the incumbency and signatures of signing officers of the Company;
|
(f)
|
the Subscriber and its legal counsel receiving certificates of good standing and/or compliance (or the equivalent) from the Company with respect to the Company and each Subsidiary, in each case dated no earlier than two (2) Business Days prior to the Tier 2 Closing Date;
|
(g)
|
the Subscriber and its legal counsel receiving confirmation from the Company's duly appointed registrar and transfer agent for the Common Shares and Preferred Shares dated no earlier than two (2) Business Days prior to the Tier 2 Closing Date as to the issued and outstanding Common Shares and Preferred Shares;
|
(h)
|
all covenants, agreements and conditions contained in this Subscription Agreement to be performed by the Company on or prior to the Tier 2 Closing Date shall have been performed or complied with in all material respects, and the Subscriber and its legal counsel shall have received a certificate from the Company in form and substance acceptable to the Subscriber and its legal counsel, acting reasonably, dated the applicable date signed by the Chief Executive Officer and the Chief Financial Officer of the Company in each case certifying for and on behalf of the Company, as the case may be, and not in their personal capacities, after having made due inquiries, with respect to the following matters:
|
(i)
|
the Company having complied with all the covenants in all material respects (or, if qualified by materiality, in all respects) and satisfied all the terms and conditions of this Subscription Agreement on its part to be complied with and satisfied at or prior to the Tier 2 Closing Time;
|
(ii)
|
there being no Order having the effect of prohibiting the sale of the Tier 2 Preferred Shares or any of the Company’s issued securities, and no proceeding for such purpose being pending or, to the Company’s knowledge, threatened under any applicable Securities Laws; and
|
(iii)
|
the Fundamental Company Representations and Warranties contained in this Subscription Agreement and in any certificates of the Company delivered pursuant to or in connection with this Subscription Agreement being true and correct in all material respects (or, if qualified by materiality, in all respects) at the Tier 2 Closing Time, with the force and effect as if made on and as at such Tier 2 Closing Time, except for such representations and warranties which are in respect of a specific date in which case such representations and warrantied shall be true and correct, in all material respects (or, if qualified by materiality, in all respects), as of such date, except for any inaccuracy, individually or in the aggregate, that would not result in a Material Adverse Effect on the Company;
|
(i)
|
the Subscriber not having exercised any rights of termination set forth in Sections 8.1 or 8.3 hereof;
|
(j)
|
there being no Order having the effect of prohibiting the sale of the Tier 2 Preferred Shares or any of the Company’s issued securities, and no proceeding for such purpose being pending or, to the Company’s knowledge, threatened under any applicable Securities Laws; and
|
(k)
|
the Company having obtained all necessary approvals and consents required for the Company to consummate the transactions contemplated herein to be consummated at the Tier 2 Closing, including from NASDAQ to the extent required with respect to the listing of the Underlying Common Shares on such exchange.
|
(a)
|
the Company obtaining the Company Shareholder Approval at the Company Meeting;
|
(b)
|
the (i) sale of the Tier 2 Preferred Shares by the Company to the Subscriber being exempt from the requirements as to the filing of a prospectus and as to the preparation of an offering memorandum or similar document contained in any applicable Securities Laws or upon the issuance of such Orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or delivering an offering memorandum or similar document and (ii) offer and sale of the Tier 2 Preferred Shares being exempt from the registration requirements of the U.S. Securities Act and applicable Securities Laws;
|
(c)
|
the Company having obtained all necessary approvals and consents required for the Company to consummate the transactions contemplated herein to be consummated at the Tier 2 Closing, including from NASDAQ to the extent required with respect to the listing of the Underlying Common Shares on such exchange;
|
(d)
|
there being no Order having the effect of prohibiting the sale of the Tier 2 Preferred Shares or any of the Company’s issued securities, and no proceeding for such purpose being pending or, to the Company’s knowledge, threatened under any applicable Securities Laws
|
(e)
|
all covenants, agreements and conditions contained in this Subscription Agreement to be performed by the Parties on or prior to the Tier 2 Closing Date shall have been performed or complied with in all material respects;
|
(f)
|
the Company not having exercised any rights of termination set forth in Sections 8.2 or 8.3 hereof; and
|
(g)
|
the Subscriber having delivered to the Company payment by direct funds transfer or wire transfer in satisfaction of the Tier 2 Subscription Amount for the Tier 2 Preferred Shares and having properly completed, signed and delivered any further documentation as required under the Securities Laws, which the Subscriber covenants and agrees to do on or prior to the Tier 2 Closing Time on the Tier 2 Closing Date upon the prior written request by the Company.
|
(a)
|
the Company and each Subsidiary is duly organized and validly existing under the Laws of their respective jurisdictions of incorporation, amalgamation, arrangement or continuance, and the Company and the Subsidiaries are in good standing with the corporate governmental authorities of such jurisdictions with respect to the filing of annual returns and such other filings as are necessary to maintain their corporate existence and that each of the Company and the Subsidiaries has full corporate power to conduct its business as such business is now being conducted;
|
(b)
|
the securities of the Subsidiaries are held directly by the Company as set out in the Company’s Public Record, free and clear of all Liens and the Company is entitled to the full beneficial ownership of all such shares in the Subsidiaries. All of such shares in the capital of the Subsidiaries have been duly authorized and validly issued and are outstanding as fully paid shares and no person, other than the Company has any right, agreement or option, present or future, contingent or absolute, or any right capable of becoming a right, agreement or option, for the purchase from the Company of any interest in any of such shares or for the issue or allotment of any unissued shares in the capital of the Subsidiaries or any other security convertible into or exchangeable for any such shares;
|
(c)
|
the Company and each of the Subsidiaries is, in all material respects, conducting its business in compliance with all applicable Laws, rules and regulations of each jurisdiction in which its business is carried on and each is licensed, registered or qualified in all jurisdictions in which it is required to be licensed, registered or qualified and all such licenses, registrations and qualifications are valid, subsisting and in good standing and neither the Company nor any of the Subsidiaries has received a notice of non-compliance, or knows of, or has reasonable grounds to know of, any facts that could give rise to a notice of non-compliance with any such Laws, rules, regulations, licenses, registrations and qualifications which could have a Material Adverse Effect on the Company or any of the Subsidiaries;
|
(d)
|
the Company has the requisite power and authority to enter into and perform its obligations under the Subscription Agreement and to issue the Offered Shares in accordance with the terms hereof, and the execution and delivery of this Subscription Agreement and the performance by the Company of its obligations hereunder and the transactions contemplated hereby, including the issuance of the Offered Shares, have been duly authorized by all necessary corporate action of the Company (except that the consummation of the Tier 2 Closing requires receipt of the Company Shareholder Approval at the Company Meeting) and this Subscription Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, provided that enforcement thereof may be limited by Laws affecting creditors’ rights generally;
|
(e)
|
other than the Company Shareholder Approval, no vote or consent of the holders of any class or series of capital stock of the Company or any of its affiliates is necessary to approve this Subscription Agreement or the transactions contemplated hereby and shareholder approval is not required under NASDAQ Listing Rule 5635;
|
(f)
|
the execution and delivery of this Subscription Agreement and the fulfillment of the terms hereof by the Company and the issuance, sale and delivery of the Offered Shares do not and will not require the consent, approval, authorization, registration or qualification of or with any Governmental Entity, stock exchange, securities regulatory authority, or other third party, except: (i) such as will have been timely obtained prior to the Tier 1 Closing Time or, if applicable, the Tier 2 Closing Time; or (ii) in the case of post-closing filings, as will be made or obtained within the times prescribed by applicable Securities Laws;
|
(g)
|
neither the Company nor any of the Subsidiaries is in default or breach of, and the execution and delivery of this Subscription Agreement, the fulfillment of the terms hereof by the Company and the issuance, sale and delivery of the Offered Shares, do not and will not result in a breach of or constitute a default under, and do not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach of or constitute a default under, and do not and will not conflict with the notice of articles or articles (or equivalent documents) of the Company or its Subsidiaries, any resolutions of the shareholders or directors of the Company or its Subsidiaries, the terms of any material agreement, or any Order, statute, rule or regulation applicable to any of them including applicable Securities Laws, which breach or default has had or would reasonably be expected to have a Material Adverse Effect on the Company;
|
(h)
|
all necessary corporate action will have been taken to validly create, authorize, reserve and issue the Offered Shares and, upon payment by the Subscriber of the aggregate Subscription Amount, will, when issued, be validly issued as fully paid and non-assessable Preferred Shares in the capital of the Company and free of any Liens, rights of first refusal or any kind of transfer restrictions other than as required by applicable Securities Laws and the holder of such Offered Shares shall be entitled to all rights afforded to a holder of Preferred Shares;
|
(i)
|
the authorized capital of the Company consists of an unlimited number of Common Shares and an unlimited number of Preferred Shares, of which, as of the close of business on September 29, 2017,
55,026,995 Common Shares and no Preferred Shares were outstanding as fully paid and non-assessable shares of the Company;
|
(j)
|
other than as disclosed in the Company’s Public Record, there are no outstanding options, warrants, rights (including conversion or pre-emptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any Common Shares or Preferred Shares, or any securities convertible into or exchangeable for Common Shares, Preferred Shares or any other equity interests;
|
(k)
|
CST Trust Company, at its principal office in Vancouver, British Columbia, is the duly appointed registrar and transfer agent for the Common Shares and Preferred Shares of the Company;
|
(l)
|
the Common Shares are registered pursuant to Section 12(b) of the U.S. Exchange Act and listed for trading on NASDAQ, and, except for such listing, no securities of the Company are listed on any other stock or securities exchange or market or registered under any Securities Laws. No delisting, suspension of trading or cease trading order with respect to any securities of the Company is pending or, to the knowledge of the Company, threatened in writing;
|
(m)
|
to the knowledge of the Company, as of the date of this Subscription Agreement, no inquiry, review or investigation (formal or informal) of the Company by any securities commission or similar regulatory authority under applicable Securities Laws, or NASDAQ is in effect or ongoing or reasonably expected to be implemented or undertaken;
|
(n)
|
the Company is a “reporting issuer” in each of the provinces of Canada;
|
(o)
|
no order ceasing or suspending trading in the securities of the Company or prohibiting the sale of the Offered Shares has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending or, to the knowledge of Company, contemplated or threatened by any regulatory authority;
|
(p)
|
other than as disclosed in the Company’s Public Record, no person now has any agreement or option or right or privilege (whether at Law, pre-emptive or contractual) capable of becoming an agreement for the purchase, subscription or issuance of, or conversion into, any unissued shares, securities, warrants or convertible obligations of any nature of the Company or any of the Subsidiaries;
|
(q)
|
since December 31, 2016, other than as disclosed in the Public Record or by the Company in writing to the Subscriber:
|
i.
|
there has not been any material change in the assets, liabilities, obligations (absolute, accrued, contingent or otherwise), business, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries, on a consolidated basis;
|
ii.
|
there has not been any material change in the capital stock or long-term debt of the Company and the Subsidiaries, on a consolidated basis; and
|
iii.
|
the Company and the Subsidiaries have carried on their respective businesses in the ordinary course;
|
(r)
|
as of their respective dates, the financial statements of the Company included in the SEC Reports (as defined below) complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (
GAAP
) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments);
|
(s)
|
there are no material off-balance sheet transactions, arrangements or obligations (including contingent obligations) of the Company or the Subsidiaries with unconsolidated entities or other persons that have had or would reasonably be expected to have a Material Adverse Effect on the Company;
|
(t)
|
the Company and each Subsidiary maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Exchange Act) which is designed to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;
|
(u)
|
to the knowledge of the Company, neither the Company nor any of the Subsidiaries nor the Company’s independent registered accountant has identified or been made aware of: (i) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by the Company; (ii) any material illegal act or fraud related to the business of the Company that involves the Company’s management or other employees; or (iii) any material claim or allegation regarding any of the foregoing;
|
(v)
|
the Company has established disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the U.S. Exchange Act) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the U.S. Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms;
|
(w)
|
the Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the U.S. Exchange Act (such date, the
Evaluation Date
);
|
(x)
|
the Company presented in its most recently filed annual report on Form 10-K or quarterly report on Form 10-Q, as applicable, under the U.S. Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date;
|
(y)
|
since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the U.S. Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting;
|
(z)
|
neither the Company nor any Subsidiary is insolvent and is able to meet all of its financial liabilities as they become due and no winding-up, liquidation, dissolution or bankruptcy proceedings have been commenced or are being commenced or contemplated by the Company or any Subsidiary, and no merger, consolidation, amalgamation, sale of all or substantially all of the assets or sale of the business of the Company or any of its Subsidiaries have been commenced or are being commenced or contemplated by the Company or any of its Subsidiaries and neither the Company nor any Subsidiary has knowledge of any such proceedings or transactions having been commenced or being contemplated in respect of the Company or any of its Subsidiaries by any other party;
|
(aa)
|
other than as disclosed in the Company's Public Record, there are no actions, suits, proceedings, inquiries or investigations existing, or to the best of the Company’s knowledge, pending or threatened against or adversely affecting the Company or its Subsidiaries or any predecessor company or to which any of the property or assets thereof is subject, at Law or equity, or before or by any court, federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which may in any way materially adversely affect the condition (financial or otherwise), property, assets, operations or business of the Company or its Subsidiaries or their ability to perform the obligations thereof and neither the Company nor any of its Subsidiaries is subject to any Order, rule, policy or regulation of any Governmental Entity, which, either separately or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect on the Company, or the ability of the Company to perform its obligations pursuant hereto;
|
(dd)
|
the information and statements set forth in the Company’s Public Record were, as of the date filed, in compliance in all material respects with the Securities Laws and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
|
(ee)
|
there is no “material change” (as defined in applicable Securities Laws) relating to the Company which has occurred and with respect to which the requisite material change report has not been filed with the applicable securities regulatory authority, nor has the Company filed any confidential material change reports with any securities regulatory authority that are still maintained on a confidential basis;
|
(ff)
|
except as qualified in the Company's Public Record, the Company and the Subsidiaries are the absolute legal and beneficial owners of and have good and marketable title to, all of the material property or assets thereof as described in the Company’s Public Record, such material properties and assets are free of all Liens and no other property rights are necessary for the conduct of the business of the Company and the Subsidiaries as currently conducted or currently contemplated to be conducted; the Company knows of no claim or basis for any claim that might or could materially adversely affect the right of the Company or the Subsidiaries to use, transfer or otherwise exploit such property rights; and, except as disclosed in the Company’s Public Record, neither the Company nor any Subsidiary has any responsibility or obligation to pay any commission, royalty, license fee or similar payment to any person with respect to the property rights thereof;
|
(gg)
|
the Company holds all requisite licences, registrations, qualifications, permits and consents necessary or appropriate for carrying on its respective business as currently carried on (col1ectively, the
Licenses
), except where the failure to hold such Licenses would not be reasonably expected to have a Material Adverse Effect on the Company, and (A) all such Licenses are valid and subsisting and in good standing in all material respects and (B) each of the Company and the Subsidiaries are in compliance with all terms of such Licenses and have not received a notice of non-compliance, or know of, or have reasonable grounds to know of, any facts that would give rise to a notice of non- compliance with any such Licenses, other than as disclosed by the Company in writing to the Subscriber concurrently herewith;
|
(hh)
|
neither the Company nor any Subsidiary is a party to or bound by any non-competition agreement or any other agreement, obligation or Order that purports to (A) limit the manner or the localities in which all or any material portion of the business of the Company or such Subsidiary is conducted, (B) limit any business practice of the Company or the Subsidiary in any material respect, or (C) restrict any acquisition or disposition of any property by the Company or the Subsidiary in any material respect;
|
(ii)
|
to the knowledge of the Company, it is not aware of any legislation, or proposed legislation published by a Governmental Entity, which it anticipates will materially and adversely affect the business, affairs, operations, assets, liabilities (contingent otherwise) or prospects of the Company or any Subsidiary;
|
(jj)
|
except as would not reasonably be expected to have a Material Adverse Effect on the Company or a Subsidiary, all rentals, payments and obligations, and other payments due or payable on or prior to the date hereof under or with respect to the assets of the Company and the Subsidiary have been properly and timely paid;
|
(kk)
|
the Company's disclosure concurrently herewith of Proprietary Rights identified as "Company IP" contains a true and complete list of all the patents owned by the Company, to the Company's knowledge. The Company has the right to use and exploit the Company IP, except as disclosed by the Company in writing to the Subscriber concurrently herewith, as such Company IP is used as of the Tier 1 Closing Time or, if applicable, the Tier 2 Closing Time or will be used in the conduct of Company’s business, and each contract with respect to the Company IP is valid and subsisting and in good standing and there is no default thereunder by the Company, or to the Company's knowledge by any seller or grantor;
|
(ll)
|
the Company is the sole legal and beneficial owner of, has good and marketable title to, and owns all right, title and interest in all the Company IP free and clear of all Liens. The Company has not assigned, licensed or otherwise conveyed any of the Company IP to any third party, except as disclosed by the Company in writing to the Subscriber concurrently herewith;
|
(mm)
|
the Company's disclosure concurrently herewith of Proprietary Rights identified "Licensed IP" contains a true and complete list of all Licensed IP licensed to the Company. The Company has the right to use and exploit the Licensed IP, as such Licensed IP is used in the conduct of the Company's business as of the Tier 1 Closing Time or, if applicable, the Tier 2 Closing Time, and each contract with respect to the Licensed IP is valid and subsisting and in good standing and there is no default thereunder by the Company or, to the Company’s knowledge, by any licensor;
|
(nn)
|
the Proprietary Rights used by the Company in its business are in full force and effect and have not been used, enforced or not enforced in a manner that would result in their abandonment, cancellation or unenforceability. There is no claim existing or, to the Company’s knowledge threatened alleging adverse ownership, invalidity or other opposition to, or any conflict with, any of the Proprietary Rights;
|
(oo)
|
to the Company’s knowledge, (A) the Company has not received any notice or claim (whether written, oral or otherwise) challenging the Company’s ownership of or right to use any Proprietary Rights or suggesting that any other person has any claim of legal or beneficial ownership or other claim or interest with respect thereto and (B) there is no reasonable basis for any claim that any person other than the Company has any claim of legal or beneficial ownership or other claim or interest in any of the Proprietary Rights;
|
(pp)
|
other than as disclosed by the Company in writing to the Subscriber concurrently herewith, the Proprietary Rights of the Company and the Subsidiaries and the Proprietary Rights used by the Company are sufficient to conduct its business as presently conducted or anticipated to be conducted. No consent of any person is necessary to make, use, reproduce, license, sell, modify, update, enhance or otherwise exploit any Company IP, other than Company IP licensed on a non-exclusive basis, and none of the Company IP comprises an improvement to any Licensed IP that would give any person any rights to the Company IP, including, without limitation, rights to license the Company IP;
|
(qq)
|
to the Company’s knowledge, no third party has misappropriated, or is misappropriating, or is threatening to misappropriate, any rights of the Company in or to any Proprietary Rights and no third party’s commercialized product infringes any rights of the Company in or to any Proprietary Rights;
|
(rr)
|
the Company and each of its Subsidiaries has used commercially reasonably efforts (including measures to protect secrecy and confidentiality, where appropriate) to protect its Proprietary Rights and confidential information. Without limiting the generality of the foregoing, to the extent that any of the Company IP is licensed or disclosed to a third party or any third party has access to such the Company IP (including but not limited to any employee, officer, shareholder, consultant, systems-integrator, distributor or other customer of the Company), the Company has entered into a valid and enforceable written agreement which contains terms and conditions prohibiting the unauthorized use, disclosure, reverse engineering or transfer of such the Company IP by such third party. All such agreements are in full force and effect and no such third party, to the Company’s knowledge, is in default of its obligations thereunder;
|
(ss)
|
the Company has taken or will take all commercially reasonable steps to obtain the approval of NASDAQ to the extent required to list the Offered Shares and has complied with all other requirements of NASDAQ and requirements of the Securities Laws applicable to the offer and sale of the Offered Shares as contemplated herein required to be taken or complied with by it prior to the Tier 1 Closing Date and, if applicable, the Tier 2 Closing Date, as the case may be;
|
(tt)
|
the Company has not received any notice of or been prosecuted for an offence alleging violation of or non-compliance with any Environmental Law, and has not settled any allegation of violation or non-compliance short of prosecution. The Company is not aware of any Orders relating to environmental matters requiring any work, repairs, construction or capital expenditures to be made with respect to the business or any property, facilities or assets (whether currently owned, leased, occupied, controlled or licensed or owned, leased, occupied, controlled or licensed at any time prior to the date hereof) of the Company;
|
(uu)
|
the Company, its Subsidiaries and, to the knowledge of the Company, if applicable, any predecessor company to the Company or its Subsidiaries, have not received any notice from a Governmental Entity relating to environmental matters that the Company’s business or that the operation of any of the Company’s property, facilities or other assets is in violation of any Environmental Law or any Environmental Approval or that the Company is responsible (or potentially responsible) for the clean up of any hazardous substances at, on or beneath any of its property, facilities or other assets (whether currently owned, leased, occupied, managed, controlled or licensed, or owned, leased, occupied, managed, controlled or licensed at any time prior to the date hereof), or at, on or beneath any other land or in connection with any waste or contamination migration to or from any of the Company’s property, facilities or other assets;
|
(vv)
|
the Company and each of its Subsidiaries has complied in all material respects and will comply in all material respects with the requirements of all applicable corporate Laws (including the provisions of the Sarbanes-Oxley Act of 2002
|
(ww)
|
the Company and its Subsidiaries, as applicable, have filed all federal, provincial, local and non-U.S. Tax Returns that are required to be filed, or have requested extensions thereof, and have paid all Taxes required to be paid by each of them and any other assessment, fine or penalty levied against each of them, to the extent that any of the foregoing is due and payable, except for such assessments, fines and penalties which are currently being contested in good faith and for which adequate reserves have been established in accordance with GAAP. Such Tax Returns are true, correct and complete in all material respects, and accurately reflect all material liability for Taxes of the Company and its Subsidiaries for the periods covered thereby;
|
(xx)
|
the Company and its Subsidiaries, if applicable, have established on their books and records reserves which are adequate for the payment of all Taxes not yet due and payable, and there are no Liens for Taxes on the assets of the Company except for Taxes not yet due;
|
(yy)
|
no claim has ever been made by a Governmental Entity in a jurisdiction where neither the Company nor any of its Subsidiaries files Tax Returns that the Company or any of its Subsidiaries is or may be subject to Tax by, or may be required to file any Tax Returns in, that jurisdiction that has not been resolved;
|
(zz)
|
other than as disclosed by the Company in writing to the Subscriber, there are no pending audits or examinations against the Company or any of its Subsidiaries by any Governmental Entity with respect to Taxes, and there are no claims that have been asserted against the Company or any of its Subsidiaries which, if determined adversely, would result in the assertion by a Governmental Entity of any deficiency that have had or would reasonably be expected to have an adverse effect on the Tax liabilities of the Company or any of its Subsidiaries;
|
(aaa)
|
neither the Company nor any of its Subsidiaries was a passive foreign investment company within the meaning of Section 1297 of the Code in respect of the taxation year ended December 31, 2016;
|
(bbb)
|
the corporate records and minute books of the Company contain copies of all material proceedings of the shareholders, the Company Board and all committees of the Company Board and there have been no other meetings, resolutions or proceedings of the shareholders, the Company Board or any committees of the Company Board not reflected in such minute books and other records. The corporate records and minute books of the Company have been maintained in accordance with all applicable Laws and are complete and accurate in all material respects, except where such incompleteness or inaccuracy would not reasonably be expected to have a Material Adverse Effect on the Company. Financial books and records and accounts of the Company: (i) have been maintained in accordance with good business practices on a basis consistent with prior years and past practice; (ii) stated in reasonable detail end accurately and fairly reflect in all material respects the Offering; and (iii) accurately and fairly reflect in all material respects the basis for the consolidated financial statements of the Company;
|
(ccc)
|
the Company and each of its Subsidiaries has conducted and is conducting its business in compliance with all, and is not in violation of any, applicable Laws of each jurisdiction in which it carries on business or holds assets, other than such non-compliance or violations that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on the Company;
|
(ddd)
|
the Company is not registered or required to be registered as an "investment company" under the U.S. Investment Company Act of 1940, as amended;
|
(eee)
|
the Company has filed all reports required to be filed by it under the U.S. Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (the foregoing materials (together with any materials filed by the Company under the U.S. Exchange Act, whether or not required), collectively referred to herein as the
SEC Reports
) and the SEC Reports did not contain any untrue statement of a material fact or omit to state any material fact required to be stated there in or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading;
|
(fff)
|
neither the Company or any of its affiliates, nor any person acting on its or their behalf has engaged or will engage in any form of “general solicitation” or “general advertising” (as such terms are defined in Rule 503(c) of Regulation D) in the United States in connection with the offer and sale of the Offered Shares;
|
(ggg)
|
the Company has not for a period of six months prior to the date hereof sold, offered for sale or solicited any offer to buy any of its securities in a manner that would be integrated with the offer and sale of the Offered Shares and would
|
(hhh)
|
the Company is eligible to register the resale of the Offered Shares by the Subscriber using Form S-3 promulgated under the U.S. Securities Act, or any similar short-form registration statement that may be available at such time under the U.S. Securities Act;
|
(iii)
|
with respect to each “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (
ERISA
)), whether or not subject to ERISA, maintained or contributed to by the Company or its Subsidiaries or pursuant to which the Company or any such Subsidiary or any organization (an
ERISA Affiliate
) which, together with the Company and/or any such Subsidiary, would be treated as a “single employer” within the meaning of the Code, may have a liability (each, an
Employee Benefit Plan
), (i) each Employee Benefit Plan has been established and maintained in compliance with its terms and the requirements of all applicable Laws (including, without limitation, ERISA and the Code), except for any noncompliance that does not and would not result, individually or in the aggregate, in a material liability of the Company or its Subsidiaries, and all contributions and payments required to be made under any Employee Plan or related agreement have been made in a timely fashion or has been reflected on the most recent balance sheet filed prior to the date hereof or accrued in the accounting records of the Company and its Subsidiaries; (ii) there are no unfunded obligations of the Company or any of its Subsidiaries under any Employee Benefit Plan; and (iii) each Employee Benefit Plan which is intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service covering all tax law changes or is comprised of a master or prototype plan that has received a favorable opinion letter from the Internal Revenue Service, and, to the Company’s knowledge, no event has occurred and no condition exists which could reasonably be expected to result in the revocation of any such determination letter or opinion letter. None of the Company, any Subsidiary of the Company or any ERISA Affiliate currently maintains or contributes to, or has at any time maintained or contributed to or been obligated to contribute to, any plan, program or arrangement covered by Title IV of ERISA or subject to Section 412 of the Code or Section 302 of ERISA;
|
(jjj)
|
neither the Company nor any of its Subsidiaries is a party to, bound by, negotiating or required to negotiate any collective bargaining agreement or other agreement with a labor union or other labor organization. No employees of the Company or any of its Subsidiaries are represented by any labor union or other labor organization. There are no activities or proceedings of any labor union or other labor organization to organize any employees of the Company or any of its Subsidiaries and no demand for recognition or certification as the exclusive bargaining representative of any employees has been made by or on behalf of any labor union or other labor organization. There are no pending or, to the knowledge of the Company, threatened, and, in the three year period prior to the date hereof, there have been no, strikes, lockouts, union organization activities (including, but not limited to, union organization campaigns or requests for representation), pickets, slowdowns, stoppages, material grievances or collective labor disputes or similar activity in respect of the business of the Company or its Subsidiaries that may, individually or in the aggregate, interfere in any material respect with the respective business activities of the Company or any of its Subsidiaries. The Company and each of its Subsidiaries are not engaged in and, in the three year period prior to the date hereof, have not engaged in any unfair labor practice that has resulted or could reasonably be expected to result, individually or in the aggregate, in any material liability to the Company or any of its Subsidiaries;
|
(kkk)
|
the Company and each of its Subsidiaries is, and, in the three years prior to the date hereof has been, in compliance in all material respects with all applicable Laws respecting labor, employment, fair employment practices (including equal employment opportunity laws), terms and conditions of employment, classification of employees, workers’ compensation, occupational safety and health, immigration, affirmative action, employee and data privacy, plant closings, and wages and hours. There is no pending or, to the knowledge of the Company, threatened charge, complaint, arbitration, audit or investigation brought by or on behalf of, or otherwise involving, any current or former employee, any person alleged to be a current or former employee, any applicant for employment, or any class of the foregoing, or any Governmental Entity, that involve the labor or employment relations and practices of the Company or any of its Subsidiaries that could reasonably be expected to result, individually or in the aggregate, in any material liability to the Company or any of its Subsidiaries;
|
(lll)
|
neither the execution and delivery of this Subscription Agreement, shareholder (at the Company Meeting or otherwise) or other approval of this Subscription Agreement nor the consummation of the transactions contemplated hereby could, either alone or in combination with another event, (i) entitle any employee, director, officer or independent contractor of the Company or any of its Subsidiaries to severance pay or any material increase in severance pay, (ii) accelerate the time of payment or vesting, or materially increase the amount of compensation due to any such employee, director, officer or independent contractor, (iii) directly or indirectly cause the Company to transfer or set aside any assets to fund any
|
(mmm)
|
the Company is a “foreign issuer” as defined in 16 C.F.R. §801.1(e)(2)(ii); and
|
(nnn)
|
the Company and the Subsidiaries (i) do not have assets located in the United States having an aggregate total value of over $80.8 million; and (ii) did not make aggregate sales in or into the United States of over $80.8 million in their most recent fiscal year.
|
(a)
|
the Company agrees to convene and conduct the Company Meeting for the purpose of obtaining approval of the Company Shareholder Approval and shall not, except as required for quorum purposes, as required by Securities Law, or otherwise as permitted under this Subscription Agreement, adjourn, postpone or cancel (or propose or permit the adjournment, postponement or cancellation of) the Company Meeting without the Subscriber’s prior written consent, such consent not to be unreasonably withheld or delayed;
|
(b)
|
as promptly as reasonably practicable following execution of this Subscription Agreement, the Company shall prepare the Company Circular, together with any other documents required by applicable Securities Laws, and cause it to be filed in all jurisdictions where the same is required to be filed, in each case, in accordance with all applicable Securities Laws, including, without limitation, Section 14 of the U.S. Exchange Act and Regulation 14A promulgated thereunder. To the extent the SEC reviews the Company Circular, the Company shall each use commercially reasonable efforts to respond as promptly as reasonably practicable to, and resolve all comments received from, the SEC (or its staff) concerning the Company Circular, and to have the Company Circular cleared by the SEC as promptly as reasonably practicable after such filing;
|
(c)
|
as promptly as reasonably practicable after the tenth calendar day following the Company’s filing of the preliminary Company Circular with the SEC (if the SEC does not review the Company Circular) or after the preliminary Company Circular is cleared by the SEC (if the SEC reviews the Company Circular), the Company shall cause the definitive Company Circular to be mailed or otherwise delivered to Shareholders and otherwise filed in all jurisdictions where the same is required to be filed, in each case, in accordance with all applicable Securities Laws, including, without limitation, Section 14 of the U.S. Exchange Act and Regulation 14A promulgated thereunder;
|
(d)
|
the Company shall ensure that the Company Circular complies in all material respects with all applicable Securities Laws, including, without limitation, the rules applicable to proxy statements on Schedule 14A promulgated under Regulation 14A under the U.S. Exchange Act, and without limiting the generality of the foregoing, that the Company Circular contains sufficient detail to permit the Shareholders to form a reasoned judgement concerning the matters to be placed before them at the Company Meeting. The Company shall ensure that all proxies solicited by it and any of its representatives in connection with the Company Meeting are solicited in compliance with all applicable Securities Laws, including, without limitation, Section 14 of the U.S. Exchange Act and Regulation 14A promulgated thereunder;
|
(e)
|
the Company shall give the Subscriber and its legal counsel a reasonable opportunity to review and comment on the Company Circular and, in the case of review by the SEC, responses to SEC comments. The Company Circular shall be reasonably satisfactory to the Subscriber, acting reasonably, before it is printed, or distributed to Shareholders or filed with any Governmental Entity, subject to any disclosure obligations imposed on the Company by any Governmental Entity;
|
(f)
|
the Company shall disclose in the Company Circular that the Company Board has determined, after receiving financial and legal advice, that the Offering is in the best interests of Company, and the Company Board recommends that the Shareholders vote in favour of the Company Shareholder Approval;
|
(g)
|
from the date of this Subscription Agreement until the Company Meeting, the Company shall use commercially reasonable efforts to take or otherwise cause to be taken, all actions and to do or otherwise cause to be done, all things necessary to complete as promptly as is practicable the Offering and the other transactions contemplated in this Agreement, and,
|
(h)
|
the Company shall solicit proxies from Shareholders in favour of the Company Shareholder Approval and against any resolution submitted by any person that is inconsistent with, or which seeks to hinder or delay the Company Shareholder Approval and the completion of the transactions contemplated hereby, including, if so requested by the Purchaser, acting reasonably, using the services of dealers and proxy solicitation services, and take all other actions that are reasonably necessary or desirable to seek the approval of the Company Shareholder Approval;
|
(i)
|
the Company will advise the Subscriber from time to time as the Subscriber may reasonably request, and at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Company Meeting, as to the aggregate tally of the proxies received by the Company in respect of the Company Shareholder Approval;
|
(j)
|
the Company shall keep the Subscriber informed of any material requests or comments made by any Governmental Entity to the Company in connection with the Company Circular and promptly provide the Subscriber with copies of any correspondence received by the Company from, or sent by the Company to, any Governmental Entity in connection with the Company Circular;
|
(k)
|
the Company agrees that no matters shall be brought before the Company Meeting other than the adoption of this Subscription Agreement and any related and customary procedural matters (including a proposal to adjourn the meeting to allow additional solicitation of votes);
|
(l)
|
none of the information contained or incorporated by reference in the Company Circular, as of the date it is first mailed to the Shareholders, and at the time of the Company Meeting, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading; and
|
(m)
|
if at any time any information relating to the Company, its Subsidiaries or any of its or their respective affiliates, directors or officers, is discovered or otherwise learned by the Company, which should be set forth in an amendment or supplement to the Company Circular so that the Company Circular would not include any misstatement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other Party and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and any other required Governmental Entity and, to the extent required by the Securities Laws, disseminated to the Shareholders.
|
(a)
|
conduct its business and affairs and maintain its assets, and not take any action except, in the usual, ordinary and regular course of business consistent with past practice and in compliance with applicable Laws;
|
(b)
|
use commercially reasonable efforts to preserve intact its present business organization, assets (including intellectual property) and goodwill, maintain its real property interests (including title to, and leasehold interests in respect of, any real property) in good standing, keep available the services of its directors, officers and senior employees and preserve the current material relationships with suppliers, senior employees, consultants, customers and others having business relationships with it, in each case except in accordance with the usual, ordinary course of business consistent with past practices;
|
(c)
|
duly and timely file all Tax Returns required to be filed by it or any Subsidiaries on or after the date hereof and all such Tax Returns will be true, complete and correct in all respects;
|
(d)
|
timely withhold, collect, remit and pay all Taxes which are to be withheld, collected, remitted or paid by it or any Subsidiaries to the extent due and payable; and
|
(e)
|
not:
|
(i)
|
issue, sell, pledge, lease, dispose of or encumber, or agree to issue, sell, pledge, lease, dispose of or encumber, any Common Shares, Preferred Shares or any securities convertible into Common Shares or Preferred Shares (other than in connection with the exercise, in accordance with their respective terms, of outstanding Company Options) or, except as provided for in this Subscription Agreement, amend, extend or terminate, or agree to amend, extend or terminate, any of the terms of, or agreements governing, any of the outstanding Company Options or other convertible securities;
|
(ii)
|
declare, pay or set aside any dividend or make any distribution (other than dividends or distributions by any Subsidiary to the Company or any other Subsidiary) with respect to the Company or any of its Subsidiaries;
|
(iii)
|
amend or propose to amend its articles or by-laws or other constating documents; or, split, consolidate or reclassify, or propose to split, consolidate or reclassify, any of the Common Shares or Preferred Shares, or undertake or propose to undertake any other capital reorganization or change in the capital structure of the Company or any of its Subsidiaries;
|
(iv)
|
sell, pledge, lease, dispose of, abandon, cancel or encumber any assets, rights or properties, except in the ordinary course of business consistent with past practice;
|
(v)
|
except as contemplated by this Subscription Agreement, acquire or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise) any company, partnership or other business organization or division, or incorporate or form, or agree to incorporate or form, any company, partnership or other business organization or make or agree to make any investment either by purchase of shares or securities, contributions of capital, property transfer or purchase of, any property or assets of any other person, company, partnership or other business organization;
|
(vi)
|
enter into or agree to the terms of any material joint venture or similar agreement, arrangement or relationship;
|
(vii)
|
incur, create, assume, modify or otherwise become liable for, any indebtedness for borrowed money or any other liability or obligation, permit any of the properties or assets of the Company or any of its Subsidiaries to be subject to any Lien or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligation of any other person or make any loans, capital contribution, investments or advances except in the ordinary course of business;
|
(viii)
|
pay, discharge or satisfy any material claims, liabilities or obligations other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, of liabilities incurred in the ordinary course of business consistent with past practice or of fees, expenses and other charges of the Company Board, advisors and service providers which are or become payable in connection with the Offering;
|
(ix)
|
take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entities to institute proceedings for the suspension, revocation or limitation of rights under, any material authorizations; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities;
|
(x)
|
take any action that could reasonably be expected to interfere with or be inconsistent with the completion of the Offering or the transactions contemplated in this Subscription Agreement or which would render, or which may reasonably be expected to render, untrue or inaccurate (without giving effect to, applying or taking into consideration any materiality or Material Adverse Effect qualification already contained within such representation or warranty) in any material respect any of the representations and warranties of Company set forth in this Subscription Agreement;
|
(xi)
|
except as required by GAAP, make any change in any method of accounting or auditing practice;
|
(xii)
|
make, change or revoke any Tax election or settle and/or compromise any Tax liability; prepare any Tax Returns in a manner which is inconsistent with the past practices of the Company or any of its Subsidiaries, as applicable, with respect to the treatment of items on such Tax Returns; adopt or change any Tax accounting method or Tax
|
(xiii)
|
other than in the ordinary course of business or as required by Law, enter into, terminate, modify or amend in any material respect any contract or agreement that is material to the Company and/or any of its Subsidiaries; or
|
(xiv)
|
announce an intention, enter into any formal or informal agreement, or otherwise make a commitment to do any of the things prohibited by any of the foregoing subsections; and
|
(xv)
|
use commercially reasonable efforts to avoid, in respect of the taxation year ending December 31, 2017, being treated as a passive foreign investment company within the meaning of Section 1297 of the Code.
|
(a)
|
the Company shall maintain its status as a “reporting issuer” in, and not in default of any requirement of the Securities Laws of, each of the Provinces of Canada until the later to occur of the Tier 1 Closing Time or, if applicable, the Tier 2 Closing Time;
|
(b)
|
until the later to occur of the Tier 1 Closing Time or, if applicable, the Tier 2 Closing Time, the Company shall remain a corporation validly subsisting under the Laws of its jurisdiction of incorporation, licensed, registered or qualified as an extra‑provincial or foreign corporation in all jurisdiction where the character of its properties owned or leased or the nature of the activities conducted by it make such licensing, registration or qualification necessary;
|
(c)
|
for a period of one year after the date of this Subscription Agreement, the Company shall file all reports required to be filed by the Company after the date hereof pursuant to the U.S. Exchange Act. During this one-year period, if the Company is not required to file reports pursuant to the U.S. Exchange Act, it will prepare and furnish to the Subscriber and make publicly available in accordance with Rule 144 under the U.S. Securities Act such information as is required for the Subscriber to sell the Securities under Rule 144 under the U.S. Securities Act;
|
(d)
|
the Company shall timely file such forms and documents as may be required to be filed by the Company under the Securities Laws, including the policies of NASDAQ relating to the Offering and will take all commercially reasonable steps to obtain the listing approval of NASDAQ to the extent required in respect of the Underlying Common Shares and will comply with all other requirements of NASDAQ and requirements of the Securities Laws applicable to the offer and sale of the Offered Shares as contemplated herein required to be taken or complied with by it; provided that the Company will discuss in good faith with the Subscriber, and agree to make, any adjustments required to the terms of the Preferred Shares that are required by NASDAQ and that are not materially adverse to the Company;
|
(e)
|
the Company shall perform and carry out all of the acts and things to be completed by it as provided in this Subscription Agreement;
|
(f)
|
the Company shall use the proceeds of this Offering to further develop and continue to advance its clinical and preclinical hepatitis B virus pipeline, and for general corporate purposes, including working capital;
|
(g)
|
the Company shall take all actions as are necessary to cause the following to be effective as of the Tier 1 Closing:
|
i.
|
the Registration Rights Agreement shall be amended by the Registration Rights Amending Agreement such that the Offered Shares and the Underlying Common Shares, will be subject to the Registration Rights Agreement on substantially the same terms as the other Common Shares subject thereto (the
Registration Rights Amendment
);
|
ii.
|
the Governance Agreement shall be amended by the Governance Agreement Amending Agreement to reflect,
inter alia
, the Subscriber Board Designation Right (the
Governance Agreement Amendment
); and
|
iii.
|
the execution and delivery by the Company of the Lock-Up Amending Agreement and the Standstill Amending Agreement;
|
(h)
|
the Company shall take all actions as are necessary to cause the Articles of Amendment to become effective, including taking all commercially reasonable actions as are necessary to obtain the Company Shareholder Approval so that the Subscriber can fully exercise the Subscriber Board Designation Right from and after the Tier 2 Closing; and
|
(i)
|
the Company shall not sell, offer for sale or solicit offers to buy any security (as defined in Section 2 of the U.S. Securities Act) in a manner that would be integrated with the offer or sale of the Offered Shares and cause the sale of the Offered Shares to the Subscriber to be required to be registered under the U.S. Securities Act.
|
(a)
|
the Subscriber certifies that it is resident in the jurisdiction set out on the face page of this Subscription Agreement. Such address was not created and is not used solely for the purpose of acquiring the Offered Shares and the Subscriber was solicited to purchase, and accepted such offer to purchase the Offered Shares, in such jurisdiction;
|
(b)
|
as of the date of execution of this Subscription Agreement and as of the Tier 1 Closing Time and, if applicable, the Tier 2 Closing Time, as the case may be, the Subscriber is an “accredited investor” as defined in Rule 501(a) of Regulation. The Subscriber agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and securities laws in connection with the purchase and sale of the Offered Shares;
|
(c)
|
the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act;
|
(d)
|
the Subscriber will not offer, sell or otherwise dispose of the Offered Shares unless such offer, sale or disposition is made in accordance with an exemption from the registration requirements of the U.S. Securities Act and the Securities Laws of all applicable states of the United States or the SEC has declared effective a registration statement in respect of such securities. The Offered Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold unless registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available;
|
(e)
|
the execution and delivery of this Subscription Agreement, the performance and compliance with the terms hereof, the subscription for the Offered Shares and the completion of the transactions by the Subscriber described herein will not result in any material breach of, or be in conflict with or constitute a material default under, or create a state of facts which, after notice or lapse of time, or both, would constitute a material default under any term or provision of the constating documents, by-laws or resolutions of the Subscriber, the Securities Laws or any other Laws applicable to the
|
(f)
|
the Subscriber is subscribing for the Offered Shares as principal for its own account, for investment purposes, and not for the benefit of any other person (within the meaning of applicable Securities Laws) and not with a view to, or for resale in connection with, any distribution of the Offered Shares;
|
(g)
|
this Subscription Agreement (and all other documentation in connection with such subscription) has been duly authorized, executed and delivered by, and constitutes a legal, valid and binding agreement of, the Subscriber, enforceable against the Subscriber in accordance with its terms, provided that enforcement thereof may be limited by Laws affecting creditors’ rights generally;
|
(h)
|
the Subscriber has the necessary legal capacity and authority to execute and deliver this Subscription Agreement and to observe and perform its covenants and obligations hereunder and has obtained all necessary approvals in respect thereof;
|
(i)
|
there is no person acting or purporting to act at the request of the Subscriber who is entitled to any brokerage or finder’s fee;
|
(j)
|
the Subscriber has not received or been provided with a prospectus, offering memorandum, within the meaning of the Securities Laws in Canada, or any sales or advertising literature in connection with the Offering and the Subscriber’s decision to subscribe for the Offered Shares was not based upon, and the Subscriber has not relied upon, any representations as to facts made by or on behalf of the Company, other than the representations and warranties of the Company under this Subscription Agreement;
|
(k)
|
no person has made any written or oral representations:
|
i.
|
that any person will resell or repurchase the Offered Shares;
|
ii.
|
that any person will refund the Tier 1 Subscription Amount or, if applicable, the Tier 2 Subscription Amount; or
|
iii.
|
as to the future price or value of the Offered Shares; and
|
(l)
|
the offering and issue of the Offered Shares has not been made or solicited through or as a result of, and the distribution of the Offered Shares is not being accompanied by any advertisement, including without limitation in printed public media, radio, television or telecommunications, including electronic display, or as part of a general solicitation or general advertising with respect to the Offering.
|
(a)
|
the Subscriber shall take all actions as are necessary to cause the following to be effective as of the Tier 1 Closing:
|
i.
|
the Registration Rights Agreement shall be amended by the Registration Rights Amending Agreement such that the Offered Shares and the Underlying Common Shares, will be subject to the Registration Rights Agreement on substantially the same terms as the other Common Shares subject thereto (the
Registration Rights Amendment
);
|
ii.
|
the Governance Agreement shall be amended by the Governance Agreement Amending Agreement to reflect,
inter alia
, the Subscriber Board Designation Right (the
Governance Agreement Amendment
); and
|
iii.
|
the execution and delivery by the Company of the Lock-Up Amending Agreement and the Standstill Amending Agreement;
|
(b)
|
the Subscriber, to the extent required, shall cooperate with the Company to facilitate the timely filing of such forms and documents as may be required to be filed by the Company under the Securities Laws, including the policies of NASDAQ relating to the Offering; provided that the Subscriber will discuss in good faith with the Company, and agree to make, any adjustments required to the terms of the Preferred Shares that are required by NASDAQ and that are not materially adverse to the Subscriber;
|
(c)
|
there are risks associated with the purchase of the Offered Shares, including the risks outlined in the Public Record and in this Subscription Agreement. The Subscriber has such knowledge, skill and experience in business, financial and investment matters that the undersigned is capable of evaluating the merits and risks of an investment in the Offered Shares. The Purchaser has been afforded the opportunity to receive information from, and to ask questions of and receive answers from the management of, the Company concerning this investment so as to allow it to make an informed investment decision prior to its investment. Additionally, with the assistance of the Subscriber’s own professional advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Offered Shares and the consequences of this Subscription Agreement. The Subscriber has considered the suitability of the Offered Shares as an investment in light of its own circumstances and financial condition and the undersigned is able to bear the risks associated with an investment in the Offered Shares and its authority to invest in the Offered Shares;
|
(d)
|
if required by applicable Securities Laws or the Company, the Subscriber will execute, deliver and file or assist the Company in filing such reports, undertakings and other documents with respect to the issue and/or sale of the Offered Shares as may be required by any securities commission or other regulatory authority;
|
(e)
|
there are restrictions on the Subscriber’s ability to resell the Offered Shares and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Offered Shares. The Offered Shares will be subject to the restrictions on transfer as set forth in this Subscription Agreement and under applicable Securities Laws. The Subscriber has been advised to consult its own legal advisors with respect to trading in the Offered Shares and with respect to the resale restrictions imposed by the Securities Laws of the province or territory in which the Subscriber resides and other applicable Securities Laws, and acknowledges that no representation has been made respecting the applicable hold periods imposed by the Securities Laws or other resale restrictions applicable to such securities which restrict the ability of the Subscriber to resell such securities that the Subscriber is solely responsible to find out what these restrictions are and the Subscriber is solely responsible (and the Company is in no way responsible) for compliance with applicable resale restrictions and the Subscriber is aware that it may not be able to resell such securities except in accordance with limited exemptions under the Securities Laws and other applicable Securities Laws;
|
(f)
|
the Offered Shares will be “restricted securities” as such term is defined in Rule 144(a)(3) under the U.S. Securities Act and may not be offered, resold or otherwise transferred, directly or indirectly, except pursuant to an effective registration statement under the U.S. Securities Act or in accordance with an exemption from the registration requirements of the U.S. Securities Act and applicable Securities Laws, as described in the legend affixed to the face of the certificates (or, if applicable, notice of entry into a direct registration system) evidencing the Offered Shares and the provisions of Section 6.2 hereof. The Subscriber understands that the availability of the exemption from registration afforded by Rule 144 under the U.S. Securities Act depends upon the satisfaction of various conditions, and that Rule 144 under the U.S. Securities Act may afford the basis for sales only in limited circumstances. The Subscriber understands that as an “affiliate” of the Company, it is subject to restrictions imposed by the U.S. Securities Act on its ability to transfer the Offered Shares. The Subscriber does not have the protection of Section 11 of the U.S. Securities Act in connection with its purchase of the Offered Shares hereunder;
|
(g)
|
the certificates (or, if applicable, notice of entry into a direct registration system) representing the Offered Shares issued pursuant to the Offering will bear the following legends as required by National Instrument 45-102 -
Resale of Securities
and the U.S. Securities Act, and with the necessary information inserted and the Subscriber agrees to comply with the terms of such legends:
|
(h)
|
no prospectus or registration statement has been filed by the Company with any securities regulatory authorities in connection with the issuance of the Offered Shares or the Underlying Common Shares, the sale of the Offered Shares and the issuance of the Underlying Common Shares is conditional upon such sale being exempt from the requirements to file and obtain a receipt for a prospectus, to file and make effective a registration statement or to deliver an offering memorandum with this Subscription Agreement and the requirement to be a registered dealer, and as a consequence of acquiring the Offered Shares pursuant to such exemptions:
|
i.
|
certain protections, rights and remedies provided by the Securities Laws including certain statutory rights of rescission or damages and certain statutory remedies against an issuer, underwriters, auditors, directors and officers that are available to investors who acquire securities offered by a prospectus or registration statement, may not be available to the Subscriber;
|
ii.
|
the common law may not provide investors with an adequate remedy in the event that they suffer investment losses in connection with securities acquired in a private placement;
|
iii.
|
the Subscriber may not receive certain information that would otherwise be required to be given under the Securities Laws; and
|
iv.
|
the Company is relieved from certain obligations that would otherwise apply under the Securities Laws;
|
(i)
|
the Company is collecting the Subscriber’s personal information (as that term is defined under applicable privacy legislation, including, without limitation, the
Personal Information Protection and Electronic Documents Act
(Canada) and any other applicable similar, replacement or supplemental provincial or federal legislation or Laws in effect from time to time), for the purpose of completing this Subscription Agreement. The Subscriber acknowledges and consents to the Company retaining such personal information for only so long as required by Law. The Subscriber further acknowledges and consents to the fact that the Company may be required by the Securities Laws to provide regulatory authorities with any personal information provided under this Subscription Agreement;
|
(j)
|
the Subscriber represents and warrants that none of the funds being used to purchase the Offered Shares are, to such Subscriber's knowledge, proceeds obtained or derived, directly or indirectly, as a result of illegal activities and that:
|
i.
|
the funds being used to purchase the Offered Shares and advanced by or on behalf of the Subscriber do not represent proceeds of crime or otherwise result in a violation of any applicable anti-money laundering Laws or regulations including, without limitation, the
Proceeds of Crime (Money Laundering) and Terrorist Financing
|
ii.
|
the Subscriber is not a person or entity identified on a list established under section 83.05 of the
Criminal Code
(Canada) (the
Criminal Code
); and
|
(k)
|
the Subscriber acknowledges and agrees that (i) the Company may in the future be required by law to disclose the Subscriber's name and other information relating to the Subscriber and any purchase of the Offered Shares, on a confidential basis, pursuant to the Criminal Code, PCMLTFA, the Patriot Act or as otherwise may be required by applicable Laws, regulations or rules, and (ii) the Company or their agents may in the future be required by law to disclose the Subscriber's name and other information relating to the Subscriber and any purchase of the Offered Shares, on a confidential basis, pursuant to the PCMLTFA, the Patriot Act, the Criminal Code or as otherwise may be required by applicable Laws, regulations or rules.
|
(a)
|
Any notice, direction or other instrument required or permitted to be given to any Party hereto shall be in writing and shall be sufficiently given if delivered personally, or transmitted by facsimile or electronic mail tested prior to transmission to such Party, as follows:
|
i.
|
in the case of the Company, to:
|
ii.
|
in the case of the Subscriber:
|
(b)
|
Any such notice, direction or other instrument, if delivered personally, shall be deemed to have been given and received on the day on which it was delivered, provided that if such day is not a Business Day then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following such day and if transmitted by facsimile or electronic mail, shall be deemed to have been given and received on the day of its transmission, provided that if such day is not a Business Day or if it is transmitted or received after the end of normal business hours then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following the day of such transmission.
|
(c)
|
Any Party may change its address for service from time to time by notice given to the other Party in accordance with the foregoing provisions.
|
(a)
|
the Company is hereby authorized and directed to issue (i) the Tier 2 Preferred Shares, (ii) up to 13,025,536 Underlying Common Shares upon conversion of the Tier 2 Preferred Shares and (iii) such additional Common Shares as may become issuable upon conversion of the Tier 2 Common Shares pursuant to the rights attached thereto, all as more particularly described in the Company Circular, and such resolution is hereby confirmed, approved and adopted in all respects;
|
(b)
|
the Articles of the Company be amended to authorize the Subscriber Board Designation Right, as more particularly described in the Company Circular, and the Company be and is hereby authorized to make such conforming amendments to its corporate documents as may be necessary or advisable to give effect to the foregoing resolution;
|
(c)
|
any officer or director of the Company is hereby authorized, acting for, in the name of and on behalf of the Company, to execute, under the seal of the Company or otherwise, and to deliver or cause to be delivered, all such documents, agreements and instruments, and to do or cause to be done all such other acts and things, as such officer or director determines to be necessary or desirable in order to carry out the intent of the foregoing paragraphs of this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing; and
|
(d)
|
these approvals are given for all purposes under the NASDAQ rules and under Multilateral Instrument 61-101.”
|
(a)
|
there be created a Series A of Preferred shares of the Company;
|
(b)
|
the identifying name of the Series A Preferred shares of the Company be “Series A Participating Convertible Preferred Shares” (the “
Series A Preferred Shares
”);
|
(c)
|
the maximum number of Series A Preferred Shares which the Company is authorized to issue is 1,164,000 no par value shares;
|
(d)
|
there be created and attached to the Series A Preferred Shares the special rights and restrictions set out in Part 27 of the Articles of the Company, as adopted by paragraph (f) below;
|
(e)
|
the Notice of Articles of the Company be altered accordingly;
|
(f)
|
the Articles of the Company be altered by the addition of Part 27 thereof in the form of Part 27 set out in Schedule A to these resolutions, such alteration to the Articles not to take effect until the Notice of Articles of the Company is altered to reflect such alteration to the Articles;
|
(g)
|
the Company hereby appoints Farris Vaughan Wills and Murphy LLP to act as its agent for filing the Notice of Alteration to the Notice of Articles as set out above; and
|
(h)
|
any director of the Company be and is hereby authorized to do, sign and execute all things, instruments, deeds and documents as such director may deem necessary or desirable to carry out the foregoing resolutions.
|
Term
|
Article
|
Common Dividend
|
27.3(b)
|
Company
|
Recitals
|
Conversion Date
|
27.6(d)
|
In-Kind Common Dividend
|
27.3(c)
|
Junior Securities
|
27.2(b)(i)
|
Liquidation Preference
Optional Conversion Date
|
27.6(c)(i)
27.6(a)
|
Parity Securities
|
27.2(b)(ii)
|
Participating Cash Dividend
|
27.3(b)
|
Participating Cash Penalty Dividends
|
27.3(b)
|
Participating Dividends
Participating In-Kind Dividend
Participating In-Kind Penalty Dividends
|
27.3(c)
27.3(c)
27.3(c)
|
Participating Penalty Dividends
|
27.3(c)
|
Preferred Shares
|
Recitals
|
Reference Property
|
27.6(f)(iii)
|
Senior Securities
|
27.2(b)(iii)
|
Series A Preferred Shares
Shareholder Rights Plan
|
27.2(a)
27.3(c)
|
Transaction
|
27.6(f)(iii)
|
1.
|
The incorporation and valid existence of the Company and the Subsidiaries.
|
2.
|
That the Company has the corporate power and capacity to carry on its business as now carried on by it and to own its assets and to amend the Articles to designate and issue the Offered Shares having such rights, privileges and obligations as described in Schedule B of the Subscription Agreement.
|
3.
|
The authorized share capital of the Company. The rights of the Offered Shares are as set forth in the Articles.
|
4.
|
That the Subscription Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
|
5.
|
That the execution and delivery of the Subscription Agreement, the performance of the obligations of the Company thereunder, the compliance by the Company with the terms and conditions thereof and the issue and sale of the Offered Shares (including the terms of the Offered Shares) do not constitute and will not constitute, with notice or lapse of time or with both notice and lapse of time, a breach of, or default under the articles of the Company or any statute or regulation of the Province of British Columbia or any federal statute or regulation of Canada having the force of law binding upon the Company and do not and will not conflict with the articles or notice of articles of the Company.
|
6.
|
That the Tier 1 Preferred Shares and, if applicable, the Tier 2 Preferred Shares have been duly authorized, allotted and validly issued, and that the Underlying Common Shares, have been reserved for issuance.
|
7.
|
That no prospectus, offering memorandum or other document is required under the Securities Laws of British Columbia, and except as have been obtained or completed, no proceeding is required to be taken and no approval, consent or authorization of or filing with any securities regulatory authority in the such jurisdiction is required in order to permit the issuance of the Offered Shares, subject to certain specified conditions and exceptions.
|
8.
|
That no prospectus, offering memorandum or other document is required to be filed, no proceeding required to be taken and no approval, permit, consent or authorization is required to be obtained under the Securities Laws of British Columbia in connection with the first trade of the Tier 1 Preferred Shares or and, if applicable, the Tier 2 Preferred Shares in the such jurisdiction through persons registered in a category permitting them to trade such securities under such Securities Laws, provided that:
|
(a)
|
the Company is and has been a reporting issuer in a jurisdiction of Canada for the four-month period immediately preceding the trade;
|
(b)
|
a four-month period has elapsed from the date of issue of the Offered Shares;
|
(c)
|
the trade is not a “control distribution” as defined in National Instrument 45‑102;
|
(d)
|
no unusual effort is made to prepare the market or create a demand for such securities;
|
(e)
|
no extraordinary commission or other consideration is paid in respect of such trade;
|
(f)
|
if the seller is an insider or officer of the Company, the seller has no reasonable grounds to believe that the Company is in default of securities legislation; and
|
(g)
|
the certificates representing the Tier 1 Preferred Shares and, if applicable, the Tier 2 Preferred Shares, as the case may be, carried the appropriate legend provided under National Instrument 45‑102 and Securities Laws.
|
A.
|
The parties entered into a governance agreement dated as of January 11, 2015 (the “
Original Governance Agreement
”), in connection with a merger agreement entered into between the Company and OnCore Biopharma, Inc., as a result of which the Shareholder received Common Shares of the Company;
|
B.
|
The parties entered into a subscription agreement dated as of October 1, 2017 (the “
Subscription Agreement
”), providing for the purchase by the Shareholder of 1,164,000 Class A Preferred Shares (the “
Preferred Shares
”) of the Company, issuable in two tranches;
|
C.
|
As a condition to the “
Tier 1 Closing
” (as defined in the Subscription Agreement), the parties agreed to amend and restate the Original Governance Agreement as provided for herein and to use commercially reasonable efforts to cause, by the "
Tier 2 Closing
" (as defined in the Subscription Agreement), the existing articles of the Company to be amended, which amendment (the “
Amendment
”) is attached as Schedule 1 to this Agreement.
|
2.1.1
|
The Company will cause that number of individuals designated by the Shareholder set out in the Articles (the “
Shareholder Designees
”) to be appointed to the Board in accordance with the Articles either concurrently with the Tier 2 Closing or, if for any reason such Tier 2 Closing does not occur, then otherwise by resolution of the Board to add a director as provided for, and otherwise in accordance with, the Articles; provided that, in such circumstance, the Company agrees that it will, at the next annual general or special meeting held following the effective date hereof at which directors of the Company are to be elected, put before the shareholders of the Company an amendment to the Articles of the Company substantially in the form of Amendment to provide for the appointment of Shareholder Designees as set out therein. The Company and the Shareholder agree that, if required by applicable laws, any additional Shareholder Designees in addition to the two Shareholder Designees as are currently appointed pursuant to the Original Governance Agreement, will be independent director(s) for the purposes of applicable laws.
|
2.1.2
|
At each annual general or special meeting of the Company’s shareholders held following the effective date hereof at which directors of the Company are to be elected, the Company will put forward for nomination for election to the Board those Shareholder Designees that the Shareholder is entitled to nominate pursuant to the Articles (who need not be the same individuals as the Shareholder Designees appointed to the Board pursuant to Section 2.1(a) but shall be those individuals set out as RS Nominated Directors pursuant to a Nomination Notice as those terms are defined in the Articles), and shall use commercially reasonable efforts to obtain shareholder approval for the election of the Shareholder Designees at such meetings (including by soliciting proxies in favour of the Shareholder Designees) and to that end will support the Shareholder Designees for election in a manner no less rigorous or favourable than the manner in which the Company supports any of its other nominees.
|
2.1.3
|
The Company shall provide advance notice to the Shareholder of any upcoming shareholders’ meetings in accordance with Part 28 of the Articles.
|
2.1.4
|
In the event that any Shareholder Designee resigns, dies, becomes incapacitated or otherwise ceases to be a director prior to the expiration of his or her term as a director, such vacancy shall be filled in accordance with the provisions of section 5 of Part 28 of the Articles. The Company shall use all commercially reasonable steps, promptly upon receipt by it of a written notice from the Shareholder identifying a Shareholder Designee to fill such vacancy and in any event no later than five (5) business days following receipt of such written notice, as are necessary to call a meeting of the board of directors to vote on the appointment of such Shareholder Designee
|
2.2.1
|
in favour of:
|
(a)
|
the election of any person or persons nominated for election to the Board by the Board from time to time in accordance with the Articles, and
|
2.2.2
|
against:
|
(b)
|
the election of any person nominated by anyone other than the Board.
|
4.2.1
|
as may be expressly permitted by this Agreement;
|
4.2.2
|
where it is already in the public domain when disclosed to the Shareholder or becomes, after having been disclosed to the Shareholder, generally available to the public through publication or otherwise unless the publication or other disclosure was made directly or indirectly by the Shareholder in breach of this Agreement;
|
4.2.3
|
as required in order to comply with applicable laws, the orders or directions of any governmental authority, the requirements of any stock exchange or clearing house, or the requirements of any other regulatory authority having jurisdiction; and
|
4.2.4
|
to Affiliates of the Shareholder, provided such Persons have agreed to maintain such Confidential Information in confidence on terms substantially similar to those in this Section 4.2.
|
ARBUTUS BIOPHARMA CORPORATION
Per: ___________________________________
Name:
Title:
|
ROIVANT SCIENCES LTD.
Per: ___________________________________
Name:
Title:
|
|
|
|
1.
|
Any one of the following matters shall require the approval of at least seventy percent (70%) of the number of directors then in office, whether such approval is given by way of a vote at a meeting of directors or by written consent:
|
(a)
|
the removal or replacement of the chair of the board of directors of the Company;
|
(b)
|
the removal or replacement of the chief executive officer of the Company,
|
(c)
|
subject to Part 28, the nomination of a director to the board for election to the board of directors of the Company;
|
(d)
|
subject to Part 28, the appointment of a director to the board of directors of the Company to fill a vacancy created by resignation or death of a director;
|
(e)
|
subject to Part 28, the appointment of an additional director to the board of directors of the Company;
|
(f)
|
any take-over bid, issuer bid, amalgamation, plan of arrangement, business combination, merger, tender offer, exchange offer, consolidation, recapitalization, reorganization, liquidation, dissolution or winding-up in respect of, or involving, the Company or any subsidiary of the Company;
|
(g)
|
any sale or issuance of shares of the Company or other equity interests in the Company (or rights, interests or securities convertible into or exercisable for such shares or other equity interests), in one or more connected transactions, which would be greater than 5% of the outstanding shares of stock of the company, other than the grant or issuance of such equity interests in connection with any stock-based compensation plan or plans approved by the board of directors of the Company;
|
(h)
|
any sale of assets (or any strategic alliance, joint venture, license or other arrangement having the same economic effect as a sale) of the Company or any subsidiary of the Company representing a transaction value and/or payments greater than $10 million;
|
(i)
|
ceasing or abandoning any research, development or commercialization efforts that were publicly disclosed by the Company as having been underway as at the effective date of the Merger, or declining to advance the development or commercialization of such programs, whether by failing to continue to fund such programs or otherwise;
|
(j)
|
incurring any indebtedness or third party guarantees in excess of $5,000,000 individually or $10,000,000 in the aggregate; or
|
(k)
|
any amendment or proposed amendment to the Articles or Notice of Articles of the Company,
|
2.
|
In the event of an inconsistency between a provision of this Part 27 and any other provision of these Articles, the provision of this Part 27 shall prevail.
|
3.
|
This Part 27 and Section 18.2 may only be amended by special resolution.
|
1.
|
In this Part, the following terms shall have the meanings assigned to them below:
|
(a)
|
No earlier than ninety (90) days and no later than sixty (60) days prior to the date of each Shareholder Meeting, the Company shall notify RS in writing of the date of the Shareholder Meeting (the “
Company Notice
”). The Company Notice shall specify the total number of Company Shares issued and outstanding calculated on a Partially Diluted Basis as at the Record Date Notice.
|
(b)
|
RS shall have the right and option, exercisable within fifteen (15) days from receipt of the Company Notice (the “
Nomination Right Notice Period
”) by written notice to the Company (the “
Nomination Notice
”) to exercise the Nomination Right. If RS wishes to exercise the Nomination Right, RS must specify in the Nomination Notice (i) the number of Company Shares beneficially owned by the Nominating Shareholder as at the date of the Nomination Notice, (ii) the name of the individual(s) RS wishes to nominate for election to the board of directors of the Company, and (iii) confirm that the nominee(s) are eligible to act as director(s) under the Act
or, if the Company is otherwise governed by another statue or regime, that the nominee(s) are eligible to act as a director under such statute or regime. As soon as reasonably possible after the request by the Company, duly completed forms and any other information in respect of the RS Nominated Directors, as required by the relevant stock exchange, shall be provided by the RS Nominated Directors.
|
(c)
|
If RS fails to deliver a Nomination Notice in response to a Company Notice within the Nomination Right Notice Period, then the Company will not be required to nominate individuals identified by RS for election to the board of directors of the Company at the Shareholder Meeting with respect to which RS failed to deliver the Nomination Notice, and RS shall have the right to nominate person(s) for election to the board of directors of the Company at the next Shareholder Meeting in accordance with this Part 28.
|
(d)
|
If RS delivers a Nomination Notice in response to a Company Notice within the Nomination Right Notice Period then, subject only to the nominee(s) identified in the Nomination Notice being eligible to act as director(s) of the Company, the Company shall (i) nominate the RS nominee(s) to stand for election to the board of directors of the Company at the Shareholder Meeting, and (ii) solicit proxies from the holders of Company Shares in respect thereof which will be satisfied by delivery of a form of proxy to the holders of Company Shares following standard procedures consistent with past practice. For greater certainty, the Company (x) shall not be required to retain a third party solicitation agent, and (y) shall include the name of the RS nominee(s) to stand for election to the board of directors of the Company in the proxy to be delivered to each holder of Company Shares in respect of the Shareholder Meeting. The Nominating Shareholder shall also provide to the Company such other information regarding the RS nominee(s) as may be reasonably requested by the Company so as to comply with applicable proxy disclosure requirements under applicable securities laws, together with such other information, including a biography of the RS Nominated Directors, that is consistent with the information the Company intends to publish about management nominees as directors of the Company in the information circular to be prepared by the Company in connection with the election of directors at a Shareholder Meeting.
|
(a)
|
transfers of Common Shares as a bona fide gift or charitable contribution;
|
(b)
|
transfers by distribution of Preferred Shares, Common Shares or other securities to affiliates, partners, members, stockholders or holders of similar equity interests of the Shareholder;
|
(c)
|
transfers pursuant to any tender offer, takeover bid, merger, consolidation, acquisition of the Company or its voting securities or other similar transaction relating to the Company or its voting securities that occurs after the date hereof and that is approved by the Board of Directors of the Company;
|
(d)
|
granting of a security interest in (whether by way of pledge or otherwise) Common Shares by the Shareholder in connection with a loan made with a financial institution in good faith on bona fide, arm’s length terms, and any
|
(e)
|
issuances of Common Shares upon conversion of the Series A Preferred Shares; and
|
(f)
|
any transfer or issuance of securities of the Shareholder, or any affiliate thereof that indirectly holds the Lock-Up Securities through the Shareholder, in a bona fide transaction; provided, however, that any such transfer or issuance shall not affect any of the Shareholder’s obligations hereunder.
|
|
COMPANY:
|
||
|
|
|
|
|
ARBUTUS BIOPHARMA CORPORATION
|
||
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDER:
|
||
|
|
|
|
|
ROIVANT SCIENCES LTD.
|
||
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
Date:
|
|
1.
|
Definitions
. In this Agreement, the following terms shall have the meaning assigned to them below. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Subscription Agreement.
|
2.
|
Original Agreement
. The Original Agreement is hereby amended and restated in its entirety by this Agreement.
|
3.
|
Standstill
. For a period commencing on the date hereof and ending on the earlier of (i) forty-eight (48) months following the Tier 1 Closing and (ii) the date upon which the Shareholder no longer has the right to nominate at least one (1) director to the Company’s board of directors (the “
Board
”) pursuant to the Governance Agreement and/or Part 28 of the Company’s Articles, the Shareholder shall not, without the prior written consent of the Company, directly or indirectly:
|
a.
|
acquire, offer to acquire, or agree to acquire ownership (including, but not limited to, beneficial ownership as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (“
Exchange Act
”)), by purchase or otherwise, any additional shares of Common Stock, or any rights or options to acquire any such securities or any securities convertible into such securities; provided that, in the event that at any time, whether due to an increase in the total outstanding shares of Common Stock , a sale of shares of Common Stock or Preferred Shares by the Shareholder (made in compliance with the provisions of the Lock-Up Agreement) or otherwise, the Shareholder beneficially owns, directly or indirectly, Common Stock representing less than the Shareholder Maximum Ownership Percentage, the Shareholder may acquire additional shares of Common Stock or rights or options to acquire any such securities or any securities convertible into such securities; provided, further, that the Shareholder’s ownership percentage will not exceed the Shareholder Maximum Ownership Percentage;
|
b.
|
call or seek to call any meeting of the stockholders of the Company;
|
c.
|
submit, or participate with others that submit, any stockholder proposals for the vote or consent (collectively, “vote”) of stockholders (whether pursuant to Rule 14a-8 under the Exchange Act, or otherwise) of the Company or any proposal for consideration by the Board;
|
d.
|
solicit “proxies” or make, participate in or encourage any “solicitation” (as such terms are used in the proxy rules of the Securities Exchange Commission) for proxies for any stockholder proposals of the Company or nominations of candidates for election as directors or trustees of the Company;
|
e.
|
form or join in a partnership, syndicate or other group, including, without limitations, a “group” as defined under Section 13(d) of the Exchange Act, with respect to the Common Shares, or deposit any Common Shares in a voting trust, arrangement or agreement, except for such actions that may be permitted under the Lock-Up Agreement;
|
f.
|
publicly or privately: (i) encourage, recommend, advise, finance or urge others to put forward stockholder proposals of the Company or nominations with respect to directors/trustees of the Company or enter into any arrangements with any other person in connection with any of the foregoing as they relate to the Company; (ii) indicate support or approval for any stockholder proposals or nominations relating to the Company that are not otherwise approved by the Board in accordance with the Articles; (iii) solicit or encourage others to vote against any matter recommended by the Board in accordance with the Articles; or (iv) act alone or in concert with others to seek control of, or otherwise effect a change to, the management or policies of the Company, unless otherwise approved by the Board in accordance with the Articles; or
|
g.
|
take or seek to take, or cause or seek to cause or solicit others to take any action inconsistent with any of the foregoing as they relate to the Company.
|
a.
|
in the event that the Company enters into a definitive agreement for a merger, consolidation or other business combination transaction as a result of which the stockholders of the Company would own (including, but not limited to, beneficial ownership) voting securities of the resulting corporation having 50% or less of the total voting power of the outstanding voting securities;
|
b.
|
in the event that a bona fide tender offer or exchange offer for at least a majority of the outstanding voting securities of the Company is commenced by a third person (not involving any breach of this Section 3 by the Shareholder); or
|
c.
|
the Company solicits from one or more persons or enters into discussions with one or more persons regarding, a proposal with respect to a merger of, or a business combination transaction involving, the Company, in each case without similarly soliciting a proposal from the Shareholder, or the Company makes a public announcement that it is seeking to sell itself and/or explore strategic alternatives which could lead to a sale, restructuring, business combination, merger or other similar transaction and, in such event, such announcement is made with the approval of the Board.
|
4.
|
Termination
.
The Shareholder may terminate this Agreement if the Company is in material breach of Articles 2 or 4.2 of the Governance Agreement or Part 27 or Part 28 of the Company’s Articles and such breach remains uncured for at least fifteen (15) days after notice to the Company thereof.
|
5.
|
Remedies
. The parties agree that any breach or threatened breach of this Agreement may cause immediate and irreparable harm to the Company for which monetary damages will not be adequate and that, in the event of a breach or threatened breach of this Agreement, the Company shall be entitled to seek and obtain immediate injunctive and other equitable relief without proof of actual damages in addition to any other remedies as may be available at law or in equity. The Shareholder further agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. All rights under this Agreement are cumulative, not exclusive, and will be in addition to all rights and remedies available to the Company at law or in equity.
|
6.
|
No Assignment
. This Agreement shall be binding upon and inure to the benefit of the parties and their respective agents, executors, heirs, successors and permitted assigns. Neither this Agreement nor any of the benefits of this Agreement shall be assigned by a party without prior written consent of the other parties hereto. No person not a party to this Agreement shall have rights, benefits, or obligations hereunder.
|
7.
|
Amendments
. No amendments, changes, or modifications may be made to this Agreement without the express prior written consent of each of the parties hereto.
|
8.
|
Notices
. All notices or communications hereunder shall be in writing, addressed as follows:
|
9.
|
Invalidity
. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
|
10.
|
No Waiver
. No failure or delay by a party in exercising any right hereunder or any partial exercise thereof shall operate as a waiver thereof or preclude any other or further exercise of any right hereunder. No waiver, express or implied, by any party of any breach of default by any other party in the performance by the other party of its obligations under this Agreement shall be deemed or construed to be a waiver of any other breach or default, whether prior, subsequent, or contemporaneous, under this Agreement. Any waiver must be in writing and executed by the party against whom the waiver is sought to be charged.
|
11.
|
Counterparts.
This Agreement may be executed in two counterparts, which may be delivered by facsimile or by
portable document format
(PDF) attachment to email transmission, each of which shall be deemed an original, and when taken together all such counterparts shall be deemed to constitute one and the same document.
|
12.
|
Applicable Law
This Agreement shall be construed, interpreted and governed in accordance with the laws of the Province of British Columbia and the laws of Canada, without reference to rules relating to conflicts of law.
|
13.
|
Entire Agreement.
This Agreement contains the entire understanding between the parties and is intended to be the complete and exclusive statement of the terms and conditions of the agreement between the parties and supersedes in all respects any prior agreement or understanding between the Company and the Shareholder.
|
|
COMPANY:
|
||
|
|
|
|
|
ARBUTUS BIOPHARMA CORPORATION
|
||
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDER:
|
||
|
|
|
|
|
ROIVANT SCIENCES LTD.
|
||
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
Date:
|
|
A.
|
The parties entered into a governance agreement dated as of January 11, 2015 (the “
Original Governance Agreement
”), in connection with a merger agreement entered into between the Company and OnCore Biopharma, Inc., as a result of which the Shareholder received Common Shares of the Company;
|
B.
|
The parties entered into a subscription agreement dated as of October 1, 2017 (the “
Subscription Agreement
”), providing for the purchase by the Shareholder of 1,164,000 Class A Preferred Shares (the “
Preferred Shares
”) of the Company, issuable in two tranches;
|
C.
|
As a condition to the “
Tier 1 Closing
” (as defined in the Subscription Agreement), the parties agreed to amend and restate the Original Governance Agreement as provided for herein and to use commercially reasonable efforts to cause, by the "
Tier 2 Closing
" (as defined in the Subscription Agreement), the existing articles of the Company to be amended, which amendment (the “
Amendment
”) is attached as Schedule 1 to this Agreement.
|
(a)
|
The Company will cause that number of individuals designated by the Shareholder set out in the Articles (the “
Shareholder Designees
”) to be appointed to the Board in accordance with
|
(b)
|
At each annual general or special meeting of the Company’s shareholders held following the effective date hereof at which directors of the Company are to be elected, the Company will put forward for nomination for election to the Board those Shareholder Designees that the Shareholder is entitled to nominate pursuant to the Articles (who need not be the same individuals as the Shareholder Designees appointed to the Board pursuant to Section 2.1(a) but shall be those individuals set out as RS Nominated Directors pursuant to a Nomination Notice as those terms are defined in the Articles), and shall use commercially reasonable efforts to obtain shareholder approval for the election of the Shareholder Designees at such meetings (including by soliciting proxies in favour of the Shareholder Designees) and to that end will support the Shareholder Designees for election in a manner no less rigorous or favourable than the manner in which the Company supports any of its other nominees.
|
(c)
|
The Company shall provide advance notice to the Shareholder of any upcoming shareholders’ meetings in accordance with Part 28 of the Articles.
|
(d)
|
In the event that any Shareholder Designee resigns, dies, becomes incapacitated or otherwise ceases to be a director prior to the expiration of his or her term as a director, such vacancy shall be filled in accordance with the provisions of section 5 of Part 28 of the Articles. The Company shall use all commercially reasonable steps, promptly upon receipt by it of a written notice from the Shareholder identifying a Shareholder Designee to fill such vacancy and in any event no later than five (5) business days following receipt of such written notice, as are necessary to call a meeting of the board of directors to vote on the appointment of such Shareholder Designee to fill such vacancy (or to obtain a vote of the directors by way of unanimous written resolution) and take all such other steps as are required by the Articles and the Act with respect to such appointment.
|
(a)
|
in favour of:
|
(i)
|
the election of any person or persons nominated for election to the Board by the Board from time to time in accordance with the Articles, and
|
(b)
|
against:
|
(i)
|
the election of any person nominated by anyone other than the Board.
|
(a)
|
as may be expressly permitted by this Agreement;
|
(b)
|
where it is already in the public domain when disclosed to the Shareholder or becomes, after having been disclosed to the Shareholder, generally available to the public through publication or otherwise unless the publication or other disclosure was made directly or indirectly by the Shareholder in breach of this Agreement;
|
(c)
|
as required in order to comply with applicable laws, the orders or directions of any governmental authority, the requirements of any stock exchange or clearing house, or the requirements of any other regulatory authority having jurisdiction; and
|
(d)
|
to Affiliates of the Shareholder, provided such Persons have agreed to maintain such Confidential Information in confidence on terms substantially similar to those in this Section 4.2.
|
ARBUTUS BIOPHARMA CORPORATION
Per:
/s/ Mark J Murray
Name: Mark J Murray
Title: President and CEO
|
ROIVANT SCIENCES LTD.
Per:
/s/ Marianne L. Romeo
Name: Marianne L. Romeo
Title: Authorized Signatory
|
|
|
|
(a)
|
transfers of Common Shares as a bona fide gift or charitable contribution;
|
(b)
|
transfers pursuant to any tender offer, takeover bid, merger, consolidation, acquisition of the Company or its voting securities or other similar transaction relating to the Company or its voting securities that occurs after the date hereof and that is approved by the Board of Directors of the Company;
|
(c)
|
granting of a security interest in (whether by way of pledge or otherwise) Common Shares by the Shareholder in connection with a loan made with a financial institution in good faith on bona fide, arm’s length terms, and any subsequent transfer of such securities to such lender or collateral agent in connection with the exercise of remedies in connection with such loan in the event of default;
|
(d)
|
issuances of Common Shares upon conversion of the Series A Preferred Shares; and
|
(e)
|
any transfer or issuance of securities of the Shareholder, or any affiliate thereof that indirectly holds the Lock-Up Securities through the Shareholder, in a bona fide transaction; provided, however, that any such transfer or issuance shall not affect any of the Shareholder’s obligations hereunder.
|
|
COMPANY:
|
||
|
|
|
|
|
ARBUTUS BIOPHARMA CORPORATION
|
||
|
|
|
|
|
By:
|
|
/s/ Mark J Murray
|
|
|
Name:
|
Mark J Murray
|
|
|
Title:
|
President and CEO
|
|
|
Date:
|
October 16, 2017
|
|
|
|
|
|
|
|
|
|
SHAREHOLDER:
|
||
|
|
|
|
|
ROIVANT SCIENCES LTD.
|
||
|
|
|
|
|
By:
|
|
/s/ Marianne L. Romeo
|
|
|
Name:
|
Marianne L. Romeo
|
|
|
Title:
|
Authorized Signatory
|
|
|
Date:
|
October 16, 2017
|
Address:
100-8900 Glenlyon Parkway
|
Burnaby, BC Canada V5J 5J8
|
Address:
Clarendon House - 2 Church St.
|
Hamilton Hill, Bermuda
|
1.
|
Definitions
. In this Agreement, the following terms shall have the meaning assigned to them below. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Subscription Agreement.
|
2.
|
Original Agreement
. The Original Agreement is hereby amended and restated in its entirety by this Agreement.
|
3.
|
Standstill
. For a period commencing on the date hereof and ending on the earlier of (i) forty-eight (48) months following the Tier 1 Closing and (ii) the date upon which the Shareholder no longer has the right to nominate at least one (1) director to the Company’s board of directors (the “
Board
”) pursuant to the Governance Agreement and/or Part 28 of the Company’s Articles, the Shareholder shall not, without the prior written consent of the Company, directly or indirectly:
|
a.
|
acquire, offer to acquire, or agree to acquire ownership (including, but not limited to, beneficial ownership as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (“
Exchange Act
”)), by purchase or otherwise, any additional shares of Common Stock, or any rights or options to acquire any such securities or any securities convertible into such securities; provided that, in the event that at any time, whether due to an increase in the total outstanding shares of Common Stock , a sale of shares of Common Stock or Preferred Shares by the Shareholder (made in compliance with the provisions of the Lock-Up Agreement) or otherwise, the Shareholder beneficially owns, directly or indirectly, Common Stock representing less than the Shareholder Maximum Ownership Percentage, the Shareholder may acquire additional shares of Common Stock or rights or options to acquire any such securities or any securities convertible into such securities; provided, further, that the Shareholder’s ownership percentage will not exceed the Shareholder Maximum Ownership Percentage;
|
b.
|
call or seek to call any meeting of the stockholders of the Company;
|
c.
|
submit, or participate with others that submit, any stockholder proposals for the vote or consent (collectively, “vote”) of stockholders (whether pursuant to Rule 14a-8 under the Exchange Act, or otherwise) of the Company or any proposal for consideration by the Board;
|
d.
|
solicit “proxies” or make, participate in or encourage any “solicitation” (as such terms are used in the proxy rules of the Securities Exchange Commission) for proxies for any stockholder proposals of the Company or nominations of candidates for election as directors or trustees of the Company;
|
e.
|
form or join in a partnership, syndicate or other group, including, without limitations, a “group” as defined under Section 13(d) of the Exchange Act, with respect to the Common Shares, or deposit any Common Shares in a voting trust, arrangement or agreement, except for such actions that may be permitted under the Lock-Up Agreement;
|
f.
|
publicly or privately: (i) encourage, recommend, advise, finance or urge others to put forward stockholder proposals of the Company or nominations with respect to directors/trustees of the Company or enter into any arrangements with any other person in connection with any of the foregoing as they relate to the Company; (ii) indicate support or approval for any stockholder proposals or nominations relating to the Company that are not otherwise approved by the Board in accordance with the Articles; (iii) solicit or encourage others to vote against any matter recommended by the Board in accordance with the Articles; or (iv) act alone or in concert with others to seek control of, or otherwise effect a change to, the management or policies of the Company, unless otherwise approved by the Board in accordance with the Articles; or
|
g.
|
take or seek to take, or cause or seek to cause or solicit others to take any action inconsistent with any of the foregoing as they relate to the Company.
|
a.
|
in the event that the Company enters into a definitive agreement for a merger, consolidation or other business combination transaction as a result of which the stockholders of the Company would own (including, but not limited to, beneficial ownership) voting securities of the resulting corporation having 50% or less of the total voting power of the outstanding voting securities;
|
b.
|
in the event that a bona fide tender offer or exchange offer for at least a majority of the outstanding voting securities of the Company is commenced by a third person (not involving any breach of this Section 3 by the Shareholder); or
|
c.
|
the Company solicits from one or more persons or enters into discussions with one or more persons regarding, a proposal with respect to a merger of, or a business combination transaction involving, the Company, in each case without similarly soliciting a proposal from the Shareholder, or the Company makes a public announcement that it is seeking to sell itself and/or explore strategic alternatives which could lead to a sale, restructuring, business combination, merger or other similar transaction and, in such event, such announcement is made with the approval of the Board.
|
4.
|
Termination
.
The Shareholder may terminate this Agreement if the Company is in material breach of Articles 2 or 4.2 of the Governance Agreement or Part 27 or Part 28 of the Company’s Articles and such breach remains uncured for at least fifteen (15) days after notice to the Company thereof.
|
5.
|
Remedies
. The parties agree that any breach or threatened breach of this Agreement may cause immediate and irreparable harm to the Company for which monetary damages will not be adequate and that, in the event of a breach or threatened breach of this Agreement, the Company shall be entitled to seek and obtain immediate injunctive and other equitable relief without proof of actual damages in addition to any other remedies as may be available at law or in equity. The Shareholder further agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. All rights under this Agreement are cumulative, not exclusive, and will be in addition to all rights and remedies available to the Company at law or in equity.
|
6.
|
No Assignment
. This Agreement shall be binding upon and inure to the benefit of the parties and their respective agents, executors, heirs, successors and permitted assigns. Neither this Agreement nor any of the benefits of this Agreement shall be assigned by a party without prior written consent of the other parties hereto. No person not a party to this Agreement shall have rights, benefits, or obligations hereunder.
|
7.
|
Amendments
. No amendments, changes, or modifications may be made to this Agreement without the express prior written consent of each of the parties hereto.
|
8.
|
Notices
. All notices or communications hereunder shall be in writing, addressed as follows:
|
9.
|
Invalidity
. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
|
10.
|
No Waiver
. No failure or delay by a party in exercising any right hereunder or any partial exercise thereof shall operate as a waiver thereof or preclude any other or further exercise of any right hereunder. No waiver, express or implied, by any party of any breach of default by any other party in the performance by the other party of its obligations under this Agreement shall be deemed or construed to be a waiver of any other breach or default, whether prior, subsequent, or contemporaneous, under this Agreement. Any waiver must be in writing and executed by the party against whom the waiver is sought to be charged.
|
11.
|
Counterparts.
This Agreement may be executed in two counterparts, which may be delivered by facsimile or by
portable document format
(PDF) attachment to email transmission, each of which shall be deemed an original, and when taken together all such counterparts shall be deemed to constitute one and the same document.
|
12.
|
Applicable Law
This Agreement shall be construed, interpreted and governed in accordance with the laws of the Province of British Columbia and the laws of Canada, without reference to rules relating to conflicts of law.
|
13.
|
Entire Agreement.
This Agreement contains the entire understanding between the parties and is intended to be the complete and exclusive statement of the terms and conditions of the agreement between the parties and supersedes in all respects any prior agreement or understanding between the Company and the Shareholder.
|
|
COMPANY:
|
||
|
|
|
|
|
ARBUTUS BIOPHARMA CORPORATION
|
||
|
|
|
|
|
By:
|
|
/s/ Mark J Murray
|
|
|
Name:
|
Mark J Murray
|
|
|
Title:
|
President and CEO
|
|
|
Date:
|
October 16, 2017
|
|
|
|
|
|
|
|
|
|
SHAREHOLDER:
|
||
|
|
|
|
|
ROIVANT SCIENCES LTD.
|
||
|
|
|
|
|
By:
|
|
/s/ Marianne L. Romeo
|
|
|
Name:
|
Marianne L. Romeo
|
|
|
Title:
|
Authorized Signatory
|
|
|
Date:
|
October 16, 2017
|
8.
|
Pursuant to Article 26.1 of the Articles, the following series of Preferred Shares be designated with the identifying name and the maximum number of shares of each series set out below:
|
9.
|
The Notice of Articles be altered to reflect the alterations authorized by these resolutions.
|
10.
|
Pursuant to section 259 of the BCBCA, the alteration of the authorized share structure of the Company and the alteration of the Articles shall not take effect until these resolutions are received for deposit at the Company’s records office and a Notice of Alteration to Notice of Articles identifying the date of these resolutions has been filed with the Registrar of Companies.
|
11.
|
Farris, Vaughan, Wills & Murphy LLP to act as its agent to attend to the electronic filing of the Notice of Alteration to Notice of Articles with the Registrar of Companies.”
|
|
|
/s/ Bruce G. Cousins
|
|
|
Bruce G. Cousins, Chief Financial Officer
|
26A
|
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED SHARES, SERIES A
|
26A.1
|
In this Part 26A, unless the context otherwise requires the following terms have the following meanings:
|
Term
|
Article
|
Common Dividend
|
26A.3(b)
|
Company
|
Recitals
|
Conversion Date
|
26A.6(d)
|
In-Kind Common Dividend
|
26A.3(c)
|
Junior Securities
|
26A.2(b)(i)
|
Liquidation Preference
|
26A.6(c)(i)
|
Optional Conversion Date
|
26A.6(a)
|
Parity Securities
|
26A.2(b)(ii)
|
Participating Cash Dividend
|
26A.3(b)
|
Participating Cash Penalty Dividends
|
26A.3(b)
|
Participating Dividends
|
26A.3(c)
|
Participating In-Kind Dividend
|
26A.3(c)
|
Participating In-Kind Penalty Dividends
|
26A.3(c)
|
Participating Penalty Dividends
|
26A.3(c)
|
Preferred Shares
|
Recitals
|
Reference Property
|
26A.6(f)(iii)
|
Senior Securities
|
26A.2(b)(iii)
|
Series A Preferred Shares
|
26A.2(a)
|
Shareholder Rights Plan
|
26A.3(c)
|
Transaction
|
26A.6(f)(iii)
|
The undersigned shareholder of the Company hereby appoints,
Dr. Mark J. Murray, President and Chief Executive Officer of the Company, or failing him, Bruce Cousins, Executive Vice President and Chief Financial Officer of the Company, or in the place of the foregoing, _____________________________ as proxyholder for and on behalf of the undersigned shareholder with the power of substitution to attend, act and vote for and on behalf of the undersigned shareholder in respect of all matters that may properly come before the Meeting and at every adjournment thereof, to the same extent and with the same powers as if the undersigned shareholder were present at the said Meeting, or any adjournment thereof.
The undersigned shareholder hereby directs the proxyholder to vote the securities of the Company registered in the name of the undersigned shareholder as specified herein.
In their discretion, the proxies are authorized to vote upon such business as may properly come before the Meeting or any adjournments or postponements thereof.
The undersigned shareholder hereby revokes any Proxy previously given to attend and vote at said Meeting.
SIGN HERE: _______________________________________
Please Print Name: _______________________________________
Date: _______________________________________
THIS PROXY
IS NOT VALID UNLESS
IT IS
SIGNED
. IF THIS PROXY IS NOT DATED, IT WILL BE DEEMED TO BE DATED SEVEN CALENDAR DAYS AFTER THE DATE ON WHICH IT WAS MAILED TO YOU, THE REGISTERED SHAREHOLDER. SEE IMPORTANT INFORMATION AND INSTRUCTIONS ON REVERSE
|
|
Resolutions
(For full details of each item, please see the enclosed Notice of Special Meeting and Management Proxy Circular and Proxy Statement).
Please indicate your proposal selection by placing an “X” in the appropriate space with blue or black ink only.
For
Against
Abstain
1. To approve the issuance by the Company to _______ ________ ________
Roivant Sciences Ltd. (“Roivant”) of a second tranche of
664,000 series A participating convertible preferred
shares of the Company (the “Preferred Shares”) at a price of
$100 per share for gross proceeds to the Company of
$66.4 million, and common shares, no par value, issuable
upon conversion of the Preferred Shares, pursuant to the
Subscription Agreement between the Company and Roivant
dated October 2, 2017 (the “Subscription Agreement”), as part
of a larger subscription by Roivant under the Subscription
Agreement for an aggregate of 1,164,000 Preferred Shares
for gross proceeds to the Company of $116.4 million.
2. To approve an amendment to Part 27 of Arbutus’ _______ ________ ________
Articles of Incorporation (“Articles”) to extend the period
during which certain decisions of the Board require approval
of at least 70% of the directors from March 4, 2018 to October 16, 2021.
3. To approve an amendment to Part 28 of Arbutus’ Articles _______ ________ ________
pursuant to which: (i) Roivant would have the right until
October 16, 2021, subject to certain conditions, to
nominate up to three members of the Board (at least one of whom
must be "independent" within the meaning of the Articles, if Roivant has three nominees), and (ii) for so long as Roivant has such nomination rights, the total number of directors of Arbutus would not, without the prior written consent of Roivant, be permitted to exceed seven directors, the majority of whom would be required to be "independent".
4. To transact such other business as may properly
come before the Meeting
|
1.
|
This Proxy is solicited by the Board of Directors of the Company.
|
2.
|
If you are a registered shareholder and you wish to attend the Meeting to vote on the proposal in person
, please register your attendance with the Company’s scrutineers at the Meeting.
|
3.
|
If you cannot attend the Meeting but wish to vote on the proposal, you have the right to appoint a person or company other than the designees of management named herein
, who need not be a shareholder of the Company, to vote according to your instructions. To appoint someone other than the designees of management named, please insert your appointed proxyholder’s name in the space provided, sign and date and return the Proxy. Where you do not specify a choice on a proposal shown on the Proxy, this Proxy confers discretionary authority upon your appointed proxyholder.
|
4.
|
If you cannot attend the Meeting but wish to vote on the proposal and to appoint one of the management appointees named
, please leave the wording appointing a nominee as shown, sign and date and return the Proxy.
Where you do not specify a choice on a proposal shown on the Proxy, a nominee of management acting as proxyholder will vote the securities as if you had specified a vote for such proposal.
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5.
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The securities represented by this Proxy will be voted or withheld from voting in accordance with your instructions
on any ballot of a proposal that may be called for and, if you specify a choice with respect to any matter to be acted upon, the securities will be voted accordingly. With respect to any amendments or variations in any of the proposal shown on the Proxy, or any other matters which may properly come before the Meeting, the securities will be voted by the appointed nominee as he or she in their sole discretion sees fit.
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6.
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If you vote on the proposal and return your Proxy, you may still attend the Meeting and vote in person should you later decide to do so. If you are a registered shareholder and you wish to revoke your Proxy, you may do so by depositing a letter to that effect and delivering it to
AST Trust Company (Canada) PO Box 721, Agincourt, ON M1S 0A1
, or by hand to
1600-1066 West Hastings St., Vancouver, BC V6E 3X1
(hand delivery), or to the address of the registered office of Arbutus at
Farris, Vaughan, Wills & Murphy LLP, 25
th
Floor, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3, attention: R. Hector MacKay-Dunn, Q.C.
, at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, or to the Chairman of the Meeting on the day of the Meeting before any vote in respect of which the proxy has been taken.
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7.
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In order to be entitled to vote or to have its shares voted at the Meeting, a shareholder which is a corporation (a “Corporate Shareholder”) must
either (a) attach a certified copy of the directors’ resolution authorizing a representative to attend the Meeting on the Corporate Shareholder’s behalf, or (b) attach a certified copy of the directors’ resolution authorizing the completion and delivery of the Proxy.
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To be represented at the Meeting, this Proxy must be received at the office of AST Trust Company (Canada): PO Box 721, Agincourt, ON M1S 0A1 (mail) or 1600-1066 West Hastings St., Vancouver, BC V6E 3X1; facsimile: 1-866-781-3111 (toll free in North America) or 1-416-368-2502; scan and email to proxy@canstockta.com; by telephone using a touch-tone phone, 1-888-489-5760 (English) (toll free in North America) or 1-888-489-7352 (Bilingual) (toll free in North America) using your 13-digit control number; by casting your vote online at cstvotemyproxy.com using your 13-digit control number, in each case,
no later than forty eight (48) hours
(excluding Saturdays, Sundays and holidays) prior to the time of the Meeting, or adjournment thereof. The Chairman of the Meeting may waive the proxy cut-off without notice. The mailing address of AST Trust Company (Canada) is Proxy Department, AST Trust Company (Canada): PO Box 721, Agincourt, ON M1S 0A1, or the address for delivery by hand is 1600-1066 West Hastings St., Vancouver, BC V6E 3X1.
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