Document:

SunOpta Inc.: Exhibit 10J - Prepared by TNT Filings Inc.

  

Exhibit 10J

FIRST AMENDING AGREEMENT

Made as of September 13, 2006

Among

SUNOPTA INC.

SUNOPTA LP

SUNOPTA FOOD GROUP LLC

as Borrowers

and

EACH OF THE FINANCIAL INSTITUTIONS

AND OTHER ENTITIES FROM TIME TO TIME 

PARTIES HERETO

as Lenders

and

CERTAIN AFFILIATES OF

THE BORROWERS

as Obligors

and

BANK OF MONTREAL

as Agent

and

HARRIS N.A.

as US Security Agent and

as US Administrative Agent

 

 

FIRST AMENDING AGREEMENT

This first amending agreement is made as of the 13th day of September, 2006

A M O N G

SUNOPTA INC.

SUNOPTA LP

SUNOPTA FOOD GROUP LLC

as Borrowers

and

EACH OF THE FINANCIAL INSTITUTIONS

AND OTHER ENTITIES FROM TIME TO TIME 

PARTIES HERETO

as Lenders

and

CERTAIN AFFILIATES OF

THE BORROWERS

as Obligors

and

BANK OF MONTREAL

as Agent

and

HARRIS N.A.

as US Security Agent and

as US Administrative Agent

WITNESSES THAT WHEREAS:

(a)

the Lenders made credit facilities available to the Borrowers on the terms and conditions set out in a third amended and restated credit agreement dated as of December 9, 2005 among the Borrowers, Lenders, certain affiliates of the Borrowers, as Obligors, Bank of Montreal, as Agent, and Harris N.A., as US Security Agent and as US Administrative Agent (the "Credit Agreement"); and

(b)

the parties to the Credit Agreement have agreed to amend the Credit Agreement in the manner set forth herein in order to, among other things, approve certain acquisitions and increase the principal amount available under certain credit facilities.

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NOW THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties covenant and agree with each other as follows:

SECTION 1

INTERPRETATION

1.1

Definitions from Agreement.  Capitalized terms defined in the Credit Agreement have the same meanings in this First Amending Agreement unless otherwise defined herein or the context expressly or by necessary implication requires otherwise.  This First Amending Agreement is referenced herein as the "First Amending Agreement".  For greater certainty, this First Amending Agreement amends the Credit Agreement and the term "Agreement", as defined in the Credit Agreement, includes (unless the context expressly or by necessary implication requires otherwise) this First Amending Agreement to the extent of such amendments.  For purposes of this First Amending Agreement, the term "First Amending Closing Date" means September 20, 2006.

1.2

New and Revised Definitions.  Section 1.1 of the Credit Agreement is hereby amended as follows:

(a)

the definition of "Advance" is amended in clause (b) thereof by deleting reference to the text “an Overdraft” and replacing it with reference to the text ", a Swing Loan";

(b)

the definition of "Facility A Borrowing Base" is amended by deleting reference to the Facility A Eligible Inventory lending value limit of "$7,500,000" and replacing it with reference to "$12,500,000";

(c)

the definition of "Facility B Borrowing Base" is amended by deleting reference to the Facility B Eligible Inventory lending value limit of "US$13,000,000" and replacing it with reference to "US$15,000,000";

(d)

the definition of "EBITDA" is amended by adding to the end thereof the following text:

For the purposes of calculating the Consolidated Borrower's EBITDA, during the first year following the closing of the Purity Investment, in lieu of calculating EBITDA in respect of the assets, shares and businesses acquired pursuant to the Purity Investment (collectively the “Purity Assets”) on a rolling, past four-quarter basis, the Borrowers shall be permitted to include in EBITDA for the Purity Assets a four fiscal quarter calculation determined as the sum of: (a) the actual EBITDA of the Purity Assets for each fiscal quarter after the closing of the Purity Investment; and (b) a deemed amount of US$700,000 for each such remaining fiscal quarter required to complete such four quarter EBITDA calculation, provided, however that the Consolidated Borrower may use an EBITDA amount of US$2,800,000 in respect of the Purity Assets as of September 30, 2006.  For greater certainty, as an example: (a) for the first fiscal quarter following the closing of the Purity Investment (namely, December 31, 2006), the actual EBITDA for such quarter along with a deemed three fiscal quarter EBITDA amount of US$2,100,000 shall be used in the calculation of EBITDA in respect of the Purity Assets; (b) for the second fiscal quarter following the closing of the Purity Investment (namely, March 31, 2007), the actual EBITDA for the first two such quarters along with a deemed two quarter EBITDA amount of US$1,400,000 shall be used in the calculation of EBITDA in respect of the Purity Assets; and (c) so forth.  For further greater certainty, after the first year following the closing of the Purity Investment, the calculation of EBITDA in respect of the Purity Assets shall be completed on a rolling four-quarter basis using historical EBITDA of the Purity Assets.
 

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(e)

the definition of "Loan" is amended such that the text "a Swing Loan," is inserted immediately after reference to the text "Overdraft, ";

(f)

the definition of "Maturity Date" is amended such that both references to "October 31, 2006" are hereby deleted and replaced with reference to "October 31, 2007";

(g)

the definition of "Permitted Investments" is amended by replacing the first reference to "US$5,000,000" and replacing it with reference to "US$7,500,000", and replacing both references to "US$15,000,000" with reference to "US$22,500,000", such that the amended definition reads as follows:

"Permitted Investments" means Investments by any Obligor in Persons or assets principally related to the natural or organic food business, provided that (i) each Investment shall not exceed a maximum amount of US$7,500,000 (which amount shall include any Debt assumed and any projected earn out payments required to be made as a result of such Investment), (ii) the aggregate of all Investments made by all Obligors in any fiscal year of SunOpta shall not exceed an aggregate maximum amount of US$22,500,000, (iii) each Investment in any such Person or assets shall be accretive to the earnings of the relevant Obligor, (iv) each Investment in any such Person shall be consented to by such Person or its shareholders or directors, as applicable, and such Investment shall not be or consist of a hostile takeover, (v) the Obligor shall acquire a 100% ownership interest in the relevant Person if the Investment is effected by way of a share purchase, (vi) all Debt attached to or associated with such Investment (other than in favour of the Lenders hereunder) must be repaid upon the closing of the Investment and all Liens in connection therewith must be discharged.  Notwithstanding the foregoing, if the Investment is in a Person that will, as a result of such Investment, become a subsidiary, the Borrower may take up to 30 days after making such Investment to repay all Debt attached to or associated with such Investment (other than in favour of the Lenders hereunder), discharge all Liens and provide the Lenders with such first ranking security as the Lenders may require, and (vii) if the Investment in whole or in part is to be funded by the proceeds of Advances under Facility A or Facility B, then after giving effect to the requested Advance under either Facility A or Facility B, as applicable, there shall remain available for borrowing an amount of at least US$5,000,000 either under Facility A or Facility B.  For greater certainty, no separate Investment shall be permitted if such Investment were to cause the foregoing US$22,500,000 aggregate limit to be exceeded or the proposed Investment otherwise contravenes the provisions of this Agreement.

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(h)

the definition of "US Overdraft" is hereby amended as such that the text "or Facility B" and the text "or Harris" contained therein is hereby deleted;

(i)

the following definitions are inserted in the Credit Agreement at the appropriate alphabetical location:
 

"Purity Investment" means the acquisition by SunOpta of (i) all of the assets of Purity Life Health Products Limited pursuant to the provisions of an asset purchase agreement dated on or about September 15, 2006 among, inter alia, SunOpta, Purity Life Health Products Limited, Adept Inc., David Chapman and Elyse Chapman, (ii) all of the shares or assets, as applicable, of Esstential Phytosterolins Inc. pursuant to the provisions of a share purchase agreement or an asset purchase agreement, as applicable, dated on or about September 15, 2006 among, inter alia, SunOpta, Adept Inc., David Chapman and Elyse Chapman, and (iii) all of the shares of 2035181 Ontario Inc., Marathon Natural Foods Ltd. and Essential Phytosterolins U.S.A. Inc. pursuant to the provisions of a share purchase agreement dated on or about September 15, 2006 among, inter alia, SunOpta, Adept Inc., David Chapman and Elyse Chapman.
 

"Sweep to Loan Program" means the program established by Harris pursuant to which SunOpta Food Group may link one or more deposit accounts maintained by it with Harris with a commercial loan facility provided by Harris.

"Swing Line Sublimit" means $5,000,000, as reduced pursuant to the terms hereof, by mutual agreement of Harris and SunOpta Food Group or by Harris in its discretion.

"Swing Loan" has the meaning assigned thereto in Section 3.18.

1.3

References to Northern Food and Sonne Labs.  
For greater certainty, all references to Northern Food and Sonne Labs, respectively, contained in the Credit Agreement and the Documents are hereby amended and are now and shall for all purposes be deemed to be references to SunOpta Ingredients and SunOpta Aseptic, respectively, and their successors and permitted assigns, as, effective as of January 1, 2006, Northern Food merged into SunOpta Ingredients under the laws of Delaware and Sonne Labs merged into SunOpta Aseptic under the laws of Minnesota.

1.4

Headings.  The insertion of headings in this First Amending Agreement is for convenience of reference only and shall not affect the interpretation of this First Amending Agreement.

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SECTION 2

THE CREDIT FACILITIES

2.1

Establishment of Credit Facilities.  Section 3.1 of the Credit Agreement is hereby amended as follows:

(a)

the reference to the Facility A aggregate principal amount of "$15,000,000" in Section 3.1(a) is deleted and replaced with reference to $25,000,000; and

(b)

the reference to the Facility B aggregate principal amount of "US$25,000,000" in Section 3.1(b) is deleted and replaced with reference to "US$30,000,000".

2.2

Availability of Credit Facilities.    Section 3.2 of the Credit Agreement is hereby amended as follows:

(a)

the reference to the amount of "$15,000,000" in Section 3.2(a) is deleted and replaced with reference to "$25,000,000";
 

(b)

the reference to the amount of "US$25,000,000" in Section 3.2(b) is deleted and replaced with reference to "US$30,000,000";

(c)

the reference to the amount of "$3,000,000" in Section 3.2(e)(i) is deleted and replaced with reference to "$25,000,000"; and

(d)

the references to the text "U.S. Overdraft" and the amount of "US$3,000,000" in Section 3.2(e)(ii) are hereby deleted and replaced, respectively, with reference to the text "Swing Loans" and to an amount of "US$5,000,000".

2.3

Revolving Nature. Section 3.4(b) of the Credit Agreement is hereby amended such that reference to the text "U.S. Overdrafts" contained therein is deleted and replaced with reference to the text "Swing Loans".

2.4

Purpose.  Each of Section 3.5(a) and Section 3.5(b) of the Credit Agreement is hereby amended such the following text is added to the end of each such Section:  ", and to assist with the financing of Permitted Investments".

2.5

Swing Loans. The following text is hereby inserted into the Credit Agreement as new Section 3.18:

3.18 Swing Loans.

(a)

Generally. Subject to the terms and conditions hereof, as part of Facility B, Harris agrees to make loans in US Dollars to the SunOpta Food Group under the swing line established hereby (individually a "Swing Loan" and collectively the "Swing Loans") which shall not in the aggregate at any time outstanding exceed the Swing Line Sublimit.  The Swing Loans may be availed of by SunOpta Food Group from time to time and borrowings thereunder may be repaid and used again during the period ending on the Maturity Date in respect of Facility B.  Each Swing Loan shall be in a minimum amount of US$250,000 or such greater amount which is an integral multiple of US$100,000, unless made pursuant to the Sweep to Loan Program.

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(b)

The Sweep to Loan Program. SunOpta Food Group may elect in its discretion to participate in the Sweep to Loan Program offered by Harris to its customers.  In the event SunOpta Food Group participates in the Sweep to Loan Program, SunOpta Food Group’s and Harris’ respective rights and obligations thereunder shall be governed by the documentation entered into between them from time to time, except as otherwise expressly provided in this Agreement.

(c)

Requests for Swing Loans. SunOpta Food Group shall give Harris prior notice (which may be written or oral) no later than 12:00 Noon (Chicago time) on the date upon which SunOpta Food Group requests that any Swing Loan be made, of the amount and date of such Swing Loan, and the interest period requested therefor.  SunOpta Food Group hereby authorizes Harris to make Swing Loans hereunder without specific request by SunOpta Food Group in accordance with and as part of the Sweep to Loan Program.  Subject to the terms and conditions hereof, the proceeds of such Swing Loan shall be made available to SunOpta Food Group on the date so requested at the offices of Harris in Chicago, Illinois, by depositing such proceeds to the credit of SunOpta Food Group’s operating account maintained with Harris or as SunOpta Food Group and Harris may otherwise agree.  Anything contained in the foregoing to the contrary notwithstanding,  (i) the obligation of Harris to make Swing Loans shall be subject to all of the terms and conditions of this Agreement and (ii) Harris shall not be obligated to make more than one Swing Loan during any one day.

(d)

Refunding Loans. In its sole and absolute discretion, Harris may at any time, on behalf of SunOpta Food Group (which hereby irrevocably authorizes Harris to act on its behalf for such purpose) and with notice to SunOpta Food Group, request each Facility B Lender to make an Alternate Base Rate Loan in an amount equal to such Facility B Lender’s Rateable Portion of the amount of the Swing Loans outstanding on the date such notice is given.  Unless an Event of Default described in Section 10.1(i) or 10.1(j) exists with respect to SunOpta Food Group, regardless of the existence of any other Event of Default, each Facility B Lender shall make the proceeds of its requested Alternate Base Rate Loan available to Harris, in immediately available funds, at Harris’ principal office in Chicago, Illinois, before 12:00 Noon (Chicago time) on the Business Day following the day such notice is given.  The proceeds of such Alternate Base Rate Loans shall be immediately applied to repay the outstanding Swing Loans.

(e)

Participations. If any Facility B Lender refuses or otherwise fails to make an Alternate Base Rate Loan requested by Harris pursuant to Section 3.18(d) above (because an Event of Default described in Section 10.1(i) or 10.1(j) exists with respect to SunOpta Food Group or otherwise), such Facility B Lender will, by the time and in the manner such Alternate Base Rate Loan was to have been funded to Harris, purchase from Harris an undivided participating interest in the outstanding Swing Loans in an amount equal to its Rateable Portion of the aggregate principal amount of Swing Loans that were to have been repaid with such Alternate Base Rate Loans.  Each Facility B Lender that so purchases a participation in a Swing Loan shall thereafter be entitled to receive its Rateable Portion of each payment of principal received on the Swing Loan and of interest received thereon accruing from the date such Facility B Lender funded to Harris its participation in such Loan.  The several obligations of the Facility B Lenders under this Section shall, subject to Section 12.21 hereof, be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be subject to any set-off, counterclaim or defense to payment which any Facility B Lender may have or have had against SunOpta Food Group, any other Facility B Lender or any other Person whatsoever.  Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of the Facility B Commitment of any Facility B Lender, and each payment made by a Facility B Lender under this Section shall be made without any offset, abatement, withholding or reduction whatsoever.

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SECTION 3

INTEREST

3.1

Rate. Section 4.2(a) of the Credit Agreement is hereby amended such that the second reference to the text "US Overdrafts" contained in the third last line of such section is hereby deleted and replaced with reference to the text "Swing Loans".

3.2

Change of Rate. Section 4.2(b) of the Credit Agreement is hereby amended such that text ", Swing Loan" is hereby inserted immediately after reference to the text "US Overdraft” contained therein.

3.3

Calculation. Section 4.2(c) of the Credit Agreement is hereby amended such that (i) the text ", Swing Loan" is hereby inserted immediately after both references in such Section to the text "US Overdrafts" contained therein, and (ii) the text "365 or 366 days" is hereby deleted and replaced with the text "360, 365 or 366 days".

3.4

Payment of Interest. Section 4.2(d) of the Credit Agreement is hereby amended such that (i) the text ", Swing Loans" is hereby inserted after the text "US Overdrafts" contained in the first line of such section, and (ii) the text "U.S. Overdrafts" referred to in the second last line of such section is hereby deleted and replaced with reference to the text "Swing Loans".

SECTION 4

CONDITIONS AND COVENANTS

4.1

Condition.  Section 8.2 of the Credit Agreement is hereby amended such that the following text is added as new clause (f) to such Section.

(f) Material Adverse Change. No Material Adverse Change shall have occurred with respect to the Obligors.

4.2

Purity Investment.  The following paragraph is added as paragraph (t) to Section 9.1:

(t)

Purity Investment.  On or before that date which is 30 days after the closing of the Purity Acquisition it shall provide, or it shall cause to be provided, to the Agent or the US Security Agent, as it or they may require in their sole and absolute discretion:

(i)

Additional Obligor Counterparts duly executed by each of 2035181 Ontario Inc., Marathon Natural Foods Limited and Essential Phytosterolins U.S.A. Inc. (collectively, the “Purity Group”), along with all guarantees and security documents as may be referenced therein or otherwise required by the Lenders;

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(ii)

a certificate in respect of all insurance policies, including but not limited to fire and all perils insurance on real property and policies insuring the assets of the Purity Group, indicating loss payable to the Agent or the US Security Agent, as applicable;

(iii)

terminations, releases and discharges of indebtedness and security from any creditor of the Purity Group, Purity Life Health Products Limited or Essential Phytosterolins Inc. identified by the Agent as being required by the Agent and the Lenders to be terminated, released or discharged;

(iv)

any legal opinions of counsel to the Obligors and the Purity Group regarding, inter alia, each entity’s incorporation, existence, due authorization, execution, delivery and enforceability of the documents identified in clause (i) above;
 

(v)

a duly completed Environmental Checklist in the Agent’s or the US Security Agent’s standard form, or, if available, Phase I environmental reports, in respect of the Purity Group;

(vi)

the Obligors shall provide to the Agent and/or the U.S. Security Agent, as applicable, the original share certificates issued in its name in respect of the shares that it holds in the capital of the Purity Group, along with duly executed stock transfer powers of attorney, in form and substance satisfactory to the Agent and/or the US Security Agent, as applicable;

(vii)

duly executed subordination agreements from each Person identified by the Agent;
 

(viii)

landlord waivers satisfactory to the Agent and/or the US Security Agent in respect of real property leased by the Purity Group; and

(iv)

all such other documents as the Agent, the US Security Agent or the Lenders may reasonably request including without limitation an update of Schedules B, C, E, G, I, J, K, L and R in order to account for the changes resulting from the Purity Investment.

4.3

Debt.  Section 9.2(d) of the Credit Agreement is hereby amended such that the (i) the word “and” is deleted immediately before reference to “(viii)” and, (ii) the following text is inserted at the end of such Section: “; and (ix) unsecured Debt to BMO in an amount not in excess of Cdn$150,000 and US$50,000, respectively, in respect of MasterCard corporate credit cards issued by BMO to the Obligors".

4.4

Loans and Investments.  Section 9.2(n) of the Credit Agreement is hereby amended by deleting the word "and" in the second last line of such Section and adding to the end thereof "; and (F) except for the Purity Investment" after the term "US$8,000,000".

4.5

Funded Debt to EBITDA Ratio.  Section 9.3(a) of the Credit Agreement is hereby amended by adding the words ", including the Purity Investment" after the word Obligor in the second last line of such Section.

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4.6

Quarterly Reporting.  Section 9.4 (a) of the Credit Agreement is hereby amended such that the Borrower is no longer required to deliver to the Agent the consolidating spreadsheets and the quarterly report of Management to the board of directors of SunOpta contemplated therein.

4.7

Borrowing Base Statement.  Section 9.4(b) of the Credit Agreement is hereby amended such that within 30 days of the end of each month, the Facility A Borrower and SunOpta Food Group are no longer required to deliver a full listing of aged Accounts Receivable and detailed list of Inventory, rather the Facility A Borrower and/or SunOpta Food Group will, as applicable, delver a summary listing of aged Accounts Receivable and a summary listing of Inventory acceptable to the Agent and/or the US Administrative Agent, as applicable.

SECTION 5

DEFAULT AND ENFORCEMENT

5.1

Events of Default.  Sections 10.1(k) to, and including, 10.1(q) of the Credit Agreement are hereby deleted and replaced with the following paragraphs:

(k)

Creditor Action.  Any secured creditor, encumbrancer or lien or, or any trustee, interim receiver, receiver, receiver and manager, administrative receiver, agent, bailiff or other similar official appointed by any secured creditor, encumbrancer or lienor, takes possession of, forecloses, seizes, retains, sells or otherwise disposes of, or otherwise proceeds to enforce security over, all or a substantial part of the assets of any Obligor or gives notice of its intention to do any of the foregoing.

(l)

Material Contracts.  Any Obligor defaults in any material respect under any Material Contract and all applicable notice or cure periods under the Material Contract have expired and the default has not been cured or waived.

(m)

Change of Control Regarding Persons Other Than SunOpta.  There occurs, directly or indirectly, a change in the legal or beneficial ownership of any shares in the capital stock of any Obligor (other than SunOpta) or any Subsidiary such that SunOpta shall cease to own or control, directly or indirectly, shares or ownership interests of such Obligor or Subsidiary carrying voting rights sufficient to permit SunOpta to elect a majority of the members of the board of directors of such Obligor or Subsidiary.

(n)

Change of Control Regarding SunOpta.   There occurs, directly or indirectly, a change in the legal or beneficial ownership of any shares in the capital stock of SunOpta such that a Person or group of Persons acting in concert beneficially owns or controls 51% or more of the shares of SunOpta carrying voting rights.

(o)

Pension Plan.  If any of the following events shall occur with respect to any Canadian Pension Plan or US Pension Plan: (i) the institution of any steps by any Obligor or any member of its Controlled Group or any applicable regulatory authority to terminate a Canadian Pension Plan or US Pension Plan (wholly or in part) if, as a result of such termination, any Obligor may be required to make an additional contribution to such Canadian Pension Plan or US Pension Plan, or to incur an additional liability or obligation to such Canadian Pension Plan or US Pension Plan, equal to or in excess of $1,000,000 or the equivalent thereof in another currency; or (ii) a contribution failure occurs with respect to any US Pension Plan sufficient to give rise to a lien or charge under Section 302(f) of ERISA or under any applicable pension benefits legislation in any other jurisdiction.

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5.2

Material Adverse Effect.  For greater certainty, paragraph 10.1(m) of the Credit Agreement has been deleted in its entirety, and for greater certainty, no event or circumstance which has a Material Adverse Effect on any Obligor shall entitle the Agent, the U.S. Administrative Agent or the Lenders to declare that an Event of Default has occurred, unless such event or circumstance would otherwise constitute a Default or an Event of Default without reference to the concept or definition of Material Adverse Effect.

SECTION 6

SCHEDULES

6.1

Schedules.  The following schedules to the Credit Agreement are hereby deleted and replaced with the corresponding following schedules attached as Exhibit "I"
 

Schedule T - Compliance Certificate

Schedule V - Commitments  

SECTION 7

CONDITIONS PRECEDENT

7.1

Conditions Precedent.  The effectiveness of this First Amending Agreement is subject to and conditional upon the satisfaction of the following conditions:

(a)

Delivery of Documents.  The Agent or the US Security Agent, as applicable, shall have received on or before the First Amending Closing Date Sufficient Copies, in form and substance satisfactory to the Agent, the US Security Agent and the Lenders, as applicable, of the following:

(i)

this First Amending Agreement duly executed by all of the parties hereto;

(ii)

a Certificate of each of the Obligors, dated as of the date hereof certifying that:

  
    

A.

its constating documents and the by-laws, which shall be attached thereto or cross-referenced therein, as applicable, are complete and correct copies and are in full force and effect; and

B.

all resolutions and all other authorizations necessary to authorize the execution and delivery of and the performance by it of its obligations under, as applicable, the Credit Agreement, this First Amending Agreement and the other Documents to which it is a party and all the transactions contemplated thereby; and

    

  

(iii)

all such other documents as the Agent, the US Security Agent or the Lenders may reasonably request including without limitation an updated consolidated promissory note from SunOpta Food Group to SunOpta LLC pledged to the US Security Agent on behalf of the Lenders and relevant mortgage supplements.

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(b)

Due Diligence.  The Agent and the Lenders shall have completed their business, legal and accounting due diligence with results satisfactory to them.

(c)

Material Adverse Change.  No Material Adverse Change shall have occurred with respect to the Obligors.

(d)

Purity Investment.  The Agent, the US Administrative Agent, US Security Agent and the Lenders shall be satisfied with the terms and conditions upon which SunOpta or a Subsidiary proposes to and does in fact effect the Purity Investment.  

(e)

Opinions.  Opinions of counsel to the Obligors, addressed to the Agent, each Lender and counsel to the Agent with respect to, inter alia, due authorization, execution and delivery of the First Amending Agreement and the enforceability of the First Amending Agreement and the Credit Agreement as amended by the First Amending Agreement.

7.2

Waiver.  The conditions stated in Section 7.1 immediately above are inserted for the sole benefit of the Agent, the US Security Agent and the Lenders and may only be waived by the Unanimous Lenders, in whole or in part, with or without terms or conditions.

SECTION 8

REPRESENTATIONS AND WARRANTIES

8.1

Representations.  Each of the Obligors represent and warrant to the Agent, the US Security Agent and the Lenders that:

(a)

the Credit Agreement, as amended by this First Amending Agreement, is its legal, valid and binding obligation, enforceable against each of the Obligors in accordance with its terms, subject to (i) applicable bankruptcy, reorganization, moratorium or similar laws affecting creditors' generally, (ii) the fact that specific performance and injunctive relief may only be given at the discretion of the courts, and (iii) the equitable or statutory powers of the courts to stay proceedings before them and to stay the execution of judgments;

(b)

the Credit Agreement, as amended by this First Amending Agreement, does not conflict with any constating document, agreement, instrument or undertaking binding upon any Obligor or any of its properties; and

(c)

no Default or Event of Default now exists under the Credit Agreement or will exist after giving effect to this First Amending Agreement.

SECTION 9

GENERAL

9.1

Consent.  The Agent and the Lenders hereby consent to the corporate re-organization of the Obligors described in Exhibit “II” hereto.  The Obligors hereby represent and warrant that the corporate re-organization described in Exhibit “II” is true and correct in all respects and that there is no misstatement in, or omission of information from, Exhibit “II”.  SunOpta hereby covenants that it will advise the Agent in writing of each step of the corporate re-organization when it occurs or is completed, promptly upon such occurrence or completion.

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9.2

Severability.  Any provision of this First Amending Agreement which is prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition without invalidating the remaining terms and provisions hereof.
 

9.3

Costs, Expenses and Taxes.  The Obligors agree to pay, on demand, all reasonable costs and expenses of the Agent, the US Security Agent and the Lenders in connection with the preparation, execution, delivery, operation or enforcement of this First Amending Agreement and the Credit Agreement including, without limitation, the reasonable fees and out-of-pocket expenses of third parties, the Agents’ and the Lenders’ counsel and other professionals engaged by the Lenders with respect to the preparation, negotiation and documentation of this First Amending Agreement, the Security Documents, if any, and the related closing documents with respect thereto and with respect to advising the Agent, the US Security Agent and the Lenders of its or their rights and responsibilities in connection with the continuing operation of the Credit Agreement, as may be amended by this First Amending Agreement.
  

9.4

Form of Documents.  All documents delivered under or in connection with this First Amending Agreement or under or in connection with the Credit Agreement shall be in form and substance satisfactory to the Agent, the US Security Agent, the Lenders and their counsel.

9.5

Governing Law.  This First Amending Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and of Canada applicable therein and shall be treated in all respects as an Ontario contract.  The Obligors irrevocably attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario.

9.6

Governing Documents.  The Credit Agreement as amended by this First Amending Agreement and all other Documents delivered pursuant to or referenced in the Credit Agreement as amended by this First Amending Agreement constitute the complete agreement of the parties hereto with respect to the subject matter hereof and supersede any other agreements or understandings between each of the Obligors and the Lender.  Save as expressly amended by this First Amending Agreement, all other terms and conditions of the Credit Agreement remain in full force and effect unamended.

9.7

Time of the Essence.  Time shall be of the essence of this First Amending Agreement.

9.8

Acknowledgement of Obligors.  By signing this First Amending Agreement, each of the Obligors, as applicable, confirms that the guarantees given by each of them to the Agent, the US Security Agent, the US Administrative Agent and the Lenders and all Security Documents given by each of them as collateral security for their respective obligations, direct, indirect, absolute and/or contingent, remain in full force and effect and continue to support all of the Borrowers’ indebtedness and liabilities, present and future, to, the Agent, the US Security Agent, the US Administrative Agent and the Lenders including, without limitation, each Borrower's indebtedness and liabilities under the Credit Agreement and the Security Documents granted by each such Borrower.

-13-

9.9

Counterparts.  This First Amending Agreement may be executed and delivered in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument.

[SIGNATURE PAGES FOLLOW]

 

-S-1-

The parties have executed this Agreement as of the day and year first written above.

	 	 
	SUNOPTA INC.	By:_"John Dietrich"                             
    
	2838 Hwy 7	Name: John Dietrich
	Norval, Ontario LOP 1KO	Title: VP & CFO
	Attention: Chief Financial Officer	 
	Fax: (905) 455-2529	 
	 	 
	SUNOPTA LP	By:_"John Dietrich"                             
    
	By: 1510146 Ontario Inc., its General	Name: John Dietrich
	Partner	Title: VP & CFO
	 	 
	SUNOPTA FOOD GROUP LLC	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	SUNOPTA FOOD INGREDIENTS	By:_"John Dietrich"                             
    
	CANADA, LTD.	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	1510146 ONTARIO INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	3060385 NOVA SCOTIA COMPANY	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	DRIVE ORGANICS CORPORATION	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	SUNRICH LLC	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 

-S-2-

	 	 
	SUNOPTA ASEPTIC, INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO:
	 	 
	SUNOPTA LLC	By:_"James Rifenbergh"                       
    
	 	Name: James Rifenbergh
	 	Title: Officer
	 	 
	ORGANIC INGREDIENTS INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	SUNOPTA INGREDIENTS, INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	SUNOPTA HOLDINGS INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	SUNOPTA FINANCING INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 
	PACIFIC FRUIT PROCESSORS INC.	By:_"John Dietrich"                             
    
	 	Name: John Dietrich
	 	Title: VP & CFO
	 	 

-S-3-

	BANK OF MONTREAL	By:_"K.W.
    Everett"                                
    
	in its capacity as
    Agent	Name: K.W. Everett
	Global Distribution
    Services	Title: Senior
    Syndications
	100 King Street
    West	 
	19th Floor	 
	Toronto, Ontario	 
	M5X 1A1	 
	Attention: Manager,
    Global	 
	Distribution
    Services	 
	Fax: (416) 867-5938	 
	 	 
	HARRIS N.A.	By:_"Shane
    Koonce"                                
    
	in its capacity as
    US Security Agent	Name: Shane Koonce
	111 West Monroe
    Street	Title: Vice
    President
	Chicago, Illinois	 
	60603	 
	Attention: Account
    Manager	 
	Fax: 312-765-8095	 
	 	 
	HARRIS N.A.	By:_"Shane
    Koonce"                                
    
	in its capacity as
    US Administrative	Name: Shane Koonce
	Agent	Title: Vice
    President
	111 West Monroe
    Street	 
	Chicago, Illinois	 
	60603	 
	Attention: Account
    Manager	 
	Fax: 312-765-8095	 
	 	 
	BANK OF MONTREAL	By:_"Gordon J.
    Card"                                   
    
	in its capacity as
    Lender	Name: Gordon J.
    Card
	Corporate Finance	Title: Vice
    President
	100 King Street
    West	 
	11th Floor	 
	Toronto, Ontario	 
	M5X 1A1	 
	Attention: Senior
    Manager	 
	Fax: (416) 360-7168	 
	 	 

-S-4-

	BANK OF MONTREAL	By:_"Shane
    Koonce"                              
    
	(Chicago Branch)	Name: Shane Koonce
	in its capacity as
    Lender	Title: Vice
    President
	12th
    Floor, West	 
	115 South Lasalle
    Street	 
	Chicago, Illinois	 
	60603	 
	Attention: Account
    Manager	 
	Fax: 312-750-6057	 
	 	 
	HARRIS N.A.	By:_"Shane
    Koonce"                              
    
	in its capacity as
    Lender	Name: Shane Koonce
	111 West Monroe
    Street	Title: Vice
    President
	Chicago, Illinois	 
	60603	 
	Attention: Account
    Manager	 
	Fax: 312-765-8095	 
	 	 
	SUN LIFE
    ASSURANCE	By:_"Keith
    Cressman"                               
    
	COMPANY OF
    CANADA	Name: Keith
    Cressman
	in its capacity as
    Lender	Title: AVP, Private
    Placements
	225 King Street
    West	 
	Toronto, Ontario	By:_"Steve
    Theofanis"                               
    
	M5V 3C5	Name: Steve
    Theofanis
	 	Title: Director,
    Private Placements
	Attention: Manh
    Pham	 
	Director, Private
    Placements	 
	Fax: 416-595-0131	 
	 	 
	THE
    MANUFACTURERS LIFE	By:_"Patrick
    Chen"                                      
    
	INSURANCE
    COMPANY	Name: Patrick Chen
	in its capacity as
    Lender	Title: VP, CDN
    Private Placements
	200 Bloor Street
    East	 
	Floor NT-4 B-17	 
	Toronto, Ontario	 
	M4W 1E5	 
	Attention: Patrick
    Chen	 
	Fax: 416-852-6333	 

-S-5-

	JOHN HANCOCK LIFE	By:_"Kenneth L.
    Warlick"                       
    
	INSURANCE COMPANY	Name: Kenneth L.
    Warlick
	in its capacity as
    Lender	Title: Authorized
    Signatory
	128 South Tryon	 
	Suite 1588	 
	Charlotte, NC	 
	28202	 
	Attention: Kenneth L.
    Warlick	 
	Fax: 704-377-2653	 
	 	 
	JOHN HANCOCK LIFE	By:_"Kenneth L.
    Warlick"                         
    
	INSURANCE COMPANY	Name: Kenneth L.
    Warlick
	(U.S.A.)	Title: Authorized
    Signatory
	in its capacity as
    Lender	 
	128 South Tryon	 
	Suite 1588	 
	Charlotte, NC	 
	28202	 
	Attention: Kenneth L.
    Warlick	 
	Fax: 704-377-2653	 
	 	 

 

EXHIBIT “I”

SCHEDULE T

COMPLIANCE CERTIFICATE

Date:__________________  

This certificate is given by SunOpta Inc., a Canadian corporation (the "Borrower"), pursuant to Section 9.4(a) of the third amended and restated credit agreement dated as of December 9, 2005 (as the same may be amended, restated or replaced from time to time) among the Borrower, certain affiliates of the Borrower (as Obligors), each of the financial institutions and other entities from time to time parties thereto (as Lenders) and Bank of Montreal, as Agent (the "Credit Agreement").  Capitalized terms used but not defined herein have the meaning assigned to such terms set forth in the Credit Agreement.

The officer executing this certificate is the chief financial officer of the Borrower and as such is duly authorized to execute and deliver this certificate on behalf of the Borrower.  By executing this certificate such officer hereby certifies, in that capacity and not personally to the Lender that:

(a)

the financial statements delivered with this certificate in accordance with Section 9.4 of the Credit Agreement fairly present, in accordance with GAAP, the financial position and the results of the operations of the Borrower and the Obligors as of the dates of such financial statements (subject in the case of interim financial statements to normal year-end adjustments and the Schedules delivered with such financial statements present fairly the financial position and the results of operations of the Borrower and the Obligors (subject in the case of Schedules delivered with interim financial statements to normal year-end adjustments);

(b)

to the best of my knowledge, the Borrower and each Obligor, during the period covered by such financial statements, has observed and performed all of its covenants and other agreements, and satisfied every condition in the Credit Agreement to be observed, performed or satisfied by it, and I have obtained no knowledge of any Default or Event of Default [except as specified on the written attachment hereto];

(c)

all Material Contracts and Material Licenses, as currently disclosed on Schedule L to the Credit Agreement, remain in full force and effect and are not, to the best of my knowledge, threatened to be terminated over the course of the next six months.  In addition there are no new Material Contracts or Material Licenses currently in the process of being negotiated;
 

(d)

Exhibit A hereto is a correct calculation of each of the financial covenants contained in Section 9.3 of the Credit Agreement and Exhibit B hereto is a true and current copy of the quarterly report of management to the board of directors of SunOpta; and

(e)

no Obligor or Obligors, during the period covered by the financial statements referred to above, entered into any individual sale or sale/leaseback of fixed assets giving rise to Permitted Proceeds in excess of $500,000
 [except as specified on the written attachment hereto].

 

 

IN WITNESS WHEREOF, the Borrower has
caused this Certificate to be executed by its Chief Financial Officer this   13th   day
of     September     , 2006.

	 	
  
  SUNOPTA INC.

	 	 
	
  
  By:

	
  
  “John Dietrich”

	 	
  
  Name:  John Dietrich

	 	
  
  Title:  Chief Financial Officer

 

EXHIBIT A TO COMPLIANCE CERTIFICATE

1.

Total Liabilities to Tangible Net Worth Ratio – consolidated company less Opta Minerals and Cleughs
 

Total Liabilities less Subordinated Debt

Shareholders Equity plus Subordinated Debt

less:

Deferred tax (asset) liability – current  

Deferred tax (asset) liability – long term

Goodwill and intangibles

Other intangible assets

Tangible Net Worth  

Ratio

Required Maximum

Exess

IN COMPLIANCE:  Yes or No

2.

Working Capital Ratio Calculation

Current assets

Less current assets of Opta Minerals

Less current assets of Cleughs

Net current assets of borrower

Current liabilities of SunOpta

Less current liabilities of Opta Minerals

Less current liabilities of Cleughs

Net current liability of borrower

Less current portion subordinated debt ex Cleughs & Opta Minerals

Current liabilities less subordinated debt

Ratio

Required Minimum

Excess

IN COMPLIANCE:  Yes or No

 

3.

Fixed Charge Coverage Ratio Calculation

Earnings

Add back (deduct):

Tax expense

Minority Interest

Dilution gain

Interest

Interest income

Unrealized exchange (gains) losses

Amortization (per cash flow)

Non Cash Stock Option Compensation

Acquisition adjustment

Adjusted earnings to EBITDA

Less:

Cash taxes

Sustaining Capital Expenditures

Total interest expense – last 12 months  

Other debt payments Total SunOpta Current Debt

Scheduled payments (Based on Schedule P) – next 12 months

Payment commitments including P & I

Ratio of EBITDA to payment/interest commitments

Required Minimum

Excess Ratio Amount

Excess EBITDA in dollars

IN COMPLIANCE:  Yes or No

4.

Funded Debt to EBITDA Calculation

Bank Indebtedness 

Senior Bank Debt

Other debt and capital leases

Less Subordinate Debt

Letters of credit

Less cash and marketable securities subject to a first ranking Lien in favour of the Lenders

Total EBITDA equivalent to the sum of the following:

-

EBITDA (other than in respect of the Purity Investment)

-

[EBITDA (actual EBITDA in respect of the Purity Investment for the fiscal quarter(s) following closing of the Purity Investment along with a deemed amount of $700,000 for each fiscal quarter required to complete a four quarter EBITDA calculation in respect of the Purity Investment)]

Ratio

Required Maximum

Excess

Premium over Libor

IN COMPLIANCE:  Yes or No

5.

Sale or Sale/Leaseback of Fixed Assets

[Name of entity or entities]  sold or entered into a sale/leaseback of fixed assets giving rise to Permitted Proceeds of $€.  These Permitted Proceeds were used to [Note to Draft:  Describe what was done with Permitted Proceeds with reference to Section 5.2 of the Agreement.]

 

6.

Other Requirements

Capital spending during the year

Maximum approved

Excess (shortfall)

IN COMPLIANCE:  Yes or No

 

 

SCHEDULE V

COMMITMENTS

	
  
  Lender

	
  
  Facility A Commitment

	
  
  BMO

	
  
  $25,000,000

	 	
  
  Facility B Commitment

	
  
  BMO (Chicago Branch)

	
  
  US$10,000,000

	
  
  Harris

	
  
  US$20,000,000

	 	
  
  Facility C Commitment

	
  
  Manulife

	
  
  US$15,000,000

	
  
  Sun Life

	
  
  US$20,000,000

	
  
  Hancock

	
  
  US$5,000,000

	
  
  Hancock USA

	
  
  US$5,000,000

	 	
  
  Facility D Commitment

	
  
  BMO (Chicago Branch)

	
  
  US$10,000,000

	 	 

 

EXHIBIT “II”

SEE THE ATTACHED SUNOPTA INC. TOWER RESTRUCTURING STEPS POWERPOINT DATED AUGUST 22, 2006 PREPARED BY PRICEWATERHOUSECOOPERS.Employment Agreement

    Exhibit
      10.32

     

    EMPLOYMENT
      AGREEMENT

     

    ASPREVA
      PHARMACEUTICALS CORPORATION

    1203-
      4464 Markham St. Victoria BC. V8Z 7X8

     

    

     

    PRIVATE
      AND CONFIDENTIAL

    

      6,
        January, 2007

      

      Dr
        Usman Azam

      3622
        Green ridge Road

      Furlong,
        Pennsylvania, 18925, USA

    

    

    Dear
      Oz,

     

    
      	
              Re:

            	
              Terms
                of Employment with ASPREVA PHARMACEUTICALS CORPORATION (the
                “Corporation”)

            

    

     

    This
      Agreement confirms the terms and conditions of your employment by the
      Corporation and will constitute your employment agreement. Those terms and
      conditions are set out below:

     

    
      	
              1.

            	
              Position
                and Duties.
                You will be employed by and will serve the Corporation as its Executive
                Vice-President and Chief Medical Officer.
                You
                will report directly to the Chief Executive Officer or subsequent
                designate. Your duties and functions are outlined in the attached
                position
                description (HR307
                - Exhibit B)
                and as they pertain to the Corporation and any of its subsidiaries.
                These
                duties and functions may be varied or added to from time to time
                by the
                CEO, at their discretion, exercised reasonably. These duties and
                functions
                will be conducted in accordance with and adhering to all corporate
                policies and procedures. 

            

    

     

    
      	
              2.

            	
              Term.
                The terms and conditions of this Agreement shall have effect on or
                before
                Monday 19th
                February, 2007 (the “Effective
                Date”)
                (tentatively January, 22, 2007, and your employment as Executive
                Vice-President and Chief Medical Officer of the Corporation shall
                continue
                until terminated as provided in this Agreement. It is expected that
                a
                minimum two year period will be completed based in Victoria
                B.C.

            

    

     

    
      	 	
              (i)

            	
              There
                will be a transition period of up to four months from the date employment
                commences for you to relocate to Victoria, having secured appropriate
                immigration clearances; at which time the two year period will
                commence.

            

    

     

    
      	 	
              (ii)

            	
              Three
                months prior to completing this two year period based from Aspreva’s
                Victoria office, we will discuss your interest in relocating to Victoria
                on a permanent basis; utilizing any unused funds within your relocation
                allowance - as per Section 10.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	 	
              (iii)

            	
              Should
                you prefer to relocate back to New Jersey, we will discuss the possibility
                of you performing the CMO role in the USA and if acceptable to Aspreva,
                we
                will support the relocation of you and your family back to New Jersey;
                utilizing any unused funds within your relocation allowance - as
                per
                Section 10.

            

    

     

    
      	 	
              (iv)

            	
              Should
                you prefer to relocate back to New Jersey, and Aspreva concludes
                the CMO
                role cannot be performed outside of Victoria
                then:

            

    

     

    
      
        	 	(a)	Aspreva will relocate you and your family back
                to New
                Jersey utilizing any unused funds within your relocation allowance
                - as
                per Section 10.

      

        

    

    
      	 	
              (b)

            	
              Additionally,
                Aspreva would also provide you severance compensation of up to six
                months
                base salary as referred to in Section 3 (Base Salary) and as adjusted
                from
                time to time in accordance with Section 4 (Annual Review); this payment
                would supersede any claim under section 14 (Termination without Cause),
                would be seen as full and final settlement. Furthermore payments
                would
                cease if you commenced employment with another employer.
                

            

    

     

    
      	 	
              (c)

            	
              Your
                stock options would continue to vest in accordance with Aspreva’s Stock
                Option Plan guidelines, subject to you agreeing to provide reasonable
                consulting services to Aspreva during the remaining vesting period
                and
                that such consulting did not cause a conflict of interest as per
                sections
                19 (Disclosure of Conflicts of Interest) and section 20 (Avoidance
                of
                Conflicts of Interest).

            

    

     

    
      	
              3.

            	
              Base
                Salary.
                The Corporation shall pay you a base salary at the rate of $350,000
                USD to
                be converted to Canadian dollars on transition per year (the “Base
                Salary”),
                payable semi-monthly, subject to the withholding of all applicable
                statutory deductions from such Base Salary in respect of the Base
                Salary
                and including any taxable benefits received under this Agreement
                or in
                respect of your employment.

            

    

     

    
      	
              4.

            	
              Annual
                Review.
                The compensation committee (the “Compensation
                Committee”)
                established by the Board of Directors (the “Board”)
                of the Corporation for the purposes of this Agreement shall review
                your
                Base Salary annually. This review shall not result in a decrease
                of your
                Base Salary nor shall it necessarily result in an increase in your
                Base
                Salary and any increase shall be in the discretion of the
                Board.

            

    

     

    
      	
              5.

            	
              Performance
                Bonus.
                

            

    

     

    
      	 	
              (a)

            	
              The
                Corporation shall review the performance of your duties and functions
                under this Agreement annually and shall pay you a cash bonus of up
                to 35%
                of annual salary based on achieving certain objectives determined
                by
                senior management in its sole discretion (weighted 60% personal and
                40%
                corporate) determines that the Corporation and the employee has met
                its
                short-term and long-term business performance objectives (together,
                the
                “Objectives”),
                which Objectives will be established from time to time by the Senior
                Management in consultation with
                you.

            

    

     

    Sign-on
      Bonus:
      $150,000 (USD) gross sign on bonus, to be paid on first pay period one month
      after commencing employment with Aspreva. Should the employee terminate
      employment, Aspreva Pharmaceuticals reserves the right to ask for reimbursement
      of the sign-on bonus under the following terms - within 12 months 100%, under
      24
      months 50%, under 36 months 25%.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Benefits.
                

            

    

     

    
      	 	
              (a)

            	
              The
                Corporation will arrange for you to have health, medical, dental,
                and such
                other benefits as made available by the Company from time to time.
                You may
                be required to provide information and undergo reasonable assessments
                of
                the insurers in order to determine your eligibility for benefits
                coverage.
                Please note that coverage under any benefit plan in effect from time
                to
                time is subject to availability and other requirements of the applicable
                insurer.

            

    

     

    
      	 	
              (b)

            	
              We
                are pleased to offer you up to $3,000 CDN: $2,000 in first year and
                $1000
                in the second year to support the advice for and preparation of American
                and Canadian personal income tax returns. Expenses are reimbursed
                through
                receipts. Expenses are reimbursed through receipts. This is a taxable
                benefit to you as the employee.

            

    

     

    
      	
              7.

            	
              Vacation.
                During your employment with the Corporation under this Agreement,
                you will
                be entitled to an annual paid vacation as determined by the Corporation
                from time to time, not less than 20 days per annum. The Corporation
                reserves the right, acting reasonably, to request that vacations
                be
                scheduled so as not to conflict with critical business operations.
                

            

    

     

    
      	
              8.

            	
              Reimbursement
                for Expenses.
                During your employment under this Agreement, the Corporation shall
                promptly reimburse you for reasonable travelling and other expenses
                actually and properly incurred by you in connection with the performance
                of your duties and functions, such reimbursement to be made in accordance
                with, and subject to, the policies of the Corporation from time to
                time.
                For all such expenses you will be required to keep proper accounts
                and to
                furnish statements, vouchers, invoices and/or other supporting documents
                to the Corporation within 30 days after the date the expenses are
                incurred.

            

    

     

    9. Stock
      Options.
      

    
       

      
        	
                 

              	
                You
                  will be eligible to receive 225,000 stock options (the “Options”). No
                  Options shall vest during the first
                  year following your start date and up to 12 months following the
                  Grant
                  Date, which ever comes first, as
                  defined in the option agreement (the “Option Agreement”) between you and
                  the Corporation. Thereafter,
                  1/36th
                  of the Options will vest at the end of each month for the next
                  36 months.
                  Thus, all of the Options
                  will vest and become exercisable over
                  a four (4) year period. The
                  Options will cease to vest
                  on the following
                  occurrences:

              

      

       

    

    
      	 	
              (a)

            	
              on
                the date you provide the Corporation with written notice of your
                decision
                to resign your employment pursuant to Section 13 (Termination by
                Employee);

            

    

     

    
      	 	
              (b)

            	
              on
                the date the Corporation provides you with written notice of its
                decision
                to terminate your employment pursuant to Section 14 (Termination
                without
                Cause);

            

    

     

    
      	 	
              (c)

            	
              on
                the date the Corporation terminates your employment pursuant to Section
                15
                (Termination for Cause); or

            

    

    
       

      
        	 	
                (d)

              	
                
                  otherwise
                    on the
                    date this Agreement is terminated or deemed terminated.

                

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    For
      greater certainty; neither the period of notice nor any payment in lieu thereof
      will be considered as extending the period of your employment with respect
      to
      the vesting or exercise of the options granted in this Section 9. 

     

    The
      terms and conditions relating to the Options will be subject to the Option
      Agreement as well as the Aspreva
      2002 Incentive Stock Option Plan, as amended (the “Plan”). If there is any
      conflict between the terms of this Agreement and the Plan, the terms of the
      Plan
      will govern. If there is any conflict between the terms of this Agreement and
      the Option Agreement, the terms of this Agreement will govern to the extent
      of
      the conflict. 

     

    

     

    
      	
              10.

            	
              Relocation
                Allowance. You
                are eligible to a
                $90,000 (USD)
                capped allowance to be used
                towards:

            

    

     

    
      	 	
              a)

            	
              one
                trip for family to identify housing

            

    

     

    
      	 	
              b)

            	
              temporary
                housing 

            

    

     

    
      	 	
              c)

            	
              moving
                household expenses 

            

    

    

    This
      includes the cost of Aspreva contributing to rental of a temporary residence
      in
      Victoria of up to $2,000 USD per month for a period of up to two
      years.

     

    Expenses
      will be reimbursed with receipts.

     

    Subject
      to Termination by Employee (Section 13), the Relocation allowance shall
      repayable by you to the Corporation in accordance with the following schedule:
      

     

    Years
      of Employment         Repayment
      of Relocation Allowance

     

    0-1
      year    Full
      repayment of Relocation Allowance

     

    1-2
      years    2/3
      of Relocation Allowance

     

    2-3
      years    1/3
      of Relocation Allowance

     

    after
      3 years          Nil

     

    Please
      note for 10a, if you wish to have the company coordinate an economy class return
      trip for you, your spouse & dependants to assist with establishing residence
      in Victoria as part of your relocation allowance, please contact Human
      Resources. 

     

    
      	
              11.

            	
              No
                Other Compensation or Benefits.
                You expressly acknowledge and agree that unless otherwise expressly
                agreed
                in writing by the Corporation subsequent to execution of this Agreement
                by
                the parties hereto, you shall not be entitled by reason of your employment
                by the Corporation or by reason of any termination of such employment,
                to
                any remuneration, compensation or benefits other than as expressly
                set
                forth in this Agreement.

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              12.

            	
              Service
                to Employer.
                During your employment under this Agreement you
                will:

            

    

     

    
      	 	
              (a)

            	
              well
                and faithfully serve the Corporation, at all times act in, and promote,
                the best interests of the Corporation, and devote substantially the
                whole
                of your working time, attention and energies to the business and
                affairs
                of the Corporation;

            

    

     

    
      	 	
              (b)

            	
              comply
                with all rules, regulations, policies and procedures of the Corporation;
                and

            

    

     

    
      	 	
              (c)

            	
              not,
                without the prior approval of the Board, carry on or engage in any
                other
                business or occupation or become a director, officer, employee or
                agent of
                or hold any position or office with any other corporation, firm or
                person,
                except as a volunteer for a non-profit organization, for personal
                investments or a personal holding company, which may include members
                of
                your family as shareholders.

            

    

     

    
      	
              13.

            	
              Termination
                By Employee

            

    

     

    
      	 	
              (a)

            	
              You
                may resign as Executive Vice-President and Chief Medical Officer
                with 2
                months prior written notice of the effective date of your resignation.
                On
                the giving of any such notice, the Corporation shall have the right
                to
                elect, in lieu of the notice period, to pay you a lump sum equal
                to 2
                months’ Base Salary, as referred to in Section 3 (Base Salary) and as
                adjusted from time to time in accordance with Section 4 (Annual Review),
                plus other sums owed for arrears of salary, vacation pay and, if
                granted
                pursuant to Section 5 (Performance Bonus),
                bonus.

            

    

     

    
      	 	
              (b)

            	
              If
                the Corporation elects to pay you such lump sum in lieu of the 2
                months’
                notice period, the Corporation shall, subject to the terms and conditions
                of any benefit plans in effect from time to time, maintain the benefits
                and payments set out in Section 6 (Benefits) of this Agreement for
                2
                months after the date of your notice, but in all other respects your
                resignation and the termination of your employment will be effective
                immediately upon your receipt of the lump
                sum.

            

    

     

    
      	
              14.

            	
              Termination
                by the Corporation Without Cause.
                

            

    

     

    
      	 	
              (a)

            	
              The
                Corporation may terminate your employment as Executive Vice-President
                and
                Chief Medical Officer and require that you resign at any time without
                Cause (as defined below) by giving you written notice of the effective
                date of such termination and in all respects, except as set out below,
                your resignation and the termination of your employment will be effective
                immediately.

            

    

     

    
      	 	
              (b)

            	
              If
                your employment is terminated by the Corporation pursuant to this
                Section,
                unless otherwise determined by the Board, the Corporation shall pay
                to you
                as a lump sum the number of months of Base Salary, as referred to
                in
                Section 3 (Base Salary) and as adjusted from time to time in accordance
                with Section 4 (Annual Review) set out in the table below depending
                upon
                the year of employment in which you are terminated, plus such other
                sums
                owed for arrears of salary, vacation pay and, if granted pursuant
                to
                Section 5 (Performance Bonus),
                bonus:

            

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Year
                of Employment

            	 	
              Lump
                Sum Payment of Base Salary (as adjusted)

            
	
              1
                - 2

            	 	
              6
                months

            
	
              after
                2

            	 	
              12
                months

            

    

     

    
      	 	
              (c)

            	
              To
                the extent permitted by law and subject to the terms and conditions
                of any
                benefit plans in effect from time to time, the Corporation shall
                maintain
                the benefits and payments set out in Section 6 (Benefits) of this
                Agreement (the “Maintenance
                Payments”)
                during the full notice period as defined by 13.
                (b).

            

    

     

    
      	 	
              (d)

            	
              If
                you obtain a new source of remuneration for personal services, whether
                through an office, new employment, a contract for you to provide
                consulting or other personal services, or any position analogous
                to any of
                the foregoing, the Maintenance Payments shall terminate forthwith
                on the
                date of commencement of such office, employment, contract or position.
                

            

    

     

    
      	 	
              (e)

            	
              The
                payments of Base Salary and benefits set out in this Section 14 shall
                be
                in lieu of any applicable notice period.

            

    

     

    
      	
              15.

            	
              Termination
                by the Corporation for Cause.
                Notwithstanding Section 13 (Termination by Employee), Section 14
                (Termination by the Corporation Without Cause), the Corporation may
                terminate your employment as Executive Vice-President and Chief Medical
                Officer for Cause at any time without any notice or severance. In
                this
                Agreement, “Cause”
                shall include, but not be limited to, the
                following:

            

    

     

    
      	 	
              (a)

            	
              the
                commission of theft, embezzlement, fraud, obtaining funds or property
                under false pretences or similar acts of misconduct with respect
                to the
                property of the Corporation or its employees or the Corporation’s
                customers or suppliers;

            

    

     

    
      	 	
              (b)

            	
              your
                entering of a guilty plea or conviction for any crime involving fraud,
                misrepresentation or breach of trust, or for any serious criminal
                offence
                that impacts adversely on the Corporation; or

            

    

     

    
      
        	 	
                (c)

              	
                persistent
                  unsatisfactory performance of your job duties after written notice
from
                  the company and a reasonable opportunity to cure, if
                  possible; 

              

      

       

    

    
      	 	
              (d)

            	
              intentional
                damage to any property of the
                Corporation;

            

    

     

    
      	 	
              (e)

            	
              any
                other matter constituting just cause at common
                law.

            

    

     

    any
      of which shall entitle the Corporation to terminate your employment under this
      Section 15.

     

    

     

    
      	
              16.

            	
              Termination
                Following Change in Control.
                Concurrently with execution and delivery of this Agreement, you and
                the
                Corporation shall enter into a “Change of Control Agreement” in the form
                attached hereto as Schedule B setting out the compensation provisions
                to
                be applicable in the event of the termination of your employment
                as
                Executive Vice-President and Chief Medical Officer of the Corporation
                in
                certain circumstances following a “Change in Control” of the Corporation
                (as defined in the Change of Control
                Agreement).

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              17.

            	
              No
                Additional Compensation upon Termination.
                It is agreed that neither you nor the Corporation shall, as a result
                of
                the termination of your employment, be entitled to any notice, fee,
                salary, bonus, severance or other payments, benefits or damages arising
                by
                virtue of, or in any way relating to, your employment or any other
                relationship with the Corporation (including termination of such
                employment or relationship) in excess of what is specified or provided
                for
                in Section 13 (Termination by Employee), Section 14 (Termination
                by the
                Corporation Without Cause), Section 15 (Termination by the Corporation
                for
                Cause), Payment of any amount whatsoever pursuant to Section 13
                (Termination by Employee), Section 14 (Termination by the Corporation
                Without Cause), Section 15 (Termination by the Corporation for Cause),
                Section 16 (Termination Following
                Change in Control)shall
                be subject to the withholding of all applicable statutory deductions
                by
                the Corporation.

            

    

     

    
      	
              18.

            	
              Confidentiality
                and Assignment of Inventions.
                Concurrently with execution and delivery of this Agreement and in
                consideration of your employment by the Corporation, you and the
                Corporation will enter into a “Confidentiality Agreement and Assignment of
                Inventions” in the form attached hereto as Schedule
                A.

            

    

     

    
      	
              19.

            	
              Disclosure
                of Conflicts of Interest.
                During your employment with the Corporation, you will promptly, fully
                and
                frankly disclose to the Corporation in
                writing:

            

    

     

    
      	 	
              (a)

            	
              the
                nature and extent of any interest you or your Associates (as hereinafter
                defined) have or may have, directly or indirectly, in any contract
                or
                transaction or proposed contract or transaction of or with the Corporation
                or any subsidiary or affiliate of the
                Corporation;

            

    

     

    
      	 	
              (b)

            	
              every
                office you may hold or acquire, and every property you or your Associates
                may possess or acquire, whereby directly or indirectly a duty or
                interest
                might be created in conflict with the interests of the Corporation
                or your
                duties and obligations under this Agreement;
                and

            

    

     

    
      	 	
              (c)

            	
              the
                nature and extent of any conflict referred to in subsection (b)
                above.

            

    

     

    In
      this Agreement the expression “Associate”
      shall include all those persons and entities that are included within the
      definition or meaning of “associate” as set forth in Section 1(1) of the
Company
      Act
      (British Columbia), as amended, or any successor legislation of similar force
      and effect, and shall also include your spouse, children, parents, brothers
      and
      sisters.

     

    
      	
              20.

            	
              Avoidance
                of Conflicts of Interest.
                You acknowledge that it is the policy of the Corporation that all
                interests and conflicts of the sort described in Section 19 (Disclosure
                of
                Conflicts of Interest) be avoided, and you agree to comply with all
                policies and directives of the Board from time to time regulating,
                restricting or prohibiting circumstances giving rise to interests
                or
                conflicts of the sort described in Section 19 (Disclosure of Conflicts
                of
                Interest). During your employment with the Corporation, without Board
                approval, in its sole discretion, you shall not enter into any agreement,
                arrangement or understanding with any other person or entity that
                would in
                any way conflict or interfere with this Agreement or your duties
                or
                obligations under this Agreement or that would otherwise prevent
                you from
                performing your obligations hereunder, and you represent and warrant
                that
                you or your Associates have not entered into any such agreement,
                arrangement or understanding. 

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              21.

            	
              Compliance
                with Insider Trading Guidelines and Restrictions.
                As a result of your position as Executive Vice-President and Chief
                Medical
                Officer, you are subject to insider trading regulations and restrictions
                and are required to file insider reports disclosing the grant of
                any
                options as well as the purchase and sale of any shares in the capital
                of
                the Corporation. The Corporation may from time to time publish trading
                guidelines and restrictions for its employees, officers and directors
                as
                are considered by the Board, in its discretion, prudent and necessary
                for
                a publicly listed company. It is a term of your employment as a senior
                officer of the Corporation that you comply with such guidelines and
                restrictions.

            

    

     

    
      	
              22.

            	
              Directors’
                & Officers’ Liability Insurance.
                The Corporation shall use commercially reasonable efforts to provide
                you
                with directors’ and officers’ liability insurance under the policies for
                such insurance arranged by the Corporation from time to time upon
                such
                terms and in such amounts as the Board may reasonably determine in
                its
                discretion. 

            

    

     

    
      	
              23.

            	
              Remedies.
                You acknowledge and agree that any breach or threatened breach of
                any of
                the provisions of Section 12 (Service to Employer), Section 17
                (Confidentiality and Assignment of Inventions), Section 19 (Disclosure
                of
                Conflicts of Interest) or Section 20 (Avoidance of Conflicts of Interest)
                could cause irreparable damage to the Corporation or its partners,
                subsidiaries or affiliates, that such harm could not be adequately
                compensated by the Corporation’s recovery of monetary damages, and that in
                the event of a breach or threatened breach thereof, the Corporation
                shall
                have the right to seek an injunction, specific performance or other
                equitable relief as well as any equitable accounting of all your
                profits
                or benefits arising out of any such breach. It is further acknowledged
                and
                agreed that the remedies of the Corporation specified in this Section
                23
                are in addition to and not in substitution for any rights or remedies
                of
                the Corporation at law or in equity and that all such rights and
                remedies
                are cumulative and not alternative and that the Corporation may have
                recourse to any one or more of its available rights or remedies as
                it
                shall see fit. 

            

    

     

    
      	
              24.

            	
              Binding
                Effect.
                This Agreement shall be binding upon and inure to the benefit of
                the
                Corporation and its successors and assigns. Your rights and obligations
                contained in this Agreement are personal and such rights, benefits
                and
                obligations shall not be voluntarily or involuntarily assigned, alienated
                or transferred, whether by operation of law or otherwise, without
                the
                prior written consent of the Corporation. This Agreement shall otherwise
                be binding upon and inure to the benefit of your personal or legal
                representatives, executors, administrators, successors, heirs,
                distributees, devisees, legatees and permitted
                assigns.

            

    

     

    
      	
              25.

            	
              Agreement
                Confidential.
                Both parties shall keep the terms and conditions of this Agreement
                confidential except as may be required to enforce any provision of
                this
                Agreement or as may otherwise be required by any law, regulation
                or other
                regulatory requirement.

            

    

     

    
      	
              26.

            	
              Governing
                Law.
                This Agreement shall be governed by and interpreted in accordance
                with the
                laws of the Province of British Columbia and applicable laws of Canada
                and
                the parties hereto attorn to the exclusive jurisdiction of the provincial
                and federal courts of such
                province.

            

    

     

    
      	
              27.

            	
              Exercise
                of Functions.
                The rights of the Corporation as provided in this Agreement may be
                exercised on behalf of the Corporation only by the Board (excluding
                you).

            

    

     

    
      	
              28.

            	
              Entire
                Agreement.
                The terms and conditions of this Agreement are in addition to and
                not in
                substitution for the obligations, duties and responsibilities imposed
                by
                law on employees of corporations generally, and you agree to comply
                with
                such obligations, duties and responsibilities. Except as otherwise
                provided in this Agreement, this Agreement constitutes the entire
                agreement between the parties with respect to the subject matter
                hereof,
                and may only be varied by further written agreement signed by you
                and the
                Corporation. This Agreement supersedes any previous communications,
                understandings and agreements between you and the Corporation regarding
                your employment. It is acknowledged and agreed that this Agreement
                is
                mutually beneficial and is entered into for fresh and valuable
                consideration with the intent that it shall constitute a legally
                binding
                agreement.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              29.

            	
              Further
                Assurances.
                The parties will execute and deliver to each other such further
                instruments and assurances and do such further acts as may be required
                to
                give effect to this Agreement.

            

    

     

    
      	
              30.

            	
              Surviving
                Obligations.
                Your obligations and covenants under Section 18 (Confidentiality
                and
                Assignment of Inventions) and Section 23 (Remedies) shall survive
                the
                termination of this Agreement.

            

    

     

    
      	
              31.

            	
              Independent
                Legal Advice.
                You hereby acknowledge that you have obtained or have had an opportunity
                to obtain independent legal advice in connection with this Agreement,
                and
                further acknowledge that you have read, understand, and agree to
                be bound
                by all of the terms and conditions contained
                herein.

            

    

     

    
      	
              32.

            	
              Notice.
                Any notice or other communication required or contemplated under
                this
                Agreement to be given by one party to the other shall be delivered
                or
                mailed by prepaid registered post to the party to receive same at
                the
                address as set out below:

            

    

     

     If
      to the Corporation:

     

    Aspreva
      Pharmaceuticals Corporation

    1203
      - 4464 Markham St. Victoria BC V8Z 7X8

    Attn: Farris,
      Vaughan, Wills & Murphy

    26th
      Floor, 700 West Georgia Street

    Vancouver,
      BC V7Y 1B3

     

    If
      to:

    Dr
      Usman Azam

    3622
      Green ridge Road

    Furlong,
      Pennsylvania, 18925, USA

    

     

    Any
      notice delivered shall be deemed to have been given and received on the first
      business day following the date of delivery. Any notice mailed shall be deemed
      to have been given and received on the fifth business day following the date
      it
      was posted, unless between the time of mailing and actual receipt of the notice
      there shall be a mail strike, slow-down or other labour dispute which might
      affect delivery of the notice by mail, then the notice shall be effective only
      if actually delivered.

     

    
      	
              33.

            	
              Severability.
                If any provision of this Agreement or any part thereof shall for
                any
                reason be held to be invalid or unenforceable in any respect, then
                such
                invalid or unenforceable provision or part shall be severable and
                severed
                from this Agreement and the other provisions of this Agreement shall
                remain in effect and be construed as if such invalid or unenforceable
                provision or part had never been contained
                herein.

            

    

     

    
      	
              34.

            	
              Waiver.
                Any waiver of any breach or default under this Agreement shall only
                be
                effective if in writing signed by the party against whom the waiver
                is
                sought to be enforced, and no waiver shall be implied by any other
                act or
                conduct or by any indulgence, delay or omission. Any waiver shall
                only
                apply to the specific matter waived and only in the specific instance
                in
                which it is waived.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              35.

            	
              Counterparts.
                This Agreement may be executed in any number of counterparts, each
                of
                which so executed shall be deemed to be an original, and such counterparts
                will together constitute but one
                Agreement.

            

    

     

    If
      you accept and agree to the foregoing, please confirm your acceptance and
      agreement by signing the enclosed duplicate copy of this letter where indicated
      below and by returning it to us. You are urged to consider fully all the above
      terms and conditions and to obtain, at your expense, independent legal advice
      or
      any other advice you feel is necessary before you execute this
      agreement.

     

    Yours
      truly,

     

    ASPREVA
      PHARMACEUTICALS CORPORATION

     

    

     

    By:        /s/
      Richard Glickman___________________________________

    Richard
      Glickman

     

    

     

    Accepted
      and agreed to by Usman Azam as of the 6th January, 2007

     

    

     

    /s/
      Usman Azam____________________ 

    Dr.
      Usman Azam

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
      A

     

    CONFIDENTIALITY
      AGREEMENT AND

    ASSIGNMENT
      OF INVENTIONS

     

    ASPREVA
      PHARMACEUTICALS CORPORATION

     

    

     

    PRIVATE
      AND CONFIDENTIAL

     

       Dr
      Usman
      Azam

    3622
      Green ridge Road

    Furlong,
      Pennsylvania, 18925, USA

     

    Dear
      Oz:

     

    The
      purpose of this letter is to confirm and record the terms of the agreement
      (the
“Agreement”)
      between you and Aspreva Pharmaceuticals Corporation (“Aspreva”)
      concerning the terms on which you will (i) receive from and disclose to Aspreva
      proprietary and confidential information; (ii) agree to keep the information
      confidential, to protect it from disclosure and to use it only in accordance
      with the terms of this Agreement; and (iii) assign to Aspreva all rights,
      including any ownership interest which may arise in all inventions and
      intellectual property developed or disclosed by you over the course of your
      work
      during your employment with Aspreva. The effective date (“Effective
      Date”)
      of this Agreement is the date that you start or started working at Aspreva,
      as
      indicated in the employment agreement between you and Aspreva dated as of
      January 3rd,
      2007.

     

    In
      consideration of the offer of employment by Aspreva and the payment by Aspreva
      to you of the sum of CDN$1.00 and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged, you and Aspreva hereby
      agree as follows:

     

    The
      following numbering is done with the Alt NB numbering macro. There are 6 levels
      (Heading 1 to Heading 6 styles); shortcut keys Ctrl Alt 1 to Ctrl Alt 6.

     

    
      	
              2.

            	
              INTERPRETATION

            

      	 	 

      	2.1	Definitions.
              In this Agreement:

    

                     

    
      	 	
              (a)

            	
              “Confidential
                Information”,
                subject to the exemptions set out in Section 2.8, shall mean any
                information relating to Aspreva’s Business (as hereinafter defined),
                whether or not conceived, originated, discovered, or developed in
                whole or
                in part by you, that is not generally known to the public or to other
                persons who are not bound by obligations of confidentiality
                and:

            

    

     

    
      	 	
              (i)

            	
              from
                which Aspreva derives economic value, actual or potential, from the
                information not being generally known;
                or

            

    

     

    
      	 	
              (ii)

            	
              in
                respect of which Aspreva otherwise has a legitimate interest in
                maintaining secrecy;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    and
      which, without limiting the generality of the foregoing, shall
      include;

     

    
      	 	
              (iii)

            	
              all
                proprietary information licensed to, acquired, used or developed
                by
                Aspreva in its search and development activities including but not
                restricted to the development and commercialization of drugs for
                rare
                diseases and conditions and orphan drugs as defined by the U.S.
                Orphan
                Drug Act,
                other scientific strategies and concepts, designs, know-how, information,
                material, formulas, processes, research data and proprietary rights
                in the
                nature of copyrights, patents, trademarks, licenses and industrial
                designs;

            

    

     

    
      	 	
              (iv)

            	
              all
                information relating to Aspreva’s Business, and to all other aspects of
                Aspreva’s structure, personnel, and operations, including financial,
                clinical, regulatory, marketing, advertising and commercial information
                and strategies, customer lists, compilations, agreements and contractual
                records and correspondence; programs, devices, concepts, inventions,
                designs, methods, processes, data, know-how, unique combinations
                of
                separate items that is not generally known and items provided or
                disclosed
                to Aspreva by third parties subject to restrictions on use or
                disclosure;

            

    

     

    
      	 	
              (v)

            	
              all
                know-how relating to Aspreva’s Business including, all biological,
                chemical, pharmacological, toxicological, pharmaceutical, physical
                and
                analytical, clinical, safety, manufacturing and quality control data
                and
                information, and all applications, registrations, licenses,
                authorizations, approvals and correspondence submitted to regulatory
                authorities;

            

    

     

    
      	 	
              (vi)

            	
              all
                information relating to the businesses of competitors of Aspreva
                including
                information relating to competitors’ research and development,
                intellectual property, operations, financial, clinical, regulatory,
                marketing, advertising and commercial strategies, that is not generally
                known; 

            

    

     

    
      	 	
              (vii)

            	
              all
                information provided by Aspreva’s agents, consultants, lawyers,
                contractors, licensors or licensees to Aspreva and relating to Aspreva’s
                Business; and

            

    

     

    
      	 	
              (viii)

            	
              all
                information relating to your compensation and benefits, including
                your
                salary, vacation, stock options, rights to continuing education,
                perquisites, severance notice, rights on termination and all other
                compensation and benefits, except that you shall be entitled to disclose
                such information to your bankers, advisors, agents, consultants and
                other
                third parties who have a duty of confidence to you and who have a
                need to
                know such information in order to provide advice, products or services
                to
                you.

            

    

     

    
      	 	
              (b)

            	
              “Inventions”
                shall mean any and all discoveries, developments, enhancements,
                improvements, concepts, formulas, processes, ideas, writings, whether
                or
                not reduced to practice, industrial and other designs, patents, patent
                applications, provisional patent applications, continuations,
                continuations-in-part, substitutions, divisionals, reissues, renewals,
                re-examinations, extensions, supplementary protection certificates
                or the
                like, trade secrets or utility models, copyrights and other forms
                of
                intellectual property including all applications, registrations and
                related foreign applications filed and registrations granted
                thereon.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	 	
              (c)

            	
              “Work
                Product”
                shall mean any and all Inventions and possible Inventions relating
                to
                Aspreva’s Business resulting from any work performed by you for Aspreva
                that you may invent or co-invent during your involvement in any capacity
                with Aspreva, except those Inventions invented by you entirely on
                your own
                time that do not relate to Aspreva’s Business or do not derive from any
                equipment, supplies, facilities, Confidential Information or other
                information, gained, directly or indirectly, by you from or through
                your
                involvement in any capacity with
                Aspreva.

            

    

     

    
      	 	
              (d)

            	
              “Aspreva’s
                Business”
                shall mean the businesses actually carried on by Aspreva, directly
                or
                indirectly, whether under an agreement with or in collaboration with,
                any
                other party including but not exclusively, the development and
                commercialization of drugs for rare diseases and conditions and orphan
                drugs as defined by the U.S. Orphan
                Drug Act.

            

    

     

    
      	
              3.

            	
              CONFIDENTIALITY

            

    

     

    
      	
              3.1

            	
              Basic
                Obligation of Confidentiality.
                You hereby acknowledge and agree that in the course of your involvement
                with Aspreva, Aspreva may disclose to you or you may otherwise have
                access
                or be exposed to Confidential Information. Aspreva hereby agrees
                to
                provide such access to you and you agree to receive and hold all
                Confidential Information on the terms and conditions set out in this
                Agreement. Except as set out in this Agreement, you will keep strictly
                confidential all Confidential Information and all other information
                belonging to Aspreva that you acquire, observe or are informed of,
                directly or indirectly, in connection with your involvement, in any
                capacity, with Aspreva.

            

    

     

    
      	
              3.2

            	
              Fiduciary
                Capacity.
                You will be and act toward Aspreva as a fiduciary in respect of the
                Confidential Information.

            

    

     

    
      	
              3.3

            	
              Non-disclosure.
                Unless Aspreva first gives you written permission to do so under
                Section
                2.7 of this Agreement, you will not at any time, either during or
                after
                your involvement in any capacity with
                Aspreva;

            

    

     

    
      	 	
              (a)

            	
              use
                or copy Confidential Information or your recollections thereof;
                

            

    

     

    
      	 	
              (b)

            	
              publish
                or disclose Confidential Information or your recollections thereof
                to any
                person other than to employees of Aspreva who have a need to know
                such
                Confidential Information for their work for Aspreva;
                

            

    

     

    
      	 	
              (c)

            	
              permit
                or cause any Confidential Information to be used, copied, published,
                disclosed, translated or adapted except as otherwise expressly permitted
                by this Agreement;

            

    

     

    
      	 	
              (d)

            	
              permit
                or cause any Confidential Information to be stored off the premises
                of
                Aspreva, including permitting or causing such Information to be stored
                in
                electronic format on personal computers, except in accordance with
                written
                procedures of Aspreva, as amended from time to time in writing;
                or

            

    

     

    
      	 	
              (e)

            	
              communicate
                the Confidential Information or your recollections thereof to another
                employee of Aspreva in a public place or using methods of communication
                that are capable of being intercepted (such as unencrypted messages
                using
                the internet or cellular phones) or overheard, without the written
                permission of Aspreva.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	
              3.4

            	
              Taking
                Precautions.
                You will take all reasonable precautions necessary or prudent to
                prevent
                material in your possession or control that contains or refers to
                Confidential Information from being discovered, used or copied by
                third
                parties.

            

    

     

    
      	
              3.5

            	
              Aspreva’s
                Ownership of Confidential Information.
                As between you and Aspreva, Aspreva shall own all right, title and
                interest in and to the Confidential Information, whether or not created
                or
                developed by you.

            

    

     

    
      	
              3.6

            	
              Control
                of Confidential Information and Return of
                Information.
                All physical materials produced or prepared by you containing Confidential
                Information, including, without limitation, biological material,
                chemical
                entities, test results, notes of experiments, computer files, photographs,
                x-ray film, designs, devices, formulas, memoranda, drawings, plans,
                prototypes, samples, accounts, reports, financial statements, estimates
                and materials prepared in the course of your responsibilities to
                or for
                the benefit of Aspreva, shall belong to Aspreva, and you will promptly
                turn over to Aspreva’s possession every original and copy of any and all
                such items in your possession or control upon request by Aspreva.
                You
                shall not permit or cause any physical materials to be stored off
                the
                premises of Aspreva, unless in accordance with written procedures
                of
                Aspreva, as amended from time to time in writing. You shall not transfer
                any biological material to another person outside of Aspreva, unless
                a
                material transfer agreement has been signed by both Aspreva and the
                other
                party. You shall not accept any biological material from another
                person
                outside of Aspreva, unless in accordance with written procedures
                of
                Aspreva, as amended from time to time in
                writing.

            

    

     

    
      	
              3.7

            	
              Purpose
                of Use.
                You will use Confidential Information only for purposes authorised
                or
                directed by Aspreva.

            

    

     

    
      	
              3.8

            	
              Exemptions.
                Your obligation of confidentiality under this Agreement will not
                apply to
                any of the following:

            

    

     

    
      	 	
              (a)

            	
              information
                that is already known to you, though not due to a prior disclosure
                by
                Aspreva or by a person who obtained knowledge of the information,
                directly
                or indirectly, from Aspreva;

            

    

     

    
      	 	
              (b)

            	
              information
                disclosed to you by another person who is not obliged to maintain
                the
                confidentiality of that information and who did not obtain knowledge
                of
                the information, directly or indirectly, from
                Aspreva;

            

    

     

    
      	 	
              (c)

            	
              information
                that is developed by you independently of Confidential Information
                received from Aspreva and such independent development can be documented
                by you;

            

    

     

    
      	 	
              (d)

            	
              other
                particular information or material which Aspreva expressly exempts
                by
                written instrument signed by
                Aspreva;

            

    

     

    
      	 	
              (e)

            	
              information
                or material that is in the public domain through no fault of your
                own;
                and

            

    

     

    
      	 	
              (f)

            	
              information
                or material that you are obligated by law to disclose, to the extent
                of
                such obligation, provided that:

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (g)

            	
              in
                the event that you are required to disclose such information or material,
                then, as soon as you become aware of this obligation to disclose,
                you will
                provide Aspreva with prompt written notice so that Aspreva may seek
                a
                protective order or other appropriate remedy and/or waive compliance
                with
                the provisions of this Agreement;

            

    

     

    
      	 	
              (h)

            	
              if
                Aspreva agrees that the disclosure is required by law, it will give
                you
                written authorization to disclose the information for the required
                purposes only;

            

    

     

    
      	 	
              (i)

            	
              if
                Aspreva does not agree that the disclosure is required by law, this
                Agreement will continue to apply, except to the extent that a Court
                of
                competent jurisdiction orders otherwise;
                and

            

    

     

    
      	 	
              (j)

            	
              if
                a protective order or other remedy is not obtained or if compliance
                with
                this Agreement is waived, you will furnish only that portion of the
                Confidential Information that is legally required and will exercise
                all
                reasonable efforts to obtain confidential treatment of such Confidential
                Information.

            

    

     

    
      	
              4.

            	
              ASSIGNMENT
                OF INTELLECTUAL PROPERTY
                RIGHTS

            

    

     

    
      	
              4.1

            	
              Notice
                of Invention.
                You agree to promptly and fully inform Aspreva of all your Work Product,
                whether or not patentable, throughout the course of your involvement,
                in
                any capacity, with Aspreva, whether or not developed before or after
                your
                execution of this Agreement. On your ceasing to be employed by Aspreva
                for
                any reason whatsoever, you will immediately deliver up to Aspreva
                all of
                your Work Product. You further agree that all of your Work Product
                shall
                at all times be the Confidential Information of
                Aspreva.

            

    

     

    
      	
              4.2

            	
              Assignment
                of Rights.
                Subject only to those exceptions set out in Exhibit A hereto, you
                will
                assign, and do hereby assign, to Aspreva or, at the option of Aspreva
                and
                upon notice from Aspreva, to Aspreva’s designee, your entire right, title
                and interest in and to all of your Work Product during your involvement,
                in any capacity, with Aspreva and all other rights and interests
                of a
                proprietary nature in and associated with your Work Product, including
                all
                patents, patent applications filed and other registrations granted
                thereon. To the extent that you retain or acquire legal title to
                any such
                rights and interests, you hereby declare and confirm that such legal
                title
                is and will be held by you only as trustee and agent for Aspreva.
                You
                agree that Aspreva’s rights hereunder shall attach to all of your Work
                Product, notwithstanding that it may be perfected or reduced to specific
                form after you have terminated your relationship with Aspreva. You
                further
                agree that Aspreva’s rights hereunder are worldwide rights and are not
                limited to Canada, but shall extend to every country of the
                world.

            

    

     

    
      	
              4.3

            	
              Moral
                Rights.
                Without limiting the foregoing, you irrevocably waive any and all
                moral
                rights arising under the Copyright Act (Canada), as amended, or any
                successor legislation of similar force and effect or similar legislation
                in other applicable jurisdictions or at common law that you may have
                with
                respect to your Work Product, and agree never to assert any moral
                rights
                which you may have in your Work Product, including, without limitation,
                the right to the integrity of such Work Product, the right to be
                associated with the Work Product, the right to restrain or claim
                damages
                for any distortion, mutilation or other modification or enhancement
                of the
                Work Product and the right to restrain the use or reproduction of
                the Work
                Product in any context and in connection with any product, service,
                cause
                or institution, and you further confirm that Aspreva may use or alter
                any
                such Work Product as Aspreva sees fits in its absolute
                discretion.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              4.4

            	
              Goodwill.
                You hereby agree that all goodwill you have established or may establish
                with clients, customers, suppliers, principals, shareholders, investors,
                collaborators, strategic partners, licensees, contacts or prospects
                of
                Aspreva relating to the business or affairs of Aspreva (or of its
                partners, subsidiaries or affiliates), both before and after the
                Effective
                Date, shall, as between you and Aspreva, be and remain the property
                of
                Aspreva exclusively, for Aspreva to use, alter, vary, adapt and exploit
                as
                Aspreva shall determine in its
                discretion.

            

    

     

    
      	
              4.5

            	
              Assistance.
                You hereby agree to reasonably assist Aspreva, at Aspreva’s request and
                expense, in:

            

    

     

    
      	 	
              (a)

            	
              making
                patent applications for your Work Product, including instructions
                to
                lawyers and/or patent agents as to the characteristics of your Work
                Product in sufficient detail to enable the preparation of a suitable
                patent specification, to execute all formal documentation incidental
                to an
                application for letters patent and to execute assignment documents
                in
                favour of Aspreva for such
                applications;

            

    

     

    
      	 	
              (b)

            	
              making
                applications for all other forms of intellectual property registration
                relating to your Work Product;

            

    

     

    
      	 	
              (c)

            	
              prosecuting
                and maintaining the patent applications and other intellectual property
                relating to your Work Product; and

            

    

     

    
      	 	
              (d)

            	
              registering,
                maintaining and enforcing the patents and other intellectual property
                registrations relating to your Work
                Product.

            

    

     

    
      	
              4.6

            	
              Assistance
                with Proceedings.
                You further agree to reasonably assist Aspreva, at Aspreva’s request and
                expense, in connection with any defence to an allegation of infringement
                of another person’s intellectual property rights, claim of invalidity of
                another person’s intellectual property rights, opposition to, or
                intervention regarding, an application for letters patent, copyright
                or
                trademark or other proceedings relating to intellectual property
                or
                applications for registration
                thereof.

            

    

     

    
      	
              5.

            	
              GENERAL

            

    

     

    
      	
              5.1

            	
              Term
                and Duration of Obligation.
                The term of this Agreement is from the Effective Date and terminates
                on
                the date that you are no longer working at or for Aspreva. Except
                as
                otherwise agreed in a written instrument signed by Aspreva, Article
                2
                shall survive the termination of this Agreement, including your
                obligations of confidentiality and to return Confidential Information,
                and
                shall endure, with respect to each item of Confidential Information,
                for
                so long as those items fall within the definition of Confidential
                Information. Sections 1.1, 3.2, 3.3, 3.4, 3.5, 3.6, 4.1, 4.2, 4.4,
                4.5,
                4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12 and 4.13 shall also survive
                the
                termination of this Agreement.

            

    

     

    
      	
              5.2

            	
              Binding
                Nature of Agreement.
                This Agreement is not assignable by you. You agree that this Agreement
                shall be binding upon your heirs and
                estate.

            

    

     

    
      	
              5.3

            	
              Non-Competition.
                While you are an employee of Aspreva, you will not provide services
                to or
                enter into a contract of employment or service in any capacity for
                any
                business which is in any way competitive with Aspreva’s Business without
                the prior written consent of
                Aspreva.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              5.4

            	
              No
                Conflicting Obligations.
                You represent and warrant that you will not use or disclose to other
                persons at Aspreva information that (i) constitutes a trade secret
                of
                persons other than Aspreva during your employment at Aspreva, or
                (ii)
                which is confidential information owned by another person. You represent
                and warrant that you have no agreements with or obligations to others
                with
                respect to the matters covered by this Agreement or concerning the
                Confidential Information that are in conflict with anything in this
                Agreement.

            

    

     

    
      	
              5.5

            	
              Equitable
                Remedies.
                You acknowledge and agree that a breach by you of any of your obligations
                under this Agreement would result in damages to Aspreva that could
                not be
                adequately compensated by monetary award. Accordingly, in the event
                of any
                such breach by you, in addition to all other remedies available to
                Aspreva
                at law or in equity, Aspreva shall be entitled as a matter of right
                to
                apply to a court of competent jurisdiction for such relief by way
                of
                restraining order, injunction, decree or otherwise, as may be appropriate
                to ensure compliance with the provisions of this Agreement, without
                having
                to prove damages to the court.

            

    

     

    
      	
              5.6

            	
              Publicity.
                You shall not, without the prior written consent of Aspreva, make
                or give
                any public announcements, press releases or statements to the public
                or
                the press regarding your Work Product or any Confidential
                Information.

            

    

     

    
      
        	
                5.7

              	
                Severability.
                  If any covenant or provision of this Agreement or of a section
                  of this
                  Agreement is determined by a court of competent jurisdiction to
                  be void or
                  unenforceable in whole or in part, then such void or unenforceable
                  covenant or provision shall not affect or impair the enforceability
                  or
                  validity of the balance of the section or any other covenant or
                  provision.

              

      

       

    

    
      	
              5.8

            	
              Time
                of Essence/No Waiver.
                Time is of the essence hereof and no waiver, delay, indulgence, or
                failure
                to act by Aspreva regarding any particular default or omission by
                you
                shall affect or impair any of Aspreva’s rights or remedies regarding that
                or any subsequent default or omission that is not expressly waived
                in
                writing, and in all events time shall continue to be of the essence
                without the necessity of specific
                reinstatement.

            

    

     

    
      	
              5.9

            	
              Further
                Assurances.
                The parties will execute and deliver to each other such further
                instruments and assurances and do such further acts as may be required
                to
                give effect to this Agreement.

            

    

     

    
      	
              5.10

            	
              Notices.
                All notices and other communications that are required or permitted
                by
                this Agreement must be in writing and shall be hand delivered or
                sent by
                express delivery service or certified or registered mail, postage
                prepaid,
                or by facsimile transmission (with written confirmation copy by registered
                first-class mail) to the parties at the addresses indicated
                below.

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If
      to Aspreva:

     

    Aspreva
      Pharmaceuticals Corporation

    1203
      - 4464 Markham St. Victoria BC V8Z 7X8

    Attn: Farris,
      Vaughan, Wills & Murphy

    26th
      Floor, 700 West Georgia Street

    Vancouver,
      BC V7Y 1B3

     

    If
      to:

       Dr
      Usman
      Azam

    3622
      Green ridge Road

    Furlong,
      Pennsylvania, 18925, USA

     

    Any
      such notice shall be deemed to have been received on the earlier of the date
      actually received or the date five (5) days after the same was posted or sent.
      Either party may change its address or its facsimile number by giving the other
      party written notice, delivered in accordance with this Section
      4.10.

     

     

     

    
      	
              5.11

            	
              Amendment.
                No amendment, modification, supplement or other purported alteration
                of
                this Agreement shall be binding unless it is in writing and signed
                by you
                and by Aspreva.

            

    

     

    
      	
              5.12

            	
              Entire
                Agreement.
                This Agreement supersedes all previous dealings, understandings,
                and
                expectations of the parties and constitutes the whole agreement with
                respect to the matters contemplated hereby, and there are no
                representations, warranties, conditions or collateral agreements
                between
                the parties with respect to such transactions except as expressly
                set out
                herein.

            

    

     

    
      	
              5.13

            	
              Governing
                Law.
                This Agreement shall be governed by and interpreted in accordance
                with the
                laws of the Province of British Columbia and applicable laws of Canada
                and
                the parties hereto attorn to the exclusive jurisdiction of the provincial
                and federal courts of such
                province.

            

    

     

    
      	
              5.14

            	
              Independent
                Legal Advice.
                You hereby acknowledge that you have obtained or have had an opportunity
                to obtain independent legal advice in connection with this Agreement,
                and
                further acknowledge that you have read, understand, and agree to
                be bound
                by all of the terms and conditions contained
                herein.

            

    

     

    Acceptance

     

    If
      the foregoing terms and conditions are acceptable to you, please indicate your
      acceptance of and agreement to the terms and conditions of this Agreement by
      signing below on this letter and on the enclosed copy of this letter in the
      space provided and by returning the enclosed copy so executed to us. Your
      execution and delivery to Aspreva of the enclosed copy of this letter will
      create a binding agreement between us.

     

    Thank
      you for your cooperation in this matter.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Yours
      truly,

     

    ASPREVA
      PHARMACEUTICALS CORPORATION

     

    

     

    By:     /s/
      Richard Glickman   

     

     

     

    Accepted
      and agreed as of the January 3rd,
      2007

     

    
      	/s/
              David B. Robinson	 	
              /s/
                Usman Azam

            
	
              Witness
                Signature

            	 	
              Signature
                of employee 

            
	 	 	 
	David
              B. Robinson	 	 
	
              Witness
                Name

            	 	 
	 	 	 
	Physician	 	 
	
              Occupation

            	 	 
	 	 	 
	8
              Chukka Way	 	 
	Far
              Hills, NJ	 	 
	07931	 	 
	
              Address

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