Document:

Exhibit 10.2

 

 

FRAMEWORK AGREEMENT

FORWARD PHARMA A/S

 

BETWEEN

 

Nordic Biotech K/S

 

Nordic Biotech Opportunity Fund K/S

 

BML Healthcare I, L.P.

 

NB FP Investment K/S

 

NB FP Investment II K/S

 

AND

 

Forward Pharma A/S

 

DATED 11/7/2014

 

 

CONTENTS

 

	
1.
    	
Definitions
    	
7
    
	
2.
    	
Purpose   and general provisions
    	
10
    
	
3.
    	
Timeline
    	
11
    
	
4.
    	
Shareholder   items
    	
12
    
	
5.
    	
Board   items
    	
17
    
	
6.
    	
Over-Allotment   Option
    	
21
    
	
7.
    	
General   power of attorney
    	
21
    
	
8.
    	
Confidentiality
    	
22
    
	
9.
    	
Assignment
    	
23
    
	
10.
    	
Costs   and expenses
    	
23
    
	
11.
    	
Governing   law and arbitration
    	
23
    
	
12.
    	
Miscellaneous
    	
24
    

 

2

 

	
APPENDICES
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Appendix   3.1:
    	
 
    	
Step-plan
    
	
 
    	
 
    	
 
    
	
Appendix   4.1.1:
    	
 
    	
Minutes   of general meeting (increase of share capital pursuant to the Investment   Agreement)
    
	
 
    	
 
    	
 
    
	
Appendix   4.2.1:
    	
 
    	
Minutes   of general meeting (conversion of Bridge Loan and exercise of BNOPP Warrant)
    
	
 
    	
 
    	
 
    
	
Appendix   4.3.1 (a):
    	
 
    	
2014   omnibus equity incentive compensation plan
    
	
 
    	
 
    	
 
    
	
Appendix   4.3.1 (b):
    	
 
    	
Draft   minutes of general meeting (authorisation of the Board to issue warrants and   shares to employees etc. and adoption of 2014 omnibus equity compensation   plan)
    
	
 
    	
 
    	
 
    
	
Appendix   4.4.1:
    	
 
    	
Draft   minutes of general meeting (authorisations of the Board to issue new shares   to be subscribed for at the IPO and in case of exercise of the Over-Allotment   Option)
    
	
 
    	
 
    	
 
    
	
Appendix   4.5.1 (a):
    	
 
    	
Draft   minutes of general meeting (amendments to the Articles of Association,   including among others conversion of Bridge Loan II and elimination of share   classes)
    
	
 
    	
 
    	
 
    
	
Appendix   4.5.1 (b):
    	
 
    	
Draft   articles of association following the general meeting referred to in clause   4.5.1
    
	
 
    	
 
    	
 
    
	
Appendix   4.5.1 (c):
    	
 
    	
Example   illustrating the implementation of items (i)-(v) in clause 4.5.1
    
	
 
    	
 
    	
 
    
	
Appendix   4.5.2:
    	
 
    	
Proxies   from the Shareholders to Jakob Mosegaard Larsen, attorney-at-law, in relation   to the general meeting referred to in clause 4.5.1
    
	
 
    	
 
    	
 
    
	
Appendix   4.5.4:
    	
 
    	
Example   of the application of conversion principle
    

 

3

 

	
Appendix   5.1.1:
    	
 
    	
Draft   minutes of Board meeting (employment of CEO and CFO, adoption of 2014 omnibus   equity compensation plan, and issuance of warrants and grant of rights to   deferred shares)
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(a):
    	
 
    	
Draft   rules of procedures for the Board, including guidelines for the executive   management
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(b):
    	
 
    	
Draft   internal rules on trading securities issued by the Company
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(c):
    	
 
    	
Draft   internal rules on dissemination of inside information
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(d):
    	
 
    	
Draft   list of insiders
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(e):
    	
 
    	
Draft   indemnification agreement
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(f):
    	
 
    	
D&O   and POSI insurance terms
    
	
 
    	
 
    	
 
    
	
Appendix   5.2.1(g):
    	
 
    	
Draft   minutes of Board meeting (adoption of internal rules and   execution/authorization of execution of certain agreements)
    
	
 
    	
 
    	
 
    
	
Appendix   5.3.1(a):
    	
 
    	
Draft   Underwriting Agreement
    
	
 
    	
 
    	
 
    
	
Appendix   5.3.1(b):
    	
 
    	
Draft   Deposit Agreement
    
	
 
    	
 
    	
 
    
	
Appendix   5.3.1(c):
    	
 
    	
Draft   minutes of Board meeting (exercise of authorisation to issue new shares to be   subscribed for at the IPO and approval of certain documents)
    
	
 
    	
 
    	
 
    
	
Appendix   5.4.1:
    	
 
    	
Draft   minutes of Board meeting (approval of IPO Subscription Price and IPO Offer   Price and allocation of American Depositary Shares)
    
	
 
    	
 
    	
 
    
	
Appendix   5.5.1:
    	
 
    	
Post-IPO   Articles of Association
    
	
 
    	
 
    	
 
    
	
Appendix   5.6.1:
    	
 
    	
Draft   letter to warrant holders (information about the revised articles of   association of the Company)
    

 

4

 

	
Appendix   9.1
    	
 
    	
Lock-up   agreements
    

 

5

 

FRAMEWORK AGREEMENT

 

ENTERED INTO BETWEEN

 

Nordic Biotech K/S

Company registration no. 26290724

Østergade 24A, first floor

1100 Copenhagen K

Denmark

(“NB”)

 

Nordic Biotech Opportunity Fund K/S

Company registration no. 31262488

Østergade 24A, first floor

1100 Copenhagen K

Denmark

(“NBOPP”)

 

NB FP Investment K/S

Company registration no. 34902038

Østergade 24A, first floor

1100 Copenhagen K

Denmark

(“NBFPI”)

 

NB FP Investment II K/S

Company registration no. 35867899

Østergade 24A, first floor

1100 Copenhagen K

Denmark

(“NBFPI2”)

 

6

 

BML Healthcare I, L.P.

c/o Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, County of New Castle, Delaware

United States

(“BML”)

 

AND

 

Forward Pharma A/S

Company registration no. 28865880

Østergade 24A, first floor

1100 Copenhagen K

Denmark.

(“Company”)

 

1.             DEFINITIONS

 

1.1          In this Agreement the following words and expressions shall have the following meanings, unless the context otherwise requires:

 

	
 
    	
American   Depositary Shares
    	
 
    	
American depositary shares created under the Deposit Agreement   representing rights with respect to shares in the Company deposited with the   Depositary under the Deposit Agreement.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Agreement
    	
 
    	
This framework agreement, including appendices.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Articles of   Association
    	
 
    	
The articles of association of the Company dated 20 June 2014.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Board
    	
 
    	
The board of directors of the Company.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Bridge Loan
    	
 
    	
The convertible loan provided by NBOPP to the Company pursuant to the   Loan Note.
    

 

7

 

	
 
    	
Bridge Loan II
    	
 
    	
The convertible loan provided by NBFPI2 to the Company pursuant to   the Loan Note II.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Deposit Agreement
    	
 
    	
The deposit agreement contemplated to be completed between, among   others, the Company and the Depositary (as depositary) as set out in clause   5.3.1.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Depositary
    	
 
    	
Bank of New York Mellon.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Investment Agreement
    	
 
    	
The investment agreement entered into between the Shareholders (other   than NBFPI2) and the Company, dated 19 January 2013.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
IPO
    	
 
    	
Has the meaning set out in clause 2.1.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
IPO Offer Price
    	
 
    	
The price at which American Depositary Shares are sold by the   Underwriters to eligible investors at the IPO.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
IPO Subscription Price
    	
 
    	
The IPO Offer Price minus the underwriting discount/commission of the   Underwriters (excluding any subscription of shares (to be delivered in the   form of American Depositary Shares) pursuant to the Over-Allotment Option).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Loan Note
    	
 
    	
The convertible loan note entered into between the Company and NBOPP   in October 2013 with a principal amount of DKK 13,775,000.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Loan Note II
    	
 
    	
The convertible loan note dated 30 May 2014 entered into between   the Company and NBFPI2 with a principal amount of EUR 8,350,000.
    

 

8

 

	
 
    	
NBOPP Warrant
    	
 
    	
NBOPP’s right to subscribe for up to 138.010 class A shares in the   Company in accordance with clause 2.2 of the shareholders agreement entered   into between the Shareholders (other than NBFPI2) and the Company, dated 19   January 2013.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Over-Allotment Option
    	
 
    	
An over-allotment option to be granted by the Company to the   Underwriters pursuant to the Underwriting Agreement to subscribe for (or have   the Depositary subscribe for) additional new shares (to be delivered in the   form of American Depositary Shares) in a number equal to up to 15 per cent of   the initial offering size. The Over-Allotment Option may be exercised fully   or in part, on multiple occasions within 30 calendar days after the date of   the Underwriting Agreement. The exercise, if any, of the Over-Allotment   Option shall take place at the IPO Subscription Price.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Parties
    	
 
    	
The Shareholders, NBFPI2, the Company, and the members of the Board,   collectively.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Post-IPO Articles of Association
    	
 
    	
The articles of association expected to come in force immediately   upon closing and settlement of the IPO.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Shareholders
    	
 
    	
NB, NBOPP, NBFPI, BML and (automatically upon conversion of the   Bridge Loan II into shares in the Company) NBFPI2, collectively.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Shareholders’ Agreement
    	
 
    	
The shareholders’ agreement dated 30 May 2014 entered into   between NB, NBOPP, NBFPI, NBFPI2 and BML regarding the Company.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Underwriters
    	
 
    	
Leerink Partners LLC and each of the other underwriters named in   schedule A to the Underwriting Agreement, collectively.
    

 

9

 

	
 
    	
Underwriting Agreement
    	
 
    	
The underwriting agreement to be completed between the Company and   the Underwriters as set out in clause 5.3.1.
    

 

2.             PURPOSE AND GENERAL PROVISIONS

 

2.1          The Company is preparing an initial public offering of American Depositary Shares to be listed on the NASDAQ Global Market, New York (the “IPO”). As part of said preparation a series of steps, implying among others the adoption of changes to the Company’s capital structure and Articles of Association must be completed.

 

2.2          It is the purpose of this Agreement to set forth the terms and conditions which shall apply to the implementation of the steps referred to in clause 2.1. The Agreement shall be binding not only to the Shareholders but also to the Company and the members of the Board. The members of the Board shall confirm their own and the Company’s adherence to the Agreement by co-signing the Agreement.

 

2.3          Each of the Shareholders shall vote in favour of all general meeting resolutions and any other resolutions and procure each of its elected members of the Board to give effect to this Agreement, including that each of the Shareholders waive any and all pre-emption rights and similar rights which otherwise might prevent any issue of shares contemplated under this Agreement. Correspondingly, the members of the Board and the Company shall give full effect to this Agreement.

 

2.4          Each of the Parties shall at its own cost, on being reasonably required to do so by any of the other Parties, perform, or procure the performance of, all further acts, and execute and deliver, or procure the execution and delivery, of all documents which the requesting Party may reasonably consider necessary or desirable for giving full effect to this Agreement or for securing the full benefit of the rights, powers and remedies given to the Parties under this Agreement.

 

10

 

3.             TIMELINE

 

3.1          The high level timetable below outlines indicative dates for the implementation of the steps referred to in clause 2.1, while a more detailed, indicative step-plan is attached to this Agreement as appendix 3.1:

 

	
 
    	
Item
    	
 
    	
Date
    	
 
    	
Clause
    
	
 
    	
Capital   increase pursuant to the Investment Agreement
    	
 
    	
13 March 2014
    	
 
    	
4.1
    
	
 
    	
Conversion   of the Bridge Loan and exercise of the NBOPP Warrant
    	
 
    	
17 March 2014
    	
 
    	
4.2.1
    
	
 
    	
Conclusion   of lock-up agreements by the Share-holders, members of the Board and the   executive management
    	
 
    	
8 April 2014
    	
 
    	
9.1
    
	
 
    	
Conclusion   of Loan Note II
    	
 
    	
30 May 2014
    	
 
    	
4.2.2
    
	
 
    	
Authorisation   of the Board to issue warrants and shares to employees etc.
    	
 
    	
July 2014
    	
 
    	
4.3
    
	
 
    	
Employment   of CEO and CFO, adoption of compensation plan and issuance of warrants
    	
 
    	
July 2014
    	
 
    	
5.1
    
	
 
    	
Authorisation   of the Board to issue new shares (to be delivered in the form of American   Depositary Shares) to be subscribed for at the IPO and in case of exercise of   the Over-Allotment Option
    	
 
    	
July 2014
    	
 
    	
4.4
    
	
 
    	
Adoption   of internal rules and guidelines and execution/authorization of   execution of certain agreements
    	
 
    	
July/August 2014
    	
 
    	
5.2
    
	
 
    	
Exercise   of authorisation to issue new shares to be subscribed for at the IPO (in the   form of American Depositary Shares) and approval of certain documents
    	
 
    	
July/August 2014
    	
 
    	
5.3
    
	
 
    	
Amendments   to the Articles of Association, including conversion of Bridge Loan II and   elimination of share classes
    	
 
    	
August 2014
    	
 
    	
4.5.1
    
	
 
    	
Determination   of binding IPO Subscription Price and IPO Offer Price and allocation of   American Depositary Shares
    	
 
    	
August 2014
    	
 
    	
5.4
    

 

11

 

	
 
    	
Termination   of the Shareholders Agreement
    	
 
    	
August 2014
    	
 
    	
4.6
    
	
 
    	
Dispatch   of letter to warrant holders
    	
 
    	
August/September 2014
    	
 
    	
5.6
    

 

4.             SHAREHOLDER ITEMS

 

4.1          Capital increase pursuant to the Investment Agreement

 

4.1.1       On 13 March 2014 NBFPI has subscribed for a total of 8,841 B shares in the Company against payment of DKK 10,408,951 as set out in the minutes of extraordinary general meeting in the Company attached hereto as appendix 4.1.1 and in accordance with the Investment Agreement.

 

4.1.2       Following the subscription of shares, payment of the subscription price and registration of the capital increase with the Danish Business Authority, which occurred on 27 March 2014, in accordance with clause 4.1.1 above, no further subscription of shares may take place pursuant to the Investment Agreement.

 

4.2          Bridge loans and exercise of the NBOPP Warrant

 

4.2.1       On 17 March 2014 NBOPP has converted the Bridge Loan to share capital in the Company in accordance with clause 3.3 of the Loan Note and as set out in the minutes of extraordinary general meeting in the Company attached hereto as appendix 4.2.1. As appears from the minutes, the conversion of the principal amount, DKK 13,775,000, entitled NBOPP to subscribe for 137,750 class A shares. The remaining 260 class A shares, which NBOPP was entitled to subscribe for under the NBOPP Warrant, were subscribed for by cash contribution. At the date of the conversion, the Company paid the accrued, unpaid interest on the Bridge Loan to NBOPP, in the amount of DKK 1,048,430.

 

4.2.2       On 30 May 2014 the Company and NBFPI2 have entered into a convertible loan agreement (Loan Note II) regarding NBFPI2’s grant of a convertible loan facility to the Company in the principal amount of EUR 8,350,000, convertible into ordinary

 

12

 

shares in the Company upon the occurrence of an IPO on or before 31 December 2014. The Loan Note II has been approved by all Shareholders.

 

4.3          Authorisation of the Board to issue warrants and shares to employees etc. and approval of compensation plan

 

4.3.1       In July 2014 (or at such other point in time as decided by the Board) an extraordinary general meeting shall be held in the Company on which it is resolved to adopt the draft 2014 omnibus equity incentive compensation plan attached hereto as appendix 4.3.1 (a) and authorise the Board in two separate authorizations to

 

(i)            issue up to 120,000 warrants, each warrant entitling the holder to subscribe for up to, and including, nominally DKK 120,000 A shares, to employees, members of the Board, members of the management, and consultants of the Company and/or its subsidiaries; and

 

(ii)           issue and up to nominally DKK 120,000 A shares to employees, members of the Board, members of the management, and consultants of the Company and/or its subsidiaries.

 

A copy of the draft minutes of the extraordinary general meeting is attached hereto as appendix 4.3.1 (b).

 

4.4          Authorisation of the Board to issue new shares to be subscribed for at the IPO

 

4.4.1       In July 2014 (or at such other point in time as decided by the Board) an extraordinary general meeting shall be held in the Company on which it is resolved to authorise the Board in two separate authorizations to

 

(i)            issue new shares without pre-emption rights for existing shareholders and to be subscribed for by the Depositary at the request of the Underwriters at the IPO (and delivered to the Underwriters in the form of American Depositary Shares); and

 

13

 

(ii)           issue new shares without pre-emption rights for existing shareholders and to be subscribed for by the Depositary at the request of the Underwriters (and delivered to the Underwriters in the form of American Depositary Shares) pursuant to the Over-Allotment Option provided by the Company to the Underwriter, cf. clause 6,

 

in accordance with the draft minutes attached hereto as appendix 4.4.1.

 

4.4.2       The authorization provided to the Board pursuant to clause 4.4.1(i) may and shall be used by the Board only to issue shares to be subscribed for by the Depositary at the request of the Underwriters (and delivered to the Underwriters in the form of American Depositary Shares) at the IPO, whereas the authorization provided to the Board pursuant to clause 4.4.1(ii) may and shall be used by the Board only to issue shares to be subscribed for by the Depositary at the request of the Underwriters (and delivered to the Underwriters in the form of American Depositary Shares) pursuant to the Over-Allotment Option provided by the Company to the Underwriters, cf. clause 6. The authorizations may not be used for any other purposes.

 

4.5          Amendments to the Articles of Association, including conversion of Bridge Loan II and elimination of share classes

 

4.5.1       Immediately prior to the Board’s approval of the IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares to eligible investors (which shall be subject to satisfaction of the conditions for admission to trading set by the NASDAQ Global Market, New York, and the conditions set forth in the Underwriting Agreement), an extraordinary general meeting shall be held in the Company on which it is, among others, resolved to

 

(i)            issue class A bonus shares to the class B shareholders;

 

(ii)           convert all shares in the Company to one share class;

 

(iii)          convert any bridge financing obtained by the Company, including the Bridge Loan II, into shares in the Company with a discount of up to 15 per cent relative to the IPO Offer Price;

 

14

 

(iv)          issue bonus shares to all Shareholders to such extent that the undiluted nominal share capital of the Company will amount to DKK 3,333,333 (or such other amount as decided by the Board), excluding, however, any shares that may be issued pursuant to exercise of warrants;

 

(v)           carry out a split of the shares to the effect that each share of nominally DKK 1.00 is split into 20 shares of nominally DKK 0.05 (or such other number of shares as decided by the Board) after which there will be 66,666,660 shares in the Company of nominally DKK 0.05 (or such other number of shares as decided by the Board);

 

(vi)          cancel the Board’s authorization to issue up to 150,000 class B shares pursuant to article 4Q of the Articles of Association;

 

(vii)         authorise the Board to resolve to distribute extraordinary dividends;

 

(viii)        authorise the Board to have the Company acquire its own shares (directly or through acquisition of American Depositary Shares which are then surrendered to the Depository enabling the Company to take delivery of the underlying shares represented by the American Depository Shares, which can then be cancelled at a general meeting);

 

(ix)          authorise the Board to issue new shares without pre-emption rights for existing shareholders at a price determined by the Board and which may be lower than the market price; and

 

(x)           make certain other changes to the Articles of Association,

 

all in accordance with the draft minutes attached hereto as appendix 4.5.1(a) and the draft articles of association attached hereto as appendix 4.5.1(b).

 

The Board shall cause the resolutions set out in the attached minutes (appendix 4.5.1(a)) and the attached articles of association (appendix 4.5.1(b)) to be registered with the Danish Business Authority as soon as possible after the holding of the general meeting.

 

15

 

An example illustrating the implementation of items (i)-(v) above is attached hereto as appendix 4.5.1(c).

 

4.5.2       The Shareholders have signed the proxies attached hereto as appendix 4.5.2, which authorize Jakob Mosegaard Larsen, attorney-at-law, (with a right of substitution) to attend and vote on their behalf on the extraordinary general meeting in the Company referred to in clause 4.5.1 above in accordance with the draft minutes also referred to in clause 4.5.1 above and attached hereto as appendix 4.5.1(a).

 

4.5.3       The Parties agree that the extraordinary general meeting in the Company referred to in clause 4.5.1 shall only be filed with the Danish Business Authority after and subject to the Board’s approval of the number of shares to be issued, the IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares to eligible investors, cf. clause 5.4. If such approval and allocation do not occur, no filing with the Danish Business Authority shall take place and all decisions made at the extraordinary general meeting in the Company referred to in clause 4.5.1 shall be null and void, to the extent permissible under Danish law.

 

4.5.4       The issue of class A bonus shares to the class B shareholders and conversion of all shares in the Company to one share class referred to in sub-clause 4.5.1(i) and (ii) above shall be implemented under the observance of the following principle: The class B shares in the Company shall be converted to class A shares (common shares) in the Company by application of a ratio which reflects a preference payment on the class B shares of (1.375*2.73) = 3.75375 times the money paid in on the class B shares.

 

An example of the application of said principle (including fictive numbers chosen for illustration purposes only) is attached hereto as appendix 4.5.4.

 

4.6          Termination of Shareholders Agreement

 

4.6.1       Upon the Board’s approval of the number of shares to be issued, the IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares to eligible investors, and satisfaction of the conditions for admission to trading set by the NASDAQ Global Market, New York, the Shareholders Agreement shall

 

16

 

automatically terminate without further notice or other action required by the Shareholders, provided however that the Shareholders and all warrant holders shall continue to be bound be the lock-up provision set forth in clause 7.2 of the Shareholders Agreement, except to the extent separate lock-up undertakings (attached hereto as appendix 8.1) applies to such Shareholders and warrant holders, in which case such separate lock-up undertakings shall replace the lock-up provisions set forth in clause 7.2 of the Shareholders Agreement.

 

5.             BOARD ITEMS

 

5.1          Employment of CEO/CFO and adoption of compensation plan

 

5.1.1       In July 2014 (or at such other point in time as decided by the Board) a board meeting shall be held in the Company on which it is resolved to

 

(i)            approve employments of a CEO and CFO and to conclude employment agreements with the CEO and CFO;

 

(ii)           adopt the draft 2014 omnibus equity incentive compensation plan attached hereto as appendix 4.3.1 (a); and

 

(iii)          issue warrants and grant a right to deferred shares under the omnibus equity incentive compensation plan to each of the CEO and CFO based on the authorisation of the Board in clause 4.3.1 and to conclude pertaining Award Agreements (as defined in the omnibus incentive compensation plan) with each of the CEO and CFO.

 

A copy of the draft minutes of the board meeting is attached hereto as appendix 5.1.1.

 

17

 

5.2          Adoption of internal rules and guidelines and execution of certain agreements

 

5.2.1       In July 2014 (or at such other point in time as decided by the Board) a board meeting shall be held in the Company on which it is resolved to

 

(i)            adopt the draft rules of procedures for the Board, including guidelines for the executive management, attached hereto as appendix 5.2.1 (a);

 

(ii)           adopt the draft internal rules to prevent the misuse of inside information attached hereto as appendices 5.2.1(b),(c) and (d);

 

(iii)          approve and execute the indemnification agreements with all members of the Board and the executive management substantially in the form attached hereto as appendix 5.2.1(e); and

 

(iv)          approve the taking out oft prospectus liability insurance and D&O insurance substantially in the form attached hereto as appendix 5.2.1(f),

 

all in accordance with the draft minutes attached hereto as appendix 5.2.1(g).

 

5.2.2       It is noted that

 

·              the rules of procedures for the Board, including guidelines for the executive management, and the service agreement referred to in clause 5.2.1 above, will only enter into force subject to and with effect from the Board’s approval of the number of shares to be issued, the IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares to eligible investors, and satisfaction of the conditions for admission to trading set by the NASDAQ Global Market, New York;

 

·              the internal rules of procedures to prevent the misuse of inside information referred to in clause 5.2.1 above, will only enter into force subject to and with effect from the date where the Company has submitted its final application for admission to trade on NASDAQ Global Market; and

 

18

 

·              the indemnification agreements, the prospectus liability insurance and the D&O insurance referred to in clause 5.2.1 above will only enter into force subject to the Board’s approval of the number of shares to be issued, the IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares to eligible investors, and satisfaction of the conditions for admission to trading set by the NASDAQ Global Market, New York and the conditions set forth in the Underwriting Agreement, but with retroactive effect from the first public filing of the prospectus.

 

5.2.3       The Shareholders hereby expressly confirm that indemnification agreements (substantially in the form attached hereto as appendix 5.2.1 (e)) shall be concluded between the Company and the members of the Board and the management board in accordance with clause 5.2.1 and waive any and all objects in relation the Board’s competence to act on behalf of the Company in accordance with clause 5.2.1.

 

5.3          Exercise of authorisation to issue new shares to be subscribed for at the IPO and approval of certain documents

 

5.3.1       In July/August 2014 (or at such other point in time as decided by the Board) a board meeting shall be held in the Company on which it is resolved to

 

(i)            exercise the authorization granted to the Board to issue new shares without pre-emption rights for existing shareholders and to be subscribed for by the Underwriters or the Depositary at the request of the Underwriters (and delivered to the Underwriters in the form of American Depositary Shares) at the IPO;

 

(ii)           approve the F-1 Registration Statement (including filing range and number of American Depositary Shares offered) in final form, the filing hereof with the US Securities and Exchange Commission, and any other offering materials;

 

(iii)          approve and authorize the execution of the listing agreement to be concluded between the Company and NASDAQ;

 

19

 

(iv)          approve and authorize the execution of the transfer agreement to be concluded with Computershare or Danske Bank, if any;

 

(v)           approve and authorize the execution of the Underwriting Agreement, substantially in the form attached hereto as appendix 5.3.1(a);

 

(vi)          approve and authorize the execution of a deposit agreement with BNY Mellon regarding deposits of shares and issue of American Depositary Shares, substantially in the form attached hereto as appendix 5.3.1(b); and

 

(vii)         approve and/or execute all other documents necessary or desirable in relation to the foregoing,

 

all in accordance with the draft minutes attached hereto as appendix 5.3.1(c).

 

5.4          Determination of the number of shares to be issued, binding IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares

 

5.4.1       Upon completion of the subscription/book building period a board meeting shall be held in the Company on which the number of shares to be issued, the IPO Subscription Price and IPO Offer Price and the allocation of American Depositary Shares to eligible investors are approved in accordance with the draft minutes attached hereto as appendix 5.4.1. It is noted, that the Underwriters or the Depositary at the request of the Underwriters will subscribe for all of the shares in the Company offered in connection with the IPO and that the Depositary will deliver American Depositary Shares to the Underwriters, which will be allocated to the investors, all subject to the terms and conditions of the Underwriting Agreement and the Deposit Agreement.

 

5.5          Registration of Capital Increase and update of register of shareholders

 

5.5.1       Upon closing of the IPO scheduled to take place on T+3, the Board shall cause the capital increase and the new Post-IPO Articles of Association substantially in the form attached hereto as appendix 5.5.1, to be registered with the Danish Business

 

20

 

Authority as soon as the Company has received confirmation that the amount to be paid to the Company as payment for the shares subscribed for at the IPO has been credited and deposited in full on the agreed subscription bank account in accordance with the terms and conditions of the Underwriting Agreement and the Deposit Agreement. Further, the Board shall sign an updated copy of the register of shareholders of the Company reflecting the capital increase.

 

5.6          Letter to warrant holders

 

5.6.1       Following the adoption and registration with the Danish Business Authority of the amended articles of association attached hereto as appendix 4.5.1 (b), the Board shall procure that a letter, substantially in the form attached hereto as appendix 5.6.1, is sent to each person holding warrants to subscribe for shares in the Company informing such person about the amendments made to the warrant terms (by the amendment of the articles of association) and that such amendments are merely of a formal nature and do not imply any changes to the substance of the warrant terms.

 

6.             OVER-ALLOTMENT OPTION

 

6.1          The Underwriter will, in the Underwriting Agreement, be granted an option to subscribe for or have the Depositary subscribe for additional new shares (to be delivered by the Depositary in the form of American Depositary Shares) in a number equal to up to 15% of the initial offering size (the “Over-Allotment Option”). The Over-Allotment Option may be exercised fully or in part, on multiple occasions within 30 calendar days after the date of the Underwriting Agreement. The exercise of the Over-Allotment Option shall be made as an issue of new shares pursuant to an authorization to the Board as set out in clause 4.3 at the IPO Subscription Price.

 

7.             GENERAL POWER OF ATTORNEY

 

7.1          The Parties hereby irrevocably authorize Florian Schönharting (acting alone and with a right of substitution), in his sole discretion, to on behalf of each of the Parties (a) complete and make all such amendments as Florian Schönharting may reasonably

 

21

 

consider required or appropriate to the IPO structure, appendices to this Agreement prior to the Parties’ execution of said appendices, or otherwise and (b) perform, or procure the performance of, all further acts, and execute and deliver, or procure the execution and delivery, of all additional documents, certificates, notices, requests or other communications on behalf of each of the Parties (including but not limited to all appendices to this Agreement), which Florian Schönharting, in his sole discretion, may reasonably consider required or appropriate for giving full effect to this Agreement or for securing the full benefit of the rights, powers and remedies given to the Parties under this Agreement and the completion of the IPO.

 

7.2          In case of material breach of this Agreement by any of the Shareholders, Florian Schönharting (with a right of substitution) shall automatically be constituted the agent for such breaching Shareholder with respect to such Shareholder’s obligations pursuant to this Agreement, and each of the Shareholders hereby appoint Florian Schönharting (acting alone and with a right of substitution) as their true and lawful attorney to execute any documents on their behalf required in connection with this Agreement if any of them should become a breaching shareholder and undertake to ratify whatever Florian Schönharting (with a right of substitution) shall lawfully do pursuant to such power of attorney.

 

7.3          The Shareholders hereby waive any and all objects in relation the Board’s competence to act on behalf of the Company in any decision by the Board as contemplated by this Agreement and the attached draft minutes of board resolutions.

 

8.             CONFIDENTIALITY

 

8.1          The Parties agree that the terms and conditions of this Agreement, including its existence and the negotiations relating hereto, shall be considered confidential information and shall not be disclosed by the Parties to any third party except if such disclosure takes place with the consent of the other Parties or as set forth below in this clause 8.

 

8.2          Irrespective of clause 8.1, the Company may disclose such parts of the Agreement (including any appendices hereto) as it deems necessary or appropriate in any 

 

22

 

documentation to be filed by the Company to authorities and/or the NASDAQ Global Market in connection with the preparation and completion of the IPO.

 

8.3          Further, irrespective of of clause 8.1, any Party may disclose any information comprised by clause 8.1, (a) if and to the extent required by law or for the purpose of any judicial proceedings between the Parties; (b) if and to the extent required by any securities exchange or regulatory or governmental body to which that Party is subject or submits, wherever situated, whether or not the requirement for information has the force of law; and (c) to its professional advisers, investment committees, investors, board members, auditors and bankers.

 

9.             ASSIGNMENT

 

9.1          Irrespective of clause 7 in the Shareholders Agreement none of the shareholders shall be entitled to transfer or assign any part of their shareholdings in the Company prior to the IPO (or such point in time where the Parties have decided to discontinue the process towards the IPO). Following the IPO, any transfer of shares by the Shareholders shall take place in accordance with lock-up agreements attached hereto as appendix 9.1 and attached to the Underwriting Agreement.

 

9.2          None of the Shareholders shall be entitled to assign all or any part of its rights and obligations under this Agreement.

 

10.          COSTS AND EXPENSES

 

10.1        The Company shall pay all fees and expenses to Nielsen Nørager Law Firm LLP with respect to the drafting, negotiation and execution of this Agreement and all other documentation and actions prepared or taken in connection with the transactions contemplated hereunder.

 

11.          GOVERNING LAW AND ARBITRATION

 

11.1        This Agreement shall be governed by and construed in accordance with Danish law.

 

23

 

11.2        Any dispute arising out of or in connection with this Agreement, its conclusion, performance, construction or termination shall - if such dispute cannot be settled amicably - be decided with final and binding effect by arbitration in accordance with the rules of procedure of the Danish Institute of Arbitration (Copenhagen Arbitration). The arbitral tribunal shall be composed of three arbitrators. Each party shall appoint one arbitrator and the institute shall appoint the chairman of the arbitral tribunal. Where a dispute shall include more than two parties, all three arbitrators shall be appointed by the institute, except otherwise agreed by all parties to such dispute.

 

11.3        The place of arbitration shall be Copenhagen and the language of the arbitration shall be English unless otherwise agreed between the parties. The arbitration, documents relating to the same and the decision of the arbitration shall be kept confidential.

 

12.          MISCELLANEOUS

 

12.1        Severability

 

12.1.1     If at any time any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under the laws of any jurisdiction, this shall not affect or impair:

 

(i)            the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement or

 

(ii)           the legality, validity or enforceability under the laws of any other jurisdiction of that or any other provision of this Agreement.

 

If a provision of this Agreement is or becomes invalid, illegal or unenforceable or if an illegal or unenforceable provision affects the entire nature of this Agreement, each of the Parties shall use its best endeavours to promptly negotiate a legally valid replacement provision.

 

24

 

12.2        Entire Agreement

 

12.2.1     This Agreement and any other documents referred to in this Agreement constitute the entire agreement and understanding between the Parties in respect of the subject matter of this Agreement. Neither Party has entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set out or referred to in this Agreement.

 

12.3        No Third-Party Beneficiaries

 

12.3.1     With the exception of the Parties to this Agreement, no other person has a right to claim a beneficial interest in this Agreement or in any rights occurring by virtue of this Agreement.

 

12.4        Legal Relationship

 

12.4.1     Nothing in this Agreement shall be deemed to constitute a partnership or an agency partnership between the Parties.

 

-o0o-

 

[THE REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK, SIGNATURE PAGE TO FOLLOW]

 

25

 

11/7/2014

 

For Nordic Biotech K/S by Nordic Biotech General Partner ApS:

 

 

	
/s/ Florian Schönharting
    	
 
    
	
Florian Schönharting
    	
 
    

 

For Nordic Biotech Opportunity Fund K/S by Nordic Biotech General Partner ApS:

 

 

	
/s/ Florian Schönharting
    	
 
    
	
Florian Schönharting
    

 

For BML Healthcare I, L.P.:

 

 

	
/s/ Torsten Goesch
    	
 
    
	
By: 
    	
 
    
	
Name: 
    	
Torsten Goesch
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

For NB FP Investment K/S by NB FP Investment General Partner ApS:

 

 

	
/s/ Florian Schönharting
    	
 
    
	
Florian Schönharting
    	
 
    

 

 

26

 

For NB FP Investment K/S II by NB FP Investment General Partner ApS:

 

 

	
/s/ Florian Schönharting
    	
 
    
	
Florian Schönharting
    	
 
    

 

The members of the Board hereby confirm their own and the Company’s adherence to the Agreement:

 

 

	
/s/ Florian Schönharting
    	
 
    	
/s/ Torsten Goesch
    
	
Florian Schönharting 
    	
 
    	
Torsten Goesch
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Kevin Buchi
    	
 
    	
 
    
	
Kevin Buchi
    	
 
    	
 
    

 

27

 

APPENDIX 5.2.1(a) - Draft rules of procedures for the Board, including guidelines for the executive management

 

RULES OF PROCEDURE

FOR THE BOARD OF DIRECTORS OF FORWARD PHARMA A/S

 

DATED [·] 2014

 

 

RULES OF PROCEDURE

FOR 

THE BOARD OF DIRECTORS OF FORWARD PHARMA A/S

(Company registration no. (CVR) 28865880)

 

1                      THE BOARD OF DIRECTORS: COMPOSITION, CONSTITUTION, ETC

 

1.1            Pursuant to Article 9.2 of the Articles of Association, the Board of Directors shall consist of 3-6 members elected by the shareholders. Each such board member shall be elected at the annual shareholders’ meeting of the company and shall be elected for a term of office of one year. Directors may be re-elected.

 

Only persons younger than 70 years at the time of election can be elected to the Board of Directors.

 

In addition to the Board members elected by the shareholders, the employees of the Company may be entitled to elect one or more members to the Board of Directors under mandatory principles of Danish law on employee and group representation. Currently, the employees are not entitled to elect any members to the Board of Directors.

 

Prior to any election, including re-election, of members to the Board of Directors by the shareholders, information about each board candidate’s managerial posts held in other commercial enterprises, excluding wholly-owned and/or controlled subsidiaries. Similar information is disclosed in the annual report of the company.

 

1.2            The chairman shall serve as the liaison between the other members of the Board of Directors and the Executive Management, and shall act as the spokesperson for the Board of Directors.

 

In case of the chairman’s permanent absence the Board of Directors shall elect a new chairman until the next shareholders’ meeting.

 

1.4            Pursuant to Article 12.1 of the Articles of Association, the company shall be bound (i) by the joint signatures of the Chairman and a member of the Board of Directors, (ii) by the joint signatures of the Chairman and a member of the Executive Management, or (iii) by the joint signatures of all the members of Board of Directors.

 

2

 

2                      BOARD MEETINGS

 

2.1            Number and notice of meetings

 

The Board of Directors shall meet when deemed necessary by the chairman and upon request of a board member, a member of the Executive Management or the auditors.

 

The Board of Directors shall endeavour to hold 4-6 ordinary board meetings each year. To the extent possible a meeting schedule for the ordinary board meetings in a given calendar year must be scheduled one year ahead of the commencement of the calendar year in question.

 

Meetings shall normally be convened with at least one week’s prior notice together with an agenda for the meeting. The notice must be forwarded by delivery and/or by electronic mail to all board members. Any written material relating to the agenda items shall, to the extent possible, be forwarded to the members together with the notice convening the meeting.

 

Under special circumstances, a board resolution may be passed by voting by phone, by writing or electronically. In such cases the proposed resolution shall be forwarded to all board members and the chairman shall subsequently seek to obtain a written or oral statement from all board members and arrange for the recording of the resolution in the minute book. Further, an agenda and written materials related thereto may, in special circumstances, be forwarded to board members at any time prior to the meeting.

 

2.2            Other persons participating in board meetings

 

Unless otherwise resolved by the Board of Directors from time to time, any member of the Executive Management shall be entitled to attend and speak at board meetings.

 

The Board of Directors may appoint a secretary. Unless otherwise decided by the Board of Directors, the secretary shall attend all board meetings, take minutes of such meetings and attend to all such other matters resting with such person pursuant to these Rules of Procedure or assigned to such person by the Board of Directors or by the chairman.

 

3

 

The auditors are obligated to attend the board meeting at which the annual reports of the company are being presented. The auditors shall inter alia make a statement on whether the annual accounts, together with any consolidated annual accounts, in their opinion give a true and fair view of the assets and liabilities, the financial position and the result of the company. At the same meeting, the auditors shall provide a statement on whether the annual report contains a reliable outline of the development of the company’s financial activities and situation, and whether it generally complies with the requirements of the Danish Financial Statements Act (in Danish: årsregnskabsloven).

 

The auditors shall be entitled to attend board meetings for the discussion of an agenda item that have specifically been included on the agenda on the request of the auditors, and each board member shall be entitled to request the presence of the auditors at any board meeting.

 

2.3            Agenda

 

Normally, the agenda of each board meeting shall include at least the following items:

 

1.                                      Presentation of the minute book with minutes of the most recent board meeting for approval and signature.

 

2.                                      Presentation of the audit book for review and signature where relevant, and decision on any entries made since the latest board meeting.

 

3.                                      Account by Executive Management of the business of the company since the latest board meeting, material business transactions which have occurred or are expected, expectations to the remaining part of the financial year and special risks, if any. The review may be wholly or partly in writing.

 

4.                                      Decisions on specific transactions requiring the approval of the Board of Directors.

 

5.                                      Any other business.

 

2.4            In addition, the agenda must include items on the approval of budgets and accounts, including quarterly accounts, in accordance with clauses 8.1-8.3. In connection with these meetings the Audit Committee shall also make a statement to the Board of Directors.

 

2.5            At the board meeting where the Board of Directors considers the annual report, the agenda must include the following additional items:

 

4

 

1.                                      Decision on Executive Management’s account of whether the company’s and the group’s capital resources are at an appropriate level as compared to operations.

 

2.                                      Decision on the agenda of the annual shareholders’ meeting, including election of board members, appointment of auditor and election of chairman of said meeting.

 

3.                                      Evaluation and decision of whether the company should establish a function handling internal audit.

 

2.6            Furthermore, the following items must be included on the board agenda sometime during the year:

 

1.                                      Account by Executive Management of the overall insurance situation of the company as well as the group containing a description of the overall principles for the insurance coverage within each individual insurance area, supplemented by a statement from Executive Management and an independent insurance broker to the effect that the insurance coverage is deemed sufficient and adequate.

 

2.                                      A review, if appropriate, of the Rules of Procedure for the Board of Directors.

 

3.                                      A review, if appropriate, of the guidelines of the Board of Directors for Executive Management’s management of the company and the group.

 

4.                                      The overall goals, strategies, action plans and policies on stakeholder responsibility of the company, including whether the necessary competences and financial resources are available for the company to achieve its strategic objectives.

 

5.                                      Identification and analysis of the most important business risks associated with the realization of the company’s strategy and overall goals as well as the risks associated with financial reporting.

 

6.                                      Decision on whether the company’s capital and share structure continue to be in the interests of the shareholders and the company.

 

7.                                      The company’s general management and organization.

 

8.                                      Performance evaluation, including evaluation of the competencies represented in the Board of Directors, the number of members of the Board of directors and the independence of the members of the Board of Directors.

 

2.7            Quorum, etc.

 

The chairman shall preside at board meetings and shall ensure implementation of resolutions passed.

 

5

 

The Board of Directors forms a quorum when more than half of its members are present. However, resolutions cannot be passed unless all the board members, as far as possible, have been given access to participate in the transaction of the business.

 

Resolutions are passed by a simple majority of votes. In case of a parity of votes, the chairman shall have the casting vote.

 

2.8            Conflicts of interest

 

The Board of Directors shall approve any agreements made between a board member or a member of Executive Management and the company or one of its subsidiaries as well as any agreements entered into between the company or its subsidiaries and a third party in which a board member or a member of Executive Management is deemed to have an interest which may be contrary to the interests of the company or its subsidiaries.

 

A board member or a member of Executive Management shall not be entitled to be present during discussions of issues where, on the one part, said board member or member of Executive Management and, on the other part, the company or its subsidiaries are counterparts, nor in the consideration of any other issue in connection with which the board member or the member of Executive Management, in the opinion of the other board members, is deemed to have interests which may be contrary to the interests of the company. Prior to the transaction of such business, the affected member of the Board of Directors/Executive Management shall be given the opportunity to render a short, written statement on the subject matter.

 

2.9            The minute book

 

The Board of Directors shall keep minutes of its meetings and any resolutions passed at board meetings (the minute book). The minutes shall be presented for approval and be signed at the following board meeting. See also clause 10.2 below.

 

Where a board member or a member of Executive Management disagrees with the resolution passed, such board member or member of Executive Management shall be entitled to have his or her opinion recorded in the minute book.

 

To the extent possible, draft of minutes of a board meeting shall be forwarded to the board members not later than 8 days after said board meeting.

 

6

 

2.10     Confidentiality

 

The discussions of the Board of Directors are confidential and each board member is bound to observe professional secrecy to any information received in his or her capacity as a board member unless such information is to become public on the decision of the Board of Directors. Any person attending board meetings shall be subject to the same secrecy obligation. Violation of this secrecy obligation shall be under liability to pay damages and under the penalty of applicable law.

 

Each individual board member is responsible for treating as confidential and storing safely all material received in his or her capacity as a member of the Board of Directors.

 

Upon the resignation or retirement of a board member, said member shall return to the chairman all material received in his or her capacity as a board member, and still in the possession of such member. Alternatively, the retiring board member shall effectively destroy the said material, including electronically erasure, and provide a written statement to the company that such destruction has taken place.

 

In the event of a board member’s death, his or her estate shall observe the obligation to return documents to the chairman or to destruct the documents.

 

3                      MANAGEMENT OF THE COMPANY

 

3.1            The Board of Directors

 

The Board of Directors is in charge of the overall and strategic management of the affairs of the company and the group.

 

The Board of Directors shall ensure

 

(a)           a proper organization of the operations of the company and the group;

 

(b)           that the company is managed properly and in compliance with the Danish Companies Act, the Articles of Association of the company as well as applicable law on securities trading, including any regulation issued hereunder, and any other legislation;

 

7

 

(c)           that the bookkeeping and the asset management are controlled satisfactorily as compared to company needs;

 

(d)           that required procedures for risk management and internal controls are established;

 

(e)           that the Board of Directors regularly receives reporting about the financial situation of the company; and

 

(f)            that Executive Management performs its task in a competent manner and according to the guidelines of the Board of Directors.

 

The Board of Directors shall consider whether the capital resources of the company are at an appropriate level at all times compared to the operations and the financial situation of the company and the group, including that there is sufficient liquidity to meet the company’s current and future obligations as they fall due.

 

Upon recommendation by Executive Management, the Board of Directors shall specify the overall goals, strategies, policies and action plans of the company and the group.

 

3.2            Executive Management

 

All references to these Rules of Procedure apply to “Executive Management” registered with the Danish Business Authority unless otherwise explicitly stated.

 

The Board of Directors shall employ a chief executive officer (CEO) to head Executive Management. The Board of Directors may also employ additional members of Executive Management.

 

Executive Management is in charge of the day-to-day operations of the company. Executive Management shall comply with the guidelines and instructions which the Board of Directors has set up. The day-to-day operations do not include transactions which, by company and group standards, are unusual or of major importance. Executive Management is only authorized to undertake such transactions upon special authorization from the Board of Directors, except where such approval by the Board of Directors cannot be awaited without a major drawback to the business activities of the company. In such case, the Board of Directors must be notified as soon as possible of

 

8

 

the transaction that has been made.

 

Executive Management shall ensure that the bookkeeping of the company is conducted under applicable rules of law and that the asset management is carried out in accordance herewith and in an adequate manner.

 

Furthermore, Executive Management shall ensure that the capital resources of the company are at an appropriate level at all times, including that there is sufficient liquidity to meet the company’s current and future obligations as they fall due. Executive Management is in this way at all times obligated to consider the financial situation and to ensure that the current capital resources are at an appropriate level.

 

Executive Management shall continuously notify the Board of Directors of significant risk factors, including strategic, organizational, business, and other risk factors of a significant nature.

 

The Board of Directors shall lay down the general guidelines for Executive Management’s management of the company and the group. The present guidelines are attached hereto as Schedule 1.

 

Executive Management may appoint one or more subordinated managers, including managers in subsidiaries, who are not members of Executive Management and who are not registered as such with the Danish Business Authority. Executive Management shall inform the Board of Directors of any such appointments.

 

Such managers are not subject to any special rights or obligations under these Rules of Procedure, including Schedule 1.

 

3.3            Supervision by the Board of Directors of Executive Management’s operations of the company and its subsidiaries

 

The Board of Directors primarily supervises and follows the company’s development and progress through the reporting from Executive Management, including financial statements and other interim reports as well as through discussions with the members of Executive Management at board meetings.

 

The chairman shall on behalf of the Board of Directors oversee the performance of Executive Management in particular, including Executive Management’s compliance

 

9

 

with the guidelines included in Schedule 1, and shall at least once every year at a board meeting give a review of the conclusions of his or her supervising activities. Whenever required, the chairman shall discuss the supervisory task and its contents with the other board members.

 

The board of directors shall determine the terms of employment of the members of Executive Management.

 

Executive Management supervises the management of the company’s subsidiaries.

 

3.4            Committees set up by the Board of Directors

 

The Board of Directors may in certain cases set up ad hoc committees which shall attend to some of the tasks of the Board of Directors on behalf of the Board of Directors and subject to a duty of reporting to the Board of Directors. When setting up or appointing such committee, specific terms of reference shall be prepared for the competence and authority of such committee.

 

The Company will have an audit committee, the composition of which will be in compliance with the requirements of the NASDAQ rules. The audit committee shall be responsible for:

 

(a)                                 making recommendations on the appointment and retention of the Company’s independent registered public accounting firm which will audit our consolidated financial statements, overseeing the independent registered accounting firm’s work and advising on the determination of the independent registered accounting firm’s compensation;

 

(b)                                 reviewing in advance all audit services and non-audit services to be provided to the Company by its independent registered accounting firm;

 

(c)                                  recommending procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, auditing or compliance matters, as well as for the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters;

 

(d)                                 reviewing and discussing with management and the Company’s independent registered accounting firm the results of the annual audit;

 

(e)                                  conferring with management and the Company’s independent registered accounting firm about the scope, adequacy and effectiveness of the Company’s internal accounting controls, the objectivity of its financial reporting and its

 

10

 

accounting policies and practices;

 

(f)                                   overseeing regulatory compliance and related matters; and

 

(g)                                  reviewing related party transaction matters.

 

5                      REMUNERATION

 

5.1            Remuneration Policies

 

The chairman must regularly evaluate and propose to the Board of Directors remuneration policies for members of the Board of Directors and Executive Management in the company. Furthermore, the chairmanship shall regularly evaluate and propose to the Board of Directors guidelines for incentive pay for members of the Board of Directors and Executive Management.

 

5.2            Board remuneration

 

In the calendar year preceding the annual shareholders’ meeting, the chairman shall present to the Board of Directors a proposal for remuneration of the members of the Board of Directors.

 

Payment of the remuneration to the members of the Board of Directors can be contingent upon final approval at the annual shareholders’ meeting where the annual accounts — in accordance with which payments are made — are approved. This means that approval is retroactive and that repayment will be necessary in case of rejection at the annual shareholders’ meeting.

 

6                      NOMINATION OF MEMBERS OF THE BOARD OF DIRECTORS

 

6.1            It is evaluated annually whether elected members of the Board of Directors shall be nominated for re-election.

 

The chairman provides to the Board of Directors for their consideration candidates for election to the Board of Directors.

 

7                      COMPANY ORGANIZATION, ETC

 

7.1            Upon the recommendation of Executive Management, the Board of Directors shall approve the overall organizational chart of the company as well as any amendments

 

11

 

thereof.

 

7.2            Furthermore, the Board of Directors shall approve the general guidelines prepared by Executive Management for the company’s finance and accounting function(s), IT organization and internal controls as well as any changes thereof.

 

7.3            The Board of Directors annually carries out a self-evaluation of the Board’s efforts and achievements as a single body and an evaluation of each member, and its efforts and skills.

 

Furthermore, the Board of Directors annually evaluates Executive Management’s achievements and results, and the cooperation between Executive Management and the Board of Directors.

 

The evaluation is facilitated by the chairman.

 

It is recommended that members of the Board of Directors maintain and improve skills and competencies relevant to them as directors.

 

A member of the Board of Directors must without delay notify the chairman of any event, situation or circumstance that may affect that member’s skills and independence. Changes in a board members’ main employment or accession — or termination — of membership of other boards must always be reported.

 

8                      BUDGET AND FINANCIAL RECORDS

 

8.1            Budget

 

Not later than at the board meeting taking place each December, Executive Management shall present to the Board of Directors for approval a budget for the next financial year. The budget shall include planned operations, liquidity and balance sheet development plans, the investments of the year and the development in the financial resources of the group.

 

8.2            Quarterly Accounts

 

At a board meeting not later than 45 days after the expiry of the first, second and third quarter, respectively, Executive Management shall, if so required by applicable

 

12

 

law, present the quarterly accounts for approval.

 

The quarterly accounts shall be prepared in accordance with the standards governing the presentation of annual accounts and include a profit and loss account for the quarter in question (year to date) and comparative figures to the corresponding period in the preceding year. The accounts shall also be compared to the approved budget and include an estimate of the year’s result as well as the financial resources of the company and the group.

 

In its statement, Executive Management shall describe and explain the most important deviations as compared to the approved budget and state whether the company and the group may be deemed exposed to special risks that have not been included in the budget.

 

8.3            Annual accounts

 

At a board meeting to be held not later than the month of February, Executive Management shall present a draft of the annual accounts for approval. The auditors of the company shall attend such meeting.

 

The Board of Directors shall ensure that the annual accounts and the consolidated annual accounts give a true and fair view of the assets and liabilities, the financial position and the result of the company and the group.

 

The annual accounts and the consolidated annual accounts shall be signed by the Board of Directors, Executive Management and endorsed by the auditors.

 

In the event that a board member or a member of Executive Management objects to the annual accounts or the consolidated annual accounts, if any, and wishes to inform the shareholders of his or her objection, notification to this effect must be made in the annual accounts and a statement to the same effect shall be made in the annual report.

 

9                      AUDITING

 

Pursuant to the Articles of Association, the annual shareholders’ meeting shall appoint one auditor every year which shall be a state-authorized public accountant.

 

13

 

To the extent possible, audit of the company’s subsidiaries shall be performed by the auditor of the company or by foreign auditors in cooperation with said auditor.

 

The auditor shall conduct its audit of the annual accounts and the consolidated annual accounts in accordance with generally accepted auditing standards and shall perform a detailed examination of the financial records and procedures of the company and the group.

 

The Board of Directors and Executive Management shall provide the auditor with any documents or information which in the opinion of the auditor may be of importance in the assessment of the financial position of the company and the group.

 

Executive Management shall ensure that the management of each of the company’s subsidiaries are assigned a similar duty.

 

At least once every year (in connection with the adoption of the annual accounts), the auditor of the company shall participate in a meeting with the Board of Directors of the company, including the Audit Committee, without the Executive Management being present.

 

The auditor agreement and associated auditors’ fee are agreed between the company’s Board of Directors and the auditor(s) on the basis of recommendation by the Audit Committee.

 

10               BOOKS, RECORDS AND REGISTERS

 

10.1     Register of shareholders

 

The company’s register of shareholders is kept by [name and address], company registration number [·], which is appointed by the company as keeper of the register of shareholders, see article 2.4 of the Articles of Association of the company.

 

10.2     Minute books

 

The Board of Directors shall keep minutes of all its meetings and each page shall be numbered consecutively and entered in the minute book. A similar minute book shall be kept of the shareholder meetings of the company.

 

14

 

10.3     Audit book

 

The Chairman of the Board of Directors shall ensure that copies of all recordings made in the audit book are forwarded immediately to all of the board members for discussion purposes and consideration at the next board meeting.

 

10.4     Register of major shareholders

 

The Board of Directors shall ensure the keeping of a register of shareholders holding shares representing five per cent or more of the voting share capital, or shares representing a nominal value of five per cent or more of the share capital.

 

Any notification of changes in the ownership structure to the effect that 5, 10, 15, 20, 25, 50, 90 or 100 per cent thresholds or thresholds of one-third or two-thirds of the voting rights or of the share capital are reached or no longer reached, shall immediately be recorded in the register (see Section 55 of the Danish Companies Act).

 

The register shall state the date of the acquisition or disposal of the shares, the number of shares held, the full name and the address of the shareholder, or in the event of undertakings, the name, company registration number and registered office of the shareholder. Furthermore the register shall state the nominal value as well as information about voting rights of the shares.

 

The annual report shall state the parties listed in the register and the dates of the registrations.

 

10.5     Guidelines on avoiding insider trading, etc.

 

In guidelines to the Board of Directors, Executive Management and the other employees of the company, the Board of Directors shall establish rules governing such persons’ trade in shares and other securities and related financial instruments issued by the company and dissemination of inside information.

 

These guidelines shall establish rules pertaining to:

 

1.                                      the prohibition of participating in speculative transactions regarding shares, etc. in the company

 

2.                                      the prohibition of trading in company shares, etc. outside restricted periods of

 

15

 

time and if the person in question is in possession of internal knowledge which is likely to affect the price formation of the company’s securities, as well as

 

3.                                      preventing internal knowledge from becoming accessible to others than those needing the information.

 

The existing guidelines are attached as Schedule 2 A-B.

 

10.7     Keeping registers, records and books

 

The Executive Management shall on behalf of the Board of Directors keep the registers, etc. mentioned under clauses 10.2-10.5. Further, the Executive Management shall ensure the proper keeping of the register of shareholders.

 

11               COMMUNICATIONS FROM THE COMPANY

 

11.1     The Board of Directors shall lay down general guidelines for the disclosure of information on the affairs of the company and its subsidiaries to the company’s employees, shareholders, the public, and NASDAQ.

 

11.2     The Board of Directors shall ensure that disclosure of information on material matters relating to the company and its subsidiaries, and information that may affect the price of the shares, etc. issued by the company, is made in accordance with applicable laws and regulations including the U.S. securities laws.

 

11.3     The Board of Directors shall ensure compliance at all times by the company and its subsidiaries of the applicable U.S. securities laws, applicable NASDAQ rules and the reporting rules in Section 58, cf. Section 55 and 56, of the Danish Companies Act (once Section 58 of the Danish Companies Act has entered into force).

 

12               AMENDMENTS TO THESE RULES OF PROCEDURE

 

12.1     Any proposal to amend these Rules of Procedure shall be subject to a simple majority vote by the Board of Directors in favor of such proposed amendment.

 

Adopted at the board meeting held on [·], subject to and with effect from the Board of Directors’ approval of the offer price and the allocation of offer shares to eligible investors in connection with the initial public offering of the company’s shares on the NASDAQ Stock

 

16

 

Market, and satisfaction of the conditions for admission to trading on the NASDAQ Stock Market.

 

 

	
Members of the board of directors:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Florian Schönharting, chairman
    	
 
    	
Torsten Goesch
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
John Kevin Buchi
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Members of the Executive Management:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Name:
    
	
Title:
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

17

 

SCHEDULE 1

 

GUIDELINES

FOR THE EXECUTIVE MANAGEMENT OF FORWARD PHARMA A/S

 

DATED [·] 2014

 

 

1.                   PURPOSE AND DESCRIPTION OF FUNCTIONS

 

1.1            The purpose of these Guidelines is to lay down the rules of procedure for the work in Forward Pharma A/S (“the Company”) carried out by the Executive Management of the Company. The Executive Management comprises all managers of the Company who are notified as such to the Danish Business Authority (in Danish: “Erhvervsstyrelsen”).

 

1.2            In accordance with the specific and general Executive Management instructions issued by the Board of Directors of the Company, the Executive Management shall attend to the day-to-day management of the overall activities of the Company, to the coordination of the day-to-day management of the Group in general and to other tasks entrusted to management by legislation and the Executive Management Guidelines of the Board of Directors. When exercising its responsibilities and carrying out its tasks, the Executive Management shall also observe these guidelines and any other general and/or specific directions given by the Board of Directors.

 

1.3            The Executive Management is responsible to the Board of Directors for managing the Company in accordance with the legislation in force at any time, the Articles of Association, these Executive Management Guidelines and any further specific and/or general Executive Management instructions given by the Board of Directors.

 

1.4            The day-to-day management does not include transactions of an unusual kind or of great importance as seen in relation to the situation of the Company. The Executive Management is only authorized to undertake such transactions upon special prior authorization from the Board of Directors, except where such approval by the Board of Directors cannot be awaited without a major drawback to the business activities of the Company and/or of the Subsidiary. In such case, the Board of Directors must be notified as soon as possible of the transaction that has been made.

 

1.5            The following transactions, but not limited hereto, shall be considered transactions of an unusual kind or of great importance to the Company for above-said purposes:

 

·                                          Material changes to the organization of the Company,

 

19

 

·                                          The appointment of members of the board of directors of subsidiaries and the employment of executive managers of subsidiaries,

 

·                                          The conclusion of agreements of significant importance or which fall outside the scope of the general line of business of the Company,

 

·                                          The purchase, sale or pledging (in Danish: “pantsætning”) of real estate,

 

·                                          The establishment, discontinuation, purchase or sale of subsidiaries, except for the restructuring of existing businesses, as well as the execution of amendments to the capital value (in Danish: “kapitalændringer”) or amendments of the articles of association of subsidiaries,

 

·                                          Singular investments exceeding the approved budget by DKK 100,000,

 

·                                          Taking up loans or disposing of securities, pledges or surety (in Danish: “kaution”),

 

·                                          Material amendments to the existing audit principles followed in the annual reports of the Company and/or its subsidiaries,

 

·                                          Presents aimed at charity purposes,

 

·                                          Similar extraordinary transactions, which are likely to obligate the Company in an equivalent manner as above-said illustrative list of transactions.

 

1.6            The Executive Management shall continuously notify the Board of Directors of significant risk factors, including strategic, organizational, business, and other risk factors of a significant nature. Furthermore, the Executive Management shall ensure that the capital resources of the Company and of its subsidiaries are at an appropriate level at all times, implying inter alia that there is sufficient liquidity to meet the Company’s and/or the subsidiaries’ current and future financial obligations as they fall due.

 

1.7            The Board of Directors shall approve and sanction any costs incurred by the members

 

20

 

of the Executive Management themselves, including e.g. travelling costs etc.

 

2.                   COMPOSITION OF THE EXECUTIVE MANAGEMENT AND ITS INTERNAL DIVI-SION OF WORK

 

2.1            The Executive Management is composed of one or more managers employed by the Board of Directors. One of the managers is to be employed as the CEO (in Danish: “administrerende direktør”).

 

2.2            The individual Executive Management members are responsible for the activities of the Company, but in such a manner that each individual manager holds special responsibility for the field attended to by said manager following any specific agreement with the Board of Directors. Generally, the tasks are to be distributed internally within the Executive Management by the CEO.

 

2.3            On behalf of the Executive Management, the CEO shall ensure regular contact with the Board of Directors, through its Chairman. The CEO is obliged to ensure the performance of any tasks imposed on the Executive Management by the Board of Directors, through its Chairman.

 

2.4            The Executive Management shall provide the Board of Directors with a written recommendation on the overall strategy of the Company. Within the framework fixed by the Board of Directors, the Executive Management shall ensure the achievement of the objectives set for the Company by the Board of Directors.

 

2.5            No later than one (1) month before the expiry of the fiscal year (in Danish: “regnskabsår”) of the Company, the Executive Management shall provide the Board of Directors with a draft budget for the subsequent fiscal year for its approval. The budget shall be divided into respectively a result, balance and investment budget as well as a cash budget, along with the enclosure of the recommendation of the Executive Management with respect to the financing of the cash budget.

 

2.6            The CEO is the chief spokesperson of the Company, both internally and externally, in matters of a general nature pertaining to the Company. All communication with 

 

21

 

Company shareholders and the public in matters of an extraordinary or overall nature must however be handled by the Board of Directors, represented by its Chairman.

 

2.7            Any member of the Executive Management may request the submission of individual issues to the Board of Directors, through the CEO.

 

2.8            The Executive Management shall inform the Company’s elected auditor of any such information, which the auditor deems necessary for the purposes of the auditing of the Company and/or its subsidiaries.

 

3.                   MEETINGS OF THE EXECUTIVE MANAGEMENT

 

3.1            The Executive Management shall meet according to a plan made by the CEO. Additional meetings will be held whenever necessary.

 

3.2            The Executive Management meetings are to be summoned and chaired by the CEO. The CEO shall ensure that brief minutes of the Executive Management meetings are entered in the record of proceedings. Minutes and other reports must be signed by all the Executive Management members.

 

3.3            A manager disagreeing with an Executive Management decision is entitled to have his or her opinion entered into the minutes.

 

3.4            If the Executive Management members have failed to agree on a matter deemed by one or more of the members to be of material importance, such members and the CEO shall notify the Chairman of the Board of Directors thereof immediately.

 

4.                   SUBSIDIARIES

 

4.1            All matters concerning employees of a subsidiary are subject to the directions of the board of directors and management of such company. Employment and dismissal of the management of a subsidiary must however always be approved by the Executive Management and Board of Directors of the Company.

 

22

 

4.2            The Executive Management shall appoint the chairman and other directors for the subsidiaries. However, the Executive Management must clear any changes to such appointments with the Chairman of the Board of Directors.

 

4.3            Endeavours shall be made with a view to having the Executive Management members appointed as chairman of the board of directors of any such subsidiaries and, if possible, of affiliated companies. Furthermore, the Executive Management shall endeavour to have at least one more member of the Executive Management or another Company executive appointed director of such company. Finally, endeavours shall be made with a view to appointing supplementary experts for the board of directors of such subsidiaries to the extent necessary.

 

4.4            In addition to the managerial responsibility, the Executive Management is responsible for controlling the subsidiaries, and to the widest extent possible also the affiliated companies.

 

4.5            The Executive Management shall endeavour to develop the subsidiaries and their cooperation with the Company so that the Group companies will supplement, reinforce and complete each other when deemed necessary for the long-term Group development.

 

4.6            Subsidiaries are in general to be operated as independent undertakings in accordance with the policies laid down for each subsidiary. To the requisite extent the management of subsidiaries must be given the opportunity to act at its own initiative and consequently the right to dispose.

 

5.                   BOARD MEETINGS

 

5.1            The Executive Management shall participate in Board meetings.

 

5.2            Matters are to be presented at Board meetings by the Chairman, the CEO or a manager as determined by the Chairman and the CEO.

 

5.3            A manager may not take part in the consideration of issues concerning an agreement between the Company and such manager or concerning any proceedings against the

 

23

 

manager. The same applies to issues concerning an agreement between the Company and any third party or proceedings against such third party if the manager has a material interest in such third party which may be contrary to the interests of the Company.

 

5.4            In case of the emergence of such issue, the manager may submit a memorandum on the matter to the Board of Directors, but shall otherwise leave the meeting until the Board of Directors has decided the matter.

 

 

	
Adopted at the Executive Management meeting on [·].
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
The Executive Management:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Name:
    
	
Title:
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

24

 

	
Submitted and approved at   the Board meeting in the Company on [·].
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
For the Board of Directors:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Florian Schönharting (chairman)
    	
 
    	
 
    

 

 

APPENDIX 5.2.1(b) - Draft internal rules on trading securities issued by the Company

 

INTERNAL RULES

 

ON THE MANAGEMENT’S AND OTHER EMPLOYEES’  TRANSACTIONS WITH SECURITIES ISSUED BY FORWARD PHARMA A/S

 

 

CONTENTS

 

	
1.
    	
Purpose
    	
3
    
	
2.
    	
Inside   Information
    	
3
    
	
3.
    	
Insider   List
    	
5
    
	
4.
    	
Trade   In Securities Issued By The Company
    	
8
    
	
5.
    	
Prohibition   Against Speculation
    	
9
    
	
6.
    	
prohibition   against insider trading
    	
9
    
	
7.
    	
Prohibition   Against Price Manipulation
    	
9
    
	
8.
    	
Suspicion   Of Violations
    	
10
    
	
9.
    	
Annual   Update
    	
11
    
	
10.
    	
Effective   Date, Etc.
    	
11
    

 

2

 

PREAMBLE

 

Forward Pharma A/S (the “Company” and, together with its subsidiaries, the “Group”) has applied to have American Depositary Shares (“ADSs”), representing ordinary shares of the Company, listed on the NASDAQ Global Market. These internal rules apply to these ADSs as well as financial instruments attached to the ADSs, including warrants, convertible debentures and similar securities.

 

These internal rules have been established to provide for compliance with Section 37 of the Danish Securities Trading Act (in Danish: værdipapirhandelsloven) and the United States securities laws, as applied to the Company, and cover:

 

(i)                                     the dissemination of inside information for the purpose of preventing inside information from becoming available to others than those needing such information; and

 

(ii)                                  management’s and other employees’ transactions with securities issued by the Company.

 

1.                                      PURPOSE

 

1.1                               This set of internal rules governs Group’s officers and directors and its other employees, consultants and contractors, as well as members of their immediate families and households, for the purpose of ensuring that the prohibition against insider trading, price manipulation and speculation is not violated.

 

2.                                      INSIDE INFORMATION

 

2.1                               “Inside information” means information, which

 

·                                          is of a precise nature, meaning information that

 

(a)                                 indicates a set of circumstances which exists, or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to do so, and

 

3

 

(b)                                 is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the market price of the relevant securities;

 

·                                          has not been made public; and

 

·                                          relates to (a) the Company, (b) the Company’s securities, or (b) market conditions which, if it were made public, would be likely to have a significant effect on the market price of one or more securities.

 

2.2                               Information shall be considered as published once, for the market, there has been general and relevant dissemination hereof, which will include that it must be widely disseminated in a manner making it generally available to investors through a report filed with the Securities and Exchange Commission (the “SEC”) or through media such as Dow Jones, Reuters Economic Services, The Wall Street Journal or the Associated Press. The circulation of rumours, even if accurate and reported in the media, does not constitute effective public dissemination.

 

2.3                               Information shall not be regarded as published until two business days after the day on which the relevant information is disseminated to the public. Consequently, information shall be treated as inside information until that time.

 

2.4                               Non-published information, to the extent the information is of a precise nature and may be expected to have significant impact on the market price, regarding the matters listed below (including considerations and negotiations relating thereto) shall always be considered inside information:

 

·                                          considerable profit or loss on single transactions;

·                                          conclusion or termination/cancellation of major co-operation agreements or contracts;

·                                          major investments;

·                                          material new products;

·                                          legal proceedings taken out by or against the Company and/or the Group in the event that the outcome hereof is considered to have material impact;

·                                          major, new markets or lapse of the same;

·                                          purchase or sale of major fixed assets, including real estate;

 

4

 

·                                          major expansion, changes or limitations to the activities of the Company and/or the Group;

·                                          business cycle fluctuations of significant importance to the Company and/or the Group;

·                                          liquidation, suspension of payments, bankruptcy petition, etc.;

·                                          proposals for merging with another company;

·                                          proposals for material amendments of the articles of association;

·                                          transfer of a controlling interest in the Company and/or the Group, which the board or management is involved in or has knowledge of.

 

In addition, any non-published information regarding the following matters comprised by the Company’s specific and/or continuous duty of disclosure must always be regarded as inside information until it has been made public:

 

·                                          substantial changes in earnings or liquidity;

·                                          interim results and balances, including interim financial reports and budgets, and tax affairs;

·                                          changes to the management and audit;

·                                          the establishment or material changes to incentive schemes.

 

Finally, all other information that, considering the nature and contents of such information, is considered as confidential or which by the management of the Company is declared to be confidential, shall be considered inside information.

 

3.                                      INSIDER LIST

 

3.1                               The Company shall prepare and, on a continuous basis, update a list (the Insider List) of all persons working for the Group and who regularly or in isolated circumstances have access to inside information directly or indirectly relating to the Group.

 

3.2                               The Insider List shall include both physical and legal persons who work for the Group and who have access to inside information. The Insider List shall also include substantial shareholders in the Company, to the extent such shareholders are not subject to their own insider trading policy.

 

5

 

3.3                               The following employees shall always be included on the Insider List:

 

(i)                                     members of the board of directors of the Company; 

(ii)                                  executive officers of the Company; and

(iii)                               other managers and senior employees with direct reference to the board of directors, internal auditors and deputy internal auditors.

 

3.4                               A person must be included on the list even if the person has only had access to inside information in isolated cases. This may e.g. be relevant with respect to persons who are involved with the Company in connection with merger and take-over offers, substantial acquisitions/asset disposals, product development or likewise.

 

3.5                               The Insider List shall, as a minimum, contain the following information on the persons having or having had access to inside information:

 

(i)                                     the identity in the form of:

 

(a)                                 name and civil registration number (CPR-no.) for physical persons having a Danish civil registration number;

 

(b)                                 name, address and date of birth for physical persons not having a Danish civil registration number; and

 

(c)                                  name, address and company registration number for legal persons. 

 

(ii)                                  the reason why the person in question is stated on the Insider List; and

 

(iii)                               the date of the insertion or update of information regarding the persons in question.

 

3.6                               The Insider List shall be updated immediately when

 

(i)                                     changes occur as to the reason why the person is included on the Insider List;

 

(ii)                                  a new person is added to the Insider List; or

 

6

 

(iii)                               a person already on the Insider List no longer has access to inside information.

 

3.7                               The duty to update the Insider List implies that a person shall only appear on the list for as long as such person has access to inside information. Consequently, persons only having had access to inside information in isolated circumstances shall be removed from the list, when the information, which such persons have had access to, has been published. Persons with regular access to inside information shall be stated on the list for as long as such persons have regular access to inside information.

 

3.8                               In the event that a person has become an insider outside of normal office hours, the Insider List must be updated the next business day.

 

3.9                               Persons included on the Insider List shall without undue delay be informed (a) that they have been included on the list; (b) of the legal obligations pertaining with possession of inside information; and (c) of the legal sanctions associated with any abuse and unauthorized disclosure of inside information.

 

Persons included on the list shall be informed that unauthorized disclosure of inside information is punishable under Danish law by fine or up to 1 year and 6 months imprisonment. Abuse of inside information is punishable by fine or up to 1 year and 6 months imprisonment. In case of intentional and aggravated abuse or in case of repeated offences, the punishment may increase to 6 years imprisonment. Additionally, penalties under U.S. securities laws for the unauthorized disclosure of inside information are severe and can subject the disclosing party to civil and/or criminal penalties, including treble damages, imprisonment of up to 20 years and criminal fines of up to $5 million per violation and civil fines of up to three times the gain or loss avoided, regardless of whether the relevant person benefited.

 

Unauthorized disclosure or abuse will also imply a violation of the conditions of employment, if any, with the Company and may lead to immediate termination and suspension of employment. The Company may also be obliged to report the matter to the police.

 

7

 

3.10                        The management board is responsible for preparing the Company’s Insider List. The board of directors may appoint a trusted employee to handle the day-to-day updating. The Insider List must state the full name and address of such person.

 

3.11                        The Insider List shall be kept for no less than five (5) years after preparation or updating of the list.

 

3.12                        It is the responsibility of the Company’s chief financial officer to ensure compliance with established procedures.

 

4.                                      TRADE IN SECURITIES ISSUED BY THE COMPANY

 

4.1                               Persons who are included on the Insider List may only purchase and sell securities of the Company, and financial instruments attached thereto, during a period of four (4) weeks from the date of publishing of the Company’s annual report or interim financial report.

 

4.2                               Purchase, sale or subscription of shares etc. may not take place outside the 4-week period, unless the chairman of the board of directors has approved the transaction in advance. Such approval may only be granted in special circumstances, e.g. with respect to subscription of employee-owned shares; exercising of subscription rights; share options or similar, where the right may only be exercised within a fixed dead-line, which the rights holder has no influence on.

 

4.3                               The request to the chairman of the board of directors pursuant to clause 4.2 shall be specific and include the reason for the request. Purchase and sale outside the 4-weeks period may under no circumstances take place within three (3) weeks prior to publication of an interim financial report.

 

4.4                               It shall be emphasized that, in addition to the above, the prohibition against insider trading in clause 6 always applies - regardless of whether or not permission from the chairman of the board of directors pursuant to clause 4.2 has been granted.

 

8

 

5.                                      PROHIBITION AGAINST SPECULATION

 

5.1                               Pursuant to Section 113 of the Danish Companies Act (in Danish: selskabsloven), members of the board of directors and the management board may not engage in speculative transactions involving shares in the Company or in other companies in the Group.

 

6.                                      PROHIBITION AGAINST INSIDER TRADING

 

6.1                               The purchase, sale and recommendation to purchase or sell shares in the Company and of financial instruments attached to these shares, including warrants, convertible debentures and similar securities, may not be performed by any person while in possession of inside information.

 

6.2                               The prohibition against insider trading set out in clause 6.1 applies

 

(i)                                     to all persons with inside information, regardless of whether or not these persons are included on the Insider List;

 

(ii)                                  at all times and regardless of whether or not the Company’s management and/or employees would otherwise have been allowed to perform such transactions, including within the 4-weeks period mentioned in item 6.1.

 

7.                                      PROHIBITION AGAINST PRICE MANIPULATION

 

7.1                               Pursuant to Section 39 of Danish Securities Trading Act, price manipulation or attempts hereof may not take place. Pursuant to Section 38 of the Danish Securities Trading Act “Price manipulation” shall mean acts covered by nos. (i)-(iv) which are likely to influence the price of the securities in a direction deviating from their value on the market through:

 

(i)                                     dissemination of information through the media or other methods likely to give false or misleading signals as to the supply of, demand for, or price of securities;

 

(ii)                                  transactions or orders to trade likely to give false or misleading signals as to the supply of, demand for or price of securities;

 

9

 

(iii)                               transactions or orders to trade which employ fictitious devices or any other form of deception or contrivance; or

 

(iv)                              transactions or orders to trade through which secure, by a person, or persons acting in collaboration, the price of one or several securities at an abnormal or artificial level.

 

Price manipulation may, for example, include

 

(i)                                     sending out an expression of opinion through the media regarding a security or an issuer of a security after having previously acquired a certain amount of the relevant security if, at a later time, profit is gained from the impact of the opinions voiced on the price of the security, and if t he conflict of interest is not disclosed to the public in a proper and effective manner no later than at the time said expression of opinion is sent out;

 

(ii)                                  the buying or selling of securities at the close of the market with the effect of misleading investors acting on the basis of closing prices; or

 

(iii)                               conduct by a person, or persons acting in collaboration, to secure a dominant position over the supply of or demand for a security which has the effect of fixing, directly or indirectly, purchase or sale prices of the security at an abnormal or artificial level or creating other unfair trading conditions for the transaction.

 

8.                                      SUSPICION OF VIOLATIONS

 

8.1                               If the Company’s officers — regardless of the context — suspects that these internal rules have been violated, including violation of the prohibition against insider trading, the management shall immediately inform the chairman of the board of directors hereof.

 

8.2                               It is emphasized that a violation of these internal rules may constitute a punishable offence and may seriously harm the Company. Regardless of the Company’s wish to protect its employees, the Company may in the event of a violation of these internal rules be obliged to report the violating person(s) to the police and to terminate the employment with immediate effect.

 

10

 

9.                                      ANNUAL UPDATE

 

9.1                               The board of directors shall on a regular basis and at least once a year, review and reconsider the contents of these internal rules.

 

10.                               EFFECTIVE DATE, ETC.

 

10.1                        These internal rules are effective as per [date].

 

10.2                        Immediately upon the adoption of these internal rules, a copy shall be handed out to each person included on the Insider List.

 

10.3                        A copy of these internal rules will upon be handed over to the Danish Financial Supervisory Authority upon its request.

 

 

	
 
    	
Board   of Directors:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
Name:
    

 

11

 

APPENDIX 5.2.1(c) - Draft internal rules on dissemination of inside information

 

INTERNAL RULES

ON DISSEMINATION OF INSIDE INFORMATION

 

 

CONTENTS

 

	
1.
    	
Purpose
    	
3
    
	
2.
    	
Inside   Information
    	
3
    
	
3.
    	
Insider   List
    	
5
    
	
4.
    	
Observing   Confidentiality - Responsibilities
    	
8
    
	
5.
    	
Disclosure   of Inside Information
    	
9
    
	
6.
    	
Suspicion   of Violation
    	
10
    
	
7.
    	
Obligation   To Publish Information Upon Unlawful Disclosure
    	
10
    
	
8.
    	
Annual   Update
    	
10
    
	
9.
    	
Effective   Date, Etc.
    	
10
    

 

2

 

PREAMBLE

 

Forward Pharma A/S (the “Company” and, together with its subsidiaries, the “Group”) has applied to have American Depositary Shares (“ADSs”), representing ordinary shares of the Company, listed on the NASDAQ Global Market.

 

These internal rules have been established to provide for compliance with Section 37 of the Danish Securities Trading Act (in Danish: værdipapirhandelsloven) and the United States securities laws, as applied to the Company, and cover:

 

(i)                                     the dissemination of inside information for the purpose of preventing inside information from becoming available to others than those needing such in- formation; and

 

(ii)                                  management’s and other employees’ transactions with securities issued by the Company.

 

1.                                      PURPOSE

 

1.1                               The main purpose of this set of internal rules is to prevent inside information from becoming available to others than those specifically needing such information.

 

2.                                      INSIDE INFORMATION

 

2.1                               “Inside information” means information, which

 

·                                          is of a precise nature, meaning information that

 

(a)                                 indicates a set of circumstances which exists, or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to do so, and

 

(b)                                 is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the market price of the relevant securities;

 

3

 

·                                          has not been made public; and

 

·                                          relates to (a) the Company, (b) the Company’s securities, or (b) market conditions which, if it were made public, would be likely to have a significant effect on the market price of one or more securities.

 

2.2                               Information shall be considered as published once, for the market, there has been general and relevant dissemination hereof, which will include that it must be widely disseminated in a manner making it generally available to investors through a report filed with the Securities and Exchange Commission (the “SEC”) or through media such as Dow Jones, Reuters Economic Services, The Wall Street Journal or the Associated Press. The circulation of rumours, even if accurate and reported in the media, does not constitute effective public dissemination.

 

2.3                               Information shall not be regarded as published until two business days after the day on which the relevant information is disseminated to the public. Consequently, information shall be treated as inside information until that time.

 

2.4                               Non-published information, to the extent the information is of a precise nature and may be expected to have significant impact on the market price, regarding the matters listed below (including considerations and negotiations relating thereto) shall always be considered inside information:

 

·                                          considerable profit or loss on single transactions;

·                                          conclusion or termination/cancellation of major co-operation agreements or contracts;

·                                          major investments;

·                                          material new products;

·                                          legal proceedings taken out by or against the Company and/or the Group in the event that the outcome hereof is considered to have material impact;

·                                          major, new markets or lapse of the same;

·                                          purchase or sale of major fixed assets, including real estate;

·                                          major expansion, changes or limitations to the activities of the Company and/or the Group;

·                                          business cycle fluctuations of significant importance to the Company and/or the Group;

 

4

 

·                                          liquidation, suspension of payments, bankruptcy petition, etc.;

·                                          proposals for merging with another company;

·                                          proposals for material amendments of the articles of association;

·                                          transfer of a controlling interest in the Company and/or the Group, which the board or management is involved in or has knowledge of.

 

In addition, any non-published information regarding the following matters comprised by the Company’s specific and/or continuous duty of disclosure must always be regarded as inside information until it has been made public:

 

·                                          substantial changes in earnings or liquidity;

·                                          interim results and balances, including interim financial reports and budgets, and tax affairs;

·                                          changes to the management and audit;

·                                          the establishment material changes to incentive schemes.

 

Finally, all other information that, considering the nature and contents of such information, is considered as confidential or which by the management of the Company is declared to be confidential, shall be considered inside information.

 

3.                                      INSIDER LIST

 

3.1                               The Company shall prepare and, on a continuous basis, update a list (the Insider List) of all persons working for the Group and who regularly or in isolated circumstances have access to inside information directly or indirectly relating to the Group.

 

3.2                               The Insider List shall include both physical and legal persons who work for the Group and who have access to inside information. The Insider List shall also include substantial shareholders in the Company, to the extent such shareholders are not subject to their own insider trading policy.

 

3.3                               The following employees shall always be included on the Insider List: 

 

(i)                                     members of the board of directors of the Company;

(ii)                                  executive officers of the Company; and

 

5

 

(iii)                               other managers and senior employees with direct reference to the board of directors, internal auditors and deputy internal auditors.

 

3.4                               A person must be included on the list even if the person has only had access to inside information in isolated cases. This may e.g. be relevant with respect to persons who are involved with the Company in connection with merger and take-over offers, substantial acquisitions/asset disposals, product development or likewise.

 

3.5                               The Insider List shall, as a minimum, contain the following information on the persons having or having had access to inside information:

 

(i)                                     the identity in the form of:

 

(a)                                 name and civil registration number (CPR-no.) for physical persons having a Danish civil registration number;

(b)                                 name, address and date of birth for physical persons not having a Danish civil registration number; and

(c)                                  name, address and company registration number for legal persons. 

 

(ii)                                  the reason why the person in question is stated on the Insider List; and

 

(iii)                               the date of the insertion or update of information regarding the persons in question.

 

3.6                               The Insider List shall be updated immediately when

 

(i)                                     changes occur as to the reason why the person is included on the Insider List;

 

(ii)                                  a new person is added to the Insider List; or

 

(iii)                               a person already on the Insider List no longer has access to inside information.

 

3.7                               The duty to update the Insider List implies that a person shall only appear on the list for as long as such person has access to inside information. Consequently, persons

 

6

 

only having had access to inside information in isolated circumstances shall be removed from the list, when the information, which such persons have had access to, has been published. Persons with regular access to inside information shall be stated on the list for as long as such persons have regular access to inside information.

 

3.8                               In the event that a person has become an insider outside of normal office hours, the Insider List must be updated the next business day.

 

3.9                               Persons included on the Insider List shall without undue delay be informed (a) that they have been included on the list; (b) of the legal obligations pertaining with possession of inside information; and (c) of the legal sanctions associated with any abuse and unauthorized disclosure of inside information.

 

Persons included on the list shall be informed that unauthorized disclosure of inside information is punishable under Danish law by fine or up to 1 year and 6 months imprisonment. Abuse of inside information is punishable by fine or up to 1 year and 6 months imprisonment. In case of intentional and aggravated abuse or in case of repeated offences, the punishment may increase to 6 years imprisonment. Additionally, penalties under U.S. securities laws for the unauthorized disclosure of inside information are severe and can subject the disclosing party to civil and/or criminal penalties, including treble damages, imprisonment of up to 20 years and criminal fines of up to $5 million per violation and civil fines of up to three times the gain or loss avoided, regardless of whether the relevant person benefited.

 

Unauthorized disclosure or abuse will also imply a violation of the conditions of employment, if any, with the Company and may lead to immediate termination and suspension of employment. The Company may also be obliged to report the matter to the police.

 

3.10                        The management board is responsible for preparing the Company’s Insider List. The board of directors may appoint a trusted employee to handle the day-to-day updating. The Insider List must state the full name and address of such person.

 

3.11                        The Insider List shall be kept for no less than five (5) years after preparation or updating of the list.

 

7

 

3.12                        It is the responsibility of the Company’s chief financial officer to ensure compliance with established procedures.

 

4.                                      OBSERVING CONFIDENTIALITY - RESPONSIBILITIES

 

4.1                               All of the Company’s employees are obliged to treat inside information confidential. It is the responsibility of the chief financial officer to emphasize the importance hereof to the Company’s employees.

 

4.2                               Inside information shall, internally as well as externally, be kept with as few persons as possible.

 

4.3                               The Company’s board of directors and officers shall, when working on cases containing inside information, ensure that this information is disclosed to only those employees, external advisors etc., which specifically need to receive this information.

 

4.4                               It is moreover the responsibility of the Company’s officers to ensure confidential treatment of inside information, including by way of preparing further guidelines, to the effect that

 

·                                          special attention is observed in connection with copying and transmissions, including when using e-mails;

·                                          access to inside information in data rooms, including storage of text, is ensured and limited to the relevant persons by use of passwords or similar;

·                                          careful shredding takes place and that confidential material is not left at places accessible for unauthorized persons;

·                                          transmissions of confidential faxes, letters and e-mails are coordinated in a manner so that only the right recipient will receive the transmission; and

·                                          confidential matters and information are disclosed under a code name or on anonymous terms.

 

8

 

5.                                      DISCLOSURE OF INSIDE INFORMATION

 

5.1                               Any person with inside information may not disclose such information to any other person unless such disclosure is made within the normal course of the exercise of his employment, profession or duties and that the recipient has a specific, professional need of the information.

 

5.2                               Any employee participating in the Company’s investor meetings shall in particular be aware that no information is being disclosed on the meetings, which may affect the market price, as this may be considered an unlawful disclosure of inside information.

 

5.3                               The recipient of inside information shall expressly be made aware that inside information is involved, which may not be disclosed to others.

 

5.4                               An employee in possession of inside information and having the need to disclose this information (in full or in part) to others, either inside or outside of the Company, shall in case of doubt present the matter to the management board. The employee shall, unless it will constitute a disclosure of inside information, inform the chief financial officer or, in his absence, another member of the management about the disclosure, which has taken place, including stating which persons who have received the inside information.

 

5.5                               The chief executive officer shall ensure that employees, external advisors and business partners having access to inside information undertake a non-disclosure and confidentiality obligation substantially in the form attached hereto as Schedule 1, or that external advisors declare that they are comprised by a set of professional rules being as strict as these present rules. Otherwise, the Company will be obliged to publish the inside information as a whole at the time of the disclosure to the third party.

 

5.6                               Unless otherwise specifically resolved by the board of directors, only the chairman of the Company’s board of directors and the chief executive officer shall be entitled to speak on behalf of the Company and the Group about matters, which may have an impact on the market price of the Company’s shares and other securities.

 

9

 

6.                                      SUSPICION OF VIOLATION

 

6.1                               It is emphasized that these internal rules has been prepared for the purpose of preventing inside information from becoming available to others than those needing such information. Violations of these rules may constitute a punishable offence and may seriously harm the Company. Regardless of the Company’s wish to protect its employees, the Company may in the event of a violation of these internal rules be obliged to report the violating person(s) to the police and to terminate the employment with immediate effect.

 

7.                                      OBLIGATION TO PUBLISH INFORMATION UPON UNLAWFUL DISCLOSURE

 

7.1                               If established that inside information has been unlawfully disclosed, the chief financial officer shall ensure that the inside information, as a whole, is immediately published in accordance with clause 2.2 above. This obligation does, however, not apply if the receiving third party is subject to professional secrecy according to law, regulatory requirements, articles of association or contract, and if the recipient in connection with the disclosure was informed that the information is inside information and that the recipient thus is subject to the prohibition against disclosure of inside information.

 

8.                                      ANNUAL UPDATE

 

8.1                               The board of directors shall on a regular basis and at least once a year, review and reconsider the contents of these internal rules.

 

9.                                      EFFECTIVE DATE, ETC.

 

9.1                               These internal rules are effective as per [date].

 

9.2                               A copy of these internal rules will upon be handed over to and the Danish Financial Supervisory Authority upon their request.

 

10

 

	
Board of Directors:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Name:
    

 

11

 

Schedule 1 — Non-Disclosure and Confidentiality Undertaking

 

CONFIDENTIAL

 

	
To:
    	
Forward Pharma A/S
    
	
 
    	
Østergade 24 A 1
    
	
 
    	
1100 Copenhagen K
    
	
 
    	
Denmark
    
	
 
    	
Company registration no:   28865880
    

 

NON-DISCLOSURE AND CONFIDENTIALITY UNDERTAKING

 

The undersigned hereby confirms (i) having received a copy of Forward Pharma A/S’ Internal Rules on dissemination of inside information for the purpose of preventing inside information from becoming available to others than those needing such information; and (ii) undertakes to observe and comply with these internal rules.

 

	
[Place],   [Date]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name:
    	
 
    
	
Position:
    	
 
    
	
Address:
    	
 
    

 

12Exhibit 10.3

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “Agreement”) is made and entered into this        day of [·], 2014, by and between Forward Pharma A/S, a Danish corporation (the “Company,” which term shall include, where appropriate, any Entity (as hereinafter defined) controlled directly or indirectly by the Company), and [·] (the “Indemnitee”).

 

WHEREAS, the Company is preparing an initial public offering of American Depositary Shares representing shares in the Company on the NASDAQ Stock Market, New York (the “IPO”);

 

WHEREAS, increased corporate litigation has subjected directors and officers to litigation risks and expenses;

 

WHEREAS, it is essential to the Company that it be able to retain and attract as directors and officers the most capable persons available;

 

WHEREAS, the Company desires to provide Indemnitee with specific contractual protections assuring Indemnitee of full indemnification against litigation risks and expenses (regardless, among other things, of any amendment to or revocation of the Memorandum or Articles or any change in the ownership of the Company or the composition of its board of directors (the “Board of Directors”)); and

 

WHEREAS, Indemnitee is relying upon the rights afforded under this Agreement in becoming or continuing as a director and/or officer of the Company.

 

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

1.             Definitions.

 

(a)           “Corporate Status” describes the status of a person who is serving or has served (i) as a director and/or officer of the Company, or (ii)  as a director and/or officer of any other Entity at the request of the Company.  For purposes of subsection (ii) of this Section 1(a), if Indemnitee is serving or has served as a director and/or officer of a Subsidiary (as defined below), the Indemnitee shall be deemed to be serving at the request of the Company. If Indemnitee is an employee of the Company, Corporate Status shall not include actions taken by Indemnitee in any capacity other than as a director and/or officer.

 

(b)           “Entity” shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity.

 

(c)           “Expenses” shall mean all fees, costs and expenses reasonably incurred by Indemnitee in connection with any Proceeding (as defined below), including, without limitation,

 

 

reasonable attorneys’ fees, disbursements and retainers (including, without limitation, any such fees, disbursements and retainers incurred by Indemnitee pursuant to Sections 10 and 11(c) of this Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses. Expenses shall also include fees, costs and expenses reasonably incurred in connection with any appeal relating from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement including without limitation, the premium, security for, and other costs relating to any security bond or its equivalent.

 

(d)           “Indemnifiable Expenses,” “Indemnifiable Liabilities” and “Indemnifiable Amounts” shall have the meanings ascribed to those terms in Section 2(a) below.

 

(e)           “Liabilities” shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement.

 

(f)            “Proceeding” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee’s rights hereunder.

 

(g)           “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other Entity of which the Company has control. Control means the power to exercise decisive influence over a subsidiary’s financial and operating decisions owns as set out in Section 7 of the Danish Companies Act (in Danish: selskabsloven) (the “Danish Companies Act”).

 

(h)           “to the fullest extent permissible by applicable law” shall include, but not be limited to: (i) the fullest extent permitted by the provisions and general principles of Danish law, including the Danish Companies Act; and (ii) the fullest extent authorized or permitted by any amendments to or replacements of the Danish Companies Act adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its directors and/or officers.

 

2.             Agreement to Indemnify.  The Company agrees to hold harmless and indemnify Indemnitee to the fullest extent permissible by applicable law as follows:

 

(a)           Proceedings.  Subject to the exceptions contained in Section 3(a) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities actually and reasonably incurred or paid by Indemnitee in connection

 

2

 

with such Proceeding (referred to herein as “Indemnifiable Expenses” and “Indemnifiable Liabilities,” respectively, and collectively as “Indemnifiable Amounts”).

 

(b)           Affiliated Stockholder.  If (i) the Indemnitee is or was affiliated with one or more venture capital or private equity funds or other entities that has invested, directly or indirectly, in the Company (an “Affiliated Stockholder”), and (ii) the Affiliated Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of the Affiliated Stockholder’s position as a direct or indirect stockholder of, or lender to, the Company, or the Affiliated Stockholder’s appointment of or affiliation with the Indemnitee or any other director or officer, including any allegation of inappropriate control or influence over the Company or its Board members, officers, equity holders or debt holders, then the Affiliated Stockholder will be entitled to indemnification hereunder for Expenses and Liabilities to the same extent as the Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of the Indemnitee and advancement of Expenses shall apply to any such indemnification of the Affiliated Stockholder.

 

3.             Exceptions to Indemnification.  Subject to Section 19 below, Indemnitee shall be entitled to indemnification under Section 2(a) above in all circumstances and with respect to each and every specific claim, issue or matter involved in the Proceeding out of which Indemnitee’s claim for indemnification has arisen to the fullest extent permissible by applicable law, except as follows:

 

(a)           Proceedings.  If indemnification is requested under Section 2(a) and it has been finally adjudicated by a court of competent jurisdiction that, in connection with such specific claim, issue or matter, Indemnitee failed to act (i) in good faith or (ii) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder to the extent that they arise out of such claim, issue or matter.

 

(b)           Insurance Proceeds.  To the extent payment is actually made to the Indemnitee under a valid and collectible insurance policy maintained at the expense of the Company in respect of Indemnifiable Amounts in connection with such specific claim, issue or matter, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder except in respect of any excess of such Indemnifiable Amounts beyond the amount of payment under such insurance.

 

4.             Procedure for Payment of Indemnifiable Amounts.  Indemnitee shall submit to the Company a written request specifying the Indemnifiable Amounts for which Indemnitee seeks payment under Section 2 of this Agreement and the basis for the claim.  The Company shall pay such Indemnifiable Amounts to Indemnitee promptly, but in no event later than thirty (30) calendar days after receipt of such request.  At the request of the Company, Indemnitee shall furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder.

 

5.             Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, and without limiting any such provision,

 

3

 

to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the fullest extent permissible by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify to the fullest extent permissible by applicable law Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, by reason of settlement, judgment, order or otherwise, shall be deemed to be a successful result as to such claim, issue or matter, provided always that any settlement of Proceedings, claims, issues and matters shall be approved by the Company in writing advance. For the avoidance of doubt, the Company shall have no liability or obligation pursuant to this Agreement to indemnify the Indemnitee for any Indemnifiable Liabilities arising from any settlement of the Indemnitee reached without the Company’s prior written approval.

 

6.             Effect of Certain Resolutions.  Neither the settlement nor termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create a presumption that Indemnitee is not entitled to indemnification hereunder.  In addition, the termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, had reasonable cause to believe that Indemnitee’s action was unlawful.

 

7.             Agreement to Advance Expenses; Undertaking.  The Company shall advance to the fullest extent permissible by applicable law all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding in which Indemnitee is involved by reason of such Indemnitee’s Corporate Status within thirty (30) calendar days after the receipt by the Company of a written statement from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.  To the extent required by Danish law, Indemnitee hereby undertakes to repay any and all of the amount of Indemnifiable Expenses paid to Indemnitee if it is finally determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement to indemnification with respect to such Expenses.  This undertaking is an unlimited general obligation of Indemnitee.

 

8.             Procedure for Advance Payment of Expenses.  Indemnitee shall submit to the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 7 of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses.

 

4

 

9.             Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he or she shall be indemnified to the fullest extent permissible by applicable law against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

 

10.          Remedies of Indemnitee.

 

(a)           Right to Petition Court.  In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Sections 2 and 4 above or a request for an advancement of Indemnifiable Expenses under Sections 7 and 8 above and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may file a writ with the court set out in Section 21 to order for enforcement the Company’s obligations under this Agreement.

 

(b)           Expenses.  The Company agrees to reimburse Indemnitee in full for any Expenses in connection with any Proceeding reasonably incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by Indemnitee under Section 10(a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith, whether or not Indemnitee is successful in whole or in part in connection with any such action, except to the extent that it has been finally adjudicated by a court of competent jurisdiction that such reimbursement would be unlawful.

 

(c)           Failure to Act Not a Defense.  The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption that such payment or advancement is not permissible.

 

11.          Defense of the Underlying Proceeding.

 

(a)           Notice by Indemnitee.  Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses unless and to the extent the Company’s ability to defend in such Proceeding is adversely prejudiced thereby.

 

(b)           Defense by Company.  Subject to the provisions of the last sentence of this Section 11(b) and of Section 11(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to the payment of Indemnifiable Amounts hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within three weeks of the Company’s receipt of notice of any such Proceeding under Section

 

5

 

11(a) above.  The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding on the terms and principles set out in this Agreement.  This Section 11(b) shall not apply to a Proceeding brought by Indemnitee under Section 10(a) above or pursuant to Section 18 below.

 

(c)           Indemnitee’s Right to Counsel.  Notwithstanding the provisions of Section 11(b) above, in any Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, at the Indemnitee’s option Indemnitee shall have the right to retain counsel of Indemnitee’s reasonable choice, at the expense of the Company, to represent Indemnitee in connection with any such matter.

 

12.          Representations and Warranties of the Company.  The Company hereby represents and warrants to Indemnitee as follows:

 

(a)           Authority.  The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

 

(b)           Enforceability.  This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally.

 

13.          Insurance.  The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of director and officer liability insurance with a reputable insurance company with Indemnitee as insured party.  For so long as Indemnitee shall have Corporate Status, Indemnitee shall be named as an insured in all policies of director and officer liability insurance in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s officers and directors.  If, at the time of the receipt of a notice of a claim pursuant to the terms of this Agreement, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all reasonable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.  Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, or if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit.

 

14.          No Duplication of Payments.  Notwithstanding anything to the contrary in this Agreement, the Company shall not be liable under this Agreement to make any payment in

 

6

 

connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment under any insurance policy or otherwise of the amounts otherwise indemnifiable hereunder. The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee as a result of the Indemnitee’s Corporate Status with an Entity other than the Company shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other Entity.

 

15.          Contract Rights Not Exclusive.  The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Memorandum or Articles, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s serving as a director of the Company.

 

16.          Successors.  This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee.  This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate Status.

 

17.          Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

 

18.          Indemnitee as Plaintiff.  Except as provided in Section 10(b) of this Agreement and in the next sentence, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by Indemnitee against the Company, any Subsidiary, any Entity which it controls, any director or officer thereof, or any third party, unless the Board of Directors has consented to the initiation of such Proceeding or the Company provides indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.  This Section shall not apply to counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee.

 

19.          Modifications and Waivers; Counterparts.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver. This Agreement may also be executed and delivered by

 

7

 

facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

 

20.          General Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged during normal business hours, and if not, the next business day after transmission, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

	
(i)
    	
If   to Indemnitee, to:
    
	
 
    	
 
    
	
 
    	
[·]
    
	
 
    	
[·]
    
	
 
    	
[·]
    
	
 
    	
 
    
	
(ii)
    	
If   to the Company, to:
    
	
 
    	
 
    
	
 
    	
Forward   Pharma A/S
    
	
 
    	
Østergade   24A, 1.s.
    
	
 
    	
1100   Copenhagen K
    
	
 
    	
Denmark
    
	
 
    	
Attn:   Chairman of board of director
    

 

or to such other address as may have been furnished in the same manner by any party to the others.

 

22.          Governing Law; Consent to Jurisdiction; Service of Process.  This Agreement shall be governed by and construed in accordance with the laws of the Denmark without regard to its rules of conflict of laws.  Each of the Company and Indemnitee hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the Copenhagen City Court (in Danish: Københavns Byret) (the “Copenhagen City Court”) for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Copenhagen City Court.

 

23.          Joinders.  Subsidiaries of the Company may from time to time join this Agreement by signing a joinder in substantially the form attached hereto as Exhibit A.  The Company and all Subsidiaries that have joined this Agreement shall be jointly and severally liable for all obligations of the Company under this Agreement.

 

24.          Assignment. Except as otherwise set forth herein, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any party hereto, without the prior written consent of all of the other parties hereto.

 

8

 

25.          Entire Agreement.  Without limitation to the Memorandum and the Articles, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

26.          Effective Date. This Agreement is conditional upon the Company’s board of directors approving the IPO offer price and the issuance of American Depositary Shares to eligible investors, and satisfaction of the conditions for admission to trading set by NASDAQ Global Market, New York. Where these conditions for the Agreement have all been fully satisfied the Agreement shall enter into force with retroactive effect from the date of the first public filing of the prospectus.

 

9

 

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the day and year first above written.

 

	
INDEMNITEE
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
FORWARD   PHARMA A/S:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Florian   Schönharting
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Kevin   Buchi
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Torsten   Goesch
    	
 
    

 

 

EXHIBIT A

 

JOINDERS

 

The undersigned hereby join in the obligations of Forward Pharma A/S under this Indemnification Agreement as provided in Section 23 above on this        day of           , 20          .

 

	
 
    	
[
    	
]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[
    	
]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]