Document:

Exhibit 4.1

 

	
  C1234567890

  	
  104598

  

 

INCORPORATED
UNDER THE CANADA BUSINESS CORPORATIONS ACT

 

	
  Number

  	
   

  	
  Shares

  
	
   

  	
  ONCOGENEX
  TECHNOLOGIES INC.

  	
  * * * * 0 * * * * * * *
  * *

  
	
  ZQ 123456

  	
   

  	
  * * * * * 0 * * * * * *
  * *

  * * * * * * 0 * * * * * * *

  * * * * * * * 0 * * * * * *

  * * * * * * * * 0 * * * * *

  

 

	
  THIS CERTIFIES THAT

  	
   

  	
  CUSIP 682308 10 1

  
	
   

  	
  SPECIMEN

  	
   

  
	
   

  	
   

  	
  ISIN CA 6823081014

  
	
   

  	
   

  	
   

  
	
  is the registered holder of

  	
   

  	
  SEE REVERSE FOR
  CERTAIN DEFINITIONS

  
	
   

  	
   

  	
   

  
	
   

  	
  ***ZERO***

  	
   

  

 

FULLY PAID AND
NON-ASSESSABLE COMMON SHARES WITHOUT PAR VALUE IN THE CAPITAL OF

 

ONCOGENEX
TECHNOLOGIES INC.

 

transferable on the books of the Company only upon surrender of this
certificate properly endorsed.

 

This certificate is not valid unless countersigned by the Transfer
Agent and Registrar of the Company.

 

IN WITNESS WHEREOF the Company has caused this certificate to be signed
on its behalf by the facsimile signatures of its duly authorized officers.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Scott Cormack    VOID

  	
   

  	
  /s/ Stephen Anderson    VOID

  
	
   

  	
  Chief Executive
  Officer,

  	
   

  	
  Chief Financial Officer
  and

  
	
   

  	
  President and Director

  	
   

  	
  Corporate Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COUNTERSIGNED AND REGISTERED

  COMPUTERSHARE TRUST COMPANY, INC.

  (DENVER)

  TRANSFER AGENT AND REGISTRAR

  	
  OR

  	
  COUNTERSIGNED AND REGISTERED

  COMPUTERSHARE INVESTOR SERVICES INC.

  (VANCOUVER)(TORONTO)

  TRANSFER AGENT AND REGISTRAR

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  	
   

  	
  Authorized Officer

  

 

The shares represented by
this certificate are transferable at the offices of Computershare Investor
Services Inc.

in Vancouver, BC and Toronto, ON or at the offices of Computershare Trust
Company, Inc. in Denver, CO.

 

	
  SECURITY INSTRUCTIONS ON REVERSE

  	
  VOIR LES INSTRUCTIONS
  DE SÉCURITÉ AU VERSO

  

 

 

The shares represented by this certificate have rights, privileges,
restrictions and conditions attached thereto and the Company will furnish to a
shareholder, on demand and without charge, a full copy of the text of: (a) the
rights, privileges, restrictions and conditions attached to each class
authorized to be issued and to each series in so far as the same have been
fixed by the directors; and (b) the authority of the directors to fix the
rights, privileges, restrictions and conditions of subsequent series.

 

 

 

	
  The following abbreviations shall be construed as
  though the words set forth below opposite each abbreviation were written out
  in full where such abbreviation appears:

  
	
   

  
	
  TEN COM

  	
  -

  	
  as tenants in common

  
	
  TEN ENT

  	
  -

  	
  as tenants by the entireties

  
	
  JT TEN

  	
  -

  	
  as joint tenants with rights of survivorship and not
  as

  tenants in common

  
	
   

  	
   

  	
   

  
	
  (Name) CUST (Name) UNIF

  GIFT MIN ACT (State)

  	
  -

  	
  (Name) as Custodian for (Name) under the

  (State) Uniform Gifts to Minors Act

  
	
   

  
	
  Additional abbreviations may also be used though not
  in the above list.

  

 

	
  *

  	
  Please insert Social Insurance, Tax Identification,
  or

  other identifying number of transferee.

  	
   

  

 

For value received the undersigned hereby sells, assigns and transfers
unto

 

 

Insert name and
address of transferee

 

 

 

 

 

shares represented by
this certificate and does hereby irrevocably constitute and appoint

 

 

the attorney of the
undersigned to transfer the said shares on the books of the Company with full
power of substitution in the premises.

 

	
  DATED:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature of
  Shareholder

  	
   

  	
  Signature of Guarantor

  

 

Signature Guarantee:

The signature on this assignment must correspond with the name as
written upon the face of the certificate(s), in every particular, without
alteration or enlargement, or any change whatsoever and must be guaranteed by a
major Canadian Schedule I chartered bank or a member of an acceptable Medallion
Signature Guarantee Program (STAMP, SEMP, MSP). The Guarantor must affix a
stamp bearing the actual words “Signature Guaranteed”.

 

In the USA, signature guarantees must be done by members of a
“Medallion Signature Guarantee Program” only.

 

Signature guarantees are not accepted from Treasury Branches, Credit
Unions or Caisses Populaires unless they are members of the Stamp Medallion
Program. 

 

Computershare’s Privacy Notice:

In the course of providing services to you and our corporate clients,
Computershare receives non-public personal information about you - your name,
address, social insurance number, securities holdings, transactions, etc. We
use this to administer your account, to better serve your and our clients’
needs and for other lawful purposes. We have prepared a Privacy Code to tell
you more about our information practices and how your privacy is protected. It
is available at our website, computershare.com, or by writing us at 100
University Avenue, Toronto, Ontario, M5J 2Y1. *You are required to provide your
SIN if you will receive income on these securities. We will use this number for
income reporting. Computershare may also ask for your SIN as an
identification-security measure if you call or write to request service on your
account; however you may decline this usage.

 

 

	
  SECURITY INSTRUCTIONS - INSTRUCTIONS DE SÉCURITÉ

   

  THIS IS WATERMARKED PAPER, DO NOT ACCEPT WITHOUT
  NOTING WATERMARK. HOLD TO LIGHT TO VERIFY WATERMARK.

  PAPIER FILIGRANÉ, NE PAS ACCEPTER SANS VÉRIFIER LA
  PRÉSENCE DU FILGRANE, POUR CE FAIRE, PLACER Á LA LUMIÉRE.

  	
  [MAP]

  	
  00DOQAExhibit 4.2

 

FURTHER
AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

 

THIS AGREEMENT is dated as of September 24, 2003 and is further amended,
restated and dated for reference as of August 10, 2005

 

BETWEEN:

 

ONCOGENEX
TECHNOLOGIES INC., a
corporation formed under the laws of Canada and having an address at Suite 400,
1001 West Broadway, Vancouver, British Columbia, V6H 4B1, Facsimile No. (604)
736-3687

 

(the “Corporation”)

 

AND:

 

VENTURES WEST
7 LIMITED PARTNERSHIP,
a limited partnership registered under the laws of the Province of British
Columbia and having an address at Suite 2500, 1066 West Hastings Street,
Vancouver, British Columbia, V6E 3X1, Facsimile No. (604) 687-2145

 

(“Ventures West Canada”)

 

AND:

 

VENTURES WEST
7 U.S. LIMITED PARTNERSHIP, a limited partnership registered under the laws of Delaware and having
an address at Suite 2500, 1066 West Hastings Street, Vancouver, British
Columbia, V6E 3X1, Facsimile No. (604) 687-2145

 

(“Ventures West U.S.”)

 

AND:

 

H.I.G.
HORIZON CORP., a
corporation formed under the laws of Barbados and having an address at c/o
H.I.G Ventures, 27th Floor, 1001 Brickell Bay Dr., Miami, Florida, U.S.A.  33131, Facsimile No. (305) 379-2013

 

(“H.I.G. Horizon”)

 

AND:

 

WORKING
OPPORTUNITY FUND (EVCC) LTD., a company formed under the laws of the Province of British Columbia
and having an address at Suite 2600, 1055 West Georgia Street, Vancouver,
British Columbia, V6E 3R5, Facsimile No. (604) 669-7605

 

(“WOF”)

 

*Certain information in this exhibit has been omitted as confidential,
as indicated by [***]. This information has been filed separately with the
Commission.

 

 

AND:

 

BUSINESS
DEVELOPMENT BANK OF CANADA, a Crown corporation formed under the Business
Development Bank of Canada Act and having an address at 444 7th
Avenue SW, Suite 110, Calgary, Alberta, T2P 0X8, Facsimile No. (403) 292-6951

 

(“BDC”)

 

AND:

 

MILESTONE
MEDICA CORPORATION, a
corporation formed under laws of Canada and having an address at 1 Richmond
Street West, 8th Floor, Toronto, Ontario, M5H 3W4, Facsimile No. (416) 974-1288)

 

(“MMC”)

 

AND:

 

MARTIN GLEAVE, Physician, of [***]

 

(“Gleave”)

 

AND:

 

603356 B.C.
LTD., a company formed
under the laws of the Province of British Columbia and having an address at
[***]

 

(“Gleave HoldCo”)

 

AND:

 

SCOTT CORMACK, a Businessperson and having an address at
[***]

 

(“Cormack”)

 

AND:

 

WHI MORULA
FUND, LLC, a limited
liability company of 191 North Wacker Drive, Suite 1500, Chicago, IL, 60606, 

Facsimile No. 312-621-0984

 

(“WH”)

 

WHEREAS:

 

A.                                   On September 24, 2003, the Corporation, BDC,
MMC, Cormack, Ventures West Canada, Ventures West U.S., H.I.G. Horizon, WOF,
Gleave and Gleave HoldCo (collectively, the “Current
Parties”) entered into an agreement to establish certain rights and
obligations

 

2

 

in respect of the conduct of
the affairs of the Corporation (as hereinafter defined), the holding and sale
of their respective securities, and certain other matters (the “Amended and
Restated Shareholders’ Agreement”); and

 

B.                                     The Current Parties and WH wish to amend and
restate the Amended and Restated Shareholders’ Agreement as provided for
herein.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, the
mutual covenants and agreements set forth in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by each of the parties), the parties hereby agree as follows:

 

ARTICLE 1 - INTERPRETATION

 

1.1                               Interpretation

 

In this Agreement, unless otherwise provided:

 

(a)                                  “Acquisition”
means any bona fide acquisition of any shares or business assets by the
Corporation, whether by purchase, exchange, amalgamation or otherwise, from an
arms-length third party for fair market value, approved by Major Investor
Approval;

 

(b)                                 “Acquisition
Price” means $9.21 in United
States funds, subject to immediate adjustment from time to time to reflect any
subdivisions or consolidations of the Common Shares after the Issue Date and
the Acquisition Price shall simultaneously be adjusted upon the happening of
each such event by multiplying the Acquisition Price in effect immediately
prior to such event by the following fraction:

 

(i)                                     the numerator of which is the number of Common
Shares issued and outstanding immediately prior to the event, and

 

(ii)                                  the denominator of which is the number of
Common Shares issued and outstanding immediately after completion of the event;

 

(iii)                               and any such adjustments shall be successive
and each resulting new Acquisition Price shall continue in effect until the
next adjustment (if any) is made;

 

(c)                                  “Act”
means the Canada Business Corporations Act
(Canada), as amended from time to time, and every statute that may be
substituted therefor, and in the case of any such amendment or substitution,
any reference in this Agreement to the Act shall be read as referring to the
amended or substituted provisions therefor;

 

(d)                                 “Affiliate”
means with respect to any Person:

 

(i)                                     any corporation which is directly or indirectly
Controlled by that Person;

 

3

 

(ii)                                  if a corporation, any corporation which
Controls that Person, and any corporation which is directly or indirectly
Controlled by a corporation which Controls that corporate Person; and

 

(iii)                               if a partnership or limited partnership, any
partner of the partnership or any corporation which Controls that partner and
any corporation which is directly or indirectly Controlled by a corporation
that Controls that partner;

 

(e)                                  “Agreement”
means this further amended and restated shareholders’ agreement, together with
any amendments to or restatements or replacements of this amended and restated
shareholders’ agreement;

 

(f)                                    “Associate”
has the same meaning as has been designated to that term in the Act;

 

(g)                                 “Board”
means the board of Directors of the Corporation;

 

(h)                                 “Board
approval”,“approval of the Board”,“determined
by the Board”, “as the Board
determines” or any such similar terminology denoting approval of the
Board means approval of the Board determined by majority vote of those
Directors present at a duly called and convened meeting of the Board at which
the matter is considered or by a written resolution signed by all Directors
which may be signed in one or more counterparts which together shall be treated
as one and the same document;

 

(i)                                     “Business”
means the business conducted by the Corporation and proposed to be conducted by
the Corporation, including, without limitation, research, development and
commercialisation of oncology therapeutics and diagnostics acquired by or
developed by the Corporation;

 

(j)                                     “Business Day”
means any day except a Saturday or Sunday and legal holidays for Canadian
chartered banks in Vancouver, British Columbia, Canada;

 

(k)                                  “Class A
Preferred Shares” means the Class A Preferred shares, issuable in
series, in the share capital of the Corporation and “Class A Preferred Share” means any one of them;

 

(l)                                     “Class B
Preferred Shares” means the Class B Preferred shares, issuable in
series, in the share capital of the Corporation and “Class B Preferred Share” means any one of them;

 

(m)                               “Common
Shares” means the shares of any class of common shares in the share
capital of the Corporation and “Common Share”
means any one of them;

 

(n)                                 “Constating
Documents” means the articles of incorporation, continuance or
amalgamation pursuant to which a corporation was incorporated, continued or
amalgamated, as the case may be, together with any amendments thereto or
replacements thereof, and the by-laws (if any) of such corporation;

 

4

 

(o)                                 “Control”
or “Controls” means, in relation
to a corporation:

 

(i)                                     the right to cast a majority of the votes which
may be cast at a general meeting of that corporation; or

 

(ii)                                  the right to elect or appoint, directly or
indirectly, a majority of the directors of that corporation

 

provided, however, that a
corporation shall be deemed to be Controlled by either of Gleave or Gleave
HoldCo only if Gleave or Gleave HoldCo, as applicable, (i) has the right
to cast all of the votes which may be cast at a general meeting of that
corporation and (ii) Gleave, Gleave HoldCo or members of Gleave’s immediate
family own 100% of the shares in the capital of the corporation.

 

(p)                                 “Corporation”
means OncoGenex Technologies Inc. and includes any successor resulting from any
amalgamation, merger, arrangement or other reorganization of or including the
Corporation or any continuance under the laws of another jurisdiction;

 

(q)                                 “Directors”
means the persons who are, from time to time, elected or appointed directors of
the Corporation and a “Director”
means any one of them;

 

(r)                                    “Environmental
Laws” means any applicable federal, provincial, state, municipal and
local laws, statutes, ordinances, by-laws, regulations and orders, directives
and decisions, approvals of all governmental authorities or administrative or
regulatory agency related to environmental, health, occupational safety and
product liability matters, in effect from time to time;

 

(s)                                  “Equity
Securities” means:

 

(i)            Shares or any other security of the Corporation that
carries the residual right to participate in the earnings of the Corporation
and, on liquidation, dissolution or winding-up, in the assets of the
Corporation, whether or not the security carries voting rights;

 

(ii)           any warrants, options or rights entitling the holders
thereof to purchase or acquire any such securities; or

 

(iii)          any securities issued by the Corporation which are
convertible or exchangeable into such securities;

 

(t)                                    “Founder”
means Gleave and Gleave HoldCo;

 

(u)                                 “Fully
Converted Basis” at any time means that all Shares convertible into
Common Shares outstanding at that time shall be deemed to have been fully
converted, in accordance with the rights, privileges, restrictions and
conditions attached thereto, into Common Shares and Common Shares issuable as a
result thereof shall be deemed to have been issued and to form part of the
holdings of the Person(s) entitled to receive such Common Shares;

 

5

 

(v)                                 “Fully
Diluted Basis” at any time means that all options, warrants or other
rights of any kind to acquire Common Shares and all securities convertible or
exchangeable into Common Shares outstanding at that time shall be deemed to
have been fully exercised, converted or exchanged, as the case may be, and the
Common Shares issuable as a result thereof shall be deemed to have been fully
issued and to form part of the holdings of the Person(s) entitled to receive
such Common Shares;

 

(w)                               “GrowthWorks
Group” means

 

(i)                                     WOF;

 

(ii)                                  Growth Works Capital Ltd. (“GrowthWorks”);

 

(iii)                               any investment fund (whether corporation,
limited partnership, trust or other entity) to which GrowthWorks or any
Affiliate or Associate of GrowthWorks provides management or investment
advisory services; or

 

(iv)                              any Affiliate or an Associate of the foregoing;

 

(x)                                   “GrowthWorks
Shareholders” means the members of the GrowthWorks Group who are
parties to this Agreement, and “GrowthWorks
Shareholder” means any one of them;

 

(y)                                 “H.I.G.
Horizon Nominee” has the meaning set forth in
Section 3.1(a)(iv);

 

(z)                                   “Incentive
Compensation Plan/ESOP” means the employee stock option plan of the
Corporation (amended to provide for the grant of options to acquire up to
1,905,557 Common Shares) as amended from time to time ;

 

(aa)                            “Industry
Expert” means an individual who:

 

(i)                                     is not an employee of the Corporation or a
relative thereof;

 

(ii)                                  is not an employee or direct or indirect
shareholder of or consultant to any shareholder of the Corporation (including,
without limitation, any Shareholder);

 

(iii)                               has significant knowledge of the biotechnology
industry; and

 

(iv)                              has a stature such that a reasonable, prudent
person would view such individual as being able to benefit the Corporation as a
Director.

 

6

 

(bb)                          “Investment
Agreement” means the investment agreement dated August 10, 2005
among the Corporation, Ventures West Canada, Ventures West US, H.I.G. Horizon,
WOF, BDC and WH;

 

(cc)                            “Investors” means Ventures West Canada, Ventures West US,
H.I.G. Horizon, WOF, BDC, MMC and WH and “Investor”
means any one of them;

 

(dd)                          “Issue Date”
means the first date upon which Class B Preferred Shares are issued;

 

(ee)                            “Liquid
Securities” means any securities that are traded on the Toronto
Stock Exchange, New York Stock Exchange or quoted on the NASDAQ National Market
that are free trading, not subject to any escrow agreement or to any statutory
or contractual hold period (the “Acquisition
Securities”) and where the aggregate number of the Acquisition
Securities to be issued to the holders of Common Shares, calculated on a Fully
Diluted Basis, is less than 20% of the aggregate trading volume of the
Acquisition Securities on the Toronto Stock Exchange, New York Stock Exchange
and/or the NASDAQ National Market for the three month period immediately prior
to the issuance of such securities;

 

(ff)                                “Major
Investor Approval” in respect of a matter, means that Major
Investors holding not less than 50% of the Class B Preferred Shares held by the
Major Investors at the time have approved of the matter in writing;

 

(gg)                          “Major
Investors” means Ventures West Canada, Ventures West U.S., H.I.G.
Horizon, WOF and BDC (or their respective successors or permitted assigns) and
“Major Investor” means any
one of them, provided that if any of the Major Investors ceases to be a party
to this Agreement without successor or assignee then “Major Investors” or “Major Investor” means the remaining parties
or party alone;

 

(hh)                          “Person”
means any individual, partnership, joint venture, syndicate, sole
proprietorship, company or corporation with or without share capital, trust,
trustee, executor, administrator, power of attorney or other legal personal
representatives, regulatory body or agency, government or governmental agency,
authority or entity howsoever designated or constituted;

 

(ii)                                  “purchase”
includes any purchase, acquisition or other arrangement by which a Person
obtains beneficial ownership of a security from another Person, whether or not
voluntarily and whether or not for value, and any agreement to effect any of
the foregoing; and the words “purchased”,
“purchasing” and similar words
have corresponding meanings;

 

(jj)                                  “Qualified
IPO” means a public offering of Common Shares by the Corporation at
an offering price per Common Share of not less than the Acquisition Price,
resulting in not less than $25 million United States dollars net proceeds
(including treasury and secondary shares) pursuant to:

 

(i)                                     a final prospectus for which a receipt is
issued by one or more of the provincial securities commissions in Canada, or

 

7

 

(ii)                                  a registration statement which has been filed
under United States securities laws and is declared effective to enable the
sale of Common Shares by the Corporation to members of the public,

 

(iii)                               which results in the Common Shares being listed
and posted for trading on the Toronto Stock Exchange, New York Stock Exchange
or quoted on the NASDAQ National Market;

 

(kk)                            “Qualified
Sale” means:

 

(i)                                     a sale of all of the issued Common Shares,
calculated on a Fully Diluted Basis on the closing date for such sale, to a
third party for an aggregate price which results in payment to the holders of
Common Shares of cash or Liquid Securities in an amount that is not less than
the Acquisition Price per Common Share; or

 

(ii)                                  a sale of all or substantially all of the
Corporation’s assets or property for an aggregate price which results in
payment to the holders of Common Shares, calculated on a Fully Diluted Basis on
the closing date for such sale, of cash or Liquid Securities in an amount that
is not less than the Acquisition Price per Common Share;

 

(ll)                                  “Shareholders”
means the Persons who hold securities of the Corporation who have executed this
Agreement or who from time to time hold securities of the Corporation and have
agreed to become bound by this Agreement (or their respective successors or
permitted assigns), and a “Shareholder”
means any one of them;

 

(mm)                      “Shares”
means shares of any class in the share capital of the Corporation from time to
time;

 

(nn)                          “Subsidiary”
means a subsidiary within the meaning of the Act and “Subsidiaries” means more than one
subsidiary;

 

(oo)                          “Transfer”
includes any sale, exchange, assignment, gift, bequest, disposition, mortgage,
charge, pledge, encumbrance, grant of a security interest or other arrangement
by which possession, legal title or beneficial ownership passes from one Person
to another, or to the same Person in a different capacity, whether or not
voluntarily and whether or not for value, and any agreement to effect any of
the foregoing; and the words “Transferred”,
“Transferring” and similar words
have corresponding meanings;

 

(pp)                          “UBC
Shareholders Agreement” means the shareholders agreement dated for
reference September 24, 2003, as amended August 10, 2005 between the
Corporation, the Investors, the Founder, Cormack and the University of British
Columbia;

 

(qq)                          “U.S.
Securities Act” means the Securities
Act of 1933, as amended, of the United States of America or any
similar federal statute, and the rules and regulations of the United States
Securities and Exchange Commission (or of any other United States Federal
agency then administering the Securities Act
of 1933) thereunder, all as the same is in effect from time to time;

 

8

 

(rr)                                Any words or phrases defined elsewhere in this
Agreement shall have the particular meaning assigned thereto;

 

(ss)                            Words (including defined terms) using or
importing the singular number include the plural and vice versa and words
importing one gender only shall include all genders and words importing persons
in this Agreement shall include individuals, partnerships, corporations and any
other entities, legal or otherwise;

 

(tt)                                The headings used in this Agreement are for
ease of reference only and shall not affect the meaning or the interpretation
of this Agreement;

 

(uu)                          All references to Article, Section and
subsection numbers refer, unless expressly stated otherwise, to the Articles,
Sections and subsections in this Agreement having those numbers; and

 

(vv)                          All accounting terms not defined in this
Agreement shall have the meanings generally ascribed to them under the
generally accepted accounting principles set forth in the Handbook published by
the Canadian Institute of Chartered Accounts (as revised from time to time).

 

1.2                               Schedules

 

The schedules attached to this Agreement shall form part of this
Agreement.

 

ARTICLE 2
- SCOPE, EFFECT AND PARTIES

 

2.1                               Shareholders to Act in Support
of Terms

 

The
Shareholders shall at all times promptly:

 

(a)                                  vote their respective Shares (or if more
convenient execute written shareholder consent resolutions provided they are
executed by all shareholders of the Corporation); and

 

(b)                                 take all such steps as may be reasonably within
their powers;

 

so as to cause the Corporation to act in the manner contemplated by this
Agreement and so as to fully implement the terms of this Agreement and, to the
extent permitted by law, shall cause their respective nominees as Directors to
so act.

 

2.2                               Removal of Directors who fail
to Act in accordance with Terms

 

If a Director refuses to exercise his discretion to vote and act as a
Director (other than a Director abstaining from voting as required by law or
voting in accordance with the requirements of the Act) so as to fully carry out
the terms of this Agreement, then the Shareholders shall, on the request of a
Shareholder, promptly convene a meeting of Shareholders pursuant to the Act and
vote their respective Shares to remove such Director from the Board and elect a
replacement Director in accordance with Section 3.1 who will, to the extent
permitted by law, choose to 

 

9

 

exercise his discretion to vote and act as a Director so as to fully
carry out the terms of this Agreement.

 

2.3                               Directors Consent and
Agreement

 

The Corporation covenants and agrees that it will cause all Directors,
and any Person who becomes a Director from time to time, to execute and deliver
a Consent and Agreement in the form attached hereto as Schedule C.

 

2.4                               Indemnity for Directors and
Others

 

The Corporation covenants and agrees that it will enter into indemnity
agreements with its Directors from time to time in the form attached hereto as
Schedule D.

 

2.5                               Terms to Prevail over
Constating Documents

 

In the event of any conflict between the provisions of this Agreement
and the Corporation’s Constating Documents or any agreement to which the
Corporation or a Shareholder is or becomes a party, the provisions of this
Agreement shall prevail and govern to the extent permitted by law.  The Shareholders shall promptly procure all
necessary proceedings and vote their respective Shares so as to cause the
Corporation’s Constating Documents to be amended in order to resolve such
conflict in favour of the provisions of this Agreement.

 

2.6                               Ceasing to be a Party

 

Except as otherwise specifically provided herein, if a Person who was a
Shareholder no longer holds any Equity Securities and is owed no monies by the Corporation
or any of its Subsidiaries, then from that point forward that Person shall be
deemed to no longer be a party to this Agreement; provided however that where
such Person disposed of his Equity Securities in compliance with the provisions
of this Agreement he shall be entitled to the benefit of and be bound by the
rights and obligations set forth in this Agreement in respect of matters
occurring prior to such disposition.

 

2.7                               Shareholder Representations
& Warranties

 

Each Shareholder hereby represents and warrants to each other
Shareholder and the Corporation that the Shareholder:

 

(a)                                  is the registered and beneficial owner of the
Shares shown beside the Shareholder’s name in Schedule A (or on the instrument
under which the Shareholder became party to this Agreement) free and clear of
any mortgage, lien or encumbrance or security interest, and except as disclosed
in the Investment Agreement or as provided in this Agreement, the Shareholder
is not subject to any agreement under which any mortgage, encumbrance, lien or
security interest may be created upon any of the Shareholder’s Shares;

 

(b)                                 is not in a relationship in respect of which an
event described in Section 56(1) of the Family
Relations Act (British Columbia), or in any similar provision of any
applicable legislation, has occurred;

 

10

 

(c)                                  is not in a any way subject or party to any
unsatisfied judgments, consent decrees, injunctions, litigation, proceedings,
actions or claims (and to the best of the knowledge of the Shareholder no such
matters are pending or threatened against the Shareholder) which could result
in a judgment against the Shareholder leading to the impairment or loss of the
Shareholder’s title to the Shares;

 

(d)                                 is not violating, contravening, breaching, or
creating a default under any law, statute, regulation, order, judgment, or
decree applicable to the Shareholder by becoming party to this Agreement or
performing the provisions hereof; and

 

(e)                                  if the Shareholder is not an individual, is
duly created and is validly existing under the laws of its jurisdiction of
creation and has the legal power and capacity to own its assets and enter into
and perform its obligations pursuant to this Agreement.

 

2.8                               Covenant of Gleave

 

Gleave hereby covenants and agrees that:

 

(a)                                  while Gleave HoldCo holds any Equity
Securities, Gleave HoldCo shall not enter into any transaction that would
directly or indirectly in any manner circumvent or avoid the provisions of this
Agreement and, further, that Gleave shall maintain voting control at all times
over all Shares held by Gleave HoldCo as of the date hereof and that Gleave and
members of Gleave’s immediate family shall remain at all times the only holders
of shares in the capital of Gleave HoldCo; and

 

(b)                                 in the event that the Board proposes to create
or issue any additional Shares in connection with a financing of the
Corporation that has received Board approval and Major Investor Approval (a
“Financing”) and if the completion of the Financing will require changes to the
Corporation’s articles, Gleave and Gleave HoldCo shall vote all Shares held by
them at the relevant time in favour of all resolutions with respect to the
changes and Financing (and shall withdraw any and all notices of dissent and notices
demanding payment for the fair value of their Shares under the dissent rights
of the Act) and shall execute and deliver to the Corporation any document or
instrument necessary or, in the opinion of the Corporation or its solicitors,
desirable in order for the Corporation and the shareholders to give effect to
the changes and Financing .

 

2.9                               Power of Attorney

 

Upon a Triggering Event (as defined in Section 7.2(b)), each Shareholder
shall be deemed to have hereby irrevocably nominated, constituted and appointed
the Chief Executive Officer of the Corporation from time to time as the
Shareholder’s true and lawful attorney and agent with full power and authority
to act on the Shareholder’s behalf in the Shareholder’s name, place and stead,
to execute, ratify, swear to, acknowledge, deliver and file all instruments,
elections, deeds, agreements and documents to further effect the rights and
obligations of such Shareholder under this Agreement.  The foregoing power of attorney is hereby
declared by each such Shareholder to be an enduring irrevocable power coupled
with an interest, and it shall survive the death, disability or bankruptcy of
the Shareholder or any Transfer by the Shareholder and extends to the heirs,
executors, administrators and other legal representatives and successors and
assigns of the Shareholder.  Each such
Shareholder agrees to be bound by any action taken by the Chief

 

11

 

Executive Officer pursuant to this power of attorney and hereby waives
any and all defences which may be available to contest, negate or disaffirm the
action of the Chief Executive Officer taken in good faith under this power of
attorney.  In accordance with the
Representation Agreement Act (British Columbia), each such Shareholder declares
that this power of attorney may be exercised during any legal incapacity or
infirmity, or mental incompetence of the Shareholder.

 

ARTICLE 3
- CONDUCT OF THE AFFAIRS OF THE COMPANY

 

3.1                               Composition of the Board of
Directors

 

(a)                                  As soon as practicable following execution of
this Agreement, and subject to Section 3.1(b), the Board shall have seven
Directors, which shall be composed as follows:

 

(i)                                     the CEO of the Corporation from time to time;

 

(ii)                                  at any time during which the Founder owns 6.5%
or more of the Common Shares on a Fully Diluted Basis, one nominee selected by
the Founder (the “Founder Nominee”);

 

(iii)                               at any time during which Ventures West Canada
and Ventures West U.S. own, in the aggregate, 7.5% or more of the Common Shares
on a Fully Diluted Basis, one nominee selected by agreement between Ventures
West Canada and Ventures West U.S. (the “Ventures
West Nominee”);

 

(iv)                              at any time during which H.I.G. Horizon owns
7.5% or more of the Common Shares on a Fully Diluted Basis, one nominee
selected by H.I.G. Horizon (the “H.I.G.
Horizon Nominee”);

 

(v)                                 at any time during which Ventures West Canada
and Ventures West U.S. (collectively “Ventures
West”) and H.I.G. Horizon own, in the aggregate, 15% or more of the
Common Shares on a Fully Diluted Basis, one Industry Expert selected by
agreement between Ventures West and H.I.G. Horizon (the “Class B Nominee”) , provided that if at any
time only one of Ventures West or H.I.G. Horizon owns, in aggregate at least
7.5% of the Common Shares on a Fully Diluted Basis, then that party alone shall
be entitled to select the Class B Nominee;

 

(vi)                              at any time during which BDC and MMC own, in
the aggregate, 7.5% or more of the Common Shares on a Fully Diluted Basis, one
Industry Expert selected by agreement between BDC and MMC (the “Class A Nominee”); and

 

(vii)                           one Industry Expert selected by a majority of
the then current Board (the “Board Nominee”).

 

12

 

(b)                                 Upon execution of this Agreement, the Board
will be constituted as follows: 

 

	
  Name of
  Director:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Scott Cormack

  	
   

  	
  CEO

  
	
   

  	
   

  	
   

  
	
  Martin Gleave

  	
   

  	
  Founder Nominee

  
	
   

  	
   

  	
   

  
	
  Nancy Harrison

  	
   

  	
  Ventures West Nominee

  
	
   

  	
   

  	
   

  
	
  Aaron Davidson

  	
   

  	
  H.I.G. Horizon Nominee

  
	
   

  	
   

  	
   

  
	
  James Shepard

  	
   

  	
  Board Nominee

  
	
   

  	
   

  	
   

  
	
  Neil Clendeninn

  	
   

  	
  Class A Nominee

  

 

As soon as is reasonably
possible after the date of this Agreement, the Directors shall appoint the
Class B Nominee.

 

If a Director ceases to be a Director for any reason, the vacancy on the
Board shall promptly be filled in a manner which ensures that the Board
composition set out above is maintained.

 

Compensation of independent Directors shall be determined by the Board
(determined by majority vote of the Directors present at the meeting such
compensation is considered, or by a written resolution signed by all
Directors); however all Directors shall be reimbursed for all reasonable out of
pocket expenses to attend Board or committee meetings including travel
expenses.

 

3.2                               Observers

 

The following observers (each
an “Observer”) will have the right
to receive notice of all meetings of the Board (and meetings of the board of
any of the Corporation’s Subsidiaries) and the right to speak thereat and will
receive all information and material presented to the Board as would a
director, but will not have a vote, all provided that each Observer must sign
the form of non-disclosure agreement attached as Schedule B hereto:

 

(a)                                  one Observer selected by agreement between the
GrowthWorks Shareholders, at any time during which the GrowthWorks Shareholders
own, in the aggregate, 5% or more of the Common Shares on a Fully Diluted
Basis; and

 

(b)                                 one Observer selected by BDC, at any time
during which BDC owns 5% or more of the Common Shares on a Fully Diluted Basis.

 

3.3                               Meetings of the Board of
Directors

 

For the two complete fiscal years following the date of this Agreement,
the Board shall meet at least four times each fiscal year.  Meetings of the Directors shall be in
Vancouver or such other place as the Directors may determine from time to
time.  Unless otherwise waived in writing
by all of the Directors, the Corporation shall give at least 5 Business Days
advance written notice to Directors of all meetings together with an agenda of
items to be discussed together with a brief description of each item.  Directors may participate in any meeting by
telephone conference call

 

13

 

or in any manner by which all participants in the meeting can hear one
another, and any Director so participating shall be considered to be present
for the purposes of quorum and voting at such meeting provided that each
Director shall use his or her best efforts to attend in person at least
three-quarters of Board meetings per fiscal year.  The Corporation shall provide each Director
with copies of the minutes of each meeting within 30 days of each such meeting.

 

3.4                               Quorum for Board Meetings

 

A quorum for the transaction of business at any meeting of the Board
shall be a majority of Directors which must include either (a) the CEO or (b)
the Founder’s Nominee and either (a) the Ventures West Nominee or (b) H.I.G.
Horizon Nominee.  If a quorum is not
present at the commencement of a Board meeting, then the Directors present may
not transact any business and such Directors shall be deemed to have adjourned
such meeting to the same time and place on the day which is 5 Business Days
after the date of the original meeting. 
If a quorum is not present at such adjourned meeting, then provided that
a majority of Directors are present, they shall be deemed to be a quorum and
may transact all business which a full quorum might have transacted with
respect to the items set forth in the notice (or accompanying documentation)
provided to the Directors in connection with the originally scheduled meeting
of the Board.

 

3.5                               Audit Committee

 

From and after the reference date of this Agreement, the Board shall
constitute an audit committee (the “Audit Committee”)
composed of 3 members, all of whom shall be non-management Directors and one of
whom is appointed by agreement between Ventures West Canada and Ventures West
U.S.  Subject to the foregoing, the
members of the Audit Committee shall be selected by a simple majority vote of
the Board.  The Audit Committee must
approve all audited financial statements of the Corporation and its
Subsidiaries.  The Board must also
approve such statements.

 

3.6                               Compensation Committee

 

From and after the reference date of this Agreement, the Board shall
constitute a compensation committee (the “Compensation Committee”)
composed of at least 3 members, all of whom shall be non-management Directors
and one of whom is appointed by Ventures West and one of whom is appointed by
H.I.G. Horizon.  Subject to the
foregoing, the members of such committee shall be selected by a simple majority
vote of the Board.  Recommendations to
the Board with respect to the compensation of the directors and officers of the
Corporation and its Subsidiaries will be within the mandate of the Compensation
Committee.

 

3.7                               Board and Committee Mandates

 

The Board shall, within two board meetings after the date of this
Agreement, adopt a mandate for each of the Audit Committee and the Compensation
Committee.

 

3.8                               Specific Major Matters
Requiring Board Approval

 

The Corporation shall only undertake or proceed with any of the
following matters (if such matters are not contemplated in an annual operating
or capital budget approved by the Board after the date of this Agreement) with
the prior approval of the Board:

 

14

 

(a)                                  allot or issue any Equity Securities or
purchase, redeem or acquire any securities of the Corporation or make a
declaration or payment of dividends on any shares of the Corporation unless:

 

(i)                                     required under the rights, privileges,
restrictions or conditions attached to Shares; or

 

(ii)                                  pursuant to pre-existing rights or securities
as disclosed in reference s.3.1(o) on Schedule 3.1 to the Investment Agreement;

 

(b)                                 increase or decrease the authorized capital of
the Corporation, alter the share capital of the Corporation or alter the
articles or by-laws of the Corporation;

 

(c)                                  enter into or amend any shareholders agreement
other than this Agreement and the UBC Shareholders Agreement or amend the
Corporation’s stock option plan, including without limitation, any amendment
increasing the number of shares available under the Corporation’s stock option
plan;

 

(d)                                 complete a Qualified IPO or otherwise allow any
of the shares or securities of the Corporation to be qualified for distribution
to the public or listed for trading on a recognized securities exchange;

 

(e)                                  amalgamate, consolidate or merge or enter into
an agreement to amalgamate, consolidate or merge the Corporation or its
Subsidiaries with any Person, continue the Corporation under the laws of
another jurisdiction, enter into any agreement for a Control Sale, Control
Purchase or Qualified Sale or for the sale of all or substantially all of its
assets or enter into any joint venture or partnership with any Person;

 

(f)                                    enter into or amend any material agreement,
contract or commitment regarding the sale, disposition, or licensing of any
intellectual property of the Corporation other than in the normal course of
business, or enter into any licenses regarding the intellectual property of the
Corporation which exceeds an annual cash commitment of $500,000 per fiscal
year;

 

(g)                                 permit the Transfer of Shares except as
provided in this Agreement;

 

(h)                                 loan any money to, provide a guarantee of, or
assume liability for the debts or obligations of any other Person or repay any
shareholder loans or borrow any money, except purchase money mortgages,
operating lines of credit and any debt incurred in connection with capital
expenditures approved by the Board;

 

(i)                                     materially change the nature of the Corporation’s
business or undertake or proceed with any transaction outside the ordinary
course of the business of the Corporation or with non-arm’s length Persons;

 

(j)                                     make an assignment for the benefit of any of
the Corporation’s creditors generally or institute proceedings for the
winding-up, liquidation, reorganization or dissolution of the Corporation;

 

15

 

(k)                                  incorporate, purchase, acquire, fund, sell or
dispose of any Subsidiary, whether wholly or partially owned by the Corporation
or enter into any agreement, whether in participation with others or otherwise,
to acquire the shares, assets or business of any other Person;

 

(l)                                     adopt annual operating and capital budgets,
plus quarterly budget plan updates or make any expenditures or leasing
commitments exceeding $25,000 per item or $100,000 (in aggregate) which are not
included as line items in the Corporation’s budget for that year previously
approved by the Board;

 

(m)                               enter into any agreements with employees, consultants
or officers having payments by the Corporation in excess of $125,000 per annum
or amend any of the foregoing agreements;

 

(n)                                 make a proposal to the Corporation’s
shareholders to change the Corporation’s auditors or significantly change the
Corporation’s accounting practices; or

 

(o)                                 incur any substantial expenditures exceeding
$25,000 in aggregate in a fiscal year until the Board has approved an annual
operating and capital expenditure budget for that fiscal year.

 

The Corporation’s annual operating budget (including quarterly forecast
updates) shall be subject to approval by the majority of Directors.

 

3.9                               Board Approval of Major
Matters undertaken by Subsidiaries

 

The Corporation shall ensure that any of its Subsidiaries only undertake
or proceed with the kind of transactions referred to in Section 3.8 (as
adjusted to relate to similar actions of such Subsidiary) with the prior
approval of the Board.

 

3.10                        Incentive Compensation
Plan/ESOP

 

Without the prior approval of the Board, the Corporation covenants and
agrees that it shall not grant any stock options pursuant to the Incentive
Compensation Plan/ESOP that would cause the aggregate of:

 

(a)                                  all Common Shares issued after the date of this
Agreement pursuant to the exercise of stock options granted under the Incentive
Compensation Plan/ESOP; and

 

(b)                                 all Common Shares issuable on the exercise of
stock options granted under the Incentive Compensation Plan/ESOP

 

to exceed 1,905,557  Common Shares.

 

3.11                        Specific Major Matters also
Requiring Major Investors’ Approval

 

Subject to the rights, privileges, restrictions and conditions of any
Shares pursuant to the Corporation’s Constating Documents, the Corporation and
its Subsidiaries shall only undertake or proceed with the matters set out in
Sections 3.8(a) through (f), 3.8(h) through (k) and 3.10 with prior Major
Investor Approval.  Notwithstanding the
foregoing, allotments or issuances of

 

16

 

Equity Securities that are permitted non pro-rata offerings pursuant to
Section 6.3 and Transfers by the Founder in accordance with Section 7.14 need
not receive such prior Major Investor Approval.

 

3.12                        Preserving Proprietary
Rights/Confidentiality

 

The Corporation covenants and agrees that it will cause all:

 

(a)                                  Proprietary Rights - employees of the Corporation and its
Subsidiaries and all consultants engaged by the Corporation or its Subsidiaries
to assign to the Corporation and waive all rights to: any and all patents,
trademarks, copyrights, inventions and other intellectual property arising out
of the work of such employees or consultants or arising out of the use of
funds, materials or facilities of the Corporation or its Subsidiaries;

 

(b)                                 Confidentiality - employees of the Corporation and its
Subsidiaries and all consultants engaged by the Corporation or its Subsidiaries
having confidential knowledge of the intellectual property of the Corporation
or its Subsidiaries to sign appropriate confidentiality agreements with the
Corporation;

 

(c)                                  Non-Competition - Persons who become employees of, or
consultants to, the Corporation and its Subsidiaries after the date of this
Agreement to represent and warrant to the Corporation that such employee or
consultant, as the case may be, is not subject to any contractual or other
restriction or obligation which currently or in the future may in any way limit
the Person’s activities on behalf of the Corporation; and

 

(d)                                 Personal Information - Persons who become employees of, or
consultants to, the Corporation and its Subsidiaries after the date of this
Agreement to consent to the disclosure of their personal information, as may be
necessary by the Corporation in the normal course of the Corporation’s
business, pursuant to the requirements of federal and/or provincial legislation
that addresses the protection of individuals’ personal information;

 

using forms of agreements approved by Major Investor Approval.

 

3.13                        Shareholders’ Meetings

 

The Corporation shall provide each Shareholder with notice of all
general meetings of the shareholders of the Corporation in accordance with the
Act.  If requested in writing by Major
Investor Approval, the Corporation shall as soon as possible under the Act
call, give proper notice of, and hold a general meeting of the shareholders of
the Corporation to consider the items of business specified in such written
request.  Each Shareholder may from time
to time designate up to three individuals who are employees of or counsel to
the Shareholders to attend at meetings of the shareholders of the Corporation
and those individuals shall be permitted to attend meetings of the shareholders
of the Corporation.  The Corporation
shall provide each Shareholder with a copy of the minutes of each meeting of
shareholders of the Corporation within 60 days thereof.

 

17

 

3.14                        Deposit of Proxies

 

A Shareholder may deposit a proxy and the power of attorney, appointment
of authorized representative or other authority, if any, under which it is
signed at any time before the proper commencement of the shareholders meeting
to which the proxy relates and any such proxy may be so deposited with the
Chairperson of such meeting.  A proxy
deposited in accordance with this Section shall be accepted as valid.

 

ARTICLE 4 - INFORMATION

 

4.1                               Reporting Requirements

 

The Corporation shall provide to each Investor:

 

(a)                                  Quarterly Financial Statements - within 30 days of the end of each fiscal
quarter, comprehensive financial statements prepared by the Corporation in
accordance with GAAP (including actual and projected cash flows for the most
recent quarter and a rolling six month cash flow forecast) with management’s
analysis of the results and comments on variances from budget and a summary
President’s report with a more detailed description of the general affairs of
the Corporation;

 

(b)                                 Annual Budget - at least 30 days before the beginning of each fiscal year, a business
plan containing financial projections and 12 month pro forma cash flow
calculations;

 

(c)                                  Financial Statements - within 90 days of the end of each fiscal
year, annual audited consolidated financial statements for the Corporation
(including its balance sheet and its statements of earnings, retained earnings
and changes in financial position);

 

(d)                                 Board Materials - at least 3 Business Days prior to each Board
meeting, a complete package of all materials provided to the Directors for such
meeting;

 

(e)                                  Progress Reports - any other progress reports as are provided
to Directors and the Corporation’s shareholders;

 

(f)                                    Statutory Compliance Certificate - within 30 days of the end of each quarter, a
certificate signed by the CEO of the Corporation stating that the:

 

(i)                                     the Corporation has deducted, paid and remitted
(as the case may be) to the proper authorities all taxes, premiums,
contributions and payments required to be deducted at source, paid and/or
remitted under the Income Tax Act (Canada), Excise Tax Act (Canada), Canada
Pension Plan, Employment Insurance Act (Canada), Income Tax Act (British
Columbia), Workers Compensation Act (British Columbia), Social Services Tax Act
(British Columbia) or applicable regulations thereto; and

 

(ii)                                  each of the Corporation and Subsidiaries is in
compliance with all applicable Environmental Laws;

 

18

 

(g)                                 Litigation - promptly after the Corporation becomes aware of same, a summary of
any substantial litigation (pending, threatened or otherwise) or other
proceedings against the Corporation or any of its Subsidiaries before any
court, tribunal or administrative agency;

 

(h)                                 Material Adverse Effect - within five (5) days after the Corporation
becomes aware of same, of any default, breach, acceleration, modification,
cancellation of any agreement, arrangement or other transaction or matter that
may result in a material adverse effect to the Corporation or its Subsidiaries;
and

 

(i)                                     Merger etc. - promptly after the Corporation becomes aware of same, the intention
to effect a change of control, sale of substantial assets, reorganization,
amalgamation, consolidation, merger or an agreement to amalgamate, consolidate
or merge the Corporation or its Subsidiaries with any Person.

 

The financial reports to be provided above, shall conform to Canadian
generally accepted accounting principles and include the Corporation’s
Subsidiaries.

 

4.2                               CEO Update

 

The Corporation’s CEO shall prepare and provide written quarterly
updates to the Board.

 

4.3                               Additional Information

 

Each Major Investor shall have the right to request such additional
information concerning the affairs of the Corporation and its Subsidiaries as
the Shareholder reasonably considers necessary in order to understand and
assess the affairs of the Corporation and its Subsidiaries, and the Corporation
shall in response to each such request provide or cause to be provided to the
Shareholder as promptly as possible the additional information reasonably
requested.

 

4.4                               Right to Visit Premises

 

The Corporation shall permit representatives of a Major Investor to from
time to time, upon reasonable notice and at any reasonable time, visit the
business premises of the Corporation and to observe the operations of the
Corporation.  The Corporation shall
ensure that its Subsidiaries give representatives of the Major Investors
similar access rights.

 

4.5                               Confidential Information

 

Each of the Investors acknowledge that the Corporation has “Confidential Information” concerning the
Business and the Corporation.  Each of
the Investors covenants and agrees during the term of this Agreement and for a
period of two years thereafter to safeguard such “Confidential Information” to the same extent as if it was
confidential information pertaining to the Investor and not disclose such
confidential information to any person provided however, that each Investor
shall be entitled, from time to time, to disclose (i) the details of its
investment in the Corporation in continuous disclosure documents, promotional
literature and to prospective purchasers, shareholders, Affiliates and
Associates and (ii) such information as is reasonably and customarily required
to be disclosed, on a confidential basis, to the Investor’s managers,
investors, directors, officers, employees, advisors, consultants, lawyers,
accountants, other professional advisors, and other stakeholders of the
Investor.

 

19

 

For the purposes of this Section, “Confidential
Information” means information of a confidential nature, including
without limitation all information disclosed to an Investor pursuant to this
Agreement, that the Corporation furnishes to an Investor in writing or orally,
but excludes any information that:

 

(a)                                  is generally known;

 

(b)                                 becomes part of the public domain through no
act or omission of the Investor;

 

(c)                                  is developed independently by an Investor;

 

(d)                                 is furnished to an Investor by a third party on
a non-confidential basis;

 

(e)                                  is required to be disclosed by an Investor by
law; or

 

(f)                                    is disclosed with the Corporation’s consent.

 

ARTICLE 5 - INSURANCE POLICIES

 

5.1                               Key Person Insurance

 

The Corporation shall use reasonable efforts to maintain suitable key
person life and disability insurance policies in the amount of at least
$1,000,000 or greater on Gleave and the CEO, and, from time to time, other key
employees as determined by the Board.  In
each case, all loss and benefits shall be payable to the Corporation.

 

The Corporation shall pay all applicable premiums thereunder; provided
that each policy can be obtained on reasonable commercial terms as determined
by the Board.  Each of Gleave, the CEO and
other insured persons, if any, shall ensure that he does whatever is reasonably
necessary to enable the Corporation to maintain such insurance, including
attending for physical examinations, executing such consents, directions and
instruments and answering such questions as may be necessary to maintain such
insurance or to increase the benefits payable under such insurance.

 

5.2                               Director’s and Officers
Liability Insurance

 

The Corporation shall obtain and maintain directors’ and officers’
liability insurance for the Directors and senior officers of the Corporation
with coverage comparable to that available to companies of a similar size and
stage of development as the Corporation, on reasonable commercial terms as
determined by the Board but which in any event shall provide coverage of at
least CDN $3,000,000.

 

5.3                               Other Insurance

 

The Corporation shall maintain and, and shall ensure that its
Subsidiaries maintain, property and casualty insurance policies with sufficient
coverage to allow replacement of any of their respective insurable properties
that might be damaged or destroyed, insurance policies for comprehensive
general liability insurance (including bodily injury, death and property
damage)

 

20

 

for amounts which meet commercially reasonable standards and clinical
trial insurance policies for amounts which meet commercially reasonable
standards.

 

5.4                               Limitation on Encumbrances

 

The Corporation shall not grant a security interest in, borrow on the
security of, hypothecate, assign or dispose of any of the insurance policies
referred to in this Article or any part thereof except to the extent that such
policies are charged or encumbered from time to time by security instruments
granted by the Corporation in good faith to its lenders for genuine corporate
borrowing purposes approved by the Board.

 

ARTICLE 6
- ISSUE OF ADDITIONAL EQUITY SECURITIES

 

6.1                               Treasury Share Offerings

 

Except as otherwise agreed to by the parties hereto, each offering by
the Corporation of additional Equity Securities shall be made in accordance
with this Article.

 

6.2                               Pro-Rata Pre-emptive Right

 

Subject to Section 6.3, each time the Corporation proposes to allot,
issue, sell or resell any Equity Securities, the Corporation shall first offer
(the “Treasury Offer”) the Equity
Securities to the Major Investors, WH, Cormack and the Founder (collectively
the “Treasury Offerees” and
individually a “Treasury Offeree”)
on the following basis:

 

(a)                                  Pro Rata Portions - The number of Equity Securities a particular
Treasury Offeree shall be offered and may purchase shall be determined by the
following formula:

 

	
   

  	
   

  	
   

  	
  Number of Common Shares held

  	
   

  	
   

  	
   

  
	
  Number of

  	
   

  	
   

  	
  by the Treasury Offeree on a

  	
   

  	
   

  	
   

  
	
  Equity Securities

  	
   

  	
   

  	
  Fully Converted Basis immediately

  	
   

  	
   

  	
  Total Number of

  
	
  which the

  	
  =

  	
   

  	
  prior to the Treasury Offer

  	
  X

  	
   

  	
  Equity Securities

  
	
  Treasury Offeree

  	
   

  	
   

  	
  Number of Common Shares held

  	
   

  	
   

  	
  being offered;

  
	
  shall be offered

  	
   

  	
   

  	
  by all Treasury Offerees on a Fully

  	
   

  	
   

  	
   

  
	
  and may purchase

  	
   

  	
   

  	
  Converted Basis immediately prior

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  to the Treasury Offer

  	
   

  	
   

  	
   

  

 

(b)                                 Notice of Offer - Each Treasury Offer shall be made by written
notice to the Treasury Offerees specifying:

 

(i)                                     the total number and class of Equity Securities
offered;

 

(ii)                                  the Treasury Offeree’s pro rata portion thereof
as determined by the formula in (a) above;

 

(iii)                               the price at which the Equity Securities are
being offered;

 

21

 

(iv)                              any other terms and conditions applicable to
the offer not set out in this Section 6.2;

 

(v)                                 that Treasury Offerees shall have 21 days (the
“Initial Acceptance Period”)
following receipt of the notice to accept the Treasury Offer (provided that if
such written notice is mailed by first class mail to the address for the
Treasury Offeree shown on the Corporation’s register of shareholders, that
Treasury Offeree will be deemed to have received the notice 3 days thereafter);

 

(c)                                  Acceptance - Acceptance of a Treasury Offer shall be made by notice in writing to
the Corporation within the Initial Acceptance Period specifying the number of
Equity Securities up to the pro rata number determined above the Treasury
Offeree wishes to purchase.  The Treasury
Offeree may also specify in such notice an additional number of the Equity
Securities (“Specified Additional Amounts”)
offered for sale that the Treasury Offeree is prepared to purchase if any of
the other Treasury Offerees fails to fully accept their offered portion of the
Treasury Offer.  If a Treasury Offeree
does not accept the Treasury Offer before expiration of the Initial Acceptance
Period, then such Treasury Offeree shall be deemed to have refused the Treasury
Offer.  Additionally, if all Treasury
Offerees notify the Corporation in writing that they accept or decline the
Treasury Offer before the end of the Initial Acceptance Period, then the
Initial Acceptance Period shall be deemed to have ended on the date the last
such notice is received by the Corporation;

 

(d)                                 Remaining Equity Securities - In the event that some Treasury Offerees do
not fully accept their offered portion of the Equity Securities within the
Initial Acceptance Period, the unaccepted remaining portion of the Equity
Securities (the “Remaining Amount”)
shall be divided, within 7 days of the end of the Initial Acceptance Period,
among such of the Treasury Offerees as have in their notice of acceptance of
the Treasury Offer indicated a preparedness to purchase Specified Additional
Amounts (collectively the “Second Round
Offerees” and individually a “Second
Round Offeree”) as follows:

 

(i)                                     in such manner as may be agreed among the
Second Round Offerees; and

 

(ii)                                  failing such agreement, the Remaining Amount
shall be divided pro rata among the Second Round Offerees in accordance with
their respective holdings of Common Shares on a Fully Converted Basis in
successive rounds if necessary to fully divide such Remaining Amount, provided
that no Second Round Offeree shall be required to accept more than his
Specified Additional Amount;

 

(e)                                  Sale to Third Party - The Corporation shall be entitled to allot,
issue or sell the balance of any of the offered Equity Securities which are not
purchased by the Treasury Offerees upon completion of the above process to any
Person(s), other than a Treasury Offeree who did not accept the Treasury Offer,
provided that such allotment, issuance or sale:

 

(i)                                     shall not be effected at a price which is less
than the price or on terms and conditions which are more favourable (from the
purchaser’s perspective) than those set forth in the written notice to the Treasury
Offerees concerning the Treasury Offer; and

 

22

 

(ii)                                  shall be effected within a three month period
following the expiration of the Initial Acceptance Period, after which period
has expired, the Corporation shall comply with this Article 6 before
offering Equity Securities to any Person.

 

6.3                               Permitted Non-Pro rata
Offerings

 

Subject to Sections 3.8 and 3.10 and the rights, privileges and
restrictions attaching to any Shares, the Corporation may directly allot, issue
or sell Equity Securities without complying with Section 6.2 in the
following circumstances:

 

(a)                                  ESOP or Employment/Consultant Contract - the securities are being issued pursuant to
a duly approved grant or exercise of options under the Incentive Compensation
Plan/ESOP or to Directors and officers of the Corporation or pursuant to a duly
approved employment or consultant contract;

 

(b)                                 Subdivision etc. - the Shares are being issued pursuant to a
duly approved subdivision, amalgamation, reorganization, or dividend payable in
Shares;

 

(c)                                  Conversion etc. - the Shares are being issued in accordance
with the rights, privileges, restrictions and conditions attached to Shares;

 

(d)                                 Existing Options etc. - the securities are being issued pursuant to
the options, warrants or other rights disclosed in Section 3.1(o) or Schedule
3.1 to the Investment Agreement;

 

(e)                                  Acquisitions - the Shares are being allotted or issued pursuant to an Acquisition;

 

(f)                                    Strategic Alliances - the Shares are being allotted or issued
pursuant to strategic alliances approved by Major Investor Approval; or

 

(g)                                 Investment Agreement – the Shares are being issued to the
additional investors as agreed to in Section 2.4 of the Investment Agreement
which such Shares each of the Investors, including the Major Investors, hereby
designates as an “Excluded Issuance” for the purposes of Part 3,4, 6 and 7 of
the Corporation’s Constating Documents and consents to such issuance pursuant
to Sections 6.14 and 7.14 of the Constating Documents.

 

6.4                               Waiver of Rights

 

Notwithstanding any other provision of this Article 6, any
Shareholder may waive his rights with respect to any particular offer or right
given under, or any provision contained in, Article 6 by notice in writing
to the Corporation.

 

ARTICLE 7 - SHARE TRANSFERS

 

7.1                               Transfers Restricted

 

Except as permitted by the terms of this Agreement a Shareholder shall
not, directly or indirectly, Transfer any Equity Securities (including but not
restricted to any disposition by agreement, option, right or privilege capable
of becoming an agreement or option).

 

23

 

7.2                               Permitted Transfers and
Mandatory Sales

 

(a)                                  Permitted Transfers - Sections 7.1, 7.3 and 7.6 do not apply to
the following Transfers of Equity Securities:

 

(i)                                  Sale to a Controlled
Corporation - A Shareholder
may from time to time Transfer all or any part of his Equity Securities to a
corporation which is under the Control of the Shareholder provided that such
corporation agrees as a condition of the Transfer to Transfer back such Equity
Securities to such Shareholder in the event that such corporation ceases to be
under control of such Shareholder. 
Notwithstanding Section 2.6, any such Transfer shall not release
the transferor from his obligations hereunder.

 

(ii)                              Family, RSP Sales - A Shareholder may from time to time Transfer
all or any part of his Equity Securities to:

 

A.                                   a trust for the benefit of the Shareholder or
his or her immediate family;

 

B.                                     a registered retirement savings plan of the
Shareholder or his or her spouse;

 

C.                                     notwithstanding Section 2.6, any such Transfer
shall not release the transferor from his obligations hereunder; and

 

D.                                    provided that if such transferee (both legal
and beneficial transferees in the case of a trust) is required to become a
party to this Agreement, such transferees (if more than one) shall designate
the Shareholder to represent all of the transferees and such representative
will remain a party to and bound by this Agreement for and on behalf of such
transferees and the Shareholder shall be deemed to be the legal and beneficial
owner of such Transferred Equity Securities for the purposes of this Agreement.

 

(iii)                          Death - Subject to Section 7.15, upon the death of a
Shareholder, that Shareholder’s Equity Securities may be Transferred in
accordance with a probated will of the deceased or by operation of laws for the
administration of estates upon intestacy, provided that each such transferee
enters into an agreement under which the transferee becomes party to and bound
by this Agreement.

 

(iv)                            Investor Exemptions - Any Investor may Transfer the whole or any
part of its Equity Securities:

 

A.                                   if it is required by law to do so;

 

B.                                     if it resolves to Transfer all or substantially
all of its assets or if the Transfer is part of a portfolio sale of its assets;

 

C.                                     to any Person, where the Transfer is in
connection with a reorganization of the Investor;

 

24

 

D.                                    if the Transfer is to any manager, general partner,
Affiliate or Associate of the Investor or Affiliate or Associate of such
manager or general partner;

 

E.                                      to any corporation or other form of entity
whose senior officers are, or which is managed by a corporate manager whose
senior officers are, common officers of the Investor, the Investor’s manager or
the Investor’s general partner, as the case may be, as at the date of the
Transfer;

 

F.                                      to any limited partnership the general partner
of which is Controlled, directly or indirectly, by the Investor, the manager or
general partner of the Investor, or an Affiliate or Associate of the Investor,
or its manager or general partner as at the date of the Transfer;

 

G.                                     to any Persons who are bona fide investors
(including limited partners, the general partner or fund manager, as the case
may be) in the Investor who are entitled to participate in a distribution of
the assets of the Investor upon winding-up, liquidation or dissolution where
the Equity Securities are distributed to them on such occurrence; provided that
if such investors are required to become parties to this Agreement, such
investors (if more than one) shall designate one person to represent all such
investors and such representative will become party to and bound by this
Agreement for and on behalf of such investors and the representative shall be
deemed to be the legal and beneficial owner of such Transferred Equity
Securities for the purposes of this Agreement;

 

H.                                    in respect of Ventures West Canada and Ventures
West U.S., without limiting any of the foregoing, to (i) any limited partner of
Ventures West Canada or Ventures West U.S., (ii) Ventures West Capital Ltd.,
any Subsidiary thereof, or any corporation whose senior officers are common
officers of Ventures West Capital Ltd., or (iii) any fund managed by
Ventures West Capital Ltd. or any Subsidiary thereof; or

 

I.                                         in respect of a GrowthWorks Shareholder,
without limiting any of the foregoing, to any member of the GrowthWorks Group

 

provided that each such
transferee enters into an agreement under which the transferee becomes party to
and bound by this Agreement.

 

(v)                                Co-Sales and Piggyback Sales - A Transfer of Equity Securities pursuant to
the rights provided to the Investors, Cormack and the Founder in Sections 7.4,
7.5 and 7.6, as applicable.

 

(vi)                            Redemptions, Retractions etc - Any Transfer of Shares made in a accordance
with the rights, privileges, restrictions and conditions attached to Shares or
a Transfer of Equity Securities under a repurchase of Equity Securities by the
Corporation itself.

 

(vii)                        Drag Along - Any Transfer of Equity Securities made in
accordance Section 7.13.

 

25

 

(viii)       Investment Agreement -
Deleted.

 

(ix)         Founder – Any
transfer of Common Shares permitted by Section 7.14.

 

(b)           Mandatory
Sales

 

(i)            For the purposes of this Section 7.2(b),
the happening of any of the following events shall be deemed to be a “Triggering Event”:

 

A.            If
any Shareholder makes a voluntary or involuntary assignment for the benefit of
its creditors, enters into any composition or arrangement with its creditors,
has a receiver or liquidator appointed with respect to its business or assets, commences
or is the subject of any proceedings under any bankruptcy, insolvency or other
law for the protection of creditors or relief debtors, or ceases to carry on
business in the ordinary course; or

 

B.            If
any Shareholder becomes subject to any order under the Family Law Act (British
Columbia) or any successor legislation thereto or under the equivalent laws of
any jurisdiction requiring the Shareholder’s Shares to be transferred, charged,
encumbered, attached, seized or sold;

 

(ii)           Unless the provisions of Section 7.3 hereof
have been validly commenced, in which event that Section shall take precedence,
if any Shareholder (the “Selling Shareholder”)
causes or suffers any Triggering Event, then upon the occurrence of the
Triggering Event, the Selling Shareholder and, where applicable, the Selling
Shareholder’s spouse, trust, personal representative, executor, administrator,
trustee, power of attorney or the like, as the case may be, (the “Selling Shareholder’s Representative”), shall be required to
sell and the remaining Shareholders (the “Remaining Shareholders”)
shall have the option, exercisable at any time within three months following
the Corporation becoming aware of the Triggering Event to purchase all, but not
less than all, of the Selling Shareholder’s and the Selling Shareholder’s
Representative’s Shares (the “Available Shares”).

 

(iii)          if only one Remaining Shareholder wishes to
purchase the Available Shares, the Remaining Shareholder may purchase all, but
not less than all, of the Available Shares. If more than one of the Remaining
Shareholders wishes to purchase the Available Shares, they shall purchase all,
but not less than all of the Available Shares in their pro rata portions as
determined by the following formula or in such other proportion as they may
agree:

 

 

	
  

  Portion of Available 

  Shares a Remaining 

  Shareholder may 

  purchase

  	
  

  

  =

  	
  Number
  of Shares on a Fully 

  Diluted Basis Held by 

  the Remaining Shareholder 

  	
  

  

           X

  	
  

  

  Available Shares

  
	
  Total
  number of Shares held 

  by all Remaining Shareholders 

  on a Fully Diluted Basis

  

 

26

 

(iv)          if the Remaining Shareholders do not purchase
all of the Available Shares, then:

 

A.            in
the case of a Triggering Event described in paragraph 7.2(b)(i)A, the
Corporation shall, within six (6) months after becoming aware of the Triggering
Event, purchase for cancellation all but not less than all of the Available
Shares; and

 

B.            in
the case of a Triggering Event described in paragraph 7.2(b)(i)B hereof, the
Corporation may at its sole option, such option exercisable at any time within
six (6) months after becoming aware of the Triggering Event, purchase all but
not less than all of the Available Shares.

 

(v)           if the Corporation does not purchase all of
the Available Shares, the Selling Shareholder and the Selling Shareholder’s
Representative, together, may offer the Available Shares to a third party
pursuant to the provisions of Section 7.3(e) hereof.

 

(vi)          In the event of a Triggering Event, the
selling price (the “Selling Price”) of the Available Shares shall be determined in
accordance with the following procedure:

 

A.            the
Selling Price shall be based on the valuation of the Corporation established in
the most recent equity financing provided:

 

(1)           the
equity financing was completed in the immediately preceding three (3) month
period, and

 

(2)           such
equity financing was with an independent third party and was an equity
investment of not less than $1,000,000.

 

B.            if no
such equity financing occurred in the immediately preceding three (3) month
period, the Selling Price shall be such price to which the Selling Shareholder
and the Remaining Shareholders or Corporation, as the case may be, shall agree.

 

C.            if
those parties are unable to agree on the Selling Price within thirty (30) days
following the Triggering Event, the value of the Corporation shall be
determined as at the date of the Triggering Event by a Chartered Business
Valuator (the “Valuator”) appointed by the
Shareholders who shall be, in addition to being a Chartered Business Valuator,
a Chartered Accountant, such expenses of the Valuator to be borne equally by
the Corporation and the Selling Shareholder.

 

D.            if
the Shareholders are unable to agree upon a Valuator, then any Shareholder or
the Corporation may upon fifteen (15) days’ prior written notice to the other
Shareholders and the Corporation, apply to a court of competent jurisdiction to
appoint a Valuator who shall have the right and power to act and to make an
award, as if such Valuator had been duly appointed by all of the parties.

 

27

 

E.             the
decision of the Valuator so appointed or agreed upon shall be final and binding
upon the Shareholders. The Valuator shall be governed by the provisions of this
Agreement and generally accepted valuation principles in determining the value
of the Corporation. The Selling Price shall be determined by dividing the
valuation so obtained by the total number of Shares on a Fully Diluted Basis
and multiplying the quotient by the number of the Available Shares. No majority
premium or minority discount shall be applied.

 

7.3          Right of First Offer

 

Subject to Section 7.2, no Shareholder shall Transfer any of his Equity
Securities unless that Shareholder (the “Offeror”) first
offers (the “Offer”) the Corporation and the
other Shareholders (the latter being the “Other Offerees”) the prior right to purchase, receive or acquire
such securities (the “Offered Securities”) on the following basis:

 

(a)           Notice
of Offer - Each Offer shall be made by written
notice (the “Sale Notice”)
to the Corporation and the Other Offerees specifying:

 

(i)            the total number and class of the Offered
Securities;

 

(ii)           the price at which the Shareholder is
prepared to sell the Offered Securities;

 

(iii)          any other terms and conditions applicable to
the offer not set out in this Section 7.3; and

 

(iv)          whether or not the Offeror has received a
third party offer to purchase any of the Offered Securities (in which case the
third party offer shall be attached to the notice);

 

(b)           Corporation’s
First Right - The Corporation shall have the first
right to accept the Offer and purchase all or a portion of the Offered
Securities from the Offeror. The Corporation shall have 14 days (the “Corporation Acceptance Period”) after receipt of the Sale Notice within which to
give to the Offeror written notice (the “Corporation Notice”) that it accepts the Offer and agrees to purchase
all or a portion of the Offered Securities and deliver a copy of the
Corporation Notice to each of the Other Offerees;

 

(c)           Shareholders’
Second Right - If upon the expiry of the
Corporation Acceptance Period the Corporation has not delivered a Corporation
Notice or has delivered a Corporation Notice which provides for the purchase of
only a portion of the Offered Securities, then the Offeror shall immediately
notify (the “Second Right
Notice”) each of the Other Offerees in
writing and the Other Offerees shall have the right to purchase the remaining
Offered Securities on the following basis:

 

(i)                                  Pro
Rata Portions - the Second Right Notice shall specify the number of Offered
Securities remaining and state that each of the Other Offerees is entitled to
purchase up to that number of the remaining Offered Securities determined by
the following formula:

 

28

 

	
  

  Number of 

  remaining Offered 

  Securities which
 a particular Other 

  Offeree may 

  purchase

  	
  

  

  

         =

  	
  Number
  of Common Shares 

  held by the Other Offeree on a 

  Fully Converted Basis 

  immediately prior to the Offer 

  	
  

  

  

         X

  	
  

  Number of 

  remaining 

  Offered 

  Shares

  
	
  Number
  of Common Shares held 

  by all Other Offerees on a Fully 

  Converted Basis immediately 

  prior to the Offer

  

 

(ii)                              Acceptance
- each of the Other Offerees shall have 14 days after receipt of the Second
Right Notice (the “Second Acceptance Period”) within
which to give to the Offeror written notice that it accepts the Offer and
specifying the number of Offered Securities up to the pro rata number
determined above it wishes to purchase. The Other Offeree may also specify in
such notice an additional number of the remaining Offered Securities (“Specified Additional Securities”) the Other Offeree is prepared to purchase if
any of the other Offerees fails to fully accept their offered portion of the
Offered Securities. If all the Other Offerees notify the Offeror in writing
that they accept or decline the Offer before the end of the Second Acceptance
Period, then the Second Acceptance Period shall be deemed to have ended on the
date the last such notice is received by the Offeror;

 

(iii)                          Remaining
Securities - in the event that some Other Offerees do not fully accept
their offered portion of the Offered Securities within the Second Acceptance
Period, the unaccepted remaining portion of the Offered Securities (the “Remaining Securities”)
shall be divided, within 3 days of the end of the Second Acceptance Period,
among such of the Other Offerees as have in their notice of acceptance of the
Offer indicated a preparedness to purchase Specified Additional Securities
(collectively the “Second Tier Offerees”
and individually a “Second Tier Offeree”)
as follows:

 

A.                                   in
such manner as may be agreed among the Second Tier Offerees;

 

B.                                     failing
such agreement, the Remaining Securities shall be divided pro rata among the
Second Tier Offerees in accordance with their respective holdings of Common
Shares on a Fully Converted Basis in successive rounds if necessary to fully
divide such Remaining Securities, provided that no Second Tier Offeree shall be
required to accept more than his Specified Additional Securities;

 

(the process
provided for in this clause (iii) is referred to as the “Last Step”)

 

(d)           Closing - The closing of the purchase of the Offered Securities by the
Corporation and the Other Offerees hereunder shall take place at the principal
office of the Corporation on the later of the closing date specified in the
Offer and 10 days after expiry of either the Corporation’s Acceptance Period or
the Second Acceptance Period, as the case may be;

 

29

 

(e)           Sale
to Third Party - If any of the Offered Securities
remain unaccepted after completion of the Last Step, then the Offeror shall
have the option to reject all acceptances given by the Corporation and the Other
Offerees hereunder and (subject to Sections 7.4 and 7.5) Transfer all, but not
less than all, of the Offered Securities to a third party provided that:

 

(i)                                     such
Transfer is effected at a price which is not less than the price and on terms
and conditions no more favourable (from a purchaser’s perspective) than those
set forth in the Sale Notice hereunder;

 

(ii)                                  the
Offeror shall not Transfer any of the Offered Securities to a third party who
is a competitor of the Corporation unless the Sale Notice originally delivered
by the Offeror attached a detailed written offer from such competitor for the
Offered Securities; and

 

(iii)                               such
Transfer is completed within a 90 day period following the Last Step (after
which period has expired the Offeror must again comply with this Article 7
before Transferring any of his Equity Securities to any Person).

 

(f)            Corporation
Assistance - The Corporation shall use its
reasonable commercial efforts to assist with the efficient operation and
administration of the process provided for under this Section, including, if
requested in writing by an Offeror, acting as the Offeror’s agent to receive
and give notices on behalf of the Offeror.

 

(g)           Mailed
Notices - If a written notice is mailed by first
class mail to the address for an Other Offeree shown on the Corporation’s
register of shareholders, such notice will be deemed to have been received by
the Other Offeree 3 days thereafter.

 

7.4          Change of Control
Co-Sale Right - Shareholder Sales

 

If a Shareholder (the “Seller”)
becomes entitled to Transfer Offered Securities to a third party pursuant to
Section 7.3(e) and the third party, together with its Associates and
Affiliates, would upon completion of such Transfer, Control the Corporation on
a Fully Converted Basis (a “Control Sale”), then the Founder, Cormack and each Investor shall
have the right (the “Co-Sale Right”)
to participate in such Transfer on the following terms and conditions:

 

(a)                                  Intended
Sale Notice - If the Seller intends to proceed with
a Control Sale, the Seller shall immediately notify (the“Control Sale Notice”) the Founder, Cormack and each Investor
in writing specifying:

 

(i)            the name, address and telephone number of
the third party (the “Third Party”)
involved;

 

(ii)           the purchase price the Third Party is to pay
the Seller for each class of Equity Securities to be purchased (the “Specified Prices”) and the other terms and conditions of the
intended sale;

 

(iii)          the number and class of Equity Securities
held by the Third Party and its Associates and Affiliates, and details of any
previous transactions under which the 

 

30

 

Seller Transferred Equity Securities to the
Third Party or any of its Associates and Affiliates; and

 

(iv)          that the Founder, Cormack and each Investor
has the Co-Sale Right provided under this Section in respect of the Control
Sale and the Founder, Cormack and each Investor shall be entitled to sell any
or all of its Equity Securities of any class to the Third Party in conjunction
with the closing of the Third Party’s purchase of the Offered Securities from
the Seller.

 

(b)           Exercise
Notice - the Founder, Cormack and each Investor
shall have 14 days after receipt of the Control Sale Notice, to exercise its
Co-Sale Right by written notice to the Seller specifying the number and class
of Equity Securities which the Founder, Cormack and each Investor elects to
sell to the Third Party hereunder, which may be all of its Equity Securities or
such lesser number of Equity Securities as the Founder , Cormack and each
Investor may determine.

 

(c)           Co-Sale
to Third Party - If the Founder, Cormack and/or one
or more Investor exercises the Co-Sale Right, the Seller shall not complete the
Transfer of the Offered Securities to the Third Party unless the Third Party
also purchases from the Founder, Cormack and/or those Investors all of the
Equity Securities (the “Co-Sale Securities”)
in respect of which the Co-Sale Right has been exercised at the same time and
on the same terms and conditions (subject however to the pricing adjustments
and rules set forth in (d) below).

 

(d)           Pricing
of Securities - The price that the Third Party must
pay to the Founder, Cormack and each Investor for its Co-Sale Securities shall
be further adjusted or derived in accordance with the following rules:

 

(i)            the price per share for a class of Shares
shall be the greater of:

 

A.            the
price payable per share for that class of Shares, as specified in the Control
Sale Notice; and

 

B.            the
average price per share of that class paid on any previous purchases by the
Third Party and any of its Affiliates or Associates;

 

(ii)           if the Specified Prices are for Common
Shares only, the price per share for any preferred shares of the Corporation in
respect of which the Co-Sale Right was exercised shall be computed as if such
shares were converted into Common Shares in accordance with their terms;

 

(iii)          if the Specified Prices are for preferred
shares of the Corporation only, the price per for any Common Shares in respect
of which the Co-Sale Right was exercised shall be computed on the basis of a
reverse conversion;

 

(iv)          if the Specified Prices do not include a
price for a class of Equity Securities which entitle the holder thereof to
acquire Common Shares, such class of Equity Securities shall be priced as if such
securities were fully exercised, converted or exchanged (as the case may be)
into Common Shares (net of any amounts payable by the holder on such exercise,
conversion or exchange); and

 

31

 

(v)           if the Specified Prices do not include a
price for a class of Equity Securities which entitle the holder thereof to
acquire preferred shares of the Corporation, such class of Equity Securities
shall be priced as if such securities were fully exercised, converted or exchanged
(as the case may) into preferred shares (net of any amounts payable by the
holder on such exercise, conversion or exchange).

 

If the Third Party will not purchase the Co-Sale Securities from an
Investor, Cormack and/or the Founder, as the case may be, on the terms and
conditions provided for herein, then the Transfer of the Offered Securities
from the Seller to the Third Party shall not be made. If the Seller completes
the Transfer of all or part of the Offered Securities to the Third Party in violation
of the foregoing, then the Investor, Cormack and/or the Founder, as the case
may be, shall have, in addition to any other rights or remedies available at
law or equity, the right to put (by notice in writing) the Investor’s Equity
Securities and/or the Founder’s Equity Securities, as the case may be, to the
Seller at the price(s) determined hereunder.

 

7.5          Change of Control
Co-Sale Offer - External Purchases

 

If a Shareholder (the “Buyer”)
proposes to purchase Equity Securities from a Person (the “External
Seller”) who is not party to this Agreement and the Buyer, together
with its Associates and Affiliates, would, upon completion of such purchase,
Control the Corporation on a Fully Converted Basis (a “Control
Purchase”), then the Buyer shall concurrently offer (the “Co-Sale Offer”) to purchase all of the Equity Securities on
a Fully Diluted Basis of the Founder, Cormack and each Investor (or such lesser
number of Equity Securities as the Founder and each Investor may determine on a
Fully Diluted Basis) on the following terms and conditions:

 

(a)           Intended
Purchase Notice - If the Buyer intends to proceed
with a Control Purchase, the Buyer shall immediately notify (the “Control Purchase Notice”) the Founder, Cormack and each
Investor in writing specifying:

 

(i)            the name, address and telephone number of
the External Seller involved;

 

(ii)           the purchase price the Buyer is to pay the
External Seller for each class of Equity Securities to be purchased (the “Specified Prices”) and the other terms and conditions of the
intended sale;

 

(iii)          the number and class of Equity Securities
held by the Buyer and its Associates and Affiliates, and details of any
previous transactions under which the Buyer or any of its Associates and
Affiliates purchased Equity Securities from other holders of Equity Securities;
and

 

(iv)          that the Buyer is making the Co-Sale Offer
provided for under this Section in respect of the Control Purchase and the
Founder, Cormack and each Investor shall be entitled to sell any or all of
their Equity Securities of any class to the Buyer in conjunction with the
closing of the Buyer’s purchase of Equity Securities from the External Seller.

 

(b)           Acceptance
Notice - the Founder, Cormack and each Investor
shall have 14 days after receipt of the Control Purchase Notice to individually
accept the Co-Sale Offer by written 

 

32

 

notice to the
Buyer specifying the number and class of Equity Securities which the Founder,
Cormack and each Investor wishes to sell to the Buyer hereunder.

 

(c)           Right
of Co-Sale to Buyer - If one or more Investor,
Cormack and/or the Founder accepts the Co-Sale Offer, the Buyer shall not
complete the purchase of Equity Securities from the External Seller unless the
Buyer also purchases from the Investor, Cormack and/or the Founder all of the
Equity Securities in respect of which the Co-Sale Offer has been accepted at
the same time and on the same terms and conditions (subject however to the
pricing adjustments and rules set forth in (d) below).

 

(d)           Pricing
of Securities - The price that the Buyer must pay
to the Founder, Cormack and each Investor for its Equity Securities shall be
further adjusted or derived in accordance with the following rules:

 

(i)            the price per share for a class of Shares
shall be the greater of:

 

A.            the
price payable per share for that class of Shares, as specified in the Control
Purchase Notice; and

 

B.            the
average price per share of that class paid on any previous purchases by the
Buyer and any of its Affiliates or Associates from other holders of Equity
Securities;

 

(ii)           if the Specified Prices are for Common
Shares only, the price per share for any preferred shares of the Corporation in
respect of which the Co-Sale Offer was accepted shall be computed as if such
shares were fully converted into Common Shares in accordance with their terms;

 

(iii)          if the Specified Prices are for preferred
shares of the Corporation only, the price per for any Common Shares in respect
of which the Co-Sale Offer was accepted shall be computed on the basis of a
reverse conversion;

 

(iv)          if the Specified Prices do not include a
price for a class of Equity Securities which entitle the holder thereof to
acquire Common Shares, such class of Equity Securities shall be priced as if
such securities were fully exercised, converted or exchanged (as the case may)
into Common Shares (net of any amounts payable by the holder on such exercise,
conversion or exchange); and

 

(v)           if the Specified Prices do not include a
price for a class of Equity Securities which entitle the holder thereof to
acquire preferred shares of the Corporation, such class of Equity Securities
shall be priced as if such securities were fully exercised, converted or
exchanged (as the case may) into preferred shares (net of any amounts payable
by the holder on such exercise, conversion or exchange).

 

7.6          Piggyback Rights

 

If a Shareholder or a Person to whom such Shareholder has Transferred
Shares under Section 7.2 (a) or (b) (any of whom is a “Key Person
Seller”) becomes entitled pursuant to Section 7.3(e) and intends to
Transfer Offered Securities, held directly or indirectly by the Key Person
Seller, to 

 

33

 

a third party, then each of the Investors (the “Other
Holder(s)”) shall have the right (the “Piggyback
Right”) to participate in any such Transfers on the following terms
and conditions:

 

(a)           Intended
Sale Notice - If the Key Person Seller intends to
proceed with the Transfer of Equity Securities, the Key Person Seller shall
immediately notify (the “Piggyback Sale Notice”)
each Other Holder in writing specifying:

 

(i)            the name, address and telephone number of
the third party (the “Third Party”)
intended to purchase the Offered Securities;

 

(ii)           the purchase price the Third Party is to pay
the Key Person Seller for each class of Equity Securities to be purchased (the “Specified Prices”) and the other terms and conditions of the
intended sale;

 

(iii)          the number and class of Equity Securities
held by the Third Party and its Associates and Affiliates; and

 

(iv)          that each Other Holder has the Piggyback
Right provided under this Section in respect of the proposed Transfer.

 

(b)           Securities
which can be Piggybacked - Subject to the
provisions of Section 7.7, each Other Holder shall be entitled to sell to the
Third Party, in conjunction with the closing of the Third Party’s purchase of
Equity Securities from the Key Person Seller, a pro rata portion of its Equity
Securities (or such lesser number of Equity Securities as each Other Holder may
determine) determined by the following formula:

 

	
  

  

  Portion of Equity 

  Securities an Other 

  Holder may sell

  	
  

  

  

  

          =

  	
  Number
  of Common Shares 

  on a Fully Diluted Basis to be 

  sold to the Third Party by the 

  Key Person Seller 

  	
  

  

  

          X

  	
  

  

  Common Shares held 

  By the Other Holder 

  on a Fully Diluted 

  Basis

  
	
  Total
  number of Common 

  Shares Then held by the Key 

  Person Seller on a Fully 

  Diluted Basis

  

 

(c)           Exercise
Notice - Each Other Holder shall have 14 days after
the receipt of the Piggyback Notice, to exercise its Piggyback Right by written
notice to the Key Person Seller specifying the number and class of Equity
Securities which each Other Holder elects to sell to the Third Party hereunder.

 

(d)           Piggyback
Sale to Third Party - If an Other Holder exercises
the Piggyback Right, the Key Person Seller may not complete the Transfer of the
Offered Securities to the Third Party unless the Third Party also purchases
from the Other Holder all of the Equity Securities (the “Piggyback
Securities”) in respect of which the Piggyback Right was exercised
at the same time and on the same terms and conditions (subject however to the
pricing adjustments and rules set forth in (e) below).

 

34

 

(e)           Pricing
of Securities - The price that the Third Party must
pay to an Other Holder for its Piggyback Securities shall be further adjusted
or derived in accordance with the following rules:

 

(i)            if the Specified Prices are for Common
Shares only, the price per share for any preferred shares of the Corporation in
respect of which the Piggyback Right was exercised shall be computed as if such
shares were fully converted into Common Shares in accordance with their terms;

 

(ii)           if the Specified Prices are for preferred
shares of the Corporation only, the price per share for any Common Shares in
respect of which the Piggyback Right was exercised shall be computed on the
basis of a reverse conversion;

 

(iii)          if the Specified Prices do not include a
price for a class of Equity Securities which entitle the holder thereof to
acquire Common Shares, such class of Equity Securities shall be priced as if
such securities were fully exercised, converted or exchanged (as the case may)
into Common Shares (net of any amounts payable by the holder on such exercise,
conversion or exchange); and

 

(iv)          if the Specified Prices do not include a
price for a class of Equity Securities which entitle the holder thereof to
acquire preferred shares of the Corporation, such class of Equity Securities
shall be priced as if such securities were fully exercised, converted or
exchanged (as the case may) into preferred shares (net of any amounts payable
by the holder on such exercise, conversion or exchange).

 

If the Third Party will not purchase the Piggyback Securities from the
Other Holders on the terms and conditions provided for herein, then the
proposed Transfer of Offered Securities from the Key Person Seller to the Third
Party shall not be made. If the Key Person Seller completes the Transfer of all
or part of the Offered Securities to the Third Party in violation of the
foregoing, then each Other Holders shall have, in addition to any other rights
or remedies it may have at law or equity, the right to put (by notice in
writing) its Piggyback Securities to the Key Person Seller at the price(s)
determined hereunder.

 

7.7          Section 7.4 to
Prevail over 7.6

 

If a Piggy Back Sale would result in a Control Sale (as defined in
Section 7.4), the provisions of Section 7.4 shall override the provisions of
this Section 7.6 and apply to such Transfer.

 

7.8          Recognition of
Transfers

 

The Corporation shall not recognize any Transfers of Shares made in
violation of this Agreement.

 

7.9          Endorsement on Share
Certificates

 

Any and all certificates representing Equity Securities now or hereafter
owned by Shareholders during the currency of this Agreement (whether such
Equity Securities are issued initially or following a Transfer or otherwise)
shall have endorsed thereon in bold type the following legend:

 

35

 

“The securities represented by this certificate are
subject to the provisions of a Shareholders’ Agreement, as amended from time to
time, and such securities are not transferable on the books of the Corporation
except in accordance and compliance with the terms and conditions of such
Agreement.”

 

7.10        Waiver of Rights

 

Notwithstanding any other provision of this Article 7, any
Shareholder may waive its rights with respect to any particular offer or right
given under, or provision contained in, Article 7 by notice in writing to
the Corporation and the Offeror, Seller, Buyer or Key Person Seller, as the
case may be.

 

7.11        Shareholder Transfer of
Agreement Rights

 

Subject to Section 7.15 and Article 8, the Transfer of Equity
Securities by a Shareholder pursuant to the provisions of Article 7 may
include the transfer of such Shareholders’ rights under this Agreement.

 

7.12        Investors’ Assignment
of Rights

 

Each Investor shall each be entitled to assign its right to be offered
and take up Equity Securities under Sections 6.2 and 6.3 and/or its rights to
Transfer or take-up Equity Securities under Sections 7.3, 7.4, 7.5 and 7.6 and
its rights under and to the extent provided in Article 8, in whole or in part,
to any Person described in Section 7.2(a)(iv).

 

7.13        Drag-Along Rights

 

Notwithstanding any other provision of this Agreement, if:

 

(a)           security
holders of the Corporation, including at least two securityholders who are not
Major Investors (the “Selling Shareholders”),
holding not less than 73.5% of the outstanding Shares calculated on a Fully
Converted Basis have agreed to Transfer their Equity Securities to a Person, or
Persons acting in concert, (a “Purchaser”);
and

 

(b)           the
Purchaser offers to each of the other security holders of the Corporation (the “Other Shareholders”) to purchase the remaining Equity
Securities (the “Specified Securities”) on equivalent terms and conditions,
mutatis mutandis, as those agreed to by the Selling Shareholders, but in any
event subject to the rights, privileges, restrictions and conditions, including
all liquidation preferences, attaching to the respective Equity Securities as
set out in the Corporation’s constating documents, all of which terms and
conditions are set out in writing and promptly delivered to the Other
Shareholders (the “Drag Along Offer”);

 

then each of the Shareholders shall, on not less than 10 days’ notice,
be required to sell all of their Specified Securities to the Purchaser in
accordance with the terms and conditions of the Drag Along Offer and shall
undertake all reasonable acts that are required to complete the transactions
described in the Drag Along Offer, including but not limited to, the execution
of all 

 

36

 

necessary consents, approvals and resolutions required to, among other
things, amend the articles of the Corporation.

 

If any of the Shareholders (the “Delinquent Holders”)
fail to sell their Specified Securities to the Purchaser in accordance with the
terms and conditions of the Drag Along Offer, the Purchaser shall have the
right to deposit the applicable purchase price for those Specified Securities
of the Delinquent Holders in a special account at any financial institution in
Canada, to be paid proportionately with interest, to the respective Delinquent
Holders upon presentation and surrender to such financial institution of the
certificates or documents representing such holders’ Specified Securities duly
endorsed for transfer to the Purchaser. Upon such deposit being made, the Specified
Securities in respect of which the deposit was made shall hereby automatically
(without any further action of any kind on the part of the Delinquent Holders
or the Purchaser) be transferred to and purchased by the Purchaser and shall be
transferred on the books of the Corporation to the Purchaser and the rights of
the Delinquent Holders in respect of those Specified Securities after such
deposit shall hereby be limited to receiving, with interest, their respective
portion of the total amount so deposited against presentation and surrender of
the certificates or documents representing their respective Specified
Securities duly endorsed for transfer to the Purchaser.

 

In addition to the foregoing, in the event that
security holders of the Corporation, including at least two securityholders who
are not Major Investors, holding at least 73.5% of the outstanding Shares
calculated on a Fully Converted Basis accept or approve any proposed Transfer
of their Equity Securities in connection with an amalgamation, arrangement,
corporate reorganization, merger or otherwise, or the sale, lease or licence of
all or substantially all of the assets of the Corporation and such transaction
or series of transactions (the “Transaction”) requires the approval of the
shareholders, whether by separate class vote, series vote or otherwise, under
the articles of the Corporation, the Act or otherwise, then the Shareholders
shall vote the Shares held by them at the relevant time in favour of all
resolutions with respect to the Transaction (and shall withdraw any and all
notices of dissent and notices demanding payment for the fair value of their
Shares under the dissent rights of the Act) and shall execute and deliver to
the Corporation any document or instrument necessary or, in the opinion of the
Corporation or its solicitors, desirable in order for the Corporation and the
shareholders to give effect to the Transaction.

 

7.14        Restriction on Founder

 

Notwithstanding Article 7, from and after the reference date of this
Agreement the Founder shall have the right to Transfer an aggregate amount of
20,000 Common Shares to any Person and Gleave shall have the right at any time
to Transfer Shares to Gleave HoldCo (and vice versa).

 

7.15        Matters Relating to
Gleave

 

(a)           If
Gleave dies or Gleave becomes permanently disabled in a manner which renders
Gleave unable to fulfill his obligations to the Corporation or is found to be
of unsound mind or incapable of managing his own affairs by the final judgment
or order of a court of competent jurisdiction, then the Founder agrees that
immediately thereafter:

 

37

 

(i)            the
Founder shall be deemed to have executed the instrument in writing under
Section 9.1 for any amendments to this Agreement or under Section 9.2(a)
for the termination of this Agreement; and

 

(ii)           the
rights granted to the Founder under Sections 6.2, 7.4 and 7.5 shall immediately
cease and forever be extinguished.

 

7.16        Matters Relating to
Cormack

 

Cormack expressly acknowledges and agrees that the rights granted to
Cormack in this Agreement, including without limitation, those rights set forth
in Sections 6.2, 7.4 and 7.5:

 

(a)           will
expire on the date of termination of Cormack’s employment with the Corporation
for cause; and

 

(b)           are
solely granted to Cormack in his capacity as a Shareholder.

 

Without limiting the generality of the foregoing, Cormack expressly
acknowledges and agrees that any termination of Cormack’s employment with the
Corporation for cause shall not give rise to any rights or remedies in relation
to or in respect of any corresponding termination of rights under this
Agreement and Cormack hereby releases and forever discharges the Corporation
from all actions, causes of action, liabilities, claims and demands whatsoever
which Cormack may hereafter have by reason of any loss or termination of rights
under this Agreement as a result of the termination of Cormack’s employment
with the Corporation.

 

ARTICLE 8
- PUBLIC OFFERING PROVISIONS

 

8.1          Secondary Offering

 

If after the date of this Agreement, the Corporation files a prospectus
with any Canadian provincial securities commission from time to time, the
Corporation will use reasonable efforts to facilitate and enable the Investors
to make a secondary offering of the Equity Securities held by and to be issued
to the Investors in connection therewith or shortly after completion thereof to
the fullest extent permitted by applicable securities laws, subject to approval
by the underwriters or agents involved in the offering and the applicable
securities regulators.

 

8.2          U.S. Registration
Rights

 

Any Shareholder that on the reference date of this Agreement holds, or
has the right to receive upon exercise or conversion of outstanding securities,
Common Shares that are or would upon issuance be either (i) “restricted
securities” within the meaning of Rule 144 under the U.S. Securities Act or
(ii) subject to transfer restrictions under Rule 144 due to such Shareholder’s
status as an “affiliate” of the Corporation as defined thereunder (such Common
Shares, “Restricted Securities”) shall have the
following rights:

 

(a)           If the
Corporation registers any of its securities under the U.S. Securities Act
(other than by a registration on Form S-8, S-4, F-4 or any successor similar
forms or any other form not available for registering Restricted Securities)
for sale to the public, whether or not 

 

38

 

for sale for
its own account (including any registration for the account of a Major Investor
made pursuant to Section 8.2(b) or (c) below), it will each such time, at
least twenty (20) days prior to filing the registration statement, give written
notice to all Shareholders holding or having the right to receive Restricted
Securities of its intention to do so. Upon the written request of any such
Shareholder made within fifteen (15) days thereafter (which request shall
specify the Restricted Securities intended to be disposed of by such
Shareholder and the intended method of disposition thereof), the Corporation
will use its reasonable best efforts to include in such registration under the
U.S. Securities Act (if it proceeds with such registration) all Restricted
Securities which the Corporation has been so requested to register. In the case
of an underwritten offering, the lead underwriter shall be entitled to (a)
reduce the number of Restricted Securities to be included in the registration
statement by any amount it deems appropriate, and (b) require that each selling
Shareholder accept the terms of the underwriting as agreed upon between the
Corporation and the underwriters selected by the Corporation, assuming usual
and customary underwriting terms.

 

(b)                                 If
the Corporation receives a written request of one or more Major Investors
seeking to register Restricted Securities for sale to the public for gross
proceeds of at least USD $5,000,000 at a time when the Corporation is
eligible to register such Restricted Securities on Form S-3 or F-3, the
Corporation will use its reasonable best efforts to register such Restricted
Securities for resale under the U.S. Securities Act on one of such forms; and

 

(c)                                  After
September 15, 2008, if the Corporation receives a written request of one or
more Major Investors seeking to register Restricted Securities for sale to the
public for gross proceeds of at least USD $25,000,000, the Corporation
will use its reasonable best efforts to register such Restricted Securities for
resale under the U.S. Securities Act and under such state securities laws as
shall be reasonably requested by such Major Investors, provided that the
Corporation shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such state. Notwithstanding the foregoing, if the Corporation
determines that it would be seriously detrimental to the Corporation and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Corporation
shall have the right to defer such filing for a period of not more than one
hundred eighty (180) days; provided, however, that the Corporation shall only
be able to defer any demand under this Section 8.2(c) one (1) time in any
24-month period. The Corporation shall not be required to effect more than one
(1) registration pursuant to this Section 8.2(c).

 

The Shareholders’ (including the Major Investors’) rights under this
Section 8.2 may not be exercised in connection with a Qualified IPO or
within the six-month period immediately following a Qualified IPO. Any costs
associated with the exercise of the rights under this Section 8.2 shall be
borne by the Corporation; provided, however, that the selling Shareholders
shall bear the expenses of any underwriting discounts and commissions
applicable to Restricted Securities. The Corporation shall not be required to
keep any registration statement under this Section 8.2 (a “Registration
Statement”) effective for a period of more than one hundred eighty (180) days
(the “Effective Period”). Each Shareholder agrees that if so requested by the
Corporation, it will not effect any offer or sale of shares pursuant to the
Registration Statement 

 

39

 

for such time as the Corporation determines may be reasonably necessary
(the “Suspension Period”), in its sole discretion, due to the existence of
material non-public information regarding the Corporation or other
circumstances making such activities inappropriate. In such case, the Effective
Period shall be extended by an amount of time equal to the Suspension Period.
Each Shareholder agrees that, if so requested by the Corporation, it shall keep
the fact of any notification pursuant to this paragraph and the contents of any
such notification confidential.

 

If after the date of this Agreement, the Corporation grants
registration rights to a Person or Persons and/or enters into an agreement or
agreements regarding the grant of such registration rights, on terms more
favorable to such Persons than the registration rights granted to the Major
Investors holding Restricted Securities pursuant to this Section 8.2, then
the Corporation agrees to immediately grant such rights to each such Major
Investor and enter into agreements with such Major Investors to reflect such
additional registration rights.

 

Except as provided for in the following sentence, the rights granted
under this Section 8.2 may not be assigned to any transferee or assignee
of Restricted Securities. A Shareholder holding Restricted Securities may
transfer or assign the rights granted to it under Section 8.2(b) to a person to
whom the Shareholder concurrently Transfers Restricted Securities in accordance
with Section 7.2(a)(iv) of  this Agreement,
provided such person first agrees in writing to be bound by the obligations of
a Shareholder under Article 8. The rights granted pursuant to this
Section 8.2 will terminate on the fifth anniversary of the Qualified IPO,
and will sooner terminate as to any Shareholder on the first to occur of the
following:  (i) the Shareholder ceases to
hold or have the right to receive any Restricted Securities, or (ii) the
Shareholder is eligible to sell all Restricted Securities it holds or has a
right to receive pursuant to Rule 144 under the U.S. Securities Act in a three
(3) month period.

 

8.3          Lock-Up Agreement

 

Each Shareholder hereby agrees that, during the period of duration
specified by the Corporation or the underwriter of Common Shares or other
securities of the Corporation (the “Lock-Up Period”),
beginning on the closing date of the Corporation’s initial public offering in
the United States or Canada, the Shareholder shall not, without the prior
written consent of the Corporation and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the
Corporation held by the Shareholder or any interest in any such securities at
any time during such period except securities issued by the Corporation as part
of the initial public offering, or enter into any Hedging Transaction (as
defined below) relating to any securities of the Corporation (each of the foregoing
referred to as a “Disposition”);
provided, however, that:

 

(a)           such
agreement shall be applicable only to the Corporation’s first public offering
in the United States or Canada,

 

(b)           the
Lock-Up Period shall not exceed one hundred eighty (180) days, and

 

(c)           all of
the Corporation’s officers and directors and those shareholders holding over
five percent (5%) of the Corporation’s shares then outstanding are bound by
restrictions similar to those of this Section 8.3.

 

40

 

The foregoing restriction is expressly intended to preclude the
Shareholder from engaging in any Hedging Transaction or other transaction that
is designed to or reasonably expected to lead to or result in a Disposition
during the Lock-Up Period even if the securities would be disposed of by
someone other than the Investor. The Shareholder agrees to execute an agreement
reflecting the foregoing as may be requested by the underwriters at the time of
an initial public offering. “Hedging Transaction” means any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any security (other
than a broad-based market basket or index) that includes, relates to or derives
any significant part of its value from securities of the Corporation or any
other transaction (whether or not involving an offer or sale by the Investor of
a security of the Corporation or any interest therein) that has the purpose or
effect of transferring the risks or benefits of ownership of securities of the
Corporation.

 

The Shareholder agrees that the Corporation may condition any transfer
of securities of the Corporation upon the transferee agreeing to be bound by
the restrictions set forth in this Section 8.3.

 

ARTICLE 9
- AMENDMENT AND TERMINATION

 

9.1          Amendments

 

This Agreement may only be amended by an instrument in writing duly
executed by the Corporation and Shareholders holding not less than 80% of the
Common Shares held by them on a Fully Converted Basis, and any amendment so
made shall be binding upon all of the parties to this Agreement; provided
however, that if the amendment affects rights, restrictions and obligations of
the Shareholders only, the Corporation need not execute the amendment
instrument.

 

Notwithstanding the foregoing, an amendment which adversely affects
rights, restrictions and obligations of any one particular Shareholder and not
all Shareholders generally, will not be binding on the said Shareholder without
such Shareholder’s agreement to the amendment.

 

9.2          Termination Events

 

This Agreement shall terminate, except as provided in Section 9.3, if:

 

(a)           the
Corporation and Shareholders holding not less than 90% of the Common Shares
held by all Shareholders on a Fully Converted Basis agree in writing to
terminate this Agreement;

 

(b)           the
Corporation is dissolved, liquidated or formally wound-up; or

 

(c)           upon a
Qualified IPO.

 

9.3          Surviving Obligations

 

The termination of this Agreement shall not affect the right of any
party to whom money is owed hereunder at the time of termination to receive
that money according to the provisions hereof or 

 

41

 

affect any other rights or obligations which arose hereunder in respect
of matters occurring prior to or concurrent with such termination.
Sections 4.5, 8.1, 8.2 and 8.3 will survive the termination of this
Agreement.

 

ARTICLE 10
- GENERAL PROVISIONS

 

10.1        No Partnership

 

Nothing in this Agreement or in the relationship of the parties hereto
shall be construed as in any sense creating a partnership among or between the
parties or as giving to any party any of the rights or subjecting any party to
any of the creditors of the other party.

 

10.2        Time of the Essence

 

Time shall be of the essence of this Agreement.

 

10.3        Further Acts

 

Each of the parties to this Agreement shall at the request of any other
party, and at the expense of the Corporation, execute and deliver any further
documents and do all acts and things as that party may reasonably require in
order to carry out the true intent and meaning of this Agreement.

 

10.4        Parties of Interest

 

This Agreement and the rights of such party hereunder shall enure to
the benefit of and be binding upon the parties hereto, their permitted assigns
and their personal representatives, administrators, heirs and successors.

 

10.5        Share Reorganizations

 

The provisions of this Agreement relating to Equity Securities shall
also apply, with the necessary changes, to the following:

 

(a)           any
shares or securities into which such Equity Securities may be converted,
changed, reclassified, redivided, redesignated, redeemed, subdivided or
consolidated;

 

(b)           any
shares or securities that are received by the shareholders of the Corporation
as a stock dividend or distribution payable in Shares or securities of the
Corporation; and

 

(c)           any
shares or securities of the Corporation or of any successor or continuing
corporation to the Corporation that may be received by the shareholders of the
Corporation on a reorganization, amalgamation, consolidation or merger or
otherwise.

 

10.6        Governing Law

 

This Agreement shall be exclusively construed and governed by the laws
in force in British Columbia and the laws of Canada applicable thereto and,
except as provided in Section 10.12, the courts of British Columbia (and the
Supreme Court of Canada, if necessary) shall have exclusive jurisdiction to
hear and determine all disputes arising hereunder. Except as provided in 

 

42

 

Section 10.12, each of the parties hereto irrevocably attorns to the
jurisdiction of said courts and consents to the commencement of proceedings in
such courts. This paragraph shall not be construed to affect the rights of a
party to enforce a judgment or award outside said province, including the right
to record and enforce a judgment or award in any other jurisdiction.

 

10.7        Entire Agreement

 

This Agreement constitutes the entire agreement between the parties to
this Agreement with respect to the subject matter hereof and supersedes all
prior negotiations, proposals and agreements, whether oral or written, with
respect to the subject matter of this Agreement. The parties hereto hereby
terminate all other shareholders’ agreements between or among or between any of
them which govern the voting, holding or sale of Equity Securities or the
management of the affairs of the Corporation including, without limitation, the
Amended and Restated Shareholders’ Agreement. The parties represent that they
are not aware of any outstanding breaches of such other agreements now being
terminated.

 

10.8        Notices

 

Except as otherwise provided herein, all notices, demands and payments
under this Agreement must be in writing and may be delivered personally or by
facsimile transmission to the addresses as first written above and on any
document pursuant to which a Person becomes party hereto or such other
addresses as may from time to time be notified in writing by the parties. All
notices shall be deemed to have been given and received on the next Business
Day following the date of transmission or delivery, as the case may be.

 

10.9        Waiver

 

Failure by any party hereto to insist in any one or more instances upon
the strict performance of any one of the covenants contained herein shall not
be construed as a waiver or relinquishment of such covenant. No waiver by any
party hereto of any such covenant shall be deemed to have been made unless
expressed in writing and signed by the waiving party.

 

10.10      Severability

 

The unlawfulness or invalidity or unenforceability of any provision in
this Agreement or of any covenant herein contained on the part of any party
shall not affect the validity or enforceability of any other provision or
covenant hereof or herein contained and the parties hereby undertake to
renegotiate in good faith, with a view to concluding arrangements as nearly as
possible the same as those herein contained.

 

10.11      Assignment

 

Except as provided in Sections 7.11 and 7.12, no party shall be
entitled to assign his rights under this Agreement to any Person without the
prior written consent of the other parties; provided that such consent shall
not be unreasonably withheld or delayed.

 

43

 

10.12      Arbitration

 

In the event of a dispute hereunder which does not involve a party
seeking a court injunction, that dispute shall be resolved by a by arbitration
subject to the provisions of the Commercial Arbitration Act, R.S.B.C. 1996 c.
55 as amended from time to time. The arbitrated resolution of the dispute shall
be final and binding on all parties. The place of arbitration will be
Vancouver, British Columbia.

 

10.13      Independent Legal Advice 

 

Each of the parties to this Agreement acknowledge and agree that
DuMoulin Black has acted as counsel only to the Corporation and that Fraser
Milner Casgrain LLP has acted as counsel only to Ventures West Canada, Ventures
West U.S., H.I.G. Horizon, WOF, BDC and WH in connection with their acquisition
of Series 2 Class B Preferred Shares and that DuMoulin Black and Fraser Milner
Casgrain LLP are not protecting the rights and interests of any other party to
this Agreement. The other parties to this Agreement acknowledge and agree that
the Corporation, DuMoulin Black, Ventures West Canada, Ventures West U.S.,
H.I.G. Horizon, WOF, BDC and WH and Fraser Milner Casgrain LLP have given them
the opportunity to seek, and have recommended that such parties obtain,
independent legal advice with respect to the subject matter of this Agreement
and the other Transaction Documents (as defined in the Investment Agreement)
and, further, each of the other parties hereby represent and warrant to the
Corporation, DuMoulin Black, Ventures West Canada, Ventures West U.S., H.I.G.
Horizon, WOF, BDC and WH and Fraser Milner Casgrain LLP that such party has
sought independent legal advice or waives such advice.

 

10.14      Counterparts

 

This Agreement may be executed in several counterparts (including by
fax), each of which when so executed shall be deemed to be an original and
shall have the same force and effect as an original but such counterparts
together shall constitute but one and the same instrument.

 

[THE REST OF THIS PAGE IS INTENTIONALLY
LEFT BLANK]

 

44

 

IN WITNESS WHEREOF the parties have signed, sealed and delivered this
agreement as of the date first written above.

 

ONCOGENEX
TECHNOLOGIES INC.

 

	
  Per:

  
	
   

  
	
   

  
	
  /s/ Scott Cormack

  	
   

  
	
  Authorized Signatory

  

 

 

VENTURES
WEST 7 LIMITED PARTNERSHIP

by its general partner, Ventures West 7
Management Ltd.

 

Per:

 

	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  
	
   

  
	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  

 

 

VENTURES
WEST 7 U.S. LIMITED PARTNERSHIP

by its manager, Ventures West 7 Management
(International) Inc.

 

Per:

 

	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  
	
   

  
	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  

 

 

H.I.G.
HORIZON CORP.

 

 

Per:

 

	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  

 

45

 

WORKING
OPPORTUNITY FUND (EVCC) LTD.,

by its manager, Growth Works Capital Ltd.

 

Per:

 

	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  

 

 

BUSINESS
DEVELOPMENT BANK OF CANADA

 

Per:

 

	
  /s/ Gary Bantle

  	
   

  
	
  Authorized Signatory

  

 

 

MILESTONE
MEDICA CORPORATION

 

Per:

 

	
  /s/ Rene Douville

  	
   

  
	
  Authorized Signatory

  
	
  Rene Douville

  
	
  Director

  

 

 

WHI
MORULA FUND, LLC

By: 
William Harris Investors, Inc., Manager

By:  Michael S. Resnick

 

Per:

 

	
  /s/ [illegible]

  	
   

  
	
  Authorized Signatory

  

 

46

 

	
  SIGNED, SEALED AND DELIVERED by

  	
  )

  	
   

  
	
  MARTIN GLEAVE in the presence of:

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  /s/ Sherry Tryssenaar

  	
  )

  	
  /s/ Martin Gleave

  
	
  Name

  	
  )

  	
  MARTIN GLEAVE

  
	
  S. Tryssenaar

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  [***]

  	
  )

  	
   

  
	
  Address

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  Businessperson

  	
  )

  	
   

  
	
  Occupation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  603356 B.C. LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Martin Gleave

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED, SEALED AND DELIVERED by 

  SCOTT CORMACK in the presence of:

  	
  )

  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  /s/ Sherry Tryssenaar

  	
  )

  	
  /s/ Scott Cormack

  
	
  Name

  	
  )

  	
  SCOTT CORMACK

  
	
  S. Tryssenaar

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  [***]

  	
  )

  	
   

  
	
  Address

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  Businessperson

  	
  )

  	
   

  
	
  Occupation

  	
   

  	
   

  

 

47

 

SCHEDULE A

 

LIST OF SHAREHOLDERS

 

(Party to this Agreement as of August 10,
2005

 

 

	
  Name

  	
   

  	
  Shares Held as at August 10,
  2005

  
	
  Ventures
  West Canada

  	
   

  	
  1,324,738
  Class B Preferred Shares – Series 1 

  
	
   

  	
   

  	
  1,245,239
  Class B Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
  Ventures
  West U.S.

  	
   

  	
  127,168
  Class B Preferred Shares – Series 1 

  
	
   

  	
   

  	
  119,536
  Class B Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
  H.I.G.
  Horizon

  	
   

  	
  1,088,930
  Class B Preferred Shares – Series 1 

  
	
   

  	
   

  	
  1,141,435
  Class B Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
  WOF

  	
   

  	
  725,954
  Class B Preferred Shares – Series 1 

  
	
   

  	
   

  	
  820,258
  Class B Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
  Gleave

  	
   

  	
  358,000
  Common

  
	
   

  	
   

  	
   

  
	
  Gleave
  HoldCo

  	
   

  	
  400,000
  Common

  
	
   

  	
   

  	
   

  
	
  BDC

  	
   

  	
  203,620
  Class A Preferred Shares – Series 1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  111,940.2
  Class A Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  635,208
  Class B Preferred Shares – Series 1 

  
	
   

  	
   

  	
  407,166
  Class B Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
  MMC

  	
   

  	
  297,500
  Common

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  142,534
  Class A Preferred Shares – Series 1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  78,358.2
  Class A Preferred Shares – Series 2

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  261,342
  Class B Preferred Shares – Series 1

  
	
   

  	
   

  	
   

  
	
  Cormack

  	
   

  	
  6,000
  Common

  
	
   

  	
   

  	
   

  
	
  WH

  	
   

  	
  163,062
  Class B Preferred Shares – Series 2

  

 

 

SCHEDULE B

 

NON-DISCLOSURE AGREEMENT

 

THIS AGREEMENT is made on                                               ,
200  

 

BETWEEN:

 

OncoGenex Technologies, Inc., of                                               

 

(the “Corporation”)

 

AND:

 

                                                                                                       

 

(the “Signor”)

 

WHEREAS:

 

A.            The Signor may come into
possession of certain confidential information of the Corporation which is not
otherwise known or available to the public; and

 

B.            The Corporation has
requested the Signor to provide the Corporation with the confidentiality and
non-disclosure covenants set forth in this Agreement;

 

NOW THEREFORE this Agreement witnesses that in consideration of the
premises, the parties agree as follows:

 

1.             The
Signor agrees that all knowledge and information not already in the public
domain or known to the Signor independently of the Corporation which the Signor
may acquire from the Corporation or through attendance at a Corporation Board
or Shareholders’ meeting or through a visit to the Corporation’s premises
respecting the business, work, inventions, designs, methods, improvements,
trade secrets, know-how and all other confidential or proprietary matters of
the Corporation (hereinafter referred to as the “Confidential
Information”) shall for all purposes be
regarded by the Signor as strictly confidential.

 

2.             The
Signor agrees to use its best efforts to not to reveal, or induce or permit
others to reveal, any of the Confidential Information to anyone else (except if
the Signor is a representative of an investor in the Corporation (an “Investor”),
those of the Investor’s employees, directors, advisors, counsel or agents with
a definable need to know).

 

3.             Nothing
contained in this Agreement shall prevent the Signor from using or disclosing
any portion of the Confidential Information which:

 

(a)           was
in-the possession of the Signor prior to its receipt thereof from the
Corporation;

 

 

(b)           was or
does come into the public domain other than as a result of a breach of this
Agreement;

 

(c)           is
required to be disclosed by law or by any governmental or regulatory authority
having jurisdiction: or

 

(d)           is
disclosed with the permission of the Corporation.

 

IN WITNESS WHEREOF the parties have executed this Agreement as of the
date set forth above.

 

 

	
   

  	
   

  	
   

  	
   

  
	
  (Signature of Corporation Representative)

  	
  (Signature of Signor or Representative)

  
	
  Print Name:

  	
  Print Name:

  

 

B-2

 

SCHEDULE C

 

CONSENT AND AGREEMENT

 

TO:         ONCOGENEX TECHNOLOGIES, INC. (the “Corporation”)

 

Consent to Act as a Director

 

I hereby certify that:

 

1.             I am
not less than eighteen years of age;

 

2.             I am
not of unsound mind and have not been so found by a court in Canada or
elsewhere; and

 

3.             I do
not have the status of a bankrupt.

 

I hereby:

 

1.             hereby
consent to my election or appointment from time to time as a director of the
Corporation and consent to the holding of meetings of directors or any
committees of directors of which I am a member by means of such telephone or
other communications facilities as permit all persons participating in the
meetings to hear each other;

 

2.             acknowledge
and declare that I am a resident of                                               ;

 

3.             undertake
to advise the Corporation in writing of any change in my status as a resident
of                                               ;

 

Agreement

 

Whereas:

 

A.            The Corporation has
entered into to a Shareholders Agreement as amended, restated or replaced from
time to time, (the “Shareholders’ Agreement”)
dated for reference August 10, 2005 among the Corporation, Ventures West 7
Limited Partnership, Ventures West 7 U.S. Limited Partnership, H.I.G. Horizon
Corp., Working Opportunity Fund (EVCC) Ltd., Business Development Bank of
Canada (the “Major Investors”),
WHI Morula Fund, LLC and Milestone Medica Corporation and certain others;

 

B.            The Major Investors have
invested a large amount of money in the Corporation on the basis that the
business and affairs of the Corporation will be conducted in accordance with
the provisions of the Shareholders’ Agreement;

 

C.            The Corporation and the
Major Investors wish to ensure that all directors of the Corporation
acknowledge the framework established by the Shareholders’ Agreement for the
conduct of the Corporation’s business and affairs and, except as otherwise
required by law, agree to act according to its provisions;

 

B-3

 

In consideration of the premises, I hereby agree to be bound by the
terms and conditions of the Shareholders’ Agreement applicable to the
Corporation and its board of directors, except as otherwise required by law.

 

This consent and agreement is effective until I resign in writing from
the Corporation or otherwise cease to be a director of the Corporation.

 

Signed, sealed and delivered by the undersigned on this          
day of                  ,
200  .

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

Residential Address:

 

C-2

 

SCHEDULE D

 

INDEMNITY AGREEMENT

 

This Agreement has been entered into as of the           
day of            , 200  

 

BETWEEN:

 

ONCOGENEX TECHNOLOGIES INC., a corporation incorporated under the laws of Canada and having an
office at Suite 400, 1001 West Broadway, Vancouver, British Columbia, V6H 4B1,
Facsimile No. (604) 736-3687

 

(the “Indemnitor”)

 

AND:

 

                                                                                                                                  

                                                                                                                                  

                                                                                                                                  

 

(the“Indemnitee”)

 

WHEREAS:  The Indemnitor has
requested the Indemnitee to act as a director of the Indemnitor and may request
the Indemnitee, from time to time, to act as a director of another entity at
the Indemnitor’s request, and the Indemnitee has agreed, subject to the
granting of the indemnities herein provided for, to act in the aforementioned
capacities:

 

NOW THEREFORE in consideration of these premises, the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged by each of the parties hereto,
the parties hereto covenant and agree as set forth below.

 

ARTICLE 1
- INDEMNITY

 

1.1          Scope of Indemnity

 

Subject to subsections 1.2, 1.7, 1.8, 2.7 and 2.8 below, the Indemnitor
shall to the fullest extent possible under applicable law indemnify and save
harmless the Indemnitee against and from:

 

(a)                                  any
and all charges and claims of every nature and kind whatsoever which may be
brought or made by any person, firm, corporation or government, or by any
governmental department, body, commission, board, bureau, agency or
instrumentality against the Indemnitee in connection with the execution of the
duties of his office as a director or by virtue of his holding any other
directorship with any other entity held by the Indemnitee at the Indemnitor’s
request;

 

 

(b)                                 any
and all costs, damages, expenses (including legal fees and disbursements on a
full indemnity basis), fines, liabilities (statutory or otherwise), losses and
penalties which the Indemnitee may sustain, incur or be liable for in
consequence of his acting as a director of the Indemnitor, whether sustained or
incurred by reason of his negligence, default, breach of duty, breach of trust,
failure to exercise due diligence or otherwise in relation to the Indemnitor or
any of its affairs; and

 

(c)                                  in
particular, and without in any way limiting the generality of the foregoing,
any and all costs, damages, expenses (including legal fees and disbursements on
a full indemnity basis), fines, liabilities, losses and penalties which the
Indemnitee may sustain, incur or be liable for as a result of or in connection
with the release of or presence in the environment of substances, contaminants,
litter, waste, effluent, refuse, pollutants or deleterious materials and that
arise out of or are in any way connected with the management, operation,
activities or existence of the Indemnitor or by virtue of the Indemnitee holding
any other directorship with any other entity held by the Indemnitee at the
Indemnitor’s request.

 

1.2          Indemnity Restricted

 

If, under applicable law, any payment by the Indemnitor under Section
1.1 first requires the approval of any court, the Indemnitor, at its own
expense and in good faith, will promptly take all necessary proceedings to
obtain such approval.

 

1.3          Taxable Benefits

 

The Indemnitor shall gross up any indemnity payment made pursuant to
this Indemnity Agreement by the amount of any income tax payable by the
Indemnitee in respect of that payment.

 

1.4          Enforcement Costs

 

The Indemnitor shall indemnify the Indemnitee for the amount of all
costs incurred by the Indemnitee in obtaining any court approval required to
enable or require the Indemnitee to make a payment under or in enforcing this
Indemnity Agreement, including without limitation legal fees and disbursements
on a full indemnity basis.

 

1.5          Re-Election

 

The obligations of the Indemnitor under this Indemnity Agreement
continue after and are not affected in any way by the re-election or
re-appointment from time to time of the Indemnitee as a director of the
Indemnitor or of any entity in which he holds a directorship at the request of
the Indemnitor.

 

1.6          Nominee’s
Compensation

 

The obligations of the Indemnitor under this Indemnity Agreement are
not diminished or in any way affected by:

 

D-2

 

(a)                                  the
Indemnitee holding from time to time any direct or indirect financial interest
in the Indemnitor or in any entity in which he holds such directorship at the
request of the Indemnitor;

 

(b)                                 payment
to the Indemnitee by the Indemnitor of director’s fees or any salary, wages, or
any other form of compensation or remuneration or in any entity which he holds
such directorship at the request of the Indemnitor; and

 

(c)                                  except
as otherwise herein provided, any directors’ liability insurance placed by or
for the benefit of the Indemnitee by the Indemnitee, the Indemnitor or any
entity in which the Indemnitee holds a directorship at the request of the
Indemnitor.

 

1.7                               Limitation
on Indemnitee

 

Notwithstanding the provisions of subsection 1.1, the Indemnitor shall
not be obligated to indemnify or save harmless the Indemnitee against and from
any charge, claim, cost, damage, expense, fine, liability, loss or penalty if a
court of competent jurisdiction finds that:

 

(a)           the
Indemnitee failed to act honestly and in good faith with a view to the best
interest of:

 

the
Indemnitor, if the claim relates to his position as a director of the
Indemnitor, or

 

the entity
with which the Indemnitee holds or held a directorship at the Indemnitor’s
request;

 

(b)           in the
case of a criminal or administrative action or proceeding that is enforced by a
monetary penalty, the Indemnitee did not have reasonable grounds for believing
that his conduct was lawful; or

 

(c)           in the
case of any act, error or omission of the Indemnitee, the Indemnitee acted
fraudulently or maliciously.

 

1.8          Insurance Limitation

 

Notwithstanding the provisions of subsections 1.1 and 1.6, the
Indemnitor shall have no obligation to indemnify or save harmless the
Indemnitee in respect of any liability for which the Indemnitee is entitled to
indemnity pursuant to any valid and collectible policy of insurance obtained
and maintained by the Indemnitor, to the extent of the amounts actually
collected by the Indemnitee under such insurance policy. Where partial
indemnity is provided by such insurance policy, the obligation of the
Indemnitor under subsection 1.1 shall continue in effect but be limited to that
portion of the liability for which indemnity is not provided by such insurance
policy.

 

D-3

 

ARTICLE 2
- DEFENCE

 

2.1          Interpretation

 

For the purposes of Section 2:

 

“Action” means any action, inquiry,
investigation, suit or other proceeding before a court or other tribunal in
which a Claim is brought, made or advanced by or against the Indemnitee;

 

“Claim” means any charge, claim, cost,
damage, expense, fine, liability, loss or penalty contemplated by subsection
1.1;

 

“Judgment” means an award of damages or
other monetary compensation made in an Action or any amounts the Indemnitee is
ordered to pay by any court or other tribunal or any government, governmental
department, body, commission, board, bureau, agency or instrumentality having
proper jurisdiction as a result of any Claim brought, made or advanced by or
against the Indemnitee; and

 

“Settlement” means an agreement to
compromise a Claim or an Action.

 

2.2          Notice of Claim

 

Upon the Indemnitee or the Indemnitor becoming aware of any pending or
threatened Claim or Action, written notice shall be given by or on behalf of
one to the other as soon as is reasonably practicable.

 

2.3          Right to Conduct
Investigation

 

The Indemnitor shall conduct such investigation of each Claim as is
reasonably necessary in the circumstances and shall pay all costs of such
investigation.

 

2.4          Defence of Claim

 

Subject to this subsection and subsection 2.7, the Indemnitor shall
defend, on behalf of the Indemnitee, any Action, even if the Claim upon which
the Action is founded is groundless, false or fraudulent.

 

2.5          Appointment of
Counsel

 

The Indemnitor shall consult with and pay reasonable heed to the
Indemnitee concerning the appointment of any defence counsel to be engaged by
the Indemnitor in fulfilment of its obligation to defend an Action pursuant to
subsection 2.4; thereafter the Indemnitor shall appoint counsel.

 

2.6          Settlement
Negotiations

 

With respect to a Claim for which the Indemnitor is obliged to
indemnify the Indemnitee hereunder, the Indemnitor may conduct negotiations
towards a Settlement and, with the written consent of the Indemnitee (which the
Indemnitee agrees not to unreasonably withhold), the 

 

D-4

 

Indemnitor may make such Settlement as it deems expedient provided,
however, that the Indemnitee shall not be required, as part of any proposed
Settlement, to admit liability or agree to indemnify the Indemnitor in respect of,
or make contribution to, any compensation or other payment for which provision
is made by such Settlement.

 

2.7          Failure to Consent to
Settlement

 

With respect to a Claim for which the Indemnitor is obliged to
indemnify the Indemnitee hereunder, if the Indemnitee fails to give his consent
to the terms of a proposed Settlement which is otherwise acceptable to the
Indemnitor and the claimant, the Indemnitor may require the Indemnitee to
negotiate or defend the Action independently of the Indemnitor and in such
event any amount recovered by such claimant in excess of the amount for which
Settlement could have been made by the Indemnitor, shall not be recoverable
under this Indemnity, it being further agreed by the parties that the
Indemnitor shall only be responsible for legal fees and costs up to the time at
which such Settlement could have been made.

 

2.8          Settlement in Certain
Circumstances

 

The Indemnitor, in consultation with the Indemnitee, shall have the
right to negotiate a Settlement in respect of any Claim or Action which is
founded upon any of the acts specified in subsection 1.7. In the event that the
Indemnitor negotiates such a Settlement, the Indemnitee shall pay any
compensation or other payment for which provision is made under the Settlement
and shall not seek indemnity or contribution from the Indemnitor in respect of
such compensation or payment. The Indemnitee shall pay to the Indemnitor,
within 60 days of the Indemnitor making demand therefor, all fees, costs and
expenses (including legal fees and disbursements on a full indemnity basis)
which result from the defence of the Claim or the Action in respect of which
the Settlement was made.

 

2.9          Payment of Judgment

 

The Indemnitor shall pay any Judgment which may be given against the
Indemnitee unless any of the circumstances in subsection 1.7 applies to the
Action in respect of which the Judgment is given or unless and to the extent
the Indemnitee is otherwise entitled to indemnity under the policy of insurance
as contemplated by subsection 1.8 in either case, the Indemnitee shall pay to
the Indemnitor, within 60 days of the Indemnitor making demand therefor, all
fees, costs and expenses (including legal fees and disbursements on a full
indemnity basis) which result from the defence and appeal of the Action,
including the costs of any investigation undertaken by the Indemnitor in
connection with the Action.

 

ARTICLE 3
- GENERAL

 

3.1          

 

Nothing herein contained shall in any way affect the Indemnitee’s right
to resign from his position as a director of the Indemnitor or at any time to
resign from his position with any other entity held at the Indemnitor’s request
at any time.

 

D-5

 

3.2          

 

The indemnity herein provided for shall survive the termination of the
Indemnitee’s position as a director of the Indemnitor and the termination of
any directorship held by the Indemnitee at the Indemnitor’s request, whether by
resignation, removal, death, incapacity, disqualification under applicable law,
or otherwise, and shall continue in full force and effect thereafter.

 

3.3          

 

Unless stated otherwise, all monies to be paid hereunder shall be paid
within 10 days of becoming payable.

 

3.4          

 

If any provision of this agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof shall continue in full force and
effect. The parties hereto agree to negotiate in good faith to agree to a
substitute provision which shall be as close as possible to the intention of
any invalid or unenforceable provision as may be valid or enforceable. The
invalidity or unenforceability of any provision in any particular jurisdiction
shall not affect its validity or enforceability in any other jurisdiction where
it is valid or enforceable.

 

3.5          

 

Each party hereto agrees to do all such things and take all such
actions as may be necessary or desirable to give full force and effect to the
matters contemplated by this Agreement.

 

3.6          

 

This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and permitted assigns.

 

3.7          

 

Time shall be of the essence of this Agreement.

 

3.8          

 

This Agreement shall be exclusively construed and governed by the laws
in force in British Columbia and the laws of Canada applicable therein, and,
except as provided in Section 3.9, the courts of British Columbia (and Supreme
Court of Canada, if necessary) shall have exclusive jurisdiction to hear and
determine all disputes arising hereunder. Subject to Section 3.9, each of the
parties hereto irrevocably attorns to the jurisdiction of said courts and
consents to the commencement of proceedings in such courts. This Section shall
not be construed to affect the rights of a party to enforce a judgment or award
outside said province, including the right to record and enforce a judgment or
award in any other jurisdiction.

 

D-6

 

3.9          

 

In the event of a dispute which does not involve a party seeking a
court injunction or a determination referred to in Section 1.7, that dispute
shall be resolved between the Indemnitor and the Indemnitee in respect of the
indemnity provided by this Agreement by arbitration subject to the provisions
of the Commercial Arbitration Act, R.S.B.C. 1996 c. 55 as amended from time to
time. The arbitrated resolution of the dispute shall be final and binding on
all parties. The place of arbitration will be Vancouver, British Columbia.

 

IN
WITNESS WHEREOF the parties hereto have
signed, sealed and delivered this agreement as of the date first written above.

 

ONCOGENEX
TECHNOLOGIES INC.

 

 

	
  Per:

  	
   

  	
   

  
	
   

  	
  (Authorized Signatory)

  
	
   

  	
   

  
	
  INDEMNITEE

  
	
   

  
	
   

  	
   

  
	
  Per:

  	
   

  	
   

  
	
   

  	
  (Authorized Signatory)

  	
   

  

 

 

 

AMENDMENT AGREEMENT TO FURTHER AMENDED AND RESTATED 

SHAREHOLDERS’ AGREEMENT

 

THIS AMENDMENT AGREEMENT is made as of this 7th day of
September, 2006

 

BETWEEN:

 

ONCOGENEX TECHNOLOGIES INC., a corporation formed under the laws of Canada and having an address at
Suite 400, 1001 West Broadway, Vancouver, British Columbia, V6H 4B1, Facsimile
No. (604) 736-3687

 

(the
“Corporation”)

 

AND:

 

VENTURES WEST 7 LIMITED PARTNERSHIP, a limited partnership registered under the
laws of the Province of British Columbia and having an address at Suite 2500,
1066 West Hastings Street, Vancouver, British Columbia, V6E 3X1, Facsimile No.
(604) 687-2145

 

(“Ventures West Canada”)

 

AND:

 

VENTURES WEST 7 U.S. LIMITED PARTNERSHIP, a limited partnership registered under the
laws of Delaware and having an address at Suite 2500, 1066 West Hastings
Street, Vancouver, British Columbia, V6E 3X1, Facsimile No. (604) 687-2145

 

(“Ventures West U.S.”)

 

AND:

 

H.I.G. HORIZON CORP., a corporation formed under the laws of Barbados and having an address
at c/o H.I.G Ventures, 27th Floor, 1001 Brickell Bay Dr., Miami,
Florida, U.S.A. 33131, Facsimile No. (305) 379-2013

 

(“H.I.G. Horizon”)

 

AND:

 

WORKING OPPORTUNITY FUND (EVCC) LTD., a company formed under the laws of the
Province of British Columbia and having an address at Suite 2600, 1055 West
Georgia Street, Vancouver, British Columbia, V6E 3R5, Facsimile No.
(604) 669-7605

 

(“WOF”)

 

 

AND:

 

BUSINESS DEVELOPMENT BANK OF CANADA (“BDC”), a Crown corporation formed under the Business Development Bank of Canada Act and BDC Capital Inc. (“BDC Capital”) a wholly owned subsidiary
of BDC, both having an address at 444 7th Avenue SW, Suite 110, Calgary,
Alberta, T2P 0X8, Facsimile No. (403) 292-6951

 

AND:

 

MILESTONE MEDICA CORPORATION, a corporation formed under laws of Canada and having an address at 1
Richmond Street West, 8th Floor, Toronto, Ontario, M5H 3W4,
Facsimile No. (416) 974-1288)

 

(“MMC”)

 

AND:

 

MARTIN GLEAVE, Physician,
of [***]

 

(“Gleave”)

 

AND:

 

603356 B.C. LTD.,
a company formed under the laws of the Province of British Columbia and having
an address at [***]

 

(“Gleave HoldCo”)

 

AND:

 

SCOTT CORMACK,
a Businessperson and having an address at [***]

 

(“Cormack”)

 

AND:

 

WHI MORULA FUND, LLC, a limited liability company of 191 North Wacker
Drive, Suite 1500, Chicago, IL, 60606, 

Facsimile No. 312-621-0984

 

(“WH”)

 

WHEREAS:

 

A.                                   The Corporation, Ventures West Canada, Ventures
West U.S., H.I.G. Horizon, WOF, BDC, MMC, Gleave, Gleave HoldCo, Cormack and WH
entered into a Further Amended 

 

2

 

and Restated Shareholders’ Agreement dated for reference August 10, 2005
(the “Shareholders’ Agreement”);

 

B.                                    The Corporation is considering completing an
initial public offering of its Common Shares;

 

C.                                    The parties to the Shareholders’ Agreement wish
to amend the Shareholders’ Agreement as provided herein;

 

D.                                   BDC has transferred all of its Shares to BDC
Capital and BDC Capital has agreed to be bound by the Shareholders’ Agreement;
and

 

E.                                     Section 9.1 of the Shareholders’ Agreement
provides that the Shareholders’ Agreement may only be amended by an instrument
in writing duly executed by the Corporation and Shareholders holding not less
than 80% of the Common Shares held by them on a Fully Converted Basis, and any
amendment so made shall be binding upon all of the parties to the Shareholders’
Agreement; provided however, that if the amendment affects rights, restrictions
and obligations of the Shareholders only, the Corporation need not execute the
amendment instrument, and notwithstanding the foregoing, an amendment which
adversely affects rights, restrictions and obligations of any one particular
Shareholder and not all Shareholders generally, will not be binding on the said
Shareholder without such Shareholder’s agreement to the amendment.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, the
mutual covenants and agreements set forth in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by each of the parties), the parties hereby agree as follows:

 

1.                                      Unless amended herein, terms defined in the
Shareholders’ Agreement will have the same meaning when used herein.

 

2.                                      All section numbers referenced herein as being
amended refer to corresponding section numbers in the Shareholders’ Agreement.

 

3.                                       Section 1.1 is amended by deleting the
definition of “Qualified IPO” and substituting the following in its place:

 

(jj)                                  “Qualified IPO”
means a public offering of Common Shares by the Corporation at an offering
price per Common Share of not less than the Acquisition Price (or such lesser
price as determined and approved by Major Investor Approval), resulting in not
less than $25 million United States dollars net proceeds (including treasury
and secondary shares) pursuant to:

 

(i)                                     a final prospectus for which a receipt is
issued by one or more of the provincial securities commissions in Canada, or

 

(ii)                                  a registration statement which has been filed
under United States securities laws and is declared effective to enable the
sale of Common Shares by the Corporation to members of the public,

 

3

 

and
which results in the Common Shares being listed and posted for trading on the
Toronto Stock Exchange or the New York Stock Exchange or quoted on the NASDAQ
Global Market;

 

4.                                       Section 6.3 is amended by adding new subsection
(h) as follows:

 

(h)                                 Qualified IPO – the Shares are
being allotted or issued pursuant to a Qualified IPO.

 

5.                                       Section 9.3 is amended by deleting the
reference in it to Section 8.1.

 

6.                                       Except as provided in paragraph 8 below, the
general provisions set out in Article 10 of the Shareholders’ Agreement (other
than Section 10.13) shall apply in respect to this Agreement, including the
ability to execute this Agreement in counterparts.

 

7.                                       This Agreement shall be construed and governed
exclusively by the laws in force in British Columbia and the laws of Canada
applicable therein and, except as provided in Section 10.12 of the
Shareholders’ Agreement, the courts of British Columbia (and Supreme Court of
Canada, if necessary) shall have exclusive jurisdiction to hear and determine
all disputes arising hereunder. Except as provided in Section 10.12 of the
Shareholders’ Agreement, each of the parties hereto irrevocably attorns to the
jurisdiction of said courts and consents to the commencement of proceedings in
such courts. This Section shall not be construed to affect the rights of a
party to enforce a judgment or award outside said province, including the right
to record and enforce a judgment or award in any other jurisdiction.

 

8.                                       Section 10.7 is hereby deleted and the
following substituted therefor:

 

10.7        Entire Agreement - This Agreement, together with an amendment
dated as of September 7, 2006 (the “Amendment”), constitutes the entire
agreement between the parties to this Agreement and the Amendment with respect
to the subject matter hereof and supersedes all prior negotiations, proposals
and agreements, whether oral or written, with respect to the subject matter of
this Agreement and the Amendment. The parties hereto hereby terminate all other
shareholders’ agreements between or among or between any of them which govern
the voting, holding or sale of Equity Securities or the management of the
affairs of the Company. The parties represent that they are not aware of any
outstanding breaches of such other agreements now being terminated.

 

9.                                       Each of the parties to this Agreement
acknowledge and agree that DuMoulin Black LLP has acted as counsel only to the
Corporation and that McCullough O’Connor Irwin 
has acted as counsel only to Ventures West Canada, Ventures West U.S.,
H.I.G. Horizon, WOF, BDC, BDC Capital and WH and that DuMoulin Black LLP and
McCullough O’Connor Irwin are not protecting the rights and interests of any
other party to this Agreement. The other parties to this Agreement acknowledge
and agree that the Corporation, DuMoulin Black LLP, Ventures West Canada,
Ventures West U.S., H.I.G. Horizon, WOF, BDC, BDC Capital and WH and McCullough
O’Connor Irwin have given them the opportunity to seek, and have recommended
that such parties obtain, independent legal advice with respect to the subject
matter of this Agreement and, further, each of the other parties hereby
represent and warrant to the Corporation, 

 

4

 

DuMoulin
Black LLP, Ventures West Canada, Ventures West U.S., H.I.G. Horizon, WOF, BDC,
BDC Capital  and WH and McCullough
O’Connor Irwin that such party has sought independent legal advice or waives
such advice.

 

10.                                 The Shareholders’ Agreement in all other
respects remains unamended and in force among all of the parties to this
Agreement.

 

11.                                 In accordance with Section 9.1 of the
Shareholders’ Agreement, this Agreement shall take effect immediately upon its
due execution by the Corporation and Shareholders holding not less than 80% of
the Common Shares held by them on a Fully Converted Basis; provided however,
that if the amendment affects rights, restrictions and obligations of the
Shareholders only, the Corporation need not execute the amendment instrument,
and notwithstanding the foregoing, an amendment which adversely affects rights,
restrictions and obligations of any one particular Shareholder and not all
Shareholders generally, will not be binding on the said Shareholder without
such Shareholder’s agreement to the amendment. Once effective in accordance
with the foregoing, this Agreement shall be binding upon and enforceable
against all of the parties to Shareholders’ Agreement, notwithstanding the fact
that any one or more of such parties have not executed this Agreement.

 

IN WITNESS WHEREOF the parties have signed, sealed and
delivered this agreement as of the date first written above.

 

ONCOGENEX TECHNOLOGIES INC.

 

 

	
  Per: 

  	
  /s/ Scott Cormack

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

VENTURES WEST 7 LIMITED PARTNERSHIP

by its general partner,
Ventures West 7 Management Ltd.

 

 

	
  Per: 

  	
  /s/ Chris Laird       /s/ [illegible]

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

	
  Per:

  	
   

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

VENTURES WEST 7 U.S. LIMITED PARTNERSHIP

by its manager,
Ventures West 7 Management (International) Inc.

 

 

	
  Per: 

  	
  /s/ Chris Laird       /s/ [illegible]

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

5

 

	
  Per:

  	
   

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

H.I.G. HORIZON CORP.

 

 

	
  Per: 

  	
  /s/ [illegible]

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

WORKING OPPORTUNITY FUND (EVCC) LTD.,

by its manager, Growth
Works Capital Ltd.

 

 

	
  Per: 

  	
  /s/ Patrick R. Brady

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

	
  BUSINESS DEVELOPMENT BANK OF
  CANADA

  	
  AND

  	
  BDC CAPITAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per: 

  	
  /s/ Gary Bantle

  	
   

  	
  Per: 

  	
  /s/ Gary Bantle

  	
   

  
	
   

  	
  (Authorized Signatory)

  	
  (Authorized Signatory)

  
	
   

  	
   

  	
   

  
								

 

 

MILESTONE MEDICA CORPORATION

 

 

	
  Per: 

  	
  /s/ David B. Shindler

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

 

WHI MORULA FUND, LLC

By:  William Harris Investors, Inc., Manager

By:  Michael S. Resnick

 

 

	
  Per:

  	
  /s/ Michael S. Resnick

  	
   

  
	
   

  	
  (Authorized Signatory)

  

 

6

 

	
  SIGNED, SEALED AND DELIVERED by

  	
  )

  	
   

  
	
  MARTIN GLEAVE in the presence of:

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
  /s/ Martin Gleave

  
	
  Name

  	
  )

  	
  MARTIN GLEAVE

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  Address

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  Occupation)

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  603356 B.C. LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per: 

  	
  /s/ Martin Gleave

  	
   

  	
   

  
	
   

  	
  (Authorized Signatory)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED, SEALED AND DELIVERED by 

  	
  )

  	
   

  
	
  SCOTT CORMACK in the presence of:

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  /s/Sandra Thomson

  	
  )

  	
  /s/ Scott Cormack

  
	
  Name

  	
  )

  	
  SCOTT CORMACK

  
	
   

  	
  )

  	
   

  
	
  [***]

  	
  )

  	
   

  
	
  Address

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  Legal Secretary

  	
  )

  	
   

  
	
  Occupation

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

7

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