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NOTICE OF EXTRAORDINARY GENERAL MEETING OF KARO BIO AB (PUBL)

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​The shareholders of Karo Bio AB (publ) are hereby given notice of an extraordinary general meeting on 24 November 2010, at 17.00 at Klara Konferens, Vattugatan 6, Stockholm, with opening for registration from 16.30.

Right to participate, notice
A right to participate at the general meeting applies for those who have first been listed as a shareholder in the share register kept by Euroclear Sweden AB relating to the situation on 18 November 2010, second who have no later than 16.00 on 22 November 2010, given notice to the Company of their intention to participate at the general meeting. 

Notification must be given in writing to Karo Bio AB, attn.: Eva Kruse, Novum, 141 57 Huddinge, by fax +46 (0)8-774 52 80 or by e-mail to stamma@karobio.se. Notification may also be given on the Company’s website www.karobio.se/stamma. When giving notice the shareholder should state their name, personal/corporate identity (ID) number, address, telephone number and also e-mail address. In those cases where a legal representative or proxy participates at the meeting, documents of authorisation must be sent to the Company in conjunction with the notification. Shareholders may bring with them to the meeting one or two assistants, provided that the number of assistants is stated in the notification. 

Shareholders who have their shares registered with a nominee must temporarily re-register the shares in their own name with Euroclear Sweden in order to be allowed to participate at the meeting. Such registration must be implemented no later than 18 November 2010 and such request should be made to the nominee well in advance of this date. 

Proposed agenda

  1. Opening
  2. Election of chair for the meeting
  3. Drawing up and approval of voting register
  4. Approval of agenda
  5. Election of two persons to attest the minutes
  6. Consideration of whether the meeting has been duly convened
  7. Revocation of decision concerning amendment of Articles of Association
  8. Amendment of Articles of Association
  9. Approval of financing contract
  10. Authorisation of the board to issue shares
  11. Approval of the board’s resolution on new issue of shares
  12. Amendment of the Articles of Association
  13. Authorisation of the CEO to implement the minor adjustments to the decisions under items 7 to 8 and 10 to 12 that may be required for registration at the Swedish Companies Registration Office and Euroclear Sweden AB
  14. Conclusion

REVOCATION OF AMENDMENT OF ARTICLES OF ASSOCIATION (ITEM 7)
The board proposes the revocation of the resolution of the 2009 Annual General Meeting to amend Article 7 of the Articles of Association. This amendment has not yet been registered as the statutory amendment which was a condition precedent to the amendment has not yet entered into force. 

AMENDMENT OF ARTICLES OF ASSOCIATION (ITEM 8)
The board proposes that the meeting resolves that the Company’s share capital limits should be increased from ‘at least SEK 35 000 000 and at most SEK 140 000 000’ to ‘at least SEK 75 000 000 and at most SEK 300 000 000’, that the limits for the number of shares are to be increased from ‘at least 70 000 000 and at most 280 000 000’ to ‘at least 150 000 000 and at most 600 000 000’ and that the general meeting shall be allowed to be held in Huddinge, beside Stockholm. 

APPROVAL OF FINANCING CONTRACT (ITEM 9)
The board proposes that the meeting approves the Company entering into a financing contract, known as an ‘Equity Credit Facility’, with the international business company Azimuth Opportunity Ltd. on basically the following conditions. The contract means that the Company is granted the right, but not an obligation, to on at most 36 occasions over 36 months implement new issues directed to the financier. The total amount that the financier may have to pay to the Company under the contract amounts to USD 35 million. The subscription price per share will be calculated at 95 per cent of the Karo Bio share’s volume-weighted average price during each and every of five immediately consecutive trading days after Karo Bio has made a call under the contract. In addition to the discount of five per cent, the financier is entitled to a lump sum payment of one per cent of the commitment amount under the contract in conjunction with the contract entering into force and also a draw down fee of one per cent for each draw down. The Company is allowed to on each call fix a floor price below which the Company does not need to issue any shares. The calls may amount to between USD 350 000 and USD 4 500 000 in issue proceeds, depending upon the floor price. The parties may, however, agree on other amounts. This contract contains provisions that enable the Company to ensure that the financier’s ownership share does not exceed 9.99 per cent of the shares and votes in the Company. The contract also contains a number of guarantees and commitments on the part of the Company in relation of the financier. The board proposes that the general meeting grants the board the right to renegotiate the contract, throughout its entire term, in order to adapt it to application. It is a precondition for the contract that the general meeting approves the contract and authorises the board to issue shares as referred to below. 

AUTHORISATION OF THE BOARD TO ISSUES SHARES (ITEM 10)
The board proposes that the meeting should authorise the board to adopt resolutions on new issues of shares, on one or more occasions, before the next Annual General Meeting, deviating from the pre-emption rights of the shareholders. It shall be possible to make issues for cash payment, set-off or otherwise on conditions. The number of shares that should be possible to issue pursuant to the authorisation shall not be limited in a way other than as is prescribed by the Articles of Association applicable from time to time concerning limits on the number of shares and share capital. The reason for deviating from the shareholders’ priority rights shall be that the Company should be able to utilize the financing dealt with in item 9.  The subscription price shall be determined in accordance with the contract mentioned in item 9. 

APPROVAL OF THE BOARD’S DECISION FOR A NEW ISSUE (ITEM 11)
The board proposes that the general meeting approves the decision of the board of 25 October 2010, concerning the new issue of shares with pre-emption rights for the shareholders on the following principal conditions. The record day shall be 29 November 2010. The board, or the person that the board appoints from within its members, is authorised to no later than five working days before the record date to be entitled to participate in the issue: determine the highest amount by which the Company’s share capital is to be increased; the highest number of shares that are to be issued; and what amount is to be paid for each new share. Subscription through the exercise of subscription rights and the Guarantors’ subscription without subscription rights is to be made by payment. Other subscription without subscription rights shall be made on a subscription list. The subscription period runs from and including 2 December 2010 up to and including 16 December 2010, except for the Guarantors, for whom the subscription period runs from and including 17 December 2010 up to and including 28 December 2010.
The main purpose of the rights issue is to finance clinical phase III trials of eprotirome for the indication HeFH. 

AMENDMENT OF ARTICLES OF ASSOCIATION (ITEM 12)
The board proposes that the first sentence of Article 7 of the Articles of Association be replaced by the following.
Notice of general meetings is to be given by advertisement in Post- och Inrikes Tidningar (Swedish Official Gazette) and also on the Company’s website. The fact that notice has been given shall be advertised in Svenska Dagbladet.
The board proposes that the decision shall be conditional upon the amendment of the Swedish Companies Act (2005:551) having entered into force, whereby the wording of Article 7 proposed above will be compatible with the Companies Act. The statutory amendment is anticipated to enter into force on 1 January 2011. 


Other information
Decisions referred to in items 7, 8, 10 and 12 above are subject to a condition precedent for their validity that they are supported by shareholders holding at least two-thirds of both the votes cast and the shares represented at the meeting. 

At the time of issuing this notice, the total number of shares and votes in the Company amounted to 154,825,589. 

The complete proposal (except regarding the highest amount by which the Company’s share capital is to be increased; the highest number of shares that are to be issued; and what amount is to be paid for each new share) and other documentation concerning decisions will be available at the Company and on the Company’s web site no later than two weeks before the meeting. Copies of documents will be sent to those shareholders who so request and provide their postal address.  

Huddinge, October 2010
Karo Bio AB (publ)
The board
 

For further information please contact:
Fredrik Lindgren, CEO
Phone: +46 8 608 6020 

Erika Söderberg Johnson, CFO
Phone: +46 8 608 6052

About Karo Bio
Karo Bio is a pharmaceutical company focused on the research and development of innovative drugs for unmet medical needs. Karo Bio’s vision is to become a pharmaceutical company with sustainable profitability, commercial products and a competitive project portfolio. 

Karo Bio runs a number of development projects within the indication areas cardiovascular and metabolic diseases, neuropsychiatry, inflammation, cancer and women’s health. An important foundation for the company’s activities is its unique knowledge of nuclear receptors as target proteins for the development of novel pharmaceuticals, as well as related mechanisms of action. Important processes and competencies within the company include structurally based research, drug discovery, preclinical and clinical development, and medical and regulatory expertise. 

Karo Bio has the capacity to process select compounds for niche indications through the whole development chain, while compounds addressing large patient groups require development collaborations or outlicensing at some stage in the process. In addition to proprietary projects, Karo Bio has three strategic collaborations with international pharmaceutical companies. 

Karo Bio, headquartered in Huddinge, has 70 employees, and is listed on NASDAQ OMX Stockholm since 1998 (Reuters: KARO.ST). 

Karo Bio publishes this information in accordance with the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was published on October 26, 2010 at 08:28am CET.

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