Nevada
|
333-174705
|
45-1352286
|
|||
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
11767 South Dixie Highway, Suite 115
|
|
||
Miami, Florida
|
|
33156
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
Emerging Growth Company ☐
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
4.1 | ||
4.2 | ||
10.1
|
|
CLS HOLDINGS USA, INC.
|
|||
Date: June 26, 2018
|
By:
|
/s/ Jeffrey I. Binder | |
Jeffrey I. Binder | |||
Chairman and Chief Executive Officer
|
|||
Article 1 INTERPRETATION
|
2
|
|
1.1
|
Definitions
|
2
|
1.2
|
Headings
|
8
|
1.3
|
Gender
|
8
|
1.4
|
Weekends and Holidays
|
8
|
1.5
|
Meaning of "Outstanding"
|
8
|
1.6
|
Time
|
8
|
1.7
|
Applicable Law
|
8
|
1.8
|
Severability
|
8
|
1.9
|
Currency
|
8
|
1.10
|
Conflicts
|
8
|
1.11
|
Schedules
|
9
|
Article 2 ISSUE AND PURCHASE OF SPECIAL WARRANTS
|
9
|
|
2.1
|
Creation, Form and Terms of Special Warrants
|
9
|
2.2
|
Form of Special Warrants, Certificated Special Warrants
|
9
|
2.3
|
Book Entry Only Special Warrants
|
9
|
2.4
|
Special Warrant Certificate
|
9
|
2.5
|
Transferability and Ownership of Special Warrants
|
10
|
2.6
|
Special Warrantholders Not Shareholders
|
10
|
2.7
|
Loss, Mutilation, Destruction or Theft of Special Warrants
|
13
|
2.8
|
Exchange of Special Warrants
|
13
|
2.9
|
Ranking
|
13
|
2.10
|
Purchase of Special Warrants for Cancellation
|
14
|
2.11
|
Cancellation of Surrendered Special Warrants
|
14
|
Article 3 representations, warranties and COVENANTS OF THE CORPORATION
|
14
|
|
3.1
|
To Issue Special Warrants and Reserve Common Shares
|
14
|
3.2
|
To Execute Further Assurances
|
15
|
3.3
|
To Carry On Business
|
15
|
3.4
|
No Breach of Constating Documents
|
15
|
3.5
|
Filing Prospectus and Related Matters
|
15
|
3.6
|
Notices to Special Warrant Agent and Agent
|
16
|
3.7
|
Securities Qualification Requirements
|
16
|
3.8
|
Obtain Listing
|
16
|
3.9
|
Satisfy Covenants
|
16
|
3.10
|
Performance of Covenants by Special Warrant Agent
|
16
|
3.11
|
Special Warrant Agent's Remuneration and Expenses
|
17
|
3.12
|
Notice to Special Warrantholders of Certain Events
|
17
|
3.13
|
Closure of Share Transfer Books
|
18
|
3.14
|
Payment of Commissions
|
18
|
3.15
|
Contractual Right of Rescission
|
18
|
Article 4 RELEASE OF ESCROWED FUNDS
|
19
|
|
4.1
|
Escrowed Proceeds and Distribution Amounts
|
19
|
4.2
|
Satisfaction of Escrow Release Conditions
|
19
|
4.3
|
Release of Escrowed Funds
|
19
|
4.4
|
Failure to Satisfy Escrow Release Conditions by the Escrow Release Deadline
|
20
|
4.5
|
Direction
|
20
|
4.6
|
Method of Disbursement and Delivery
|
20
|
4.7
|
Acknowledgements of Escrowed Funds
|
21
|
4.8
|
Miscellaneous
|
21
|
Article 5 ADJUSTMENT OF NUMBER OF Underlying SCURITIES
|
22
|
|
5.1
|
Adjustment of Number of Underlying Securities
|
22
|
5.2
|
Proceedings Prior to any Action Requiring Adjustment
|
27
|
5.3
|
Notice of Adjustment
|
28
|
5.4
|
No Action After Notice
|
28
|
5.5
|
Protection of Special Warrant Agent
|
28
|
5.6
|
Notice of Special Matters
|
28
|
5.7
|
Underlying Warrants and Warrant Shares Treated Separately
|
29
|
Article 6 EXERCISE AND CANCELLATION OF SPECIAL WARRANTS
|
29
|
|
6.1
|
Notice of Deemed Exercise to Special Warrantholders
|
29
|
6.2
|
No Voluntary Exercise of Special Warrants
|
29
|
6.3
|
Deemed Exercise of Special Warrants
|
29
|
6.4
|
Effect of Exercise of Special Warrants
|
29
|
6.5
|
Special Warrants Void After Exercise
|
30
|
6.6
|
Fractions of Underlying Securities
|
30
|
6.7
|
Accounting and Recording
|
30
|
6.8
|
Legending of Special Warrants and Underlying Securities
|
31
|
6.9
|
Securities Restrictions
|
32
|
Article 7 MEETINGS OF SPECIAL WARRANTHOLDERS
|
32
|
|
7.1
|
Definitions
|
32
|
7.2
|
Convening Meetings
|
32
|
7.3
|
Place of Meeting
|
32
|
7.4
|
Notice
|
33
|
7.5
|
Persons Entitled to Attend
|
33
|
7.6
|
Quorum
|
33
|
7.7
|
Chairman
|
33
|
7.8
|
Power to Adjourn
|
33
|
7.9
|
Adjourned Meeting
|
34
|
7.10
|
Show of Hands
|
34
|
7.11
|
Poll
|
34
|
7.12
|
Regulations
|
34
|
7.13
|
Powers of Special Warrantholders
|
35
|
7.14
|
Powers Cumulative
|
36
|
7.15
|
Minutes of Meetings
|
36
|
7.16
|
Written Resolutions
|
37
|
7.17
|
Binding Effect
|
37
|
7.18
|
Holdings by the Corporation or Subsidiaries of the Corporation Disregarded
|
37
|
Article 8 SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS
|
37
|
|
8.1
|
Provision for Supplemental Indentures for Certain Purposes
|
37
|
8.2
|
Corporation May Consolidate, etc. on Certain Terms
|
38
|
8.3
|
Successor Body Corporate Substituted
|
39
|
Article 9 CONCERNING THE SPECIAL WARRANT AGENT
|
39
|
|
9.1
|
Duties of Special Warrant Agent
|
39
|
9.2
|
Action by Special Warrant Agent
|
39
|
9.3
|
Certificate of the Corporation
|
39
|
9.4
|
Special Warrant Agent May Employ Experts
|
40
|
9.5
|
Resignation and Replacement of Special Warrant Agent
|
40
|
9.6
|
Indenture Legislation
|
41
|
9.7
|
Notice
|
41
|
9.8
|
Use of Proceeds
|
41
|
9.9
|
No Inquiries
|
42
|
9.10
|
Actions by Special Warrant Agent to Protect Interest
|
42
|
9.11
|
Special Warrant Agent Not Required to Give Security
|
42
|
9.12
|
No Conflict of Interest
|
42
|
9.13
|
Special Warrant Agent Not Ordinarily Bound
|
42
|
9.14
|
Special Warrant Agent May Deal in Instruments
|
43
|
9.15
|
Recitals or Statements of Fact Made by Corporation
|
43
|
9.16
|
Special Warrant Agent's Discretion Absolute
|
43
|
9.17
|
No Representations as to Validity
|
43
|
9.18
|
Special Warrant Agent's Authority to Carry on Business
|
44
|
9.19
|
Indemnification of Special Warrant Agent
|
44
|
9.20
|
Third Party Interests
|
44
|
9.21
|
Compliance with Anti-Money Laundering Legislation
|
44
|
9.22
|
Not Appointed Receiver
|
45
|
9.23
|
Compliance with Privacy Policy
|
45
|
Article 10 NOTICES
|
46
|
|
10.1
|
Notice to Corporation, Special Warrant Agent and Agent
|
46
|
10.2
|
Notice to Special Warrantholders
|
47
|
Article 11 POWER OF BOARD OF DIRECTORS
|
48
|
|
11.1
|
Board of Directors
|
48
|
Article 12 MISCELLANEOUS PROVISIONS
|
48
|
|
12.1
|
Further Assurances
|
48
|
12.2
|
Unenforceable Terms
|
48
|
12.3
|
No Waiver
|
48
|
12.4
|
Waiver of Default
|
49
|
12.5
|
Immunity of Shareholders
|
49
|
12.6
|
Limitation of Liability
|
49
|
12.7
|
Suits by Special Warrantholders
|
49
|
12.8
|
Force Majeure
|
50
|
12.9
|
Enurement
|
50
|
12.10
|
Counterparts and Formal Date
|
50
|
12.11
|
Satisfaction and Discharge of Indenture
|
50
|
12.12
|
Provisions of Indenture and Special Warrants for the Sole Benefit of Parties and Special Warrantholders
|
51
|
12.13
|
Formal Date and Effective Date
|
51
|
(a)
|
“1933 Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
|
(b)
|
“Acquisition Date” means the date on which Proposed Acquisition is completed;
|
(c)
|
“Agency Agreement” means the agency agreement dated as of June 20, 2018 between the Corporation and the Agent;
|
(d)
|
“Agent” means Canaccord Genuity Corp., the agent with respect to the Private Placement;
|
(e)
|
“Agent’s Commission” means $1,043,029, being an amount equal to 8% of the aggregate gross proceeds from the Private Placement;
|
(f)
|
“Applicable Legislation” means the provisions, if any, for the time being, of any statute of Canada or a province or territory thereof, and of the regulations under such statute, relating to special warrant indentures and to the rights, duties and obligations of special warrant agents under special warrant indentures, and of corporations issuing their securities under special warrant indentures, to the extent that any such provisions are in force and applicable to this Indenture;
|
(g)
|
“Authenticated” means with respect to the issuance of a Special Warrant Certificate, one which has been duly signed by the Corporation and authenticated by manual signature of an authorized officer of the Special Warrant Agent, and “Authenticate”, “Authenticating” and “Authentication” have the appropriate correlative meanings;
|
(h)
|
“Business Day” means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in Toronto, Ontario are not open for business;
|
(i)
|
“Capital Reorganization” has the meaning ascribed thereto in subsection 5.1(d);
|
(j)
|
“Closing” means the closing on the applicable Closing Date of the Private Placement;
|
(k)
|
“Closing Date” means June 20, 2018, or such other date as agreed to by the Corporation and the Agent;
|
(l)
|
“Common Share Reorganization” has the meaning ascribed thereto in subsection 5.1(a);
|
(m)
|
“Common Shares” means common shares in the capital of the Corporation;
|
(n)
|
“Completion Notice and Direction” means the certificate executed by the Corporation and the Agent in the form attached as Schedule “B” hereto and addressed to the Special Warrant Agent confirming that the Escrow Release Conditions have been satisfied;
|
(o)
|
“Convertible Securities” has the meaning ascribed thereto in subsection 5.1(a);
|
(p)
|
“Corporate Finance Fee” means $651,893, being an amount equal to 5% of the aggregate gross proceeds from the Private Placement, payable in Special Warrants;
|
(q)
|
“Corporation” means CLS Holding USA, Inc., a corporation existing under the laws of the State of Nevada;
|
(r)
|
“Corporation’s auditors” means the firm of accountants serving as the auditors of the Corporation at the relevant time;
|
(s)
|
“Counsel” means a barrister or solicitor or a firm of barristers and solicitors retained by the Special Warrant Agent or retained by the Corporation and acceptable to the Special Warrant Agent, which may or may not be counsel for the Corporation;
|
(t)
|
“CSE” means the Canadian Securities Exchange;
|
(v)
|
“Deemed Exercise Date” means, subject to Section 5.1(f), the earlier of:
|
(i)
|
the date that is the fifth Business Day after the Qualification Date; and
|
(ii)
|
the date that is four months and one day following the Acquisition Date;
|
(w)
|
“Deemed Exercise Time” means 5:00 p.m. (Toronto time) on the Deemed Exercise Date;
|
(x)
|
“Designated Jurisdictions” means, collectively, each of the provinces of Canada (which shall not include Québec) where Special Warrants are sold;
|
(y)
|
“director” means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to an action by the directors means an action by the directors of the Corporation as a board or, whenever duly empowered, action by a committee of such board;
|
(z)
|
“Earnings” means any income (including interest or gains) derived from investing the Escrowed Proceeds;
|
(aa)
|
“Escrow Release Conditions” means all of the following conditions:
|
(i)
|
completion of the Proposed Acquisition;
|
(ii)
|
receipt of audited financial statements, in a form acceptable to the Agent, for the Oasis Subsidiaries for the preceding 2 years;
|
(iii)
|
the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Proposed Acquisition;
|
(iv)
|
the Corporation shall not be in breach or default of any of its covenants or obligations under this Indenture or the Agency Agreement;
|
(v)
|
the Corporation having delivered a certificate to the Agent that the conditions set forth in (i), (ii) (iii) and (iv) have been satisfied; and
|
(vi)
|
the Corporation and the Agent having delivered the Completion Notice and Direction to the Special Warrant Agent;
|
(bb)
|
“Escrow Release Deadline” means 5:00 p.m. (Toronto time) on June 30, 2018;
|
(cc)
|
“Escrow Release Event” means the satisfaction of the Escrow Release Conditions on or prior to the Escrow Release Deadline;
|
(dd)
|
“Escrowed Funds” at any time means the aggregate of: (i) the Escrowed Proceeds, and (ii) any Earnings derived directly or indirectly from time to time from holding the Escrowed Proceeds;
|
(ee)
|
“Escrowed Proceeds” means the amount of $12,181,538, representing the gross proceeds of the Private Placement (being $13,037,859) less (i) approximately 50% of the Agent’s Commission (being $496,582); (ii) all of the Agent’s estimated costs and expenses with respect to the Private Placement to date (being $300,000); and (iii) a portion of the fees (including disbursements and applicable taxes) incurred to date by Cassels Brock & Blackwell LLP;
|
(ff)
|
“Exercise Notice” has the meaning ascribed thereto in subsection 3.6(a);
|
(gg)
|
“Indenture”, “herein”, “hereto”, “hereunder”, “hereof”, “hereby” and similar expressions mean or refer to this special warrant indenture and not to any particular Article, Section, paragraph, clause, subdivision or portion hereof and include any indenture, deed or instrument supplemental or ancillary hereto, in each case, as may be amended from time to time; and the expressions “Article”, “Section” and “paragraph” followed by a number mean and refer to the specified Article, Section or paragraph of this Indenture;
|
(hh)
|
“Listing Date” means the date the Common Shares are listed for trading on the CSE;
|
(ii)
|
“Oasis Subsidiaries” means (i) Serenity Wellness Center, LLC dba Oasis Cannabis Dispensary/Retail Store; (ii) Serenity Wellness Products, LLC dba City Trees Fresh Cannabis Production, Wholesale; and (iii) Serenity Wellness Growers, LLC dba City Trees Fresh Cannabis Cultivation, Wholesale.
|
(jj)
|
“Officer’s Certificate” means a certificate signed by a senior officer of the Corporation;
|
(kk)
|
“Passport System” means the passport system procedures provided for under Multilateral Instrument 11-102 - Passport System and National Policy 11-202 - Process for Prospectus Reviews in Multiple Jurisdictions;
|
(ll)
|
“person” means an individual, body corporate, partnership, trust, warrant agent, executor, administrator, legal representative or any unincorporated organization;
|
(mm)
|
“Preliminary Prospectus” means a preliminary prospectus of the Corporation (in the English language), including documents incorporated or deemed to be incorporated by reference therein (if any), filed with the Securities Regulators by the Corporation in connection with qualifying the distribution of the Underlying Securities underlying the Special Warrants in the Designated Jurisdictions;
|
(nn)
|
“Private Placement” means the private placement of 28,973,019 Special Warrants pursuant to the Agency Agreement and the subscription agreements entered into on the Initial Closing Date between the Corporation and the purchasers of Special Warrants;
|
(oo)
|
“Proposed Acquisition” means the transaction between the Corporation and Alternative Solutions, LLC whereby the Corporation will acquire the outstanding equity interests in the Oasis Subsidiaries from Alternative Solutions, LLC for total remaining consideration of approximately USD$16,200,000 in accordance with the terms of a definitive agreement that has been entered into between the Corporation and Alternative Solutions, LLC;
|
(pp)
|
“Prospectus” means a final prospectus of the Corporation (in the English language) including documents incorporated or deemed to be incorporated by reference therein (if any), filed with the Securities Regulators by the Corporation which qualifies the distribution of the Underlying Shares underlying the Special Warrants in the Designated Jurisdictions;
|
(qq)
|
“Qualification Deadline” means 5:00 p.m. (Toronto time) on August 20, 2018;
|
(rr)
|
“Qualification Date” means the date on which the Ontario Securities Commission, as the principal regulator under the Passport System, issues the Receipt evidencing that each Securities Regulator has issued a receipt for the Prospectus;
|
(ss)
|
“Receipt” means the receipt issued by the Ontario Securities Commission, which is deemed to also be a receipt of the Securities Regulators of the other Designated Jurisdictions pursuant to the Passport System;
|
(tt)
|
“Rights Offering” has the meaning ascribed thereto in subsection 5.1(b);
|
(uu)
|
“Rights Period” has the meaning ascribed thereto in subsection 5.1(b);
|
(vv)
|
“Securities Regulators” means, collectively, the securities commissions or other applicable securities regulatory authorities of each of the Designated Jurisdictions;
|
(ww)
|
“SEC” means the United States Securities and Exchange Commission;
|
(xx)
|
“Special Distribution” has the meaning ascribed thereto in subsection 5.1(c);
|
(yy)
|
“Special Warrant” means a special warrant of the Corporation created by the Corporation, issued and Authenticated hereunder and entitling the holder thereof to acquire one Unit (provided that if a Receipt for the Prospectus is not issued prior to the Qualification Deadline then each holder of a Special Warrant will be entitled to 1.1 Units per Special Warrant instead of one Unit) upon deemed exercise thereof, in accordance with this Indenture, without payment of additional consideration or further action on the part of the holder of Special Warrants, subject to adjustment as set out herein; provided, however, that any fractional entitlement to Units will be rounded down to the nearest whole Unit;
|
(zz)
|
“Special Warrant Agent” means the special warrant agent under this Indenture, initially being Odyssey Trust Company, in its capacity as special warrant agent hereunder, having an office in Calgary, Alberta or such other address as it shall inform the Corporation and Special Warrantholders from time to time;
|
(aaa)
|
“Special Warrant Certificate” means a certificate evidencing one or more Special Warrants issuable hereunder, substantially in the form attached hereto as Schedule “A”;
|
(bbb)
|
“Special Warrantholder” means the registered holder from time to time of an outstanding Special Warrant;
|
(ccc)
|
“Subscription Price” means the price paid per Special Warrant by each subscriber in the Private Placement;
|
(ddd)
|
“Subsidiary of the Corporation” means a corporation of which voting securities carrying a majority of the votes attached to all outstanding voting securities of such corporation are owned, directly or indirectly, by the Corporation or by one or more subsidiaries of the Corporation, or by the Corporation and one or more subsidiaries of the Corporation and, as used in this definition, voting securities means securities, other than debt securities, carrying a voting right to elect directors either under all circumstances or under some circumstances that may have occurred and are continuing;
|
(eee)
|
“Termination Date” means the date on which the Termination Event occurs;
|
(fff)
|
“Termination Event” means any one of:
|
(i)
|
(ii)
|
(ggg)
|
“Termination Notice” means the notice to be provided to the Special Warrant Agent, the Agent and each Special Warrantholder by the Corporation in the form attached as Schedule “C” hereto forthwith following a Termination Event pursuant to Section 4.4 confirming that a Termination Event has occurred;
|
(hhh)
|
“Trading Day” means any day on which the facilities of the CSE, or, if the Common Shares are not listed thereon, the facilities of any stock exchange on which the Common Shares are listed, or, if the Common Shares are not listed thereon, an over-the-counter market in Canada as may be selected by the directors on which the Common Shares are traded, is open for trading;
|
(iii)
|
“Underlying Security” means any of an Underlying Share and an Underlying Warrant;
|
(jjj)
|
“Underlying Share” means one Common Share, subject to adjustment in accordance with Article 5 ;
|
(kkk)
|
“Underlying Warrant” means one common share purchase warrant, each being exercisable to acquire one Common Share for a period of 36 months following the Listing Date at a price of $0.65 per Common Share, subject to adjustment in accordance with Article 5;
|
(lll)
|
“Unit” means a unit of the Corporation, consisting of one Underlying Share and one-half of one Underlying Warrant, subject to adjustment in accordance with Article 5;
|
(mmm)
|
“U.S. Person” and “United States” have the meanings ascribed thereto in Regulation S under the 1933 Act;
|
(nnn)
|
“Warrant Indenture” means the warrant indenture governing the terms of the Underlying Warrants between the Corporation and Odyssey Trust Company in its capacity as warrant agent, dated June 20, 2018, and
|
(ooo)
|
“written order of the Corporation”, “written direction of the Corporation”, “written request of the Corporation”, “written consent of the Corporation” and “certificate of the Corporation” and “any other document required to be signed by the Corporation”, means, respectively, a written order, direction, request, consent, certificate or other document signed in the name of the Corporation by any officer or director and may consist of one or more instruments so executed.
|
(b)
|
The Special Warrants shall be executed by the Corporation and Authenticated by, or on behalf of, the Special Warrant Agent upon the written order of the Corporation and delivered by the Special Warrant Agent to the Corporation or to the order of the Corporation in accordance with the written order of the Corporation.
|
(c)
|
(d)
|
Subject to the provisions hereof, the Special Warrants issued under this Indenture are limited in the aggregate to 30,421,670 Special Warrants, provided that the number and type of securities to be issued upon deemed exercise of the Special Warrants is subject to increase or decrease so as to give effect to the adjustments as required by Article 4.
|
(e)
|
No fractional Special Warrants shall be issued or otherwise provided for hereunder.
|
|
the Special Warrantholder entitled to the benefits, notwithstanding that one or more of the persons whose signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Special Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Corporation, with the approval of the Special Warrant Agent, may determine.
|
(c)
|
2.6
|
Transferability and Ownership of Special Warrants
|
|
the Special Warrantholder’s residency and that the address of any transferee to whom any Special Warrants or any Underlying Securities are to be registered, as shown on the transfer document, is the transferee’s actual address and is also determinative of the transferee’s residency.
|
(h)
|
(i)
|
(ii)
|
(j)
|
|
Special Warrants in accordance with the terms and conditions herein contained discharges all responsibilities of the Corporation and the Special Warrant Agent with respect to such Special Warrants and neither the Corporation nor the Special Warrant Agent is bound to inquire into the title of any such registered holder.
|
(k)
|
(c)
|
That Odyssey Trust Company is the warrant agent of the Underlying Warrants, and is duly authorized to countersign, register and issue certificates representing, or document such other evidence of ownership of, such Underlying Warrants, in each case in accordance with and pursuant to the terms of this Indenture and the Warrant Indenture.
|
(a)
|
(b)
|
(c)
|
(d)
|
(a)
|
(b)
|
(a)
|
(b)
|
(c)
|
(d)
|
(ii)
|
|
unless otherwise specified, shall, in the case of the Corporation, refer to a certificate of any officer of director of the Corporation, and, in the case of any other party, refer to a certificate of an authorized officer of such party. The Special Warrant Agent shall not be liable for any error in judgment or for any act done or step taken or omitted by it in good faith or for any mistake, in fact or law, or for anything which it may do or refrain from doing in connection therewith, except arising out of its own gross negligence, wilful misconduct or fraud. None of the provisions of this Agreement shall require the Special Warrant Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. The Special Warrant Agent shall not be responsible for any losses which may occur as a result of the investment of the Escrowed Funds where the Escrowed Funds have been invested in accordance with the terms of this Agreement.
|
(a)
|
(i)
|
(ii)
|
(iii)
|
(B)
|
(b)
|
|
during a period expiring not more than 45 calendar days after the record date for such issue (“Rights Period”), to subscribe for or acquire Common Shares (or securities convertible or exchangeable into Common Shares) at a price per share (or having a conversion or exchange price per share) to the holder of less than 95% of the Current Market Price for the Common Shares on such record date (any such issuance being herein called a “Rights Offering), then the number of Underlying Shares obtainable upon the exercise of each Special Warrant shall be adjusted effective immediately after the end of the Rights Period to a number determined by multiplying the number of Underlying Shares obtainable upon the exercise thereof immediately prior to the end of the Rights Period by a fraction:
|
(c)
|
(iii)
|
(A)
|
(1)
|
|
shall accept, in lieu of the number of Underlying Securities obtainable under the Special Warrants to which it was previously entitled, the kind and number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such Capital Reorganization, that the Special Warrantholder would have been entitled to receive on such Capital Reorganization if, on the record date or the effective date thereof, as the case may be, the Special Warrantholder had been the registered holder of the number of Underlying Securities obtainable upon the exercise of Special Warrants then held, subject to adjustment thereafter in accordance with provisions of the same, as nearly as may be possible, as those contained in this Article 4. The Corporation shall not carry into effect any action requiring an adjustment pursuant to this Section 5.1(d) unless all necessary steps have been taken so that the Special Warrantholders are thereafter entitled to receive such kind and number of shares, other securities or property. The Corporation will not enter into a Capital Reorganization unless its successor, or the purchasing body corporate, partnership, trust or other entity, as the case may be, prior to or contemporaneously with any such Capital Reorganization, enters into an indenture which provides, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Special Warrantholders to the end that the provisions set forth in this Indenture are correspondingly made applicable, as nearly as may reasonably be possible, with respect to any shares, other securities or property to which a Special Warrantholder is entitled on the exercise of his acquisition rights thereafter. An indenture entered into by the Corporation pursuant to the provisions of this Section 5.1(d) is deemed a supplemental indenture entered into pursuant to the provisions of Article 8. An indenture entered into between the Corporation, any successor to the Corporation or any purchasing body corporate, partnership, trust or other entity and the Special Warrant Agent must provide for adjustments which are as nearly equivalent as may be practicable to the adjustments provided in this Article 4 and which apply to successive Capital Reorganizations;
|
(a)
|
is entitled to act and rely, and shall be protected in so doing, on any adjustment calculation of the Corporation or the Corporation’s auditors and any other documents filed by the Corporation pursuant to this Article 4 for all purposes;
|
(c)
|
(e)
|
(c)
|
(a) |
All Special Warrant Certificates and all certificates issued in exchange therefor or in substitution thereof will have the following legends endorsed thereon:
|
(b) |
All Special Warrant Certificates and all certificates issued in exchange therefor or in substitution thereof and any certificates representing the Underlying Securities issued upon deemed exercise thereof will have the following legend endorsed thereon in addition to the legend set forth in 6.8(a):
|
(b)
|
(c)
|
(a)
|
(b)
|
(c)
|
(b)
|
(d)
|
(e)
|
(h)
|
(j)
|
(k)
|
(l)
|
amend, alter, or repeal any Extraordinary Resolution previously passed pursuant to this Section 7.13; or
|
(m)
|
(b)
|
(c)
|
(i)
|
(j)
|
to allow for the voluntary exercise of Special Warrants if agreed to by the Corporation in accordance with Section 5.2; or
|
(k)
|
(b)
|
Failing such appointment by the Corporation or by the Special Warrantholders by Extraordinary Resolution, the retiring Special Warrant Agent, at the expense of the Corporation, or any Special Warrantholder may apply to a Judge of the Ontario Superior Court of Justice on such notice as such Judge may direct, for the appointment of a new special warrant agent. The Special Warrantholders may, by Extraordinary Resolution, remove the Special Warrant Agent (including a special warrant agent appointed by the Corporation or by a Judge as aforesaid) and appoint a new special warrant agent.
|
(c)
|
Any new Special Warrant Agent appointed under the provisions of this Section 9.5 shall be a corporation authorized to carry on the business of a trust company in one or more provinces of Canada and, if required by Applicable Legislation of any province, in such province.
|
(d)
|
On any new appointment, the new Special Warrant Agent is vested with the same powers, rights, duties and obligations as if it had been originally named as Special Warrant Agent without any further assurance, conveyance, act or deed; but there will be immediately executed, at the expense of the Corporation, all such conveyances or other instruments as may, in the opinion of Counsel, be necessary or advisable for the purpose of assuring such powers, rights, duties, and responsibilities of the new Special Warrant Agent, provided that, any successor Special Warrant Agent shall have executed an appropriate instrument accepting such appointment and, at the request of the Corporation,
|
|
the predecessor Special Warrant Agent, upon payment of its outstanding remuneration and expenses, shall execute and deliver to the successor Special Warrant Agent an appropriate instrument transferring to such successor Special Warrant Agent all rights and powers of the Special Warrant Agent hereunder.
|
(e)
|
On the appointment of a new Special Warrant Agent, the Corporation will promptly give notice thereof to the Special Warrantholders.
|
(f)
|
Any Special Warrant Certificates certified but not delivered by a predecessor Special Warrant Agent may be delivered by the successor Special Warrant Agent in the name of the predecessor or successor Special Warrant Agent.
|
(a)
|
(b)
|
under any obligation to see to, or to require evidence of, the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto;
|
(d)
|
responsible for any breach by the Corporation of any covenant or condition contained in this Indenture or in any Special Warrant Certificate and will not incur any liability or responsibility whatever or be in any way responsible for the consequences of any breach by the Corporation of any obligation herein contained or of any act of any director, officer, employee, or agent of the Corporation; or
|
|
(a) |
to provide the services required under this Indenture and other services that may be requested from time to time;
|
(b) |
to help the Special Warrant Agent manage its servicing relationships with such individuals;
|
(c) | to meet the Special Warrant Agent’s legal and regulatory requirements; and |
(d) |
if Social Insurance Numbers are collected by the Special Warrant Agent, to perform tax reporting and to assist in verification of an individual’s identity for security purposes.
|
(a)
|
If to the Corporation:
|
(c)
|
If to the Agent:
|
|
request to the Special Warrant Agent and the Special Warrant Agent has been afforded reasonable opportunity to proceed or complete any action or suit for any such purpose whether or not in its own name and the Special Warrantholders or any of them have furnished to the Special Warrant Agent, when so requested by the Special Warrant Agent, sufficient funds and security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby and the Special Warrant Agent has failed to act within a reasonable time or the Special Warrant Agent has failed to actively pursue any such act or proceeding.
|
12.12
|
CLS HOLDINGS USA, INC.
|
|
Per:
|
/s/ Jeffrey I. Binder |
Authorized Signatory
|
|
ODYSSEY TRUST COMPANY
|
|
Per:
|
/s/ Dan Sander |
Authorized Signatory
|
|
Per:
|
/s/ Lisa Scotland |
Authorized Signatory
|
No. [l]
|
«Number» SPECIAL WARRANTS entitling the holder to acquire one Unit (comprised of one Underlying Share and one-half of one Underlying Warrant) for each Special Warrant, subject to adjustment as set out below
|
(i) |
the date that is the fifth Business Day after the date on which the receipt (the “Receipt”) for a (final) prospectus qualifying the distribution of the Underlying Shares issuable upon deemed exercise of the Special Warrants (the “Prospectus”) has been issued by the securities commissions or similar regulatory authority (the “Securities Regulators”) in each of the provinces of Canada in which Special Warrants are sold (the “Designated Jurisdictions”); and
|
(ii) |
the date that is 4 months and one day after the Acquisition Date (as defined in the Indenture) (the “Deemed Exercise Time”).
|
CLS HOLDINGS USA, INC.
|
|
Per:
|
|
Authorized Signatory
|
ODYSSEY TRUST COMPANY
|
|
Per:
|
|
Authorized Signatory
|
Signature Guaranteed
|
(Signature of Special Warrantholder)
|
Name of Special Warrantholder:
|
|
Address (Please print):
|
|
(1) |
In order to transfer the Special Warrants represented by this Special Warrant Certificate, this transfer form must be delivered to the Special Warrant Agent, together with this Special Warrant Certificate at the following address:
|
TO:
|
Odyssey Trust Company, as Special Warrant Agent (the “Special Warrant Agent”)
|
RE:
|
Special Warrant Indenture (the “Special Warrant Indenture”) dated June 20, 2018 among CLS Holdings USA, Inc. (the “Corporation”), Canaccord Genuity Corp. (the “Agent”) and the Special Warrant Agent
|
(a)
|
CLS HOLDINGS USA, INC.
|
|
By:
|
|
Authorized Signing Officer
|
CANACCORD GENUITY CORP.
|
|
By:
|
|
Authorized Signing Officer
|
TO:
|
Odyssey Trust Company, as Special Warrant Agent (the “Special Warrant Agent”)
|
AND TO:
|
Canaccord Genuity Corp.
|
AND TO:
|
Special Warrantholders
|
RE:
|
Special Warrant Indenture (the “Special Warrant Indenture”) dated June 20, 2018 among CLS Holdings USA, Inc. (the “Corporation”), Canaccord Genuity Corp. (the “Agent”) and the Special Warrant Agent
|
CLS HOLDINGS USA, INC.
|
|
By:
|
|
Authorized Signing Officer
|
(a)
|
(b)
|
(c)
|
(2)
|
CLS HOLDINGS USA, INC.
|
|
Per:
|
|
Authorized Signatory
|
TO: |
Odyssey Trust Company, as Special Warrant Agent (the “Special Warrant Agent”)
|
AND TO: |
Canaccord Genuity Corp.
|
CLS HOLDINGS USA, INC.
|
|
Per:
|
|
Authorized Signatory
|
Page | ||
ARTICLE 1 INTERPRETATION
|
1
|
|
1.1
|
Definitions.
|
1
|
1.2
|
Gender and Number.
|
6
|
1.3
|
Headings, Etc.
|
6
|
1.4
|
Day not a Business Day.
|
6
|
1.5
|
Time of the Essence.
|
6
|
1.6
|
Monetary References.
|
6
|
1.7
|
Applicable Law.
|
7
|
ARTICLE 2 ISSUE OF WARRANTS
|
7
|
|
2.1
|
Creation and Issue of Warrants.
|
7
|
2.2
|
Terms of Warrants.
|
7
|
2.3
|
Warrantholder not a Shareholder.
|
7
|
2.4
|
Warrants to Rank Pari Passu.
|
8
|
2.5
|
Form of Warrants.
|
8
|
2.6
|
Book Entry Only Warrants.
|
8
|
2.7
|
Signing of Warrant Certificates.
|
8
|
2.8
|
Authentication by the Warrant Agent.
|
8
|
2.9
|
Legends.
|
9
|
2.10
|
Register of Warrants
|
11
|
2.11
|
Issue in Substitution for Warrant Certificates Lost, etc.
|
12
|
2.12
|
Exchange of Warrant Certificates.
|
12
|
2.13
|
Transfer and Ownership of Warrants.
|
12
|
2.14
|
Cancellation of Surrendered Warrants.
|
13
|
ARTICLE 3 EXERCISE OF WARRANTS
|
14
|
|
3.1
|
Right of Exercise.
|
14
|
3.2
|
Warrant Exercise.
|
14
|
3.3
|
U.S. Restrictions; Legended Certificates
|
16
|
3.4
|
Transfer Fees and Taxes.
|
18
|
3.5
|
Warrant Agency.
|
18
|
3.6
|
Effect of Exercise of Warrants.
|
19
|
3.7
|
Partial Exercise of Warrants; Fractions.
|
19
|
3.8
|
Expiration of Warrants.
|
20
|
3.9
|
Accounting and Recording.
|
20
|
3.10
|
Securities Restrictions.
|
20
|
ARTICLE 4 ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE
|
20
|
|
4.1
|
Adjustment of Number of Common Shares and Exercise Price.
|
20
|
4.2
|
Entitlement to Common Shares on Exercise of Warrant.
|
25
|
4.3
|
No Adjustment for Certain Transactions.
|
25
|
4.4
|
Determination by Independent Firm.
|
25
|
4.5
|
Proceedings Prior to any Action Requiring Adjustment.
|
25
|
4.6
|
Certificate of Adjustment.
|
25
|
4.7
|
Notice of Special Matters.
|
26
|
4.8
|
No Action after Notice.
|
26
|
4.9
|
Other Action.
|
26
|
4.10
|
Protection of Warrant Agent.
|
26
|
4.11
|
Participation by Warrantholder.
|
27
|
ARTICLE 5 RIGHTS OF THE CORPORATION AND COVENANTS
|
27
|
|
5.1
|
Optional Purchases by the Corporation.
|
27
|
5.2
|
General Covenants.
|
27
|
5.3
|
Warrant Agent’s Remuneration and Expenses.
|
28
|
5.4
|
Performance of Covenants by Warrant Agent.
|
28
|
5.5
|
Enforceability of Warrants.
|
29
|
ARTICLE 6 ENFORCEMENT
|
29
|
|
6.1
|
Suits by Warrantholders.
|
29
|
6.2
|
Suits by the Corporation.
|
29
|
6.3
|
Immunity of Shareholders, etc.
|
29
|
6.4
|
Waiver of Default.
|
30
|
ARTICLE 7 MEETINGS OF WARRANTHOLDERS
|
30
|
|
7.1
|
Right to Convene Meetings.
|
30
|
7.2
|
Notice.
|
30
|
7.3
|
Chairman.
|
31
|
7.4
|
Quorum.
|
31
|
7.5
|
Power to Adjourn.
|
31
|
7.6
|
Show of Hands.
|
31
|
7.7
|
Poll and Voting.
|
32
|
7.8
|
Regulations.
|
32
|
7.9
|
Corporation and Warrant Agent May be Represented.
|
33
|
7.10
|
Powers Exercisable by Extraordinary Resolution.
|
33
|
7.11
|
Meaning of Extraordinary Resolution.
|
34
|
7.12
|
Powers Cumulative.
|
34
|
7.13
|
Minutes.
|
35
|
7.14
|
Instruments in Writing.
|
35
|
7.15
|
Binding Effect of Resolutions.
|
35
|
7.16
|
Holdings by Corporation Disregarded.
|
35
|
ARTICLE 8 SUPPLEMENTAL INDENTURES
|
36
|
|
8.1
|
Provision for Supplemental Indentures for Certain Purposes.
|
36
|
8.2
|
Successor Entities.
|
37
|
ARTICLE 9 CONCERNING THE WARRANT AGENT
|
37
|
|
9.1
|
Indenture Legislation.
|
37
|
9.2
|
Rights and Duties of Warrant Agent.
|
37
|
9.3
|
Evidence, Experts and Advisers.
|
38
|
9.4
|
Documents, Monies, etc. Held by Warrant Agent.
|
39
|
9.5
|
Actions by Warrant Agent to Protect Interest.
|
39
|
9.6
|
Warrant Agent Not Required to Give Security.
|
39
|
9.7
|
Protection of Warrant Agent.
|
39
|
9.8
|
Replacement of Warrant Agent; Successor by Merger.
|
41
|
9.9
|
Conflict of Interest.
|
41
|
9.10
|
Acceptance of Agency
|
42
|
9.11
|
Warrant Agent Not to be Appointed Receiver.
|
42
|
9.12
|
Authorization to Carry on Business
|
42
|
9.13
|
Warrant Agent Not Required to Give Notice of Default.
|
42
|
9.14
|
Anti-Money Laundering.
|
42
|
9.15
|
Compliance with Privacy Code.
|
43
|
9.16
|
Securities and Exchange Commission Certification.
|
|
ARTICLE 10 GENERAL
|
44
|
|
10.1
|
Notice to the Corporation and the Warrant Agent.
|
44
|
10.2
|
Notice to Warrantholders.
|
45
|
10.3
|
Ownership of Warrants.
|
45
|
10.4
|
Counterparts and Electronic Copies.
|
46
|
10.5
|
Satisfaction and Discharge of Indenture.
|
46
|
10.6
|
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders.
|
46
|
10.7
|
Common Shares or Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided.
|
46
|
10.8
|
Severability
|
47
|
10.9
|
Force Majeure
|
47
|
10.10
|
Assignment, Successors and Assigns
|
47
|
10.11
|
Rights of Rescission and Withdrawal for Holders
|
47
|
SCHEDULE “A” FORM OF WARRANT
|
A-1 |
SCHEDULE “B” FORM OF DECLARATION FOR CERTAIN TRANSFERS OF WARRANT CERTIFICATES BY U.S. PURCHASERS
|
B-1 |
SCHEDULE “C” FORM OF DECLARATION FOR CERTAIN TRANSFERS OF COMMON SHARE CERTIFICATES BY U.S. PURCHASERS
|
C-1 |
(1)
|
Subject to the applicable conditions for exercise set out in Article 3 having been satisfied and subject to adjustment in accordance with Article 4, each Warrant shall entitle each Warrantholder thereof, upon exercise at any time after the Issue Date and prior to the Expiry Time, to acquire one Common Share upon payment of the Exercise Price.
|
(2)
|
No fractional Warrants shall be issued or otherwise provided for hereunder and Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Common Shares shall be rounded down to the nearest whole number and the holder shall not be entitled to any compensation in respect of any fractional Common Share which is not issued.
|
(3)
|
Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture.
|
(4)
|
The number of Common Shares which may be purchased pursuant to the Warrants and the Exercise Price therefor shall be adjusted upon the events and in the manner specified in Article 4.
|
(1)
|
The form of certificate representing Warrants shall be substantially as set out in Schedule “A” hereto or such other form as is authorized from time to time by the Warrant Agent. Each Warrant Certificate shall be Authenticated manually by or on behalf of the Warrant Agent. Each Warrant Certificate shall be signed by either of the Chief Executive Officer or Chief Financial Officer of the Corporation whose signature shall appear on the Warrant Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event, certificates so signed are as valid and binding upon the Corporation as if it had been signed manually. Any Warrant Certificate which has the applicable signatures as hereinbefore provided shall be valid notwithstanding that one or more of the persons whose signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Warrant Agent may determine.
|
(2)
|
Any Warrant Certificate validly issued in accordance with the terms of this Indenture in effect at the time of issue of such Warrant Certificate shall, subject to the terms of this Indenture and applicable law, validly entitle the holder to acquire Common Shares, notwithstanding that the form of such Warrant Certificate may not be in the form currently required by this Indenture.
|
(1)
|
No Warrant shall be considered issued and shall be valid or obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by the Warrant Agent. Authentication by the Warrant Agent shall not be construed as a
|
|
representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrant Certificates or Uncertificated Warrants (except the due Authentication thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the Warrants or any of them or of the consideration therefor. Authentication by the Warrant Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated have been duly issued hereunder and that the holder thereof is entitled to the benefits of this Indenture.
|
(2)
|
[Reserved]
|
(4)
|
[Reserved].
|
(5)
|
[Reserved].
|
(3)
|
Notwithstanding any other provisions of this Indenture, in processing and registering transfers of Warrants, no duty or responsibility whatsoever shall rest upon the Warrant Agent to determine the compliance by any transferor or transferee with the terms of the legend contained in subsections 2.9(1), or 2.9(2), or with the relevant securities laws or regulations, including, without limitation, Regulation S, and the Warrant Agent shall be entitled to assume that all transfers that are processed in accordance with this Indenture are legal and proper.
|
(a)
|
the name and address of the holder of the Warrants, the date of Authentication thereof and the number Warrants;
|
(b)
|
whether such Warrant is a Certificated Warrant or an Uncertificated Warrant and, if a Certificated Warrant, the unique number or code assigned to and imprinted thereupon and, if an Uncertificated Warrant, the unique number or code assigned thereto if any;
|
(c)
|
whether such Warrant has been cancelled; and
|
(d)
|
a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered.
|
(2)
|
The register shall be available for inspection by the Corporation and or any Warrantholder during the Warrant Agent’s regular business hours on a Business Day and upon payment to the Warrant Agent of its reasonable fees. Any Warrantholder exercising such right of inspection shall first provide an affidavit in form satisfactory to the Corporation and the Warrant Agent stating the name and address of the Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders or to influence the voting of Warrantholders at any meeting of Warrantholders.
|
(1)
|
If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law, and subsection 2.11(2) shall issue and thereupon the Warrant Agent shall certify and deliver, a new Warrant Certificate of like tenor, and bearing the same legend, if applicable, as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Warrant Agent and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder.
|
(1)
|
Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Warrant Agent (including compliance with applicable Securities Laws), be exchanged for one or more other Warrant Certificates representing the same aggregate number of Warrants, and bearing the same legend, if applicable, as represented by the Warrant Certificate or Warrant Certificates so exchanged.
|
(2)
|
Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is designated by the Corporation with the approval of the Warrant Agent. Any Warrant Certificate tendered for exchange shall be cancelled and surrendered to the Warrant Agent.
|
(1)
|
The Warrants may only be transferred on the register kept by the Warrant Agent at the Warrant Agency by the holder or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Warrant Agent only upon
|
(a) |
surrendering to the Warrant Agent at the Warrant Agency the Warrant Certificates representing the Warrants to be transferred together with a duly executed transfer form as set forth in Schedule “A” (together with a opinion of counsel, if required by Sections 2.9(1));
|
(b) |
[reserved]
|
(c) |
upon compliance with:
|
(i)
|
the conditions herein;
|
(ii)
|
such reasonable requirements as the Warrant Agent may prescribe; and
|
(iii)
|
all applicable Securities Laws and requirements of regulatory authorities;
|
(2)
|
The Warrant Agent shall not register a transfer unless the transferor has provided the Warrant Agent with the Warrant Certificate and such securities may be transferred only as set forth in such Section 2.9(1).
|
(3)
|
Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled to the rights and privileges attaching to the Warrants, and the issue of Common Shares by the Corporation upon the exercise of Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and the Warrant Agent with respect to such Warrants and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder.
|
(4)
|
The Corporation will be entitled, and may direct the Warrant Agent, to refuse to recognize any transfer, or enter the name of any transferee, of any Warrant on the register kept by the Warrant Agent, if such transfer would constitute a violation of Securities Laws or the rules, regulations or policies of any regulatory authority having jurisdiction. The Warrant Agent is entitled to assume compliance with all applicable Securities Laws unless otherwise notified in writing by the Corporation. No duty shall rest with the Warrant Agent to determine compliance of the transferee or transferor of any Warrant with Securities Laws.
|
(5)
|
Any Warrant Certificate issued to a transferee upon transfers contemplated by this section 2.13 shall bear the appropriate legends, as required by applicable Securities Laws, as set forth in subsection 2.9.
|
(2)
|
If, at the time of exercise of any Warrant in accordance with this Indenture, there is no effective Registration Statement under the U.S. Securities Act covering the resale by the holder of a portion of the Common Shares to be issued upon exercise of the Warrant, or the prospectus contained therein is not available for the resale of the Common Shares to the Warrantholder under the U.S Securities Act by reason of a blackout or suspension of use thereof, then the Warrants may be exercised, in part for that portion of the Common Shares not registered for resale by the holder under an effective Registration Statement or in whole in the case of the prospectus not being available for the resale of such Common Shares, at such time by means of a “cashless exercise” in which the Warrantholder shall
|
|
be entitled to receive a number of Common Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
|
A = |
the last VWAP for the Trading Day immediately preceding the time of delivery of the Exercise Form giving rise to the applicable “cashless exercise” (to clarify, the “last VWAP” will be the VWAP as calculated over an entire Trading Day such that, in the event that a Warrant is exercised at a time when the Trading Market is open, the prior Trading Day’s VWAP shall be used in this calculation);
|
(3)
|
[Reserved]
|
(4)
|
[Reserved].
|
(5)
|
[Reserved].
|
(6)
|
The Exercise Notice referred to in this Section 3.2 shall be signed by the Warrantholder, or its executors or administrators or other legal representatives or an attorney of the Warrantholder, duly appointed by an instrument in writing satisfactory to the Warrant Agent.
|
(7)
|
Any exercise referred to in this Section 3.2 shall require that the entire Exercise Price for Common Shares subscribed for must be paid at the time of subscription and such Exercise Price and original Exercise Notice executed by the Warrantholder must be received by the Warrant Agent prior to the Expiry Time.
|
(8)
|
Notwithstanding the foregoing in this Section 3.2, Warrants may only be exercised pursuant to this Section 3.2 by or on behalf of a Warrantholder, who is permitted to and makes one of the certifications set forth on the Exercise Notice and delivers, if applicable, any opinion or other evidence as required by the Corporation.
|
(9)
|
If the form of Exercise Notice set forth in the Warrant Certificate shall have been amended, the Corporation shall cause the amended Exercise Notice to be forwarded to all Warrantholders.
|
(10)
|
Exercise Notices and Confirmations must be delivered to the Warrant Agent at any time during the Warrant Agent’s actual business hours on any Business Day prior to the Expiry Time. Any Exercise Notice or Confirmations received by the Warrant Agent after business hours on any Business Day will be deemed to have been received by the Warrant Agent on the next following Business Day.
|
(11)
|
Any Warrant with respect to which an Exercise Notice or Confirmation is not received by the Warrant Agent before the Expiry Time shall be deemed to have expired and become void and all rights with respect to such Warrants shall terminate and be cancelled.
|
(iii)
|
(2)
|
No certificates representing Common Shares will be registered or delivered to an address in the United States unless the Warrantholder complies with the requirements set forth in subsection 3.3(1)(ii) or subsection 3.3(1)(iii) and, in the case of subsection 3.3(1)(iii), the Corporation has confirmed in writing to the Warrant Agent that the opinion of counsel and such other evidence required by the Corporation is reasonably satisfactory to the Corporation. The certificates representing any Common Shares issued in connection with the exercise of Warrants shall bear the legend set forth in subsection 3.3(3) of this Indenture. Common Shares must be issued only in individually certificated form.
|
(3)
|
(4) |
Common Shares issued upon the exercise of Warrants prior to the date that a receipt is issued for a (final) prospectus qualifying the resale of the Warrants and Underlying Shares shall bear or be deemed to bear the following legend:
|
3.4
|
Transfer Fees and Taxes.
|
(1)
|
Upon the exercise of Warrants pursuant to and in compliance with Section 3.2 and subject to Section 3.3 and Section 3.4, the Common Shares to be issued pursuant to the Warrants exercised shall be deemed to have been issued and the person or persons to whom such Common Shares are to be issued shall be deemed to have become the holder or holders of such Common Shares as of the Exercise Date, unless the registers shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such person or persons deemed to have become the holder or holders of record of such Common Shares, on the date on which such registers are reopened.
|
(2)
|
Within two Business Days after the Exercise Date with respect to a Warrant, the Warrant Agent on behalf of the Corporation shall deliver or shall cause to be delivered or mailed to the person or persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such person or persons at the Warrant Agency where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for, or any other appropriate evidence of the issuance of Common Shares to such person or persons.
|
(1)
|
The holder of any Warrants may exercise his right to acquire a number of whole Common Shares less than the aggregate number which the holder is entitled to acquire. In the event of any exercise of a number of Warrants less than the number which the holder is entitled to exercise, the holder of Warrants upon such exercise shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate evidence of Warrants, in respect of the balance of the Warrants held by such holder and which were not then exercised.
|
(2)
|
Notwithstanding anything herein contained including any adjustment provided for in Article 4, the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Common Shares. Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Common Shares shall be rounded down to the nearest whole number and the holder of such Warrants shall
|
|
not be entitled to any compensation in respect of any fractional Common Share which is not issued.
|
(1) |
Immediately after the Expiry Time, all rights under any Warrant in respect of which the right of acquisition provided for herein shall not have been exercised shall cease and terminate and each Warrant shall be void and of no further force or effect.
|
(1)
|
The Warrant Agent shall promptly account to the Corporation with respect to Warrants exercised, and shall promptly forward to the Corporation (or into an account or accounts of the Corporation with the bank or trust company designated by the Corporation for that purpose), all monies received by the Warrant Agent on the subscription of Common Shares through the exercise of Warrants and any securities or other instruments, from time to time received by the Warrant Agent shall be received as agent for, and shall be segregated and kept apart by the Warrant Agent for the Warrantholders and the Corporation as their interests may appear.
|
(2)
|
The Warrant Agent shall record the particulars of Warrants exercised, which particulars shall include the names and addresses of the persons who become holders of Common Shares on exercise and the Exercise Date, in respect thereof. The Warrant Agent shall provide such particulars in writing to the Corporation within five Business Days of any request by the Corporation therefor.
|
(i)
|
(ii)
|
(iii)
|
|
shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;
|
(f)
|
in any case in which Section 4.1(a)(iii), Section 4.1(b) or Section 4.1(c) require that an adjustment be made to the Exercise Price, no such adjustment shall be made if the Warrantholders of the outstanding Warrants receive, subject to the approval of the CSE if required, the rights or warrants referred to in Section 4.1(a)(iii), Section 4.1(b) or the shares, rights, options, warrants, evidences of indebtedness or assets referred to in Section 4.1(c), as the case may be, in such kind and number as they would have received if they had been holders of Common Shares on the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised into Common Shares at the Exercise Price in effect on the applicable record date or effective date, as the case may be;
|
(h)
|
after any adjustment pursuant to this Section 4.1, the term “Common Shares” where used in this Indenture shall be interpreted to mean securities of any class or classes which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Warrantholder is entitled to receive upon the exercise of his Warrant, and the number of Common Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant.
|
(a)
|
at any time be under any duty or responsibility to any Warrantholder to determine whether any facts exist which may require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;
|
(b)
|
be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Warrant;
|
(c)
|
be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article; and
|
(d)
|
incur any liability or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations, warranties or covenants herein contained or of any acts of the directors, officers, employees, agents or servants of the Corporation.
|
(a)
|
it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common Shares upon the exercise of the Warrants;
|
(b)
|
it will cause the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance with the Warrants and the terms hereof;
|
(c)
|
all Common Shares which shall be issued upon exercise of the right to acquire provided for herein shall be fully paid and non-assessable;
|
(d)
|
it will use reasonable commercial efforts to maintain its existence and carry on its business in the ordinary course, to maintain its status as a Canadian reporting issuer in good standing, and to preserve its listing on the Canadian Securities Exchange provided that this clause shall not be construed as limiting or restricting the Corporation to agree to a consolidation, amalgamation, arrangement, takeover bid or merger that would result in the Corporation winding up, dissolving or ceasing to exist, so long as the holders of Common Shares receive securities of an entity which is existing, or cash, or the holders of Common Shares have approved the transaction in accordance with the requirements of applicable corporate and securities laws;
|
(e)
|
it will give notice to the Warrant Agent and Warrantholders of a default under the terms of the Indenture which remains unrectified for a period of ten Business Days; and
|
(f)
|
generally, it will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture.
|
(a)
|
the Warrantholders of not less than 51% of the Warrants then outstanding shall have power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in writing to instruct the Warrant Agent to waive any default hereunder and the Warrant Agent shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or
|
(b)
|
the Warrant Agent shall have power to waive any default hereunder upon such terms and conditions as the Warrant Agent may deem advisable, on the advice of Counsel, if, in the Warrant Agent’s opinion, based on the advice of Counsel, the same shall have been cured or adequate provision made therefor;
|
(1)
|
On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the chairman or by one or more of the Warrantholders acting in person or by proxy and holding in the aggregate at least 5% of all the Warrants then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by Extraordinary Resolution shall be decided by a majority of the votes cast on the poll.
|
(2)
|
On a show of hands, every person who is present and entitled to vote, whether as a Warrantholder or as proxy for one or more absent Warrantholders, or both, shall have one vote. On a poll, each Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each Warrant then held or represented by it. A proxy need not be a Warrantholder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him.
|
(1)
|
The Warrant Agent, or the Corporation with the approval of the Warrant Agent, may from time to time make and from time to time vary such regulations as it shall think fit for:
|
(a)
|
the setting of the record date for a meeting for the purpose of determining Warrantholders entitled to receive notice of and to vote at the meeting;
|
(b)
|
the deposit of instruments appointing proxies at such place and time as the Warrant Agent, the Corporation or the Warrantholders convening the meeting, as the case may be, may in the notice convening the meeting direct;
|
(c)
|
the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed or telecopied before the meeting to the Corporation or to the Warrant Agent at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting;
|
(d)
|
the form of the instrument of proxy; and
|
(e)
|
generally for the calling of meetings of Warrantholders and the conduct of business thereat.
|
(2)
|
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as a Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to Section 7.9), shall be Warrantholders or proxies of Warrantholders.
|
(a)
|
to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrantholders or the Warrant Agent in its capacity as warrant agent hereunder (subject to the Warrant Agent’s prior consent, acting reasonably) or on behalf of the Warrantholders against the Corporation whether such rights arise under this Indenture or otherwise;
|
(b)
|
to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Warrantholders;
|
(c)
|
to direct or to authorize the Warrant Agent, subject to Section 9.2(2) hereof, to enforce any of the covenants on the part of the Corporation contained in this Indenture or to enforce any of the rights of the Warrantholders in any manner specified in such Extraordinary Resolution or to refrain from enforcing any such covenant or right;
|
(d)
|
to waive, and to direct the Warrant Agent to waive, any default on the part of the Corporation in complying with any provisions of this Indenture either unconditionally or upon any conditions specified in such Extraordinary Resolution;
|
(e)
|
to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or to enforce any of the rights of the Warrantholders;
|
(f)
|
to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith;
|
(g)
|
to assent to any change in or omission from the provisions contained in this Indenture or any ancillary or supplemental instrument which may be agreed to by the Corporation, and to authorize the Warrant Agent to concur in and execute any ancillary or supplemental indenture embodying the change or omission;
|
(h)
|
with the consent of the Corporation, such consent not to be unreasonably withheld, to remove the Warrant Agent or its successor in office and to appoint a new warrant agent or warrant agents to take the place of the Warrant Agent so removed; and
|
(i)
|
to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation.
|
(2)
|
If, at the meeting at which an Extraordinary Resolution is to be considered, Warrantholders holding at least 10% of the aggregate number of all then outstanding Warrants are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 14 days’ prior notice shall be given of the time and place of such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Section 7.11(1) shall be an Extraordinary Resolution within the meaning of this Indenture notwithstanding that Warrantholders holding at least 10% of the aggregate number of all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.
|
(3)
|
Subject to Section 7.14, votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary.
|
(a)
|
providing for the issuance of additional Warrants hereunder and any consequential amendments hereto as may be required by the Warrant Agent relying on the advice of Counsel;
|
(b)
|
setting forth any adjustments resulting from the application of the provisions of Article 4;
|
(c)
|
adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of Counsel, are necessary or advisable in the premises, provided that the same are not in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Warrantholders;
|
(d)
|
giving effect to any Extraordinary Resolution passed as provided in Section 7.11;
|
(e)
|
making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining a listing or quotation of the Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Warrantholders;
|
(f)
|
adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrants, and making any modification in the form of the Warrant Certificates which does not affect the substance thereof;
|
(g)
|
modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such modification or relief in no way prejudices any of the rights of the Warrantholders or of the Warrant Agent, and provided further that the Warrant Agent may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection to the Warrant Agent when the same shall become operative; and
|
(h)
|
for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent
|
|
provisions, errors, mistakes or omissions herein, provided that in the opinion of the Warrant Agent, relying on the advice of Counsel, the rights of the Warrant Agent and of the Warrantholders are in no way prejudiced thereby.
|
(1)
|
If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail.
|
(2)
|
The Corporation and the Warrant Agent agree that each will, at all times in relation to this Indenture and any action to be taken hereunder, observe and comply with and be entitled to the benefits of Applicable Legislation.
|
(1)
|
In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Warrant Agent shall act honestly and in good faith and exercise that degree of care, diligence and skill that a reasonably prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Warrant Agent from liability for its own gross negligence, wilful misconduct, bad faith or fraud under this Indenture.
|
|
its duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid.
|
(3)
|
The Warrant Agent may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Warrantholders, at whose instance it is acting to deposit with the Warrant Agent the Warrants Certificates held by them, for which Warrant Certificates the Warrant Agent shall issue receipts.
|
(4)
|
Every provision of this Indenture that by its terms relieves the Warrant Agent of liability or entitles it to rely upon any evidence submitted to it is subject to the provisions of Applicable Legislation.
|
(2)
|
In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good faith, rely as to the truth of the statements and the accuracy of the opinions expressed in statutory declarations, opinions, reports, written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Warrant Agent pursuant to a request of the Warrant Agent, provided that the Warrant Agent examines the same and determines that such evidence complies with the applicable requirements of this Indenture.
|
(3)
|
Whenever it is provided in this Indenture or under Applicable Legislation that the Corporation shall deposit with the Warrant Agent resolutions, certificates, reports, opinions, requests, orders or other documents, it is intended that the truth, accuracy and good faith on the effective date thereof and the facts and opinions stated in all such documents so deposited shall, in each and every such case, be conditions precedent to the right of the Corporation to have the Warrant Agent take the action to be based thereon.
|
(4)
|
Whenever Applicable Legislation requires that evidence referred to in subsection 9.3(1) be in the form of a statutory declaration, the Warrant Agent may accept such statutory declaration in lieu of a certificate of the Corporation required by any provision hereof. Any such statutory declaration may be made by one or more of the Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Executive Vice-President, Vice-President, Secretary, Controller, Treasurer, or any Assistant-Secretary or Assistant-Treasurer of the Corporation, or officers of the Corporation having equivalent positions.
|
(5)
|
The Warrant Agent may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any
|
|
misconduct or negligence on the part of any such experts or advisers who have been appointed with due care by the Warrant Agent. The Corporation shall pay or reimburse the Warrant Agent for any reasonable fees, expenses and disbursements made or incurred by the Warrant Agent in the discharge of its duties and in the management of the agency hereunder.
|
(6)
|
The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained from any Counsel, accountant, appraiser, engineer or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in the administration of the agency hereof.
|
(7)
|
Proof of the execution of an instrument in writing, including a Warrantholders’ Request, by any Warrantholder may be made by the certificate of a notary, solicitor or commissioner for oaths, or other officer with similar powers, that the person signing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution or in any other manner which the Warrant Agent may consider adequate and in respect of a corporate Warrantholder, shall include a certificate of incumbency of such Warrantholder together with a certified resolution authorizing the person who signs such instrument to sign such instrument.
|
(a)
|
the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates (except the representation contained in Section 9.9) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation;
|
(b)
|
nothing herein contained shall impose any obligation on the Warrant Agent to see to or to require evidence of the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto;
|
(c)
|
the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof;
|
(d)
|
the Warrant Agent shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of the Corporation of any of its covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation; and
|
(e)
|
the Corporation hereby indemnifies and agrees to hold harmless the Warrant Agent, its affiliates, their current and former officers, directors, employees, agents, successors and assigns from and against any and all liabilities, losses (other than loss of profits), damages, penalties, claims, actions, suits, costs, expenses and disbursements, including legal fees and disbursements of whatever kind and nature which may at any time be imposed on or incurred by or asserted against the Warrant Agent, whether groundless or otherwise, arising from or out of any act, omission or error of the Warrant Agent, provided that the Corporation shall not be required to indemnify the Warrant Agent in the event of the gross negligence or wilful misconduct of the Warrant Agent, and this provision shall survive the resignation or removal of the Warrant Agent or the termination or discharge of this Indenture.
|
(f)
|
notwithstanding the foregoing or any other provision of this Indenture, any liability of the Warrant Agent, other than gross negligence, wilful misconduct and fraud, shall be limited, in the aggregate, to the amount of annual retainer fees paid by the Corporation to the Warrant Agent under this Indenture in the twelve months immediately prior to the Warrant Agent receiving the first notice of the claim. Notwithstanding any other provision of this Indenture, and whether such losses or damages are foreseeable or unforeseeable, the Warrant Agent shall not be liable under any circumstances whatsoever for any (a) breach by any other party of securities law or other rule of any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages.
|
(g)
|
the forwarding of a cheque or the sending of funds by wire transfer by the Warrant Agent will satisfy and discharge the liability of any amounts due to the extent of the sum represented thereby unless such cheque is not honoured on presentation, provided that in the event of the non-receipt of such cheque by the payee, or the loss or destruction thereof, the Warrant Agent, upon being furnished
|
|
with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to it, will issue to such payee a replacement cheque for the amount of such cheque.
|
(2)
|
Upon the appointment of a successor Warrant Agent, the Corporation shall promptly notify the Warrantholders thereof in the manner provided for in Section 10.2.
|
(3)
|
Any Warrant Certificates Authenticated but not delivered by a predecessor Warrant Agent may be Authenticated by the successor Warrant Agent in the name of the predecessor or successor Warrant Agent.
|
(4)
|
Any corporation in to which the Warrant Agent may be merged or consolidated or amalgamated, or any corporation resulting therefrom to which the Warrant Agent shall be a party, or any corporation succeeding to substantially the corporate trust business of the Warrant Agent shall be the successor to the Warrant Agent hereunder without any further act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as successor Warrant Agent under Section 9.8(1).
|
(2)
|
Subject to Section 9.9(1), the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in securities of the Corporation and generally may contract and enter into financial transactions with the Corporation without being liable to account for any profit made thereby.
|
(1)
|
Each party to this Agreement other than the Warrant Agent hereby represents to the Warrant Agent that any account to be opened by, or interest to be held by the Warrant Agent in connection with this Agreement, for or to the credit of such party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by
|
|
or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the Warrant Agent’s prescribed form as to the particulars of such third party.
|
(2)
|
The Warrant Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Warrant Agent, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Warrant Agent, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days written notice to the other parties to this Indenture, provided (i) that the Warrant Agent’s written notice shall describe the circumstances of such non-compliance; (ii) that if such circumstances are rectified to the Warrant Agent’s satisfaction within such 10 day period, then such resignation shall not be effective.
|
(a)
|
to provide the services required under this Indenture and other services that may be requested from time to time;
|
(b)
|
to help the Warrant Agent manage its servicing relationships with such individuals;
|
(c)
|
to meet the Warrant Agent’s legal and regulatory requirements; and
|
(d)
|
if Social Insurance Numbers are collected by the Warrant Agent, to perform tax reporting and to assist in verification of an individual’s identity for security purposes.
|
(1)
|
(a)
|
If to the Corporation:
|
(b)
|
If to the Warrant Agent:
|
(2)
|
The Corporation or the Warrant Agent, as the case may be, may from time to time notify the other in the manner provided in Section 10.1(1) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Warrant Agent, as the case may be, for all purposes of this Indenture.
|
(3)
|
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrant Agent or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed, as provided in Section 10.1(1), or given by fax, email or other means of prepaid, transmitted and recorded communication.
|
(1)
|
Unless otherwise provided herein, notice to the Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or sent by ordinary post addressed to such holders at their post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively received and given on the date of delivery or, if mailed, on the third Business Day following the date of mailing such notice. In the event that Warrants are held in the name of the Depository, a copy of such notice shall also be sent by electronic communication to the Depository and shall be deemed received and given on the day it is so sent.
|
(2)
|
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to such Warrantholders to the address for such Warrantholders contained in the register maintained by the Warrant Agent or such notice may be given, at the Corporation’s expense, by means of publication in the Globe and Mail, National Edition, or any other English language daily newspaper or newspapers of general circulation in Canada, in each two successive weeks, and any so notice published shall be deemed to have been received and given on the latest date the publication takes place.
|
(3)
|
Accidental error or omission in giving notice or accidental failure to mail notice to any Warrantholder will not invalidate any action or proceeding founded thereon.
|
(a)
|
the date by which there shall have been delivered to the Warrant Agent for exercise or cancellation all Warrants theretofore Authenticated hereunder in the case of Certificated Warrants or by way of standard processing through the book entry only system in the case of an Uncertificated Warrant; and
|
(b)
|
the Expiry Time;
|
10.7
|
(a)
|
the names (other than the name of the Corporation) of the Warrantholders which, to the knowledge of the Corporation, are owned by or held for the account of the Corporation; and
|
(b)
|
the number of Warrants owned legally or beneficially by the Corporation;
|
Warrant
|
Certificate for _____________________
|
|
Certificate No. l
|
Warrants, each entitling the holder to acquire one Common Share (subject to adjustment as provided for in the Warrant Indenture (as defined below))
|
(a) |
duly completing and executing the exercise form (the “Exercise Form”) attached hereto; and
|
(b) |
surrendering this warrant certificate (the “Warrant Certificate”), with the Exercise Form to Odyssey Trust Company (the “Warrant Agent”) at the principal office of the Warrant Agent, in the city of Calgary, Alberta, together with a certified cheque, bank draft or money order in the lawful money of Canada payable to or to the order of the Corporation in an amount equal to the purchase price of the Common Shares so subscribed for.
|
TO: |
CLS HOLDINGS USA, INC.
|
SPACE FOR GUARANTEES OF SIGNATURES (BELOW)
|
)
) ) |
|
)
) ) |
Signature of Transferor
|
|
Guarantor’s Signature/Stamp
|
)
|
Name of Transferor
|
)
)
|
·
|
Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct prefix covering the face value of the certificate.
|
·
|
Canada: A Signature Guarantee obtained from the Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature & Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guarantee” Stamp) obtained from an authorized officer of a major Canadian Schedule 1 chartered bank.
|
·
|
Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed.
|
TO: |
CLS Holdings USA, Inc. (the “Corporation”)
|
AND TO: |
Odyssey Trust Company (the “Warrant Agent”)
|
☐
|
Cashless Exercise of ___________ common shares pursuant to Section 3.2(2) of the Warrant Indenture
|
B. £ |
The undersigned holder is the original U.S. Purchaser and (a) purchased the Special Warrants directly from the Corporation pursuant to the a duly executed Subscription Agreement, dated June 20, 2018 for the purchase of Special Warrants; (b) is exercising the Warrants solely for its own account or for the account of the original beneficial purchaser, if any; (c) each of it and any beneficial purchaser was, on the date the Special Warrants were purchased from the Corporation, has continued to be and is on the date of exercise of the Warrants, an Accredited Investor within the meaning of Rule 501(a) under the U.S. Securities Act; and (d) all the representations, warranties and covenants set forth in the original written and duly executed Subscription Documents made by the undersigned for the purchase of Special Warrants from the Corporation continue to be true and correct as if duly executed as of the date hereof. OR
|
Name(s) in Full
|
Address(es)
|
Number of Common Shares
|
||
)
) |
||
Witness
|
)
) ) ) ) |
(Signature of Warrantholder, to be the same as it appears on the face of this Warrant Certificate. If an entity, the signatory represents that he or she has authority to bind such entity and duly execute this form.)
|
)
|
Name of Warrantholder
|
(i)
|
all conditions of the Proposed Acquisition except the payment of the purchase price shall have been satisfied or waived;
|
(ii)
|
receipt of audited financial statements, in a form acceptable to the Agent, for Alternative Solutions for the fiscal years ended December 31, 2017 and 2016;
|
(iii)
|
the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Proposed Acquisition; and
|
(iv)
|
the Corporation shall not be in breach or default of any of its covenants or obligations under the Special Warrant Indenture of the Agency Agreement.
|
(a)
|
In this Agreement:
|
(b)
|
The division of this Agreement into sections, subsections, paragraphs and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect the construction or the interpretation of this Agreement. Unless something in the subject matter or context is inconsistent therewith, references herein to sections, subsections, paragraphs and other subdivisions are to sections, subsections, paragraphs and other subdivisions of this Agreement.
|
(c)
|
Unless otherwise expressly provided in this Agreement, (i) words importing only the singular number include the plural and vice versa and words importing gender include all genders; and (ii) all references to dollars or “$” are to Canadian dollars.
|
(a)
|
The Offering. The Corporation hereby appoints the Agent to act as exclusive Agent to offer and sell the Special Warrants on a private placement basis and the Agent hereby accepts such appointment. Notwithstanding anything to the contrary contained herein or any oral representations or assurances previously or subsequently made by the parties hereto, this Agreement does not constitute a commitment by, or legally binding obligation of, the Agent or any of its affiliates to act as underwriters, initial purchasers, arrangers, and/or placement Agent in connection with any offering of securities of the Corporation, including the Special Warrants, or to provide or arrange any financing, other than the appointment as
|
Agent in connection with the Offering in accordance with the prior sentence and otherwise on the terms set forth herein.
|
(b)
|
Sale on Exempt Basis. The Agent shall use its “best efforts” to arrange for the purchase of the Special Warrants:
|
(i)
|
in the Qualifying Jurisdictions on a private placement basis in compliance with applicable Canadian Securities Laws and in accordance with the requirements of Category 3 of Rule 903 of Regulation S under the U.S. Securities Act;
|
(ii)
|
in the United States and to, or for the account or benefit of, U.S. Persons that are Accredited Investors in compliance with Schedule “A” hereto; and
|
(iii)
|
in such other Designated Jurisdictions as may be agreed upon between the Corporation and the Agent, on a private placement basis in compliance with all applicable Securities Laws of such other Designated Jurisdictions and in accordance with the requirements of Category 3 of Rule 903 of Regulation S under the U.S. Securities Act provided that no prospectus, registration statement or similar document is required to be filed in such Designated Jurisdiction, no registration or similar requirement would apply with respect to the Corporation in connection with the Offering in such other Designated Jurisdiction and the Corporation does not become subject to ongoing continuous disclosure obligations in such other Designated Jurisdictions.
|
(c)
|
Filings. The Corporation undertakes to file or cause to be filed all forms or undertakings required to be filed by the Corporation in connection with the issue and sale of the Special Warrants such that the distribution of the Special Warrants may lawfully occur without the necessity of filing a prospectus, a registration statement or an offering memorandum in Canada, the United States or elsewhere, and the Agent undertakes to use its best efforts to cause Purchasers to complete any forms required by Canadian Securities Laws or other applicable Securities Laws. All fees payable in connection with such filings shall be at the expense of the Corporation.
|
(d)
|
No Offering Memorandum. Neither the Corporation nor the Agent shall: (i) provide to prospective Purchasers any document or other material or information that would constitute an offering memorandum within the meaning of Canadian Securities Laws other than the Presentation; or (ii) engage in any form of general solicitation or general advertising in connection with the offer and sale of the Special Warrants, including but not limited to, causing the sale of the Special Warrants to be advertised in any newspaper, magazine, printed public media, printed media or similar medium of general and regular paid circulation, broadcast over radio, television or telecommunications, including electronic display, or conduct any seminar or meeting relating to the offer and sale of the Special Warrants whose attendees have been invited by general solicitation or advertising.
|
(e)
|
Press Releases. In order to comply with applicable U.S. Securities Laws, any press release announcing or otherwise concerning the Offering shall be in compliance with Rule 135c under the U.S. Securities Act and include an appropriate notation as follows: “The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.”
|
|
effective resale Registration Statement or if the Registration Statement is not available for use due to a blackout period or suspension, the Compensation Warrants may be exercised on a “cashless” or “net” basis into Units. The description of the Compensation Warrants herein is a summary only and is subject to the specific attributes and detailed provisions of the Compensation Warrants to be set forth in the Compensation Warrant Certificate. In case of any inconsistency between the description of the Compensation Warrants in this Agreement and the terms of the Compensation Warrants as set forth in the Compensation Warrant Certificate, the provisions of the Compensation Warrant Certificate shall govern.
|
(d)
|
In relation to the issuance of the Compensation Warrants to the Agent, the Agent hereby represents, warrants and acknowledges to the Corporation that:
|
(i)
|
The Compensation Warrants and the underlying Units, Common Shares, Warrants and Warrant Shares (“Compensation Securities”) have not been registered under the U.S. Securities Act and may not be offered or sold unless registered or pursuant to an exemption from such registration requirements;
|
(ii)
|
The Agent is not a U.S. Persons, is not acting for the account or benefit of a U.S. Person, was not offered the Compensation Warrants while in the United States and was outside the United States at the time this Agreement was executed and delivered;
|
(iii)
|
The Agent will not sell or otherwise transfer the Compensation Securities except outside the United States in accordance with Regulation S under the U.S. Securities Act or into the United States or to, or for the account or benefit of a U.S. Person pursuant to registration of the Compensation Securities under the U.S. Securities Act or pursuant to an exemption from such registration requirements;
|
(iv)
|
The Agent agrees not to engage in hedging transactions in the Compensation Securities except pursuant to the requirements of the U.S. Securities Act; and
|
(v)
|
The Agent understands that the Compensation Securities are “restricted securities” under Rule 144 of the U.S. Securities Act, are subject to transfer restrictions under the U.S. Securities Act and will bear a restrictive legend to such effect.
|
|
Registration Statements and pro rata with common shares issuable upon conversion of notes or other derivative instruments of the Corporation being registered for resale by the selling stockholders included in Related Registration Statements to the extent permitted by the registration rights of such selling stockholders and (ii) following removal of all Warrant Shares and, if applicable, all common shares issuable upon exercise of warrants contained in Related Registration Statements, all Common Shares will be cut back pro rata between the selling stockholders included in the Registration Statement and, if applicable, pro rata with any common shares being registered for resale by selling stockholders in Related Registration Statements to the extent permitted by the registration rights of such selling stockholders.
|
(d)
|
The Corporation will use reasonable commercial efforts to maintain the Registration Statement or post-effective amendment filed under this Section 8 effective under the U.S. Securities Act until the earlier of the date (i) all of the Registrable Securities have been sold pursuant to such Registration Statement or Rule 144, if available, or (ii) three years from the Effective Date (the “Effectiveness Period”).
|
any state which will require an escrow or other restriction relating to the Corporation and/or the sellers, or which will require the Corporation to qualify to do business in such state or require the Corporation to file therein any general consent to service of process. The Corporation at its expense will supply the Agent with copies of the applicable Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by the Agent.
|
(a)
|
Preliminary Qualification Prospectus. The Corporation covenants with the Agent that: (i) the Corporation shall use its best efforts to file the Preliminary Qualification Prospectus, in form and substance satisfactory to the Agent, acting reasonably, with the Securities Commissions in the Qualifying Jurisdictions under the Canadian Securities Laws pursuant to the Passport System and NP 11-202 and shall designate the Province of Ontario as the designated and principal jurisdiction thereunder, together with the required supporting documents; and (ii) following receipt of the Preliminary Receipt, the Corporation shall use its best efforts to promptly resolve all comments received and deficiencies raised by the Securities Commissions.
|
(b)
|
Final Qualification Prospectus. The Corporation covenants and agrees to use its best efforts to, as soon as practicable after all comments of the Securities Commissions have been satisfied with respect to the Preliminary Qualification Prospectus, prepare and file the Final Qualification Prospectus, in form and substance satisfactory to the Agent, with the Securities Commissions under the Canadian Securities Laws, together with the required supporting documents, and obtain the Final Receipt from the Ontario Securities Commission, as principal regulator, as soon as possible after the filing of the Final Qualification Prospectus, and, in any event, use its best efforts to obtain such document by no later than 5:00 p.m. (EST) on August 31, 2018. The Corporation shall promptly take, or cause to be taken, all commercially reasonable steps and proceedings that may from time to time be required under applicable Canadian Securities Laws to qualify the
|
|
distribution of the Units in the Qualifying Jurisdictions and shall use its commercially reasonable efforts to ensure that such requirements (including the issuance of a Final Receipt for the Final Qualification Prospectus) shall be obtained promptly following the Closing Date.
|
(c)
|
Commercial Copies. The Corporation shall cause commercial copies of the Final Qualification Prospectus, the Registration Statement, the final prospectus filed pursuant to Rule 424 under the U.S. Securities following effectiveness of the Registration Statement (including any supplements thereto, the “U.S. Prospectus”) and any Supplementary Material to be delivered to the Agent without charge, in such numbers and in such cities in the Qualifying Jurisdictions as the Agent may reasonably request. Such delivery shall be effected as soon as practicable and, in any event, within two Business Days after the filing thereof in the Qualifying Jurisdictions.
|
(d)
|
Due Diligence and Review of Offering Documents. The form and substance of the Preliminary Qualification Prospectus, the Final Qualification Prospectus, the Registration Statement, the U.S. Prospectus and any Supplementary Material shall be satisfactory to the Agent, acting reasonably, prior to the filing thereof with the Securities Commissions. Prior to the filing of the Preliminary Qualification Prospectus, the Final Qualification Prospectus, the Registration Statement, the U.S. Prospectus and any Supplementary Material, the Corporation shall allow the Agent to participate fully in the preparation of such documents and shall allow the Agent to conduct all due diligence which the Agent may reasonably require in order to fulfill their obligations as Agent and in order to enable the Agent to responsibly execute any certificate related to such documents required to be executed by them under applicable Securities Laws. Up to the Qualification Date, the Corporation shall allow the Agent to conduct any due diligence investigations that the Agent reasonably require to confirm as at any date that the Agent continue to have reasonable grounds for the belief that the Offering Documents do not contain a misrepresentation as at such date or as at the date of such Offering Documents.
|
(e)
|
Material Change. Once the Preliminary Qualification Prospectus has been filed, comply with section 57 of the Ontario Act and with any comparable provisions of the other Canadian Securities Laws, and the Corporation will prepare and file promptly any Supplementary Material which may be necessary and will otherwise comply with all legal requirements necessary to continue to permit the Units (and Penalty Units, if applicable) to be distributed in each of the Qualifying Jurisdictions as contemplated herein.
|
(f)
|
Deliveries. The Corporation will deliver to the Agent prior to or concurrently with the filing of the Preliminary Qualification Prospectus and Final Qualification Prospectus, the Registration Statement, the U.S. Prospectus and any Supplementary Material, as applicable, unless otherwise indicated:
|
(i)
|
a copy of the Preliminary Qualification Prospectus, and the Final Qualification Prospectus manually signed on behalf of the Corporation, by
|
|
the persons and in the form signed and certified as required by Canadian Securities Laws;
|
(ii)
|
a copy of the Registration Statement (including all exhibits thereto, documents filed therewith and amendments thereof) manually signed on behalf of the Corporation and an additional conformed copy of the Registration Statement (without exhibits thereto) and a copy of the U.S. Prospectus;
|
(iii)
|
a copy of any Supplementary Material, or other document required to be filed with or delivered to, the Securities Commissions by the Corporation under Securities Laws in connection with the Offering, including any document to be incorporated by reference in the Preliminary Qualification Prospectus or the Final Qualification Prospectus or the Registration Statement (other than documents already filed publicly with a Securities Commissions);
|
(iv)
|
concurrently with the filing of the Final Qualification Prospectus with the Canadian Securities Commissions, a “long-form” comfort letter of both (i) the Corporation’s auditors; and (ii) Alternative Solutions’ auditors, dated the date of the Final Qualification Prospectus (with the requisite procedures to be completed by such auditor within two Business Days of the date of such letter), in form and substance satisfactory to the Agent, acting reasonably, addressed to the Agent and the directors and officers of the Corporation, with respect to certain financial and accounting information relating to the Corporation in the Final Qualification Prospectus, including all Documents Incorporated by Reference, which letter shall be in addition to the auditors’ reports incorporated by reference in the Final Qualification Prospectus;
|
(v)
|
a copy of any document filed with, or delivered to, the Canadian Securities Commissions by the Corporation under applicable Canadian Securities Laws with the Preliminary Qualification Prospectus, Final Qualification Prospectus and any Supplementary Material;
|
(vi)
|
a certificate dated the date of the Final Qualification Prospectus, addressed to the Agent and signed by the Chief Executive Officer of the Corporation, certifying for and on behalf of the Corporation, and not in their personal capacities, after having made due inquiries, with respect to the following matters:
|
(A)
|
the Corporation has complied in all material respects (except where already qualified by a materiality or Material Adverse Effect qualification, in which case the Corporation has complied in all respects) with all the terms, covenants and satisfied in all material respects (except where already qualified by a materiality or Material Adverse Effect qualification, in which case the Corporation has satisfied in all respects) all the terms and conditions of this
|
|
Agreement on its part to be complied with and satisfied at or prior to the date of the Final Qualification Prospectus;
|
(B)
|
no order, ruling or determination having the effect of ceasing or suspending trading in any securities of the Corporation or prohibiting the issue of the Units or any of the Corporation’s issued securities, having been issued, and no proceeding for such purpose being threatened or, to the knowledge of such officers, pending;
|
(C)
|
the representations and warranties of the Corporation contained in this Agreement and in any certificates of the Corporation delivered pursuant to or in connection with this Agreement being true and correct in all material respects (or, in the case of any representation or warranty containing a materiality or Material Adverse Effect qualification, in all respects) as at the date of the Final Qualification Prospectus (other than those that speak to a specific time, in which case they shall have been true and correct in all material respects at such time), with the same force and effect as if made on and as at the date of the Closing Date, after giving effect to the transactions contemplated by this Agreement; and
|
(D)
|
since the Closing Time, there having been no material adverse change, financial or otherwise, in the assets, liabilities (contingent or otherwise), capital, business, prospects or results of operations of the Corporation and the Subsidiary on a consolidated basis;
|
(vii)
|
concurrently with, or prior to the filing of, the Final Qualification Prospectus, an opinion, subject to customary qualifications, of the Corporation’s counsel or from local counsel in the Qualifying Jurisdiction (it being understood that such counsel may rely to the extent appropriate in the circumstance as to matters of fact, on certificates of the Corporation executed on its behalf by a senior officer of the Corporation) with respect to the following matters:
|
(A)
|
the Corporation has the necessary corporate power and authority to execute and deliver the Preliminary Qualification Prospectus and the Final Qualification Prospectus and all necessary corporate action has been taken by the Corporation to authorize the execution and delivery by it of the Preliminary Qualification Prospectus and the Final Qualification Prospectus and the filing thereof, as the case may be, in each of the Qualifying Jurisdictions in accordance with applicable Securities Laws in each of the Qualifying Jurisdictions in accordance with applicable Canadian Securities Laws;
|
(B)
|
all necessary documents have been filed, all necessary proceedings have been taken and all legal requirements have been fulfilled as required under Canadian Securities Laws in order to qualify the
|
|
distribution of the Common Shares and Warrants comprising the Units to the public in each of the Qualifying Jurisdictions by or through investment dealers and brokers duly registered under the applicable laws of such provinces who have complied with the relevant provisions of Securities Laws in each of the Qualifying Jurisdictions and the distribution of Compensation Warrants to the Agent;
|
(C)
|
the statements and opinions concerning tax matters set forth in the Final Qualification Prospectus under the headings (including for certainty, all subheadings under such headings) “Eligibility for Investment” and “Certain Canadian Federal Income Tax Considerations” insofar as they purport to describe the provisions of the laws referred to therein are fair and adequate summaries of the matters discussed therein subject to the qualifications, assumptions and limitations set out under such headings; and
|
(D)
|
the attributes of the Special Warrants, Compensation Warrants, Common Shares, Warrants and Warrant Shares conform in all material respects with the description thereof contained in the Final Qualification Prospectus; and
|
(viii)
|
opinions, comfort letters and other documents substantially similar to those referred to in this Section to the Agent with respect to any Supplementary Material, contemporaneously with, or prior to the filing of, any Supplementary Material.
|
(g)
|
(ii)
|
no material fact or information has been omitted from such disclosure (except for Agent’s Information) that is required to be stated in such disclosure or that is necessary to make a statement contained in such
|
|
disclosure not misleading in the light of the circumstances under which it was made; and
|
(iii)
|
except with respect to any Agent’s Information, such documents comply in all material respects with the requirements of Canadian Securities Laws (and, in the case of the Registration Statement and the U.S. Prospectus, with U.S. Securities Laws).
|
(b)
|
The Agent shall, and shall require any Selling Firm to agree to, distribute the Special Warrants in a manner which complies with and observes all applicable Laws in each jurisdiction into and from which they may offer to sell the Special Warrants or distribute the Final Qualification Prospectus, any Marketing Materials or any Supplementary Material in connection with the distribution of the Special Warrants and will not, directly or indirectly, offer, sell or deliver any Special Warrants or deliver the Final Qualification Prospectus, any Marketing Materials or any Supplementary Material to any person in any jurisdiction other than in the Qualifying Jurisdictions except in a manner which will not require the Corporation to comply with the registration, prospectus, filing, continuous disclosure or other similar requirements under the applicable Laws of such other jurisdictions or pay any unreasonable filing fees which relate to such other jurisdictions. Subject to the foregoing, the Agent and any Selling Firm shall be entitled to offer and sell the Special Warrants solely pursuant to an applicable exemption or exemptions from the registration requirements of any other jurisdictions (other than offers and sales in the United States which shall be governed by Schedule “A” hereto) in accordance with any applicable Laws in the jurisdictions in which the Agent and/or Selling Firms offer the Special Warrants and in all cases for sales outside of the United States, to non-U.S. Persons and to persons not acting for the account or benefit of U.S. Persons in accordance with the requirements of Category 3 of Rule 903 of Regulation S under the U.S. Securities Act.
|
(c)
|
The Agent will use commercially reasonable efforts to obtain from each Purchaser a duly completed and executed Subscription Agreement and other forms required under Canadian Securities Laws, U.S. Securities Laws or the applicable Securities Laws of any other Designated Jurisdiction outside of Canada and the United States into and which the Special Warrants are sold that are provided to the Agent by the Corporation for execution by the Purchasers relating to the issuance and sale of the Special Warrants, and the Agent shall at least one Business Day prior to the Closing Date, provide the Corporation with copies of such Subscription Agreements and complete registration instructions in respect of the Special Warrants.
|
(a)
|
receipt of evidence by the Agent, in a form acceptable to the Agent, acting reasonably, that all actions required to be taken by or on behalf of the Corporation, including the passing of all requisite resolutions of the directors and shareholders of the Corporation, having been taken so as to approve the execution and delivery of each of the Transaction Documents, the distribution of the Special Warrants and the Compensation Warrants, the issuance of the Common Shares and Warrants comprising the Units issuable upon exercise of the Special Warrants and the issuance of the Warrant Shares issuable upon exercise of the Warrants;
|
(b)
|
the Corporation delivering to the Agent, at the Closing Time, a certificate dated the Closing Date addressed to the Agent and signed by the Chief Executive Officer of the Corporation, in a form satisfactory to the Agent, acting reasonably, certifying for and on behalf of the Corporation and without personal liability, after having made due enquiries, that:
|
(i)
|
the Corporation has complied in all material respects (except where already qualified by materiality, in which case the Corporation has complied in all respects) with all the covenants and satisfied in all material respects (except where already qualified by materiality, in which case the Corporation has satisfied in all respects) all the terms and conditions of this Agreement on its part to be complied with and satisfied at or prior to the Closing Time;
|
(ii)
|
the representations and warranties of the Corporation contained in this Agreement and any certificate of the Corporation delivered hereunder are true and correct in all material respects (or, in the case of any representation or warranty containing a materiality or Material Adverse Effect qualification, in all respects) as at the Closing Time with the same force and effect as if made on and as at the Closing Time after giving effect to the transactions contemplated by this Agreement;
|
(iii)
|
since June 20, 2017, other than as disclosed in the Disclosure Documents, (A) there has been no material change affecting the Corporation on a consolidated basis, and (B) other than the Proposed Acquisition, no transaction has been entered into by the Corporation other than in the ordinary course of business;
|
(iv)
|
there has been no change in any material fact (which includes the disclosure of any previously undisclosed material fact or a new material fact) which material fact or change is of such a nature as to render any statement in the Disclosure Documents misleading or untrue in any material respect or which would result in a misrepresentation in the Disclosure Documents or which would result in the Disclosure Documents not complying with applicable Canadian Securities Laws; and
|
(v)
|
no order, ruling or determination having the effect of ceasing or suspending trading in any securities of the Corporation or prohibiting or suspending the offering, issue or sale of the Special Warrants or any of the Corporation’s issued securities, having been issued, and no proceeding for such purpose being threatened or, to the knowledge of such officers, pending;
|
(c)
|
the Agent receiving, at the Closing Time a legal opinion dated the Closing Date, to be addressed to the Agent and the Purchasers, in form and substance acceptable to the Agent acting reasonably, of Cassels Brock & Blackwell LLP, Connor & Connor PLLC and/or Dorsey & Whitney LLP (as applicable), counsel to the Corporation (who may rely, to the extent appropriate in the circumstances, on the opinions of local counsel acceptable to the Agent and may rely, to the extent appropriate in the circumstances, as to matters of fact, on certificates of officers, public and exchange officials or of the auditors or Transfer Agent of the Corporation), with respect to those matters that are usual and customary for transactions of this nature and subject to the usual and customary assumptions, limitations and qualifications, including the following matters:
|
(i)
|
as to the incorporation and valid existence of the Corporation;
|
(ii)
|
as to the authorized and issued capital of the Corporation;
|
(iii)
|
that the Corporation has the corporate power and capacity to own or lease its properties and assets, carry on its business as it is currently conducted, and to execute, deliver and perform its obligations under the Transaction Documents; and to issue and sell the Special Warrants, the Compensation Warrants, the Common Shares and Warrants comprising the Units (including any Units issuable upon exercise of the Compensation Warrants) and the Warrant Shares, as applicable;
|
(iv)
|
all necessary corporate action has been taken by the Corporation to authorize the execution and delivery of the Transaction Documents and the performance of the Corporation’s obligations hereunder and thereunder and
|
the issuance of the Special Warrants, the Compensation Warrants, the Common Shares and Warrants comprising the Units (including any Units issuable upon exercise of the Compensation Warrants) and the Warrant Shares, as applicable
|
(v)
|
each of the Transaction Documents has been duly authorized and (other than the Warrant Certificates) executed and delivered by the Corporation and each such Transaction Document constitutes a valid and legally binding agreement of the Corporation enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law;
|
(vi)
|
the execution and delivery of the Transaction Documents, the performance by the Corporation of its obligations hereunder and thereunder and the issuance and sale of the Special Warrants, the Compensation Warrants, the Common Shares and Warrants comprising the Units (including any Units issuable upon exercise of the Compensation Warrants) and the Warrant Shares does not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, whether after notice or lapse of time or both, (A) corporate laws of the State of Nevada or Canadian Securities Laws; and (B) the constating documents of the Corporation;
|
(vii)
|
that the Special Warrants, the Compensation Warrants and the Warrants (including any Warrants issuable upon exercise of the Compensation Warrants) will, upon issuance, be validly created, executed and issued by the Corporation and constitute valid and binding obligations of the Corporation enforceable against it in accordance with their terms;
|
(viii)
|
that the Common Shares partially comprising the Units issuable upon exercise of the Special Warrants and the Compensation Warrants have been duly authorized and validly allotted for issuance by the Corporation and, when issued in accordance with the terms of the Special Warrants and the Compensation Warrants, as applicable, will be outstanding as fully paid and non-assessable shares in the capital of the Corporation;
|
(ix)
|
that the Warrant Shares have been duly authorized and validly allotted for issuance by the Corporation and, when issued in accordance with the terms of the Warrants, will be outstanding a fully paid and non-assessable shares in the capital of the Corporation;
|
(x)
|
that the issuance and sale by the Corporation of the Special Warrants to the Purchasers resident in the Qualifying Jurisdictions in accordance with the
|
|
Subscription Agreements and the granting and the issuance of the Compensation Warrants to the Agent in accordance with the terms of this Agreement are exempt from the prospectus requirements of Canadian Securities Laws and except as has been completed, no filings, proceedings, approvals, consents or authorizations are required to be made, taken or obtained by the Corporation, or any securities regulatory authority in the Qualifying Jurisdictions to permit the issuance, distribution and delivery of the Special Warrants to Purchasers resident in the Qualifying Jurisdictions and the granting and the issuance of the Compensation Warrants to the Agent, except for the filing, within ten days from the date of each such issue and distribution, of a report of the offering and sale prepared on Form 45-106F1 prepared and executed in accordance with Canadian Securities Laws, together with the requisite filing fees;
|
(xi)
|
that the issuance of (A) the Common Shares and Warrants comprising the Units issuable upon exercise of the Special Warrants and the Compensation Warrants, and (B) the Warrant Shares issuable upon the exercise of the Warrants (including any Warrants issuable upon exercise of the Compensation Warrants) will be exempt from the prospectus and registration requirements of Canadian Securities Laws and no filings, proceedings, approvals, consents or authorizations will be required to be made pursuant to Canadian Securities Laws to permit such issuance, provided that (i) in the case of the Common Shares and Warrants issuable upon the exercise of the Special Warrants and the Compensation Warrants, the Special Warrants are exercised in accordance with the terms and conditions of the Special Warrant Indenture or the terms and conditions of the Compensation Warrants, as applicable; and (ii) in the case of the Warrant Shares, the Warrants are exercised in accordance with the terms and conditions of the Warrant Indenture and such Warrants, as applicable;
|
(xii)
|
that the first trade in the Compensation Warrants, the Common Shares and Warrants comprising the Units issuable upon exercise of the Special Warrants and the Compensation Warrants and the Warrant Shares issuable upon exercise of the Warrants will be, as applicable, exempt from the prospectus requirements of applicable Securities Laws and no prospectus, offering memorandum or other document is required to be filed, no proceeding is required to be taken and no approval, permit, consent or authorization of regulatory authorities is required to be obtained by the Corporation under applicable Securities Laws to permit such trade through registrants registered under applicable Securities Laws who have complied with such laws and the terms and conditions of their registration, provided that at the time of such trade:
|
(A)
|
the Corporation is and has been a “reporting issuer” (within the meaning of Securities Laws) in a “jurisdiction of Canada” (as
|
|
defined in National Instrument 14-101 – Definitions (“NI 14-101”)) for the four months immediately preceding the trade;
|
(B)
|
at the time of such trade, at least four months have elapsed from the “distribution date” (as defined in section 1.1 of National Instrument 45-102 – Resale of Securities (“NI 45-102”)) of the Special Warrants or Compensation Warrants;
|
(C)
|
any certificates representing the Special Warrants, Compensation Warrants, Common Shares, Warrants or the Warrant Shares, if any, carry a legend or ownership statement issued under a direct registration system acceptable to the regulator, as required pursuant to section 2.5(2)(3)(i) of NI 45-102;
|
(D)
|
the trade is not a “control distribution” (as defined in section 1.1 of NI 45- 102);
|
(E)
|
no unusual effort is made to prepare the market or to create a demand for the securities that are the subject of the trade (within the meaning of Securities Laws);
|
(F)
|
no extraordinary commission or consideration is paid to a person or company in respect of such trade (within the meaning of Securities Laws);
|
(G)
|
if the selling security holder is an “insider” or “officer” of the Corporation (within the meaning of Securities Laws), such selling security holder has no reasonable grounds to believe that the Corporation is in default of “securities legislation” (as defined in NI 14-101); and
|
(H)
|
the Registration Statement covering the securities to be sold has become effective under the U.S. Securities Act and the selling security holder is named in the U.S. Prospectus related thereto in relation to the securities being traded or Rule 144 under the U.S. Securities Act is available for the trade of such securities by the selling security holder;
|
(xiii)
|
that if the Final Qualification Prospectus qualifying the issuance by the Corporation of the Common Shares and Warrants comprising the Units issuable upon exercise of the Special Warrants has been filed before the deemed exercise date with, and a Final Receipt obtained therefor from, the Securities Commissions in the Qualifying Jurisdictions, and provided that the Common Shares and Warrants comprising the Units are issued after the date of the Final Receipt, the first trade by a holder, of the Common Shares, Warrants and Warrant Shares issued upon the exercise of the Special Warrants and Warrants (or in the case of the Warrant Shares, will
|
|
be exempt from), as applicable, after the issuance of such Final Receipt will not be subject to the prospectus requirements under Canadian Securities Laws, such Common Shares, Warrants and Warrant Shares will not be subject to any statutory hold period, and no filing, proceeding, approval, consent or authorization under Canadian Securities Laws will be required to be made, taken or obtained to permit the trade of such Common Shares, Warrants and Warrant Shares in the Qualifying Jurisdictions through registrants registered under Canadian Securities Laws who have complied with such laws, provided that such sale is not a “control distribution” within the meaning of NI 45-102;
|
(xiv)
|
that the form and terms of the certificates representing the Special Warrants, the Compensation Warrants, the Common Shares, the Warrants and the Warrant Shares have been approved by the board of directors of the Corporation;
|
(xv)
|
that Vstock Transfer, LLC, at its principal offices in Woodmere, New York, has been duly appointed as registrar and transfer agent for the Common Shares;
|
(xvi)
|
that Odyssey Trust Company, at its principal offices in Calgary, Alberta, has been, as of the Closing Date, duly appointed as Special Warrant Agent and as Warrant Agent under the Special Warrant Indenture and the Warrant Indenture, respectively; and
|
(xvii)
|
as to such other matters as may reasonably be requested by the Agent, in a form acceptable to the Agent, acting reasonably.
|
(d)
|
the Agent receiving, at the Closing Time, a legal opinion dated the Closing Date, addressed to the Agent and the Purchasers, in form and substance acceptable to the Agent, from counsel to the Subsidiary with respect to the following matters: (i) the incorporation and subsistence of the Subsidiary; (ii) the corporate power, capacity and authority of the Subsidiary to carry on its business as presently carried on and to own, lease and operate its properties and assets; (iii) the authorized and issued capital of the Subsidiary; and (iv) the ownership of the issued and outstanding securities of the Subsidiary;
|
(e)
|
if any Special Warrants are sold in the United States, the Agent receiving, at the Closing Time on the Closing Date, a legal opinion dated the Closing Date, to be addressed to the Agent, in form and substance acceptable to the Agent, of Dorsey & Whitney LLP, United States legal counsel to the Corporation (who may rely, to the extent appropriate in the circumstances, as to matters of fact, on certificates of officers, public and exchange officials or of the auditors or Transfer Agent of the Corporation), to the effect that the offer and sale of the Special Warrants in the United States, the issuance of the Common Shares and Warrants upon conversion of the Special Warrants is not required to be registered under the U.S. Securities Act, provided such offers and sales are made in accordance with the Subscription
|
|
Agreements and Schedule “A” hereto; it being understood that such counsel need not express its opinion with respect to any resale of the Special Warrants or the Common Shares, Warrants or Warrant Shares issuable thereunder;
|
(f)
|
the Agent receiving at the Closing Time, a certificate, signed by the Chief Executive Officer of the Corporation (or such other officers as the Agent may agree to), in a form satisfactory to the Agent, acting reasonably, certifying for and on behalf of the Corporation and without personal liability, with respect to:
|
(i)
|
the constating documents and articles of the Corporation;
|
(ii)
|
the resolutions of the board of directors of the Corporation relevant to the issue and sale of the Special Warrants and the Compensation Warrants, the allotment and reservation of the Units and the Warrant Shares issuable thereunder and the authorization of the Transaction Documents and transactions contemplated herein and therein; and
|
(iii)
|
the incumbency and signatures of signing officers of the Corporation;
|
(g)
|
(h)
|
the Agent shall have received a certificate of status (or the equivalent) with respect to the jurisdiction in which the Corporation and the Subsidiary is incorporated, amalgamated or continued, as the case may be;
|
(i)
|
the Agent shall have received certificates of the Special Warrants in form and substance satisfactory to the Agent, acting reasonably;
|
(j)
|
the Agent shall have received certificates of the Compensation Warrants in form and substance satisfactory to the Agent, acting reasonably;
|
(k)
|
the Agent shall have received a certificate from the Transfer Agent as to the number of Common Shares issued and outstanding as at the end of Business Day prior to the Closing Date;
|
(l)
|
all consents, approval, permits, authorizations or filings as may be required under Securities Laws necessary for the Offering and the transactions contemplated by this Agreement, shall have been obtained or made, as applicable;
|
(m)
|
each of the Transaction Documents shall have been executed and delivered by the parties thereto in form and substance satisfactory to the Agent, acting reasonably;
|
(n)
|
the Agent not having previously terminated its obligations pursuant to Section 10 of this Agreement; and
|
(o)
|
the Agent shall have completed, to its satisfaction, acting reasonably its due diligence review of the Corporation and its Subsidiary and each of their respective businesses, operations and financial condition.
|
(b)
|
the Corporation has all requisite corporate power, authority and capacity to enter into each of the Transaction Documents and to perform the transactions contemplated herein and therein, including, without limitation, to issue the Special Warrants and the Compensation Warrants and the Common Shares, Warrants and Warrant Shares issuable upon exercise thereof, as applicable;
|
(c)
|
the Corporation is not aware of any facts or circumstances that would cause it to believe that the Escrow Release Conditions will not be satisfied prior to the Escrow Deadline and the Corporation will use its commercially reasonable efforts to satisfy or caused to be satisfied the Escrow Release Conditions prior to the Escrow Deadline;
|
(d)
|
the Corporation has no direct or indirect subsidiary or any material investment or proposed investment in any person that is or will be material to the Corporation, other than the Subsidiary;
|
(e)
|
other than U.S. Marijuana Laws, each of the Corporation and the Subsidiary has conducted and is conducting its business in compliance with all applicable laws and regulations of each jurisdiction in which it carries on business, except where the failure to so comply would not have a Material Adverse Effect, and each of the Corporation and the Subsidiary holds all material requisite licences, registrations, qualifications, permits and consents necessary or appropriate for carrying on its business as currently carried on and all such licences, registrations, qualifications,
|
|
permits and consents are valid and subsisting and in good standing in all material respects. Without limiting the generality of the foregoing, neither Corporation nor any Subsidiary has received a written notice of non-compliance, nor does the Corporation know of, nor have reasonable grounds to know of, any facts that could give rise to a notice of non-compliance with any such laws, regulations or permits which would have a Material Adverse Effect other than non-compliance with U.S. Marijuana Laws;
|
(f)
|
(g)
|
no order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of the Corporation has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of the Corporation, are pending, contemplated or threatened by any regulatory authority;
|
(h)
|
the Corporation has filed all reports, schedules, forms, statements and other documents required to be filed by the Corporation under the U.S. Securities Act and the U.S. Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Corporation was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and Documents Incorporated by Reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis (with the exception of one Form 8-K filing) or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the U.S. Securities Act and the U.S. Exchange Act, as applicable (including, to the extent applicable, requirements under the Canada-U.S. Multijurisdictional Disclosure System), and none of the SEC Reports, as amended, if applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date of such amendment;
|
(i)
|
the Corporation has not filed any confidential material change report with the Securities Commissions since June 20, 2017;
|
(j)
|
other than the Leased Premises and any Intellectual Property that they license from third parties, each of the Corporation and the Subsidiary is the absolute legal and beneficial owner of, and has good and marketable title to, all of the material properties and assets thereof, and no other property or assets are necessary for the conduct of the business of the Corporation and the Subsidiary as currently conducted. Any and all of the agreements and other documents and instruments pursuant to which each of the Corporation or the Subsidiary holds the property and
|
|
assets thereof (including any interest in, or right to earn an interest in, any Intellectual Property) are valid and subsisting agreements, documents and instruments in full force and effect, enforceable in accordance with the terms thereof, and such properties and assets are in good standing under the applicable statutes and regulations of the jurisdictions in which they are situated, and all material leases, licenses and other agreements pursuant to which the Corporation or any Subsidiary derives the interests thereof in such property are in good standing. The Corporation does not know of any claim or the basis for any claim that might or could materially and adversely affect the right of the Corporation or any Subsidiary to use, transfer or otherwise exploit their respective assets, none of the properties (or any interest in, or right to earn an interest in, any property) of the Corporation or any Subsidiary is subject to any right of first refusal or purchase or acquisition right, and neither the Corporation nor any Subsidiary has a responsibility or obligation to pay any commission, royalty, licence fee or similar payment to any person with respect to the property and assets thereof;
|
(k)
|
no legal or governmental proceedings or inquiries are pending to which the Corporation or any Subsidiary is a party or to which the property thereof is subject that would result in the revocation or modification of any certificate, authority, permit or license necessary to conduct the business now owned or operated by the Corporation or any Subsidiary which, if the subject of an unfavourable decision, ruling or finding could reasonably be expected to have a Material Adverse Effect and, to the knowledge of the Corporation, no such legal or governmental proceedings or inquiries have been threatened against or are contemplated with respect to the Corporation or the Subsidiary or with respect to the properties or assets thereof;
|
(l)
|
other than as disclosed in the Disclosure Documents, there are no material actions, suits, judgments, investigations or proceedings of any kind whatsoever outstanding or, to the best of the Corporation’s knowledge, pending or threatened against or affecting the Corporation, the Subsidiary or to the best of the Corporation’s knowledge, the directors, officers or employees of the Corporation or the Subsidiary, at law or in equity or before or by any commission, board, bureau or agency of any kind whatsoever and, to the best of the Corporation’s knowledge, there is no basis therefore and neither the Corporation nor any Subsidiary is subject to any judgment, order, writ, injunction, decree, award, rule, policy or regulation of any Governmental Authority, which, either separately or in the aggregate, may have a Material Adverse Effect or that would materially adversely affect the ability of the Corporation to perform its obligations under the Transaction Documents;
|
|
assets may be bound which, either separately or in the aggregate, may have a Material Adverse Effect;
|
(n)
|
to the knowledge of the Corporation, no counterparty to any material obligation, agreement, covenant or condition contained in any contract, indenture, trust deed, mortgage, loan agreement, note, lease or other agreement or instrument to which the Corporation or any Subsidiary is a party is in default in the performance or observance thereof, except where such violation or default in performance would not have a Material Adverse Effect;
|
(o)
|
there are no judgments against the Corporation or any Subsidiary which are unsatisfied, nor are there any consent decrees or injunctions to which the Corporation or any Subsidiary is subject;
|
(p)
|
neither of the Corporation nor any Subsidiary has committed an act of bankruptcy or sought protection from the creditors thereof before any court or pursuant to any legislation, proposed a compromise or arrangement to the creditors thereof generally, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to be declared bankrupt or wound up, taken any proceeding to have a receiver appointed of any of the assets thereof, had any person holding any encumbrance, lien, charge, hypothec, pledge, mortgage, title retention agreement or other security interest or receiver take possession of any of the property thereof, had an execution or distress become enforceable or levied upon any portion of the property thereof or had any petition for a receiving order in bankruptcy filed against it;
|
(q)
|
at the Closing Time, all consents, approvals, permits, authorizations or filings as may be required to be made or obtained by the Corporation under applicable Securities Laws necessary for the execution and delivery of the Transaction Documents and the creation, issuance and sale, as applicable, of the Special Warrants and the Compensation Warrants and the Common Shares, Warrants and Warrant Shares issuable upon exercise thereof, as applicable, and the consummation of the transactions contemplated thereby, will have been made or obtained, as applicable (other than the filing of reports required under applicable Securities Laws within the prescribed time periods, which documents shall be filed as soon as practicable after the Closing Date and, in any event, within 10 calendar days of the Closing Date or within such other deadline imposed by applicable Securities Laws);
|
(r)
|
the Common Shares, Warrants and Warrant Shares issuable upon exercise of the Special Warrants, the Compensation Warrants and the Warrants, as applicable, have been authorized and reserved and allotted for issuance, as applicable;
|
(s)
|
at the Closing Time, the Special Warrants and the Compensation Warrants will be duly and validly issued and created;
|
(t)
|
upon the due exercise of the Special Warrants and the Compensation Warrants in accordance with the respective provisions thereof, the Common Shares and Warrants issuable upon the exercise thereof will be duly and validly issued and, in the case of the Common Shares, as fully paid and non-assessable Common Shares of the Corporation, on payment of the purchase price therefor;
|
(u)
|
upon the due exercise of the Warrants in accordance with the provisions thereof, the Warrant Shares issuable upon the exercise thereof will be duly and validly issued as fully paid and non-assessable Common Shares of the Corporation, on payment of the purchase price therefor;
|
(v)
|
the Special Warrants, the Compensation Warrants and the Common Shares, Warrants and Warrant Shares issuable upon exercise thereof, as applicable, will not be subject to a restricted period or to a statutory hold period under the Securities Laws which extends beyond four months and one day after the Closing Date in accordance with and subject to the conditions set out in NI 45-102, except for restrictions on transfer under applicable U.S. Securities Laws;
|
(w)
|
the execution and delivery of each of the Transaction Documents, the performance by the Corporation of its obligations hereunder or thereunder, the issue and sale of the Special Warrants hereunder and the consummation of the transactions contemplated in this Agreement, including the issuance and delivery of the Common Shares and Warrants issuable upon exercise of the Special Warrants, the granting of the Compensation Warrants, the issuance and delivery of the Common Shares and Warrants issuable upon exercise of the Compensation Warrants and the Warrant Shares issuable upon exercise of the Warrants, as the case may be, do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (whether after notice or lapse of time or both): (A) any Laws applicable to the Corporation including, without limitation, the Securities Laws; (B) the constating documents, by-laws or resolutions of the Corporation which are in effect at the date hereof; (C) any Material Agreement, contract, agreement, instrument, Debt Instrument, lease or other document to which the Corporation is a party or by which it is bound which, either separately or in the aggregate, may have a Material Adverse Effect; or (D) any judgment, decree or order binding the Corporation or the property or assets of the Corporation;
|
(x)
|
at the Closing Time, the Corporation shall have duly authorized and (other than the Warrant Certificates) executed and delivered the Transaction Documents and upon such execution and delivery (and subsequent execution and delivery of the Warrant Certificates) each shall constitute a valid and binding obligation of such Corporation and each shall be enforceable against such Corporation in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law;
|
(y)
|
the Common Shares are registered pursuant to Section 12(g) of the U.S. Exchange Act, and the Corporation has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Shares under the U.S. Exchange Act nor has the Corporation received any notification that the SEC is contemplating terminating such registration;
|
(z)
|
the Financial Statements have been prepared in accordance with U.S. GAAP, contain no misrepresentations, and with respect to the audited comparative consolidated financial statements of the Corporation as at and for the year ended December 31, 2017 and 2016 only present fairly, in all material respects, the financial condition of the Corporation on a consolidated basis as at the date thereof and the results of the operations and cash flows of the Corporation on a consolidated basis for the period then ended and contain and reflect adequate provisions or allowance for all reasonably anticipated liabilities, expenses and losses of the Corporation on a consolidated basis that are required to be disclosed in such financial statements and there has been no material change in accounting policies or practices of the Corporation since December 31, 2016;
|
(aa)
|
to the knowledge of the Corporation, the Alternative Solutions Financial Statements have been prepared in accordance with U.S. GAAP, contain no misrepresentations, and with respect to the audited comparative consolidated financial statements of the Corporation as at and for the year ended December 31, 2017 and 2016 only present fairly, in all material respects, the financial condition of Alternative Solutions on a consolidated basis as at the date thereof and the results of the operations and cash flows of Alternative Solutions on a consolidated basis for the period then ended and contain and reflect adequate provisions or allowance for all reasonably anticipated liabilities, expenses and losses of Alternative Solutions on a consolidated basis that are required to be disclosed in such financial statements and there has been no material change in accounting policies or practices of Alternative Solutions since December 31, 2016;
|
(bb)
|
there are no material liabilities of the Corporation or the Subsidiary whether direct, indirect, absolute, contingent or otherwise required to be disclosed in the Financial Statements which are not disclosed or reflected in the Financial Statements, except those incurred in the ordinary course of business or disclosed in the Disclosure Documents since June 20, 2017;
|
(cc)
|
there are no off-balance sheet transactions, arrangements or obligations (including contingent obligations) of the Corporation or the Subsidiary with unconsolidated entities or other persons that may have a material current or future effect on the financial condition, changes in financial condition, results of operations, earnings, cash flow, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses of the Corporation or any Subsidiary or that would reasonably be expected to be material to an investor in making a decision to purchase the Special Warrants;
|
(ee)
|
the Corporation maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (A) transactions are executed in accordance with management’s general or specific authorization; and (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain accountability for assets;
|
(ff)
|
except as disclosed in the Financial Statements the Corporation is not party to any Debt Instrument or any agreement, contract or commitment to create, assume or issue any Debt Instrument and does not have any loans or other indebtedness outstanding which has been made to any of its shareholders, officers, directors or employees, past or present, or any person not dealing at arm’s length with the Corporation (as such term is defined in the Tax Act). The Corporation has not guaranteed the obligations of any person;
|
(gg)
|
the Corporation’s auditors, who audited the Financial Statements and who provided their respective audit report thereon, are independent public accountants as required under applicable Securities Laws and there has never been a reportable event (within the meaning of NI 51-102) between the Corporation and the Corporation’s auditors;
|
(hh)
|
during the previous 12 months, the Corporation has not, directly or indirectly, declared or paid any dividend or declared or made any other distribution on any of its shares or securities of any class, or, directly or indirectly, redeemed, purchased
|
|
otherwise acquired any of its Common Shares or securities or agreed to do any of the foregoing;
|
(ii)
|
no legal or governmental proceedings or inquiries are pending to which the Corporation or the Subsidiary is a party or to which their property or assets are subject that would result in the revocation or modification of any certificate, authority, permit or license necessary to conduct the business now owned or operated by the Corporation or the Subsidiary which, if the subject of an unfavourable decision, ruling or finding could reasonably be expected to have a Material Adverse Effect and, to the knowledge of the Corporation, no such legal or governmental proceedings or inquiries have been threatened against or are contemplated with respect to the Corporation, the Subsidiary or their property or assets;
|
(jj)
|
the assets of each of the Corporation and the Subsidiary and their businesses and operations are not insured;
|
(ll)
|
except where such steps are limited due to federal U.S. restrictions on patents and trademarks in connection with U.S. Marijuana Laws, the Corporation and the Subsidiary has taken all reasonable steps to protect its owned Intellectual Property in those jurisdictions where, in the reasonable opinion of the Corporation, the Corporation and/or each Subsidiary carries on a sufficient business to justify such filings;
|
(mm)
|
there are no material restrictions on the ability of the Corporation or the Subsidiary to use all rights in the Intellectual Property required in the ordinary course of the business of the Corporation or the Subsidiary, as applicable. None of the rights of the Corporation or the Subsidiary in the Intellectual Property will be impaired or affected in any way by the transactions contemplated by this Agreement;
|
(nn)
|
neither the Corporation nor any Subsidiary has received any notice or claim (whether written or oral) challenging its ownership or right to use of any Intellectual
|
|
Property or suggesting that any other person has any claim of legal or beneficial ownership or other claim or interest with respect thereto;
|
(oo)
|
none of the rights of the Corporation or any Subsidiary in the Intellectual Property will be impaired or affected in any way by the transactions contemplated by this Agreement;
|
(pp)
|
other than as set out in the Disclosure Documents, there are no material restriction on the ability of the Corporation or the Subsidiary to use and exploit all rights in the Intellectual Property required in the ordinary course of business of the Corporation or the Subsidiary;
|
(qq)
|
all registrations of Intellectual Property are in good standing and are recorded in the name of the Corporation or one of the Subsidiary, or in the name of the parties that have licensed that Intellectual Property to the Corporation or the Subsidiary, as applicable, in the appropriate offices to preserve the rights thereto. Other than as would not have a Material Adverse Effect, all such registrations have been filed, prosecuted and obtained in accordance with all applicable legal requirements and are currently in effect and in compliance with all applicable legal requirements. No registration of Intellectual Property has expired, become abandoned, been cancelled or expunged, or has lapsed for failure to be renewed or maintained, except where such expiration, abandonment cancellation, expungement or lapse would not have a Material Adverse Effect;
|
(rr)
|
the Material Agreements are the only material contracts (as defined under Securities Laws) of the Corporation and the Subsidiary on a consolidated basis. All of the Material Agreements and Debt Instruments of the Corporation and of the Subsidiary have been disclosed in the Disclosure Documents and each is valid, subsisting, in good standing in all material respects and in full force and effect, enforceable in accordance with the terms thereof. The Corporation and the Subsidiary have performed all obligations (including payment obligations) in a timely manner under, and are in material compliance with, all terms, conditions and covenants (including all financial maintenance covenants) contained in each Material Agreement and Debt Instrument. None of the Corporation or the Subsidiary is in material violation, breach or default and none has received any notification from any party claiming that the Corporation or the Subsidiary is in breach, violation or default under any Material Agreement or Debt Instrument and no other party, to the knowledge of the Corporation, is in material breach, violation or default of any term under any Material Agreement or Debt Instrument. None of the properties (or any interest in, or right to earn an interest in, any property) of the Corporation or a Subsidiary is subject to any right of first refusal or purchase or acquisition right;
|
(ss)
|
other than disclosed in the Disclosure Documents, none of the directors, officers or employees of the Corporation or the Subsidiary, any person who owns, directly or indirectly, more than 5% of any class of securities of the Corporation or any associate or affiliate of any of the foregoing, had or has any material interest, direct
|
|
or indirect, in any transaction or any proposed transaction (including, without limitation, any loan made to or by any such person) with the Corporation which, as the case may be, materially affects, is material to or will materially affect the Corporation or the Subsidiary, except as disclosed in the Financial Statements or related management’s discussion and analysis;
|
(tt)
|
the Corporation is not party to any agreement, nor is the Corporation aware of any agreement, which in any manner affects the voting control of any of the securities of the Corporation or the Subsidiary;
|
(uu)
|
none of the Corporation or any of the Subsidiary is a party to, bound by or, to the knowledge of the Corporation, affected by any commitment, agreement or document containing any covenant which expressly and materially limits the freedom of the Corporation or the Subsidiary to compete in any line of business, transfer or move any of its respective assets or operations or which adversely materially affects the business practices, operations or condition of the Corporation or the Subsidiary;
|
(vv)
|
neither the Corporation nor the Subsidiary has ever been in violation of, in connection with the ownership, use, maintenance or operation of the property and assets thereof, any applicable Environmental Laws which could reasonably be expected to have a Material Adverse Effect;
|
(ww)
|
the authorized capital of the Corporation consists of 250,000,000 Common Shares and 20,000,000 preferred shares of which, as at the date hereof (prior to the completion of the Offering), 51,936,972 Common Shares are issued and outstanding as fully paid and non-assessable shares in the capital of the Corporation and nil preferred shares are outstanding. Other than as disclosed in the Financial Statements (and subsequent Disclosure Documents and publicly available filings of the Corporation) and other than stock options issued under the Corporation’s stock option plan, there are no outstanding rights, warrants, options, convertible debt or any other securities or rights capable of being converted into, or exchanged or exercised for, any Common Shares of the Corporation;
|
(xx)
|
Vstock Transfer, LLC at its principal offices in Woodmere, New York, has been duly appointed as registrar and transfer agent for the Common Shares;
|
(yy)
|
Odyssey Trust Company, at its principal offices in Calgary, Alberta, has been, as of the Closing Date, duly appointed as Special Warrant Agent and as Warrant Agent under the Special Warrant Indenture and the Warrant Indenture, respectively;
|
(zz)
|
the issue of the Special Warrants and the Compensation Warrants and issuance and delivery of the Common Shares, Warrants and Warrant Shares issuable thereunder, as applicable, will not be subject to any pre-emptive right or other contractual right to purchase securities granted by the Corporation or to which the Corporation is subject that has not been waived, subject to the rights of first refusal and other rights contained in the copies engagement letters to which the Corporation is a party
|
|
provided to the Agent’ counsel, certain of which rights have been waived by the parties thereto. No holder of outstanding shares in the capital of the Corporation is at the Closing Time or will be following the Closing Time entitled to any pre-emptive or any similar rights to subscribe for any Common Shares or other securities of the Corporation;
|
(aaa)
|
neither the Corporation nor the Subsidiary is and has ever been in violation of, in connection with the ownership, use, maintenance or operation of the property and assets thereof, any Environmental Laws which could reasonably expected to have a Material Adverse Effect;
|
(bbb)
|
with respect to each of the Leased Premises, the Corporation and the Subsidiary, as applicable, occupies the Leased Premises and has the exclusive right to occupy and use the Leased Premises and each of the leases pursuant to which the Corporation or any Subsidiary, as applicable, occupies the Leased Premises is in good standing and in full force and effect. The performance of obligations pursuant to and in compliance with the terms of this Agreement and the completion of the transactions described herein by the Corporation, will not afford any of the parties to such leases or any other person the right to terminate such leases or result in any additional or more onerous obligations under such leases;
|
(ccc)
|
each of the Corporation and the Subsidiary has all Environmental Permits and is in compliance with any material requirements thereof;
|
(ddd)
|
there are no pending or, to the knowledge of the Corporation, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigation or proceedings relating to any Environmental Laws against the Corporation or any Subsidiary, which if determined adversely, would reasonably be expected to have a Material Adverse Effect;
|
(eee)
|
none of the Corporation or the Subsidiary has used the Leased Premises or any facility which it previously owned or leased, to generate, manufacture, process, distribute, use, treat, store, dispose of, transport or handle any Hazardous Materials;
|
(fff)
|
as of the date hereof, there are no past unresolved, pending or (to the knowledge of the Corporation) threatened claims, complaints, notices or requests for information with respect to any alleged violation of any Law and no conditions exist at, on or under any Leased Premises which, with the passage of time, or the giving of notice or both, would give rise to liability under any Law that, individually or in the aggregate, has or may reasonably be expected to have a Material Adverse Effect with respect to the Corporation or the Subsidiary;
|
(ggg)
|
other than the U.S. Marijuana Laws and as publicly disclosed or publicly available, the Corporation is not aware of any licensing or legislation, regulation, by-law or other lawful requirement of any Governmental Authority having lawful jurisdiction over the Corporation presently in force or, to its knowledge, proposed to be brought
|
into force, or any pending or contemplated change to any licensing or legislation, regulation, by-law or other lawful requirement of any Governmental Authority having lawful jurisdiction over the Corporation or any Subsidiary presently in force, that the Corporation anticipates the Corporation or any Subsidiary will be unable to comply with or which could reasonably be expected to materially adversely affect the business of the Corporation or any Subsidiary or the business environment or legal environment under which such entity operates;
|
(hhh)
|
each of the Corporation and the Subsidiary is in compliance with all laws respecting employment and employment practices, terms and conditions of employment, pay equity and wages, except where non-compliance with such laws could not reasonably be expected to have a Material Adverse Effect;
|
(iii)
|
the Corporation has not withheld from the Agent any material fact relating to the Corporation, any Subsidiary or to the Offering;
|
(jjj)
|
the minute books and corporate records of the Corporation and the Subsidiary for the period from incorporation to the date hereof made available to the Agent contain copies of all proceedings (or certified copies thereof or drafts thereof pending approval) of the shareholders and the directors (or any committee thereof) thereof and there have been no other meetings, resolutions or proceedings of the shareholders or directors of the Corporation or the Subsidiary to the date hereof not reflected in such corporate records, other than those related to this transaction, copies of which have been provided to the Agent, or those which are not material to the Corporation or the Subsidiary;
|
(kkk)
|
subject to the rights of first refusal and other rights contained in the copies engagement letters to which the Corporation is a party provided to the Agent’s counsel, certain of which rights have been waived by the parties thereto, other than the Agent, there is no person acting or purporting to act at the request or on behalf of the Corporation that is entitled to any brokerage or finder’s fee or other compensation in connection with the transactions contemplated by this Agreement;
|
(lll)
|
the Corporation has made available and provided to the Agent (and its counsel), and, on a timely basis, shall make available and provide to the Agent (and its counsel), all material agreements, arrangements and understandings in connection with the Proposed Acquisition and any of the other transactions contemplated in connection therewith and copies of all written reports produced in the course of its due diligence investigation of the business and affairs of Alternative Solutions;
|
(mmm)
|
the Corporation is not aware, based on its due diligence to date of Alternative Solutions, including financial, legal and technical due diligence, of any fact or circumstance which would be likely to have a Material Adverse Effect on the Corporation and its Subsidiary on a consolidated basis following completion of the Proposed Acquisition;
|
(nnn)
|
the Proposed Acquisition has been approved by the board of directors of the Corporation and no further approval or consent will be required from the board of directors or any third party that will not be completed in order for the Corporation to complete the Proposed Acquisition;
|
(ooo)
|
the net proceeds of the Offering will be used to fund the purchase price for the Proposed Acquisition and for capital expenditures and general corporate purposes;
|
(ppp)
|
upon satisfaction of the Escrow Release Conditions, other than the Corporation, there is no person that is or will be entitled to demand the proceeds of this Offering under the terms of any agreement or instrument to which the Corporation is party (including any Debt Instrument or Material Agreement) or otherwise;
|
(qqq)
|
neither the Corporation nor any Subsidiary is required to obtain any permits or licenses pursuant to the Access to Cannabis for Medical Purposes Regulations or any other permits from Health Canada or any similar federal, provincial, state or municipal regulatory body or self-regulatory body in connection with the conduct of their respective businesses as currently conducted;
|
(rrr)
|
all product research and development activities, including quality assurance, quality control, testing, and research and analysis activities, conducted by the Corporation and the Subsidiary in connection with their business is being conducted in compliance, in all material respects, with all industry, laboratory safety, management and training standards applicable to its current and proposed business, and all such processes, procedures and practices, required in connection with such activities are in place as necessary and are being complied with, in all material respects;
|
(sss)
|
the Corporation and the Subsidiary have complied, in all material respects, with all applicable privacy and consumer protection legislation and none has collected, received, stored, disclosed, transferred, used, misused or permitted unauthorized access to any information protected by privacy laws, whether collected directly or from third parties, in an unlawful manner. The Corporation and the Subsidiary have taken all reasonable steps to protect personal information against loss or theft and against unauthorized access, copying, use, modification, disclosure or other misuse;
|
(ttt)
|
neither the Corporation nor any Subsidiary nor, to the Corporation’s knowledge, any of their affiliates, directors or officers or any agent, employee or affiliate of the Corporation or any Subsidiary, is aware of or has taken any action, directly or indirectly, that could result in a violation by such persons of applicable laws relating to terrorism and money laundering, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Corruption of Foreign Public Officials Act (Canada), the Foreign Corrupt Practices Act of 1977 (United States), as amended, and the rules and regulations thereunder or any other similar anticorruption law to which the Corporation or any Subsidiary may be subject (collectively, the “Acts”), including, without limitation, making any bribe, rebate, payoff, influence payment, kickback or other unlawful payment or making use of
|
|
mails or any means or instrumentality of interstate commerce in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value or benefit to any “foreign official” or “public official” (as such terms are defined in the applicable Acts) or any foreign political party or official thereof or any candidate for foreign political office, or any third party or any other person to the benefit of the foregoing, in contravention of the Acts, and the Corporation, each Subsidiary, and their affiliates have conducted their businesses in compliance with the Acts and will implement and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith; and
|
(uuu)
|
the Corporation is not and immediately after receipt of payment for the Special Warrants, will not be required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
|
(a)
|
promptly provide to the Agent copies of any filings made by the Corporation or the Subsidiary of information relating to the Offering with any Securities Commissions or any regulatory body in Canada, United States or any other jurisdiction;
|
(b)
|
promptly provide to the Agent drafts of any press releases and other public documents of the Corporation relating to the Offering for review by the Agent prior to issuance, and give the Agent a reasonable opportunity to provide comments on any such press release or other public document, subject to the Corporation’s timely disclosure obligations under applicable Securities Laws;
|
(c)
|
from the time it has filed a Preliminary Qualification Prospectus, promptly inform the Agent in writing of the particulars of:
|
(i)
|
any material change (whether actual, anticipated, contemplated or proposed by, or threatened), financial or otherwise, in the assets, liabilities (contingent or otherwise), business, affairs, prospects, operations, cash flow or capital of the Corporation and its Subsidiary, taken as a whole;
|
(ii)
|
any material fact which has arisen or has been discovered or any new material fact which would have been required to have been stated in the Offering Documents had that fact arisen or been discovered on, or prior to, the date of any of the Offering Documents, as the case may be; or
|
(iii)
|
any change in any material fact (which for the purposes of this Agreement shall be deemed to include the disclosure of any previously undisclosed
|
|
material fact or any new material fact) contained or incorporated by reference in any of the Offering Documents or whether any event or state of facts has occurred after the date of this Agreement, which, in any case, is of such a nature as to render any of the Offering Documents untrue or misleading in any material respect or to result in any misrepresentation in any of the Offering Documents including as a result of any of the Offering Documents containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statement therein not false or misleading in the light of the circumstances in which it was made, which would result in any Offering Document not complying with applicable Securities Laws or which would reasonably be expected to have an effect on the market price or value of the Common Shares;
|
(iv)
|
advise the Agent, promptly after receiving notice or obtaining knowledge thereof, during the period shall during the period from the date of this Agreement until the first to occur of the Qualification Date, and (ii) the day that is four months and one day after the Closing Date: (i) the issuance by any Securities Commission or similar regulatory authority of any order suspending or preventing the use of any Offering Document; (ii) the suspension of the qualification of the Units issuable upon exercise of the Special Warrants in any of the Qualifying Jurisdictions; (iii) the institution, threatening or contemplation of any proceeding for any such purposes; (iv) any requests made by any Securities Commission or similar regulatory authority for information amending or supplementing any of the Offering Documents or for additional information; (v) the receipt by the Corporation of any material communication, whether written or oral, from any Securities Commission or similar regulatory authority or any stock exchange, relating to the distribution of the Units issuable upon exercise of the Special Warrants; (vi) the receipt by the Corporation of any material communication, whether written or oral, from any Securities Commission, the CSE, or any other competent authority, relating to the Offering or any Offering Document; (vii) any notice for other correspondence received by the Corporation from any Governmental Authority and any requests from such bodies for information, a meeting or a hearing relating to the Corporation, the Offering, the issue and sale of the Special Warrants, the issue of the Units issuable upon exercise of the Special Warrants or any other event or state of affairs that could, individually, or in the aggregate, have a Material Adverse Effect; or (viii) the issuance by any Securities Commission, the CSE, or any other competent authority, including any other Governmental Authority, of any order to cease or suspend trading or distribution of any securities of the Corporation or of the institution, threat of institution of any proceedings for that purpose or any notice of investigation that could potentially result in an order to cease or suspect trading or distribution of any securities of the Corporation, and will use its commercially reasonable efforts to prevent the issuance of any order
|
|
referred to in (i) and (viii) above and, if any such order is issued, to obtain the withdrawal thereof as quickly as possible;
|
(d)
|
comply with Sections 6.5 and 6.6 of NI 41-101 and with the comparable provisions of the other relevant Canadian Securities Laws. The Corporation will promptly prepare and file with the Securities Commissions any Supplementary Material which in the opinion of the Agent and the Corporation, each acting reasonably, may be necessary or advisable, and will otherwise comply with all legal requirements necessary to continue to qualify the Units issuable upon exercise of the Special Warrants for distribution. If the Corporation and the Agent in good faith disagree as to whether a change, fact or event requires the filing of any Supplementary Material in compliance with Sections 6.5 or Section 6.6 of NI 41-101, the Corporation will prepare and file promptly at the request of the Agent any Supplementary Material which, in the opinion of the Agent, acting reasonably, may be necessary or advisable. Upon receipt of any Supplementary Material the Agent shall, as soon as possible, send such Supplementary Material to Purchasers of the Special Warrants;
|
(e)
|
in addition to the provisions of Section 9(a) - Section 9(f) hereof, the Corporation shall, in good faith discuss with the Agent any circumstance, change, event or fact contemplated in Section 9(a) – Section 9(f) hereof which is of such a nature that there is or could be reasonable doubt as to whether notice should be given to the Agent under Section 9(a) – Section 9(f) hereof and shall consult with the Agent with respect to the form and content of any Supplementary Material proposed to be filed by the Corporation, it being understood and agreed that no such Supplementary Material shall be filed with any Securities Commission prior to the review and approval thereof by the Agent, acting reasonably;
|
(f)
|
deliver to the Agent prior to the filing of the Preliminary Qualification Prospectus and Final Qualification Prospectus, a copy thereof signed and certified as required by the applicable Canadian Securities Laws;
|
(g)
|
advise the Agent, promptly after receiving notice thereof, of the time when the Preliminary Qualification Prospectus, the Final Qualification Prospectus, any Marketing Materials and any Supplementary Material has been filed and receipts therefor (if any) have been obtained pursuant to the Canadian Securities Laws and will provide evidence reasonably satisfactory to the Agent of each such filing and copies of such receipts;
|
(h)
|
use the net proceeds of the Offering in the manner specified in the Disclosure Documents;
|
(i)
|
concurrently with the filing of the Final Qualification Prospectus with the Canadian Securities Commissions, file or cause to be filed with the CSE all necessary documents and shall take or cause to be taken all necessary steps to ensure that the Corporation has obtained all necessary approvals for the Common Shares and
|
|
Warrant Shares issuable upon exercise of the Special Warrants and Compensation Warrants to be listed on the CSE;
|
(j)
|
until the date that is three years following the Closing Date, use its commercially reasonable efforts to remain, and to ensure the Subsidiary remains, a corporation validly subsisting under the laws under which it is currently subsisting, licensed, registered or qualified as an extra-provincial or foreign corporation in all jurisdictions where the character of its properties owned or leased or the nature of the activities conducted by it make such licensing, registration or qualification necessary and shall carry on its business in the ordinary course and in compliance in all material respects with all applicable Laws of each such jurisdiction, provided that the Corporation shall not be required to comply with the terms of this Section 9(m) following the completion of a merger, amalgamation, arrangement, business combination or take-over bid pursuant to which the Corporation ceases to be a “distributing corporation” (within the meaning of the Business Corporations Act (Ontario);
|
(k)
|
other than in the event of an acquisition of all of the issued and outstanding Common Shares by way of take-over bid merger, amalgamation, plan of arrangement or similar transaction, until the date that is three years following the Closing Date, use commercially reasonable efforts to maintain its status as a “reporting issuer” under the Securities Laws of a jurisdiction of Canada, not in default of any requirement of such Securities Laws;
|
(l)
|
other than in the event of an acquisition of all of the issued and outstanding Common Shares by way of take-over bid merger, amalgamation, plan of arrangement or similar transaction, until the date that is three years following the date of listing of Common Shares on the CSE, use commercially reasonable efforts to maintain the listing of the Common Shares on the CSE or another recognized stock exchange or quotation system in Canada;
|
(m)
|
duly execute and deliver the Transaction Documents at the Closing Time and comply with and satisfy all terms, conditions and covenants therein contained to be complied with or satisfied by the Corporation;
|
(n)
|
fulfil or cause to be fulfilled, at or prior to the Closing Time each of the conditions required to be fulfilled by it set out in Section 9 hereof;
|
(o)
|
ensure that at the Closing Time the Special Warrants and the Compensation Warrants are duly and validly created, authorized and issued and shall have attributes corresponding in all material respects to the description set forth in the Special Warrant Indenture and this Agreement, respectively;
|
(p)
|
ensure that, at the Closing Time, the Common Shares and Warrants issuable upon exercise of the Special Warrants and the Compensation Warrants, respectively, have been duly authorized and validly allotted for issuance by the Corporation and shall, upon issuance in accordance with terms of the Special Warrants and the
|
|
Compensation Warrant Certificate, as applicable, be outstanding, and in respect of the Common Shares, as fully paid securities of the Corporation;
|
(q)
|
ensure that, at the Closing Time, the Warrant Shares have been duly authorized and validly allotted and reserved for issuance by the Corporation and shall, upon issuance in accordance with terms of the Warrant Indenture, be outstanding as fully paid and non- assessable shares in the capital of the Corporation;
|
(r)
|
in the event that a Purchaser who acquires Common Shares and Warrants upon exercise or deemed exercise of the Special Warrants is or becomes entitled under Canadian Securities Laws to the remedy of rescission by reason of a misrepresentation in the Final Qualification Prospectus, or any Supplementary Material, the Corporation hereby agrees that such holder shall, subject to available defences and any limitation period under Canadian Securities Laws, be entitled to rescission not only of the holder’s exercise or deemed exercise of its Special Warrants, but also of the private placement transaction under this Agreement pursuant to which the Special Warrants were initially acquired (i.e. the Offering), and shall be entitled in connection with such rescission to a full refund of all consideration paid to the Corporation on the acquisition of the Special Warrants. The Corporation agrees that the foregoing rights shall be described in the Preliminary Qualification Prospectus, the Final Qualification Prospectus and any Supplementary Material, and the Corporation agrees to and shall comply with such contractual right of rescission;
|
(s)
|
for the period of 90 days following the date of listing of the Common Shares on the CSE, the Corporation will not, directly or indirectly, offer, issue, sell, grant, secure, pledge, or otherwise transfer, dispose of or monetize, or engage in any hedging transaction, or enter into any form of agreement or arrangement the consequence of which is to alter economic exposure to, or announce any intention to do so, in any manner whatsoever, any Common Shares or securities convertible into, exchangeable for, or otherwise exercisable to acquire Common Shares or other equity securities of the Corporation, without the prior written consent of the Agent (such consent not to be unreasonably withheld or delayed), other than in conjunction with: (i) the grant or exercise of stock options and other similar issuances pursuant to the share incentive plan of the Corporation and other share compensation arrangements; (ii) outstanding warrants; (iii) obligations in respect of existing agreements; and (iv) the issuance of securities in connection with property or share acquisitions in the normal course of business, provided that any Common Shares or securities convertible, exercisable or exchangeable for Common Shares issued in such financings shall not be freely tradable in Canada prior to the Special Warrants having been exercised and the Common Shares and Warrants issued upon such exercise being freely tradable in Canada (subject to restrictions on control block distributions);
|
(t)
|
|
negotiated in good faith and contain customary provisions, pursuant to which each such person agrees to not, directly or indirectly, offer, sell, contract to sell, grant or sell any option to purchase, purchase any option or contract to sell, hypothecate, pledge, transfer, assign, lend, swap, or enter into any other agreement to transfer the economic consequences of, or otherwise dispose of or deal with (or agree to or publicly announce any intention to do any of the foregoing) whether through the facilities of a stock exchange, by private placement or otherwise, any Common Shares or other securities of the Corporation convertible into, exchangeable for or exercisable to acquire, Common Shares, directly or indirectly, unless (i) such person first obtain the prior consent of the Agent, such consent not to be unreasonably withheld, or (ii) there occurs a take-over bid or similar transaction involving a change of control of the Corporation, until the date that is 6 months from the date of listing of Common Shares on the CSE;
|
(u)
|
as promptly as practicable after becoming aware of such event, notify the Agent of the issuance by the SEC of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time and take all lawful action to effect the withdrawal, rescission or removal of such stop order or other suspension; and
|
(v)
|
promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, such further acts, documents and things for the purpose of giving effect to this Agreement and the transactions contemplated herein.
|
(a)
|
(i)
|
Restrictions on Distribution. Any inquiry, action, suit, investigation or other proceeding (whether formal or informal), including matters of regulatory transgression or unlawful conduct, is commenced, announced or threatened or any order is made or issued under or pursuant to any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality (including without limitation the CSE or any securities regulatory authority) or there is any enactment or change in any law, rule or regulation, or the interpretation or administration thereof, which, in the reasonable opinion of the Agent, could operate to prevent, restrict or otherwise seriously adversely affect in any manner the distribution or trading of the Special Warrants or the market price or value of the Common Shares;
|
(ii)
|
Material Change. There shall occur or come into effect any material change in the business, affairs, financial condition, prospects, capital or control of the Corporation and its subsidiaries, taken as a whole, or any change in any material fact or new material fact, or there should be discovered any previously undisclosed fact which, in each case, in the reasonable opinion of the Agent, has or could reasonably be expected to have a significant effect on the market price or value or marketability of the Special Warrants;
|
(iii)
|
Disaster Out. There should develop, occur or come into effect or existence any event, action, state, or condition or any action, law or regulation, inquiry, including, without limitation, terrorism, accident or major financial, political or economic occurrence of national or international consequence, or any action, government, law, regulation, inquiry or other occurrence of any nature, which in the reasonable opinion of the Agent, seriously adversely affects or involves, or may seriously adversely affect or involve, the financial markets in Canada or the United States or the business, operations or affairs of the Corporation or the marketability of the Special Warrants;
|
(iv)
|
Market Out. The state of the financial markets in Canada or the United States is such that in the reasonable opinion of the Agent, the Special Warrants cannot be marketed profitably;
|
(v)
|
Breach. The Corporation is in breach of any material term, condition or covenant of this Agreement or any representation or warranty given by Corporation becomes or is false in any material respect; or
|
(vi)
|
Due Diligence. The due diligence investigations performed by the Agent or its representatives reveal any material information or fact, which, in the sole opinion of the Agent, acting reasonably, is materially adverse to the Corporation or its business, or materially adversely affects the price or value of the Special Warrants.
|
(b)
|
The rights of termination contained in this Section 12 as may be exercised by the Agent and are in addition to any other rights or remedies the Agent may have in respect of any default, act or failure to act or non-compliance by the Corporation in respect of any of the matters contemplated by this Agreement or otherwise. Any such termination shall not discharge or otherwise affect any obligations or liability of the Corporation provided herein or prejudice any other rights or remedies any party may have as a result of any breach, default or non-compliance by any other party. Notwithstanding the foregoing sentence, in the event of any such termination, there shall be no further liability on the part of the Agent to the Corporation or on the part of the Corporation to the Agent except in respect of any liability which may have arisen prior to or which may arise after such termination under Section 13, Section 17 and Section 19. A notice of termination given by one Agent under Section 12 shall not be binding upon the other Agent.
|
(a)
|
The Corporation will notify the Agent of the terms of any further equity financing, corporate finance, or professional, sponsorship or advisory services performed (or normally performed) by a broker or investment dealer that the Corporation requires or proposed to obtain during the 12 months following the date that the Common Shares of the Corporation are listed on a recognized Canadian stock exchange (the “Subsequent Financing”) and the Agent will have the right of first refusal to act as lead selling agents in connection with any such financing.
|
(b)
|
The right of first refusal described in Section 12(a) must be exercised by the Agent within 3 Business Days following the receipt of the notice referred to Section 12(a) by notifying the Corporation that it: (i) will act as selling agent on the terms set out in the notice or subject to agreeing to the terms and conditions, as the case may be;
|
|
and/or (ii) will act as the Corporation’s sponsor in connection with the Subsequent Financing, as applicable.
|
(c)
|
If the Agent fails to give notice within the 3 Business Days that it will act as selling agent for the Subsequent Financing upon the terms set out in the notice and/or sponsor for the Subsequent Financing, the Corporation will be free to make other arrangements to obtain financing from another source on the same terms or on terms no less favorable to the Corporation, and/or engage another sponsor for its Subsequent Financing, provided the arrangement with such agent or underwriter are entered into within 30 calendar days thereafter.
|
(d)
|
The right of first refusal will not terminate with respect to any future offerings and/or sponsorship of the Subsequent Financing if, on receipt of any notice from the Corporation under this Section 14, the Agent fails to exercise any of the rights.
|
(e)
|
The rights of first refusal granted under this Section 14 will terminate if the Offering is not completed.
|
(f)
|
The rights of first refusal granted under this Section 14 shall not apply to the issuance of securities of the Corporation in which the Corporation does not retain or propose to retain a registered dealer as an agent.
|
(i)
|
any material breach of or default under any representation, warranty, covenant or agreement of the Corporation in this Agreement or the failure of the Corporation to comply with any of its obligations hereunder;
|
(ii)
|
any information or statement (except any information or statement relating solely to an Indemnified Party and provided in writing by the Indemnified Party for inclusion in such document) contained in any of the Offering Documents or any other document or material filed or delivered by or on behalf of the Corporation pursuant to this Agreement being or being alleged to be a misrepresentation or untrue or any omission or alleged omission to state in those documents any material fact required to be stated in those documents or necessary to make any of the statements therein not misleading in light of the circumstances in which they were made;
|
(iii)
|
any order made or any inquiry, investigation or proceeding instituted, threatened or announced by any court, securities regulatory authority, stock exchange or by any other competent authority, based upon any untrue statement, omission or misrepresentation or alleged untrue statement, omission or misrepresentation (except a statement, omission or misrepresentation relating solely to an Indemnified Party provided in writing by the Indemnified Party) contained in any of the Offering Documents or any other document or material filed or delivered by or on behalf of the Corporation pursuant to this Agreement, preventing or restricting the trading in or the sale or distribution of the Common Shares;
|
(iv)
|
the Corporation not complying with any requirement of the Canadian Securities Laws or U.S. Securities Laws, including the Corporation’s non-compliance with any statutory requirement to make any document available for inspection; or
|
(v)
|
any failure or alleged failure to make timely disclosure of a material change by the Corporation, where such failure or alleged failure occurs during the
|
|
Offering or during the period of distribution or where such failure relates to the Offering or the Special Warrants and may give or gives rise to any liability under any Law in any jurisdiction which is in force on the date of this Agreement.
|
(b)
|
The Corporation agrees to waive any right it may have of first requiring an Indemnified Party to proceed against or enforce any other right, power, remedy or security or claim payment from any other person before claiming under this indemnity.
|
(c)
|
The Corporation will not, without the Indemnified Party’s prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any Claim in respect of which indemnification may be sought hereunder (whether or not any Indemnified Party is a party thereto) unless the Corporation has acknowledged in writing that the Indemnified Parties are entitled to be indemnified in respect of such Claim and such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Party from any liabilities arising out of such Claim without any admission of negligence, misconduct, liability or responsibility by or on behalf of any Indemnified Party.
|
(d)
|
Promptly after receiving notice of a Claim against an Indemnified Party or receipt of notice of the commencement of any investigation which is based, directly or indirectly, upon any matter in respect of which indemnification may be sought from the Corporation, the Indemnified Party will notify the Corporation in writing of the particulars thereof, provided that the omission so to notify the Corporation shall not relieve the Corporation of any liability which the Corporation may have to any Indemnified Party except and only to the extent that any such delay in or failure to give notice as herein required prejudices the defense of such Claim or results in any material increase in the liability which the Corporation has under this indemnity. The Corporation shall have 14 days after receipt of the notice to undertake, conduct and control, through counsel of its own choosing and at its own expense, the settlement or defense of the Claim. If the Corporation undertakes, conducts and controls the settlement or defense of the Claim, the relevant Indemnified Parties shall have the right to participate in the settlement or defense of the Claim.
|
(e)
|
Each Indemnified Party may retain separate legal counsel to act on such Indemnified Party’s behalf to separately represent it in the defense of a Claim, which shall be at the Corporation’s expense if (i) the Corporation does not promptly assume the defense of the Claim no later than 14 days after receiving actual notice of the Claim (as set forth above), (ii) the Corporation agrees to separate representation, or (iii) the Indemnified Party is advised by counsel that there is an actual or potential conflict in the Corporation’s and the Indemnified Party’s respective interests or additional defenses are available to the Indemnified Party, which makes representation by the same counsel inappropriate.
|
(f)
|
The Corporation agrees that in case any legal proceeding shall be brought against the Corporation and/or the Agent by any governmental commission or regulatory
|
|
authority or any stock exchange or other entity having regulatory authority, either domestic or foreign, shall investigate the Corporation and/or the Indemnified Parties shall be required to testify in connection therewith or shall be required to respond to procedures designed to discover information regarding, in connection with, or by reason of the performance of professional services rendered to the Corporation by the Agent, the Indemnified Parties shall have the right to employ their own counsel in connection therewith, and the reasonable fees and expenses of such counsel as well as the reasonable costs (including an amount to reimburse the Agent for time spent by the Indemnified Parties in connection therewith) and out-of-pocket expenses incurred by Indemnified Parties in connection therewith shall be paid by the Corporation as they occur.
|
(g)
|
To the extent that any Indemnified Party is not a party to this Agreement, the Agent shall obtain and hold the right and benefit of the above-noted indemnity in trust for and on behalf of such Indemnified Party.
|
(h)
|
The Corporation agrees to reimburse the Agent for the time spent by their personnel in connection with any Claim at their normal per diem rates.
|
(i)
|
The indemnity and the contribution obligations of the Corporation pursuant to Section 17 shall be in addition to any liability which the Corporation may otherwise have, shall extend upon the same terms and conditions to the personnel of the Agent and shall be binding upon and enure to the benefit of any successors, assigns, heirs and personal representatives of the Corporation and any of the Indemnified Parties. The foregoing provisions shall survive the completion of professional services rendered under this Agreement or any termination of the authorization given by this Agreement.
|
(i)
|
to the Corporation at:
|
(ii)
|
to the Agent, to:
|
1.
|
The Corporation acknowledges that the Securities have not been registered under the U.S. Securities Act or any state securities laws and may be offered and sold only in transactions exempt from or not subject to the registration requirements of the U.S. Securities Act and applicable state securities laws. Except with respect to sales of the Special Warrants solicited by the Agent through a U.S. Affiliate and/or Accredited Investors in reliance upon available exemptions from registration under the U.S. Securities Act and applicable state securities laws, neither the Corporation nor any of its affiliates, nor any person acting on any of their behalf (other than the Agent, the U.S. Affiliates, or any Selling Firm, as to whom the Corporation makes no representation, warranty, acknowledgement, covenant or agreement), has made or will make: (A) any offer to sell, or any solicitation of an offer to buy, any Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons; or (B) any sale of Special Warrants unless, at the time the buy order was or will have been originated, the purchaser is (i) outside the United States and not a U.S. Person, or (ii) the Corporation, its affiliates, and any person acting on any of their behalf (other than the Agent, the U.S. Affiliates, or any Selling Firm, as to whom the Corporation makes no representation, warranty, acknowledgement, covenant or agreement) reasonably believe that the purchaser is outside the United States and not a U.S. Person.
|
2.
|
Neither the Corporation nor any of its affiliates, nor any person acting on any of their behalf (other than the Agent, the U.S. Affiliate, or any Selling Firm, as to whom the Corporation makes no representation, warranty, acknowledgement, covenant or agreement), has engaged or will engage in any Directed Selling Efforts, or has taken or will take any action that would cause the exemption afforded by Section 4(a)(2) of the U.S. Securities Act or the exclusion afforded by Rule 903 of Regulation S, to be unavailable for offers and sales of the Special Warrants.
|
3.
|
None of the Corporation, any of its affiliates or any person acting on any of their behalf (other than the Agent, the U.S. Affiliate, or any Selling Firm, as to whom the Corporation makes no representation, warranty, acknowledgement, covenant or agreement) has offered or will offer to sell, or has solicited or will solicit offers to buy, any of the Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons, by means of any form of General Solicitation or General Advertising or in any manner involving a public offering within the meaning of Section 4(a)(2) of the U.S. Securities Act in connection with the offer and sale of the Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons.
|
4.
|
Neither the Corporation nor any person acting on behalf of the Corporation has, within six months prior to the commencement of the Offering, sold, offered for sale or solicited any offer to buy any of the Corporation’s securities, and will not do so for a period of six months following the completion of this Offering, in a manner that would be integrated with the offer and sale of the Special Warrants and would cause the exemption from registration under the U.S. Securities Act to become unavailable with respect to the offer and sale of the Special Warrants.
|
5.
|
Neither the Corporation nor any of its predecessors or affiliates has been subject to any order, judgment or decree of any court of competent jurisdiction temporarily, preliminarily or permanently enjoining such person for failure to comply with Rule 503 of Regulation D.
|
6.
|
The Corporation will, within prescribed time periods, prepare and file any forms or notices required under the U.S. Securities Act or applicable state securities laws in connection with the offering of the Special Warrants in the United States.
|
7.
|
To the best of the Corporation’s knowledge after reasonable investigation, none of the Corporation (including its predecessors or affiliated issuers), any director or executive officer, any non-executive officer participating in the Offering, any shareholder holding or controlling 20% or more of the Common Shares, any current promoter of the Corporation or any person (other than the Agent and any person set out in Section 10 of the Agent’s representations, warranties and covenants below, for which no representation or warranty is made) that has been or will be paid (directly or indirectly) for the solicitation of purchasers in the Offering (a “Compensated Solicitor”) and any general partner or managing member of any Compensated Solicitor or any executive officer, non-executive officer participating in the Offering, or director of any Compensated Solicitor or general partner or managing member of such Compensated Solicitor is subject to a Disqualifying Event. For the purposes hereof, “Disqualifying Event” means any conviction, order, judgment, decree, suspension, expulsion, event or other matter set out in Rule 506(d)(1)(i) through (viii) of Regulation D that is currently in effect or which occurred within the periods set out in Rule 506(d)(1)(i) through (viii) and, without limiting the foregoing, includes criminal convictions, court injunctions or restraining orders, final orders of any state or federal regulator, SEC disciplinary orders, SEC cease-and-desist orders, SEC stop orders or orders suspending the Regulation A exemption, suspension or expulsion from membership in, or association with a member of, a self-regulatory organization (such as FINRA) or United States Postal Service false representation orders.
|
1.
|
It acknowledges that the Securities have not been registered under the U.S. Securities Act or any state securities laws and may be offered and sold only in transactions exempt from or not subject to the registration requirements of the U.S. Securities Act and applicable state securities laws. It has not offered for sale by the Corporation, and will not offer for sale by the Corporation, any Special Warrants except: (a) Special Warrants in an Offshore Transaction in accordance with Category 3 of Rule 903 of Regulation S; or (b) Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons, that are Accredited Investors, in transactions that are exempt from the registration requirements of the U.S. Securities Act in compliance with available exemptions thereunder and in compliance with state securities laws, as provided in this Schedule “A” and the Agreement to which it is annexed. Accordingly, neither the Agent, its U.S. Affiliate nor any of their affiliates nor any persons acting on behalf of any of them, has made or will make (except as permitted hereby) any: (x) offer to sell or any solicitation of an offer to buy, any Special
|
|
Warrants in the United States or to, or for the account or benefit of, U.S. Persons; (y) arrangement for any sale of Special Warrants to any purchaser unless, at the time the buy order was or will have been originated, the purchaser (i) has certified to the Agent that it was outside the United States and not a U.S. Person and not acting for the account or benefit of a U.S. Person, and (ii) has agreed to only resale such securities in accordance with Regulation S under the U.S. Securities Act, in accordance with registration under the U.S. Securities Act or an exemption from such registration requirements, or (z) Directed Selling Efforts.
|
2.
|
It agrees that, at or prior to confirmation of the sale of the Special Warrants, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Special Warrants from it during the Distribution Compliance Period a confirmation or notice to substantially the following effect:
|
3.
|
Neither the Agent, its U.S. Affiliate nor any of their affiliates either directly or through a person acting on its or their behalf has taken or will take any action that would constitute a violation of Regulation M under the U.S. Exchange Act in connection with the offer and sale of the Special Warrants.
|
4.
|
It has not entered and will not enter into any contractual arrangement with respect to the distribution of the Special Warrants, except with its U.S. Affiliate, any Selling Firm or with the prior written consent of the Corporation. It shall require its U.S. Affiliate and each Selling Firm to agree, for the benefit of the Corporation, to comply with, and shall use its reasonable best efforts to ensure that its U.S. Affiliate and each Selling Firm complies with, the provisions of this Schedule applicable to the Agent as if such provisions applied directly to its U.S. Affiliate and such Selling Firm.
|
5.
|
All offers to sell and solicitations of offers to purchase Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons, shall be solicited and arranged by the Agent through its U.S. Affiliate, which on the dates of such offers and subsequent sales by the Corporation was and will be duly registered as a broker-dealer under the U.S. Exchange Act and under all applicable state securities laws (unless exempted therefrom)
|
|
and a member of, and in good standing with, the Financial Industry Regulatory Authority, Inc. in accordance with all applicable United States state and federal securities (including broker-dealer) laws. The U.S. Affiliate will arrange for all offers of Special Warrants for sale by the Corporation in compliance with all applicable United States federal and state broker-dealer requirements and this Schedule “A” and the Agreement to which it is annexed.
|
6.
|
It and its U.S. Affiliate and their respective affiliates, either directly or through a person acting on behalf of any of them, have not solicited and will not solicit offers for, and have not offered to sell and will not offer to sell, any of the Special Warrants in the United States by any form of General Solicitation or General Advertising or in any manner involving a public offering within the meaning of Section 4(a)(2) of the U.S. Securities Act in connection with the offer and sale of the Securities in the United States or to, or for the account or benefit of, U.S. Persons.
|
7.
|
Any offer, or solicitation of an offer to buy, Special Warrants that has been made or will be made in the United States or to, or for the account or benefit of, U.S. Persons, was or will be made only to Accredited Investors.
|
8.
|
Immediately prior to soliciting any person in the United States or person purchasing for the account or benefit of, a U.S. Person, the Agent, the U.S. Affiliate, their respective affiliates, and any person acting on behalf of any of them, had reasonable grounds to believe and did believe that each such offeree was an Accredited Investor, and at the time of completion of each sale by the Corporation to a person in the United States or a person purchasing for the account or benefit of, a U.S. Person, the Agent, the U.S. Affiliate, their respective affiliates, and any person acting on behalf of any of them will have reasonable grounds to believe and will believe, that each such purchaser is an Accredited Investor.
|
9.
|
Each offeree in the United States, that is a U.S. Person or is purchasing for the account or benefit of a U.S. Person has been or will be provided by the Agent through its U.S. Affiliate, with a copy of the Subscription Agreement and each purchaser in the United States, that is a U.S. Person or is purchasing for the account or benefit of a U.S. Person will have received at or prior to the time of purchase of any Special Warrants the Subscription Agreement and the Agent agrees that they have not and will not use any written material other than such documents in connection therewith.
|
10.
|
Prior to soliciting such offerees and to the completion of any sale of Special Warrants to persons in the United States, U.S. Persons or persons purchasing for the account or benefit of U.S. Persons, each such purchaser will be informed that the Securities have not been registered under the U.S. Securities Act or any applicable state securities laws and are being offered to such purchaser in reliance on an exemption from the registration requirements of the U.S. Securities Act and in accordance with exemptions from any applicable state securities laws.
|
11.
|
Prior to completion of any sale of Special Warrants in the United States or to, or for the account or benefit of, any person in the United States, each such purchaser will have
|
|
completed a Subscription Agreement including Schedule C thereto and provided the necessary verification letter regarding its status as an Accredited Investor.
|
12.
|
It and its U.S. Affiliates acknowledge that until 40 days after the commencement of the Offering, an offer or sale of Special Warrants within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an exemption from the registration requirements of the U.S. Securities Act.
|
13.
|
At least one Business Day prior to the applicable Closing Date, the transfer agent for the Corporation will be provided with a list of the names and addresses of all purchasers of the Special Warrants in the United States or purchasing for the account or benefit of, a U.S. Person.
|
14.
|
At the Closing, each Agent and its U.S. Affiliate that has offered or solicited offers of Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons, will provide a certificate, substantially in the form of Exhibit I, relating to the manner of the offer and sale of the Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons, or will be deemed to represent and warrant that it did not make any offers or solicitations to purchase Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons.
|
15.
|
None of the Agent, any general partner or managing member, any director or executive officer of any of the foregoing, any other officer of any of the foregoing participating in the Offering, or any officer or other employee of the foregoing that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in the Offering are subject to any Disqualifying Event and upon request, the Agent will provide the Corporation with evidence reasonably satisfactory to the Corporation that Finder used “reasonable care” in making the determination that it and its respective general partners, managing members, directors, executive officers, and any other officer participating in the Offering is not subject to any Disqualifying Event.
|
(i)
|
on the date hereof and on the date of each offer, solicitation of an offer and sale of Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons, the U.S. Affiliate is and was: (A) a duly registered broker-dealer with the United States Securities and Exchange Commission and under the laws of each state where offers and sales of Special Warrants were made (unless exempted therefrom); and (B) a member of and in good standing with the Financial Industry Regulatory Authority, Inc.;
|
(ii)
|
all offers of Special Warrants for sale by the Corporation in the United States or to, or for the account or benefit of, U.S. Persons, have been and will be effected and arranged by the U.S. Affiliate in accordance with all applicable U.S. federal and state laws and regulation (including, without limitation, laws and regulation with respect to the registration and conduct of broker- dealers);
|
(iii)
|
immediately prior to offering or soliciting offers for the Special Warrants in the United States or to, or for the account or benefit of U.S. Persons, we had reasonable grounds to believe and did believe that each offeree was either a Qualified Institutional Buyer or an Accredited Investor, and, on the date hereof, we continue to believe that each person purchasing Special Warrants from the Corporation in the United States or to, or for the account or benefit of, U.S. Persons, is either a Qualified Institutional Buyer or an Accredited Investor;
|
(iv)
|
no form of “general solicitation” or “general advertising” (as those terms are used in Regulation D under the U.S. Securities Act) was used by us, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or the internet or broadcast over radio or television or the internet, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising or in any manner involving a public offering within the meaning of Section 4(a)(2) of the U.S. Securities Act, in connection with the offer or sale of the Special Warrants in the United States or to, or for the account or benefit of, U.S. Persons; and
|
(v)
|
the offers and solicitations of offers of the Special Warrants have been conducted by us in accordance with the terms of the Agency Agreement.
|
[INSERT NAME OF AGENT]
|
[INSERT NAME OF U.S. AFFILIATE]
|
|||
By:
|
By:
|
|||
Name:
Title:
|
Name:
Title:
|