10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-37426

CYNAPSUS THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)

Canada (State or other jurisdiction of incorporation or organization)	98-1226819 (I.R.S. Employer Identification No.)
828 Richmond Street West, Toronto, Ontario, Canada (Address of principal executive offices)	M6J 1C9 (zip code)
416-703-2449 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of August 13, 2015, there were 12,117,301 common shares, no par value per share, of Cynapsus Therapeutics Inc. outstanding.

CYNAPSUS THERAPEUTICS INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
general matters		1
Special Note Regarding Forward-Looking statements		2
PART I FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS.	3
	Interim Consolidated Statements of Financial Position as of June 30, 2015 and December 31, 2014	3
	Interim Consolidated Statements of Loss and Comprehensive Loss for the three and six months ended June 30, 2015 and 2014	4
	Interim Consolidated Statements of Changes in Equity for the six months ended June 30, 2015 and 2014	5
	Interim Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014	6
	Notes to the Unaudited Condensed Interim Consolidated Financial Statements	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	39
PART II OTHER INFORMATION
ITEM 1A.	RISK FACTORS	40
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	73
ITEM 6.	EXHIBITS	74
SIGNATURES		76
EXHIBIT INDEX		77

i

GENERAL MATTERS

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “Cynapsus,” “we,” “us” and “our” refer to Cynapsus Therapeutics Inc. and our wholly-owned subsidiary, Adagio Pharmaceuticals Ltd., or Adagio.

Cynapsus, a corporation organized under the federal laws of Canada, qualifies as a foreign private issuer in the U.S. for purposes of the United States Securities Exchange Act of 1934, as amended, or the Exchange Act. Although, as a foreign private issuer, we are not required to do so, we currently file quarterly reports on Form 10-Q and current reports on Form 8-K, and we will file annual reports on Form 10-K, with the United States Securities and Exchange Commission, or the SEC, instead of filing the reporting forms available to foreign private issuers.

Unless otherwise noted herein, all references to “$,” “Cdn$,” “Canadian dollars,” or “dollars” are to the currency of Canada and “US$,” “United States dollars,” or “U.S. dollars” are to the currency of the United States.

As of August 13, 2015, the noon rate of exchange published by the Bank of Canada was US$1.00 = Cdn$1.3078.

1

Special Note Regarding Forward-Looking Statements

Some of the statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of applicable securities laws. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. The statements we make regarding the following matters are forward-looking by their nature and are based on certain of the assumptions noted below:

· our beliefs regarding the advantages of APL-130277 and assumptions that others will share such beliefs;

· our expectations regarding the commercialization of APL-130277;

· our belief that there is an unmet medical need and market opportunity for APL-130277;

· our expectations regarding regulatory approval in the United States and in other jurisdictions;

· our expectation that APL-130277 will be able to follow the regulatory pathway set forth in Section 505(b)(2) of the United States Federal Food, Drug, and Cosmetic Act, or FDCA;

· our plan to timely commence and/or complete remaining trials and studies as required by the U.S. Food and Drug Administration, or FDA, and other regulators, including our Phase 3 clinical trials and studies;

· our beliefs regarding frequency, types and severity of OFF episodes;

· our expectations regarding future capital needs and funding requirements and our assumptions relating to current and future costs;

· our ability to otherwise successfully develop APL-130277 and any other product candidates we may develop in the future;

· our beliefs regarding the sufficiency of our existing cash for funding certain activities;

· our intention to develop and commercialize APL-130277 in international markets;

· our expectation that third-party contract manufacturing organizations will be able to provide us with sufficient quantities of our sublingual thin film formulation of apomorphine; and

· our expectation for building a focused sales and marketing infrastructure to market APL-130277 and any other product candidates in the United States.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements including, but not limited to those factors identified under the caption “Risk Factors” in Part II, Item 1A and in our filings and reports in the United States with the SEC available on the SEC’s web site at www.sec.gov, and in Canada with the various Canadian securities regulators, which are available online at www.sedar.com. Furthermore, unless otherwise stated, the forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date hereof, and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes or otherwise, except as required by law.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CYNAPSUS THERAPEUTICS INC.

Interim Consolidated Statements of Financial Position

UNAUDITED

(in Canadian dollars)

		June 30,			December 31,
	NOTES	2015			2014
		$			$
ASSETS
Current assets
Cash	5		111,455,042			17,448,497
Prepaid expenses and other current assets			564,289			269,779
Total current assets			112,019,331			17,718,276
Non-current assets
Property, plant and equipment	6		386,965			257,830
Intangible assets	7		550,584			574,522
Total assets			112,956,880			18,550,628
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	8, 14		4,473,840			3,080,631
Total current liabilities			4,473,840			3,080,631
SHAREHOLDERS’ EQUITY
Share capital	9		140,407,452			31,740,941
Equity reserves
Warrants	9		12,026,470			13,452,183
Share-based payments	9		4,612,711			2,787,525
Deficit			(48,563,593	)		(32,510,652	)
Total shareholders’ equity			108,483,040			15,469,997
Total liabilities and shareholders’ equity			112,956,880			18,550,628

COMMITMENTS AND CONTINGENT LIABILITIES (Note 15)

APPROVED ON BEHALF OF THE BOARD:

“Ronald Hosking” , Director “Rochelle Stenzler” , Director

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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CYNAPSUS THERAPEUTICS INC.

Interim Consolidated Statements of Loss and Comprehensive Loss

UNAUDITED

(in Canadian dollars)

		For the three months ended June 30,						For the six months ended June 30,
	NOTES	2015			2014			2015			2014
		$			$			$			$
EXPENSES
Research and development	10		7,880,569			1,164,166			10,751,670			1,612,858
Operating, general and administrative	11		2,039,823			894,111			3,817,973			1,852,474
Share-based payments	9		1,601,005			401,020			1,875,073			418,096
Amortization of intangible assets	7		11,969			14,747			23,938			29,493
Depreciation of property, plant and equipment	6		33,414			1,776			41,701			2,435
Acquisition milestone share-based payment	13, 14		-			-			1,500,000			-
Unrealized foreign exchange (gain) loss			(562,593	)		367,327			(1,745,025	)		390,225
Recovery on scientific research			(40,000	)		(10,000	)		(70,000	)		(20,000	)
Research grant	12		-			-			(127,710	)		(239,968	)
Interest income net of interest expense and related charges			(5,678	)		(17,089	)		(14,679	)		(19,283	)
Loss and comprehensive loss for the period			10,958,509			2,816,058			16,052,941			4,026,330
Loss per share - basic and diluted			1.50			0.62			2.56			1.15
Weighted average number of shares outstanding – basic and diluted	9		7,316,076			4,524,549			6,280,674			3,501,059

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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CYNAPSUS THERAPEUTICS INC.

Interim Consolidated Statements of Changes in Equity

UNAUDITED

(in Canadian dollars)

	Share Capital		Equity Reserves – Warrants			Equity Reserves – Share-based Payments			Deficit			Total
	$		$			$			$			$
Balance as at December 31, 2014		31,740,941		13,452,183			2,787,525			(32,510,652	)		15,469,997
Public offering, net of transaction costs		81,260,387		-			-			-			81,260,387
Private placement, net of transaction costs		19,551,377		-			-			-			19,551,377
Exercise of warrants		6,219,154		(1,425,713	)		-			-			4,793,441
Acquisition milestone share-based payment		1,500,000		-			-			-			1,500,000
Exercise of share-based payments		135,593		-			(49,887	)		-			85,706
Share-based payments		-		-			1,875,073			-			1,875,073
Loss for the period		-		-			-			(16,052,941	)		(16,052,941	)
Activity for the period		108,666,511		(1,425,713	)		1,825,186			(16,052,941	)		93,013,043
Balance as at June 30, 2015		140,407,452		12,026,470			4,612,711			(48,563,593	)		108,482,040
Balance as at December 31, 2013		16,156,398		4,211,014			1,918,672			(21,692,065	)		594,019
Prospectus offering, net of transaction costs		13,037,024		9,803,212			-			-			22,840,236
Exercise of warrants		988,356		(251,360	)		-			-			736,996
Exercise of share-based payments		226,892					(106,774	)		-			120,118
Share-based payments		-		-			418,096			-			418,096
Loss for the period		-		-			-			(4,026,330	)		(4,026,330	)
Activity for the period		14,252,272		9,551,852			311,322			(4,026,330	)		20,089,116
Balance as at June 30, 2014		30,408,670		13,762,866			2,229,994			(25,718,395	)		20,683,135

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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CYNAPSUS THERAPEUTICS INC.

Interim Consolidated Statements of Cash Flows

(in Canadian dollars)

		For the six months ended June 30,
	NOTES	2015			2014
		$			$
Operating activities
Loss for the period			(16,052,941	)		(4,026,330	)
Items not affecting cash:
Share-based payments	9		1,875,073			418,096
Amortization of intangible assets	7		23,938			29,493
Depreciation of property, plant and equipment	6		41,701			2,435
Acquisition milestone share-based payment	13		1,500,000			-
Unrealized gain on foreign exchange			(1,745,025	)		390,225
			(14,357,254	)		(3,186,081	)
Changes in non-cash working capital:
Change in prepaid expenses and other current assets			(294,510	)		(58,056	)
Change in accounts payables and accrued liabilities			1,393,209			(1,458,116	)
Deferred grant proceeds			-			(239,968	)
Net cash used in operating activities			(13,258,555	)		(4,942,221	)
Investing activities
Purchase of property, plant and equipment	6		(170,836	)		(17,906	)
Net cash used in investing activities			(170,836	)		(17,906	)
Financing activities
Gross proceeds from issuance of shares and warrants	9		110,290,694			25,000,000
Commissions and share issuance costs	9		(9,478,930	)		(2,159,764	)
Gross proceeds from exercise of warrants	9		4,793,441			736,996
Gross proceeds from exercise of share-based payments	9		85,706			120,118
Net cash provided by financing activities			105,690,911			23,697,350
Effect of exchange rate changes on cash and cash equivalents			1,745,025			(390,225	)
Increase in cash and cash equivalents			94,006,545			18,346,998
Cash and cash equivalents, beginning of period			17,448,497			2,289,046
Cash and cash equivalents, end of period			111,455,042			20,636,044

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

1. NATURE OF OPERATIONS

Cynapsus Therapeutics Inc. (“Cynapsus” or the “Company”) is a specialty pharmaceutical company currently focused on developing and preparing to commercialize a fast-acting, easy-to-use, sublingual thin film for the on-demand management of debilitating OFF episodes associated with Parkinson’s disease. The Company’s shares are listed on the TMX Group Inc.’s Toronto Stock Exchange (“Exchange”) (CTH: TSX) and traded in the United States on the NASDAQ Global Market (NASDAQ: CYNA). Cynapsus was incorporated under the federal laws of Canada. The head office, principal address, registered address and records office of the Company are located at 828 Richmond Street West, Toronto, Ontario, Canada, M6J 1C9.

2. BASIS OF PREPARATION

The condensed interim consolidated financial statements consolidate the financial statements of Cynapsus and its wholly-owned subsidiary, Adagio Pharmaceuticals Ltd. (“Adagio”). All significant intercompany transactions and balances have been eliminated.

These unaudited condensed interim consolidated financial statements have been prepared in compliance with International Accounting Standard 34 Interim Financial Reporting. The notes presented in these unaudited condensed interim consolidated financial statements include only significant events and transactions occurring since our last fiscal year end and are not fully inclusive of all matters required to be disclosed in our annual audited consolidated financial statements. The policies applied in these unaudited condensed interim consolidated financial statements are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Any subsequent changes to IFRS or their interpretation, that are given effect in the Company’s annual consolidated financial statements for the year ending December 31, 2015 could result in a restatement of these unaudited condensed interim consolidated financial statements.

On August 13, 2015, the Board of Directors approved and authorized these condensed interim consolidated financial statements for the three and six months ended June 30, 2015.

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current period.

In the opinion of management, all adjustments considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

3. FUTURE ACCOUNTING CHANGES

Certain pronouncements that were issued by the IASB or the International Financial Reporting Interpretations Committee are mandatory for accounting periods beginning on or after January 1, 2016. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following pronouncement has not yet been adopted and is being evaluated to determine its impact on the Company.

IFRS 9, Financial Instruments (“IFRS 9”) was issued by the IASB in July 2014 and will replace IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”) and all previous versions of IFRS 9. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9, except that an entity choosing to measure a financial liability at fair value will present the portion of any change in fair value due to changes in the entity’s own credit risk in other comprehensive income, rather than within profit or loss. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier adoption is permitted.

4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of these condensed interim consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from these estimates. The condensed interim consolidated financial statements include estimates, which, by their nature, are uncertain. The impact of such estimates are pervasive throughout the condensed interim consolidated financial statements, and may require accounting adjustments based on future occurrences.

The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where the assumptions and estimates are significant to the financial statements were the same as those applied to the Company’s consolidated financial statements as at and for the year ended December 31, 2014.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

5. RISK MANAGEMENT

Financial risk management

In the normal course of business, the Company is exposed to a number of financial risks that can affect its operating performance. These risks are credit risk, liquidity risk and market risk. The Company’s overall risk management program and prudent business practices seek to minimize any potential adverse effects on the Company’s financial performance. There were no changes in the Company’s approach to risk management during the three and six months ended June 30, 2015.

(i) Credit risk

The Company’s cash balance is on deposit with a Canadian chartered bank. The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to these financial instruments is remote.

(ii) Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at June 30, 2015, the Company had cash of $111,455,042 and prepaid expenses and other current assets of $564,289 (December 31, 2014 - $17,448,497 and $269,779, respectively) to settle current liabilities of $4,473,840 (December 31, 2014 - $3,080,631). The Company’s accounts payable and accrued liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

Market risk

(i) Interest rate risk

The Company had a cash balance of $111,455,042 as at June 30, 2015 (December 31, 2014 - $17,448,497). The Company’s current policy is to invest excess cash in a business savings account and investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. The Company considers interest rate risk to be minimal as investments are short-term.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s functional and presentation currency is the Canadian dollar and all amounts in the condensed interim consolidated financial statements are expressed in Canadian dollars, unless otherwise noted. The Company funds the majority of research and development expenses in the United States from its U.S. dollar bank account held in Canada and certain expenses in Europe on a cash call basis using the Euro converted from its Canadian dollar bank accounts held in Canada. The Company believes that while currency conversions could affect results of operations, there is not a significant risk to its ability to meet its obligations. The Company does not use derivative instruments to hedge its foreign currency risk.

The following table summarizes accounts denominated in U.S. dollars, reported in Canadian dollar equivalents, and the effective US$/Cdn$ exchange rate applied as at:

	June 30, 2015			December 31, 2014
	$			$
Cash		107,913,724			12,370,423
Accounts payable		(2,070,117	)		(1,539,496	)
Net exposure		105,843,607			10,830,927
US$/Cdn$ exchange rate		1.249			1.160

Based on the Company’s foreign currency exposures noted above, a 10% strengthening of the U.S. dollar against the Canadian dollar as at dates indicated would have decreased the net loss by approximately $10,600,000 (December 31, 2014 - $1,100,000), assuming all other variables remained constant. A 10% weakening of the U.S. dollar would have an opposite effect, assuming that all other variables remained constant.

(iii) Price risk

The Company is exposed to price risk with respect to Active Pharmaceutical Ingredient (“API”) prices used in research and development activities. The Company monitors API prices in the United States, Europe and Asia to determine the appropriate course of action to be taken by the Company. Management believes that the price risk concentration with respect to API is minimal.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

5. RISK MANAGEMENT (continued)

(iv) Fair value

IFRS require that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the consolidated statement of financial position date based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

Cash is classified as loans and receivables, measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which are measured at amortized cost.

The carrying amounts for cash, accounts payable and accrued liabilities on the consolidated statement of financial position approximate fair value because of the short term of these instruments.

Capital risk management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support its research and development activities. The Company’s capital structure consists of share capital and equity reserves. The Board of Directors does not establish quantitative return on capital criteria for management but rather relies on the expertise of the Company’s management to sustain future development of the business.

The product candidates which the Company currently has in its pipeline are in the research stage; as such, the Company is dependent on external financing to fund its activities. In order to carry out the planned research and development and pay for administration costs, the Company will spend its existing working capital and raise additional amounts as needed.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes in the Company’s approach to capital management during the three and six months ended June 30, 2015. The Company and its subsidiary are not subject to externally imposed capital requirements.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

6. PROPERTY, PLANT AND EQUIPMENT

The following is a summary of property, plant and equipment as at December 31, 2014 and June 30, 2015:

	Computer		Furniture		Leasehold
	Equipment		and Fixtures		Improvements		Total
	$		$		$		$
Cost
Balance as at December 31, 2014		199,773		54,093		32,880		286,746
Additions		148,119		12,043		10,674		170,836
Balance as at June 30, 2015		347,892		66,136		43,554		457,582
Accumulated Depreciation
Balance as at December 31, 2014		10,934		10,982		7,000		28,916
Depreciation		27,236		4,818		9,647		41,701
Balance as at June 30, 2015		38,170		15,800		16,647		70,617
Net book value
Net book value as at December 31, 2014		188,839		43,111		25,880		257,830
Net book value as at June 30, 2015		309,722		50,336		26,907		386,965

7. INTANGIBLE ASSETS

The following is a summary of intangible assets as at December 31, 2014 and June 30, 2015:

	APL-130277		License
	Patents		Agreement		Total
	$		$		$
Cost
Balance as at December 31, 2014 and June 30, 2015		718,150		200,000		918,150
Accumulated Amortization
Balance as at December 31, 2014		143,628		200,000		343,628
Amortization		23,938		-		23,938
Balance as at June 30, 2015		167,566		200,000		367,566
Net book value
Net book value as at December 31, 2014		574,522		-		574,522
Net book value as at June 30, 2015		550,584		-		550,584

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

7. INTANGIBLE ASSETS (continued)

On December 22, 2011, the Company completed the acquisition of 100% of the outstanding common shares of Adagio and certain indebtedness of Adagio. The acquisition was accounted for as a purchase of assets by the Company, as Adagio did not meet the definition of a business.

On June 10, 2005, the Company entered into a license agreement with a research and development company relating to technologies associated with the Company’s previous drug development candidate. The license is for patents that have been issued in certain jurisdictions, which will expire in February 2023, and are currently pending in other jurisdictions. On December 31, 2014, due to the emphasis by the licensee on a different product line in their development pipeline, and the lack of any progress on the licensed project, the Company reviewed the carrying value of the intangible asset for potential impairment. The Company determined that there are no expected future cash flows attributable to this asset and recorded an impairment charge of $94,449 to write down the carrying value of the intangible asset to zero.

ARx LLC Supply Agreement

On March 17, 2015, the Company entered into an agreement with ARx LLC (“ARx”), whereby ARx assigned to the Company certain patents related to APL-130277 and in exchange the agreement provides that ARx is the sole partner for formulation and process development activities for APL-130277 during the term of the agreement and the expectation of entering into a commercial supply agreement, under which ARx will be the majority supplier of APL-130277 in the United States prior to filing for Food and Drug Administration (“FDA”) approval of APL-130277. The agreement provides that the Company retain sole ownership of all filings with respect to APL-130277. The non-monetary transaction has been recorded at nil, as the fair value of the patents received by the Company and considerations given up could not be reliably measured.

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following is a summary of accounts payable and accrued liabilities as at December 31, 2014 and June 30, 2015:

	June 30, 2015		December 31, 2014
	$		$
Trade payables		3,628,380		2,240,026
Due to related parties (Note 14)		386,412		128,713
Bonus accruals to related parties (Note 14)		249,000		508,710
Other accrued liabilities		210,048		203,182
		4,473,840		3,080,631

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

9. SHARE CAPITAL

i) Authorized common shares

   Unlimited number of common shares with no par value

ii) Issued and outstanding common shares

On May 15, 2015, the Company completed a share consolidation of the Company’s issued and outstanding common shares on the basis of one (1) new common share for every sixteen (16) common shares issued and outstanding. All common shares, options, warrants and per share amounts have been restated to give retrospective effect to the share consolidation.

	Number of Common Shares
	#
Balance as at December 31, 2014		5,020,885
Shares issued for cash – public offering		5,175,000
Shares issued for cash – private placement		1,377,467
Shares issued as acquisition milestone share-based payment		69,960
Shares issued for cash from exercise of warrants		463,157
Shares issued for cash from exercise of share-based payments		7,895
Balance as at June 30, 2015		12,114,364

On March 11, 2015, pursuant to an amended agreement, the Company issued 69,960 common shares to former Adagio shareholders as acquisition milestone share-based payment (see Note 13, Acquisition Milestone Share-based Payment).

On March 31, 2015, the Company announced the completion of a private placement of 1,377,467 common shares of the Company for gross proceeds of $20,981,579 (US$16,750,000). The issue price of $15.23 per share represents a 20% discount to the five-day volume-weighted average price per common share on the TSX as of the close of business on March 27, 2015. The common shares issued are subject to a hold period, which will expire four months plus one day from the date of issue. The Company incurred share issuance and broker commissions costs of $1,430,201 in connection with this transaction.

As part of the March 31, 2015 private placement, the Dexcel Pharma Group, a strategic pharmaceutical investor and significant shareholder of Cynapsus and which also has two directors on the Board of Directors of the Company, subscribed for 271,381 common shares having an aggregate subscription price of $4,133,684 (see Note 14, Related Party Transactions).

On June 23, 2015, the Company completed an underwritten public offering in the United States of 5,175,000 common shares at a price to the public of US$14.00 per share, for gross proceeds of $89,309,115 (US$72,450,000), including the exercise in full of the underwriters’ option to purchase additional common shares. The Company incurred share issuance and broker commissions costs of $8,048,728 in connection with this transaction. The Company’s common shares are now dual listed on the NASDAQ Global Market and the TSX. As part of the June 23, 2015 public offering in the United States, the Dexcel Pharma Group subscribed for 733,500 common shares having an aggregate subscription price of $12,658,596 (US$10,269,000).

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

9. SHARE CAPITAL (continued)

iii) Equity Reserve – Warrants

The number of warrants outstanding as at December 31, 2014 and June 30, 2015 and changes during the six months ended June 30, 2015 are presented below:

	Number of Warrants			Equity Reserve			Weighted Average Exercise Price/Share
	#			$			$
Balance as at December 31, 2014		3,752,182			13,452,183			11.74
Exercised		(463,157	)		(1,425,713	)		10.35
Balance as at June 30, 2015		3,289,025			12,026,470			11.94

A summary of warrants exercised during the six months ended June 30, 2015 is as follows:

Number of Warrants		Cash Proceeds		Exercise Price
#		$		$
	321,569		2,958,447		9.20
	141,588		1,834,994		12.96
	463,157		4,793,441

Warrants issued and outstanding as at June 30, 2015 were as follows:

Number of Warrants		Exercise Price		Exercise Trigger*		Expiry Date	Description
#		$/ Share		$/ Share
	11,875		16.00		24.00	July 18, 2017	2012 Private placement
	20,650		10.00		-	October 24, 2017	2012 Private placement
	7,968		10.00		-	November 23, 2017	2012 Private placement
	696,372		9.20		22.08	March 1, 2018	2013 Prospectus offering, first closing
	183,387		9.20		22.08	March 1, 2018	2013 Prospectus offering, second closing
	2,368,773		12.96		31.20	April 15, 2019	2014 Prospectus offering
	3,289,025

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

9. SHARE CAPITAL (continued)

iii) Equity Reserve – Warrants

*Note: Included in some of the warrant agreements are provisions such that each warrant entitles the holder to purchase one common share at a price equal to the exercise price per share for a period up to the expiry date, except that, subject to certain exceptions, the warrants will be cancelled if they are not exercised within 30 days after written notice from the Company that the closing price of its common shares on the principal stock exchange of the Company has been three times the unit price of the offering or more for 20 consecutive trading days.

There were no warrants issued during the three or six months ended June 30, 2015. The weighted average grant date fair value of the warrants issued during the year ended December 31, 2014 was $3.81. The weighted average contractual life remaining for the warrants as at June 30, 2015 is 3.48 years (December 31, 2014 - 3.71 years).

iv) Reserve – Share-based payments

The Company has in place a stock option plan for the purchase of common shares by its directors, officers, employees and other service providers. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The number of options granted is approved by the Board of Directors. All options expire up to 365 days after the resignation of an employee or director and expire 90 days after the resignation of a consultant.

The aggregate number of common shares reserved for issuance under the stock option plan is a maximum of 10% of the issued and outstanding common shares of the Company. As at June 30, 2015, there were a total of 581,501 options outstanding, representing 4.8% of the issued and outstanding common shares of the Company. No one person shall be granted options representing more than 5% of the issued and outstanding common shares of the Company in a 12-month period. Option grants to persons providing consulting and investor services may not exceed 2% of the issued and outstanding common shares of the Company in any 12-month period. The options are non-assignable and non-transferable and may be granted for a term not exceeding five years. The exercise price of the options is fixed by the Board of Directors of the Company and shall not be lower than the discounted market price (as defined by the TSX) of the shares at the time of grant, subject to all applicable regulatory requirements.

The number of stock options outstanding as at December 31, 2014 and June 30, 2015, and changes during the six months ended June 30, 2015 are as follows:

	Number of Options			Weighted Average Exercise Price/Share
	#			$
Options outstanding as at December 31, 2014		340,653			12.22
Exercised		(7,895	)		10.86
Granted		248,743			21.76
Options outstanding as at June 30, 2015		581,501			16.32

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

9. SHARE CAPITAL (continued)

iv) Reserve – Share-based payments (continued)

On April 2, 2015, the Company granted stock options to acquire 248,743 common shares. The stock options were granted to officers, directors and employees of the Company at an exercise price equal to $21.76 per share and expire 5 years from the date of grant. 39,686 options fully vested immediately. For 209,057 of the options, one-quarter vested immediately, one-quarter will vest in one year, one-quarter will vest in two years, and one-quarter will vest in three years.

Weighted average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options granted during the six months ended June 30, 2015 are as follows:

Exercise price	$	21.76
Grant date share price	$	21.76
Risk-free interest rate		0.52%
Expected dividend yield		-
Expected volatility		97.8%
Expected option term		3.13 years
Weighted average fair value of options granted during the year	$	13.31

For the three months ended June 30, 2015, share-based compensation expense attributable to the operating, general and administrative function was $1,056,605 (June 30, 2014 - $323,988) and to the research and development function was $544,400 (June 30, 2014 – $77,032). For the six months ended June 30, 2015, share-based compensation expense attributable to the operating, general and administrative function was $1,136,938 (June 30, 2014 - $358,649) and to the research and development function was $738,135 (June 30, 2014 – $59,447).

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

9. SHARE CAPITAL (continued)

iv) Reserve – Share-based payments (continued)

Stock options issued and outstanding as at June 30, 2015 were as follows:

Number of Options Outstanding		Number of Options Vested and Exercisable		Effective Exercise Price/ Share		Expiry Date
#		#		$
	5,624		5,624		16.00	August 12, 2015
	312		312		16.00	November 10, 2015
	3,124		3,124		16.00	March 4, 2016
	2,500		2,500		16.00	August 19, 2016
	17,185		17,185		16.00	March 23, 2017
	1,625		1,625		16.00	May 30, 2017
	937		937		16.00	August 29, 2017
	23,332		23,332		7.36	March 1, 2018
	55,998		55,998		5.76	May 1, 2018
	1,562		1,562		4.96	May 28, 2018
	137,749		137,749		10.40	May 20, 2019
	82,810		27,759		19.84	December 5, 2019
	248,743		91,955		21.76	April 2, 2020
	581,501		369,662

The total number of common shares that were issuable pursuant to stock options that were exercisable as at June 30, 2015 is 369,662 (December 31, 2014 – 222,317). The weighted average exercise price of these options as at June 30, 2015 is $13.49 (December 31, 2014 - $12.22).

The weighted average contractual life remaining for the exercisable and outstanding shares issuable on exercise of stock options as at June 30, 2015 is 3.69 years and 4.05 years, respectively (December 31, 2014 - 3.59 years and 3.98 years).

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

10. RESEARCH AND DEVELOPMENT

Components of research and development expenses for the three and six months ended June 30, 2015 and June 30, 2014, respectively, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	$		$		$		$
Salaries, benefits and bonuses		470,488		86,827		845,015		114,077
Other research and development		7,410,081		1,077,339		9,906,655		1,498,781
		7,880,569		1,164,166		10,751,670		1,612,858

11. OPERATING, GENERAL AND ADMINISTRATIVE

Components of operating, general and administrative expenses for the three and six months ended June 30, 2015 and June 30, 2014, respectively, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	$		$		$		$
Salaries, benefits, bonuses and board fees		771,172		259,243		1,222,676		604,759
Other operating, general and administrative		1,268,651		634,868		2,595,297		1,247,715
		2,039,823		894,111		3,817,973		1,852,474

12. RESEARCH GRANT

On August 8, 2012, the Company was awarded a grant of US$947,925 ($942,977) from The Michael J. Fox Foundation (“MJFF”) for Parkinson’s Research to support clinical studies to develop the Company’s product candidate APL-130277, a sublingual thin film strip reformulation of apomorphine. The grant was awarded under the Foundation's The Edmond J. Safra Core Programs for Parkinson’s Research, Clinical Intervention Awards aimed at supporting human clinical trials testing promising Parkinson’s disease therapies that may significantly and fundamentally improve treatment for people with Parkinson’s disease. Funds awarded by MJFF are to be used solely for the specified project and are conditioned on meeting certain milestones and deliverables. The first milestone payment of US$297,825 ($289,516) was received on September 20, 2012 and was fully used by December 31, 2012. The second milestone payment of US$412,087 ($410,053) was received on January 30, 2013 and was fully used by December 31, 2013. On December 16, 2013, the Company received the final milestone payment for the first grant of US$238,012 ($254,102). As at December 31, 2013, $239,969 was recorded as deferred grant proceeds, and was fully used and recognized into income in the three months ended March 31, 2014.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

12. RESEARCH GRANT (continued)

On July 3, 2014, the Company was awarded a second grant of US$500,000 from MJFF to support clinical studies to develop APL-130277. This MJFF grant was used to fund the Company’s CTH-105 clinical study. Funds awarded by MJFF are to be used solely for the specified project and are conditioned on meeting certain milestones and deliverables. The first milestone payment of US$100,000 ($112,000) was received on September 4, 2014 and was recognized as research grant income in the third quarter of 2014. The second milestone payment of US$300,000 ($342,660) was received on December 9, 2014 and was recognized as research grant income in the fourth quarter of 2014. The final milestone payment of US$100,000 ($127,710) was received on March 13, 2015 and was recognized as research grant income in the first quarter of 2015.

As part of the MJFF grant agreement, Cynapsus is required to support further Parkinson’s disease research by making up to US$1,000,000 in contributions to MJFF based on future sales of APL-130277 beginning the year that the Company posts net sales of APL-130277 in excess of US$5,000,000.

13. ACQUISITION MILESTONE SHARE-BASED PAYMENT

On December 22, 2011, the Company completed the acquisition of 100% of the outstanding common shares of Adagio and certain indebtedness of Adagio (the “Transaction”). The Transaction was structured as a share exchange with Adagio shareholders receiving newly issued common shares of the Company in exchange for all of the issued and outstanding shares of Adagio. The Transaction also provided for contingent payments upon the completion of operational milestones. On January 28, 2015, the Company and the former Adagio shareholders, who are substantially represented by key management and therefore are related parties, signed an amendment to the Adagio Share Purchase Agreement to better reflect the contemplated agreement between the parties resulting in an amended condition as described in milestone payment (a) below. Adagio shareholders were entitled to the following additional payments pursuant to the Transaction:

a) a payment of $1,500,000 conditional upon the successful completion of the Company’s Phase 2 CTH-105 study in Parkinson’s patients, and written confirmation from the FDA, that one Phase 3 efficacy study, one Phase 3 safety study, a bridging study and an ease-of-use study will be sufficient to allow the Company to pursue approval for a new drug application pursuant to Section 505(b)(2) of the United States Federal Food, Drug and Cosmetic Act, as amended, to be satisfied by the issuance of common shares at a deemed value equal to the 30-day volume weighted average trading price ("VWAP") immediately prior to the first public announcement of the receipt of written minutes from the FDA confirming the above; and

b) a payment of $2,500,000 conditional upon the successful completion of the APL-130277 final safety study, to be satisfied by the issuance of common shares at a deemed value equal to the 30 day VWAP immediately prior to the first public announcement of the results of such study. This study had not been started as of June 30, 2015.

With respect to the payments described in (a) and (b) above, the VWAP of the common shares may not be less than the “discounted market price” as defined in the policies of the Exchange.

On March 11, 2015, the Company announced the results of the end of Phase 2 meeting with the FDA, which triggered the milestone payment described in (a) above to former Adagio shareholders of 69,960 common shares at a deemed value of $21.44 per common share. The fair value of these shares, in the amount of $1,500,000, was recorded as an expense. See Note 14, Related Party Transactions.

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

14. RELATED PARTY TRANSACTIONS

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including directors and senior executives. Compensation paid or payable to key management was composed of the following during the three and six months ended June 30, 2015 and June 30, 2014, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	$		$		$		$
Short-term salaries, benefits and bonuses to executives		462,967		210,093		760,089		417,748
Directors’ fees		293,750		74,000		419,880		144,428
Share-based payments		3,310,825		903,640		3,310,825		903,640
		4,067,542		1,187,733		4,490,794		1,465,816

Share-based payments presented above represent the grant date fair value of options issued to key management during the period.

As at June 30, 2015, included in accounts payable and accrued liabilities was $386,412 (December 31, 2014 - $128,713) due to officers and directors of the Company (See Note 8, Accounts Payable and Accrued Liabilities). These amounts are unsecured and non-interest bearing with no fixed terms of repayment. As at June 30, 2015, $249,000 was accrued as bonuses to related parties (December 31, 2014 - $508,710).

The Company’s executive agreements provide for additional payments in the event of termination without cause (see Note 15, Commitments and Contingent Liabilities).

On March 11, 2015, the Company announced the results of the end of Phase 2 meeting with the FDA, which triggered a milestone payment to former Adagio shareholders of 69,960 common shares. Of the total, 37,652 shares were issued to the Company’s President and Chief Executive Officer (see Note 13, Acquisition Milestone Share-based Payment).

As part of the March 31, 2015 private placement, the Dexcel Pharma Group, a strategic pharmaceutical investor and significant shareholder of Cynapsus, and which also has two directors on the Board of Directors of the Company, subscribed for 271,381 common shares having an aggregate subscription price of $4,133,684 (see Note 9, Share Capital).

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CYNAPSUS THERAPEUTICS INC.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2015

(in Canadian dollars)

15. COMMITMENTS AND CONTINGENT LIABILITIES

As at June 30, 2015, the Company had research and development and other service contract commitments, as well as minimum future payments under operating leases for the periods presented as follows:

	Less than 1 year		1-2 years		Total
	$		$		$
Purchase Obligations		9,094,000		-		9,094,000
Operating Leases		95,000		5,000		100,000
Total Contractual Obligations		9,189,000		5,000		9,194,000

Of the total purchase obligations, one consulting contract contains a change of control clause in which, subject to certain conditions, the Company agrees to pay the vendor an amount equal to fees based on the minimum billable hours for the remainder of the agreement term. As a triggering event has not taken place, these contingent payments have not been recognized in these financial statements. The Company does not have a practicable estimate for the expected value of this contingent liability due to the nature of the triggering event. As at June 30, 2015, the maximum amount of any contingent liability, based on a remaining term of 11 months, was $421,000, which was included in the amount of unrecognized purchase obligations.

The Company is a party to certain management contracts for its executive officers and employees. Minimum management contract termination commitments remaining under the agreements, for termination without cause, are approximately $1,940,425 and would be payable within one year.

See also Note 12, Research Grant and Note 13, Acquisition Milestone Share-Based Payment.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, or MD&A, relates to the financial position and results of operations of Cynapsus for the three and six months ended June 30, 2015 and should be read in conjunction with our unaudited condensed interim consolidated financial statements and related notes for the three and six months ended June 30, 2015 as well as our audited annual consolidated financial statements and related notes for the year ended December 31, 2014 included in the prospectus that forms a part of our registration statement on Form F-10 (File No. 333-204226), as supplemented and filed with the SEC on June 18, 2015. Our unaudited condensed interim consolidated financial statements for the period ended June 30, 2015 and related notes have been prepared in compliance with International Accounting Standard 34, Interim Financial Reporting. The policies applied in the unaudited condensed interim consolidated financial statements are based on International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board.

The discussion and analysis within this MD&A are as of August 13, 2015.

In this MD&A, unless otherwise indicated, all dollar amounts are expressed in Canadian dollars. The term “dollars” and the symbols “$” and “Cdn$” refer to Canadian dollars and the term “U.S. dollars” and the symbol “US$” refer to United States dollars.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements and you are cautioned not to place undue reliance on forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof.

Overview

Cynapsus is a specialty central nervous system, or CNS, pharmaceutical company developing and preparing to commercialize a Phase 3, fast-acting, easy-to-use, sublingual thin film for the on-demand turning ON of debilitating OFF episodes associated with Parkinson’s disease, or PD. PD is a chronic, progressive neurodegenerative disease characterized by motor symptoms including tremor at rest, rigidity and impaired movement as well as significant non-motor symptoms such as cognitive impairment and mood disorders. The re-emergence of PD symptoms is referred to as an OFF episode. We recently successfully completed a Phase 2 clinical trial for our product candidate, APL-130277, a sublingual formulation of apomorphine hydrochloride, or apomorphine. Apomorphine is the only molecule approved for acute, intermittent treatment of OFF episodes for advanced PD patients, but is currently only approved as a subcutaneous injection in the United States. APL-130277 is a “turning ON” medication designed to rapidly, safely and reliably convert a PD patient from the OFF to the ON state while avoiding many of the issues associated with subcutaneous delivery of apomorphine. It is designed to convert all types of OFF episodes, including morning OFF episodes, often considered the most difficult to treat. We have recently initiated our Phase 3 clinical program for APL-130277, relying on the abbreviated Section 505(b)(2) regulatory pathway in the United States, and we intend to submit a new drug application, or NDA, in 2016.

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Since our inception in 2004, we have devoted substantially all of our resources to business planning, capital raising and identifying and developing our product candidates, preparing to conduct clinical studies of our product candidates, providing general and administrative support for these operations and protecting our intellectual property. We have funded our operations primarily through the public and private placements of common shares and warrants, the exercise of warrants, and the issuance of secured debentures. From inception, we have received net proceeds of approximately Cdn$148.7 million from such transactions. As of June 30, 2015, we had cash in the amount of Cdn$111.5 million.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We also expect expenses will increase substantially in connection with our ongoing activities, as we:

· continue the development of our APL-130277 product candidate, including conducting planned and future clinical trials;

· continue to engage third-party providers to supply and manufacture our clinical study materials and to develop large-scale manufacturing capabilities;

· seek regulatory approvals for our product candidate in the United States, Europe and other jurisdictions;

· add personnel, including personnel to support our product development and future commercialization of APL-130277 in the United States;

· add operational, financial and management information systems;

· maintain, leverage and expand our intellectual property portfolio; and

· operate as a public company in the United States.

We are a clinical stage company and have not generated any revenue. We have incurred significant losses and negative cash flows from operations since our inception. As of June 30, 2015, we had a deficit accumulated of Cdn$48.6 million and expect to continue to incur significant losses for the foreseeable future. Management expects our research and development and general and administrative expenses to continue to increase substantially for the foreseeable future and, as a result, we may need additional capital to fund operations, which may be obtained through one or more public or private equity or debt financings, or other sources such as potential licensing or partnership arrangements.

Recent Developments

On February 4, 2015, we held our End-of-Phase 2 meeting with the FDA. For development of APL-130277 in the U.S., we will follow Section 505(b)(2) of the FDCA. The drug substance (apomorphine) in APL-130277 is identical to the active pharmaceutical ingredient in the FDA approved subcutaneous injection, Apokyn®, and APL-130277 is designed for similar usage but potentially for a broader range of PD patients. The Section 505(b)(2) regulatory pathway will require us to provide statistically significant clinical evidence that PD patients experience improvement in their motor function as a result of delivery of apomorphine via the sublingual thin film route compared to placebo.

On March 11, 2015, following the End-of-Phase 2 meeting with the FDA, we announced that an agreement was reached on the design, duration and size for the Phase 3 program clinical studies, as well as for primary and key secondary endpoints. As a result, we have initiated a pivotal Phase 3 program evaluating the safety and efficacy of APL-130277 in PD patients.

On March 12, 2015, Tamar Howson was appointed to our board of directors. Ms. Howson is a seasoned business development executive within the pharmaceutical industry, having formerly served as Senior Vice President at both Bristol-Myers Squibb and SmithKline Beecham. Ms. Howson currently serves as a business development and strategy consultant to biopharmaceutical companies and she also serves as a director at Oxigene Pharmaceuticals and Organovo. She has formerly served as a director at several biotechnology companies, including Actavis, Ariad, Idenix Pharmaceuticals, NPS Pharmaceuticals, SkyePharma and Warner Chilcott.

-23- 

On March 31, 2015, we announced the completion of a private placement of 1,377,467 common shares for gross proceeds of approximately Cdn$21.0 million (approximately US$17 million). The financing was led by funds associated with OrbiMed, Aisling Capital and Venrock, with participation from various other institutional investors, including existing shareholders Broadfin Capital, Sphera Funds Management, Pura Vida Investments, DAFNA Capital Management and Dexcel Pharma Technologies Ltd./Dexxon Holdings Ltd.

On April 22, 2015, we presented data at the American Academy of Neurology annual meeting that demonstrated that a minimum efficacious plasma threshold of apomorphine was required to convert a patient from the OFF state to the ON state. APL-130277 reached this threshold in as early as 10 minutes and levels were maintained over this threshold through 90 minutes after dosing. This translated to clinically meaningful improvement in motor function as assessed by the MDS-UPDRS Part III score.

On May 15, 2015, we announced the filing of a registration statement with the SEC relating to our initial public offering in the United States of our common shares and the filing of an application to list our common shares on The NASDAQ Stock Market LLC, or NASDAQ. We also announced an amendment to our articles to consolidate our issued and outstanding common shares on the basis of one post-consolidation common share for 16 pre-consolidation common shares to facilitate the proposed listing on NASDAQ.

On June 4, 2015, we announced the issuance of a U.S. Patent No. 9,044,475 providing broad coverage for sublingual apomorphine.  This patent is solely owned by Cynapsus and granted with claims that provide us with protection of pharmaceutical dosage forms that combine apomorphine hydrochloride particles with an organic pH neutralizing agent and a permeation enhancer in a sublingual film. This patent is scheduled to expire in June of 2030 and covers APL-130277 and related formulations. The issued patent is the third to issue as a U.S. patent from our patent application filings directed to sublingual apomorphine therapies.

On June 18, 2015, following the pricing of our initial public offering in the United States, our common shares commenced trading on the NASDAQ Global Market under the symbol “CYNA”.  Our common shares also continue to be listed on the Toronto Stock Exchange, or TSX, under the symbol “CTH.”  On June 23, 2015, we announced the completion of our initial public offering in the United States of 5,175,000 common shares for total gross proceeds of approximately Cdn$89.3 million (approximately US$72.5 million), including the exercise in full of the underwriters’ option to purchase additional common shares.

On June 25, 2015, we announced that we presented data from clinical trials of APL-130277 at the 19^th International Congress of Parkinson’s Disease and Movement Disorders (MDS) in San Diego, California, showing APL-130277 significantly improved PD symptoms (as measured by MDS-UPDRS Part III), rapidly turning patients from the OFF to ON state and was generally safe and well tolerated.

On June 29, 2015, we announced enrollment of the first patient in the CTH-300 clinical trial, a pivotal Phase 3 study to examine the efficacy, safety and tolerability of APL-130277 for the acute treatment of OFF episodes in patients with PD. The CTH-300 trial is a double-blind, placebo-controlled, parallel-design study with an estimated enrollment of 126 PD patients in 35 centers who have at least one OFF episode every 24 hours, with total OFF time of at least two hours per day.

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Results of Operations – Comparison of the three months ended June 30, 2015 and the three months ended June 30, 2014

Loss and Loss Per Share

For the three months ended June 30,

	2015 (Cdn$)		2014 (Cdn$)		Cdn$ change in 2015		% change in 2015
Loss		10,958,509		2,816,058		8,142,451		289.1
Basic and diluted loss per share		1.50		0.62		0.88		141.9

Net loss for the three months ended June 30, 2015 exceeded the loss for the three months ended June 30, 2014 due mainly to higher research and development program costs related to the APL-130277 Phase 3 program, higher personnel costs with the number of staff increasing from eight to 17 people, higher professional fees, investor relations and shareholder relations costs, and higher share-based compensation expenses.

Basic loss per share is calculated using the weighted average number of common shares outstanding during the period. As a result of losses in the respective periods, there is no dilutive loss per share calculation.

The weighted average number of common shares outstanding for the three months ended June 30, 2015 was 7,316,076 (June 30, 2014 – 4,524,549). The weighted average number of common shares outstanding increased primarily as a result of 1,377,467 common shares issued in a private placement on March 31, 2015, and 5,175,000 common shares issued in our initial public offering in the United States on June 23, 2015.

Research and Development (R&D)

For the three months ended June 30,

	2015 (Cdn$)		2014 (Cdn$)		Cdn$ change in 2015		% change in 2015
Salaries, benefits and bonuses		470,488		86,827		383,661		441.9
Other R&D		7,410,081		1,077,339		6,332,742		587.8
Total R&D		7,880,569		1,164,166		6,716,403		576.9

Research and development expenses for the three months ended June 30, 2015 were substantially higher than for the three months ended June 30, 2014 due to increased activity associated with the APL-130277 program. Expenditures increased as a result of increases in salaries and benefits associated with additional staff, consulting, clinical research, packaging development, patent protection, analytics, and scale-up chemistry, manufacturing and controls, or CMC, work for APL-130277.

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Operating, General and Administrative (OG&A)

For the three months ended June 30,

	2015 (Cdn$)		2014 (Cdn$)		Cdn$ change in 2015		% change in 2015
Salaries, benefits, bonuses and board fees		771,172		259,243		511,929		197.5
Other OG&A		1,268,651		634,868		633,783		99.8
Total OG&A		2,039,823		894,111		1,145,712		128.1

OG&A costs for the three months ended June 30, 2015 were higher than for the comparable period in 2014 due mainly to increases in salaries and benefits associated with the addition of new staff, investor and public relations activities, professional fees, increases in employee base salaries, increased board fees related to the public offering in the United States, and travel costs.

Other Expenses (Recoveries)

For the three months ended June 30,

	2015 (Cdn$)			2014 (Cdn$)			Cdn$ change in 2015			% change in 2015
Share-based payments		1,601,005			401,020			1,199,985			299.2
Amortization of intangible assets		11,969			14,747			(2,778	)		(18.8	)
Depreciation of property, plant and equipment		33,414			1,776			31,638			1,781.4
Unrealized foreign exchange (gain) loss		(562,593	)		367,327			(929,920	)		(253.2	)
Recovery on scientific research		(40,000	)		(10,000	)		(30,000	)		300.0
Interest income net of interest expense and related charges		(5,678	)		(17,089	)		(11,411	)		(66.8	)

Share-based payments increased to Cdn$1,601,005 for the three months ended June 30, 2015 from Cdn$401,020 for the three months ended June 30, 2014, primarily due to the expense related to 248,743 stock options granted on April 2, 2015, as well as compensation expense recognized over the vesting period for stock options previously granted.

Foreign exchange gains for three months ended June 30, 2015 were Cdn$562,593 compared to a loss of Cdn$367,327 in the three months ended June 30, 2014 due to unrealized gains on significantly higher U.S. dollar cash balances on hand at June 30, 2015, combined with a strengthening of the U.S. dollar, compared to June 30, 2014. As at June 30, 2015, we had cash of US$86,441,773 denominated in U.S. dollars, compared to US$13,032,596 as at June 30, 2014.

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Results of Operations – Comparison of the six months ended June 30, 2015 and the six months ended June 30, 2014

Loss and Loss Per Share

For the six months ended June 30,

	2015 (Cdn$)		2014 (Cdn$)		Cdn$ change in 2015		% change in 2015
Loss		16,052,941		4,026,330		12,026,611		298.7
Basic and diluted loss per share		2.56		1.15		1.41		122.2

Net loss for the six months ended June 30, 2015 exceeded the loss for the six months ended June 30, 2014 due mainly to higher research and development program costs related to the APL-130277 program, higher personnel costs with the number of staff increasing from eight to 17 people, higher professional fees, investor relations and shareholder relations costs, fees related to the application and listing on NASDAQ, and higher share-based compensation expenses.

Basic loss per share is calculated using the weighted average number of shares outstanding during the period. As a result of losses in the respective periods, there is no dilutive loss per share calculation.

The weighted average number of common shares outstanding for the six months ended June 30, 2015 was 6,280,674 (2014 – 3,501,059). The weighted average number of common shares outstanding increased primarily as a result of 1,377,467 common shares issued in a private placement on March 31, 2015, and 5,175,000 common shares issued in our initial public offering in the United States on June 23, 2015.

Research and Development (R&D)

For the six months ended June 30,

	2015 (Cdn$)		2014 (Cdn$)		Cdn$ change in 2015		% change in 2015
Salaries, benefits and bonuses		845,015		114,077		730,938		640.7
Other R&D		9,906,655		1,498,781		8,407,874		561.0
Total R&D		10,751,670		1,612,858		9,138,812		566.6

Research and development expenses for the six months ended June 30, 2015 were substantially higher than for the six months ended June 30, 2014 due to increased activity associated with the APL-130277 program. Expenditures increased as a result of increases in salaries and benefits associated with additional staff, consulting, clinical research, packaging development, patent protection, analytics, and scale-up CMC work for APL-130277.

Operating, General and Administrative (OG&A)

For the six months ended June 30,

	2015 (Cdn$)		2014 (Cdn$)		Cdn$ change in 2015		% change in 2015
Salaries, benefits, bonuses and board fees		1,222,676		604,759		617,917		102.2
Other OG&A		2,595,297		1,247,715		1,347,582		108.0
Total OG&A		3,817,973		1,852,474		1,965,499		106.1

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OG&A costs for the six months ended June 30, 2015 were higher than for the comparable period in 2014 due mainly to increases in salaries and benefits associated with the addition of new staff, investor and public relations activities, professional fees, increases in employee base salaries, increased board fees related to the public offering in the United States, and travel costs.

Other Expenses (Recoveries)

For the six months ended June 30,

	2015 (Cdn$)			2014 (Cdn$)			Cdn$ change in 2015			% change in 2015
Share-based payments		1,875,073			418,096			1,456,977			348.5
Amortization of intangible assets		23,938			29,493			(5,555	)		(18.8	)
Depreciation of property, plant and equipment		41,701			2,435			39,266			1,612.6
Acquisition milestone share-based payment		1,500,000			-			1,500,000			100.0
Unrealized foreign exchange (gain) loss		(1,745,025	)		390,225			(2,135,250	)		(547.2	)
Recovery on scientific research		(70,000	)		(20,000	)		(50,000	)		250.0
Research grant		(127,710	)		(239,968	)		112,258			(46.8	)
Interest income net of interest expense and related charges		(14,679	)		(19,283	)		(4,604	)		(23.9	)

Under the terms of the amended Adagio Share Purchase Agreement, we are required to pay the former Adagio shareholders contingent consideration upon the completion of certain operational milestones. (See “Contractual Obligations and Commitments” below.) On March 11, 2015, we announced the results of our end of Phase 2 meeting with the FDA, which triggered a milestone payment to former Adagio shareholders of 69,960 newly issued common shares. The fair value of these shares, in the amount of Cdn$1,500,000, was recorded as an expense during the three months ended March 31, 2015.

Foreign exchange gains for the six months ended June 30, 2015 were Cdn$1,745,025 compared to a loss of Cdn$390,225 in the six months ended June 30, 2014 due to unrealized gains on significantly higher U.S. dollar cash balances on hand at June 30, 2015, combined with a strengthening of the U.S. dollar, compared to June 30, 2014. As at June 30, 2015, we had cash of US$86,441,773 denominated in U.S. dollars, compared to US$13,032,596 as at June 30, 2014.

Share-based payments increased to Cdn$1,875,073 for the six months ended June 30, 2015 from Cdn$418,096 for the six months ended June 30, 2014, primarily due to the expense related to 248,743 stock options granted on April 2, 2015, as well as compensation expense recognized over the vesting period for stock options previously granted.

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Research grants for the six months ended June 30, 2015 represent the final installment of the second The Michael J. Fox Foundation for Parkinson’s Research, or MJFF, grant received, while research grants recognized in the six months ended June 30, 2014 relate to amounts previously deferred from the first MJFF grant. MJFF grants were awarded to support clinical research activities and have been recognized in accordance with IFRS.

Summary of Quarterly Results

The following table presents a summary of our unaudited quarterly results of operations for each of our last eight quarters. This data has been derived from our unaudited condensed interim consolidated financial statements, which the policies applied were based on IFRS and the same basis as our annual audited financial statements and, in our opinion, include all adjustments necessary, consisting solely of normal recurring adjustments, for the fair presentation of such information.

Financial Information (in Canadian dollars):

(Numbers rounded to the nearest thousands)

	Q2 2015 (Cdn$)			Q1 2015 (Cdn$)			Q4 2014 (Cdn$)			Q3 2014 (Cdn$)
Total assets		112,957,000			38,434,000			18,551,000			20,397,000
R&D		7,881,000			2,871,000			3,333,000			1,247,000
OG&A		2,040,000			1,778,000			2,148,000			1,006,000
Other operating expenses		1,044,000			582,000			(22,000	)		(436,000	)
Research grant		-			(128,000	)		(343,000	)		(112,000	)
Interest income net of interest expense and related charges		(6,000	)		(9,000	)		(16,000	)		(13,000	)
Loss and comprehensive loss		10,959,000			5,094,000			5,100,000			1,692,000
Loss per share (basic and diluted)		1.50			0.97			1.03			0.34

	Q2 2014 (Cdn$)			Q1 2014 (Cdn$)			Q4 2013 (Cdn$)			Q3 2013 (Cdn$)
Total assets		21,540,000			2,398,000			3,149,000			4,301,000
R&D		1,164,000			449,000			946,000			404,000
OG&A		894,000			958,000			1,033,000			737,000
Other operating expenses		775,000			45,000			85,000			117,000
Research grant		-			(240,000	)		(213,000	)		-
Interest income net of interest expense and related charges		(17,000	)		(2,000	)		(1,000	)		-
Loss and comprehensive loss		2,816,000			1,210,000			1,851,000			1,258,000
Loss per share (basic and diluted)		0.62			0.49			0.76			0.52

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Income Taxes

Our management uses estimates when determining deferred income taxes. These estimates are used to determine the recoverability of tax loss carry forward amounts, research and development expenditures and investment tax credits. Significant judgment is required regarding our future profitability to be able to recognize deferred taxes. Changes in market conditions, changes in tax legislation, patent challenges and other factors, including the approval or launch of generic versions of our products, could adversely affect the ongoing value of deferred taxes. The carrying amount of deferred income tax assets is reassessed at each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to utilize all or part of the deferred income tax assets. Unrecognized deferred income tax assets are reassessed at each reporting period and are recognized to the extent that it is probable that there will be sufficient taxable profits to allow all or part of the asset to be recovered.

We had approximately Cdn$26,316,000 of non-capital losses as at December 31, 2014, which under certain circumstances can be used to reduce the taxable income of future years. We currently have not recognized any deferred income tax assets with respect to these balances.

Liquidity and Capital Resources

Since inception, our cash requirements have been financed primarily through issuances of securities and secured debentures. We anticipate future funding requirements to be met primarily through additional securities issuances, debentures, research and development tax credits, other potential sources of government funding, grants from foundations that support PD research, or a combination of the above.

The development of pharmaceutical products is a process that requires significant investment. We expect to incur significant research and development expenses, including expenses related to completing Phase 3 clinical trials, NDA submission with the FDA, commercialization studies, and preparation for a U.S. product launch. We also expect that our general and administrative expenses will increase in the future as we add infrastructure, including personnel costs, investor relations activities and professional fees.

Our future capital requirements will depend on a number of factors, including the continued progress of our research and development for our APL-130277 product candidate, the timing and outcome of clinical trials and regulatory approvals, payments received or made under licensing or other collaborative agreements, if any, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, defending against patent infringement claims, the acquisition of licenses or technologies, the status of competitive products and our success in developing and maintaining markets for our product candidate, if approved.

Our cash balance was Cdn$111,455,042 at June 30, 2015 compared to Cdn$17,448,497 at December 31, 2014. Accounts payable and accrued liabilities as at June 30, 2015 was Cdn$4,228,670 compared to Cdn$3,080,631 at December 31, 2014.

Our cash and cash equivalents balance was Cdn$17,448,497 at December 31, 2014 compared to Cdn$2,289,046 at December 31, 2013. Accounts payable and accrued liabilities as at December 31, 2014 were Cdn$3,080,631 compared to Cdn$2,315,082 at December 31, 2013.

Based on our current operating plan, we believe that existing cash will be sufficient to fund research and development and OG&A overhead expenditures, complete Phase 3 clinical studies and CMC requirements for an NDA in the United States in 2016, continue to prepare for commercial launch of APL-130277 in the U.S. market in late 2017, commence initial regulatory, clinical and commercial activities for European market registration, and initiate other early stage pipeline development programs.

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There are a significant number of warrants and options outstanding, some of which are in-the-money and may provide future sources of capital. As at June 30, 2015, we had 879,759 warrants outstanding with an exercise price of Cdn$9.20, which, if exercised, could result in gross proceeds to us of approximately Cdn$8,093,783. Also, as at June 30, 2015, we had 2,368,733 warrants outstanding with an exercise price of Cdn$12.96, which, if exercised, could result in gross proceeds to us of approximately Cdn$30,699,298.

Operating Activities

For the three months ended June 30, 2015, our operating activities used cash of Cdn$7,568,654 compared to Cdn$3,265,835 in the three months ended June 30, 2014. The increase is primarily attributed to increased research and development expenses associated with Phase 3 clinical trials for the APL-130277 product candidate. Cash used in operating activities for the three months ended June 30, 2015 reflects the net loss of Cdn$10,958,509 for the three months ended June 30, 2015, adjusted for non-cash items including share-based payments, amortization of intangible assets, depreciation of property, plant and equipment, changes in non-cash working capital (including prepaid expenses and other current assets, and accounts payable and accrued liabilities) and unrealized gain on foreign exchange.

For the six months ended June 30, 2015, our operating activities used cash of Cdn$13,258,555 compared to Cdn$4,942,221 in the six months ended June 30, 2014. The increase is primarily attributed to increased research and development expenses associated with Phase 3 clinical trials for the APL-130277 product candidate. Cash used in operating activities for the six months ended June 30, 2015 reflects the net loss of Cdn$16,052,941 for the six months ended June 30, 2015, adjusted for non-cash items including share-based payments, amortization of intangible assets, depreciation of property, plant and equipment, changes in non-cash working capital (including prepaid expenses and other current assets, and accounts payable and accrued liabilities), acquisition milestone share-based payment and unrealized gain on foreign exchange.

For the year ended December 31, 2014, our operating activities used cash of Cdn$9,990,841 compared to Cdn$4,182,839 in the year ended December 31, 2013. The increase is primarily attributed to the resumption of expenditures that were constrained in the prior years due to lack of financial resources. Cash used in operating activities for the year ended December 31, 2014 reflects the net loss of Cdn$10,818,587 for the year ended December 31, 2014, adjusted for non-cash items including share-based payments, amortization of intangible assets, depreciation of property, plant and equipment, changes in non-cash working capital (including prepaid expenses and other current assets, accounts payable and accrued liabilities, and deferred grant proceeds) and unrealized gain on foreign exchange.

Investing Activities

For the three months ended June 30, 2015, we purchased Cdn$37,690 of computer equipment and leasehold improvements, compared to Cdn$17,096 in the three months ended June 30, 2014.

For the six months ended June 30, 2015, we purchased Cdn$170,836 of computer equipment and leasehold improvements, compared to Cdn$17,096 in the six months ended June 30, 2014.

For the year ended December 31, 2014, we purchased Cdn$260,224 of furniture and computer equipment, compared to Cdn$11,442 in the year ended December 31, 2013.

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Financing Activities

For the three months ended June 30, 2015, our net financing activities generated cash of Cdn$81,837,781, compared to Cdn$23,028,084 for the three months ended June 30, 2014.

For the six months ended June 30, 2015, our net financing activities generated cash of Cdn$105,690,911 compared to Cdn$23,697,350 for the six months ended June 30, 2014.

During the second quarter of 2015, we completed an underwritten public offering in the United States of 5,175,000 common shares for net proceeds of Cdn$81,298,214 (approximately US$66.4 million), while in in the three months ended June 30, 2014, we generated Cdn$22,840,236 from the completion of a short form prospectus offering in Canada with a concurrent U.S. private placement. In addition, during the three months ended June 30, 2015, we generated Cdn$539,567 in proceeds from the exercise of warrants, while in the three months ended June 30, 2014, we generated Cdn$12,501 in proceeds from the exercise of warrants.

During the first quarter of 2015, we raised net proceeds of Cdn$19,513,550 through a private placement of common shares. In addition, during the three months ended March 31, 2015, we generated Cdn$4,253,874 in proceeds from the exercise of warrants, and Cdn$85,706 in proceeds from the exercise of share-based payments, while in the three months ended March 31, 2014, we generated Cdn$724,495 in proceeds from the exercise of warrants.

For the year ended December 31, 2014, our net financing activities generated cash of Cdn$24,718,938, compared to Cdn$6,432,926 for the year ended December 31, 2013. During 2014, we raised Cdn$25 million through a short form prospectus offering of units in Canada, less transaction costs of Cdn$2,159,764, compared to Cdn$7,317,536 raised, less transaction costs of Cdn$667,186, in the year ended December 31, 2013. In addition, during the year ended December 31, 2014, we generated Cdn$1,758,584 in proceeds from the exercise of share purchase warrants, and Cdn$120,118 in proceeds from the exercise of stock options, while in the year ended December 31, 2013, we used Cdn$217,424 as a partial repayment of debentures.

Effect of Exchange Rate Changes

For the three months ended June 30, 2015, the effect of exchange rate changes on cash was Cdn$562,593 as result of the Canadian dollar weakening relative to the U.S. dollar.

For the six months ended June 30, 2015, the effect of exchange rate changes on cash was Cdn$1,745,025 as result of the Canadian dollar weakening relative to the U.S. dollar.

As at June 30, 2015, we had cash of US$86,232,733 and accounts payable and accrued liabilities of US$1,658,199 denominated in U.S. dollars (December 31, 2014 – US$12,370,423 and US$1,539,496, respectively).

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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Related Party Transactions

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of Cynapsus, including directors and senior executives. Compensation paid or payable to key management was composed of the following during the three and six months ended June 30, 2015 and June 30, 2014, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(Cdn$)		(Cdn$)		(Cdn$)		(Cdn$)
Short-term salaries, benefits and bonuses to executives		462,967		210,093		760,089		417,748
Directors’ fees		293,750		74,000		419,880		144,428
Share-based payments		3,310,825		903,640		3,310,825		903,640
Total Related Party Transactions		4,067,542		1,187,733		4,490,794		1,465,816

As at June 30, 2015, included in accounts payable and accrued liabilities was Cdn$386,412 (December 31, 2014 - $128,713) due to our officers and directors. These amounts are unsecured and non-interest bearing with no fixed terms of repayment. As at June 30, 2015, Cdn$249,000 was accrued as bonuses to related parties (December 31, 2014 - Cdn$508,710).

The employment agreements with our executive officers provide for additional payments in the event of termination without cause.

On March 11, 2015, we announced the results of the end of Phase 2 meeting with the FDA, which triggered a milestone payment to former Adagio shareholders of 69,960 common shares. Of the total, 37,652 common shares were issued to our President and Chief Executive Officer.

As part of the March 31, 2015 private placement, the Dexcel Pharma Group, a strategic pharmaceutical investor and significant shareholder of Cynapsus, and which also has two directors on our board of directors, subscribed for 271,381 common shares having an aggregate subscription price of Cdn$4,133,684.

As part of the June 23, 2015 public offering in the United States, the Dexcel Pharma Group subscribed for 733,500 common shares having an aggregate subscription price of Cdn$12,658,596 (US$10,269,000).

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Contractual Obligations and Commitments

As at June 30, 2015, we had research and development and other service contract commitments, as well as minimum future payments under operating leases for the periods presented as follows:

	Less than 1 year (Cdn$)		1 - 2 Years (Cdn$)		Total (Cdn$)
Purchase Obligations		9,094,000		-		9,094,000
Operating Leases		95,000		5,000		100,000
Total Contractual Obligations		9,189,000		5,000		9,194,000

Of the total purchase obligations, one consulting contract contains a change of control clause in which, subject to certain conditions, we agreed to pay the vendor an amount equal to fees based on the minimum billable hours for the remainder of the agreement term. As a triggering event has not taken place, these contingent payments have not been recognized in our financial statements. We do not have a practicable estimate for the expected value of this contingent liability due to the nature of the triggering event. As at June 30, 2015, the maximum amount of any contingent liability, based on a remaining term of 11 months, was Cdn$421,000, which was included in the amount of unrecognized purchase obligations.

We are a party to certain management contracts for our executive officers. Minimum management contract termination commitments remaining under the agreements, for termination without cause, are approximately Cdn$1,940,425 and are all payable within one year.

On December 22, 2011, we completed the acquisition of 100% of the outstanding common shares of Adagio and certain indebtedness of Adagio, which we refer to as the Transaction. The Transaction was structured as a share exchange with Adagio shareholders receiving newly issued common shares of Cynapsus in exchange for all of the issued and outstanding shares of Adagio. On January 28, 2015, we and the former Adagio shareholders, who are substantially represented by key management and therefore are related parties, signed an amendment to the Adagio Share Purchase Agreement to better reflect the contemplated agreement between the parties. Adagio shareholders are entitled to a payment of Cdn$2,500,000 conditional upon the successful completion of the APL-130277 final safety study, to be satisfied by the issuance of common shares at a deemed value equal to the 30 day volume weighted average trading price, or VWAP, immediately prior to the first public announcement of the results of such study. This study had not been started as of June 30, 2015. The VWAP of the common shares may not be less than the “discounted market price” as defined in the policies of the TSX.

Our President and Chief Executive Officer was also a director, officer and majority shareholder of Adagio. To satisfy our board of director’s fiduciary duties and to appropriately manage the related party transaction, our board of directors appointed an independent special committee of our board of directors with independent legal counsel. In addition, the special committee of our board of directors retained an independent registered financial advisor registered with the Financial Industry Regulatory Authority, Inc., or FINRA, to provide a fairness opinion. We also obtained minority shareholder approval.

As a condition of the MJFF grant agreement, we are required to support further PD research by making up to US$1,000,000 in contributions to MJFF conditional on future sales of APL-130277.

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Critical Accounting Policies and Estimates

A summary of significant accounting policies is included in Note 6 of our audited consolidated financial statements for the year ended December 31, 2014. Critical accounting estimates require our management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from these estimates. Changes in our management’s accounting estimates can have a material impact on our financial results. Our significant accounting judgments, estimates and assumptions are included in Note 5 of our audited consolidated financial statements for the year ended December 31, 2014 and are also described below.

The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where the assumptions and estimates are significant to the financial statements were the same as those applied to our consolidated financial statements as at and for the year ended December 31, 2014.

Intangible assets

We estimate the useful lives of intangible assets from the date they are available for use in the manner intended by our management and periodically review the useful lives to reflect our management’s intent about developing and commercializing the assets. Our management also estimates their recoverability to assess if there has been an impairment. The amounts and timing of recorded expenses for amortization and impairments of intangible assets for any period are affected by these estimates. The estimates are reviewed at least annually and are updated if expectations change as a result of technical or commercial obsolescence, generic threats and legal or other limits to use. It is possible that changes in these factors may cause significant changes in the estimated useful lives of our intangible assets in the future.

Share-based payments

Our management determines costs for share-based payments using market-based valuation techniques. The fair value of the market-based and performance-based share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgments are used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

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Share Capital

Since the three months ended June 30, 2015, the following changes have occurred to common shares, stock options and warrants:

	As at August 13, 2015
	Number of shares		Number of shares issuable  on exercise of options		Number of shares issuable on exercise of warrants			Total
	#		#		#			#
As at June 30, 2015		12,114,364		581,501		3,289,025			15,984,890
Warrants exercised		2,937		-		(2,937	)		-
Options issued		-		-		-			-
As at August 13, 2015		12,117,301		581,501		3,286,088			15,984,890

Exercised Warrants

Summary of warrants exercised since the six months ended June 30, 2015 are as follows:

Number of Warrants		Cash Proceeds		Exercise Price		Expiry Date
#		$		$
2,000		18,400		9.20		March 1, 2018
	937		12,144		12.96	April 15, 2019
	2,937		30,544

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

FINANCIAL RISK MANAGEMENT

In the normal course of business, we are exposed to a number of financial risks that can affect our operating performance. These risks are credit risk, liquidity risk and market risk. Our overall risk management program and prudent business practices seek to minimize any potential adverse effects on our financial performance. There were no changes in our approach to risk management during the three months ended June 30, 2015.

Credit risk

Our cash balance is on deposit with a Canadian chartered bank. We have no significant concentration of credit risk arising from operations. Our management believes that the credit risk concentration with respect to these financial instruments is remote.

Liquidity risk

Our approach to managing liquidity risk is to ensure that we will have sufficient liquidity to meet liabilities when due. As at June 30, 2015, we had cash of Cdn$111,455,042 and prepaid expenses and other current assets of Cdn$564,289 (December 31, 2014 - Cdn$17,448,497 and Cdn$269,779, respectively) to settle current liabilities of Cdn$4,473,840 (December 31, 2014 - Cdn$3,080,631). Our accounts payable and accrued liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

Market risk

(a) Interest rate risk

We had a cash balance of Cdn$111,455,042 as at June 30, 2015 (December 31, 2014 - Cdn$17,448,497). Our current policy is to invest excess cash in a business savings account and investment-grade short-term deposit certificates issued by our banking institutions. We periodically monitor the investments we make and are satisfied with the credit ratings of our banks. We consider interest rate risk to be minimal as investments are short-term.

(b) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Our functional and presentation currency is the Canadian dollar and all amounts in the condensed interim consolidated financial statements are expressed in Canadian dollars, unless otherwise noted. We fund the majority of research and development expenses in the United States from our U.S. dollar bank account held in Canada and certain expenses in Europe on a cash call basis using the Euro converted from our Canadian dollar bank accounts held in Canada. We believe that while currency conversions could affect results of operations, there is not a significant risk to our ability to meet our obligations. We do not use derivative instruments to hedge our foreign currency risk.

The following table summarizes accounts denominated in U.S. dollars, reported in Canadian dollar equivalents, and the effective US$/Cdn$ exchange rate applied as at:

	June 30, 2015			December 31, 2014
	(Cdn$)			(Cdn$)
Cash		107,913,724			12,370,423
Accounts payable		(2,070,117	)		(1,539,496	)
Net exposure		105,843,607			10,830,927
US$/Cdn$ exchange rate		1.249			1.160

Based on our foreign currency exposures noted above, a 10% strengthening of the U.S. dollar against the Canadian dollar as at dates indicated would have decreased the net loss by approximately Cdn$10,600,000 (December 31, 2014 - Cdn$1,100,000), assuming all other variables remained constant. A 10% weakening of the U.S. dollar would have an opposite effect, assuming that all other variables remained constant.

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(c) Price risk

We are exposed to price risk with respect to active pharmaceutical ingredient, or API, prices used in research and development activities. We monitor API prices in the United States, Europe and Asia to determine the appropriate course of action to be taken by us. Our management believes that the price risk concentration with respect to API is minimal.

(d) Fair value

IFRS require that we disclose information about the fair value of our financial assets and liabilities. Fair value estimates are made at the consolidated statement of financial position date based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

Cash is classified as loans and receivables, which is measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which are measured at amortized cost.

The carrying amounts for cash, accounts payable and accrued liabilities on the consolidated statement of financial position approximate fair value because of the short term of these instruments.

Capital risk management

We manage our capital structure and make adjustments to it, based on the funds available to us, in order to support our research and development activities. Our capital structure consists of share capital and equity reserves. Our board of directors does not establish quantitative return on capital criteria for management but rather relies on the expertise of our management to sustain future development of the business.

The product candidates which we currently have in our pipeline are in the research stage; as such, we are dependent on external financing to fund our activities. In order to carry out the planned research and development and pay for administration costs, we will spend our existing working capital and raise additional amounts as needed.

Management reviews our capital management approach on an ongoing basis and believes that this approach, given our relative size, is reasonable.

There were no changes in our approach to capital management during the three and six months ended June 30, 2015. We and our subsidiary are not subject to externally imposed capital requirements.

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ITEM 4. CONTROLS AND PROCEDURES.

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. The evaluation was conducted under the supervision and with the participation of management, including our President and Chief Executive Officer (“CEO”), who is our principal executive officer, and Chief Operating Officer and Chief Financial Officer (“CFO”), who is our principal financial officer, as of December 31, 2014. Based on the evaluation, our CEO and CFO concluded that such disclosure controls and procedures—as defined in Canada under National Instrument 52-109—Certification of Disclosure in Issuers’ Annual and Interim Filings, are effective as at December 31, 2014.

We also conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Such evaluation was conducted under the supervision and with the participation of management, including our CEO and CFO, as of June 30, 2015. Based on such evaluation, our CEO and CFO concluded that as of June 30, 2015, such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms, and accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

It should be noted that while our disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving their objectives, our CEO and CFO do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS.

Investing in our common shares involves numerous risks. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q, before deciding to invest in our common shares. If any of the following risks actually occurs, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common shares could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Quarterly Report on Form 10-Q. See “Special Note Regarding Forward-Looking Statements” for information relating to these forward-looking statements.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred net losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future. We may never achieve or sustain profitability.

We have incurred net losses during each fiscal period since our inception. Our net loss was Cdn$10.8 million for the year ended December 31, 2014, and Cdn$4.4 million for the year ended December 31, 2013. As of December 31, 2014, we had a deficit accumulated during the development stage of Cdn$32.5 million. Our net loss was Cdn$11.0 million for the quarter ended June 30, 2015, and as of June 30, 2015, we had a deficit of Cdn$48.6 million. We do not know when or whether we will become profitable. To date, we have not commercialized any products or generated any revenues from the sale of products, and we do not expect to generate any product revenues in the foreseeable future. Our losses have resulted principally from costs incurred in our research and development activities. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year.

We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities. To date, we have financed our operations primarily through the sale of equity securities and debt and, to a lesser extent, through grants from charitable foundations. The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations (such as licensing agreements or the sale of a share of our revenue stream) or additional grants. We have not completed pivotal clinical trials for our product candidate and it will be a few years, if ever, before our product candidate APL-130277 is ready for commercialization. Even if we obtain regulatory approval to market our product candidate, our future revenues (if any) will depend upon a number of factors, including the size of any markets in which our product candidate has received approval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payors and adequate market share for our product candidate in those markets.

We expect to continue to incur significant expenses and increasing net losses for at least the next several years. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

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• conduct our Phase 3 clinical trials for APL-130277;

• prepare and submit our Section 505(b)(2) NDA to the FDA;

• seek regulatory approval for APL-130277 in the United States and elsewhere;

• add personnel to support our product development and commercialization efforts;

• continue evaluating additional product opportunities within the CNS field; and

• operate as a public company in both Canada and the United States.

If we are required by the FDA, or any equivalent foreign regulatory authority, to perform clinical trials or studies in addition to those we currently expect to conduct, or if there are any delays in completing the clinical trials of APL-130277, our expenses could further increase.

To become and remain profitable, we must succeed in developing our product candidate, obtaining regulatory approval for it, and manufacturing, marketing and selling our product when and if we obtain regulatory approval in the United States or elsewhere. We may not succeed in these activities, and we may never generate revenue from our product sales that is significant enough to achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become or remain profitable would depress our market value and could impair our ability to raise capital, expand our business, discover or develop other product candidates or continue our operations. A decline in our value could cause you to lose all or part of your investment.

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

Our cash was Cdn$111.5 million as of June 30, 2015. Based on our current operating plan, we believe that our existing cash will be sufficient to fund research and development and OG&A overhead expenditures, complete Phase 3 clinical studies and CMC requirements for the filing of an NDA in 2016 under the abbreviated Section 505(b)(2) regulatory pathway in the United States, continue to prepare for commercial launch of APL-130277 in the U.S. market in late 2017, commence initial regulatory and clinical activities for European market registration, and initiate other early stage pipeline development programs. We believe that we will continue to expend substantial resources for the foreseeable future developing APL-130277. These expenditures will include costs associated with research and development, conducting Phase 3 clinical trials, potentially obtaining regulatory approvals and manufacturing products, as well as marketing and selling products approved for sale, if any, and potentially acquiring new technologies. In addition, other unanticipated costs may arise. Because the outcome of our planned and anticipated clinical trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidate. Our costs will increase if we suffer any delays in our Phase 3 clinical trials for APL-130277, including, without limitation, delays in enrollment of patients. We expect to continue incurring additional costs associated with operating as a public company in the United States, hiring additional personnel and expanding our facilities.

Our future capital requirements depend on many factors, including:

• the scope, progress, results and costs of researching and developing APL-130277 and conducting clinical trials in the United States and elsewhere;

• the timing of, and the costs involved in, obtaining regulatory approvals in the United States, Europe and elsewhere for APL-130277 if clinical trials are successful;

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• the cost of commercialization activities for APL-130277, if our product candidate is approved for sale, including marketing, sales and distribution costs;

• the cost of manufacturing APL-130277 for clinical trials in preparation for regulatory approval and in preparation for commercialization;

• our ability to establish and maintain licensing or other arrangements with third-parties and the financial terms of such agreements;

• the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and

• the timing, receipt, and amount of sales of, or royalties on, our product candidate, if any.

Based on our current operating plan, we believe that our existing cash will be sufficient to fund research and development and OG&A overhead expenditures, complete Phase 3 clinical studies and CMC requirements for an NDA in the United States in 2016, continue to prepare for commercial launch of APL-130277 in the U.S. market in late 2017, commence initial regulatory and clinical activities for European market registration, and initiate other early stage pipeline development programs. However, our operating plan may change as a result of many factors currently unknown to us. As a result of these factors, we may need additional funds sooner than planned. In addition, we may seek additional capital due to strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate clinical trials or other development activities for our product candidates, or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our product candidate.

Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our product candidate on unfavorable terms to us.

We may seek additional capital through a variety of means, including through private and public equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of such equity or convertible debt securities may include liquidation or other preferences that are senior to, or otherwise adversely affect, your rights as a shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring indebtedness, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness. If we raise additional funds through strategic partnerships with third-parties, we may have to relinquish valuable rights to our product candidate, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts for APL-130277, or grant rights to develop and market our product candidate that we would otherwise prefer to develop and market ourselves or on terms less favorable than we might otherwise negotiate.

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Risks Related to Clinical Development and Regulatory Approval of Our Product Candidate

Clinical failure may occur at any stage of clinical development, and we may never succeed in developing marketable products or generating product revenue.

Although the active ingredient in APL-130277, apomorphine, has been used safely as apomorphine hydrochloride in injectable form for treatment of PD for a number of years, it has not previously been approved or demonstrated to be safe in sublingual form. Our early encouraging clinical results for APL-130277 are not necessarily predictive of the results of our ongoing or future clinical trials, including our Phase 3 clinical trials, and the safety of our product candidate. Promising results in preclinical studies and early clinical trials of any product candidate may not be predictive of similar results in humans during later clinical trials. Any further clinical trials that we may conduct may not demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidate and the FDA could require us to complete additional safety, efficacy or other studies. If the results of our ongoing or future clinical trials are inconclusive with respect to the efficacy of our product candidate or if we do not meet the clinical endpoints with statistical significance or if there are safety concerns associated with our product candidate, we may be prevented from or delayed in obtaining marketing approval for our product candidate. In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including, without limitation, changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, differences in the dosage amounts of APL-130277 and the response of patients to such amounts, changes in and adherence to the clinical trial protocols and the rate of dropout among clinical trial participants.

Alternatively, even if we obtain regulatory approval, that approval may be for indications or patient populations that are not as broad as intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings. For example, certain existing formulations of apomorphine outside the United States used for the treatment of OFF episodes (ApoGo, ApokinON and Apomin) are currently only indicated for advanced PD patients, and there can be no assurance that our product candidate will not be similarly limited in its indications for the treatment of PD. We may also be required by the FDA to perform additional or unanticipated clinical trials to obtain approval, including, without limitation, an ease-of-use study to be completed in patients in the morning OFF state; a Thorough QT study in healthy volunteers to determine the potential arrhythmia liability of our product candidate; additional toxicity studies; and additional safety and/or efficacy studies if the primary endpoint does not show a large enough delta, if the FDA finds a small safety signal or does not accept our final safety data, or is concerned with our study blinding. We could also be subject to additional post-approval or post-marketing testing requirements to maintain regulatory approval. In addition, regulatory authorities may withdraw their approval of a product or impose restrictions on its distribution, such as in the form of a modified Risk Evaluation and Mitigation Strategy. The failure to obtain timely regulatory approval of our product candidate, any product marketing limitations or a product withdrawal would negatively impact our business, results of operations and financial condition.

Delays or failure in the commencement, enrollment or completion of clinical trials of our product candidate could result in increased costs to us as well as a delay or failure in obtaining regulatory approval, or prevent us from commercializing our product candidate on a timely basis, or at all.

We cannot guarantee that clinical trials, including those associated with Phase 3 clinical trials for APL-130277, will be conducted as planned or completed on schedule, if at all. A delay or failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely commencement, enrollment or completion of clinical development include, without limitation:

• delays by us in reaching a consensus with regulatory agencies on trial design;

• delays in reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical trial sites;

• delays in obtaining required Institutional Review Board approval at each clinical trial site;

• delays in recruiting suitable patients to participate in clinical trials and/or recruitment occurring more slowly than expected;

• insufficient or inadequate supply or quality of materials, including API, to conduct our clinical trials;

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• imposition of a clinical hold by regulatory agencies for any reason, including safety concerns or after an inspection of clinical operations or trial sites;

• failure by CROs, other third-parties or us to adhere to clinical trial requirements;

• failure to perform in accordance with the FDA’s good clinical practices, or GCP, or applicable regulatory guidelines in other countries;

• delays or other problems in the testing, validation, manufacturing and delivery of our product candidate to the clinical sites;

• delays or negative results caused by patients not completing participation in a trial or not returning for post-treatment follow-up;

• delays in clinical trial site start-up;

• impact of placebo administered on patient participation in clinical trials and on efficacy of our product candidate;

• failure to adhere to our Phase 3 clinical trial protocols, including not administering the thin film correctly;

• patients’ inability for whatever reason to dose at home as a part of such clinical trials;

• occurrence of serious adverse events, or AEs, in further clinical trials that are associated with our product candidate and such AEs viewed to outweigh our product candidate’s potential benefits;

• changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; or

• varying interpretations of data by the FDA and foreign regulatory agencies.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of our product candidate.

Delays, including delays caused by the above or other factors, can be costly and could negatively affect our ability to complete a clinical trial, which could negatively affect the price of our common shares. If we are not able to successfully complete clinical trials, we will not be able to obtain regulatory approval and will not be able to commercialize our product candidate.

Clinical development, regulatory review and approval of the FDA and comparable foreign authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidate, our business will be materially adversely affected.

Our product candidate will be subject to extensive governmental regulations relating to, among other things, development, clinical trials, manufacturing and commercialization. In order to obtain regulatory approval for the commercial sale of our product candidate, we must demonstrate through extensive preclinical studies and clinical trials that our product candidate is safe and effective for use in the target indication.

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The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable, typically takes many years following the commencement of clinical trials, and depends upon numerous factors.

In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of our product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. We have not obtained regulatory approval for our product candidate in any jurisdiction, and it is possible that our product candidate or any product candidates we may seek to develop in the future will not obtain regulatory approval in any jurisdiction. In addition, we may gain regulatory approval for APL-130277 in some but not all of the jurisdictions available or some but not all of the target indications, resulting in limited commercial opportunity for our product candidate, if approved.

Applications for our product candidate could be delayed or could fail to receive regulatory approval for many reasons, including, but not limited to, the following:

• the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

• the population studied in the clinical program may not be sufficiently broad or representative to assure safety in the full population for which we seek approval;

• the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from nonclinical studies or clinical trials;

• the data collected from clinical trials of our product candidate may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere;

• the FDA may determine that we cannot rely on Section 505(b)(2) for our product candidate, in which case we may be required to conduct additional clinical trials, provide additional data and information and meet additional standards for product approval, resulting in increased time and financial resources required to obtain FDA approval for our product candidate;

• the FDA may not grant our product candidate three years of marketing exclusivity under the United States Drug Price Competition and Patent Term Restoration Act of 1984;

• the FDA may determine that we have identified the wrong Reference Listed Drug, or RLD, or that approval of a Section 505(b)(2) application for our product candidate is blocked by patent or non-patent exclusivity of the RLD or RLDs;

• the FDA may require us to conduct additional clinical trials depending on the safety data from our planned future clinical trials, including our Phase 3 clinical trials for APL-130277;

• we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that our product candidate’s risk-benefit ratio for its proposed indication is acceptable;

• the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;

• our third-party providers may be unable to demonstrate compliance with current Good Manufacturing Practices, or cGMP, to the satisfaction of the FDA or comparable foreign regulatory authorities, which could result in delays in regulatory approval or require us to withdraw or recall products and interrupt commercial supply of our products; and

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• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

This lengthy approval process, as well as the unpredictability of the results of clinical trials, may result in our failing to obtain regulatory approval to market our product candidate or any of our product candidates in the future, which would significantly harm our business, results of operations, and prospects.

We currently have only one product candidate, APL-130277, in clinical trials and are substantially dependent on this single product candidate. A failure of this product candidate in clinical development would adversely affect our business. If we decide to leverage success with our APL-130277 product candidate to develop other product opportunities, we may not be successful in such efforts.

APL-130277 is our only product candidate. If we were required to discontinue development of APL-130277, if APL-130277 does not receive regulatory approval, if we do not obtain our targeted indications for APL-130277 or if APL-130277 fails to achieve sufficient market acceptance for any indication, we would be delayed by many years in our ability to achieve profitability, if ever. Moreover, if we decide to leverage success with our APL-130277 product candidate to develop other product opportunities, we may not be successful in such efforts. In any such event, our business will be materially adversely affected.

If we fail to obtain regulatory approval in jurisdictions outside the United States, we will not be able to market our products in those jurisdictions.

We intend to market our product candidate, APL-130277, if approved, in international markets, including in Europe, either directly or through partnerships. Such marketing will require separate regulatory approvals in each market and compliance with numerous and varying regulatory requirements, including initial regulatory and clinical activities for European market registration. The approval procedures vary from country to country and may require additional testing that we are not required to perform to obtain regulatory approval in the United States. Moreover, the time required to obtain approval may differ from that required to obtain FDA approval. In addition, in many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that country. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize APL-130277 or any of our future products in any market. If we and/or any future partner are unable to obtain regulatory approval for APL-130277 in one or more significant foreign jurisdictions, then the commercial opportunity for APL-130277, and our financial condition, will be adversely affected.

Even if we receive regulatory approval for APL-130277 for any indication, it will be subject to ongoing regulatory review, which may result in significant additional expense. Additionally, our product, if approved, could be subject to labeling and other restrictions, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product.

Any regulatory approvals that we receive for our product candidate may also be subject to limitations on the approved indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor safety and efficacy. In addition, if the FDA or comparable foreign regulatory authorities approve our product candidate, the manufacturing process, labeling, packaging, distribution, AE reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP and GCP, for any clinical trials that we conduct post-approval.

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Later discovery of previously unknown problems with our approved product, including AEs of unanticipated severity or frequency, or with manufacturing operations or processes, or failure to comply with regulatory requirements, may result in, among other things:

• restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;

• fines, warning letters, or holds on clinical trials;

• refusal by the FDA or comparable foreign regulatory authorities to approve supplements to approved applications filed by us, or suspension or revocation of product license approval;

• product seizure or detention, or refusal to permit the import or export of our product; and

• injunctions or the imposition of civil or criminal penalties.

The policies of the FDA and comparable foreign regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidate in the United States or foreign jurisdictions. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or not able to maintain regulatory compliance, we may lose any marketing approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.

Our product candidate may cause undesirable side effects or have other properties that delay or prevent its regulatory approval or limit its commercial potential.

Undesirable side effects caused by our product candidate could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities and potential product liability claims. Serious AEs deemed to be caused by our product candidate could have a material adverse effect on the development of our product candidate and our business as a whole. The AEs seen in clinical studies in healthy volunteers and PD patients to date reflect typical dopaminergic AEs seen with all dopaminergic medications. In particular, apomorphine, the active ingredient in our product candidate, has been associated with several safety and tolerability challenges, including nausea, vomiting, lowering of blood pressure and orthostatic hypotension (a form of low blood pressure that may cause lightheadedness or fainting). Our understanding of the relationship between APL-130277 and these events may change as we gather more information, and additional unexpected AEs may occur. As we complete additional clinical trials for our product candidate, the FDA could potentially require labeling recommending extensive physician monitoring during titration (same as with injectable apomorphine), which could adversely affect the commercial potential of our product candidate. In addition, although apomorphine has been in use for over 20 years, the long-term impact of using apomorphine in sublingual delivery form is not well understood. Although side effects exhibited by patients in our clinical trials have been limited so far, there can be no assurance that, in later clinical trials or if approved, our product candidate will not cause patients to experience unexpected side effects or expected side effects on a more severe level. Moreover, incorrect or improper use of our thin film (including if a patient swallows the film rather than allowing it to dissolve under the tongue) will result in the apomorphine drug not having its intended effect, and may result in additional unexpected side effects or AEs. While we intend to invest in physician and patient education to foster correct and proper use, there can be no assurance that our product candidate will be used correctly, and if used incorrectly, such misuse could hamper commercial adoption of our product candidate, if approved, at the rate we currently expect.

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If we or others identify undesirable side effects caused by our product candidate either before or after receipt of marketing approval, a number of potentially significant negative consequences could result, including, without limitation:

• our clinical trials may be put on hold;

• we may be unable to obtain regulatory approval for our product candidate;

• regulatory authorities may withdraw approvals of our product candidate;

• regulatory authorities may require additional warnings on the label;

• we may be required to change the way our product candidate is administered, conduct additional clinical trials or change the labeling of our product candidate;

• we may be subject to limitations on how we may promote our product candidate;

• a medication guide outlining the risks of such side effects for distribution to patients may be required;

• we could be sued and held liable for harm caused to patients; and

• our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of our product candidate and could substantially increase commercialization costs.

Risks Related to Development and Manufacturing of Our Product Candidate and Our Reliance on Third-Parties

We rely on third-parties to supply APIs and manufacture and package our sublingual thin film formulation of apomorphine. We do not have long-term contracts with such manufacturers or suppliers.

We depend on third-party suppliers of APIs and third-party contract manufacturing organizations for all clinical supply and packaging of APL-130277, our sublingual thin film formulation of apomorphine, for use in our clinical trials. Any problems we experience with any such third-parties could delay the manufacturing of our product candidate and our clinical studies, which could harm our business and results of operations. We do not currently have a long-term manufacturing contract for our sublingual thin film formulation of apomorphine. We anticipate entering into a commercial supply agreement with ARx LLC, or ARx, under which ARx will be the majority supplier of APL-130277 with respect to the United States prior to our filing for FDA approval of APL-130277. Under our existing agreement with ARx, we have agreed to pay ARx in certain circumstances a fee based on the invoiced cost incurred by us (less the costs of the related API and packaging) if we engage a different supplier for the manufacture of APL-130277, which would make it more costly in certain circumstances for us to use a contingency supplier for APL-130277.

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We receive the drug substance for use in our clinical trials of our product candidate on a purchase order basis. We may be unable to enter into long-term agreements or agreements that would provide sufficient quantities of any materials for our product candidate. Though we expect that third-party contract manufacturing organizations will be able to provide sufficient quantities of our sublingual thin film formulation of apomorphine for our Phase 3 clinical trials and for commercializing our product candidate if and when it is approved, we do not have agreements in place that guarantee the supply or the price of the materials for our product candidate, so there can be no assurance that we actually receive sufficient quantities. In particular, orders of our API, which is derived from the opium poppy, must be made with significant lead time due to limited supply of opium poppy produced for this purpose. In addition, production of our API is generally lower in priority to other opium poppy derivates, such as morphine. In the event of supply limitations, due to adverse events (including poor germination conditions or catastrophic events) or otherwise, the supply of our API may be significantly reduced. Any such decrease in the availability or significant delay in the acquisition of our API or other material could considerably delay the manufacturing of our product candidate. If we are unable to arrange for alternative third-party sources, or to do so on commercially reasonable terms or in a timely manner, we may be delayed in completing our remaining clinical trials of, obtaining regulatory approval for and commercializing our product candidate. In addition, because we do not have any control over the process or timing of the supply of the API, there is greater risk that we will not have sufficient quantities of the API at an acceptable cost or quantity, which could delay, prevent or impair our development or commercialization efforts.

Reliance on third-party manufacturers and suppliers entails risks to which we would not be subject if we manufactured and packaged our product candidate ourselves, including reliance on the third-party for regulatory compliance and quality assurance, the possibility of breach of the agreement by the third-party because of factors beyond our control (including a failure to manufacture our product candidate in accordance with our specifications) and the possibility of termination or nonrenewal of the agreement by the third-party, based on its own business priorities, at a time that is costly or damaging to us. In addition, our product candidate may compete with others for access to manufacturing facilities and capacity. There are a limited number of manufacturers that operate under cGMP regulations in the United States or elsewhere and that might be capable of manufacturing for us. We may therefore be subject to unexpected increases in the cost of our supplies or manufacture of our product candidate, which may far exceed the cost of producing a drug substance and require increased capital expenditures.

We are subject to a number of risks relating to our third-party service providers, any of which could substantially increase our costs and limit supply of our products.

If our offices or any facility of our third-party service providers, such as the CROs, contract manufacturing organizations and API suppliers that we utilize to develop and manufacture our product candidate, were to suffer an accident or a force majeure event such as major fire or explosion, major equipment failure or power failure lasting beyond the capabilities of its backup generators or other similar event, we could be materially adversely affected and any of our clinical trials could be materially delayed. Such an extended shut down may force us to procure a new research and development facility or another manufacturer or supplier, which could be time-consuming and costly. During any such period, we may be unable to receive our product candidate. For example, our API is derived from the opium poppy, which is sensitive to changes in weather and environmental conditions. Any adverse changes in such conditions or other catastrophe could significantly reduce the supply of API for our product candidate.

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The process of manufacturing the active drug in our product candidate, our sublingual thin film formulation of apomorphine, is complex, highly regulated and subject to the risk of product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes or quality requirements for our product candidate could result in reduced production yields, product defects and other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidate or in the manufacturing facilities in which our product candidate is or will be made, such manufacturing facilities may need to be closed to investigate and remedy the contamination. Any adverse developments affecting manufacturing operations for our product candidate may result in shipment delays, inventory shortages, lot failures, withdrawals or recalls, or other interruptions in the supply of our product candidate. We may also have to take inventory write-offs and incur other charges and expenses for our product candidate that fails to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives. Also, as any third-party manufacturer we engage scales up manufacturing of our product candidate, if approved, it may encounter unexpected issues relating to the manufacturing process or the quality, purity and stability of the product candidate, and it may be required to refine or alter its manufacturing processes to address these issues. Resolving these issues could result in significant delays and may result in significantly increased costs. If any of our third-party manufacturers experience significant delays or other obstacles in producing any approved product for commercial scale, our ability to market and sell any approved products may be adversely affected and our business could suffer.

Our third-party manufacturers and suppliers are subject to FDA inspection from time to time. Failure by our third-party manufacturers and suppliers to pass such inspections and otherwise satisfactorily complete the FDA approval regimen with respect to our product candidate may result in regulatory actions such as the issuance of FDA Form 483 notices of observations, warning letters or injunctions or the loss of operating licenses. Based on the severity of the regulatory action, our clinical or commercial supply of product and packaging and other services could be interrupted or limited, which could have a material adverse effect on our business. In addition, in order to obtain regulatory approval for our product candidate, our third-party manufacturers will be required to consistently produce the API used in our product candidate in commercial quantities and of specified quality on a repeated basis and document their ability to do so. This is referred to as process validation. If the third-party manufacturers are unable to satisfy this requirement, our business will be materially and adversely affected.

Furthermore, if our product candidate or any future product candidate is approved and contract manufacturers fail to deliver the required commercial quantities of finished product on a timely basis or at commercially reasonable prices, and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality and on a timely basis, we would likely be unable to meet demand for our product and could lose potential revenue. It may take several years to establish an alternative source of supply for our product candidate and to have any new source approved by the FDA, the European Medicines Agency or any other relevant regulatory authorities.

The ability of our third-party manufacturers and suppliers to continue manufacturing and supplying our product candidate depends on their continued adherence to cGMP regulations.

The manufacturing processes for our product candidate and API are governed by detailed cGMP regulations. Failure by third-party manufacturers, suppliers and quality operations units to adhere to established regulations or to meet a specification or procedure set forth in cGMP requirements could require that a product or material be rejected and destroyed. Adherence to cGMP regulations and the effectiveness of our quality control systems are periodically assessed through inspections of manufacturing facilities by regulatory authorities, including the FDA through its facilities inspection program. Such inspections could result in deficiency citations, which would require action to correct those deficiencies to the satisfaction of the applicable regulatory authorities. If critical deficiencies are noted or if recurrences are not prevented, we may have to recall product or suspend operations until appropriate measures are implemented. Since cGMP reflects ever-evolving standards, manufacturing processes and procedures must be regularly updated to comply with cGMP. We have limited or no control over our manufacturers’ or suppliers’ compliance with these regulations and standards. These changes may cause us to incur additional costs and may adversely impact our results of operations. For example, more sensitive testing assays (if and when they become available) may be required or existing procedures or processes may require revalidation, all of which may be costly and time-consuming and could delay or prevent the manufacturing of our product candidate. If the safety of any product candidate or API supplied is compromised due to our manufacturers’ or suppliers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our product candidate and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical studies, regulatory submissions, approvals or commercialization of our product candidate, entail higher costs or impair our reputation.

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If we change the manufacturers of our product candidate, we may be required to conduct comparability studies evaluating the manufacturing processes of the product candidate.

The FDA and other regulatory authorities maintain strict requirements governing the manufacturing process for medical delivery systems, such as the thin films used to deliver the apomorphine sublingually in our product candidate. For example, when a manufacturer seeks to modify or change that process, the FDA typically requires the applicant to conduct non-clinical and, depending on the magnitude of the changes, potentially clinical comparability studies that evaluate the potential differences in the product candidate resulting from the change in the manufacturing process. Delays in designing and completing a comparability study to the satisfaction of the FDA or other regulatory agencies could delay or preclude our development plans and, thereby, delay our ability to receive marketing approval, or limit our revenue and growth once our product candidate is approved. In addition, in the event that the FDA or other regulatory agencies do not accept non-clinical comparability data, we may need to conduct a study involving dosing of patients comparing the two products. That study may result in a delay of the approval or launch of our product candidate.

We rely on third-parties to conduct clinical trials for APL-130277, and if they do not properly and successfully perform their obligations to us, we may not be able to obtain regulatory approvals for APL-130277.

We have designed the clinical trials for APL-130277. However, we rely on CROs and other third-parties to assist in managing, monitoring and otherwise carrying out many of these trials. We compete with many other companies for the resources of these third-parties. There is a limited number of third-party service providers that specialize or have the expertise required to achieve our business objectives. The third-parties on whom we rely generally may terminate their engagements at any time, and having to enter into alternative arrangements would delay development and commercialization of our product candidate.

The FDA and comparable foreign regulatory authorities require compliance with regulations and standards, including GCP, for designing, conducting, monitoring, recording, analyzing, and reporting the results of clinical trials to assure that the data and results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Although we rely on third-parties to conduct many of our clinical trials, they are not our employees, and we are responsible for ensuring that each of these clinical trials is conducted in accordance with its general investigational plan, protocol and other requirements. Our reliance on these third-parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities, and we cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations.

These CROs and third-parties are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, which they devote to our product candidate and clinical trials. In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated. If these third-parties do not successfully carry out their duties under their agreements, if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to clinical trial protocols or to regulatory requirements, or if they otherwise fail to comply with clinical trial protocols or meet expected deadlines, the clinical trials of our product candidate may not meet regulatory requirements. If clinical trials do not meet regulatory requirements or if these third-parties need to be replaced, such clinical trials may be extended, delayed, suspended or terminated. If any of these events occur, we may not be able to obtain regulatory approval of our product candidate on a timely basis or at all.

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We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize products, negatively impacting our operating results.

We continue to evaluate and, as deemed appropriate, we expect to enter into partnerships in the future when strategically attractive, with one or more pharmaceutical companies for the development and commercialization of APL-130277 in Europe, Japan and other countries. We face significant competition in seeking appropriate partners for our product candidate, and the negotiation process is time-consuming and complex. In order for us to successfully partner our product candidate, potential partners must view our product candidate as economically valuable in markets they determine to be attractive in light of the terms that we are seeking and other available products for development and commercialization or licensing by other companies. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such strategic partnerships if, for example, development or approval of our product candidate is delayed or sales of our approved product are disappointing. Any delay in entering into strategic partnership agreements related to our product candidate could delay the development and commercialization of our product candidate and reduce its competitiveness even if it reaches the market.

If we fail to establish and maintain strategic partnerships related to our product candidate, we will bear all of the risk and costs related to the development and commercialization of our product candidate, and we may need to seek additional financing, hire additional employees and otherwise develop expertise, such as regulatory expertise, for which we have not budgeted. This could negatively affect the development of our product candidate.

Risks Related to Commercialization of Our Product Candidate

Our future commercial success depends upon attaining significant market acceptance of our product candidate, if approved, among physicians, health care payors, patients and the medical community.

Even if we obtain regulatory approval for APL-130277, our product candidate may not gain market acceptance among physicians, health care payors (both private insurers and government programs, such as Medicare and Medicaid), patients and the medical community. Market acceptance of our product candidate, if approved, depends on a number of factors, including, without limitation:

• the efficacy and safety of the product, as demonstrated in clinical trials, compared to other products;

• the indications for which the product is approved and the label approved by regulatory authorities for use with the product, including any limitations or warnings that may be required on the label;

• acceptance by physicians and patients of the product as a safe and effective treatment;

• the cost, safety and efficacy of treatment in relation to alternative treatments;

• improper use of the product by patients;

• changes in the standard of care for the targeted indications for our product candidate;

• the availability of adequate reimbursement and pricing by third-party payors and government authorities;

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• relative convenience and ease of administration, including, but not limited to, the potential need for titration in a physician’s office, the ease of opening the packaging and retrieving the thin film and the limited need to administer medication to control for any side effects such as nausea;

• the prevalence and severity of adverse side effects; and

• the effectiveness of our sales and marketing efforts.

Market acceptance is critical to our ability to generate significant revenue and become profitable. Our product candidate, if approved and commercialized, may be accepted in only limited capacities or not at all. If our approved product is not accepted by the market to the extent that we expect, we may not be able to generate significant revenue and our business would suffer.

The market for our product candidate may not be as large as we expect.

Our estimates of the potential market opportunity for APL-130277 include several key assumptions based on our industry knowledge, industry publications, third-party research reports and other surveys, and market research with health care providers, payors and patients. These assumptions include the prevalence and growth of PD, the percentage of patients receiving apomorphine as part of their treatment regimen, the percentage of these patients experiencing OFF episodes and the percentage of PD patients for which APL-130277 may be an effective treatment option. While we believe that our internal assumptions are reasonable, if any of these assumptions proves to be inaccurate, then the actual market for APL-130277 could be smaller than our estimates of our potential market opportunity. If the actual market for APL-130277 is smaller than we expect, our product revenue may be limited and it may be more difficult for us to achieve or maintain profitability.

In addition, final product labeling specifically lists the approved therapeutic indications, the types of patients that should be treated with the product, how frequently and for how long these patients should be treated and how treatment should be initiated. While physicians are free to use the product as they choose, we and any pharmaceutical company partner are prohibited from marketing or promoting the product outside these approved indications and uses. In addition, certain existing formulations of apomorphine outside the United States used for the treatment of OFF episodes (ApoGo, ApokinON and Apomin) are currently only indicated for advanced PD patients. Should final approved labeling differ materially from our proposed labeling, the actual market for APL-130277 could be smaller than our estimates of our potential market opportunity.

We currently have no sales and marketing staff and no product distribution network. If we are unable to establish sales and marketing arrangements, we will not be successful in commercializing our product candidate.

We do not currently have a sales or marketing infrastructure and do not have experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for our product candidate in the United States, Europe and other jurisdictions, we may enter into sales, marketing and distribution agreements with third-parties in respect of the commercialization of our product candidate in such jurisdictions. Entering into arrangements with third-parties to perform these services may result in lower product revenues and profitability, if any, than if we were to market, sell and distribute our product ourselves. In addition, we may not be successful in entering into arrangements with third-parties in the future to sell, market and distribute our product candidate or may be unable to do so on terms that are favorable to us. We likely will have little control over such third-parties, and any of them may fail to devote the necessary resources and attention to sell and market our product effectively.

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In the future, we expect to build a focused sales and marketing infrastructure to market APL-130277 and, potentially, other product candidates in the United States, if and when they are approved. There are risks involved with establishing our own sales, marketing and distribution capabilities. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

• our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;

• our inability to effectively reach our target audience of general neurologists and movement disorder specialists;

• the lack of adequate numbers of physicians to prescribe our product candidate, if approved, or any future products;

• the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

• unforeseen costs and expenses associated with creating an independent sales and marketing organization.

If we do not successfully establish sales, marketing and distribution capabilities, either on our own or in collaboration with third-parties, we will not be successful in commercializing our product candidates.

Reimbursement may be limited or unavailable in certain market segments for our product candidate, which could make it difficult for us to sell our product, if approved, profitably.

In both domestic and foreign markets, sales of our product, if approved, will depend, in part, on the extent to which the costs of our product will be covered by third-party payors, such as government health programs, commercial insurance and managed health care organizations. These third-party payors decide which drugs will be covered and establish reimbursement levels for those drugs. The containment of health care costs has become a priority of governments in the United States, Europe and elsewhere as well as private third-party payors. The prices of drugs have been a focus in this effort. Governments and private third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product, if approved, profitably. Cost-control initiatives could cause us to decrease the price we might establish for our product, if approved, which could result in lower than anticipated product revenues.

In the United States, we will need to obtain approvals for payment for our product candidate from private insurers, including managed care organizations, and from governmental health care programs including Medicare and Medicaid. Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of our product candidate is:

• a covered benefit under its health plan;

• safe, effective and medically necessary;

• appropriate for the specific patient;

• cost-effective; and

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• neither experimental nor investigational.

Adverse pricing limitations may hinder our ability to recoup our investment in APL-130277, even if such product candidate obtains marketing approval.

Obtaining coverage and reimbursement approval for our product candidate from a government or other third-party payor is a time consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our product candidate to the payor. Further, there is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs, including those with novel formulations such as APL-130277. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. We cannot be sure that coverage or adequate reimbursement will be available for our product candidate. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our product candidate. If reimbursement is not available or is available only to limited levels, we may not be able to commercialize our product, if approved. In addition, in the United States, third-party payors are increasingly attempting to contain health care costs by limiting access, coverage, and the level of reimbursement of new drugs. As a result, significant uncertainty exists as to whether and how much third-party payors will reimburse patients for their use of newly approved drugs, which in turn will put pressure on the pricing of drugs.

Price controls may be imposed in foreign markets, which may adversely affect our future profitability.

In some countries other than the United States, particularly member states of the European Union, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, additional clinical research may be required to enable comparison of the cost-effectiveness of our product candidate to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our product candidate is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

The impact on us of health care reform legislation and other changes in the health care industry and in health care spending is currently unknown, and may adversely affect our business model.

Our revenue prospects could be affected by changes in health care spending and policy in the United States and abroad. We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to health care availability, the method of delivery or payment for health care products and services could negatively impact our business, operations and financial condition.

There have been, and likely will continue to be, legislative and regulatory proposals and initiatives within the United States and foreign jurisdictions directed at broadening the availability of health care and containing or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. These legislative and/or regulatory changes may negatively impact the reimbursement for drug products, following approval, and thus affect our ability to sell our product profitably. The continuing efforts of governments, insurance companies, managed care organizations and other payors of health care services to contain or reduce costs of health care may adversely affect:

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• the demand for our product candidate if we obtain regulatory approval;

• our ability to set a price that we believe is fair for our product candidate;

• our ability to obtain coverage and reimbursement approval for our product candidate;

• our ability to generate revenues and achieve or maintain profitability;

• the level of taxes that we are required to pay; and

• our access to capital.

Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, and/or any significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the United States Budget Control Act, could have an adverse impact on our anticipated product revenues.

We face substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully, than we do.

Our industry is highly competitive and subject to rapid and significant technological change. While we believe that our technology, knowledge, experience and scientific resources provide us with competitive advantages, we face competition from many different sources, including large pharmaceutical, specialty pharmaceutical, biotechnology and generic drug companies and academic and government institutions. These organizations may have significantly greater resources than we do and conduct similar research, seek and obtain patent protection that may impact our freedom to operate and establish collaborative arrangements for research, development, manufacturing and marketing of products that compete with our product candidate. Our commercial opportunity could be reduced or eliminated if our competitors have products that are better in one or more of these categories. Furthermore, our competitors may, among other things: develop and commercialize products that are, or are perceived to be, safer, more effective, less expensive, or more convenient or easier to administer; obtain quicker regulatory approval; establish superior proprietary positions; have access to more manufacturing capacity; implement more effective approaches to sales and marketing; or form more advantageous strategic alliances.

We believe that the main competitors for APL-130277 are therapies that can limit the occurrence of OFF episodes and other therapies for the on-demand treatment of OFF episodes. These therapies include both pharmacotherapies and invasive therapies for advanced patients such as deep brain stimulation and intestinal-infused levodopa that may be used in less advanced PD patients. Pharmacotherapies that can maintain consistent plasma concentration of levodopa over extended durations could reduce the occurrence of motor fluctuations and thus reduce the need for on-demand treatments for OFF episodes such as APL-130277. Approaches to achieve consistent levodopa plasma concentrations include new formulations of carbidopa/levodopa, a combination of levodopa and an inhibitor of DOPA decarboxylase (an enzyme found throughout the body) referred to as carbidopa, such as extended-release and intestinal infusions, and therapies that prolong the effect of levodopa. Extended-release formulations of oral and patch carbidopa/levodopa are being developed by groups including Impax Laboratories, Inc., Depomed Inc. and Neuroderm Ltd. A continuous administration of a gel-containing levodopa through a tube that is surgically implanted into the intestine is being developed by AbbVie Inc. This therapy, known as Duodopa/Duopa, is approved in the European Union and recently gained approval in the United States. Additionally, new formulations of dopamine agonist therapies (such as pramipexole and rotigotine) may be developed that can further prolong the effect of carbidopa/levodopa regimens and reduce the frequency of motor fluctuations.

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If approved for the treatment of OFF episodes, APL-130277 would also compete against on-demand therapies that aim to specifically address OFF episodes, such as the levodopa capsules administered through an inhaler for the treatment of OFF episodes that are being developed by Acorda Therapeutics, Inc. If such treatment is approved before our product candidate, then such treatment could capture a large percentage of the market share for the treatment of OFF episodes and could affect the acceptance and adoption of our product candidate. At this time, an injectable formulation of apomorphine, Apokyn®, which is a STADA Arzneimittel AG product distributed by U.S. Worldmeds, LLC in the United States, is the only therapy approved for the treatment of OFF episodes. Apokyn was approved for this use in the United States in 2004, and for advanced PD patients in Europe in 1993. As we complete additional clinical trials for our product candidate, if our pharmacokinetic data suggests that the time to ON associated with our product candidate is slower than with Apokyn, the commercialization of our product candidate could be adversely affected.

One or more of our competitors may utilize their expertise in sublingual delivery of drugs to develop and obtain approval for sublingual delivery products that may compete with APL-130277. If approved, our product candidate may face competition in the target commercial areas. The availability of our competitors’ products could limit the demand and the price we are able to charge for our product candidate that we may develop and commercialize.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain sufficient intellectual property protection for our product candidate, or if the scope of the intellectual property protection is not sufficiently broad, our ability to successfully commercialize our product candidate and compete effectively may be adversely affected.

Our success depends in large part on our ability to obtain and maintain protection with respect to our intellectual property and proprietary technology. We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to APL-130277. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage that we may have, which could harm our business and ability to achieve profitability. In particular, our success depends in large part on our ability to obtain and maintain patent protection with respect to our product candidate in the United States, Europe, Japan, and other countries. The patentability of inventions and the validity, enforceability and scope of patents in the pharmaceutical field can be uncertain because they involve complex legal and factual considerations. The standards applied by the United States Patent and Trademark Office, or USPTO, and other foreign patent offices in granting patents are not always applied uniformly or predictably, even within a given jurisdiction. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in patents. The same patent applications that we own may fail to result in issued patents in the United States, Europe, Japan, or in other countries, and if they do, such patents may not cover our product candidate in the United States, the European Union, Japan or in other countries. The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we may fail to identify patentable aspects of our research and development prior to the deadlines for taking action to obtain patent protection on such research and developments. No patentability searches have been completed nor have patentability opinions of counsel been obtained. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found. We may be unaware of prior art that could be used to invalidate an issued patent or prevent our pending patent applications from issuing as patents. The issuance of a patent is not conclusive as to the correctness of its inventorship, ownership, priority, validity or enforceability. Therefore, even if patents do successfully issue and even if such patents cover our product candidate, third-parties may challenge their validity, enforceability or scope, and such challenges may result in such patents being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide sufficient exclusivity for our product candidate, prevent others from designing around our claims or otherwise provide us with a competitive advantage.

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Additionally, our confidentiality agreements and other contractual protections may not be adequate to protect our intellectual property from unauthorized disclosure, third-party infringement or misappropriation. We may not have adequate remedies in the case of a breach of any such agreements, and our trade secrets and other proprietary information could be disclosed to our competitors or others may independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies. ARx is a non-exclusive licensee in all fields other than generic APL-130277 applications of our patent family entitled “Sublingual Films”, of which ARx was previously a co-owner with us. Accordingly, ARx has some freedom to operate with respect to these patents. In addition, ARx is an exclusive licensee of all intellectual property generated under our agreement with ARx in all fields, in respect of other products and formulations and such license affects our use of such intellectual property and survives termination of the agreement. Additionally, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, Europe, and Japan, and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, and this could make it difficult for us to stop the infringement of our patents. Any of these outcomes could impair our ability to prevent competition from third-parties, which may have an adverse impact on our business.

If the patent applications we own with respect to our product candidate fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity, it could dissuade companies from collaborating with us. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued patents will be found invalid and unenforceable or will be threatened by third-parties. Any successful challenge to these patents or any other patents owned by us could deprive us of rights necessary for the successful commercialization of our product candidate. Since patent applications in the United States, Europe, and Japan, and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to our product candidate. Furthermore, if third-parties have filed such patent applications, an interference proceeding in the United States can be initiated by the USPTO or a third-party to determine who was the first to invent the subject matter covered by the patent claims of our first two families of patents and applications. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after the utility application is filed. Various extensions may be available; however, the life of a patent and the protection it affords is limited. If we encounter delays in obtaining regulatory approvals, the period of time during which we could market our product under patent protection could be reduced. Even if patents covering our product candidate are obtained, once the patent life has expired or lapsed for a product, we may be open to competition from similar or generic products. The launch of a generic version of our product in particular would be likely to result in an immediate and substantial reduction in the demand for our product, which could have a material adverse effect on our business.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. On September 16, 2011, the United States Leahy-Smith America Invents Act, or AIA, was signed into law. The AIA includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted, redefine what qualifies as relevant prior art, may affect patent litigation and switch the United States patent system from a “first-to-invent” system to a “first-to-file” system. The USPTO recently developed new regulations and procedures to govern administration of the AIA, and many of the substantive changes to patent law associated with the AIA, and in particular, the first-to-file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the AIA will have on the operation of our business. The AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. Further changes to the patent laws in the United States and other jurisdictions could also diminish the value of our patents and patent applications or narrow the scope of our patent protection.

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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In this event, competitors might be able to enter the market earlier than would otherwise have been the case. Any loss of patent protection could have a material adverse impact on our business. We may be unable to prevent competitors from entering the market with a product that is similar to or the same as our product candidate.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.

Competitors may infringe, misappropriate or otherwise violate our patents or our other intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary to enforce or defend our intellectual property rights, to protect our trade secrets and/or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Such litigation can be expensive and time consuming, and any such claims could provoke these parties to assert counterclaims against us, including claims alleging that we infringed their patents or other intellectual property rights. Many of our current and potential competitors have the ability to dedicate substantially greater resources to litigate intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third-parties from infringing upon or misappropriating our intellectual property. Litigation could result in substantial costs and diversion of management attention and resources, which could harm our business and financial results. In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly, and could put any of our patent applications at risk of not issuing as a patent. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during such litigation.

We could become subject to interference or derivation proceedings provoked by third-parties or brought by the USPTO or other foreign patent authorities to determine the priority of inventions or other matters of inventorship with respect to our patents or patent applications. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms, if any license is offered at all. We may also become involved in other proceedings, such as re-examination or opposition proceedings, before the USPTO, the European Patent Office, or other foreign counterparts relating to our intellectual property or the intellectual property rights of others. An unfavorable outcome in any such proceedings could require us to cease using the related technology or require us to attempt to license rights to the related technology from the prevailing party, or could cause us to lose valuable intellectual property rights. We may also become involved in disputes with others regarding the ownership of intellectual property rights. For example, where we jointly develop intellectual property with certain parties, disagreements may arise as to the ownership of the intellectual property developed pursuant to these relationships. If we are unable to resolve these disputes, we could lose valuable intellectual property rights.

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Third-party claims of intellectual property infringement or misappropriation may prevent or delay our development and commercialization efforts or impact our share price.

Our commercial success depends, in part, on us not infringing the patents and proprietary rights of third-parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the pharmaceutical industry, including patent infringement lawsuits, interferences, oppositions and inter partes reexamination proceedings before the USPTO and corresponding foreign patent offices. Numerous United States and foreign issued patents and pending patent applications owned by third-parties exist in the field in which we are developing our product candidate. As the pharmaceutical industries expand and more patents are issued, the risk increases that our product candidate may be subject to claims of infringement of the patent rights of third-parties. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our product candidate or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Demonstrating patent invalidity and/or non-infringement may be difficult. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us. In addition, we may not have sufficient resources to bring these actions to a successful conclusion.

Third-parties may assert that we, our customers, licensees or parties indemnified by us are employing their proprietary technology without authorization or have infringed upon, misappropriated or otherwise violated their intellectual property or other rights. For example, we may be subject to claims that we are infringing the patent, trademark or copyright rights of third-parties, or that our employees have misappropriated or divulged their former employers’ trade secrets or confidential information. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidate, that we failed to identify. For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until issued as patents. Except for the preceding exceptions, patent applications in the United States and elsewhere are generally published only after a waiting period of approximately 18 months after the earliest filing, and sometimes not at all. Therefore, patent applications covering our product candidate could have been filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our platform technologies, our product candidate or the use or manufacture of our product candidate.

If any third-party patents were held by a court of competent jurisdiction to cover aspects of our product candidate, including the materials, formulations, methods of manufacture, methods of analysis, and/or methods for treatment, the holders of any such patents would be able to block our ability to develop and commercialize our product candidate until such patent expired or unless we obtain a license from such third-party in order to use the infringing technology and continue developing and commercializing our infringing product candidate. Such licenses may not be available on commercially acceptable terms, if at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property licensed to us. Ultimately, we could be prevented from commercializing our product candidate, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.

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Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidate. Defending against claims of patent infringement or misappropriation of trade secrets could be costly and time consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated costs. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business. In the event of a successful claim of infringement against us, in addition to potential injunctive relief, we may have to pay substantial damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent, pay royalties, redesign our infringing product or obtain one or more licenses from third-parties, which may be impossible or require substantial time and monetary expenditure.

We are evaluating third-party patents and pending patent applications that may pose risks to the commercialization of APL-130277 in the U.S. and Europe. The validity of several of such third-party patents is being challenged either in the U.S. district courts, at the USPTO, or both, by multiple third-parties. We have discussed a license to certain of these third-party patents and applications, and we are evaluating whether a license to certain of these third-party patents and patent applications is desirable. Should APL-130277 ultimately be found to infringe a valid and enforceable third-party patent claim, such third-party patents could adversely impact our commercial efforts, requiring us to obtain a license from the relevant third-party patent owner in order to continue commercializing our product candidate, and such licenses may not be available on commercially reasonable terms or at all. If one or more of these third-party patents were asserted against us, we expect to vigorously contest such an action.

We may face a claim of misappropriation if a third-party believes that we inappropriately obtained and used trade secrets of such third-party. We are not aware of any material threatened or pending claims related to these matters, but in the future litigation may be necessary to defend against such claims. If we are found to have misappropriated a third-party’s trade secrets, we may be prevented from further using such trade secrets, limiting our ability to develop our product candidate, and we may be required to pay damages.

During the course of any patent or other intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our product candidate or intellectual property could be diminished and it could have a substantial adverse effect on the market price of our common shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future marketing or distribution activities.

We will not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on our product candidate throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as in the United States. These products may compete with our product candidate in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

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Confidentiality agreements with employees and third-parties may not prevent unauthorized disclosure of trade secrets and other proprietary information.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our platform technology and discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Trade secrets can be difficult to protect. Any disclosure to, misappropriation by, or reverse engineering by third-parties of our confidential proprietary information or know-how could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements, non-disclosure and invention assignment agreements with our employees, consultants, and third-party scientific advisors, contractors and collaborators. However, we cannot be certain that such agreements have been entered into with all relevant parties, that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside scientific advisors might intentionally or inadvertently disclose our trade secret information to competitors.

Enforcing a claim that a third-party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States sometimes do not protect proprietary rights such as trade secrets to the same extent or in the same manner as United States courts. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business, results of operations and financial condition.

Risks Related to Our Business and Industry

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop our product candidate, conduct our clinical trials and commercialize our product candidate.

We are highly dependent on members of our senior management, including Anthony Giovinazzo, our President and Chief Executive Officer, Albert Agro, our Chief Medical Officer, Thierry Bilbault, our Chief Scientific Officer and Executive Vice President, CMC, Andrew Williams, our Chief Operating Officer and Chief Financial Officer, and Jordan Dubow, our Vice President, Medical Affairs. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives. Also, each of these persons may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.

Recruiting and retaining qualified scientific, clinical, sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, including our scientific founders, may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

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We may encounter difficulties in managing our growth and expanding our operations successfully.

As we seek to advance our product candidate through clinical trials and commercialization, we will need to expand our development, regulatory, manufacturing, marketing and sales capabilities or contract with third-parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with one or more strategic partners, and with suppliers and other third-parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidate and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate additional management, administrative and, if necessary, sales and marketing personnel. Due to our limited financial resources, we may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company or disrupt our operations.

Our relationships with health care professionals, institutional providers, principal investigators, consultants, customers (actual and potential) and third-party payors are, and will continue to be, subject, directly and indirectly, to Canadian and United States federal and state health care fraud and abuse, false claims, marketing expenditure tracking and disclosure, government price reporting, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face penalties, including, without limitation, civil, criminal, and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other government health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations.

Our business operations and activities may be directly or indirectly subject to various fraud and abuse laws, including, without limitation, the United States federal Anti-Kickback Statute and the United States False Claims Act. If we obtain FDA approval for our product candidate and begin commercializing our product candidate in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators and research subjects, as well as proposed and future sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by the federal government and state governments in which we conduct our business. The laws that may affect our ability to operate include, but are not limited to:

• the United States federal health care Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a United States federal health care program, such as the Medicare and Medicaid programs;

• United States federal civil and criminal false claims laws, including the United States False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other third-party payors that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the United States government;

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• the United States Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, regardless of the payor (public or private) and knowingly and willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, health care benefits, items or services relating to health care matters;

• HIPAA, as amended by the United States Health Information Technology for Economic and Clinical Health Act of 2009 and their respective implementing regulations, which impose requirements on certain covered health care providers, health plans, and health care clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization;

• the United States federal physician self-referral law, commonly known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services reimbursed by Medicare or Medicaid if the physician or a member of the physician’s family has a financial relationship with the entity, and which also prohibits the submission of any claims for reimbursement for designated health services furnished pursuant to a prohibited referral;

• the United States Physician Payments Sunshine Act, created under Section 6002 of the United States Patient Protection and Affordable Care Act, as amended by the United States Health Care and Education Reconciliation Act of 2010, or collectively, the ACA, and its implementing regulations requires manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, with data collection required beginning August 1, 2013 and reporting to the Centers for Medicare & Medicaid Services required by March 31, 2014 and by the 90th day of each subsequent calendar year;

• United States federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

• United States federal government price reporting laws, changed by the ACA to, among other things, increase the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program and offer such rebates to additional populations, that require us to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs (participation in these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs, and potentially limit our ability to offer certain marketplace discounts);

• the United States Foreign Corrupt Practices Act, which regulates certain financial relationships with foreign government officials (which could include, for example, certain medical professionals); and

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• U.S. state law equivalents of each of the above federal laws, such as anti-kickback, false claims, consumer protection and unfair competition laws which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements as well as submitting claims involving health care items or services reimbursed by any third-party payor, including commercial insurers; state laws that require biotech companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to health care providers; state laws that require drug manufacturers to file reports with states regarding marketing information, such as the tracking and reporting of gifts, compensation and other remuneration and items of value provided to health care professionals and entities (compliance with such requirements may require investment in infrastructure to ensure that tracking is performed properly, and some of these laws result in the public disclosure of various types of payments and relationships, which could potentially have a negative effect on our business and/or increase enforcement scrutiny of our activities); and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

In addition, the regulatory approval and commercialization of our product candidate outside the United States will also likely subject us to foreign equivalents of the health care laws mentioned above, among other foreign laws.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. In addition, recent health care reforms have strengthened some of these laws. Efforts to ensure that our business arrangements will comply with applicable health care laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other health care laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil, criminal, and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other state and federal government health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could materially adversely affect our ability to operate our business and our financial results.

We or our third-party providers may experience a security breach that could lead to the loss of critical information.

Our business is increasingly dependent on critical, complex and interdependent information technology systems, including Internet-based systems, to support business processes as well as internal and external communications. The size and complexity of our and our third-party providers’ computer systems make them potentially vulnerable to breakdown, natural disaster, malicious intrusion, malware and other cyber-attacks, which may result in the impairment of production and key business processes. In addition, our and our third-party providers’ systems are potentially vulnerable to data security breaches—whether by employees or others—that may expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property, the value of which may be contingent upon maintaining its confidentiality, or could lead to the public exposure of personal information (including sensitive personal information) of our employees, clinical trial patients, partners and others. This could require us to expend significant efforts and resources or incur significant expense to eliminate these problems and address related security concerns. Such disruptions and breaches of data security could have a material adverse effect on our business, reputation, and financial condition, could cause significant interruptions in our operations and impair our ability to conduct our business and comply with regulations during the occurrence of any such incident.

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Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards we have established, to comply with federal and state health care fraud and abuse laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the health care industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidate.

We face an inherent risk of product liability as a result of the clinical testing of our product candidate and will face an even greater risk if we commercialize our product candidate. For example, we may be sued if the product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidate. Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in, without limitation:

• injury to our reputation;

• decreased demand for our product candidate;

• withdrawal of clinical trial participants;

• costs to defend the related litigations;

• a diversion of management’s time and our resources;

• substantial monetary awards to trial participants or patients;

• product recalls, withdrawals, or labeling, marketing or promotional restrictions;

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• loss of revenue;

• the inability to commercialize our product candidate; and

• a decline in our share price.

Failure to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of our product candidate. We currently carry product liability insurance covering our clinical trials. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. If we are unable to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibit the development and commercial production and sale of our product candidate, which could adversely affect our business, financial condition, results of operations and prospects.

We and our third-party contract manufacturers and suppliers must comply with environmental, health and safety laws and regulations, and failure to comply with these laws and regulations could expose us to significant costs or liabilities.

We and our third-party manufacturers and suppliers are subject to numerous and increasingly stringent environmental, health and safety laws and regulations, including those governing laboratory procedures and the use, generation, manufacture, distribution, storage, handling, treatment, remediation and disposal of hazardous materials and wastes. Hazardous chemicals, including flammable and biological materials, are involved in certain aspects of our business, and we cannot eliminate the risk of injury or contamination from the use, generation, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials and wastes. In the event of contamination or injury, or failure to comply with environmental, health and safety laws and regulations, we could be held liable for any resulting damages and any such liability could exceed our assets and resources. We could also incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations. If our third-party manufacturers and suppliers fail to operate in compliance with applicable environmental, health and safety laws and regulations or properly dispose of wastes associated with our product candidate, we could be held liable for any resulting damages, suffer reputational harm or experience a disruption in the manufacture and supply of our product candidate.

Risks Related to Our Common Shares

If we are a passive foreign investment company, or PFIC, for United States federal income tax purposes in any year, certain adverse tax rules could apply to U.S. Holders of our common shares.

Based on estimates of the composition of our income and the value of our assets, we believe that we may be a PFIC for United States federal income tax purposes for our current taxable year.

We will be classified as a PFIC for any taxable year for United States federal income tax purposes if either (i) 75% or more of our gross income in that taxable year is passive income or (ii) the average percentage of our assets by value in that taxable year which produce or are held for the production of passive income (which includes cash) is at least 50%.

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PFIC status is determined annually and depends upon the composition of a company’s income and assets and the market value of its stock from time to time. Therefore, there can be no assurance as to our PFIC status for future taxable years. The value of our assets will be based, in part, on the then market value of our common shares, which is subject to change.

If we are a PFIC for any taxable year during which a U.S. Holder (as defined below) holds common shares, such U.S. Holders could be subject to adverse United States federal income tax consequences (whether or not we continue to be a PFIC). For example, U.S. Holders may become subject to increased tax liabilities under United States federal income tax laws and regulations, and will become subject to burdensome reporting requirements. If we are a PFIC during which a U.S. Holder holds common shares, such U.S. Holder may be able to make a “mark-to-market” election or a “qualified electing fund” election that could mitigate the adverse United States federal income tax consequences that would otherwise apply to such U.S. Holder. We will provide the information necessary for a U.S. Holder to make the qualified election; however, no assurance can be given that such information will be available for any lower-tier PFIC that we do not control.

The term “U.S. Holder” means a holder of a common share of Cynapsus that is for United States federal income tax purposes:

· an individual citizen or resident of the United States;

· a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

· an estate the income of which is subject to United States federal income taxation regardless of its source; or

· a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

U.S. Holders are urged to consult their own tax advisers as to whether we may be treated as a PFIC and the tax consequences thereof.

We are eligible to be treated as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, (1) not being required to comply with the auditor attestation requirements of Section 404 of the United States Sarbanes-Oxley Act of 2002, (2) reduced disclosure obligations regarding executive compensation in our periodic reports, and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

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We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common shares held by non-affiliates exceeds US$700 million as of any June 30 before that time or if we have total annual gross revenue of US$1.0 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than US$1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately. We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.

There is no assurance that an active trading market in our common shares will be sustained. We do not know what the market price of our common shares will be and, as a result, it may be difficult for you to sell your common shares.

Our common shares are listed on the TSX in Canada and the NASDAQ in the United States. If a robust market for our common shares is not sustained, it may be more difficult for you to sell your common shares at an attractive price. Further, an inactive market in either Canada or the United States may also impair our ability to raise capital by selling common shares and may impair our ability to enter into strategic partnerships or acquire companies or products by using our common shares as consideration. We cannot predict the prices at which our common shares will trade. It is possible that in one or more future periods our results of operations may be below the expectations of public market analysts and investors and, as a result of these and other factors, the price of our common shares may fall.

The market price of our common shares may be highly volatile, which could cause our investors to incur substantial losses.

The market price of our common shares could be subject to wide fluctuations in response to many risk factors listed in this “Risk Factors” section, and others beyond our control, including, but not limited to:

• results and timing of clinical trials of our product candidate, APL-130277;

• results of clinical trials of our competitors’ products;

• failure to adequately protect our intellectual property or proprietary technology;

• pending or threatened litigation involving our intellectual property or proprietary technology or us infringing upon a third-party’s intellectual property or proprietary technology;

• our inability to raise additional capital, or if we are able to raise capital, the terms on which we raise it;

• commencement or termination of any licensing or other partnering arrangement;

• regulatory actions with respect to our product candidate or our competitors’ products;

• actual or anticipated fluctuations in our financial condition and operating results;

• publication of research reports by securities analysts about us or our competitors or our industry;

• our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;

• additions and departures of key personnel;

• strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

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• the passage of legislation or other regulatory developments affecting us or our industry;

• fluctuations in the valuation of companies perceived by investors to be comparable to us;

• sales of our common shares by us, our insiders or our other shareholders;

• speculation in the press or investment community about us, our common shares or our industry;

• announcement or expectation of additional financing efforts;

• changes in accounting principles;

• terrorist acts, acts of war or periods of widespread civil unrest;

• natural disasters and other calamities;

• changes in market conditions for biotechnology and pharmaceutical stocks; and

• changes in general market and economic conditions.

In addition, the stock market has recently experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. As a result of this volatility, the price of our common shares may decline even if our operating results, underlying asset values or prospects have not changed. As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products, or to a lesser extent our markets. Continued listing of our common shares on the NASDAQ in addition to the TSX may increase share price volatility on the TSX and also result in volatility of the trading price on the NASDAQ because trading will be split between the two markets, resulting in less liquidity on both exchanges. In addition, different liquidity levels, volume of trading, currencies and market conditions on the two exchanges may result in different prevailing trading prices. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their share price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

A significant portion of our total outstanding common shares may be sold into the public market in the near future, which could cause the market price of our common shares to drop significantly, even if our business is doing well.

Sales of a substantial number of our common shares in the public market could occur at any time after the expiration of the lock-up agreements recently entered into in connection with our initial public offering of common shares in the United States. These sales, or the market perception that the holders of a large number of common shares intend to sell shares, could reduce the market price of our common shares. As of August 13, 2015, we had 12,117,301 common shares outstanding.

Approximately 1,268,076 common shares will be able to be sold on or about September 15, 2015, due to lock-up agreements between the holders of such common shares and the underwriters that participated in our initial public offering. However, Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the underwriters, can waive the provisions of such lock-up agreements by prior written consent and allow such shareholders to sell their common shares at any time.

As of August 13, 2015, there were 581,501 common shares subject to outstanding options granted under our Stock Option Plan. We have registered 1,211,730 common shares that we may issue under our Stock Option Plan. Once those common shares are issued in accordance with the terms of the plan, they can be freely sold in the public market upon issuance, subject to the lock-up agreements and the restrictions imposed on our affiliates under Rule 144. If the options are exercised and the underlying common shares resold in the public market in the near future, the market price of our common shares may drop.

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We do not expect to pay any cash dividends for the foreseeable future.

You should not rely on an investment in our common shares to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common shares in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common shares. Accordingly, investors must rely on sales of their common shares after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common shares.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our common shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our common shares or publish inaccurate or unfavorable research about our business, our share price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common shares could decrease, which might cause our share price and trading volume to decline.

As we are a Canadian company, it may be difficult for United States shareholders to effect service on us or to realize on judgments obtained in the United States.

We are incorporated under the federal laws of Canada, most of our directors and officers are residents of Canada, and most or all of our assets and the assets of such persons are located outside the United States. Consequently, it may be difficult for United States investors to effect service of process within the United States upon us or upon such persons who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under United States securities laws. A judgment of a United States court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.

As a foreign private issuer, we are subject to different United States securities laws and rules than a domestic United States issuer, which may limit the information publicly available to our shareholders.

We are currently a “foreign private issuer” as defined under U.S. securities laws. As a result, even though we are subject to the informational requirements of the Exchange Act, as a foreign private issuer, we are currently exempt from certain informational requirements of the Exchange Act to which domestic U.S. issuers are subject, such as the proxy solicitation rules under Section 14 of the Exchange Act. In order to be more easily compared to our principal competitors, we will be filing annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, with the SEC, as if we were a U.S. domestic issuer. The insider reporting and short-profit provisions under Section 16 of the Exchange Act are not applicable to us, so our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell our common shares, as the reporting periods under the corresponding Canadian insider reporting requirements are longer.

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We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.

In the future, we might potentially lose our foreign private issuer status. If we are not a foreign private issuer, we would not be eligible to use certain foreign issuer forms and would be required to file periodic and current reports and registration statements on United States domestic issuer forms with the SEC. In addition, we may lose the ability to rely upon exemptions from NASDAQ corporate governance requirements that are available to foreign private issuers. Further, if we engage in capital raising activities after losing our foreign private issuer status, there is a higher likelihood that investors may require us to file resale registration statements with the SEC as a condition to any such financing.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) Sales of Unregistered Securities

Set forth below are the sales of our securities sold by us during the quarter ended June 30, 2015, which were not registered under the United States Securities Act of 1933, as amended, or the Securities Act.

From April 7, 2015 to June 23, 2015, we issued an aggregate of 44,923 common shares pursuant to the exercise of warrants, for aggregate cash consideration of Cdn$539,567. Such common shares were issued by us in the United States and to “U.S. persons” (as both such terms are defined in Regulation S under the Securities Act, or Regulation S, in reliance upon Rule 506(b) of Regulation D under the Securities Act, or Regulation D, solely to “accredited investors,” as such term is defined in Rule 501(a) of Regulation D. Such common shares were issued outside the United States to non-U.S. persons in reliance upon Regulation S.

On April 2, 2015, 248,743 options were granted to certain of our officers, directors and employees at an exercise price of Cdn$21.76 per share expiring five years from the date of the grant. 39,686 of the options vested immediately. For 209,057 of the options, one-quarter vested immediately, one-quarter will vest in one year, one-quarter will vest in two years, and one-quarter will vest in three years. Such options were granted by us in the United States and to U.S. persons in reliance upon Rule 701 under the Securities Act. Such options were granted outside the United States to non-U.S. persons in reliance upon Regulation S.

(b) Use of Proceeds

On June 17, 2015, our registration statement on Form F-10 (File No. 333-204226) was declared effective by the SEC for our initial public offering in the United States pursuant to which we sold an aggregate of 5,175,000 common shares (inclusive of 675,000 common shares sold by us pursuant to the full exercise of an option granted to the underwriters in connection with the offering) at a price to the public of US$14.00 per share for aggregate gross offering proceeds of approximately US$72.5 million. Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as sole book-running manager for the offering, Nomura Securities International, Inc. acted as a lead manager and Noble Financial Capital Markets acted as co-manager. On June 23, 2015, we closed the sale of such common shares, resulting in net proceeds to us of approximately US$66.4 million after deducting underwriting discounts and commissions of approximately US$5.1 million and other offering expenses of approximately US$1 million. No payments were made by us to directors, officers or persons owning ten percent or more of our common shares or to their associates, or to our affiliates.

There has been no material change in the planned use of proceeds from our initial public offering as described in our prospectus that forms a part of our registration statement on Form F-10 (File No. 333-204226), as supplemented and filed with the SEC on June 18, 2015. As of June 30, 2015, we held all of the funds received in cash.

(c) Issuer Purchases of Equity Securities

Not applicable.

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ITEM 6.    EXHIBITS.

Exhibit Number	Description
3.1	Articles of Amalgamation of Cynapsus, as amended
3.2	By-law No. 2 of Cynapsus
4.1	Specimen Common Share Certificate of Cynapsus
4.2	Form of Warrant Certificate dated July 18, 2012
4.3	Form of Warrant Certificate dated October 24, 2012
4.4	Form of Warrant Certificate dated November 23, 2012
4.5	Warrant Indenture dated March 1, 2013, by and between Equity Financial Trust Company and Cynapsus
4.6	Supplemental Indenture dated May 15, 2015, by and between Equity Financial Trust Company and Cynapsus (relating to the Warrant Indenture dated March 1, 2013)
4.7	Warrant Indenture dated April 15, 2014, by and between Equity Financial Trust Company and Cynapsus
4.8	Supplemental Indenture dated May 15, 2015, by and between Equity Financial Trust Company and Cynapsus (relating to the Warrant Indenture dated April 15, 2014)
10.1	Lease, dated May 1, 2008, by and between Richmond Walnut Business Centre Inc. and Cynapsus
10.2	Lease Extension Agreement, dated May 1, 2014, by and between Richmond Walnut Business Centre Inc. and Cynapsus
10.3#	Agreement dated March 17, 2015 by and between ARx, LLC and Cynapsus
10.4+	2014 Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 4.1 to Cynapsus’s registration statement on Form S-8 filed with the SEC on July 29, 2015 (File No. 333-205929))
10.5+	Employment Agreement, dated May 13, 2015, between Anthony Giovinazzo and Cynapsus
10.6+	Employment Agreement, dated May 13, 2015, between Andrew Williams and Cynapsus
10.7+	Employment Agreement, dated May 13, 2015, between Albert Agro and Cynapsus
10.8+	Employment Agreement, dated May 13, 2015, between Thierry Bilbault and Cynapsus
10.9+	Form of Director and Officer Indemnification Agreement
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Exhibit Number	Description
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

____________________

# Confidential portions of the exhibit have been redacted and filed separately with the SEC pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Exchange Act.

+ Indicates management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CYNAPSUS THERAPEUTICS INC.
	(Registrant)
Date: August 14, 2015	By:	/s/ Andrew Williams
		Andrew Williams
		Chief Operating Officer and Chief Financial Officer
		(principal financial and accounting officer and duly authorized officer)

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EXHIBIT INDEX

Exhibit Number	Description
3.1	Articles of Amalgamation of Cynapsus, as amended
3.2	By-law No. 2 of Cynapsus
4.1	Specimen Common Share Certificate of Cynapsus
4.2	Form of Warrant Certificate dated July 18, 2012
4.3	Form of Warrant Certificate dated October 24, 2012
4.4	Form of Warrant Certificate dated November 23, 2012
4.5	Warrant Indenture dated March 1, 2013, by and between Equity Financial Trust Company and Cynapsus
4.6	Supplemental Indenture dated May 15, 2015, by and between Equity Financial Trust Company and Cynapsus (relating to the Warrant Indenture dated March 1, 2013)
4.7	Warrant Indenture dated April 15, 2014, by and between Equity Financial Trust Company and Cynapsus
4.8	Supplemental Indenture dated May 15, 2015, by and between Equity Financial Trust Company and Cynapsus (relating to the Warrant Indenture dated April 15, 2014)
10.1	Lease, dated May 1, 2008, by and between Richmond Walnut Business Centre Inc. and Cynapsus
10.2	Lease Extension Agreement, dated May 1, 2014, by and between Richmond Walnut Business Centre Inc. and Cynapsus
10.3#	Agreement dated March 17, 2015 by and between ARx, LLC and Cynapsus
10.4+	2014 Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 4.1 to Cynapsus’s registration statement on Form S-8 filed with the SEC on July 29, 2015 (File No. 333-205929))
10.5+	Employment Agreement, dated May 13, 2015, between Anthony Giovinazzo and Cynapsus
10.6+	Employment Agreement, dated May 13, 2015, between Andrew Williams and Cynapsus
10.7+	Employment Agreement, dated May 13, 2015, between Albert Agro and Cynapsus
10.8+	Employment Agreement, dated May 13, 2015, between Thierry Bilbault and Cynapsus
10.9+	Form of Director and Officer Indemnification Agreement

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Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

____________________

# Confidential portions of the exhibit have been redacted and filed separately with the SEC pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Exchange Act.

+ Indicates management contract or compensatory plan.

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EX-3.1

Exhibit 3.1

 

EX-3.2

Exhibit 3.2

BY-LAW NO. 2

A by-law relating generally to the transaction of the business and affairs of:

CYNAPSUS THERAPEUTICS INC.

Contents

One	-	Interpretation
Two	-	Business of the Corporation
Three	-	Borrowing and Security
Four	-	Directors
Five	-	Committees
Six	-	Officers
Seven	-	Protection of Directors, Officers and Others
Eight	-	Shares
Nine	-	Dividends and Rights
Ten	-	Meetings of Shareholders
Eleven	-	Notices
Twelve	-	Effective Date

BE IT ENACTED as a by-law of the Corporation as follows:

ARTICLE 1 - INTERPRETATION

1.1 Definitions. In the by-laws of the Corporation, unless the context otherwise requires:

"Act" means the Canada Business Corporations Act, or any statute that may be substituted for it, as from time to time amended;

"Appoint" includes "elect" and vice versa;

"Articles" means the articles on which is endorsed the certificate of incorporation of the Corporation as from time to time amended or restated;

"Board" means the board of directors of the Corporation and "director" means a member of the board;

"By-laws" means this by-law and all other by-laws of the Corporation from time to time in force and effect;

"Cheque" includes a draft;

"Corporation" means the corporation incorporated under the Act by the said certificate endorsed on the articles;

"Meeting of Shareholders" includes an annual meeting of shareholders and a special meeting of shareholders; and “special meeting of shareholders” includes a meeting of any class or classes of shareholders and a special meeting of all shareholders entitled to vote at an annual meeting of shareholders; and

"recorded address" has the meaning set forth in Section 11.8.

Save as aforesaid, words and expressions defined in the Act, including "resident Canadian", have the same meanings when used herein. Words importing the singular number include the plural and vice versa; words importing gender include the masculine, feminine and neuter genders; and words importing a person include an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, and a natural person in his capacity as trustee, executor, administrator, or other legal representative.

ARTICLE 2 BUSINESS OF THE CORPORATION

2.1         Registered Office. The registered office of the Corporation shall be in the municipality or geographic township within Ontario initially specified in its articles and thereafter as the shareholders may from time to time determine by special resolution and at such location therein as the board may from time to time determine.

2.2         Corporate Seal. The Corporation may, but need not, have a corporate seal and if one is adopted it shall be in a form approved from time to time by the board.

2.3         Financial Year. Until changed by the board, the financial year of the Corporation shall end on the 31^st day of December in each year.

2.4         Execution of Instruments. Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by any two directors or any director and any officer or any other office created by by-law or by the board. In addition, the board or the said two persons may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be signed. Any signing officer may affix the corporate seal to any instrument requiring the same.

2.5         Banking Arrangements. The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefor, shall be transacted with such banks, trust companies or other bodies corporate or organizations as may from time to time be designated by or under the authority of the board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of powers as the board may from time to time prescribe.

2.6         Voting Rights in Other Bodies Corporate. The signing officers of the Corporation under Section 2.4 may execute and deliver proxies and arrange for the issuance of voting certificates or other evidence of the right to exercise the voting rights attaching to any securities held by the Corporation. Such instruments shall be in favour of such persons as may be determined by the officers executing or arranging for the same. In addition, the board may from time to time direct the manner in which and the persons by whom any particular voting rights or class of voting rights may or shall be exercised.

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2.7         Divisions. The board may cause the business and operations of the Corporation or any part thereof to be divided into one or more divisions upon such basis, including without limitation types of business or operations, geographical territories, product lines or goods or services, as may be considered appropriate in each case. In connection with any such division the board or, subject to any direction by the board, the chief executive officer may authorize from time to time, upon such basis as may be considered appropriate in each case:

(a) Subdivision and Consolidation -the further division of the business and operations of any such division into sub-units and the consolidation of the business and operations of any such divisions and sub-units;

(b) Name - the designation of any such division or sub-unit by, and the carrying on of the business and operations of any such division or sub-unit under, a name other than the name of the Corporation; provided that the Corporation shall set out its name in legible characters in all places required by law; and

(c) Officers - the appointment of officers for any such division or sub-unit, the determination of their powers and duties, and the removal of any of such officers so appointed, provided that any such officers shall not, as such, be officers of the Corporation.

ARTICLE 3-BORROWING AND SECURITY

3.1         Borrowing Power. Without limiting the borrowing powers of the Corporation as set forth in the Act, but subject to the articles, the board may from time to time on behalf of the Corporation, without authorization of the shareholders:

(a) borrow money upon the credit of the Corporation;

(b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee of the Corporation, whether secured or unsecured;

(c) to the extent permitted by the Act, give directly or indirectly financial assistance to any person by means of a loan, a guarantee on behalf of the Corporation to secure performance of any present or future indebtedness, liability or obligation of any person, or otherwise; and

(d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable, property of the Corporation including book debts, rights, powers, franchises and undertakings, to secure any such bonds, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or obligation of the Corporation.

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Nothing in this section limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation.

3.2         Delegation. Subject to the Act, the articles and any unanimous shareholder agreement the board may from time to time delegate to a committee of the board, a director or an officer of the Corporation or any other person as may be designated by the board all or any of the powers conferred on the board by Section 3.1 or by the Act to such extent and in such manner as the board may determine at the time of such delegation.

ARTICLE 4 - DIRECTORS

4.1         Number of Directors. Until changed in accordance with the Act, the board shall consist of that number of directors, being a minimum of one (1) and a maximum of ten (10), as determined from time to time by special resolution or, if the special resolution empowers the directors to determine the number, by resolution of the board.

4.2         Qualification. No person shall be qualified for election or appointment as a director if he is less than 18 years of age; if he is of unsound mind and has been so found by a court in Canada or elsewhere; if he is not an individual; or if he has the status of a bankrupt. A director need not be a shareholder. A majority of the directors shall be resident Canadians. At least one-third of the directors shall not be officers or employees of the Corporation or any affiliate.

4.3         Election and Term. The election of directors shall take place at each annual meeting of shareholders and all the directors then in office shall retire but, if qualified, shall be eligible for re-election. Subject to the Act, the number of directors to be elected at any such meeting shall be the number of directors determined from time to time by special resolution or, if the special resolution empowers the directors to determine the number, by resolution of the board. Where the shareholders adopt an amendment to the articles to increase the number or minimum number of directors, the shareholders may, at the meeting at which they adopt the amendment, elect the additional number of directors authorized by the amendment. The election shall be by resolution, or if demanded by a shareholder or a proxyholder, by ballot. If an election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected.

4.4         Removal of Directors. Subject to the Act, the shareholders may by ordinary resolution passed at an annual or special meeting of shareholders remove any director from office and the vacancy created by such removal may be filled at the same meeting, failing which it may be filled by the board.

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4.5         Vacation of Office. A director ceases to hold office when he dies; he is removed from office by the shareholders; he ceases to be qualified for election as a director; or his written resignation is received by the Corporation, or, if a time is specified in such resignation, at the time so specified, whichever is later.

4.6         Vacancies. Subject to the Act, a quorum of the board may fill a vacancy in the board, except a vacancy resulting from an increase in the number or minimum number of directors or from a failure of the shareholders to elect the number or minimum number of directors.

4.7         Action by the Board. The board shall manage or supervise the management of the business and affairs of the Corporation. The powers of the board may be exercised at a meeting (subject to Sections 4.8 and 4.9) at which a quorum is present or by resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board. Where there is a vacancy in the board, the remaining directors may exercise all the powers of the board so long as a quorum remains in office.

4.8         Canadian Majority at Meetings. The board shall not transact business at a meeting unless a majority of the directors present are resident Canadians, except where:

(a) a resident Canadian director who is unable to be present approves in writing or by telephone, electronic, or other communications facilities the business transacted at the meeting;

(b) a majority of resident Canadians would have been present had that director been present at the meeting; or

(c) the Corporation has fewer than three directors, one of the directors present is a resident Canadian.

4.9         Meeting by Telephone. If all the directors of the Corporation consent thereto generally or in respect of a particular meeting, a director may participate in a meeting of the board or of a committee of the board by means of such telephone, electronic or other communications facilities as permit all persons participating in the meeting to communicate with each other, simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed to be present at the meeting. Any such consent shall be effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the board and of committees of the board.

4.10       Place of Meetings. Meetings of the board may be held at any place within or outside Ontario and in any financial year of the Corporation a majority of the meetings need not be held in Canada.

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4.11        Calling of Meetings. Meetings of the board shall be held from time to time at such time and at such place as the board, the chairman of the board, the managing director, the president or any two directors may determine.

4.12        Notice of Meeting. Notice of the time and place of each meeting of the board shall be given in the manner provided in Article 11 to each director not less than 48 hours before the time when the meeting is to be held. A notice of a meeting of directors need not specify the purpose of or the business to be transacted at the meeting except where the Act requires such purpose or business or the general nature thereof to be specified.

4.13        First Meeting of New Board. Provided a quorum of directors is present, each newly elected board may without notice hold its first meeting immediately following the meeting of shareholders at which such board is elected.

4.14        Adjourned Meeting. Notice of an adjourned meeting of the board is not required if the time and place of the adjourned meeting is announced at the original meeting.

4.15        Regular Meetings. The board may appoint a day or days in any month or months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meetings shall be sent to each director forthwith after being passed, but no other notice shall be required for any such regular meeting except where the Act requires the purpose thereof or the business to be transacted thereat to be specified.

4.16        Chairman. The chairman of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chairman of the board, managing director or president. If no such officer is present, the directors present shall choose one of their number to be chairman.

4.17        Quorum. Subject to Section 4.8, the quorum for the transaction of business at any meeting of the board shall be the greater of two-fifths of the board, or two constitutes a quorum at any meeting of the board, or such greater number of directors as the board may from time to time determine.

4.18        Votes to Govern. At all meetings of the board every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall be entitled to a second or casting vote.

4.19        Conflict of Interest. A director who is a party to, or who is a director or officer of or has a material interest in any person who is a party to, a material contract or transaction or proposed material contract or transaction with the Corporation shall disclose to the Corporation the nature and extent of his interest at the time and in the manner provided by the Act. Such a director shall not vote on any resolution to approve the same except as provided by the Act.

4.20        Remuneration and Expenses. The directors shall be paid such remuneration for their services as the board may from time to time determine. The directors shall also be entitled to be reimbursed for travelling and other expenses properly incurred by them in attending meetings of the board or any committee thereof Nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor.

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ARTICLE 5 - COMMITTEES

5.1         Committees of the Board. The board may appoint from their number one or more committees of the board, however designated, and delegate to any such committee any of the powers of the board except those which pertain to items which, under the Act, a committee of the board has no authority to exercise. A majority of the members of any such committee shall be resident Canadians.

5.2         Transaction of Business. The powers of a committee of the board may be exercised by a meeting at which a quorum is present or by resolution in writing signed by all members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. Meetings of such committee may be held at any place in or outside Ontario.

5.3         Audit Committee. The board shall select annually from among its number an audit committee to be composed of not fewer than three directors of whom a majority shall not be officers or employees of the Corporation or its affiliates. The audit committee shall have the powers and duties provided in the Act.

5.4         Advisory Bodies. The board may from time to time appoint such advisory bodies as it may deem advisable.

5.5         Procedure. Unless otherwise determined by the board, each committee and advisory body shall have power to fix its quorum at not less than a majority of its members, to elect its chairman and to regulate its procedure.

ARTICLE 6 - OFFICERS

6.1         Appointment. The board may from time to time appoint a president, one or more vice-presidents (to which title may be added words indicating seniority or function), a secretary, a treasurer and such other officers as the board may determine, including one or more assistants to any of the officers so appointed. One person may hold more than one office. The board may specify the duties of and, in accordance with this by-law and subject to the Act, delegate to such officers powers to manage the business and affairs of the Corporation. Subject to Sections 6.2 and 6.3, an officer may but need not be a director.

6.2         Chairman of the Board. The board may from time to time also appoint a chairman of the board who shall be a director. If appointed, the board may assign to him any of the powers and duties that are by any provisions of this by-law assigned to the managing director or to the president; and he shall have such powers and duties as the board may specify.

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6.3         Managing Director. The board may from time to time also appoint a managing director who shall be a resident Canadian and a director. If appointed, he shall be the chief executive officer and, subject to the authority of the board, shall have general supervision of the business and affairs of the Corporation; and he shall have such other powers and duties as the board may specify. During the absence or disability of the president, or if no president has been appointed, the managing director shall also have the powers and duties of that office.

6.4         President. The president shall be the chief operating officer, and he shall have such other powers and duties as the board may specify. During the absence or disability of the managing director, or if no managing director has been appointed, the president shall also have the powers and duties of that office.

6.5         Secretary. Unless otherwise determined by the board, the secretary shall be the secretary of all meetings of the board, shareholders and committees of the board that he attends. The secretary shall enter or cause to be entered in records kept for that purpose minutes of all proceedings at meetings of the board, shareholders and committees of the board, whether or not he attends such meetings; he shall give or cause to be given, as and when instructed, all notices to shareholders, directors, officers, and others and members of committees of the board; he shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation and of all books, records and instruments belonging to the Corporation, except when some other officer or agent has been appointed for that purpose; and he shall have such other powers and duties as otherwise may be specified.

6.6         Treasurer. The treasurer shall keep proper accounting records in compliance with the Act and shall be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; he shall render to the board whenever required an account of all his transactions as treasurer and of the financial position of the Corporation, and he shall have such other powers and duties as otherwise may be specified.

6.7         Powers and Duties of Officers. The powers and duties of all officers shall be such as the terms of their engagement call for or as the board or (except for those whose powers and duties are to be specified only by the board) the chief executive officer may specify. The board and (except as aforesaid) the chief executive officer may, from time to time and subject to the provisions of the Act, vary, add to or limit the powers and duties of any officer. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board chief executive officer otherwise directs.

6.8         Term of Office. The board, in its discretion, or the president may remove any officer of the Corporation. Otherwise each officer appointed by the board shall hold office until his successor is appointed or until his earlier resignation.

6.9         Agents and Attorneys. The Corporation, by or under the authority of the board, shall have power from time to time to appoint agents or attorneys for the Corporation in or outside Canada with such powers (including the power to subdelegate) of management, administration or otherwise as may be thought fit.

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6.10       Conflict of Interest. An officer shall disclose his interest in any material contract or transaction or proposed material contract or transaction with the Corporation in accordance with Section 4.19.

ARTICLE 7 - PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

7.1         Limitation of Liability. Every director and officer of the Corporation in exercising his powers and discharging his duties shall act honestly and in good faith with a view to the best interests of the Corporation and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Subject to the foregoing, no director or officer shall be liable for the acts, receipts, neglects or defaults of any other director, officer or employee, or for joining in any receipt or other act for conformity, or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation, or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Corporation shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the moneys, securities or effects of the Corporation shall be deposited, or for any loss occasioned by any error of judgment or oversight on his part, or for any other loss, damage or misfortune which shall happen in the execution of the duties of his office or in relation thereto; provided that nothing herein shall relieve any director or officer from the duty to act in accordance with the Act and the regulations thereunder or from liability for any breach thereof.

7.2         Indemnity. Subject to the Act, the Corporation shall indemnify a director or officer, a former director or officer, or a person who acts or acted at the Corporation’s request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or body corporate, if (a) he acted honestly and in good faith with a view to the best interests of the Corporation, and (b) in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. The Corporation shall also indemnify that person in such other circumstances as the Act or law permits or requires. Nothing in this by-law shall limit the right of any person entitled to indemnity to claim indemnity apart from the provisions of this by-law.

7.3         Insurance. Subject to the Act, the Corporation may purchase and maintain such insurance for the benefit of any person referred to in Section 7.2 hereof as the board may from time to time determine.

ARTICLE 8 - SHARES

8.1         Allotment of Shares. Subject to the Act and the articles, the board may from time to time allot or grant options to purchase the whole or any part of the authorized and unissued shares of the Corporation at such times and to such persons and for such consideration as the board shall determine, provided that no share shall be issued until it is fully paid as provided by the Act.

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8.2         Commissions. The board may from time to time authorize the Corporation to pay a reasonable commission to any person in consideration of his purchasing or agreeing to purchase shares of the Corporation, whether from the Corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares.

8.3         Registration of Transfers. Subject to the Act, no transfer of a share shall be registered in a securities register except on presentation of the certificate representing the share with an endorsement which complies with the Act made on or delivered with it duly executed by an appropriate person as provided by the Act, together with such reasonable assurance that the endorsement is genuine and effective as the board may from time to time prescribe, on payment of all applicable taxes and any reasonable fees prescribed by the board and on compliance with the restrictions on issue, transfer or ownership authorized by the articles.

8.4         Non-recognition of Trusts. Subject to the Act, the Corporation may treat the registered holder of any share as the person exclusively entitled to vote, to receive notices, to receive any dividend or other payment in respect of the share, and otherwise to exercise all the rights and powers of an owner of the share.

8.5         Share Certificates. Shares of the Corporation shall be represented by certificates, or shall be uncertificated shares that may be evidenced by a book-entry system (including a non-certificated inventory system (e.g. Direct Registration System)) maintained by the registrar of such shares, or a combination of both. To the extent that shares are represented by certificates, such certificates (and the form of stock transfer power on the reverse side thereof) shall (subject to compliance with the Act) be in such form as the board may from time to time by resolution approve. Unless otherwise provided by resolution of the board, such certificates may be signed manually by the Chairman of the Board, the President or a Vice-President and the Secretary or an Assistant Secretary (if any) holding office at the time of signing and notwithstanding any change in the persons holding such offices between the time of actual signing and the issuance of any certificate and notwithstanding that the Chairman of the Board, the President or Vice-President or Secretary or Assistant Secretary signing may not have held office at the date of the issuance of such certificate, any such certificate so signed shall be valid and binding on the Corporation.

8.6         Replacement of Share Certificates. The board or any officer or agent designated by the board may in its or his discretion direct the issue of a new share or other such certificate in lieu of and on cancellation of a certificate that has been mutilated or in substitution for a certificate claimed to have been lost, apparently destroyed or wrongfully taken, on payment of such reasonable fee and on such terms as to indemnity, reimbursement of expenses and evidence of loss and of title as the board may from time to time prescribe, whether generally or in any particular case.

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8.7         Joint Shareholders. If two or more persons are registered as joint holders of any share, the Corporation shall not be bound to issue more than one certificate in respect of that share and delivery of the certificate to one of those persons shall be sufficient delivery to all of them. Any one of those persons may give effectual receipts for the certificate issued in respect of it or for any dividend, bonus, return of capital or other money payable or warrant issuable in respect of that share.

8.8         Deceased Shareholders. In the event of the death of a holder, or of one of the joint holders, of any share, the Corporation shall not be required to make any entry in the securities register in respect of the death or to make any dividend or other payments in respect of the share except on production of all such documents as may be required by law and on compliance with the reasonable requirements of the Corporation and its transfer agents.

ARTICLE 9 - DIVIDENDS AND RIGHTS

9.1         Dividends. Subject to the Act, the board may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Dividends may be paid in money or property or by the issue of fully paid shares of the Corporation or options or rights to acquire fully paid shares of the Corporation. Any dividend unclaimed after a period of 6 years from the date on which it has been declared to be payable shall be forfeited and shall revert to the Corporation.

9.2         Dividend Cheques. A dividend payable in money shall be paid by cheque to the order of each registered holder of shares of the class or series in respect of which it has been declared, and mailed by prepaid ordinary mail to the registered holder at his recorded address, unless the holder otherwise directs. In the case of joint holders the cheque shall, unless the joint holders otherwise direct, be made payable to the order of all the joint holders and mailed to them at their recorded address. The mailing of the cheque, unless it is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented by it plus the amount of any tax which the Corporation is required to and does withhold. In the event of non-receipt of any dividend cheque by the person to whom it is sent, the Corporation shall issue a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case.

9.3         Record Date for Dividends and Rights. The board may fix in advance a date, preceding by not more than 50 days the date for the payment of any dividend or the date for the issue of any warrant or other evidence of the right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of the dividend or to exercise the right to subscribe for those securities, and notice of any such record date shall be given not less than seven days before the record date in the manner provided by the Act. If no record date is so fixed, the record date for the determination of the persons entitled to receive payment of any dividend or to exercise the right to subscribe for securities of the Corporation shall be at the close of business on the day on which the resolution relating to the dividend or right to subscribe is passed by the board.

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ARTICLE 10 - MEETINGS OF SHAREHOLDERS

10.1       Annual Meetings. The annual meeting of shareholders shall be held at such time in each year and, subject to Section 10.3, at such place as the board, the chairman of the board, the managing director or the president may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors and for the transaction of such other business as may properly be brought before the meeting.

10.2       Special Meetings. The board, the chairman of the board, the managing director or the president shall have power to call a special meeting of shareholders at any time.

10.3       Place of Meetings. Meetings of shareholders of the Corporation shall be held at such place in or outside Ontario as the directors determine or, in the absence of such a determination, at the place where the registered office of the Corporation is located.

10.4       Notice of Meetings. Notice of the time and place of each meeting of shareholders shall be given in the manner provided in Article 11 not less than 21 nor more than 50 days before the date of the meeting to each director, to the auditor, and to each shareholder who at the close of business on the record date for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting. Notice of a meeting of shareholders called for any purpose other than consideration of the minutes of an earlier meeting, financial statements and auditor’s report, election of directors and reappointment of the incumbent auditor shall state the nature of the business in sufficient detail to permit the shareholder to form a reasoned judgment on it and shall give the text of any special resolution or by-law to be submitted to the meeting.

10.5       List of Shareholders Entitled to Notice. For every meeting of shareholders, the Corporation shall prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order and showing the number of shares held by each shareholder entitled to vote at the meeting. If a record date for the meeting is fixed pursuant to Section 10.6, the shareholders listed shall be those registered at the close of business on that record date. If no record date is fixed, the shareholders listed shall be those registered at the close of business on the day immediately preceding the day on which notice of the meeting is given or, where no such notice is given, on the day on which the meeting is held. The list shall be available for examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where the central securities register is maintained and at the meeting for which the list was prepared.

10.6       Record Date for Notice. The board may fix in advance a date, preceding the date of any meeting of shareholders by not more than 50 days and not less than 21 days, as a record date for the determination of the shareholders entitled to notice of the meeting, and notice of any such record date may be given not less than seven days before the record date, by newspaper advertisement in the manner provided in the Act. If no such record date is so fixed, the record date for the determination of the shareholders entitled to receive notice of the meeting shall be at the close of business on the day preceding the day on which the notice is given or, if no notice is given, shall be the day on which the meeting is held.

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10.7        Meetings Without Notice. A meeting of shareholders may be held without notice at any time and place permitted by the Act (a) if all the shareholders entitled to vote at the meeting are present in person or duly represented or if those not present or represented waive notice of or otherwise consent to the meeting being held, and (b) if the auditors and the directors are present or waive notice of or otherwise consent to the meeting being held; so long as the shareholders, auditors or directors present are not attending for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. At such a meeting any business may be transacted which the Corporation may transact at a meeting of shareholders.

10.8        Chairman, Secretary and Scrutineers. The chairman of any meeting of shareholders shall be the first mentioned of such of the following officers as have been appointed and who is present at the meeting: managing director, president, chairman of the board, or a vice-president who is a shareholder. If no such officer is present within 15 minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their number to be chairman. If the secretary of the Corporation is absent, the chairman shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman with the consent of the meeting.

10.9        Persons Entitled to be Present. The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote at the meeting, the directors and auditor of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting.

10.10      Quorum. Subject to the Act in respect of a majority shareholder, a quorum for the transaction of business at any meeting of shareholders shall be two persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxyholder or representative for a shareholder so entitled. If a quorum is present at the opening of any meeting of shareholders, the shareholders present or represented may proceed with the business of the meeting even if a quorum is not present throughout the meeting. If a quorum is not present at the time appointed for the meeting or within a reasonable time after that the shareholders may determine, the shareholders present or represented may adjourn the meeting to a fixed time and place but may not transact any other business.

10.11      Right to Vote. Every person named in the list referred to in Section 10.5 shall be entitled to vote the shares shown on the list opposite his name at the meeting to which the list relates, except to the extent that (a) where the Corporation has fixed a record date in respect of the meeting, the person has transferred any of his shares after the record date or, where the Corporation has not fixed a record date in respect of the meeting, the person has transferred any of his shares after the date on which the list is prepared, and (b) the transferee, having produced properly endorsed certificates evidencing the shares or having otherwise established that he owns them, has demanded not later than 10 days before the meeting that his name be included in the list. In any such excepted case the transferee shall be entitled to vote the transferred shares at the meeting.

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10.12     Proxyholders and Representatives. Every shareholder entitled to vote at a meeting of shareholders may appoint a proxyholder, or one or more alternate proxyholders, as his nominee to attend and act at the meeting in the manner and to the extent authorized and with the authority conferred by the proxy. A proxy shall be in writing executed by the shareholder or his attorney and shall conform with the requirements of the Act. Alternatively, every shareholder which is a body corporate or association may authorize by resolution of its directors or governing body an individual to represent it at a meeting of shareholders and that individual may exercise on the shareholder’s behalf all the powers it could exercise if it were an individual shareholder. The authority of such an individual shall be established by depositing with the Corporation a certified copy of the resolution, or in such other manner as may be satisfactory to the secretary of the Corporation or the chairman of the meeting. Any such proxyholder or representative need not be a shareholder.

10.13     Time for Deposit of Proxies. The board may fix a time not exceeding 48 hours, excluding Saturdays and holidays, preceding any meeting or adjourned meeting of shareholders before which time proxies to be used at the meeting must be deposited with the Corporation or its agent, and any time so fixed shall be specified in the notice calling the meeting. A proxy shall be acted on only if, before the time so specified, it has been deposited with the Corporation or its agent specified in the notice or if, no such time having been specified in the notice, it has been received by the secretary of the Corporation or by the chairman of the meeting or any adjournment before the time of voting.

10.14     Joint Shareholders. If two or more persons hold shares jointly, any one of them present in person or duly represented at a meeting of shareholders may, in the absence of the other or others, vote the shares; but if two or more of those persons are present in person or represented and vote, they shall vote as one the shares jointly held by them.

10.15     Votes to Govern. At any meeting of shareholders every question shall, unless otherwise required by the articles or by-laws or by law, be determined by a majority of the votes cast on the question. In case of an equality of votes either on a show of hands or on a poll, the chairman of the meeting shall be entitled to a second or casting vote.

10.16     Show of Hands. Subject to the Act, any question at a meeting of shareholders shall be decided by a show of hands, unless a ballot is required or demanded as provided below, and on a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands has been taken on a question, unless a ballot is required or demanded, a declaration by the chairman of the meeting that the vote on the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the meeting shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other proceeding in respect of the question, and the result of the vote so taken shall be the decision of the shareholders on the question.

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10.17     Ballots. On any question proposed for consideration at a meeting of shareholders, and whether or not a show of hands has been taken on it, the chairman may require a ballot or any person who is present and entitled to vote on the question at the meeting may demand a ballot. A ballot so required or demanded shall be taken in such manner as the chairman shall direct. A requirement or demand for a ballot may be withdrawn at any time before the taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares which he is entitled to vote at the meeting on the question, to that number of votes provided by the Act or the articles, and the result of the ballot so taken shall be the decision of the shareholders on the question.

10.18     Adjournment. The chairman at a meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting may decide, adjourn the meeting from time to time and from place to place. If a meeting of shareholders is adjourned for less than 30 days, it will not be necessary to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned. Subject to the Act, if a meeting of shareholders is adjourned by one or more adjournments for an aggregate of 30 days or more, notice of the adjourned meeting shall be given as for an original meeting.

10.19     Action in Writing by Shareholders. A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders unless, in accordance with the Act, (a) in the case of the resignation or removal of a director, or the appointment or election of another person to fill the place of that director, a written statement is submitted to the Corporation by the director giving the reasons for his resignation or the reasons why he opposes any proposed action or resolution for the purpose of removing him from office or the election of another person to fill the office of that director; or (b) in the case of the removal or resignation of an auditor, or the appointment or election of another person to fill the office of auditor, representations in writing are made to the Corporation by that auditor concerning his proposed removal, the appointment or election of another person to fill the office of auditor, or his resignation.

ARTICLE 11 NOTICES

11.1       Method of Giving Notices. Any notice (which term includes any communication or document) to be given (which term includes sent, delivered or served) pursuant to the Act, the regulations, the articles, the by-laws or otherwise to a shareholder, director, officer, auditor or member of a committee of the board shall be sufficiently given if delivered personally to the person to whom it is to be given or if mailed to him at his recorded address by prepaid mail, or if sent to him at his recorded address by any means of prepaid transmitted or recorded communication. A notice so delivered shall be deemed to have been given when it is delivered personally and a notice so mailed shall be deemed to have been given on the fifth day after it is deposited in a post office or public letter box; and a notice sent by any means of transmitted or recorded communication shall be deemed to have been given when dispatched or delivered to the appropriate communication company or agency or its representative for dispatch. The secretary may change or cause to be changed the recorded address of any shareholder, director, officer, auditor or member of a committee of the board in accordance with any information believed by him to be reliable.

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11.2        Notice to Joint Shareholders. If two or more persons are registered as joint holders of any share, any notice may be addressed to all such joint holders, but notice addressed to one of those persons shall be sufficient notice to all of them.

11.3        Computation of Time. In computing the period of days when notice must be given under any provision requiring a specified number of days’ notice of any meeting or other event, the period shall be deemed to begin on the day following the event that began the period and shall be deemed to end at midnight of the last day of the period, except that if the last day of the period falls on a Sunday or holiday the period shall end at midnight on the day next following that is not a Sunday or holiday.

11.4        Undelivered Notices. If any notice given to a shareholder pursuant to Section 11.1 is returned on three consecutive occasions because he cannot be found, the Corporation shall not be required to give any further notices to that shareholder until he informs the Corporation in writing of his new address.

11.5        Omissions and Errors. The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any such person or any error in any notice not affecting the substance of the notice shall not invalidate any action taken at any meeting held pursuant to the notice or otherwise founded on it.

11.6       Persons Entitled by Death or Operation of Law. Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever, shall become entitled to any share, shall be bound by every notice in respect of the share which has been duly given to the shareholder from whom he derives his title to the share before his name and address were entered on the securities register (whether the notice was given before or after the happening of the event on which he became so entitled) and before he furnished the Corporation with proof of authority or evidence of his entitlement prescribed by the Act.

11.7       Waiver of Notice. Any shareholder, proxyholder or other person entitled to attend a meeting of shareholders, director, officer, auditor or member of a committee of the board may at any time waive any notice, or waive or abridge the time for any notice, required to be given to him under the Act, the regulations, the articles, the by-laws or otherwise, and that waiver or abridgement, whether given before or after the meeting or other event of which notice is required to be given, shall cure any default in the giving or in the time of the notice, as the case may be. Any such waiver or abridgement shall be in writing, except a waiver of notice of a meeting of shareholders or of the board or a committee of the board, which may be given in any manner.

11.8       Interpretation. In this bylaw, recorded address means in the case of a shareholder his address as recorded in the securities register; and in the case of joint shareholders the address appearing in the securities register in respect of the joint holding or the first address so appearing if there are more than one; in the case of an officer, auditor or member of a committee of the board, his latest address as recorded in the records of the Corporation; and, in the case of a director, his latest address as recorded in the most recent notice filed under the Corporations Information Act, whichever is the more current.

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ARTICLE 12 - EFFECTIVE DATE

12.1       Effective Date. This by-law shall come into force when made by the board in accordance with the Act.

The foregoing by-law is hereby enacted by the directors of the Corporation, effective May 13, 2015, in accordance with the provisions of the Canada Business Corporations Act.

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EX-4.1

Exhibit 4.1

 

 

EX-4.2

Exhibit 4.2

THE SHARE PURCHASE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRADED UNTIL NOVEMBER 19, 2012 AND THE SECURITIES OBTAINED UPON THE EXERCISE OF THESE SHARE PURCHASE WARRANTS MAY NOT BE TRADED UNTIL NOVEMBER 19, 2012 UNLESS A FURTHER STATUTORY EXEMPTION PURSUANT TO APPLICABLE SECURITIES LAWS MAY BE RELIED ON, A PROSPECTUS IS FILED TO QUALIFY THE SALE OF THE SHARE PURCHASE WARRANTS AND/OR THE SECURITIES OBTAINED UPON EXERCISE OF THE SHARE PURCHASE WARRANTS, OR A DISCRETIONARY ORDER IS OBTAINED.

Warrant Certificate

WARRANTS

TO PURCHASE COMMON SHARES OF

CYNAPSUS THERAPEUTICS INC.

(subsisting under the laws of Canada)

THIS CERTIFIES that, for value received, (the “Holder”) is the registered holder of (each a “Warrant” and collectively the “Warrants”); each Warrant shall entitle the Holder, subject to the terms and conditions set forth in this certificate or in a replacement certificate (either case, the “Warrant Certificate”), to acquire from Cynapsus Therapeutics Inc. (the “Corporation”) one fully paid and non-assessable common share in the capital of the Corporation (each a “Share”) at any time during the exercise period which is the period ending on the earlier of 60 months from the closing date (July 18, 2012) and a period ending 20 days after prior written notice from the Corporation that the closing price of its Common Shares on the principal stock exchange of the Corporation has been at least $0.15 per share for 20 consecutive trading days (the “Time of Expiry”) on payment of $0.10 per Share (the “Exercise Price”). The number of Shares which the Holder is entitled to acquire upon exercise of the Warrants and the payment of the Exercise Price are subject to adjustment as hereinafter provided.

Article 1 - EXERCISE OF WARRANTS

1.1 Election to Purchase

The rights evidenced by this Warrant Certificate may be exercised by the Holder in whole or in part at any time commencing on the date hereof and continuing up to the Time of Expiry and in accordance with the provisions hereof by delivery of an election to exercise in substantially the form attached hereto as Exhibit “1” (“Election to Exercise”), properly completed and executed, together with payment of the Exercise Price for the number of Shares specified in the Election to Exercise to the office of the Corporation at 828 Richmond Street West, Toronto, Ontario, M6J 1C9or such other address in Canada as may be notified in writing by the Corporation. In the event that the rights evidenced by this Warrant Certificate are exercised in part, the Corporation shall, contemporaneously with the issuance of the Shares issuable on the exercise of the Warrants so exercised, issue to the Holder Warrants on identical terms in respect of that number of Shares in respect of which the Holder has not exercised the rights evidenced by this Warrant Certificate.

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1.2 Exercise

The Corporation shall, as soon as possible following receipt of a duly executed Election to Exercise and the Exercise Price for the number of Shares specified in the Election to Exercise (the date of such receipt being referred to herein as the “Exercise Date”), issue as of the Exercise Date that number of Shares specified in the Election to Exercise as fully paid and non-assessable common shares in the capital of the Corporation.

1.3 Certificates

As promptly as practicable after the Exercise Date and, in any event, within three business days of receipt of the Election to Exercise, the Corporation shall issue and deliver to the Holder, registered in such name or names as the Holder may direct or if no such direction has been given, in the name of the Holder, certificates for the number of Shares specified in the Election to Exercise. To the extent permitted by law, such exercise shall be deemed to have been effected as of the close of business on the Exercise Date, and at such time the rights of the Holder with respect to the number of Warrants which have been exercised as such shall cease, and the person or persons in whose name or names any certificate or certificates for Shares shall then be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares represented thereby.

1.4 Fractional Shares

(a)   To the extent that the Holder is entitled to receive on the exercise or partial exercise thereof a fraction of a Share, such right may be exercised only in respect of such fraction in combination with another Warrant or other Warrants which in the aggregate entitle the Holder to receive a whole number of Shares.

(b)   If the Holder is not able to, or elects not to, combine Warrants so as to be entitled to acquire a whole number of Shares, the Holder shall not be entitled to any compensation or other right in lieu of fractional Shares, as the case may be.

Article 2 - ANTI-DILUTION PROTECTION

2.1 Definitions

For the purposes of this Section 2.1, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor in this subsection:

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(a)   “Adjustment Period” means the period commencing on the date hereof and ending at the Time of Expiry; and

(b)   “director” means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to action “by the directors” means action by the directors of the Corporation as a board or whenever empowered, action by the executive committee of such board;

2.2 Adjustments

The Exercise Price and the number of Shares issuable to the Holder upon exercise of the Warrants shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(a)   If at any time during the Adjustment Period the Corporation shall:

(i) fix a record date for the issue of, or issue, Shares to the holders of all or substantially all of the outstanding Shares by way of a stock dividend;

(ii) fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the Shares payable in Shares or securities exchangeable for or convertible into Shares;

(iii) subdivide the outstanding Shares into a greater number of Shares; or

(iv) consolidate the outstanding Shares into a lesser number of Shares,

(any of such events in subclauses (i), (ii), (ii) and (iv) above being herein called a “Common Share Reorganization”), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

(A) the numerator of which shall be the number of Shares outstanding on such record date or effective date before giving effect to such Common Share Reorganization; and

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(B) the denominator of which shall be the number of Shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a distribution of securities exchangeable for or convertible into Shares, the number of Shares that would be outstanding had such securities all been exchanged for or converted into Shares on such date).

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 2.2(a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable for or convertible into Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange or conversion right to the Exercise Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

(b)   If at any time during the Adjustment Period there shall occur:

(i) a reclassification or redesignation of the Shares, any change of the Shares into other shares or securities or any other capital reorganization involving the Shares other than a Common Share Reorganization;

(ii) a consolidation, amalgamation or merger of the Corporation with or into any other body corporate which results in a reclassification or redesignation of the Shares or a change of the Shares into other shares or securities; or

(iii) the transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity,

(any of such events being herein called a “Capital Reorganization”), after the effective date of the Capital Reorganization, the Holder shall be entitled to receive and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Shares to which the Holder was theretofore entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which the Holder was theretofore entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Certificate with respect to the rights and interest thereafter of the Holder to the end that the provisions of this Warrant Certificate shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of this Warrant Certificate.

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(c)   If at any time during the Adjustment Period any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Sections 2.2(a) hereof, then the number of Shares purchasable upon the subsequent exercise of this Warrant shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

2.3 Rules

The following rules and procedures shall be applicable to adjustments made pursuant to Section 2.2 of this Warrant Certificate.

(a)   Subject to the following provisions of this Section 2.3, any adjustment made pursuant to Section 2.2 hereof shall be made successively whenever an event referred to therein shall occur.

(b)   No adjustment in the Exercise Price shall be required unless the adjustment would result in a change of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Shares purchasable or issuable on the exercise of the Warrants unless it would result in a change of at least one one-hundredth of a Share provided, however, that any adjustments which except for the provisions of this Section 2.3(b) would otherwise have been required to be made shall be carried forward and taken into account in any subsequent adjustment.

(c)   No adjustment in the Exercise Price or in the number or kind of securities purchasable on the exercise of this Warrant shall be made in respect of any event described in Article 2 hereof if the Holder is entitled to participate in such event on the same terms mutatis mutandis as if the Holder had exercised the Warrants prior to or on the record date or effective date, as the case may be, of such event.

(d)   If the Corporation sets a record date to determine holders of Shares for the purpose of entitling such holders to receive any dividend or distribution, shall thereafter and before the distribution to such holders of any such dividend or distribution, legally abandon its plan to pay or deliver such dividend or distribution, no adjustment in the Exercise Price of the number of Shares purchasable upon the exercise of the Warrants shall be required by reason of the setting of such record date.

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(e)   In any case in which this Warrant Certificate shall require that an adjustment shall become effective immediately after a record date for an event referred to in Section 2.2 hereof, the Corporation may defer until the occurrence of such event:

(i) issuing to the Holder to the extent that the Warrants are exercised after such record date and before the occurrence of such event, the additional Shares issuable upon such exercise by reason of the adjustment required by such event; and

(ii) delivering to the Holder any distribution declared with respect to such additional Shares after such record date and before such event,

provided, however, that the Corporation shall deliver to the Holder an appropriate instrument evidencing the right of the Holder, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Shares purchasable upon the exercise of the Warrants and to such distribution declared with respect to any such additional Shares issuable on this exercise of the Warrants.

(f)   If a dispute shall at any time arise with respect to any adjustment of the Exercise Price or the number of Shares purchasable pursuant to this Warrant Certificate, such dispute shall be conclusively determined by the auditors of the Corporation or if they are unable or unwilling to act by such other firm of independent chartered accountants as may be selected by the directors.

2.4 Taking of Actions

As a condition precedent to the taking of any action which would require an adjustment pursuant to Section 2.2 hereof, the Corporation shall take any action which may, in the opinion of counsel, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable shares all of the Shares which the Holder is entitled to receive in accordance with the provisions of this Warrant Certificate.

2.5 Notice

At least five days prior to any record date or effective date, as the case may be, for any event which requires or might require an adjustment in any of the rights of the Holder under this Warrant Certificate, including the Exercise Price and the number of Shares which are purchasable under this Warrant Certificate, the Corporation shall deliver to the Holder a certificate of the Corporation specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment for which a notice in this Section 2.5 has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable deliver to the Holder a Certificate providing the calculation of such adjustment. The Corporation hereby covenants and agrees that the register of transfers and share transfer books for the Shares will be open and that the Corporation will not take any action which might deprive the Holder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate during such five day period.

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Article 3 - SHARES TO BE RESERVED

The Corporation will at all times keep available and reserve, out of its authorized share capital, solely for the purpose of issue upon the exercise of the Warrants, such number of Shares as are then issuable upon the exercise of the Warrants. The Corporation covenants and agrees that all Shares that are so issuable will, upon issuance, be duly authorized, fully paid and non-assessable. The Corporation will take such actions as may be reasonably necessary and as are within its power to ensure that all such Shares may be so issued without violation of any applicable laws or the applicable requirements of any exchange upon which the common shares of the Corporation may be listed or in respect of which such Shares are qualified for unlisted trading privileges.

Article 4 - UNITED STATES RESTRICTIONS

The Warrants and the Shares have not been registered under the United States Securities Act of 1933, as amended (“U.S. Securities Act”) or the securities laws of any state and this Warrant may not be exercised in the United States or by or on behalf of a U.S. person (as defined in Regulation S under the U.S. Securities Act) unless an exemption from registration under the U.S. Securities Act and applicable state securities laws is available and the Corporation receives an Opinion of counsel to such effect in form and substance satisfactory to it.

Article 5 - NO TRANSFER OF WARRANT

The Warrants evidenced hereby are non-assignable, non-transferable and non-negotiable and may not be exercised by or for the benefit of any person other than the Holder. The Holder further acknowledges that the Warrants represented by this certificate and the Shares issuable upon exercise hereby may be offered, sold or otherwise transferred only in compliance with all applicable securities laws.

Article 6 - REPLACEMENT

Upon, receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of this Warrant Certificate and, if requested by the Corporation, upon delivery of a bond of indemnity satisfactory to the Corporation (or in the case of mutilation, upon surrender of this Warrant Certificate), the Corporation will issue to the Holder a replacement certificate (containing the same terms and conditions as this Warrant Certificate).

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Article 7 - EXPIRY DATE

The Warrants shall expire and all rights to purchase Shares hereunder shall cease and become null and void at the Time of Expiry.

Article 8 - TIME

Time shall be of the essence of this Warrant Certificate.

Article 9 - GOVERNING LAW

The laws of the Province of Ontario and the laws of Canada applicable therein shall govern the Warrants.

Article 10 - SUCCESSOR

(a)   The Corporation shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “Successor Corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Corporation and the Successor Corporation shall have executed such instruments and done such things as are necessary or advisable to establish that upon the consummation of such transaction:

(i) the Successor Corporation will have assumed all the covenants and obligations of the Corporation under this Warrant; and

(ii) the Warrant will be valid and binding obligation of the Successor Corporation entitling the Holder, as against the Successor Corporation, to all the rights of the Holder under this Warrant.

(b)   Whenever the conditions of this Article 10 shall have been duly observed and performed, the Successor Corporation shall possess, and from time to time may exercise, each, and every right and power of the Corporation under this Warrant in the name of the Corporation or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Corporation may be done and performed with like force and effect by the like directors or officers of the Successor Corporation.

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Article 11 - EXERCISE

To exercise its rights hereunder, the Holder must complete and execute the Election to Exercise and deliver this Warrant Certificate to the Corporation.

Article 12 - GENERAL

This Warrant Certificate is not valid for any purpose whatsoever unless and until it has been signed by or on behalf of the Corporation. The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer.

DATED as of the ___ day of July, 2012.

CYNAPSUS THERAPEUTICS INC.
Per:
	Authorized Signing Officer
Per:
	Authorized Signing Officer

EXHIBIT 1

Election to Exercise

The undersigned hereby irrevocably elects to exercise the number of Warrants of Cynapsus Therapeutics Inc. set out below for the number of Shares (or other property or securities subject thereto) as set forth below:

(a) Number of Warrants to be Exercised:

(b) Number of Shares to be Acquired:

(c) Exercise Price per Warrant:

(d) Aggregate Purchase Price [(b) multiplied by (c)]: 

and hereby tenders a certified cheque, bank draft or cash for such aggregate purchase price, and directs such Shares to be registered and a certificate therefor to be issued as directed below.

The undersigned represents that it is not in the United States or a “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933, as amended), is not exercising this Warrant on behalf of a “U.S. person” and did not execute or deliver this Election to Exercise in the United States.

DATED this _______ day of __________________, _______.

[NAME OF HOLDER]

Per:

Direction as to Registration

Name of Registered Holder:

Address of Registered Holder:

EX-4.3

Exhibit 4.3

THE SHARE PURCHASE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRADED UNTIL FEBRUARY 24, 2013 AND THE SECURITIES OBTAINED UPON THE EXERCISE OF THESE SHARE PURCHASE WARRANTS MAY NOT BE TRADED UNTIL FEBRUARY 24, 2013 UNLESS A FURTHER STATUTORY EXEMPTION PURSUANT TO APPLICABLE SECURITIES LAWS MAY BE RELIED ON, A PROSPECTUS IS FILED TO QUALIFY THE SALE OF THE SHARE PURCHASE WARRANTS AND/OR THE SECURITIES OBTAINED UPON EXERCISE OF THE SHARE PURCHASE WARRANTS, OR A DISCRETIONARY ORDER IS OBTAINED.

Warrant Certificate

WARRANTS

TO PURCHASE COMMON SHARES OF

CYNAPSUS THERAPEUTICS INC.

(subsisting under the laws of Canada)

THIS CERTIFIES that, for value received, (the “Holder”) is the registered holder of (each a “Warrant” and collectively the “Warrants”); each Warrant shall entitle the Holder, subject to the terms and conditions set forth in this certificate or in a replacement certificate (either case, the “Warrant Certificate”), to acquire from Cynapsus Therapeutics Inc. (the “Corporation”) one fully paid and non-assessable common share in the capital of the Corporation (each a “Share”) at any time during the exercise period which is the period ending 60 months from the closing date (October 24, 2012) on payment of $0.0625 per Warrant for a period of 12 months, and thereafter at an exercise price of $0.10 per Warrant (the “Exercise Price”).

Notwithstanding the foregoing, if the Common Shares are consolidated during the 12 month period following the Closing Date on a basis of more than 1.6 Common Shares for one new Common Share then the automatic increase in the exercise price of the Warrants 12 months following the Closing Date will not apply, provided the exercise price will nevertheless be adjusted as a result of the consolidation in accordance with the terms of the Warrant. The Warrants shall be exercisable by the holder thereof on any business day during the period ending 60 months following the Closing Date. The number of Shares which the Holder is entitled to acquire upon exercise of the Warrants and the payment of the Exercise Price are subject to adjustment as hereinafter provided.

Article 1 - EXERCISE OF WARRANTS

1.1 Election to Purchase

The rights evidenced by this Warrant Certificate may be exercised by the Holder in whole or in part at any time commencing on the date hereof and continuing up to the Time of Expiry and in accordance with the provisions hereof by delivery of an election to exercise in substantially the form attached hereto as Exhibit “1” (“Election to Exercise”), properly completed and executed, together with payment of the Exercise Price for the number of Shares specified in the Election to Exercise to the office of the Corporation at 828 Richmond Street West, Toronto, Ontario, M6J 1C9or such other address in Canada as may be notified in writing by the Corporation. In the event that the rights evidenced by this Warrant Certificate are exercised in part, the Corporation shall, contemporaneously with the issuance of the Shares issuable on the exercise of the Warrants so exercised, issue to the Holder Warrants on identical terms in respect of that number of Shares in respect of which the Holder has not exercised the rights evidenced by this Warrant Certificate.

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1.2 Exercise

The Corporation shall, as soon as possible following receipt of a duly executed Election to Exercise and the Exercise Price for the number of Shares specified in the Election to Exercise (the date of such receipt being referred to herein as the “Exercise Date”), issue as of the Exercise Date that number of Shares specified in the Election to Exercise as fully paid and non-assessable common shares in the capital of the Corporation.

1.3 Certificates

As promptly as practicable after the Exercise Date and, in any event, within three business days of receipt of the Election to Exercise, the Corporation shall issue and deliver to the Holder, registered in such name or names as the Holder may direct or if no such direction has been given, in the name of the Holder, certificates for the number of Shares specified in the Election to Exercise. To the extent permitted by law, such exercise shall be deemed to have been effected as of the close of business on the Exercise Date, and at such time the rights of the Holder with respect to the number of Warrants which have been exercised as such shall cease, and the person or persons in whose name or names any certificate or certificates for Shares shall then be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares represented thereby.

1.4 Fractional Shares

(a)   To the extent that the Holder is entitled to receive on the exercise or partial exercise thereof a fraction of a Share, such right may be exercised only in respect of such fraction in combination with another Warrant or other Warrants which in the aggregate entitle the Holder to receive a whole number of Shares.

(b)   If the Holder is not able to, or elects not to, combine Warrants so as to be entitled to acquire a whole number of Shares, the Holder shall not be entitled to any compensation or other right in lieu of fractional Shares, as the case may be.

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Article 2 - ADJUSTMENTS

2.1 Definitions

For the purposes of this Section 2.1, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor in this subsection:

(a)   “Adjustment Period” means the period commencing on the date hereof and ending at the Time of Expiry; and

(b)   “director” means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to action “by the directors” means action by the directors of the Corporation as a board or whenever empowered, action by the executive committee of such board.

2.2 Adjustments

The Exercise Price and the number of Shares issuable to the Holder upon exercise of the Warrants shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(a)   If at any time during the Adjustment Period the Corporation shall:

(i) fix a record date for the issue of, or issue, Shares to the holders of all or substantially all of the outstanding Shares by way of a stock dividend;

(ii) fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the Shares payable in Shares or securities exchangeable for or convertible into Shares;

(iii) subdivide the outstanding Shares into a greater number of Shares; or

(iv) consolidate the outstanding Shares into a lesser number of Shares,

(any of such events in subclauses (i), (ii), (ii) and (iv) above being herein called a “Common Share Reorganization”), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

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(A) the numerator of which shall be the number of Shares outstanding on such record date or effective date before giving effect to such Common Share Reorganization; and

(B) the denominator of which shall be the number of Shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a distribution of securities exchangeable for or convertible into Shares, the number of Shares that would be outstanding had such securities all been exchanged for or converted into Shares on such date).

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 2.2(a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable for or convertible into Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange or conversion right to the Exercise Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

(b)   If at any time during the Adjustment Period there shall occur:

(i) a reclassification or redesignation of the Shares, any change of the Shares into other shares or securities or any other capital reorganization involving the Shares other than a Common Share Reorganization;

(ii) a consolidation, amalgamation or merger of the Corporation with or into any other body corporate which results in a reclassification or redesignation of the Shares or a change of the Shares into other shares or securities; or

(iii) the transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity,

(any of such events being herein called a “Capital Reorganization”), after the effective date of the Capital Reorganization, the Holder shall be entitled to receive and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Shares to which the Holder was theretofore entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which the Holder was theretofore entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Certificate with respect to the rights and interest thereafter of the Holder to the end that the provisions of this Warrant Certificate shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of this Warrant Certificate.

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(c)   If at any time during the Adjustment Period any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Sections 2.2(a) hereof, then the number of Shares purchasable upon the subsequent exercise of this Warrant shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

2.3 Rules

The following rules and procedures shall be applicable to adjustments made pursuant to Section 2.2 of this Warrant Certificate.

(a)   Subject to the following provisions of this Section 2.3, any adjustment made pursuant to Section 2.2 hereof shall be made successively whenever an event referred to therein shall occur.

(b)   No adjustment in the Exercise Price shall be required unless the adjustment would result in a change of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Shares purchasable or issuable on the exercise of the Warrants unless it would result in a change of at least one one-hundredth of a Share provided, however, that any adjustments which except for the provisions of this Section 2.3(b) would otherwise have been required to be made shall be carried forward and taken into account in any subsequent adjustment.

(c)   No adjustment in the Exercise Price or in the number or kind of securities purchasable on the exercise of this Warrant shall be made in respect of any event described in Article 2 hereof if the Holder is entitled to participate in such event on the same terms mutatis mutandis as if the Holder had exercised the Warrants prior to or on the record date or effective date, as the case may be, of such event.

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(d)   If the Corporation sets a record date to determine holders of Shares for the purpose of entitling such holders to receive any dividend or distribution and shall thereafter and before the distribution to such holders of any such dividend, distribution legally abandon its plan to pay or deliver such dividend or distribution, no adjustment in the Exercise Price of the number of Shares purchasable upon the exercise of the Warrants shall be required by reason of the setting of such record date.

(e)   In any case in which this Warrant Certificate shall require that an adjustment shall become effective immediately after a record date for an event referred to in Section 2.2 hereof, the Corporation may defer until the occurrence of such event:

(i) issuing to the Holder to the extent that the Warrants are exercised after such record date and before the occurrence of such event, the additional Shares issuable upon such exercise by reason of the adjustment required by such event; and

(ii) delivering to the Holder any distribution declared with respect to such additional Shares after such record date and before such event,

provided, however, that the Corporation shall deliver to the Holder an appropriate instrument evidencing the right of the Holder, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Shares purchasable upon the exercise of the Warrants and to such distribution declared with respect to any such additional Shares issuable on this exercise of the Warrants.

(f)   If a dispute shall at any time arise with respect to any adjustment of the Exercise Price or the number of Shares purchasable pursuant to this Warrant Certificate, such dispute shall be conclusively determined by the auditors of the Corporation or if they are unable or unwilling to act by such other firm of independent chartered accountants as may be selected by the directors.

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2.4 Taking of Actions

As a condition precedent to the taking of any action which would require an adjustment pursuant to Section 2.2 hereof, the Corporation shall take any action which may, in the opinion of counsel, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable shares all of the Shares which the Holder is entitled to receive in accordance with the provisions of this Warrant Certificate.

2.5 Notice

At least five days prior to any record date or effective date, as the case may be, for any event which requires or might require an adjustment in any of the rights of the Holder under this Warrant Certificate, including the Exercise Price and the number of Shares which are purchasable under this Warrant Certificate, the Corporation shall deliver to the Holder a certificate of the Corporation specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment for which a notice in this Section 2.5 has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable deliver to the Holder a Certificate providing the calculation of such adjustment. The Corporation hereby covenants and agrees that the register of transfers and share transfer books for the Shares will be open and that the Corporation will not take any action which might deprive the Holder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate during such five day period.

Article 3 - SHARES TO BE RESERVED

The Corporation will at all times keep available and reserve, out of its authorized share capital, solely for the purpose of issue upon the exercise of the Warrants, such number of Shares as are then issuable upon the exercise of the Warrants. The Corporation covenants and agrees that all Shares that are so issuable will, upon issuance, be duly authorized, fully paid and non-assessable. The Corporation will take such actions as may be reasonably necessary and as are within its power to ensure that all such Shares may be so issued without violation of any applicable laws or the applicable requirements of any exchange upon which the common shares of the Corporation may be listed or in respect of which such Shares are qualified for unlisted trading privileges.

Article 4 - UNITED STATES RESTRICTIONS

The Warrants and the Shares have not been registered under the United States Securities Act of 1933, as amended (“U.S. Securities Act”) or the securities laws of any state and this Warrant may not be exercised in the United States or by or on behalf of a U.S. person (as defined in Regulation S under the U.S. Securities Act) unless an exemption from registration under the U.S. Securities Act and applicable state securities laws is available and the Corporation receives an Opinion of counsel to such effect in form and substance satisfactory to it.

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Article 5 - NO TRANSFER OF WARRANT

The Warrants evidenced hereby are non-assignable, non-transferable and non-negotiable and may not be exercised by or for the benefit of any person other than the Holder. The Holder further acknowledges that the Warrants represented by this certificate and the Shares issuable upon exercise hereby may be offered, sold or otherwise transferred only in compliance with all applicable securities laws.

Article 6 - REPLACEMENT

Upon, receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of this Warrant Certificate and, if requested by the Corporation, upon delivery of a bond of indemnity satisfactory to the Corporation (or in the case of mutilation, upon surrender of this Warrant Certificate), the Corporation will issue to the Holder a replacement certificate (containing the same terms and conditions as this Warrant Certificate).

Article 7 - EXPIRY DATE

The Warrants shall expire and all rights to purchase Shares hereunder shall cease and become null and void at the Time of Expiry.

Article 8 - TIME

Time shall be of the essence of this Warrant Certificate.

Article 9 - GOVERNING LAW

The laws of the Province of Ontario and the laws of Canada applicable therein shall govern the Warrants.

Article 10 - SUCCESSOR

(a)   The Corporation shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “Successor Corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Corporation and the Successor Corporation shall have executed such instruments and done such things as are necessary or advisable to establish that upon the consummation of such transaction:

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(i) the Successor Corporation will have assumed all the covenants and obligations of the Corporation under this Warrant; and

(ii) the Warrant will be valid and binding obligation of the Successor Corporation entitling the Holder, as against the Successor Corporation, to all the rights of the Holder under this Warrant.

(b)   Whenever the conditions of this Article 10 shall have been duly observed and performed, the Successor Corporation shall possess, and from time to time may exercise, each, and every right and power of the Corporation under this Warrant in the name of the Corporation or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Corporation may be done and performed with like force and effect by the like directors or officers of the Successor Corporation.

Article 11 - EXERCISE

To exercise its rights hereunder, the Holder must complete and execute the Election to Exercise and deliver this Warrant Certificate to the Corporation.

Article 12 - GENERAL

This Warrant Certificate is not valid for any purpose whatsoever unless and until it has been signed by or on behalf of the Corporation. The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer.

DATED as of the         day of October, 2012.

CYNAPSUS THERAPEUTICS INC.
Per:
	Authorized Signing Officer
Per:
	Authorized Signing Officer

EXHIBIT 1

Election to Exercise

The undersigned hereby irrevocably elects to exercise the number of Warrants of Cynapsus Therapeutics Inc. set out below for the number of Shares (or other property or securities subject thereto) as set forth below:

(a) Number of Warrants to be Exercised:

(b) Number of Shares to be Acquired:

(c) Exercise Price per Warrant:

(d) Aggregate Purchase Price [(b) multiplied by (c)]: 

and hereby tenders a certified cheque, bank draft or cash for such aggregate purchase price, and directs such Shares to be registered and a certificate therefor to be issued as directed below.

The undersigned represents that it is not in the United States or a “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933, as amended), is not exercising this Warrant on behalf of a “U.S. person” and did not execute or deliver this Election to Exercise in the United States.

DATED this _______ day of __________________, _______.

[NAME OF HOLDER]

Per:

Direction as to Registration

Name of Registered Holder:

Address of Registered Holder:

EX-4.4

Exhibit 4.4

THE SHARE PURCHASE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRADED UNTIL MARCH 23, 2013 AND THE SECURITIES OBTAINED UPON THE EXERCISE OF THESE SHARE PURCHASE WARRANTS MAY NOT BE TRADED UNTIL MARCH 23, 2013 UNLESS A FURTHER STATUTORY EXEMPTION PURSUANT TO APPLICABLE SECURITIES LAWS MAY BE RELIED ON, A PROSPECTUS IS FILED TO QUALIFY THE SALE OF THE SHARE PURCHASE WARRANTS AND/OR THE SECURITIES OBTAINED UPON EXERCISE OF THE SHARE PURCHASE WARRANTS, OR A DISCRETIONARY ORDER IS OBTAINED.

Warrant Certificate

WARRANTS

TO PURCHASE COMMON SHARES OF

CYNAPSUS THERAPEUTICS INC.

(subsisting under the laws of Canada)

THIS CERTIFIES that, for value received, (the “Holder”) is the registered holder of (each a “Warrant” and collectively the “Warrants”); each Warrant shall entitle the Holder, subject to the terms and conditions set forth in this certificate or in a replacement certificate (either case, the “Warrant Certificate”), to acquire from Cynapsus Therapeutics Inc. (the “Corporation”) one fully paid and non-assessable common share in the capital of the Corporation (each a “Share”) at any time during the exercise period which is the period ending 60 months from the closing date (November 23, 2012) on payment of $0.0625 per Warrant for a period of 12 months, and thereafter at an exercise price of $0.10 per Warrant (the “Exercise Price”).

Notwithstanding the foregoing, if the Common Shares are consolidated during the 12 month period following the Closing Date on a basis of more than 1.6 Common Shares for one new Common Share then the automatic increase in the exercise price of the Warrants 12 months following the Closing Date will not apply, provided the exercise price will nevertheless be adjusted as a result of the consolidation in accordance with the terms of the Warrant. The Warrants shall be exercisable by the holder thereof on any business day during the period ending 60 months following the Closing Date. The number of Shares which the Holder is entitled to acquire upon exercise of the Warrants and the payment of the Exercise Price are subject to adjustment as hereinafter provided.

Article 1 - EXERCISE OF WARRANTS

1.1 Election to Purchase

The rights evidenced by this Warrant Certificate may be exercised by the Holder in whole or in part at any time commencing on the date hereof and continuing up to the Time of Expiry and in accordance with the provisions hereof by delivery of an election to exercise in substantially the form attached hereto as Exhibit “1” (“Election to Exercise”), properly completed and executed, together with payment of the Exercise Price for the number of Shares specified in the Election to Exercise to the office of the Corporation at 828 Richmond Street West, Toronto, Ontario, M6J 1C9or such other address in Canada as may be notified in writing by the Corporation. In the event that the rights evidenced by this Warrant Certificate are exercised in part, the Corporation shall, contemporaneously with the issuance of the Shares issuable on the exercise of the Warrants so exercised, issue to the Holder Warrants on identical terms in respect of that number of Shares in respect of which the Holder has not exercised the rights evidenced by this Warrant Certificate.

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1.2 Exercise

The Corporation shall, as soon as possible following receipt of a duly executed Election to Exercise and the Exercise Price for the number of Shares specified in the Election to Exercise (the date of such receipt being referred to herein as the “Exercise Date”), issue as of the Exercise Date that number of Shares specified in the Election to Exercise as fully paid and non-assessable common shares in the capital of the Corporation.

1.3 Certificates

As promptly as practicable after the Exercise Date and, in any event, within three business days of receipt of the Election to Exercise, the Corporation shall issue and deliver to the Holder, registered in such name or names as the Holder may direct or if no such direction has been given, in the name of the Holder, certificates for the number of Shares specified in the Election to Exercise. To the extent permitted by law, such exercise shall be deemed to have been effected as of the close of business on the Exercise Date, and at such time the rights of the Holder with respect to the number of Warrants which have been exercised as such shall cease, and the person or persons in whose name or names any certificate or certificates for Shares shall then be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares represented thereby.

1.4 Fractional Shares

(a)   To the extent that the Holder is entitled to receive on the exercise or partial exercise thereof a fraction of a Share, such right may be exercised only in respect of such fraction in combination with another Warrant or other Warrants which in the aggregate entitle the Holder to receive a whole number of Shares.

(b)   If the Holder is not able to, or elects not to, combine Warrants so as to be entitled to acquire a whole number of Shares, the Holder shall not be entitled to any compensation or other right in lieu of fractional Shares, as the case may be.

 -3-

Article 2 - ADJUSTMENTS

2.1 Definitions

For the purposes of this Section 2.1, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor in this subsection:

(a)   “Adjustment Period” means the period commencing on the date hereof and ending at the Time of Expiry; and

(b)   “director” means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to action “by the directors” means action by the directors of the Corporation as a board or whenever empowered, action by the executive committee of such board.

2.2 Adjustments

The Exercise Price and the number of Shares issuable to the Holder upon exercise of the Warrants shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(a)   If at any time during the Adjustment Period the Corporation shall:

(i) fix a record date for the issue of, or issue, Shares to the holders of all or substantially all of the outstanding Shares by way of a stock dividend;

(ii) fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the Shares payable in Shares or securities exchangeable for or convertible into Shares;

(iii) subdivide the outstanding Shares into a greater number of Shares; or

(iv) consolidate the outstanding Shares into a lesser number of Shares,

(any of such events in subclauses (i), (ii), (ii) and (iv) above being herein called a “Common Share Reorganization”), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

 -4-

(A) the numerator of which shall be the number of Shares outstanding on such record date or effective date before giving effect to such Common Share Reorganization; and

(B) the denominator of which shall be the number of Shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a distribution of securities exchangeable for or convertible into Shares, the number of Shares that would be outstanding had such securities all been exchanged for or converted into Shares on such date).

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 2.2(a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable for or convertible into Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange or conversion right to the Exercise Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

(b)   If at any time during the Adjustment Period there shall occur:

(i) a reclassification or redesignation of the Shares, any change of the Shares into other shares or securities or any other capital reorganization involving the Shares other than a Common Share Reorganization;

(ii) a consolidation, amalgamation or merger of the Corporation with or into any other body corporate which results in a reclassification or redesignation of the Shares or a change of the Shares into other shares or securities; or

(iii) the transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity,

(any of such events being herein called a “Capital Reorganization”), after the effective date of the Capital Reorganization, the Holder shall be entitled to receive and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Shares to which the Holder was theretofore entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which the Holder was theretofore entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Certificate with respect to the rights and interest thereafter of the Holder to the end that the provisions of this Warrant Certificate shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of this Warrant Certificate.

 -5-

(c)   If at any time during the Adjustment Period any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Sections 2.2(a) hereof, then the number of Shares purchasable upon the subsequent exercise of this Warrant shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

2.3 Rules

The following rules and procedures shall be applicable to adjustments made pursuant to Section 2.2 of this Warrant Certificate.

(a)   Subject to the following provisions of this Section 2.3, any adjustment made pursuant to Section 2.2 hereof shall be made successively whenever an event referred to therein shall occur.

(b)   No adjustment in the Exercise Price shall be required unless the adjustment would result in a change of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Shares purchasable or issuable on the exercise of the Warrants unless it would result in a change of at least one one-hundredth of a Share provided, however, that any adjustments which except for the provisions of this Section 2.3(b) would otherwise have been required to be made shall be carried forward and taken into account in any subsequent adjustment.

(c)   No adjustment in the Exercise Price or in the number or kind of securities purchasable on the exercise of this Warrant shall be made in respect of any event described in Article 2 hereof if the Holder is entitled to participate in such event on the same terms mutatis mutandis as if the Holder had exercised the Warrants prior to or on the record date or effective date, as the case may be, of such event.

 -6-

(d)   If the Corporation sets a record date to determine holders of Shares for the purpose of entitling such holders to receive any dividend or distribution and shall thereafter and before the distribution to such holders of any such dividend, distribution legally abandon its plan to pay or deliver such dividend or distribution, no adjustment in the Exercise Price of the number of Shares purchasable upon the exercise of the Warrants shall be required by reason of the setting of such record date.

(e)   In any case in which this Warrant Certificate shall require that an adjustment shall become effective immediately after a record date for an event referred to in Section 2.2 hereof, the Corporation may defer until the occurrence of such event:

(i) issuing to the Holder to the extent that the Warrants are exercised after such record date and before the occurrence of such event, the additional Shares issuable upon such exercise by reason of the adjustment required by such event; and

(ii) delivering to the Holder any distribution declared with respect to such additional Shares after such record date and before such event,

provided, however, that the Corporation shall deliver to the Holder an appropriate instrument evidencing the right of the Holder, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Shares purchasable upon the exercise of the Warrants and to such distribution declared with respect to any such additional Shares issuable on this exercise of the Warrants.

(f)   If a dispute shall at any time arise with respect to any adjustment of the Exercise Price or the number of Shares purchasable pursuant to this Warrant Certificate, such dispute shall be conclusively determined by the auditors of the Corporation or if they are unable or unwilling to act by such other firm of independent chartered accountants as may be selected by the directors.

 -7-

2.4 Taking of Actions

As a condition precedent to the taking of any action which would require an adjustment pursuant to Section 2.2 hereof, the Corporation shall take any action which may, in the opinion of counsel, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable shares all of the Shares which the Holder is entitled to receive in accordance with the provisions of this Warrant Certificate.

2.5 Notice

At least five days prior to any record date or effective date, as the case may be, for any event which requires or might require an adjustment in any of the rights of the Holder under this Warrant Certificate, including the Exercise Price and the number of Shares which are purchasable under this Warrant Certificate, the Corporation shall deliver to the Holder a certificate of the Corporation specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment for which a notice in this Section 2.5 has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable deliver to the Holder a Certificate providing the calculation of such adjustment. The Corporation hereby covenants and agrees that the register of transfers and share transfer books for the Shares will be open and that the Corporation will not take any action which might deprive the Holder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate during such five day period.

Article 3 - SHARES TO BE RESERVED

The Corporation will at all times keep available and reserve, out of its authorized share capital, solely for the purpose of issue upon the exercise of the Warrants, such number of Shares as are then issuable upon the exercise of the Warrants. The Corporation covenants and agrees that all Shares that are so issuable will, upon issuance, be duly authorized, fully paid and non-assessable. The Corporation will take such actions as may be reasonably necessary and as are within its power to ensure that all such Shares may be so issued without violation of any applicable laws or the applicable requirements of any exchange upon which the common shares of the Corporation may be listed or in respect of which such Shares are qualified for unlisted trading privileges.

Article 4 - UNITED STATES RESTRICTIONS

The Warrants and the Shares have not been registered under the United States Securities Act of 1933, as amended (“U.S. Securities Act”) or the securities laws of any state and this Warrant may not be exercised in the United States or by or on behalf of a U.S. person (as defined in Regulation S under the U.S. Securities Act) unless an exemption from registration under the U.S. Securities Act and applicable state securities laws is available and the Corporation receives an Opinion of counsel to such effect in form and substance satisfactory to it.

 -8-

Article 5 - NO TRANSFER OF WARRANT

The Warrants evidenced hereby are non-assignable, non-transferable and non-negotiable and may not be exercised by or for the benefit of any person other than the Holder. The Holder further acknowledges that the Warrants represented by this certificate and the Shares issuable upon exercise hereby may be offered, sold or otherwise transferred only in compliance with all applicable securities laws.

Article 6 - REPLACEMENT

Upon, receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of this Warrant Certificate and, if requested by the Corporation, upon delivery of a bond of indemnity satisfactory to the Corporation (or in the case of mutilation, upon surrender of this Warrant Certificate), the Corporation will issue to the Holder a replacement certificate (containing the same terms and conditions as this Warrant Certificate).

Article 7 - EXPIRY DATE

The Warrants shall expire and all rights to purchase Shares hereunder shall cease and become null and void at the Time of Expiry.

Article 8 - TIME

Time shall be of the essence of this Warrant Certificate.

Article 9 - GOVERNING LAW

The laws of the Province of Ontario and the laws of Canada applicable therein shall govern the Warrants.

Article 10 - SUCCESSOR

(a)   The Corporation shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “Successor Corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Corporation and the Successor Corporation shall have executed such instruments and done such things as are necessary or advisable to establish that upon the consummation of such transaction:

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(i) the Successor Corporation will have assumed all the covenants and obligations of the Corporation under this Warrant; and

(ii) the Warrant will be valid and binding obligation of the Successor Corporation entitling the Holder, as against the Successor Corporation, to all the rights of the Holder under this Warrant.

(b)   Whenever the conditions of this Article 10 shall have been duly observed and performed, the Successor Corporation shall possess, and from time to time may exercise, each, and every right and power of the Corporation under this Warrant in the name of the Corporation or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Corporation may be done and performed with like force and effect by the like directors or officers of the Successor Corporation.

Article 11 - EXERCISE

To exercise its rights hereunder, the Holder must complete and execute the Election to Exercise and deliver this Warrant Certificate to the Corporation.

Article 12 - GENERAL

This Warrant Certificate is not valid for any purpose whatsoever unless and until it has been signed by or on behalf of the Corporation. The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer.

DATED as of the          day of November, 2012.

CYNAPSUS THERAPEUTICS INC.
Per:
	Authorized Signing Officer
Per:
	Authorized Signing Officer

EXHIBIT 1

Election to Exercise

The undersigned hereby irrevocably elects to exercise the number of Warrants of Cynapsus Therapeutics Inc. set out below for the number of Shares (or other property or securities subject thereto) as set forth below:

(a) Number of Warrants to be Exercised:

(b) Number of Shares to be Acquired:

(c) Exercise Price per Warrant:

(d) Aggregate Purchase Price [(b) multiplied by (c)]: 

and hereby tenders a certified cheque, bank draft or cash for such aggregate purchase price, and directs such Shares to be registered and a certificate therefor to be issued as directed below.

The undersigned represents that it is not in the United States or a “U.S. person” (as defined in Regulation S under the United States Securities Act of 1933, as amended), is not exercising this Warrant on behalf of a “U.S. person” and did not execute or deliver this Election to Exercise in the United States.

DATED this _______ day of __________________, _______.

[NAME OF HOLDER]

Per:

Direction as to Registration

Name of Registered Holder:

Address of Registered Holder:

EX-4.5

Exhibit 4.5

CYNAPSUS THERAPEUTICS INC.

- and -

EQUITY FINANCIAL TRUST COMPANY

WARRANT INDENTURE

Dated as of March 1, 2013

TABLE OF CONTENTS

Article 1 - definitions and interpretation	2
1.1 Definitions:	2
1.2 Number and Gender:	6
1.3 Interpretation not Affected by Headings:	6
1.4 Day Not a Business Day:	6
1.5 Currency:	6
1.6 Applicable Law:	6
1.7 References to this Indenture:	6
1.8 Schedule:	7
Article 2 - ISSUE AND FORM OF WARRANTS	7
2.1 Issue and Form of Warrants:	7
2.2 Terms and Delivery of Warrants:	9
2.3 Warrantholder not a Shareholder:	10
2.4 Signing of Warrant Certificate:	10
2.5 Countersignature by the Warrant Agent:	10
2.6 Issue in Substitution for Lost Warrant Certificate:	11
2.7 Exchange of Warrant Certificates:	11
2.8 Registration and Transfer of Warrants:	12
2.9 Ownership of Warrants:	14
2.10 Transfer of Warrants Represented by Global Warrant Certificates:	14
2.11 Issue of Global Warrant Certificates:	14
2.12 Issue of Uncertificated Warrants to CDS:	16
Article 3 - WARRANTS TO RANK PARI PASSU	17
3.1 Warrants to Rank Pari Passu:	17
Article 4 - EXERCISE OF WARRANTS	17
4.1 Method of Exercise of Warrants:	17
4.2 Effect of Exercise of Warrants:	21
4.3 Subscription for Less than Entitlement:	22
4.4 Warrant Certificates for Fractions of Common Shares:	22
4.5 Expiration of Warrants:	22
Article 5 - ADJUSTMENTS	22
5.1 Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:	22
5.2 Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:	27
5.3 Postponement of Subscription:	29
5.4 Notice of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:	29

Article 6 - PURCHASES BY THE CORPORATION	30
6.1 Optional Purchases by the Corporation:	30
6.2 Surrender of Warrant Certificates:	31
Article 7 - COVENANTS OF THE CORPORATION	31
7.1 General Covenants of the Corporation:	31
7.2 Warrant Agent's Remuneration and Expenses:	33
7.3 Notice of Issue:	33
7.4 Performance of Covenants by Warrant Agent:	34
Article 8 - ENFORCEMENT	34
8.1 Suits by Warrantholders:	34
8.2 Immunity of Shareholders:	34
8.3 Limitation of Liability:	34
Article 9 - MEETINGS OF WARRANTHOLDERS	34
9.1 Right to Convene Meetings:	34
9.2 Notice:	35
9.3 Chairman:	35
9.4 Quorum:	35
9.5 Power to Adjourn:	35
9.6 Show of Hands:	36
9.7 Poll:	36
9.8 Voting:	36
9.9 Regulations:	36
9.10 Corporation and Warrant Agent may be Represented:	37
9.11 Powers Exercisable by Extraordinary Resolution:	37
9.12 Extraordinary Resolution:	38
9.13 Powers Cumulative:	38
9.14 Minutes:	39
9.15 Instruments in Writing:	39
9.16 Binding Effect of Resolutions:	39
9.17 Holdings by Corporation and Warrant Agent Disregarded:	39
Article 10 - SUPPLEMENTAL INDENTURES	40
10.1 Provision for Supplemental Indentures for Certain Purposes:	40
10.2 Successor Corporation:	41
Article 11 - CONCERNING THE WARRANT AGENT	41
11.1 Trust Indenture Legislation:	41
11.2 Rights and Duties of Warrant Agent:	41
11.3 Evidence:	42
11.4 Experts and Advisers:	43
11.5 Warrant Agent not Required to give Security:	43
11.6 Protection of Warrant Agent:	43
11.7 Replacement of Warrant Agent, Successor by Merger:	44
11.8 Conflict of Interest:	45

- ii -

11.9 Acceptance of Duties and Obligations:	46
11.10 Actions by Warrant Agent to Protect Interest:	46
11.11 Documents, Moneys, etc. Held by Warrant Agent:	46
11.12 Warrant Agent Not to be Appointed Receiver:	46
11.13 Compliance with Applicable Legislation	46
Article 12 - NOTICE TO WARRANTHOLDERS	47
12.1 Notice:	47
Article 13 - GENERAL	47
13.1 Notice to the Corporation and the Warrant Agent:	47
13.2 Time of the Essence:	48
13.3 Counterparts:	48
13.4 Satisfaction and Discharge of Indenture:	48
13.5 Provisions of Indenture and Warrant Certificate for the Sole Benefit of Parties and Warrantholders:	49
13.6 Stock Exchange Consents:	49
Schedule A       Form of Warrant Certificate

- iii -

THIS WARRANT INDENTURE dated the 1^st day of March, 2013.

BETWEEN:

CYNAPSUS THERAPEUTICS INC.,
a corporation amalgamated under laws of Canada,

(hereinafter called the "Corporation")

OF THE FIRST PART

- and -

EQUITY FINANCIAL TRUST COMPANY,
a trust company formed by Letters Patent under the Trust and Loan Companies Act

(hereinafter called the "Warrant Agent"),

OF THE SECOND PART

WHEREAS the Corporation proposes to issue Warrants (as hereinafter defined), which comprise part of the units being issued by the Corporation under a short form prospectus offering (each unit consisting of one Common Share (as hereinafter defined) and one Warrant);

AND WHEREAS each Warrant entitles the holder to purchase, subject to adjustment in certain events, one Common Share at a price of $0.575 at any time prior to the Time of Expiry (as hereinafter defined), all upon the terms and conditions hereinafter set forth;

AND WHEREAS for such purposes, the Corporation deems it necessary to create and issue Warrants to be constituted and issued in the manner hereinafter set forth;

AND WHEREAS the Warrants will be represented by Warrant Certificates (as hereinafter defined) issued and countersigned in accordance with the provisions hereof;

AND WHEREAS all things necessary have been or will be done and performed by the Corporation to make each of the Warrants and the Warrant Certificates, when countersigned by the Warrant Agent and issued in accordance with the provisions of this Indenture, legal, valid and binding obligations of the Corporation with the benefits and subject to the provisions of this Indenture;

AND WHEREAS the Warrant Agent has agreed to act as the warrant agent of the Warrants and to hold all rights, interests and benefits contained herein for and on behalf of those persons who become holders of Warrants issued pursuant to this Indenture from time to time;

NOW THEREFORE THIS INDENTURE WITNESSETH that for good and valuable consideration mutually given and received, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed and declared as follows:

Article 1 - definitions and interpretation

1.1          Definitions:

In this Indenture and in the Warrant Certificates, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined in this Section 1.1 shall, for the purpose of this Indenture and all supplemental indentures hereto and for the purpose of the Warrant Certificates, have the respective meanings specified in this Section 1.1:

"1933 Act" means the United States Securities Act of 1933, as amended;

"Agent" means M Partners Inc.;

"Applicable Legislation" means the provisions, if any, of the Business Corporations Act (Canada) and any statute of Canada or a province thereof, and of the regulations under any such statutes, relating to warrant indentures or to the rights, duties and obligations of trustees and of corporations under warrant indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;

"Beneficial Owner" means a person that has a beneficial interest in a Warrant that is represented by a Global Warrant Certificate;

"Book-Entry Only" means the book-based securities transfer system administered by CDS in accordance with its operating rules and procedures in force from time to time;

"Business Day" means a day which is not a Saturday or Sunday or a civic or statutory holiday in any of the cities where Warrant Certificates may be surrendered to the Warrant Agent pursuant to the provisions hereof;

"CDS" means CDS Clearing and Depository Services Inc. and its successors in interest;

:”CDS Global Warrants” means Warrants representing all or a portion of the aggregate number of Warrants, issued in the name of CDS or its nominee, represented either by a Global Warrant Certificate or uncertificated Warrants.

"Closing Date" means March 1, 2013;

"Common Share Reorganization" means any of the events described in Sections 5.1(a)(i), (ii), (iii) or (iv) hereof;

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"Common Shares" means the common shares in the capital of the Corporation which the Corporation is authorized to issue as such common shares are constituted at the close of business on the Effective Date; provided that in the event of any adjustment pursuant to the provisions of Article 5 hereof, "Common Shares" shall thereafter mean the shares or other securities or property resulting from such adjustment;

"Corporation" means Cynapsus Therapeutics Inc. and includes any successor corporation thereto;

"Corporation's Auditors" means the firm of chartered accountants appointed as the auditors of the Corporation at the particular time;

"Counsel" means a barrister and solicitor or a firm of barristers and solicitors, who may be counsel for the Corporation, acceptable to the Warrant Agent;

"Current Market Price" of the Common Shares at any date means the price per share equal to the volume weighted average trading price at which the Common Shares have traded on the Exchange or, if the Common Shares are not then listed on the Exchange, on such other Canadian stock exchange as may be selected by the Directors for such purpose or, if the Common Shares are not then listed on any Canadian stock exchange, in the over-the-counter market, during the period of any 20 consecutive Trading Days ending not more than five Business Days before such date; provided that the weighted average trading price shall be determined by dividing the aggregate sale price of all Common Shares sold on the said exchange or market, as the case may be, during the said 20 consecutive Trading Days by the total number of Common Shares so sold; and provided further that if the Common Shares are not then listed on any Canadian stock exchange or traded in the over-the-counter market, then the Current Market Price shall be determined by a firm of independent chartered accountants selected by the Directors;

"Director" means a director of the Corporation for the time being, and, unless otherwise specified herein, reference to "action by the Directors" means action by the directors of the Corporation as a board or, whenever empowered, action by any committee of the directors of the Corporation;

"Dividends Paid In The Ordinary Course" means dividends paid in any financial year of the Corporation, whether in (a) cash, (b) shares of the Corporation, (c) warrants or similar rights to purchase any shares of the Corporation or property or other assets of the Corporation at a purchase or exercise price of at least 110% of the fair market value of the shares or property or other assets purchasable as of the date of distribution of such warrants or similar rights, or (d) property or other assets of the Corporation, as the case may be, as determined by action by the Directors except that, in the case of warrants or similar rights to purchase Common Shares or securities convertible into or exchangeable for Common Shares such fair market value of the warrants or similar rights shall be equal to the number of Common Shares which may be purchased thereby (or the number of Common Shares issuable upon conversion or exchange) as of the date of distribution of such warrants or similar rights, multiplied by the Current Market Price of the Common Shares on the date of such distribution, provided that the value of such dividends does not in such financial year in the aggregate exceed the greater of:

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(i) 200% of the aggregate amount of dividends paid by the Corporation on the Common Shares in the twelve (12) month period ending immediately prior to the first day of such financial year, and

(ii) 100% of the consolidated net earnings from continuing operations of the Corporation, before any extraordinary items, for the 12-month period ending immediately prior to the first day of such financial year (such consolidated net earnings from continuing operations to be computed in accordance with generally accepted accounting principles in Canada);

"Effective Date" means the date of issue of the Warrants;

"Exchange" means the TSX Venture Exchange Inc.;

"Exercise Date" with respect to any Warrant means the date on which such Warrant is surrendered for exercise in accordance with the provisions of Article 4 hereof;

"Exercise Price" means $0.575 per Common Share, unless such amount shall have been adjusted pursuant to the provisions of Article 5 hereof in which case such term shall mean the adjusted price in effect at the applicable time;

"Expiry Date" means the earlier of: (i) the expiration of thirty (30) days after prior written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $1.38 per Common Share for twenty (20) consecutive Trading Days, and (ii) sixty (60) months from the Closing Date;

"Extraordinary Resolution" means, subject as hereinafter provided in Sections 9.12, 9.15 and 9.16 hereof, a motion proposed at a meeting of Warrantholders called for that purpose and held in accordance with the provisions of Article 9 hereof at which there are present in person or represented by proxy Warrantholders holding in the aggregate at least 50% of the total number of Warrants then outstanding as of the date of the meeting and passed by the affirmative votes of Warrantholders who hold in the aggregate not less than 66 2/3% of the total number of Warrants represented at the meeting and voted on such motion;

"Final Prospectus" means the final prospectus of the Corporation which qualifies the distribution of the Common Shares and Warrants in the Qualifying Jurisdictions and includes any amendments or supplements thereto;

"Global Warrant Certificate" means a Warrant Certificate that is issued to and registered in the name of and deposited with CDS or its nominees pursuant to Section 2.11 hereof;

"Participant" means a Person recognized by CDS as a participant in the book entry and/or book based securities registration and transfer system administered by CDS;

"Person" means an individual, corporation, partnership, trust or any unincorporated organization;

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"Qualifying Jurisdictions" means the provinces of British Columbia, Alberta and Ontario;

"Regulation S" means Regulation S under the 1933 Act;

"Rights Offering" means any of the events described in Section 5.1(b) hereof;

"Rights Period" means any period determined for the purposes of Section 5.1(b) hereof;

"Shareholder" means a holder of record of one or more Common Shares;

"Special Distribution" means any of the events described in Section 5.1(c) hereof;

"Subsidiary" means a corporation, of which voting securities carrying a majority of the votes attached to all outstanding voting securities, directly or indirectly, are owned by the Corporation, by the Corporation and one or more subsidiaries thereof, or by one or more of the subsidiaries of the Corporation, and, as used in this definition, "voting securities" means securities, other than debt securities, carrying the right to elect directors either under all circumstances or under some circumstances that have occurred and are continuing;

"Time of Expiry" means 5:00 p.m., Toronto time, on the Expiry Date;

"Trading Day" with respect to a stock exchange means a day on which such stock exchange is open for business and with respect to the over-the-counter market means a day on which shares may be traded through the facilities of such over-the-counter market;

"Transfer Agent" means the transfer agent for the time being of the Common Shares;

"United States" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;

"U.S. Person" means a "U.S. person" as that term is defined in Regulation S;

"Warrant Agent" means Equity Financial Trust Company, or the successor thereof for the time being of the duties and obligations hereby created;

"Warrant Certificates" means the certificates representing the Warrants substantially in the form attached as Schedule A hereto issued and countersigned hereunder and for the time being outstanding;

"Warrantholders" or "holders" without reference to Common Shares means the persons for the time being who are registered holders of Warrant Certificates;

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"Warrantholders' Request" means an instrument signed in one or more counterparts by Warrantholders representing not less than 25% of the aggregate number of Warrants then unexercised and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein;

"Warrants" means the warrants issued hereunder, each one of which entitles the holder thereof to purchase one Common Share for an exercise price of $0.575 at any time up to the Time of Expiry, subject to adjustment in accordance with Article 5 hereof; and

"Written Direction of the Corporation", "Written Order of the Corporation", "Written Request of the Corporation", "Written Consent of the Corporation" and "Certificate of the Corporation" mean respectively a written direction, order, request, consent or certificate signed in the name of the Corporation by its Chief Executive Officer or any Director of the Corporation and, in addition, by its Chief Financial Officer or any Director of the Corporation, and may consist of one or more instruments so executed.

1.2          Number and Gender:

Unless herein otherwise expressly provided or unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing the masculine include the feminine and neuter genders.

1.3          Interpretation not Affected by Headings:

The division of this Indenture into Articles and Sections, the provision of the table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture.

1.4          Day Not a Business Day:

If the day on or before which any action that would otherwise be required to be taken hereunder is not a Business Day in the place where the action is required to be taken, that action will be required to be taken on or before the requisite time on the next succeeding day that is a Business Day.

1.5          Currency:

All references to currency herein and in the Warrant Certificates are to lawful money of Canada unless otherwise specified herein.

1.6          Applicable Law:

This Indenture, the Warrant Certificates and the Warrants represented by the Warrant Certificates shall be governed by and performed, construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

1.7          References to this Indenture:

The words and phrases "this Warrant Indenture", "this Indenture", "herein", "hereby", "hereof" and similar expressions mean or refer to this Indenture and any indenture, deed or instrument supplemental hereto and the words "Article" and "Section", followed by a number mean and refer to the specified Article or Section of this Indenture.

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1.8          Schedule:

The following schedule is attached to, forms part of and shall be deemed to be incorporated into this Indenture.

Schedule	Title
A	Form of Warrant Certificate

Article 2 - ISSUE AND FORM OF WARRANTS

2.1          Issue and Form of Warrants:

(a)          Authorization of Warrants: The Warrants authorized to be issued hereunder are limited in respect of the aggregate number of Common Shares which can be subscribed for and purchased pursuant thereto, and Warrants may be issued only upon and subject to the terms and conditions hereinafter set forth. The Corporation hereby creates for issuance up to 17,319,304 Warrants entitling the holders thereof to subscribe for and purchase up to an aggregate of 17,319,304 Common Shares together with such additional indeterminate number of Common Shares as may be required to be issued pursuant to any adjustment required to be made by the provisions of Article 5 hereof, and such Warrants are hereby authorized to be issued.

(b)          Form of Warrant Certificate: Upon the issue of the Warrants in certificated form, Warrant Certificates shall be executed by the Corporation and delivered to the Warrant Agent, countersigned by the Warrant Agent upon the Written Direction of the Corporation and delivered by the Warrant Agent to the Corporation or to the order of the Corporation pursuant to a Written Direction of the Corporation, without any further act of or formality on the part of the Corporation. The Warrant Certificates shall be substantially in the form of the certificate attached hereto as Schedule A, shall be dated as of the date of issue thereof (including all replacements issued in accordance with this Indenture) and may bear a facsimile of the seal of the Corporation and such distinguishing letters and numbers as the Corporation may, with the approval of the Warrant Agent, prescribe. Irrespective of any adjustments required to be made by the provisions of Article 5 hereof, all replacement Warrant Certificates shall continue to express the number of Warrants represented thereby and the Exercise Price as if such Warrant Certificates were issued as of the initial date of issue thereof pursuant hereto. Notwithstanding any other provision herein, the Warrants (with the exception of any Warrants issued to U.S. Persons) may also be issued in uncertificated form. All Warrants issued to CDS, or its nominee, in uncertificated form shall be evidenced by a book position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with Section 2.8.

(c)          United States Legend on Warrant Certificates: Warrant Certificates representing Warrants issued to U.S. Persons, to Persons in the United States or to Persons for the account or benefit of a U.S. Person or a Person in the United States, as well as all certificates issued in exchange for or in substitution of such certificates representing Warrants are not to be issued in the form of a Global Warrant Certificate and shall bear the following legend:

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“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

provided, that if the Warrants are being sold in compliance with the requirements of Rule 904 of Regulation S, and provided further that the Corporation is a "foreign issuer" within the meaning of Regulation S at the time of sale, the above legend may be removed by providing a declaration to the Warrant Agent to the following effect (or as the Corporation may prescribe from time to time):

“The undersigned (a) acknowledges that the sale of Warrants of Cynapsus Therapeutics Inc. (the “Corporation”) to which this declaration relates, represented by certificate number ________, is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and (b) certifies that (1) the undersigned is not an “affiliate” (as that term is defined in Rule 405 under the 1933 Act) of the Corporation, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to replace such securities with fungible unrestricted securities and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S under the 1933 Act, is part of a plan or scheme to evade the registration provisions of the 1933 Act. Unless otherwise defined herein, terms used herein have the meanings given to them by Regulation S under the 1933 Act.”;

notwithstanding the foregoing, the Corporation may impose additional requirements for the removal of legends from securities sold in accordance with Rule 904 of Regulation S in the future; and

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provided, further, that if any such securities are being sold pursuant to Rule 144 under the 1933 Act, the above legend may be removed by delivery to the Warrant Agent of an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to the effect that such legend is no longer required under applicable requirements of the 1933 Act or state securities laws.

2.2           Terms and Delivery of Warrants:

(a)          Terms: Each one Warrant issued hereunder shall entitle the holder thereof to subscribe for and purchase one Common Share at the Exercise Price at any time after the date of issue thereof until the Time of Expiry, subject to any adjustments required to be made pursuant to Article 5 hereof.

(b)          Delivery of Warrant Certificates: Warrant Certificates in definitive form representing the Warrants authorized to be issued in Section 2.1(a) hereof shall be created and executed by the Corporation, upon the closing of the offering of units under the short form prospectus of the Corporation dated February 21, 2013.

(c)          Adjustment: The Exercise Price and the number of Common Shares which can be subscribed for and purchased pursuant to the Warrants shall be adjusted in the events and in the manner specified in Article 5 hereof.

(d)          No Fractional Warrants: No Warrant Certificate representing a fractional Warrant shall be issued or otherwise provided for, and a holder of a Warrant Certificate shall not be entitled to subscribe for or purchase a fractional Common Share or be entitled to any cash or other consideration such holder might otherwise be entitled to based upon the holding of such Warrant Certificate. If the number of Warrants to which a Warrantholder would otherwise be entitled is not a whole number, then the number of Warrants to be issued to such Warrantholder shall be rounded down to the next whole number and the Warrantholder shall not be entitled to any compensation in respect of such fractional Warrant.

(e)          Splits, Combinations: Subject to Section 2.7 hereof, the number of Warrants represented by any Warrant Certificate or any Warrant Certificates may be split, combined or exchanged for a Warrant Certificate or Warrant Certificates representing the same number of Warrants in the aggregate.

(f)          Issue of Common Shares: Subject to Section 4.4 hereof, the Corporation shall issue Common Shares upon the exercise of Warrants in accordance with the provisions hereof.

(g)          Authentication: No Warrant issued in uncertificated form shall be issued or, if issued, shall be valid for any purpose or entitle the registered holder to the benefit hereof or thereof, until it has been, upon receipt of a written direction from the Corporation, authenticated by entry on the register maintained by the Warrant Agent pursuant to Section 2.8 hereof of the particulars of such Warrant. Such entry on the register maintained by the Warrant Agent pursuant to Section 2.8 hereof of the particulars of a Warrant issued in uncertificated form shall be conclusive evidence that such Warrant is a valid and binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture. The authentication of the Warrant Agent with respect to Warrants issued in uncertificated form hereunder shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or the Warrants (except the due authentication thereof) 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 thereof except as otherwise specified herein.

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2.3          Warrantholder not a Shareholder:

Nothing in this Indenture nor in the holding of a Warrant represented by a Warrant Certificate, or held in uncertificated form, shall be construed as conferring upon a Warrantholder any right or interest whatsoever as a Shareholder including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings of the Corporation or the right to receive dividends or other distributions.

2.4          Signing of Warrant Certificate:

Warrant Certificates shall be signed by (a) the Chief Executive Officer or any Director of the Corporation and, in addition, by (b) the Chief Financial Officer or any Director of the Corporation and may, but need not be, under the seal of the Corporation or a reproduction thereof (which shall be deemed to be the seal of the Corporation). The signatures of such officers or directors, as the case may be, may be mechanically reproduced in facsimile and Warrant Certificates bearing such facsimile signatures shall be binding upon the Corporation as if they had been manually signed by such officers or directors. Notwithstanding that any of the persons whose manual or facsimile signature appears on any Warrant Certificate as one of such officers or directors may no longer hold office at the date of such Warrant Certificate or at the date of the countersigning or delivery thereof, any Warrant Certificate signed as aforesaid and countersigned by the Warrant Agent shall be valid and binding upon the Corporation and the holder thereof shall be entitled to the benefits of this Indenture.

2.5          Countersignature by the Warrant Agent:

(a)          Countersignature: No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the holder to the benefits hereof until it has been countersigned by the Warrant Agent by means of a manual signature of one or more of its authorized officers, substantially in the form of the countersignature contained on the Warrant Certificate or in some other form approved by the Corporation and the Warrant Agent and such countersignature by the Warrant Agent upon any Warrant Certificate shall be conclusive evidence as against the Corporation that the Warrant Certificate so countersigned has been issued hereunder and that the holder thereof is entitled to the benefits hereof.

(b)          No Representation: The countersignature by the Warrant Agent on Warrant Certificates issued hereunder shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of the Warrant Certificate (except the due countersignature 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 Warrant Certificates or any of them or of the consideration therefor, except as otherwise specified herein.

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2.6          Issue in Substitution for Lost Warrant Certificate:

(a)          Substitution: In case any Warrant Certificate issued and countersigned hereunder shall become mutilated, lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Warrant Agent shall countersign and deliver a new certificate for the same class of Warrants and of like date and tenor, and bearing the same legends, if any, as the one mutilated, lost, destroyed or stolen (i) in exchange for and in place of and upon cancellation of such mutilated certificate, or (ii) in lieu of and in substitution for such lost, destroyed or stolen certificate and the substituted certificate shall be in a form approved by the Warrant Agent and shall be entitled to the benefit hereof and shall rank equally in accordance with its terms with all Warrants of the same class either issued or to be issued hereunder.

(b)          Issue of New Warrant Certificates: The applicant for the issue of a new Warrant Certificate pursuant to Section 2.6(a) hereof shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft, as the case may be, of the certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent in their discretion, acting reasonably, and such applicant may also be required to furnish indemnity in the form of a surety bond in amount and form satisfactory to the Corporation and the Warrant Agent in their discretion, acting reasonably, to save each of them harmless, and shall pay the reasonable expenses, charges and any taxes applicable thereto of the Corporation and the Warrant Agent in connection therewith.

2.7          Exchange of Warrant Certificates:

(a)          Exchange: Warrant Certificates issued and countersigned hereunder representing any specified number of Warrants to subscribe for and purchase Common Shares may, upon compliance with the reasonable requirements of the Warrant Agent, be exchanged for Warrant Certificates representing in the aggregate the same number of Warrants and entitling the holder thereof to subscribe for and purchase an equal aggregate number of Common Shares at the same Exercise Price and on the same terms as the Warrant Certificates so exchanged.

(b)          Places of Exchange: Warrant Certificates may be exchanged at the principal office of the Warrant Agent in the City of Toronto, Ontario, 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 surrendered to the Warrant Agent and cancelled by the Warrant Agent. The Corporation shall sign and the Warrant Agent shall countersign all Warrant Certificates necessary to carry out such exchanges.

(c)          Charges for Exchange: For each Warrant Certificate exchanged, the Warrant Agent, except as otherwise herein provided, shall, if required by the Corporation, charge the Warrantholder a reasonable amount for each new Warrant Certificate issued. Payment for any and all taxes or governmental or other charges required to be paid shall be made by the Warrantholder requesting such exchange, as a condition precedent thereto.

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2.8          Registration and Transfer of Warrants:

(a)          Register: The Corporation will cause to be kept by the Warrant Agent at the principal office in Toronto, Ontario, of the Warrant Agent:

(i) a register of holders in which shall be entered in alphabetical order the names and addresses of the holders of Warrants and particulars of the Warrants held by them; and

(ii) a register of transfers in which all transfers of Warrants and the date and other particulars of each such transfer shall be entered.

(b)          Valid Transfers: No transfer of any Warrant will be valid unless entered on the appropriate register of transfers referred to in Section 2.8(a) hereof, or on any branch registers maintained pursuant to Section 2.8(g) hereof, upon surrender to the Warrant Agent of the Warrant Certificate representing such Warrant (other than in the case of Warrants issued in uncertificated form), duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Warrant Agent executed by the registered holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed satisfactory to the Warrant Agent, and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be recorded on the appropriate register of transfers by the Warrant Agent.

(c)          Register of Transfers: The transferee of any Warrant will, after surrender to the Warrant Agent of the Warrant Certificate, if applicable, representing such Warrant as required by Section 2.8(b) hereof and upon compliance with all other conditions in respect thereof required by this Indenture or by law, be entitled to be entered on the appropriate register of holders referred to in Section 2.8(a) hereof, or on any branch registers of holders maintained pursuant to Section 2.8(g) hereof, as the owner of such Warrant free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Warrant, except in respect of equities of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

(d)          Refusal of Registration: 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 registers referred to in Section 2.8(a) hereof, or on any branch registers maintained pursuant to Section 2.8(g)(d) hereof, if such transfer would constitute a violation of the securities laws of any jurisdiction or the rules, regulations or policies of any regulatory authority having jurisdiction. In particular, none of the Warrants and none of the Common Shares issuable on the exchange of the Warrants has been or will be registered under the 1933 Act or any state securities laws and such securities may not be offered or sold to a U.S. Person, a Person in the United States or a Person for the account or benefit of a U.S. Person, or a Person in the United States absent an exemption from the registration provisions of the 1933 Act and all applicable state securities laws.

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(e)          No Notice of Trusts: Subject to applicable law, neither the Corporation nor the Warrant Agent will be bound to take notice of or see to the execution of any trust, whether express, implied or constructive, in respect of any Warrant, and may transfer any Warrant on the direction of the person registered as the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.

(f)          Inspection: The registers referred to in Section 2.8(a) hereof, and any branch registers maintained pursuant to Section 2.8(g) hereof, will at all reasonable times be open for inspection by the Corporation and any Warrantholder. The Warrant Agent will from time to time when requested to do so in writing by the Corporation or any Warrantholder (upon payment of the reasonable charges of the Warrant Agent), furnish the Corporation or such Warrantholder with a list of the names and addresses of holders of Warrants (in the case of a Warrantholder of the same class as such Warrantholder) entered on such registers and showing the number of Warrants (in the case of a Warrantholder of the same class as such Warrantholder) held by each such holder thereof.

(g)          Location of Registers: The Corporation may at any time and from time to time change the place at which the registers referred to in Section 2.8(a) hereof are kept, cause branch registers of holders or transfers to be kept at other places and close such branch registers or change the place at which such branch registers are kept, in each case subject to the approval of the Warrant Agent. Notice of all such changes or closures shall be given by the Corporation to the Warrant Agent and to holders of Warrants in accordance with Article 12 hereof.

(h)          Restrictions on Transfer under United States Securities Laws: If a Warrant Certificate is tendered for transfer and bears the legend in form set forth in Section 2.1(c), the Warrant Agent shall only permit such transfer if it is (A) to the Corporation, (B) made outside the United States in accordance with the requirements of Rule 904 of Regulation S and in compliance with applicable local laws and regulations, (C) made in compliance with an exemption from registration under the 1933 Act provided by (i) Rule 144 thereunder, if available, or (ii) Rule 144A thereunder, if available, and, in both cases, in accordance with applicable state securities laws or (D) in another transaction that does not require registration under the 1933 Act or any applicable state securities laws and, in the case of (C)(i) and (D) above, after it has furnished to the Corporation an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect.

(i)          Reliance by Warrant Agent: The Warrant Agent shall have no obligation to ensure or verify compliance with any Applicable Legislation or regulatory requirements on the issue, exercise or transfer of any Warrants or any Common Shares or other securities issued upon the exercise of any Warrants. The Warrant Agent shall be entitled to process all proferred transfers and exercises of Warrants upon the presumption that such transfers or exercises are permissible pursuant to all Applicable Legislation and regulatory requirements and the terms of the Indenture and the related Warrant Certificates in the absence of prima facie evidence to the contrary. The Warrant Agent may assume for the purposes of this Indenture that the address on the register of Warrantholders of any Warrantholder is the actual address of such Warrantholder and is also determinative of the residency of such Warrantholder and that the address of any transferee to whom any Warrants or Common Shares or other securities issuable upon the exercise of any Warrants are to be registered, as shown on the transfer document, is the actual address of the transferee and is also determinative of the residency of the transferee.

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2.9          Ownership of Warrants:

(a)          Owner: The Corporation and the Warrant Agent may deem and treat the person in whose name any Warrant is registered as the absolute owner of such Warrant for all purposes, and such person will for all purposes of this Indenture be and be deemed to be the absolute owner thereof, and the Corporation and the Warrant Agent will not be affected by any notice or knowledge to the contrary except as required by statute or by order of a court of competent jurisdiction.

(b)          Rights of Registered Holder: The registered holder of any Warrant will be entitled to the rights evidenced thereby free from all equities and rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly, and the issue and delivery to any such registered holder of the Common Shares issuable pursuant thereto will be a good discharge to the Corporation and the Warrant Agent therefor and neither the Corporation nor the Warrant Agent will be bound to inquire into the title of any such registered holder.

2.10         Transfer of Warrants Represented by Global Warrant Certificates:

(a)          Transfer of Global Warrant Certificates: The provisions of this Article 2 with respect to the transfer of Warrants are subject to the provisions of Section 2.11.

2.11         Issue of Global Warrant Certificates:

(a)          Issuance of Global Warrant Certificates: With the exception of any Warrants issued to U.S. Persons which shall be issued using individual Warrant Certificates, the Corporation may, at its sole option, specify, in a written direction of the Corporation delivered to the Warrant Agent, that some or all of the Warrants are to be represented by CDS Global Warrants registered in the name of CDS or its nominee, and in the event the Warrants are to be represented by a Global Warrant Certificate, the Corporation shall execute and the Warrant Agent shall certify and deliver one or more Global Warrant Certificates that shall:

(i) represent the aggregate number of outstanding Warrants to be represented by such Global Warrant Certificate(s);

(ii) be delivered by the Warrant Agent to CDS or pursuant to the CDS’ instructions; and

(iii) if applicable, bear a legend substantially to the following effect:

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“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO CYNAPSUS THERAPEUTICS INC. (THE “ISSUER”) OR THE WARRANT AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER, CDS & CO., HAS AN INTEREST HEREIN. THIS CERTIFICATE IS ISSUED PURSUANT TO A MASTER LETTER OF REPRESENTATION OF THE ISSUER TO CDS, AS SUCH LETTER MAY BE REPLACED OR AMENDED FROM TIME TO TIME.”

(b)           Transfers of Beneficial Ownership: Transfers of beneficial ownership in any Warrant represented by CDS Global Warrants will be effected only (i) with respect to the interest of a Participant, through records maintained by CDS or its nominee for such CDS Global Warrants , and (ii) with respect to the interest of any person other than a Participant, through records maintained by Participants. Beneficial Owners who are not Participants but who desire to sell or otherwise transfer ownership of or any other interest in Warrants represented by such CDS Global Warrants may do so only through a Participant.

(c)           Rights of Beneficial Owners: The rights of Beneficial Owners shall be limited to those established by applicable law and agreements between CDS and the Participants, and between such Participants and Beneficial Owners, and must be exercised through a Participant in accordance with the rules and procedures of CDS;

(d)           No Obligation to Deliver Certificates: Subject to subsection 2.11(e), neither the Corporation nor the Warrant Agent shall be under any obligation to deliver to any Participant or Beneficial Owner, nor shall any Participant or Beneficial Owner have any right to require the delivery of, a certificate or other instrument evidencing any interest in Warrants.

(e)           New Certificates: If any Warrant is represented by CDS Global Warrants and any of the following events occurs:

(i) CDS or the Corporation has notified the Warrant Agent that (1) CDS is unwilling or unable to continue as depository or (2) CDS ceases to be a clearing agency in good standing under applicable laws and, in either case, the Corporation is unable to locate a qualified successor depository within 90 days of delivery of such notice;

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(ii) the Corporation has determined, in its sole discretion, with the consent of the Warrant Agent, to terminate the Book-Entry-Only system in respect of such Global Warrant Certificate and has communicated such determination to the Warrant Agent in writing;

(iii) the Corporation or CDS is required by applicable law to take the action contemplated in this subsection 2.11(e); or

(iv) the Book-Entry-Only system administered by CDS ceases to exist,

then one or more definitive fully registered Warrant Certificates shall be executed by the Corporation and certified and delivered by the Warrant Agent to CDS in exchange for the CDS Global Warrants held by CDS.

Fully registered Warrant Certificates issued and exchanged pursuant to this subsection 2.11(e) shall be registered in such names and in such denominations as CDS shall instruct the Warrant Agent, provided that the aggregate number of Warrants represented by such Warrant Certificates shall be equal to the aggregate number of Warrants represented by the CDS Global Warrants so exchanged. Upon exchange of a Global Warrant Certificate for one or more Warrant Certificates in definitive form, such Global Warrant Certificate shall be cancelled by the Warrant Agent.

(e)          No Liability: Notwithstanding anything herein or in the terms of the Warrant Certificates to the contrary, neither the Corporation nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for (i) the records maintained by CDS relating to any ownership interests or any other interests in the Warrants or the depository system maintained by CDS, or payments made on account of any ownership interest or any other interest of any Person in any Warrant represented by any CDS Global Warrants (other than CDS or its nominee). (ii) for maintaining, supervising or reviewing any records of CDS or any Participant relating to any such interest, or (iii) any advice or representation made or given by CDS or those contained herein that relate to the rules and regulations of CDS or any action to be taken by CDS on its own direction or at the direction of any Participant.

2.12         Issue of Uncertificated Warrants to CDS:

(a)          Uncertificated Warrants: With the exception of any Warrants issued to U.S. Persons which shall be issued using individual physical Warrant Certificates, the Corporation may, in its sole option, specify, in a written direction of the Corporation delivered to the Warrant Agent, that some or all of the Warrants are to be issued in uncertificated form to CDS or its nominee.

(b)          Transfers of Beneficial Ownership: Transfers of Beneficial Ownership in any Warrant issued in uncertificated form will be effected only (i) with respect to the interest of a Participant, through records maintained by CDS or its nominee for such Warrant issued in uncertificated form, and (ii) with respect to the interest of any Person other than a Participant, through records maintained by Participants. Beneficial Owners who are not Participants but who desire to sell or otherwise transfer ownership of or any other interest in Warrants issued in uncertificated form may do so only through a Participant.

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(c)          Exercise of Warrants: A Beneficial Owner of Warrants issued in uncertificated form who desires to exercise his or her Warrants must do so by causing a Participant to deliver to CDS on behalf of the entitlement holder, notice of the owner’s intention to exercise Warrants in a manner acceptable to CDS. Forthwith upon receipt by CDS of such notice, as well as payment for the Exercise Price, CDS shall deliver to the Warrant Agent confirmation of its intention to exercise Warrants (a “Confirmation”) in a manner acceptable to the Warrant Agent, including by electronic means through the book based registration system. Upon exercise of the Warrants, such Participant will be deemed to be confirming that it (a) is not in the United States; (b) is not a U.S. Person and is not exercising such Warrants on behalf of a U.S. Person or Person in the United States; and (c) did not execute or deliver the notice of the owner’s intention to exercise such Warrants in the United States.

Payment representing the Exercise Price must be provided to the appropriate office of the Participant in a manner acceptable to it. A notice in form acceptable to the Participant (together with a written confirmation substantially the same as the Confirmation) and payment from such Beneficial Owner should be provided to the Participant sufficiently in advance so as to permit the Participant to deliver notice and payment to CDS and for CDS in turn to deliver notice and payment to the Warrant Agent prior to the Time of Expiry. CDS will initiate the exercise by way of the Confirmation and forward the Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to CDS through the book based registration system the Common Shares to which the exercising Beneficial Owner is entitled pursuant to the exercise. Any expense associated with the exercise process will be for the account of the Beneficial Owner exercising the Warrants and/or the Participant exercising the Warrants on its behalf.

Article 3- WARRANTS TO RANK PARI PASSU

3.1          Warrants to Rank Pari Passu:

All Warrants shall rank pari passu, whatever may be the actual date of issue of the Warrant Certificates that evidence them, or the actual date of authentication of the Warrants issued in uncertificated form.

Article 4 - EXERCISE OF WARRANTS

4.1          Method of Exercise of Warrants:

(a)          Exercise: Subject to Section 4.1(b) hereof, the holder of any Warrant may exercise the right thereby conferred on such holder to subscribe for and purchase Common Shares by surrendering, after the date of issue of the Warrant but prior to the Time of Expiry, to the Warrant Agent at the place specified in Section 4.1(d) hereof or any other place or places that may be designated by the Corporation with the approval of the Warrant Agent:

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(i) the Warrant Certificate, with a properly completed and executed subscription form in substantially the form contained on the Warrant Certificate; and

(ii) a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Corporation at par in the city where such Warrant Certificate is surrendered for exercise, in an amount equal to the product obtained by multiplying the Exercise Price by the number of Common Shares subscribed for pursuant to such Warrant Certificate.

A Warrant Certificate with the duly completed and executed subscription form referred to in Section 4.1(a)(i) above, together with the certified cheque, bank draft or money order referred to in Section 4.1(a)(ii) above, shall be deemed to be surrendered only upon delivery thereof or, if sent by mail or other means of transmission, upon receipt thereof, in each case at the office of the Warrant Agent provided for in Section 4.1(d) hereof or any such other place designated by the Corporation with the approval of the Warrant Agent.

A Beneficial Owner who desires to exercise his or her Warrants, must do so by causing a Participant to deliver to CDS (at its office in Toronto), on behalf of the Beneficial Owner, a written notice of the Beneficial Owner’s intention to exercise Warrants (the “Exercise Notice”). Any expenses associated with the preparation and delivery of Exercise Notices will be for the account of the Beneficial Owner exercising the Warrants.

(b)          Restrictions on Exercise under United States Securities Laws: The Warrants may not be exercised by or on behalf of a person in the United States or a U.S. Person unless registered under the 1933 Act or unless an exemption is available from the registration requirements of the 1933 Act and applicable state securities laws and the holder of the Warrants has furnished an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to such effect; provided, however, that a Warrantholder who is an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the 1933 Act (a "U.S. Accredited Investor"), at the time of exercise of Warrants and that purchased units ("Units"), with each Unit comprised of one common share and one Warrant, in the Corporation’s private placement of Units in the United States and to U.S. Persons will not be required to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants underlying those Units as long as the Warrantholder is a U.S. Accredited Investor and the other representations and warranties made by such Warrantholder at the time of purchase of the Units also remain true and correct.

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(c)          Subscription Form Completion: Any subscription form referred to in Section 4.1(a) hereof shall be signed by the Warrantholder, or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent, acting reasonably, and shall specify (A) the number of Common Shares which the holder desires to subscribe for and purchase, such number being not more than the number which the holder is entitled to subscribe for and purchase pursuant to the Warrant Certificate surrendered, (B) the person or persons in whose name or names such Common Shares are to be issued, (C) the address or addresses of such person or persons, or the office of the Warrant Agent at which the Warrant Certificate was surrendered and the certificates representing such Common Shares are to be sent, and (D) the number of Common Shares to be issued to each such person if more than one is so specified. If any of the Common Shares subscribed for are to be issued to a person or persons other than the Warrantholder, the Warrantholder shall pay to the Warrant Agent all applicable transfer or similar taxes, if any, and, the Corporation and the Warrant Agent shall not be required to issue or deliver certificates representing Common Shares unless or until such Warrantholder shall have paid to the Warrant Agent the amount of such tax, if any, or shall have established to the satisfaction of the Warrant Agent that such tax has been paid or that no tax is due.

(d)          Places for Exercise: The Corporation has designated the Warrant Agent, at its principal office in the City of Toronto, Ontario, as the place at which the Warrants may be exercised. The Corporation will give notice to the Warrantholders pursuant to Article 12 hereof of the location of any other place appointed by the Corporation and approved by the Warrant Agent and of the change in the location of any new or existing place where Warrants may be exercised.

(e)          Accounting to Corporation: The Warrant Agent shall as soon as practicable account to the Transfer Agent and the Corporation with respect to Warrants exercised. All such monies, and any securities or other instruments, from time to time received by the Warrant Agent shall be received in trust for, and shall be segregated and kept apart by the Warrant Agent in trust for, the Corporation. Within five Business Days of receipt thereof the Warrant Agent shall forward to the Corporation (or to an account or accounts of the Corporation with a bank or trust company designated in writing by the Corporation for that purpose) all monies received through the exercise of Warrants pursuant to this Article 4.

(f)          Record of Exercise: The Warrant Agent shall record the particulars of the Warrants exercised for Common Shares which particulars shall include the names and addresses of the persons who become holders of Common Shares, if any, on exercise, the number of Common Shares issued, the Exercise Date and the Exercise Price. Within five Business Days of each Exercise Date, the Warrant Agent shall provide such particulars in writing to the Corporation.

(g)          United States Legend on Common Share Certificate; Restrictions on Transfer under United States Securities Laws

(i)          Any certificates representing Common Shares issued to, or for the account or benefit of, a person who cannot make the representations set forth in Box A on the Subscription Form of the Warrant Certificate, and any certificates issued in exchange therefor or in substitution thereof, shall bear the following legend until such time as it is no longer required under the 1933 Act and applicable state securities laws:

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

provided, that if any such securities are being sold in compliance with the requirements of Rule 904 of Regulation S, and provided further that the Corporation is a "foreign issuer" within the meaning of Regulation S at the time of sale, the above legend may be removed by providing a declaration to the Warrant Agent to the following effect (or as the Corporation may prescribe from time to time):

“The undersigned (a) acknowledges that the sale of Common Shares of Cynapsus Therapeutics Inc. (the “Corporation”) to which this declaration relates, represented by certificate number ________, is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and (b) certifies that (1) the undersigned is not an “affiliate” (as that term is defined in Rule 405 under the 1933 Act) of the Corporation, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to replace such securities with fungible unrestricted securities and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S under the 1933 Act, is part of a plan or scheme to evade the registration provisions of the 1933 Act. Unless otherwise defined herein, terms used herein have the meanings given to them by Regulation S under the 1933 Act.”;

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notwithstanding the foregoing, the Transfer Agent may impose additional requirements for the removal of legends from securities sold in accordance with Rule 904 of Regulation S in the future; and

provided further, that, if any of such securities are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the Corporation and the Warrant Agent of an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to the effect that the legend is no longer required under applicable requirements of the 1933 Act or state securities laws.

(ii)         If a certificate representing Common Shares is tendered for transfer and bears a legend in the form set forth in this Section 4.1(g), the Transfer Agent shall only permit such transfer if it is (A) to the Corporation, (B) made outside the United States in accordance with the requirements of Rule 904 of Regulation S and in compliance with applicable local laws and regulations, (C) made in compliance with an exemption from registration under the 1933 Act provided by (i) Rule 144 thereunder, if available, or (ii) Rule 144A thereunder, if available, and, in both cases, in accordance with applicable state securities laws or (D) in another transaction that does not require registration under the 1933 Act or any applicable state securities laws and, in the case of (C)(i) and (D) above, after it has furnished to the Corporation an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect.

4.2          Effect of Exercise of Warrants:

(a)          Effect of Exercise: Upon compliance by the holder of any Warrant Certificate with the provisions of Section 4.1 hereof, but subject to the provisions of Section 4.3(b) hereof, the number of Common Shares subscribed for and purchased 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 record of such Common Shares on the Exercise Date thereof unless the transfer books of the Corporation shall be closed on such date, in which case the Common Shares subscribed for and purchased shall be deemed to have been issued, and such person or persons shall be deemed to have become the holder or holders of record of such Common Shares on the date on which such transfer books are reopened but such Common Shares shall be issued at the Exercise Price in effect on the Exercise Date.

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(b)          Issue of Share Certificates: As soon as practicable, and in any event no later than the fifth Business Day on which the transfer books of the Corporation have been opened after the exercise of a Warrant as aforesaid, the Corporation shall forthwith (i) cause to be mailed to the person or persons in whose name or names the Common Shares so subscribed for and purchased are to be issued, as specified in the subscription completed on the Warrant Certificate, at the address specified in such subscription form, or (ii) if specified in such subscription form, cause to be delivered to such person or persons at the office of the Warrant Agent where such Warrant Certificate was surrendered, a certificate or certificates representing the appropriate number of Common Shares to which the Warrantholder is entitled and elected to subscribe for and purchase pursuant to the Warrant Certificate surrendered to the Warrant Agent.

4.3          Subscription for Less than Entitlement:

(a)          Exercise for Less Than Maximum: The holder of any Warrant Certificate may subscribe for and purchase a number of Common Shares less than the maximum number which the holder is entitled to subscribe for and purchase pursuant to the surrendered Warrant Certificate, provided that in no event shall fractional Common Shares be issued in connection with the exercise of Warrants. In such event, the holder thereof upon exercise thereof shall, in addition, be entitled to receive a new Warrant Certificate complying with Section 2.2 hereof in respect of the balance of the Common Shares which such holder was entitled to subscribe for and purchase and which were not then subscribed for and purchased.

(b)          No Fractional Common Shares: Notwithstanding any adjustment provided for in Article 5 hereof or otherwise, the Corporation shall not be required upon the exercise of a Warrant to issue fractions of Common Shares or to distribute certificates which evidence fractional Common Shares. If the number of Common Shares to which a Warrantholder would otherwise be entitled upon the exercise of a Warrant is not a whole number then, subject to Section 4.4 hereof, the number of Common Shares to be issued shall be rounded down to the next whole number and the holder of such Warrant Certificate shall not be entitled to any compensation in respect of any fractional Common Share.

4.4          Warrant Certificates for Fractions of Common Shares:

To the extent that the holder of a Warrant Certificate is entitled to receive on the exercise or partial exercise thereof a fraction of a Common Share, such right may only be exercised in respect of such fraction in combination with another Warrant Certificate which in the aggregate entitles the Warrantholder to receive a whole number of Common Shares.

4.5          Expiration of Warrants:

After the Time of Expiry all rights under any Warrant in respect of which the right of subscription and purchase therein and herein provided shall not theretofore have been exercised shall wholly cease and terminate and such Warrant shall be void, of no force or effect and of no value whatsoever.

Article 5 - ADJUSTMENTS

5.1          Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:

The Exercise Price and the number of Common Shares purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time in the events and in the manner provided in the following subsections:

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(a)          Stock Dividend; Distribution of Common Shares; Subdivision; Consolidation: If at any time after the Effective Date but prior to the Expiry Date, the Corporation shall:

(i) fix a record date for the issue of, or issue, Common Shares or securities exchangeable for or convertible into Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend or otherwise, other than as a Dividend Paid In The Ordinary Course,

(ii) fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares, other than as a Dividend Paid In The Ordinary Course,

(iii) subdivide, redivide or change the outstanding Common Shares into a greater number of Common Shares, or

(iv) consolidate, reduce or combine the outstanding Common Shares into a lesser number of Common Shares,

(any of such events in Sections 5.1(a)(i), (ii), (iii) and (iv) above being herein called a "Common Share Reorganization"), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Common Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

(A) the numerator of which shall be the number of Common Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Common Share Reorganization; and

(B) the denominator of which shall be the number of Common Shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a distribution of securities exchangeable for or convertible into Common Shares the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such date).

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To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 5.1(a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable for or convertible into Common Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right. Any Warrantholder who has not exercised his right to subscribe for and purchase Common Shares on or prior to the record date of such stock dividend or distribution or the effective date of such subdivision or consolidation, as the case may be, upon the exercise of such right thereafter shall be entitled to receive and shall accept in lieu of the number of Common Shares then subscribed for and purchased by such Warrantholder, at the Exercise Price determined in accordance with this Section 5.1(a) the aggregate number of Common Shares that such Warrantholder would have been entitled to receive as a result of such Common Share Reorganization, if, on such record date or effective date, as the case may be, such Warrantholder had been the holder of record of the number of Common Shares so subscribed for and purchased.

(b)          Issue of Rights, Options or Warrants: If at any time after the Effective Date but prior to the Expiry Date, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Common Shares of rights, options or warrants pursuant to which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue (such period being the "Rights Period"), to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share to the holder (or in the case of securities exchangeable for or convertible into Common Shares, at an exchange or conversion price per share) at the date of issue of such securities of less than 95% of the Current Market Price of the Common Shares on such record date (any of such events being called a "Rights Offering"), the Exercise Price shall be adjusted effective immediately after the record date for such Rights Offering to the amount determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i) the numerator of which shall be the aggregate of

(A) the number of Common Shares outstanding on the record date for the Rights Offering, and

(B) the quotient determined by dividing

I. either (a) the product of the number of Common Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Common Shares are offered, or, (b) the product of the exchange or conversion price of the securities so offered and the number of Common Shares for or into which the securities offered pursuant to the Rights Offering may be exchanged or converted, as the case may be, by

II. the Current Market Price of the Common Shares as of the record date for the Rights Offering; and

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(ii) the denominator of which shall be the aggregate of the number of Common Shares outstanding on such record date and the number of Common Shares offered pursuant to the Rights Offering (including in the case of the issue or distribution of securities exchangeable for or convertible into Common Shares the number of Common Shares for or into which such securities may be exchanged or converted).

(c)          Special Distributions: If at any time after the Effective Date but prior to the Expiry Date, the Corporation shall fix a record date for the payment, issue or distribution to the holders of all or substantially all of the outstanding Common Shares of:

(i) shares of the Corporation or any other corporation of any class other than Common Shares;

(ii) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (other than rights, options or warrants pursuant to which holders of Common Shares are entitled, during a period expiring not more than forty-five (45) days after the record date for such issue, to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share (or in the case of securities exchangeable for or convertible into Common Shares at an exchange or conversion price per share) at the date of issue of such securities to the holder of at least 95% of the Current Market Price of the Common Shares on such record date);

(iii) evidences of indebtedness of the Corporation; or

(iv) any property or assets of the Corporation;

and if such issue or distribution does not constitute a Dividend Paid In The Ordinary Course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special Distribution"), the Exercise Price shall be adjusted effective immediately after the record date for the Special Distribution to the amount determined by multiplying the Exercise Price in effect on the record date for the Special Distribution by a fraction:

(A) the numerator of which shall be the difference between:

I. the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date, and

II. the fair market value, as determined in good faith by the Directors (whose determination shall be conclusive, subject to the prior written consent, if required, of any stock exchange on which the Common Shares are then listed), of such dividend, cash, securities, rights, options, warrants, evidences of indebtedness or property or assets to be issued or distributed in the Special Distribution, and

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(B) the denominator of which shall be the product obtained by multiplying the number of Common Shares outstanding on such record date by the Current Market Price of the Common Shares on such record date.

Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 5.1(c) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this Section 5.1(c), the Exercise Price shall be readjusted immediately after the expiry of any relevant exercise, exchange or conversion right to the amount which would then be in effect based upon the number of Common Shares issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

(d)          Reclassification of Common Shares; Consolidation; Amalgamation; Merger: If at any time after the Effective Date but prior to the Expiry Date there shall occur:

(i) a reclassification or redesignation of the Common Shares, a change of the Common Shares into other shares or securities or any other capital reorganization involving the Common Shares other than a Common Share Reorganization;

(ii) a consolidation, arrangement, amalgamation or merger of the Corporation with or into another body corporate which results in a reclassification or redesignation of the Common Shares or a change of the Common Shares into other shares or securities;

(iii) the transfer, sale or conveyance of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity;

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(any of such events being called a "Capital Reorganization"), after the effective date of the Capital Reorganization the Warrantholder shall be entitled to receive, and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Common Shares to which the Warrantholder was theretofor entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Warrantholder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Warrantholder had been the registered holder of the number of Common Shares which the Warrantholder was theretofor entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any such Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Indenture with respect to the rights and interests thereafter of the Warrantholder to the end that the provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of the Warrants. Any such adjustments shall be made by and set forth in an indenture supplemental hereto with its successor or such corporation or other entity, as applicable, contemporaneously with such reclassification, consolidation, amalgamation, arrangement, merger or other event and which supplemental indenture shall be approved by action by the directors and shall for all purposes be conclusively deemed to be an appropriate adjustment. To give effect to the provisions of this subsection, the Corporation shall or shall impose upon its successor or such purchasing corporation or entity, as the case may be, prior to or contemporaneously with the Capital Reorganization, an agreement or an undertaking which shall provide, to the extent possible, for the applications of the provisions set forth herein with respect to the rights and interests thereafter of the Warrantholder to the extent that the adjustment provisions set forth in this Warrant Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which the Warrantholder is entitled on exercise of acquisition rights hereunder. Any such agreement or undertaking shall provide that such adjustments shall apply to successive Capital Reorganizations.

(e)          If at any time after the Effective Date but prior to the Expiry Date any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Sections 5.1(a), 5.1(b) or 5.1(c) of this Indenture, then the number of Common Shares purchasable upon the subsequent exercise of Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Common Shares purchasable upon the exercise of Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

5.2          Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:

For the purposes of Section 5.1 hereof the following subsections shall apply:

(a)          Successive Adjustments: Any adjustment made pursuant to Section 5.1 hereof shall be cumulative and made successively whenever an event referred to therein shall occur, subject to the following provisions of this Section 5.2.

(b)          Minimum Adjustments: No adjustment in the Exercise Price shall be required unless such adjustment would result in a change of at least 1% in the Exercise Price and no adjustment shall be made in the number of Common Shares purchasable upon exercise of a Warrant unless it would result in a change of at least one one-hundredth of a Common Share; provided, however, that any adjustments which, except for the provisions of this Section 5.2(b), would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment, and provided further that in no event shall the Corporation be obligated to issue fractional Common Shares upon exercise of Warrants.

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(c)          Mutatis Mutandis Adjustment: Subject to the prior written consent, if required, of any stock exchange upon which the Common Shares or Warrants may be listed, no adjustment in the Exercise Price or in the number or kind of securities purchasable upon exercise of a Warrant shall be made in respect of any event described in Section 5.1 hereof if Warrantholders are entitled to participate in such event on the same terms mutatis mutandis as if Warrantholders had exercised their Warrants prior to or on the effective date or record date, as the case may be, of such event.

(d)          No Adjustment for Certain Events: No adjustment in the Exercise Price or in the number of Common Shares purchasable upon the exercise of Warrants shall be made pursuant to Section 5.1 hereof in respect of the issue from time to time of Common Shares pursuant to this Indenture or pursuant to any stock option, stock purchase or stock bonus plan in effect from time to time for directors, officers or employees of the Corporation and/or any Subsidiary of the Corporation and any such issue, and any grant of options in connection therewith, shall be deemed not to be a Common Share Reorganization, a Rights Offering nor any other event described in Section 5.1 hereof.

(e)          Other Actions: If at any time after the Effective Date but prior to the Expiry Date the Corporation shall take any action affecting the Common Shares, other than an action described in Section 5.1 hereof, which in the opinion of the Directors acting in good faith would materially affect the rights of Warrantholders, either or both the Exercise Price and the number of Common Shares purchasable upon exercise of Warrants shall be adjusted in such manner and at such time by action by the Directors, acting in good faith in their sole discretion, but subject to the prior written consent, if required, of any stock exchange upon which the Common Shares may be listed, as may be equitable in the circumstances. Failure of the taking of action by the Directors so as to provide for an adjustment prior to the effective date of any action by the Corporation affecting the Common Shares shall be deemed to be conclusive evidence that the Directors have determined that it is equitable to make no adjustment in the circumstances.

(f)          Abandonment of Event: If the Corporation shall set a record date to determine the holders of Common Shares for the purpose of entitling such holders to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such Shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Common Shares purchasable upon exercise of any Warrant shall be required by reason of the setting of such record date.

(g)          Deemed Record Date: In the absence of a resolution of the Directors fixing a record date for a Common Share Reorganization, a Rights Offering or a Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the earlier of the date on which holders of record of Common Shares are determined for the purpose of participating in the Common Share Reorganization, Rights Offering or Special Distribution and the date on which the Common Share Reorganization, Rights Offering or Special Distribution becomes effective.

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(h)          Disputes: If a dispute shall at any time arise with respect to adjustments of the Exercise Price or the number of Common Shares purchasable upon exercise of Warrants, such disputes shall be conclusively determined by the Corporation's Auditors or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the Directors and acceptable to the Warrant Agent and any such determination shall be conclusive evidence of the correctness of any adjustment made under Section 5.1 hereof and shall be binding upon the Corporation, the Warrant Agent and the Warrantholders. Such auditors or accountants shall be provided access to all necessary records of the Corporation for the purpose of such determination. In the event any determination is made, the Corporation shall deliver a Certificate of the Corporation to the Warrant Agent describing such determination.

(i)          Corporate Affairs: As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to the Warrants, including the Exercise Price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of Counsel, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable all the shares or other securities which all holders of Warrants are entitled to receive in accordance with the provisions thereof.

5.3          Postponement of Subscription:

In any case in which this Article 5 shall require that an adjustment shall be effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event:

(a)          issuing to the holder of any Warrant, to the extent that Warrants are exercised after such record date and before the occurrence of such event, the additional Common Shares or other securities issuable upon such exercise by reason of the adjustment required by such event; and

(b)          delivering to such holder any distribution declared with respect to such additional Common Shares or other securities after such exercise date and before such event;

provided however, that the Corporation shall deliver to such holder an appropriate instrument evidencing the right of such holder upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable on the exercise of any Warrant and to such distributions declared with respect to any additional Common Shares issuable on the exercise of any Warrant.

5.4          Notice of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:

(a)          Notice of Effective or Record Date: At least 21 days prior to the effective date or record date, as the case may be, of any event which requires or might require an adjustment in any of the subscription rights pursuant to any of the Warrants, including the Exercise Price and the number of Common Shares which are purchasable upon the exercise thereof, the Corporation shall:

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(i) file with the Warrant Agent a Certificate of the Corporation specifying the particulars of such event to the extent then known including, if determinable, the required adjustment and the computation of such adjustment; and

(ii) give notice to the Warrantholders in the manner provided for in Article 12 hereof of the particulars of such event to the extent then known including, if determinable, the required adjustment.

(b)          Adjustment Not Determinable: In case any adjustment for which a notice pursuant to Section 5.4(a) hereof has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable:

(i) file with the Warrant Agent a computation of such adjustment; and

(ii) give notice to the Warrantholders in the manner provided for in Article 12 hereof of the adjustment.

Where a notice pursuant to this Section 5.4 has been given, the Warrant Agent shall be entitled to act and rely on any adjustment calculation of the Corporation or of the Corporation’s Auditors.

(c)          Duty of Warrant Agent: Subject to Section 11.2(a) hereof, the Warrant Agent shall not:

(i) at any time be under any duty or responsibility to any Warrantholder to determine whether any facts exist which may require any adjustment in the Exercise Price or number of Common Shares issuable upon the exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or which respect to the method employed in making such adjustment;

(ii) be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any time be issued or delivered upon the exercise of any Warrant; or

(iii) be responsible for any failure of the Corporation to make any cash payment or to issue, transfer or deliver Common Shares or share certificates upon the surrender of any Warrants for the purpose of exercise, or to comply with any of the covenants contained in this Section 5.4.

Article 6 - PURCHASES BY THE CORPORATION

6.1          Optional Purchases by the Corporation:

Subject to applicable law, the Corporation may from time to time purchase Warrants on any stock exchange, in the open market, by private agreement or otherwise. Any such purchase may be made in such manner, from such persons, at such prices and on such terms as the Corporation in its sole discretion may determine.

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6.2          Surrender of Warrant Certificates:

Warrant Certificates representing Warrants purchased pursuant to Section 6.1 hereof shall be surrendered to the Warrant Agent for cancellation and shall be accompanied by a direction of the Corporation to cancel the Warrants represented thereby.

Article 7 - COVENANTS OF THE CORPORATION

7.1          General Covenants of the Corporation:

The Corporation covenants with the Warrant Agent for the benefit of the Warrant Agent and the Warrantholders that so long as any Warrants remain outstanding:

(a)          the Corporation will at all times use its commercially reasonable efforts to maintain its corporate existence, remain a corporation in good standing under the Canada Business Corporations Act, will carry on and conduct its business in a proper, efficient and business-like manner and in accordance with good business practice and cause to be kept proper books of account in accordance with generally accepted accounting practices;

(b)          the Corporation will cause certificates representing the Common Shares, if any, from time to time subscribed and paid for pursuant to the exercise of Warrants to be issued and delivered in accordance with the terms hereof;

(c)          all Common Shares which are issued upon exercise of the right to subscribe for and purchase provided for herein, upon payment of the Exercise Price herein provided for, shall be fully paid and non-assessable shares;

(d)          the Corporation will reserve and keep available a sufficient number of Common Shares for the purpose of enabling the Corporation to satisfy its obligations to issue Common Shares upon the exercise of the Warrants;

(e)          the Corporation is duly authorized to create and issue the Warrants and that the Warrants, when issued and certified by the Warrant Agent will be valid and enforceable against the Corporation and that, subject to the provisions of this Indenture, the Corporation shall cause the Common Shares from time to time acquired pursuant to the exercise of Warrants to be duly issued, upon payment of the Exercise Price, to the Warrantholders;

(f)          the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other acts, deeds and assurances in law as may reasonably be required for the better accomplishing and effecting of the intentions and provisions of this Indenture;

(g)          the Corporation is currently a reporting 2issuer not in default in the Qualifying Jurisdictions and will use its best efforts to maintain its status as a reporting issuer in the Qualifying Jurisdictions for a period of at least thirty (30) months, from the date hereof;

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(h)          if any instrument is required to be filed with or any permission is required to be obtained from any securities regulatory authority or any other step is required under any federal or provincial law of a Qualifying Jurisdiction before any securities or property which a Warrantholder is entitled to receive pursuant to the exercise of a Warrant may properly and legally be delivered upon the due exercise of a Warrant, the Corporation covenants that it shall use its commercially reasonable efforts to take all such action, at its expense, as is required or appropriate in the circumstances;

(i)          from the date hereof until two years after the Expiry Date, the Corporation will use its commercially reasonable efforts to maintain the listing of the Common Shares on the Exchange to ensure that the Common Shares issued pursuant to the exercise of the Warrants are listed and posted for trading on the Exchange;

(j)          the Corporation will send to each Warrantholder a copy of all documents required to be delivered to holders of Common Shares pursuant to the Securities Act (Ontario) or other applicable law within the required time periods contemplated thereby;

(k)          each of this Indenture and the Warrant Certificates has been duly authorized, executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of, and is enforceable against, the Corporation in accordance with its terms;

(l)          the Corporation is a “foreign issuer” within the meaning of Regulation S under the 1933 Act and will use commercially reasonable efforts to remain a foreign issuer until the Time of Expiry;

(m)          the Corporation will comply with all covenants and satisfy all terms and conditions on its part to be performed and satisfied under this Indenture;

(n)          the issue of the Warrants, and the execution and delivery of the Warrant Certificates and this Indenture, does not and will not result in a breach by the Corporation of, and does not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach by the Corporation of any applicable laws, and does not and will not conflict with any of the terms, conditions or provisions of the articles or resolutions of the Corporation or any trust indenture, loan agreement or any other agreement or instrument to which the Corporation is a party or by which it is contractually bound on the date of this Indenture;

(o)          the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all other acts, deeds and assurances in law as the Warrant Agent, acting on the advice of Counsel, may reasonably require for better accomplishing and effecting the intentions and provisions of this Indenture;

(p)           with respect to any notices to be given or other acts to be performed or which may be given or performed by the Warrant Agent under or pursuant to this Indenture, the Corporation shall provide to the Warrant Agent in a timely manner all such information and documents as the Warrant Agent may reasonably request and are within the knowledge or control of the Corporation in order to verify the factual circumstances relating to such notices or acts and, if requested, such notices of acts and, if requested, such information and documents shall be certified as correct by an officer of the Corporation;

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(q)          generally, the Corporation will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture and will not take any action which might reasonably be expected to deprive Warrantholders of their rights to acquire Common Shares on the exercise of Warrants;

(r)          the Corporation will give to the Warrantholders, in the manner provided in Article 12 hereof, and to the Warrant Agent, notice of its intention to fix a record date, or effective date, as the case may be, for any event referred to in Section 5.1 hereof which may give rise to an adjustment in the Exercise Price or in the number of Common Shares purchasable upon the exercise of Warrants and, in each case, such notice shall specify the particulars of such event and the record date, or the effective date, for such event; provided that the Corporation shall only be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given, and such notice shall be given in each case not less than 21 days prior to the applicable record date or effective date, as the case may be;

(s)          the Corporation will not close its transfer books nor take any other action which might deprive a Warrantholder of the opportunity of exercising the right of purchase pursuant to the Warrants held by such person during the period of twenty-one (21) days after the giving of a notice required by this Section 7.1 or unduly restrict such opportunity;

(t)          if the Corporation is a party to any transaction in which the Corporation is not the continuing corporation, the Corporation shall use commercially reasonable efforts to obtain all consents which may be necessary or appropriate under Canadian law to enable the continuing corporation to give effect to the Warrants; and

(u)          generally, the Corporation will well and truly perform and carry out all of the acts or things to be done by the Corporation as provided in this Indenture.

7.2          Warrant Agent's Remuneration and Expenses:

The Corporation covenants that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and the Corporation will pay or reimburse the Warrant Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Warrant Agent in the administration or execution of its duties hereunder (including the reasonable compensation and the disbursements of its counsel and all other advisers not regularly in its employ) both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder shall be finally and fully performed, except any such expense, disbursement or advance as may arise out of or result from the Warrant Agent's own grossly negligent action, grossly negligent failure to act, wilful misconduct or bad faith.

7.3          Notice of Issue:

The Corporation will give written notice of the issue of Common Shares pursuant to the exercise of any Warrants, in such detail as may be required, to each securities commission or similar regulatory authority in each jurisdiction in Canada in which there is legislation or regulations requiring the giving of any such notice in order that such issue of Common Shares and the subsequent disposition of the Common Shares so issued will not be subject to the prospectus requirements, if any, of such legislation or regulations.

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7.4          Performance of Covenants by Warrant Agent:

If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Warrant Agent may notify the Warrantholders of such failure on the part of the Corporation or may itself perform any of the said covenants capable of being performed by it, but shall be under no obligation to do so or to notify the Warrantholders that it is so doing. All amounts so expended or advanced by the Warrant Agent shall be repayable upon request of the Warrant Agent as provided in Section 7.2 hereof. No such performance or advance by the Warrant Agent shall be deemed to relieve the Corporation of any default hereunder.

Article 8 - ENFORCEMENT

8.1          Suits by Warrantholders:

All or any of the rights conferred upon the holder of any Warrant Certificate by the terms of such Warrant Certificate or the provisions of this Indenture may be enforced by the holder of such Warrant Certificate by appropriate legal proceedings but without prejudice to the right which is hereby conferred upon the Warrant Agent to proceed in its own name to enforce each and all of the provisions herein contained for the benefit of the Warrantholder.

8.2          Immunity of Shareholders:

By the acceptance of the Warrant Certificate, Warrantholders and the Warrant Agent hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any past, present or future incorporator, shareholder, director, officer, employee or agent of the Corporation for the issue of Common Shares pursuant to the exercise of any Warrant.

8.3          Limitation of Liability:

The obligations hereunder are not personally binding upon, nor shall resort hereunder be had to, the private property of any of the past, present or future officers, Directors or Shareholders of the Corporation or of any successor corporation or to any of the past, present or future officers, Directors, employees or agents of the Corporation or any successor corporation, but only the property of the Corporation or any successor corporation shall be bound in respect hereof.

Article 9 - MEETINGS OF WARRANTHOLDERS

9.1          Right to Convene Meetings:

The Warrant Agent may at any time and from time to time and shall on receipt of a Written Request of the Corporation or of a Warrantholders' Request and upon receiving sufficient funds and being indemnified to its reasonable satisfaction by the Corporation or by the Warrantholders signing such Warrantholders' Request, as the case may be, against the costs which may be incurred by the Warrant Agent in connection with the calling and holding of such meeting, convene a meeting of the Warrantholders. In the event of the Warrant Agent failing within fifteen (15) days after receipt of such Written Request by the Corporation or of a Warrantholders' Request and of the required funds and indemnity as aforesaid to give notice to convene a meeting, the Corporation or such Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Toronto, Ontario, or at such other place as may be approved or determined by the Warrant Agent.

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9.2          Notice:

At least 21 days’ notice of any meeting of Warrantholders shall be given to the Warrantholders in the manner provided in Article 12 hereof and a copy thereof shall be sent by prepaid mail to the Warrant Agent unless the meeting has been called by it and to the Corporation unless the meeting has been called by it. Such notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat. It shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article 9. The notice convening any such meeting may be signed by an appropriate officer of the Warrant Agent or of the Corporation or the person or persons designated by the Warrantholders signing such Warrantholders' Request, as the case may be.

9.3          Chairman:

An individual (who need not be a Warrantholder) nominated in writing by the Warrant Agent shall be chairman of the meeting and if no individual is so nominated, or if the individual so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, or if such person is unable or unwilling to act as chairman, the Warrantholders present in person or by proxy shall choose some individual to be chairman.

9.4           Quorum:

Subject to the provisions of Section 9.12 hereof, at any meeting of the Warrantholders a quorum shall consist of Warrantholders present in person or by proxy holding at least 50% of the aggregate number Warrants outstanding as of the date of the meeting, provided that at least two persons entitled to vote thereat (including proxyholders) are personally present. If a quorum of the Warrantholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Warrantholders or on a Warrantholders' Request, shall be dissolved, but in any other case the meeting shall be adjourned to the same day in the next following week (unless such day is not a Business Day in which case it shall be adjourned to the next following Business Day thereafter) at the same time and place. 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 called notwithstanding that they may not hold at least 50% of the aggregate number of Warrants then outstanding.

9.5          Power to Adjourn:

Subject to the provisions of Section 9.4 hereof, the chairman of any meeting at which a quorum of the Warrantholders is present may, with the consent of the meeting, adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

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9.6          Show of Hands:

Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on Extraordinary Resolutions shall be given in the manner hereinafter provided. At any such meeting, unless a poll is demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of such fact. Any Warrantholder present in person or by proxy can demand a poll at any meeting in accordance with the provisions of Section 9.7 hereof.

9.7          Poll:

On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands in respect of such question if requested by the chairman or by one of or more of the Warrantholders acting in person or by proxy, a poll shall be taken in such manner as the chairman shall direct. Questions other than Extraordinary Resolutions shall be decided by a majority of the votes cast on the poll.

9.8          Voting:

On a show of hands every person who is present and entitled to vote, whether as a Warrantholder or as a 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 appointed by instrument in writing shall be entitled to one vote in respect of each one Warrant held by him. 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.

9.9           Regulations:

The Warrant Agent or the Corporation with the approval of the Warrant Agent may from time to time make regulations and from time to time vary such regulations as it shall from time to time think fit:

(a)          for the deposit of instruments appointing proxies at such place and time as the Warrant Agent, the Corporation or the Warrantholder calling the meeting, as the case may be, may direct in the notice calling the meeting;

(b)          for 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, cabled 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;

(c)          for the form of the instrument appointing a proxy, the manner in which it may be executed and verification of the authority of a person who executes it on behalf of a Warrantholder; and

(d)          generally for the calling of meetings of Warrantholders and the conduct of business thereat.

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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 the holders of any Warrant Certificates, or as entitled to vote or be present at the meeting in respect thereof, shall be registered holders of Warrant Certificates or proxies thereof.

9.10          Corporation and Warrant Agent may be Represented:

The Corporation and the Warrant Agent, by their respective employees, officers or directors, and the legal advisers of the Corporation and the Warrant Agent, may attend any meeting of the Warrantholders, but shall have no vote as such.

9.11          Powers Exercisable by Extraordinary Resolution:

In addition to all other powers conferred upon them by any other provision of this Indenture or by law, the Warrantholders at a meeting shall have the following powers exercisable from time to time by Extraordinary Resolution:

(a)          power to consent and agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrantholders or, with the reasonable consent of the Warrant Agent, of the Warrant Agent (in its capacity as warrant agent hereunder or on behalf of the Warrantholders) with the Corporation, whether such rights arise under this Indenture or the Warrant Certificates or otherwise;

(b)          subject to arrangements as to financing and indemnity satisfactory to the Warrant Agent, power to direct or authorize the Warrant Agent (i) to enforce any of the covenants of the Corporation contained in this Indenture or the Warrant Certificates, (ii) to enforce any of the rights of the Warrantholders in any manner specified in such Extraordinary Resolution, or (iii) to refrain from enforcing any such covenant or right;

(c)          power to waive and direct the Warrant Agent to waive any default on the part of the Corporation in complying with any provision of this Indenture or the Warrant Certificates, either unconditionally or upon any conditions specified in such Extraordinary Resolution;

(d)          power to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Corporation (i) for the enforcement of any of the covenants of the Corporation contained in this Indenture or the Warrant Certificates, or (ii) to enforce any of the rights of the Warrantholders;

(e)          power to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or discontinue or otherwise deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith;

(f)          power to appoint any persons (whether Warrantholders or not) as a committee to represent the interests of the Warrantholders and to confer upon such committee any powers or discretions which the Warrantholders could themselves exercise by Extraordinary Resolution or otherwise;

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(g)          power from time to time and at any time to remove the Warrant Agent and to appoint a successor Warrant Agent;

(h)          power to amend, alter or repeal any Extraordinary Resolution previously passed;

(i)          power to assent to any change in or omission from the provisions contained in the Warrant Certificates and 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; and

(j)          power 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.

9.12          Extraordinary Resolution:

(a)          Extraordinary Resolution: If, at any meeting called for the purpose of passing an Extraordinary Resolution, Warrantholders holding 50% of the aggregate number of Warrants outstanding as of the date of such meeting are not present in person or by proxy within 30 minutes from the time fixed for holding the meeting, then the meeting, if called 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 five Business Days or more than 10 Business Days later, and to such place and time as may be determined by the chairman. Not less than three Business Days' notice to Warrantholders shall be given of the time and place of such adjourned meeting in the manner provided in Article 12 hereof. 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 notwithstanding the provisions of this Section 9.12(a) to the contrary and may transact the business for which the meeting was originally called and a motion proposed at such adjourned meeting and passed by the affirmative vote of Warrantholders holding not less than 66 2/3% of the aggregate number of Warrants represented at the adjourned meeting and voted on the motion shall be an Extraordinary Resolution within the meaning of this Indenture, notwithstanding that Warrantholders holding 50% of the aggregate number of Warrants then outstanding Warrant Certificates are not present in person or by proxy at such adjourned meeting.

(b)          Poll to be Taken: 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.

9.13          Powers Cumulative:

It is hereby declared and agreed that any one or more of the powers in this Indenture, stated to be exercisable by the Warrantholders by Extraordinary Resolution or otherwise, may be exercised from time to time and the exercise of any one or more of such powers from time to time shall not be deemed to exhaust the right of the Warrantholders to exercise such power or powers then or thereafter from time to time.

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9.14          Minutes:

Minutes of all resolutions and Extraordinary Resolutions and proceedings at every meeting of Warrantholders shall be made and entered in books to be from time to time provided for that purpose by the Warrant Agent at the expense of the Corporation, and any such minutes, if signed by the chairman of the meeting at which such resolutions or Extraordinary Resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the Warrantholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made, shall be deemed to have been called and held, and all resolutions passed thereat or proceedings taken, to have been passed and taken.

9.15          Instruments in Writing:

All actions which may be taken and all powers that may be exercised by the Warrantholders at a meeting held as provided in this Article 9 may also be taken and exercised by Warrantholders representing at least 66 2/3% of the aggregate number of then outstanding Warrant Certificates, by an instrument in writing signed in one or more counterparts by such Warrantholders in person or by attorney appointed in writing and the expression "Extraordinary Resolution" when used in this Indenture shall include an instrument so signed.

9.16          Binding Effect of Resolutions:

Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 9 at a meeting of Warrantholders shall be binding upon all of the Warrantholders, whether present or absent at such meeting, and every instrument in writing signed by Warrantholders in accordance with the provisions of Section 9.15 hereof shall be binding upon all of the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and the Warrant Agent (subject to the provisions for indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing.

9.17          Holdings by Corporation and Warrant Agent Disregarded:

In determining whether Warrantholders are present at a meeting of Warrantholders for the purpose of determining a quorum or have concurred in any consent, resolution, Extraordinary Resolution, Warrantholders' Request, waiver or other action under this Indenture, Warrants owned by the Corporation or any Subsidiary of the Corporation and the Warrant Agent shall be deemed not to be outstanding and shall be disregarded. The Corporation shall provide the Warrant Agent with a Certificate of the Corporation providing details of any Warrants held by the Corporation or by a Subsidiary of the Corporation upon the written request of the Warrant Agent.

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Article 10- SUPPLEMENTAL INDENTURES

10.1          Provision for Supplemental Indentures for Certain Purposes:

From time to time the Corporation (when authorized by action by the Directors) and the Warrant Agent may, subject to the provisions of this Indenture and it shall, when so directed by the provisions of this Indenture, execute and deliver by its proper officers, indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:

(a)          setting forth adjustments pursuant to the provisions of Article 5 hereof;

(b)          increasing the number of Warrants, and the number of Common Shares issuable upon the exercise of Warrants, which the Corporation is authorized to issue under this Indenture and any consequential amendment thereto as may be required by the Warrant Agent acting on the advice of Counsel;

(c)          making such changes to the provisions hereof and of the Warrant Certificates as may be necessary or desirable in connection with the listing of the Warrants on any stock exchange;

(d)          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, prejudicial to the interests of the Warrantholders;

(e)          giving effect to any resolution or Extraordinary Resolution passed as provided in Article 9 hereof;

(f)          making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder, provided that such provisions are not, in the opinion of the Warrant Agent and on the advice of Counsel, prejudicial to the interests of the Warrantholders;

(g)          adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrant Certificates, or making any modification in the form of the Warrant Certificates which does not affect the substance thereof;

(h)          modifying any of the provisions of this Indenture or relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that in the opinion of the Warrant Agent and on the advice of Counsel, no such modification or relief shall be or become operative or effective in such manner as to impair 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; or

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(i)          any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective provisions, errors or omissions herein, provided that, in the opinion of the Warrant Agent and on the advice of Counsel, the rights of the Warrant Agent and of the Warrantholders are in no way prejudiced thereby.

10.2          Successor Corporation:

In the case of a consolidation, amalgamation, arrangement, merger, separation or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety, the successor entity resulting from such consolidation, amalgamation, arrangement, merger, separation or transfer (if not the Corporation) shall expressly assume, by supplemental indenture satisfactory in form to the Warrant Agent and executed and delivered to the Warrant Agent, the performance and observance of each and every covenant and obligation contained in this Indenture to be performed by the Corporation, as the case may be. Without limiting the generality of the foregoing, the continuing entity resulting from such consolidation, amalgamation, arrangement, merger, separation or transfer shall be deemed to be a successor entity for purposes of this Indenture.

Article 11 - CONCERNING THE WARRANT AGENT

11.1          Trust Indenture Legislation:

(a)          Mandatory Requirements: 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.

(b)          Applicable Legislation: The Corporation and the Warrant Agent agree that each of them 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.

11.2          Rights and Duties of Warrant Agent:

(a)          Degree of Skill: 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 with a view to the best interests of the Warrantholders and shall 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 grossly negligent action, its own grossly negligent failure to act or its own wilful misconduct or bad faith.

(b)          Conditions for Action: Subject to Section 11.2(a) hereof, the Warrant Agent shall not be bound to do anything or take any act or action for the enforcement of any of the obligations of the Corporation under this Indenture unless and until the Warrant Agent shall have received a Warrantholders' Request setting out the action which the Warrant Agent is required to take and the obligation of the Warrant Agent to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Warrant Agent or the Warrantholders hereunder shall be conditional upon the Warrantholders furnishing, when required by notice by the Warrant Agent, sufficient funds to commence or continue such act, action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to protect and hold harmless the Warrant Agent against the costs, charges, expenses and liabilities to be incurred thereby and any loss or damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the 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 unless indemnified as aforesaid.

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The Warrant Agent shall not be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Warrant Agent and , in the absence of any such notice, the Warrant Agent may for all purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations, warranties, covenants, agreements, or conditions contained herein.

(c)          Deposit of Warrant Certificates: The Warrant Agent may, before commencing or at any time during the continuance of any act, action or proceeding for the purpose of enforcing any rights of the Warrant Agent or the Warrantholders hereunder, require the Warrantholders at whose instance it is acting to deposit with the Warrant Agent the Warrant Certificates held by them, for which Warrant Certificates the Warrant Agent shall issue receipts.

(d)          Supremacy of Applicable Legislation: 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 and of this Article 11.

11.3          Evidence:

(a)          Entitlement to Rely on Evidence: Whenever it is provided in this Indenture 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 of the facts and opinions stated in all 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. The Warrant Agent may rely and shall be protected in acting upon any such documents deposited with it in purported compliance with any such provision or for any other purpose hereof, but may, in its discretion, require further evidence before acting or relying thereon. The Warrant Agent may also rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, letter, telegram, cablegram or other paper or document believed by it to be genuine and to have been signed, sent or presented by or on behalf of the proper party or parties.

(b)          Additional Evidence: In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Corporation shall furnish to the Warrant Agent such additional evidence of compliance with any provision hereof, and in such form, as may be prescribed by Applicable Legislation or as the Warrant Agent may reasonably require by written notice to the Corporation.

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(c)          Statutory Declarations: Whenever Applicable Legislation requires that evidence referred to in Section 11.3(a) hereof 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 (a) the Chief Executive Officer or any Director of the Corporation and, in addition, by (b) the Chief Financial Officer or any Director of the Corporation.

(d)          Proof of Execution: Proof of execution of an instrument in writing by any Warrantholder may be made by the certificate of a notary public, 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 copy of the resolution of its board of directors authorizing the person who signs such instrument to sign such instrument

11.4          Experts and Advisers:

The Warrant Agent may employ or retain, at the expense of the Corporation, such counsel, accountants or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder, may pay reasonable remuneration for all services performed by any of them without taxation of any costs of any counsel and shall not be responsible for any misconduct on the part of any of them. The Warrant Agent may act and shall be protected in acting in good faith on the opinion or advice of or information obtained from any counsel, accountant or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in relation to this Indenture.

11.5          Warrant Agent not Required to give Security:

The Warrant Agent shall not be required to give any bond or security in respect of the execution of the duties, obligations and powers of this Indenture or otherwise in respect of these premises.

11.6          Protection of Warrant Agent:

(a)          Protection: By way of supplement to the provisions of any law for the time being relating to warrant agents, it is expressly declared and agreed as follows:

(i) the Warrant Agent shall not be liable for, or by reason of, any statement of fact or recital in this Indenture or in the Warrant Certificates (except the representation contained in Section 11.8 hereof and in the countersignature of the Warrant Agent on the Warrant Certificates) or required to verify the same, but all such statements or recitals are, and shall be deemed to be made by, the Corporation;

(ii) the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof;

(iii) 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 the representations, warranties or covenants herein contained or of any acts of Directors, officers, employees, agents or servants of the Corporation;

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(iv) the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in shares of the Corporation and in the Warrant Certificates and generally may contract and enter into financial transactions with the Corporation or any corporation related to the Corporation without being liable to account for any profit made thereby;

(v) 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; and

(vi) in the event that any of the funds provided to the Warrant Agent hereunder are received by it in the form of an uncertified cheque or bank draft, the Warrant Agent shall be entitled to delay the time for the release of such funds and the related Common Shares acquired upon the exercise of any Warrants until such uncertified cheque has cleared the financial institution upon which the same is drawn.

(b)          Indemnity: In addition to and without limited any protection of the Warrant Agent hereunder or otherwise by law, the Corporation agrees to indemnify the Warrant Agent and its officers, directors and employees and save it harmless from all liabilities, suits, damages, costs, expenses and actions which may be brought against or suffered by it arising out of or connected with performance by it of its duties hereunder except to the extent that such liabilities, suits, damages, costs and actions are attributable to the gross negligence or wilful misconduct of the Warrant Agent. Notwithstanding any other provision hereof, this indemnity shall survive any removal or resignation of the Warrant Agent, discharge of this Indenture and termination of any duties and obligations hereunder.

11.7          Replacement of Warrant Agent, Successor by Merger:

(a)          Resignation: The Warrant Agent may resign its duties and obligations and be discharged from all further duties and liabilities hereunder, subject to this Section 11.7(a), by giving to the Corporation not less than sixty (60) days prior notice in writing or such shorter prior notice as the Corporation may accept as sufficient. The Warrantholders, by Extraordinary Resolution, shall have power at any time to remove the Warrant Agent and to appoint a new warrant agent. In the event of the Warrant Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new warrant agent unless such Extraordinary Resolution has appointed a new warrant agent; failing such appointment by the Corporation, the retiring Warrant Agent, at the expense of the Corporation, or any Warrantholder may apply to a judge of the Ontario Court of Justice (General Division), on such notice as such judge may direct for the appointment of a new warrant agent; provided that any new Warrant Agent so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Warrantholders. Any new warrant agent appointed under this Section 11.7(a) shall be a corporation authorized to carry on the business of a trust company or transfer agent in the Province of Ontario and, if required by Applicable Legislation of any other province in Canada, in such other provinces. On any such appointment the new warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Warrant Agent without any further assurance, conveyance, act or deed, but there shall 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 the same to the new warrant agent, provided that, following any resignation or removal of the Warrant Agent and appointment of a successor warrant agent, the successor warrant agent shall have executed an appropriate instrument accepting such appointment and, at the request of the Corporation, the predecessor Warrant Agent shall execute and deliver to the successor warrant agent an appropriate instrument transferring to such successor warrant agent all rights and powers of the Warrant Agent hereunder so ceasing to act.

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(b)          Notice of Successor: Upon the appointment of a successor warrant agent, the Corporation shall promptly notify the Warrantholders thereof in the manner provided for in Article 12 hereof.

(c)          No Further Act for Merger: Any corporation into or with which the Warrant Agent may be merged or consolidated or amalgamated, or any corporation resulting therefrom, or any corporation succeeding to the trust or transfer agency 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 a successor warrant agent under Section 11.7(a) hereof.

(d)          Certification: Any Warrant Certificate countersigned but not delivered by a predecessor Warrant Agent may be delivered by the successor warrant agent in the name of the predecessor or successor warrant agent.

11.8          Conflict of Interest:

(a)          Representation: The Warrant Agent represents to the Corporation that at the time of the execution and delivery hereof no material conflict of interest exists in the Warrant Agent's role hereunder and agrees that in the event of a material conflict of interest arising hereafter it will, within 90 days after ascertaining that it has such material conflict of interest, either eliminate the same or assign its duties and obligations hereunder to a successor warrant agent approved by the Corporation and meeting the requirements set forth in Section 11.7(a) hereof.

(b)          Dealing in Securities: Subject to Section 11.8(a) hereof, the Warrant Agent or a successor 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 or any Subsidiary of the Corporation without being liable to account for any profit made thereby.

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11.9          Acceptance of Duties and Obligations:

The Warrant Agent hereby accepts the duties and obligations in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions hereinbefore set forth unless and until discharged therefrom.

11.10        Actions by Warrant Agent to Protect Interest:

The Warrant Agent shall have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect or enforce its interest and the interests of the Warrantholders.

11.11        Documents, Moneys, etc. Held by Warrant Agent:

Any securities, documents of title or other instruments that may at any time be held by the Warrant Agent subject to the duties and obligations hereof may be placed in the deposit vaults of the Warrant Agent or of any bank listed in Schedule I of the Bank Act (Canada), as amended, or deposited for safekeeping with any such bank. Unless herein otherwise expressly provided, any moneys so held pending the application or withdrawal thereof under any provisions of this Indenture, may be deposited in the name of the Warrant Agent in any such bank at the rate of interest, if any, then current on similar deposits or, with the consent of the Corporation, may be deposited in the deposit department of the Warrant Agent or any other loan or trust company or chartered bank authorized to accept deposits under the laws of Canada or a province thereof. All interest or other income received by the Warrant Agent in respect of such deposits and investments shall belong to the Corporation.

11.12        Warrant Agent Not to be Appointed Receiver:

The Warrant Agent and any person related to the Warrant Agent shall not be appointed a receiver or receiver and manager or liquidator of all or any part of the assets or undertaking of the Corporation.

11.13        Compliance with Applicable Legislation

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 judgement, 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 judgement, determine at any time that its acting under this Warrant 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 Corporation provided: (i) that the Warrant Agent’s written notice shall describe the circumstances of such non-compliance; and (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.

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Article 12 - NOTICE TO WARRANTHOLDERS

12.1          Notice:

(a)          Notice: Unless herein otherwise expressly provided, a notice to be given hereunder to Warrantholders will be deemed to be validly given if the notice is sent by ordinary surface or air mail, postage prepaid, addressed to the Warrantholders or delivered (or so mailed to certain Warrantholders and so delivered to the other Warrantholders) at their respective addresses appearing on the registers of holders described in Section 2.8 hereof, provided, however, that if, by reason of a strike, lockout or other work stoppage, actual or threatened, involving Canadian postal employees, the notice could reasonably be considered unlikely to reach or likely to be delayed in reaching its destination, the notice will be valid and effective only if it is so delivered or is given by publication twice in the Report on Business section in the national edition of The Globe and Mail newspaper.

(b)          Date of Notice: A notice so given by mail or so delivered will be deemed to have been given on the first Business Day after it has been mailed or on the day on which it has been delivered, as the case may be, and a notice so given by publication will be deemed to have been given on the second day on which it has been published as required. In determining under any provision hereof the date when notice of a meeting or other event must be given, the date of giving notice will be included and the date of the meeting or other event will be excluded. Accidental failure or omission in giving notice or accidental failure to mail notice to any Warrantholder will not invalidate any action or proceeding founded thereon.

Article 13 - GENERAL

13.1          Notice to the Corporation and the Warrant Agent:

(a)          Notices: Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or to the Warrant Agent shall be deemed to be validly given if delivered by prepaid courier, if transmitted by telecopier or other means of prepaid, transmitted, recorded communication or if sent by registered mail, postage prepaid:

(i)           to the Corporation:

Cynapsus Therapeutics Inc.
828 Richmond Street West
Toronto, Ontario
M6J 1C9

Attention:     Chief Executive Officer

Telecopier:    416-703-2449

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(ii)          to the Warrant Agent:

Equity Financial Trust Company
Suite 400, 200 University Avenue
Toronto, Ontario
M5H 4H1

Attention:     Manager, Corporate Trust Department

Telecopier:    416-361-0470

and any such notice delivered or transmitted in accordance with the foregoing shall be deemed to have been received on the date of delivery or transmission or, if mailed, on the third Business Day following the date of the postmark on such notice. The original of any notice sent by facsimile transmission to the Warrant Agent shall be subsequently mailed to the Warrant Agent.

(b)          Change of Address: The Corporation or the Warrant Agent may from time to time notify the other in the manner provided in Section 13.1(a) hereof 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.

(c)          Postal Disruption: 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 by prepaid courier or transmitted by telecopier or other means of prepaid, transmitted, recorded communication, such notice to be deemed to have been received on the date of delivery or transmission.

13.2          Time of the Essence:

Time shall be of the essence of this Indenture.

13.3          Counterparts:

The Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution shall be deemed to be dated as of the date hereof.

13.4          Satisfaction and Discharge of Indenture:

Upon all Common Shares required to be issued in respect of Warrant Certificates delivered to the Warrant Agent prior to the Expiry Date having been issued, this Indenture shall cease to be of further force or effect and the Warrant Agent, on demand of and at the cost and expense of the Corporation and upon delivery to the Warrant Agent of a certificate of the President or any Vice-President of the Corporation stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture.

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13.5          Provisions of Indenture and Warrant Certificate for the Sole Benefit of Parties and Warrantholders:

Nothing in this Indenture or the Warrant Certificates, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the holders of the Warrant Certificates, as the case may be, any legal or equitable right, remedy or claim under this Indenture or the Warrant Certificates, or under any covenant or provision therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Warrantholders.

13.6          Stock Exchange Consents:

Any action provided for in this Indenture requiring the prior consent of any stock exchange upon which the Common Shares or Warrants may be listed shall not be completed until the requisite consent is obtained.

IN WITNESS WHEREOF the parties have executed this Indenture as of the day and year first above written.

CYNAPSUS THERAPEUTICS INC.
Per:	/s/ Anthony Giovinazzo
	Name: Anthony Giovinazzo
	Title: Chief Executive Officer
	Authorized Signing Officer
Per:	/s/ Andrew Williams
	Name: Andrew Williams
	Title: Chief Operating Officer and Chief Financial Officer
	Authorized Signing Officer
EQUITY FINANCIAL TRUST COMPANY
Per:	/s/ Derrice Richards
	Name: Derrice Richards
	Title: Senior Advisor Trust Services
	Authorized Signing Officer
Per:	/s/ Donald Crawford
	Name: Donald Crawford
	Title: Corporate Trust Officer
	Authorized Signing Officer

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SCHEDULE A TO THE WARRANT

INDENTURE DATED AS OF MARCH 1, 2013 BETWEEN

CYNAPSUS THERAPEUTICS INC. AND EQUITY FINANCIAL TRUST COMPANY

FORM OF WARRANT CERTIFICATE

For Warrants offered or sold to, or for the account or benefit of, persons in the United States or "U.S. persons," as such term is defined in Regulation S under the United States Securities Act of 1933, as amended, please include the following legend:

“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

EXERCISABLE ONLY PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE AFTER WHICH TIME THIS WARRANT CERTIFICATE SHALL BE NULL AND VOID.

NUMBER ________	CERTIFICATE FOR <>
	WARRANTS
	CUSIP:

WARRANT

TO PURCHASE COMMON SHARES OF CYNAPSUS THERAPEUTICS INC.

THIS IS TO CERTIFY THAT, for value received, ___________ (the "holder") is entitled to subscribe for and to purchase, AT ANY TIME PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE (as hereinafter defined), fully paid and non-assessable common shares ("Common Shares") of Cynapsus Therapeutics Inc. (the "Corporation") as constituted on the date hereof (as hereinafter defined), on the basis of one Common Share for each one Warrant, at an exercise price of $0.575 (Canadian) per Common Share, by surrendering this Warrant Certificate to the warrant agent specified below with a subscription form (FORM 1) properly completed and executed, and a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Corporation, for the total purchase price of the Common Shares so subscribed for and purchased. In the event of any conflict or inconsistency between the provisions of this Warrant Certificate and the provisions of the Warrant Indenture (as hereinafter defined), the provisions of the Warrant Indenture shall prevail.

The Expiry Date is the earlier of: (i) the expiration of thirty (30) days after prior written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $1.38 per Common Share for twenty (20) consecutive trading days, and (ii) March 1, 2018.

The holder of this Warrant Certificate may subscribe for and purchase less than the number of Common Shares entitled to be subscribed for and purchased on surrender of this Warrant Certificate. If the subscription does not exhaust the Warrants represented by this Warrant Certificate, a Warrant Certificate representing the balance of the Warrants will be issued to the holder. No Warrant Certificate representing fractional Warrants will be issued and the holder hereof understands and agrees that such holder will not be entitled to any cash payment or other form of compensation in respect of a fractional Warrant. By acceptance hereof, the holder expressly waives any right to receive fractional Common Shares upon exercise hereof. If the number of Common Shares to which a Warrantholder would otherwise be entitled upon the exercise of this Warrant Certificate is not a whole number, then the number of Common Shares to be issued will be rounded down to the next whole number.

The principal office of Equity Financial Trust Company (the "Warrant Agent") in the City of Toronto, Ontario, has been appointed the warrant agent to receive subscriptions for Common Shares and payments from holders of Warrant Certificates. This Warrant Certificate, the subscription form (FORM 1), and a certified cheque, bank draft or money order shall be deemed to be surrendered to the Warrant Agent only upon personal delivery thereof or, if sent by post or other means of transmission, upon receipt thereof by the Warrant Agent at the office specified above. The Corporation may also provide for other places at which this Warrant Certificate may be surrendered for exchange or exercise. If mail is used for delivery of a Warrant Certificate, for the protection of the holder, registered mail should be used and sufficient time should be allowed to avoid the risk of late delivery. Subject to adjustment hereof in the events and in the manner set forth in the Warrant Indenture hereafter mentioned and summarized below, the price payable for each Common Share upon exercise of this Warrant Certificate shall be $0.575 (Canadian).

Certificates representing Common Shares subscribed for and purchased will be mailed to the persons specified in the subscription form (FORM 1) at the respective addresses specified therein or, if so specified in the subscription form (FORM 1), delivered to such persons at the office of the Warrant Agent where the applicable Warrant Certificate was surrendered, when the transfer books of the Corporation have been opened for five Business Days after the due surrender of such Warrant Certificate and payment as aforesaid, including any applicable taxes.

The Warrants represented by this Warrant Certificate may only be transferred, upon compliance with the conditions prescribed in the Warrant Indenture, on the register of transfers to be kept at the principal office of the Warrant Agent in Toronto, Ontario, by the holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be duly recorded on such register of transfers by the Warrant Agent. Notwithstanding the foregoing, the Corporation will be entitled, and may direct the Warrant Agent, to refuse to record any transfer of any Warrant on such register if such transfer would constitute a violation of the securities laws of any jurisdiction.

This Warrant Certificate represents warrants of the Corporation issued or issuable under the provisions of an indenture (which indenture together with all other instruments supplemental or ancillary thereto is herein referred to as the "Warrant Indenture") dated as of March 1, 2013, between the Corporation and the Warrant Agent, to which reference is hereby made for particulars of the rights of the holders of the Warrant Certificates, the Corporation and the Warrant Agent in respect thereof and the terms and conditions upon which the Warrants represented hereby are issued and held, all to the same effect as if the provisions of the Warrant Indenture were herein set forth in full, to all of which the holder of this Warrant Certificate by acceptance hereof assents, it being expressly understood that the provisions of the Warrant Indenture and this Warrant Certificate are for the sole benefit of the Corporation, the Warrant Agent and the Warrantholders. A copy of the Warrant Indenture may be obtained on request without charge from the secretary of the Corporation, at 828 Richmond Street West, Toronto, Ontario M6J 1C9, telephone: 416-703-2449. Words and terms in this Warrant Certificate with the initial letter or letters capitalized and not defined herein shall have the meanings ascribed to such capitalized words and terms in the Warrant Indenture.

Warrants may not be exercised by or on behalf of a person in the United States or a "U.S. person" (a "U.S. Person"), as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the "1933 Act"), unless an exemption from registration is available under the 1933 Act and any applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to such effect; provided, however, that a Warrantholder who is an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the 1933 Act (a "U.S. Accredited Investor"), at the time of exercise of Warrants and that purchased units ("Units"), with each Unit comprised of one Common Share and one Warrant, in the Corporation’s private placement of Units in the United States and to U.S. Persons will not be required to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants underlying those Units as long as the Warrantholder is a U.S. Accredited Investor and the other representations and warranties made by such Warrantholder at the time of purchase of the Units also remain true and correct.

2.

Common Shares issued upon exercise of Warrants to, or for the account or benefit of, a person in the United States or a U.S. Person will contain a legend restricting transfer under United States federal and state securities laws.

Nothing contained in this Warrant Certificate, the Warrant Indenture or otherwise shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or other shareholder of the Corporation or any other right or interest except as herein and in the Warrant Indenture expressly provided.

The Warrant Indenture provides for adjustments to the exercise price of the Warrants and to the number and kind of securities purchaseable upon exercise upon the happening of certain stated events including the subdivision or consolidation of the Common Shares, certain distributions of Common Shares or securities exchangeable for or convertible into Common Shares or of other assets or property of the Corporation, certain offerings of rights, warrants or options and certain reorganizations.

The Warrant Indenture provides for the giving of notice by the Corporation prior to taking certain actions specified therein. The Corporation may from time to time purchase any of the Warrants by private contract or otherwise. Any such Warrants purchased by the Corporation shall be cancelled.

This Warrant Certificate, the Warrants represented by this Warrant Certificate and the Warrant Indenture shall be governed by and performed, construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

This Warrant Certificate shall not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent for the time being under the Warrant Indenture.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be executed by its respective authorized officers as of this 1^st day of March, 2013.

CYNAPSUS THERAPEUTICS INC.
Per:
	Name:
	Title:
	Authorized Signing Officer

3.

Per:
	Name:
	Title:
	Authorized Signing Officer

This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Indenture.

EQUITY FINANCIAL TRUST COMPANY
Per:
	Authorized Signing Officer
Date of Countersignature: ______________

4.

SUBSCRIPTION FORM

(FORM 1)

THE HOLDER HEREBY SUBSCRIBES FOR ___________ Common Shares of Cynapsus Therapeutics Inc. (the “Corporation”) at $0.575 (Canadian) per Common Share and on the other terms set out in the Warrant Certificate and Warrant Indenture and encloses herewith a certified cheque, bank draft or money order in Canadian dollars payable to "Cynapsus Therapeutics Inc." in payment of the aggregate subscription price therefor.

The undersigned hereby irrevocably directs that the Common Shares be delivered, subject to the conditions set out in this certificate and the provisions of the Warrant Indenture, and that the said Common Shares be registered as follows:

Name(s) in Full and Social Insurance Number(s)	Address(es) (include postal code)	Number of Common Shares
	TOTAL:

Please print full name in which certificate(s) are to be issued. If any of the Common Shares are to be issued to a person or persons other than the Warrantholder, the Warrantholder must pay to the Warrant Agent all requisite taxes or other government charges, if any.

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

A. ¨ The undersigned holder (i) at the time of exercise of the Warrants is not in the United States and is not exercising the Warrants on behalf of a person in the United States; (ii) is not a "U.S. person" (a "U.S. Person"), as defined in Regulation S under the United States Securities Act of 1933, as amended (the "1933 Act"), and is not exercising the Warrants on behalf of a U.S. Person; and (iii) did not execute or deliver this exercise form in the United States.

B.¨ The undersigned holder (i) purchased these Warrants directly from the Corporation pursuant to a written subscription agreement for the purchase of units (the "Units"), with each Unit comprised of one Common Share of the Corporation and one Warrant; (ii) is exercising these Warrants solely for its own account and not on behalf of any other person; (iii) was an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the 1933 Act, both on the date the Units were purchased from the Corporation and on the date of exercise of these Warrants and (iv) the other representations and warranties made by the undersigned holder at the time of the purchase of the Units remain true and correct.

5.

C. ¨ The undersigned holder has delivered to the Corporation and Equity Financial Trust Company an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available.

Note: The undersigned holder understands that unless Box A above is checked, the certificate representing the Common Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available. Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked. If Box C is checked, any opinion or other evidence tendered must be in form and substance reasonably satisfactory to the Corporation. Holders planning to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions or other evidence to be tendered will be acceptable to the Corporation.

DATED this__day of __________, 2013.

Signature of Warrantholder Signature Guaranteed*

Print Name and Address in full below:

Name
Address
	(Include Postal Code)

¨          Please check box if certificates representing the Common Shares are to be delivered at the office of the Warrant Agent where this Warrant Certificate is surrendered, failing which the certificates will be mailed to the address set forth above.

*The signature of the Warrantholder must be signature guaranteed by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words "signature guarantee", or "signature medallion guaranteed" and otherwise be in accordance with industry standards.

6.

FORM OF TRANSFER

(FORM 2)

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers the Warrants represented by this Warrant Certificate to:

Name
Address
	(Include Postal Code)

and hereby irrevocably constitutes and appoints
	(leave this space blank)

as the attorney of the undersigned with full power of substitution to transfer the Warrants on the appropriate register of the Warrant Agent.

DATED this ______ day of_______________, 20 __.

Signature Guaranteed	Signature of Transferor
	Name of Transferor

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

1. The Warrant Indenture contains certain other requirements relating to the transfer of Warrants, including, among other things, a requirement in certain cases that a declaration to the effect set forth in Section 2.1(c) of the Warrant Indenture (or as the Corporation may otherwise prescribe from time to time) or, in other cases, as set out in Section 2.8(h), that a written opinion of U.S. counsel of recognized standing be delivered in connection with the transfer of Warrants by a U.S. Person or a Person in the United States or a Person holding Warrants for the account or benefit of a U.S. Person or a Person in the United States to a Person in the United States or for the account or benefit of a U.S. Person or a Person in the United States.

2. The signature of the transferor must correspond in every particular with the surname and the first name(s) or initials shown on the face of this certificate and the endorsement must be signature guaranteed, in either case, by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words "signature guarantee", or "signature medallion guaranteed" and otherwise be in accordance with industry standards.

EX-4.6

Exhibit 4.6

SUPPLEMENTAL INDENTURE

THIS SUPPLEMENTAL INDENTURE is entered into as of the 15^th day of May, 2015.

AMONG:

CYNAPSUS THERAPEUTICS INC. a corporation governed by the laws of Canada (the “Corporation”)

- and -

EQUITY FINANCIAL TRUST COMPANY, a trust company governed by the laws of Canada (the “Warrant Agent”)

RECITALS:

A. The Corporation and the Warrant Agent entered into a warrant indenture (the “Original Indenture”) dated as of March 1, 2013 to provide for the creation and issuance of up to 17,319,304 Warrants to purchase 17,319,304 Common Shares;

B. Pursuant to a resolution passed at the annual and special meeting of the shareholders of the Corporation held on May 7, 2015, the shareholders of the Corporation approved by special majority, a resolution authorizing the Corporation to consolidate its existing issued and outstanding Common Shares at a consolidation ratio to be determined by the board of directors of the Corporation in its sole discretion, within a range between one post-consolidation share for every five pre-consolidation shares and one post-consolidation share for every 25 pre-consolidation shares;

C. At a meeting of the board of directors of the Corporation held on May 13, 2015, the board of directors of the Corporation unanimously approved and set the common share consolidation ratio at one post-consolidation share for every 16 pre-consolidation shares; and

B. Pursuant to articles of amendment dated May 15, 2015, the Corporation did consolidate its Common Shares at a ratio of one post-consolidation share for every 16 pre-consolidation shares

NOW THEREFORE in consideration of the mutual promises contained in this Supplemental Indenture and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties agree as follows:

1.1 References to Supplemental Indenture

As used herein “Supplemental Indenture”, “hereto”, “herein”, “hereof”, “hereby”, “hereunder” and similar expressions refer to this Supplemental Indenture and not to any particular Section or other portion hereof and include any and every instrument supplemental or ancillary hereto or in implementation hereof.

1.2 Definitions in Original Indenture

All terms contained in this Supplemental Indenture which are defined in the Original Indenture and not defined herein shall, for all purposes hereof, have the meanings given to such terms in the Original Indenture, as supplemented or amended by this Supplemental Indenture.

1.3 Supplemental Indenture of Original Indenture

The Original Indenture is hereby amended by:

(a) replacing the second recital on page 1 with the following:

“AND WHEREAS each Warrant entitles the holder to purchase, subject to adjustment in certain events, one Common Share at a price of $9.20 at any time prior to the Time of Expiry (as hereinafter defined), all upon the terms and conditions hereinafter set forth;”

(b) replacing the following definitions under Section 1.1 with the following:

““Exercise Price” means $9.20 per Common Share, unless such amount shall have been adjusted pursuant to the provisions of Article 5 hereof in which case such term shall mean the adjusted price in effect at the applicable time;”

““Expiry Date” means the earlier of: (i) the expiration of thirty (30) days after prior written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $22.08 per Common Share for twenty (20) consecutive Trading Days, and (ii) sixty (60) months from the Closing Date;”

““Warrants” means the warrants issued hereunder, each one of which entitles the holder thereof to purchase one Common Share for an exercise price of $9.20 at any time up to the Time of Expiry, subject to adjustment in accordance with Article 5 hereof;”

(c) replacing Section 2.1(a) with the following:

“Authorization of Warrants: The Warrants authorized to be issued hereunder are limited in respect of the aggregate number of Common Shares which can be subscribed for and purchased pursuant thereto, and Warrants may be issued only upon and subject to the terms and conditions hereinafter set forth. The Corporation hereby creates for issuance up to 1,082,457 Warrants entitling the holders thereof to subscribe for and purchase up to an aggregate of 1,082,457 Common Shares together with such additional indeterminate number of Common Shares as may be required to be issued pursuant to any adjustment required to be made by the provisions of Article 5 hereof, and such Warrants are hereby authorized to be issued.”

(d) deleting Schedule “A” and replacing it with Schedule “A” hereto.

- 2 -

1.4 Supplemental Indenture Supplemental to Original Indenture

This Supplemental Indenture is supplemental to the Original Indenture and the Original Indenture shall, from this date forward, be read in conjunction with this Supplemental Indenture. All other provisions of the Original Indenture shall remain in full force and effect, unamended as of the date hereof. The Original Indenture and this Supplemental Indenture shall, from this date forward, have effect so far as practicable as if all the provisions of the Original Indenture and this Supplemental Indenture were contained in the Original Indenture.

1.5 Counterparts and Formal Date

This Supplemental Indenture may be executed in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution shall be deemed to bear the date first above written.

[Signature page follows.]

- 3 -

IN WITNESS WHEREOF the parties have executed this Supplemental Indenture as of the day and year first above written.

CYNAPSUS THERAPEUTICS INC.
By:	/s/ Andrew Williams
	Name: Andrew Williams
	Title: Chief Operating Officer and Chief Financial Officer

EQUITY FINANCIAL TRUST COMPANY
By:	/s/ Donald Crawford
	Name: Donald Crawford
	Title: Corporate Trust Officer
By:	/s/ Carol Mikos
	Name: Carol Mikos
	Title: Vice President Trust Services

- 4 -

SCHEDULE “A”

CYNAPSUS THERAPEUTICS INC. AND EQUITY FINANCIAL TRUST COMPANY

FORM OF WARRANT CERTIFICATE

For Warrants offered or sold to, or for the account or benefit of, persons in the United States or “U.S. persons,” as such term is defined in Regulation S under the United States Securities Act of 1933, as amended, please include the following legend:

“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

EXERCISABLE ONLY PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE AFTER WHICH TIME THIS WARRANT CERTIFICATE SHALL BE NULL AND VOID.

NUMBER ________	CERTIFICATE FOR <>
	WARRANTS
	CUSIP:

WARRANT

TO PURCHASE COMMON SHARES OF CYNAPSUS THERAPEUTICS INC.

THIS IS TO CERTIFY THAT, for value received, ___________ (the “holder”) is entitled to subscribe for and to purchase, AT ANY TIME PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE (as hereinafter defined), fully paid and non-assessable common shares (“Common Shares”) of Cynapsus Therapeutics Inc. (the “Corporation”) as constituted on the date hereof (as hereinafter defined), on the basis of one Common Share for each one Warrant, at an exercise price of $9.20 (Canadian) per Common Share, by surrendering this Warrant Certificate to the warrant agent specified below with a subscription form (FORM 1) properly completed and executed, and a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Corporation, for the total purchase price of the Common Shares so subscribed for and purchased. In the event of any conflict or inconsistency between the provisions of this Warrant Certificate and the provisions of the Warrant Indenture (as hereinafter defined), the provisions of the Warrant Indenture shall prevail.

The Expiry Date is the earlier of: (i) the expiration of thirty (30) days after prior written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $22.08 per Common Share for twenty (20) consecutive trading days, and (ii) March 1, 2018.

The holder of this Warrant Certificate may subscribe for and purchase less than the number of Common Shares entitled to be subscribed for and purchased on surrender of this Warrant Certificate. If the subscription does not exhaust the Warrants represented by this Warrant Certificate, a Warrant Certificate representing the balance of the Warrants will be issued to the holder. No Warrant Certificate representing fractional Warrants will be issued and the holder hereof understands and agrees that such holder will not be entitled to any cash payment or other form of compensation in respect of a fractional Warrant. By acceptance hereof, the holder expressly waives any right to receive fractional Common Shares upon exercise hereof. If the number of Common Shares to which a Warrantholder would otherwise be entitled upon the exercise of this Warrant Certificate is not a whole number, then the number of Common Shares to be issued will be rounded down to the next whole number.

The principal office of Equity Financial Trust Company (the “Warrant Agent”) in the City of Toronto, Ontario, has been appointed the warrant agent to receive subscriptions for Common Shares and payments from holders of Warrant Certificates. This Warrant Certificate, the subscription form (FORM 1), and a certified cheque, bank draft or money order shall be deemed to be surrendered to the Warrant Agent only upon personal delivery thereof or, if sent by post or other means of transmission, upon receipt thereof by the Warrant Agent at the office specified above. The Corporation may also provide for other places at which this Warrant Certificate may be surrendered for exchange or exercise. If mail is used for delivery of a Warrant Certificate, for the protection of the holder, registered mail should be used and sufficient time should be allowed to avoid the risk of late delivery. Subject to adjustment hereof in the events and in the manner set forth in the Warrant Indenture hereafter mentioned and summarized below, the price payable for each Common Share upon exercise of this Warrant Certificate shall be $9.20 (Canadian).

Certificates representing Common Shares subscribed for and purchased will be mailed to the persons specified in the subscription form (FORM 1) at the respective addresses specified therein or, if so specified in the subscription form (FORM 1), delivered to such persons at the office of the Warrant Agent where the applicable Warrant Certificate was surrendered, when the transfer books of the Corporation have been opened for five Business Days after the due surrender of such Warrant Certificate and payment as aforesaid, including any applicable taxes.

2.

The Warrants represented by this Warrant Certificate may only be transferred, upon compliance with the conditions prescribed in the Warrant Indenture, on the register of transfers to be kept at the principal office of the Warrant Agent in Toronto, Ontario, by the holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be duly recorded on such register of transfers by the Warrant Agent. Notwithstanding the foregoing, the Corporation will be entitled, and may direct the Warrant Agent, to refuse to record any transfer of any Warrant on such register if such transfer would constitute a violation of the securities laws of any jurisdiction.

This Warrant Certificate represents warrants of the Corporation issued or issuable under the provisions of an indenture dated as of March 1, 2013 between the Corporation and the Warrant Agent, as supplemented by a supplemental warrant indenture dated as of May 15, 2015 between the Corporation and the Warrant Agent (which, collectively, together with all other instruments supplemental or ancillary thereto are herein referred to as the “Warrant Indenture”) to which reference is hereby made for particulars of the rights of the holders of the Warrant Certificates, the Corporation and the Warrant Agent in respect thereof and the terms and conditions upon which the Warrants represented hereby are issued and held, all to the same effect as if the provisions of the Warrant Indenture were herein set forth in full, to all of which the holder of this Warrant Certificate by acceptance hereof assents, it being expressly understood that the provisions of the Warrant Indenture and this Warrant Certificate are for the sole benefit of the Corporation, the Warrant Agent and the Warrantholders. A copy of the Warrant Indenture may be obtained on request without charge from the secretary of the Corporation, at 828 Richmond Street West, Toronto, Ontario M6J 1C9, telephone: 416-703-2449. Words and terms in this Warrant Certificate with the initial letter or letters capitalized and not defined herein shall have the meanings ascribed to such capitalized words and terms in the Warrant Indenture.

Warrants may not be exercised by or on behalf of a person in the United States or a “U.S. person” (a “U.S. Person”), as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), unless an exemption from registration is available under the 1933 Act and any applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to such effect; provided, however, that a Warrantholder who is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the 1933 Act (a “U.S. Accredited Investor”), at the time of exercise of Warrants and that purchased units (“Units”), with each Unit comprised of one Common Share and one Warrant, in the Corporation’s private placement of Units in the United States and to U.S. Persons will not be required to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants underlying those Units as long as the Warrantholder is a U.S. Accredited Investor and the other representations and warranties made by such Warrantholder at the time of purchase of the Units also remain true and correct.

Common Shares issued upon exercise of Warrants to, or for the account or benefit of, a person in the United States or a U.S. Person will contain a legend restricting transfer under United States federal and state securities laws.

3.

Nothing contained in this Warrant Certificate, the Warrant Indenture or otherwise shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or other shareholder of the Corporation or any other right or interest except as herein and in the Warrant Indenture expressly provided.

The Warrant Indenture provides for adjustments to the exercise price of the Warrants and to the number and kind of securities purchaseable upon exercise upon the happening of certain stated events including the subdivision or consolidation of the Common Shares, certain distributions of Common Shares or securities exchangeable for or convertible into Common Shares or of other assets or property of the Corporation, certain offerings of rights, warrants or options and certain reorganizations.

The Warrant Indenture provides for the giving of notice by the Corporation prior to taking certain actions specified therein. The Corporation may from time to time purchase any of the Warrants by private contract or otherwise. Any such Warrants purchased by the Corporation shall be cancelled.

This Warrant Certificate, the Warrants represented by this Warrant Certificate and the Warrant Indenture shall be governed by and performed, construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

This Warrant Certificate shall not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent for the time being under the Warrant Indenture.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be executed by its respective authorized officers as of this    day of               , 201  .

CYNAPSUS THERAPEUTICS INC.
Per:
	Name:
	Title:
	Authorized Signing Officer

This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Indenture.

EQUITY FINANCIAL TRUST COMPANY
Per:
	Authorized Signing Officer
Date of Countersignature: ______________

4.

SUBSCRIPTION FORM

(FORM 1)

THE HOLDER HEREBY SUBSCRIBES FOR ___________ Common Shares of Cynapsus Therapeutics Inc. (the “Corporation”) at $9.20 (Canadian) per Common Share and on the other terms set out in the Warrant Certificate and Warrant Indenture and encloses herewith a certified cheque, bank draft or money order in Canadian dollars payable to “Cynapsus Therapeutics Inc.” in payment of the aggregate subscription price therefor.

The undersigned hereby irrevocably directs that the Common Shares be delivered, subject to the conditions set out in this certificate and the provisions of the Warrant Indenture, and that the said Common Shares be registered as follows:

Name(s) in Full and Social Insurance Number(s)	Address(es) (include postal code)	Number of Common Shares
	TOTAL:

Please print full name in which certificate(s) are to be issued. If any of the Common Shares are to be issued to a person or persons other than the Warrantholder, the Warrantholder must pay to the Warrant Agent all requisite taxes or other government charges, if any.

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

A.o The undersigned holder (i) at the time of exercise of the Warrants is not in the United States and is not exercising the Warrants on behalf of a person in the United States; (ii) is not a “U.S. person” (a “U.S. Person”), as defined in Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and is not exercising the Warrants on behalf of a U.S. Person; and (iii) did not execute or deliver this exercise form in the United States.

B. o The undersigned holder (i) purchased these Warrants directly from the Corporation pursuant to a written subscription agreement for the purchase of units (the “Units”), with each Unit comprised of one Common Share of the Corporation and one Warrant; (ii) is exercising these Warrants solely for its own account and not on behalf of any other person; (iii) was an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the 1933 Act, both on the date the Units were purchased from the Corporation and on the date of exercise of these Warrants and (iv) the other representations and warranties made by the undersigned holder at the time of the purchase of the Units remain true and correct.

5.

C. o The undersigned holder has delivered to the Corporation and Equity Financial Trust Company an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available.

Note: The undersigned holder understands that unless Box A above is checked, the certificate representing the Common Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available. Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked. If Box C is checked, any opinion or other evidence tendered must be in form and substance reasonably satisfactory to the Corporation. Holders planning to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions or other evidence to be tendered will be acceptable to the Corporation.

DATED this __day of____________, 201  .

Signature of Warrantholder Signature Guaranteed*

Print Name and Address in full below:

Name
Address
	(Include Postal Code)

¨          Please check box if certificates representing the Common Shares are to be delivered at the office of the Warrant Agent where this Warrant Certificate is surrendered, failing which the certificates will be mailed to the address set forth above.

*The signature of the Warrantholder must be signature guaranteed by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words “signature guarantee”, or “signature medallion guaranteed” and otherwise be in accordance with industry standards.

6.

FORM OF TRANSFER

(FORM 2)

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers the Warrants represented by this Warrant Certificate to:

Name
Address
	(Include Postal Code)

and hereby irrevocably constitutes and appoints

(leave this space blank)

as the attorney of the undersigned with full power of substitution to transfer the Warrants on the appropriate register of the Warrant Agent.

DATED this _____day of_____________________, 20___.

Signature Guaranteed	Signature of Transferor
	Name of Transferor

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

1. The Warrant Indenture contains certain other requirements relating to the transfer of Warrants, including, among other things, a requirement in certain cases that a declaration to the effect set forth in Section 2.1(c) of the Warrant Indenture (or as the Corporation may otherwise prescribe from time to time) or, in other cases, as set out in Section 2.8(h), that a written opinion of U.S. counsel of recognized standing be delivered in connection with the transfer of Warrants by a U.S. Person or a Person in the United States or a Person holding Warrants for the account or benefit of a U.S. Person or a Person in the United States to a Person in the United States or for the account or benefit of a U.S. Person or a Person in the United States.

2. The signature of the transferor must correspond in every particular with the surname and the first name(s) or initials shown on the face of this certificate and the endorsement must be signature guaranteed, in either case, by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words “signature guarantee”, or “signature medallion guaranteed” and otherwise be in accordance with industry standards.

EX-4.7

Exhibit 4.7

CYNAPSUS THERAPEUTICS INC.

- and -

EQUITY FINANCIAL TRUST COMPANY

WARRANT INDENTURE

Dated as of April 15, 2014

TABLE OF CONTENTS

Article 1 - definitions and interpretation	2
1.1 Definitions:	2
1.2 Number and Gender:	6
1.3 Interpretation not Affected by Headings:	6
1.4 Day Not a Business Day:	6
1.5 Currency:	6
1.6 Applicable Law:	7
1.7 References to this Indenture:	7
1.8 Schedule:	7
Article 2 - ISSUE AND FORM OF WARRANTS	7
2.1 Issue and Form of Warrants:	7
2.2 Terms and Delivery of Warrants:	9
2.3 Warrantholder not a Shareholder:	10
2.4 Signing of Warrant Certificate:	10
2.5 Countersignature by the Warrant Agent:	11
2.6 Issue in Substitution for Lost Warrant Certificate:	11
2.7 Exchange of Warrant Certificates:	12
2.8 Registration and Transfer of Warrants:	12
2.9 Ownership of Warrants:	14
2.10 Transfer of Warrants Represented by Global Warrant Certificates:	14
2.11 Issue of Global Warrant Certificates:	14
2.12 Issue of Uncertificated Warrants to CDS:	17
Article 3 - WARRANTS TO RANK PARI PASSU	17
3.1 Warrants to Rank Pari Passu:	17
Article 4 - EXERCISE OF WARRANTS	18
4.1 Method of Exercise of Warrants:	18
4.2 Effect of Exercise of Warrants:	23
4.3 Subscription for Less than Entitlement:	24
4.4 Warrant Certificates for Fractions of Common Shares:	24
4.5 Surrender of Warrant Certificates:	24
4.6 Expiration of Warrants:	24
Article 5 - ADJUSTMENTS	25
5.1 Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:	25
5.2 Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:	29
5.3 Postponement of Subscription:	31

5.4 Notice of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:	32
Article 6 - PURCHASES BY THE CORPORATION	33
6.1 Optional Purchases by the Corporation:	33
6.2 Surrender of Warrant Certificates:	33
Article 7 - COVENANTS OF THE CORPORATION	33
7.1 General Covenants of the Corporation:	33
7.2 Warrant Agent's Remuneration and Expenses:	35
7.3 Notice of Issue:	36
7.4 Performance of Covenants by Warrant Agent:	36
Article 8 - ENFORCEMENT	36
8.1 Suits by Warrantholders:	36
8.2 Immunity of Shareholders:	36
8.3 Limitation of Liability:	36
Article 9 - MEETINGS OF WARRANTHOLDERS	37
9.1 Right to Convene Meetings:	37
9.2 Notice:	37
9.3 Chairman:	37
9.4 Quorum:	37
9.5 Power to Adjourn:	38
9.6 Show of Hands:	38
9.7 Poll:	38
9.8 Voting:	38
9.9 Regulations:	38
9.10 Corporation and Warrant Agent may be Represented:	39
9.11 Powers Exercisable by Extraordinary Resolution:	39
9.12 Extraordinary Resolution:	40
9.13 Powers Cumulative:	41
9.14 Minutes:	41
9.15 Instruments in Writing:	41
9.16 Binding Effect of Resolutions:	41
9.17 Holdings by Corporation and Warrant Agent Disregarded:	42
Article 10 - SUPPLEMENTAL INDENTURES	42
10.1 Provision for Supplemental Indentures for Certain Purposes:	42
10.2 Successor Corporation:	43
Article 11 - CONCERNING THE WARRANT AGENT	43
11.1 Trust Indenture Legislation:	43
11.2 Rights and Duties of Warrant Agent:	43
11.3 Evidence:	44
11.4 Experts and Advisers:	45
11.5 Warrant Agent not Required to give Security:	45

ii

11.6 Protection of Warrant Agent:	45
11.7 Replacement of Warrant Agent, Successor by Merger:	47
11.8 Conflict of Interest:	48
11.9 Acceptance of Duties and Obligations:	48
11.10 Actions by Warrant Agent to Protect Interest:	48
11.11 Documents, Moneys, etc. Held by Warrant Agent:	48
11.12 Warrant Agent Not to be Appointed Receiver:	49
11.13 Compliance with Applicable Legislation	49
Article 12 - NOTICE TO WARRANTHOLDERS	49
12.1 Notice:	49
Article 13 - GENERAL	50
13.1 Notice to the Corporation and the Warrant Agent:	50
13.2 Time of the Essence:	51
13.3 Counterparts:	51
13.4 Satisfaction and Discharge of Indenture:	51
13.5 Provisions of Indenture and Warrant Certificate for the Sole Benefit of Parties and Warrantholders:	51
13.6 Stock Exchange Consents:	51

Schedule A         Form of Warrant Certificate

iii

THIS WARRANT INDENTURE dated the 15^th day of April, 2014.

BETWEEN:

CYNAPSUS THERAPEUTICS INC.,
a corporation amalgamated under laws of Canada,

(hereinafter called the "Corporation")

OF THE FIRST PART

- and -

EQUITY FINANCIAL TRUST COMPANY,
a trust company existing under the laws of Canada

(hereinafter called the "Warrant Agent"),

OF THE SECOND PART

WHEREAS the Corporation proposes to issue Warrants (as hereinafter defined), which comprise part of the units being issued by the Corporation under a short form prospectus offering (each unit consisting of one Common Share (as hereinafter defined) and one Warrant);

AND WHEREAS each Warrant entitles the holder to purchase, subject to adjustment in certain events, one Common Share at a price of $0.81 at any time prior to the Time of Expiry (as hereinafter defined), all upon the terms and conditions hereinafter set forth;

AND WHEREAS for such purposes, the Corporation deems it necessary to create and issue Warrants to be constituted and issued in the manner hereinafter set forth;

AND WHEREAS the Warrants may be represented by Warrant Certificates (as hereinafter defined) issued and countersigned in accordance with the provisions hereof;

AND WHEREAS all things necessary have been or will be done and performed by the Corporation to make each of the Warrants and the Warrant Certificates, when countersigned by the Warrant Agent and issued in accordance with the provisions of this Indenture, legal, valid and binding obligations of the Corporation with the benefits of and subject to the provisions of this Indenture;

AND WHEREAS the Warrant Agent has agreed to act as the warrant agent of the Warrants and to hold all rights, interests and benefits contained herein for and on behalf of those persons who become holders of Warrants issued pursuant to this Indenture from time to time;

AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Corporation and not the Warrant Agent;

NOW THEREFORE THIS INDENTURE WITNESSETH that for good and valuable consideration mutually given and received, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed and declared as follows:

Article 1 - definitions and interpretation

1.1           Definitions:

In this Indenture and in the Warrant Certificates, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined in this Section 1.1 shall, for the purpose of this Indenture and all supplemental indentures hereto and for the purpose of the Warrant Certificates, have the respective meanings specified in this Section 1.1:

"1933 Act" means the United States Securities Act of 1933, as amended;

"Agent" means M Partners Inc.;

"Applicable Legislation" means the provisions, if any, of the Business Corporations Act (Canada) and any statute of Canada or a province thereof, and of the regulations under any such statutes, relating to warrant indentures or to the rights, duties and obligations of warrant agents and of corporations under warrant indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;

"Beneficial Owner" means a person that has a beneficial interest in a Warrant that is represented by a CDS Global Warrant;

"Book-Entry Only" means the book-based securities transfer system administered by CDS in accordance with its operating rules and procedures in force from time to time;

"Business Day" means a day which is not a Saturday or Sunday or a civic or statutory holiday in any of the cities where Warrant Certificates may be surrendered to the Warrant Agent pursuant to the provisions hereof;

"CDS" means CDS Clearing and Depository Services Inc. and its successors in interest;

“CDS Global Warrants” means Warrants representing all or a portion of the aggregate number of Warrants, issued in the name of CDS or its nominee, represented either by a Global Warrant Certificate or uncertificated Warrants.

"Closing Date" means April 15, 2014;

"Common Share Reorganization" means any of the events described in Sections 5.1(a)(i), (ii), (iii) or (iv) hereof;

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"Common Shares" means the common shares in the capital of the Corporation which the Corporation is authorized to issue as such common shares are constituted at the close of business on the Effective Date; provided that in the event of any adjustment pursuant to the provisions of Article 5 hereof, "Common Shares" shall thereafter mean the shares or other securities or property resulting from such adjustment;

"Confirmation of Issued Shares" has the meaning set forth in Section 4.1(c);

"Corporation" means Cynapsus Therapeutics Inc. and includes any successor corporation thereto;

"Corporation's Auditors" means the firm of chartered accountants appointed as the auditors of the Corporation at the particular time;

"Counsel" means a barrister and solicitor or a firm of barristers and solicitors, who may be counsel for the Corporation, acceptable to the Warrant Agent;

"Current Market Price" of the Common Shares at any date means the price per share equal to the volume weighted average trading price at which the Common Shares have traded on the Exchange or, if the Common Shares are not then listed on the Exchange, on such other Canadian stock exchange as may be selected by the Directors for such purpose or, if the Common Shares are not then listed on any Canadian stock exchange, in the over-the-counter market, during the period of any 20 consecutive Trading Days ending not more than five Business Days before such date; provided that the weighted average trading price shall be determined by dividing the aggregate sale price of all Common Shares sold on the said exchange or market, as the case may be, during the said 20 consecutive Trading Days by the total number of Common Shares so sold; and provided further that if the Common Shares are not then listed on any Canadian stock exchange or traded in the over-the-counter market, then the Current Market Price shall be determined by a firm of independent chartered accountants selected by the Directors;

"Director" means a director of the Corporation for the time being, and, unless otherwise specified herein, reference to "action by the Directors" means action by the directors of the Corporation as a board or, whenever empowered, action by any committee of the directors of the Corporation;

"Dividends Paid In The Ordinary Course" means dividends paid in any financial year of the Corporation, whether in (a) cash, (b) shares of the Corporation, (c) warrants or similar rights to purchase any shares of the Corporation or property or other assets of the Corporation at a purchase or exercise price of at least 110% of the fair market value of the shares or property or other assets purchasable as of the date of distribution of such warrants or similar rights, or (d) property or other assets of the Corporation, as the case may be, as determined by action by the Directors except that, in the case of warrants or similar rights to purchase Common Shares or securities convertible into or exchangeable for Common Shares such fair market value of the warrants or similar rights shall be equal to the number of Common Shares which may be purchased thereby (or the number of Common Shares issuable upon conversion or exchange) as of the date of distribution of such warrants or similar rights, multiplied by the Current Market Price of the Common Shares on the date of such distribution, provided that the value of such dividends does not in such financial year in the aggregate exceed the greater of:

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(i) 200% of the aggregate amount of dividends paid by the Corporation on the Common Shares in the twelve (12) month period ending immediately prior to the first day of such financial year, and

(ii) 100% of the consolidated net earnings from continuing operations of the Corporation, before any extraordinary items, for the 12-month period ending immediately prior to the first day of such financial year (such consolidated net earnings from continuing operations to be computed in accordance with generally accepted accounting principles in Canada);

"Effective Date" means the date of issue of the Warrants;

"Exchange" means the TSX Venture Exchange Inc.;

"Exercise Date" with respect to any Warrant means the date on which such Warrant is surrendered for exercise in accordance with the provisions of Article 4 hereof;

"Exercise Price" means $0.81 per Common Share, unless such amount shall have been adjusted pursuant to the provisions of Article 5 hereof in which case such term shall mean the adjusted price in effect at the applicable time;

"Expiry Date" means the earlier of: (i) the expiration of thirty (30) days after written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been three (3) times the Offering Price for twenty (20) consecutive Trading Days, subject to the provisions of Section 4.1(c); and (ii) sixty (60) months from the Closing Date;

"Expiry Notice" has the meaning set forth in Section 4.1(c);

"Extraordinary Resolution" means, subject as hereinafter provided in Sections 9.12, 9.15 and 9.16 hereof, a motion proposed at a meeting of Warrantholders called for that purpose and held in accordance with the provisions of Article 9 hereof at which there are present in person or represented by proxy Warrantholders holding in the aggregate at least 50% of the total number of Warrants then outstanding as of the date of the meeting and passed by the affirmative votes of Warrantholders who hold in the aggregate not less than 66 2/3% of the total number of Warrants represented at the meeting and voted on such motion;

"Final Prospectus" means the final prospectus of the Corporation which qualifies the distribution of the Common Shares and Warrants in the Qualifying Jurisdictions and includes any amendments or supplements thereto;

"Global Warrant Certificate" means a Warrant Certificate that is issued to and registered in the name of and deposited with CDS or its nominees pursuant to Section 2.11 hereof;

- 4 -

"Maximum Percentage" has the meaning set forth in Section 4.1(c);

"Offering Price" means $0.65;

"Participant" means a Person recognized by CDS as a participant in the book entry and/or book based securities registration and transfer system administered by CDS;

"Person" means an individual, corporation, partnership, trust or any unincorporated organization;

"Qualifying Jurisdictions" means the provinces of British Columbia, Alberta and Ontario;

"Regulation S" means Regulation S under the 1933 Act;

"Rights Offering" means any of the events described in Section 5.1(b) hereof;

"Rights Period" means any period determined for the purposes of Section 5.1(b) hereof;

"Shareholder" means a holder of record of one or more Common Shares;

"Special Distribution" means any of the events described in Section 5.1(c) hereof;

"Subsidiary" means a corporation, of which voting securities carrying a majority of the votes attached to all outstanding voting securities, directly or indirectly, are owned by the Corporation, by the Corporation and one or more subsidiaries thereof, or by one or more of the subsidiaries of the Corporation, and, as used in this definition, "voting securities" means securities, other than debt securities, carrying the right to elect directors either under all circumstances or under some circumstances that have occurred and are continuing;

"Time of Expiry" means 5:00 p.m., Toronto time, on the Expiry Date;

"Trading Day" with respect to a stock exchange means a day on which such stock exchange is open for business and with respect to the over-the-counter market means a day on which shares may be traded through the facilities of such over-the-counter market;

"Transfer Agent" means the transfer agent for the time being of the Common Shares;

"United States" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;

"U.S. Person" means a "U.S. person" as that term is defined in Regulation S;

"Warrant Agent" means Equity Financial Trust Company, or the successor thereof for the time being of the duties and obligations hereby created;

- 5 -

"Warrant Certificates" means the certificates representing the Warrants substantially in the form attached as Schedule A hereto issued and countersigned hereunder and for the time being outstanding;

"Warrantholders" or "holders" without reference to Common Shares means the persons for the time being who are registered holders of Warrants;

"Warrantholders' Request" means an instrument signed in one or more counterparts by Warrantholders representing not less than 25% of the aggregate number of Warrants then unexercised and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein;

"Warrants" means the warrants issued hereunder, each one of which entitles the holder thereof to purchase one Common Share for an exercise price of $0.81 at any time up to the Time of Expiry, subject to adjustment in accordance with Article 5 hereof; and

"Written Direction of the Corporation", "Written Order of the Corporation", "Written Request of the Corporation", "Written Consent of the Corporation" and "Certificate of the Corporation" mean respectively a written direction, order, request, consent or certificate signed in the name of the Corporation by its Chief Executive Officer or any Director of the Corporation and, in addition, by its Chief Financial Officer or any Director of the Corporation, and may consist of one or more instruments so executed.

1.2           Number and Gender:

Unless herein otherwise expressly provided or unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing the masculine include the feminine and neuter genders.

1.3           Interpretation not Affected by Headings:

The division of this Indenture into Articles and Sections, the provision of the table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture.

1.4           Day Not a Business Day:

If the day on or before which any action that would otherwise be required to be taken hereunder is not a Business Day in the place where the action is required to be taken, that action will be required to be taken on or before the requisite time on the next succeeding day that is a Business Day.

1.5           Currency:

All references to currency herein and in the Warrant Certificates are to lawful money of Canada unless otherwise specified herein.

- 6 -

1.6           Applicable Law:

This Indenture, the Warrant Certificates and the Warrants shall be governed by and performed, construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

1.7           References to this Indenture:

The words and phrases "this Warrant Indenture", "this Indenture", "herein", "hereby", "hereof" and similar expressions mean or refer to this Indenture and any indenture, deed or instrument supplemental hereto and the words "Article" and "Section", followed by a number mean and refer to the specified Article or Section of this Indenture.

1.8           Schedule:

The following schedule is attached to, forms part of and shall be deemed to be incorporated into this Indenture.

Schedule	Title
A	Form of Warrant Certificate

Article 2 - ISSUE AND FORM OF WARRANTS

2.1           Issue and Form of Warrants:

(a)          Authorization of Warrants: The Warrants authorized to be issued hereunder are limited in respect of the aggregate number of Common Shares which can be subscribed for and purchased pursuant thereto, and Warrants may be issued only upon and subject to the terms and conditions hereinafter set forth. The Corporation hereby creates for issuance up to 38,461,538 Warrants entitling the holders thereof to subscribe for and purchase up to an aggregate of 38,461,538 Common Shares together with such additional indeterminate number of Common Shares as may be required to be issued pursuant to any adjustment required to be made by the provisions of Article 5 hereof, and such Warrants are hereby authorized to be issued.

(b)          Form of Warrant Certificate: Upon the issue of the Warrants in certificated form, Warrant Certificates shall be executed by the Corporation and delivered to the Warrant Agent, countersigned by the Warrant Agent upon the Written Direction of the Corporation and delivered by the Warrant Agent to the Corporation or to the order of the Corporation pursuant to a Written Direction of the Corporation, without any further act of or formality on the part of the Corporation, within three (3) Business Days following countersignature by the Warrant Agent. The Warrant Certificates shall be substantially in the form of the certificate attached hereto as Schedule A, shall be dated as of the date of issue thereof (including all replacements issued in accordance with this Indenture) and may bear a facsimile of the seal of the Corporation and such distinguishing letters and numbers as the Corporation may, with the approval of the Warrant Agent, prescribe. Irrespective of any adjustments required to be made by the provisions of Article 5 hereof, all replacement Warrant Certificates shall continue to express the number of Warrants represented thereby and the Exercise Price as if such Warrant Certificates were issued as of the initial date of issue thereof pursuant hereto. Notwithstanding any other provision herein, the Warrants (with the exception of any Warrants issued to U.S. Persons, persons in the United States or persons acting for the account or benefit of persons in the United States or U.S. Persons) may also be issued in uncertificated form. All Warrants issued to CDS, or its nominee, in uncertificated form shall be evidenced by a book position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with Section 2.8.

- 7 -

(c)          United States Legend on Warrant Certificates: Warrant Certificates representing Warrants issued to U.S. Persons, to Persons in the United States or to Persons for the account or benefit of a U.S. Person or a Person in the United States, as well as all certificates issued in exchange for or in substitution of such certificates representing Warrants are not to be issued in the form of a Global Warrant Certificate and shall bear the following legend:

“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

provided, that if the Warrants are being sold in compliance with the requirements of Rule 904 of Regulation S, and provided further that the Corporation is a "foreign issuer" within the meaning of Regulation S at the time of sale, the above legend may be removed by providing a declaration to the Warrant Agent to the following effect (or as the Corporation may prescribe from time to time):

- 8 -

“The undersigned (a) acknowledges that the sale of Warrants of Cynapsus Therapeutics Inc. (the “Corporation”) to which this declaration relates, represented by certificate number ________, is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and (b) certifies that (1) the undersigned is not an “affiliate” (as that term is defined in Rule 405 under the 1933 Act) of the Corporation, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to replace such securities with fungible unrestricted securities and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S under the 1933 Act, is part of a plan or scheme to evade the registration provisions of the 1933 Act. Unless otherwise defined herein, terms used herein have the meanings given to them by Regulation S under the 1933 Act.”;

notwithstanding the foregoing, the Corporation may impose additional requirements for the removal of legends from securities sold in accordance with Rule 904 of Regulation S in the future; and

provided, further, that if any such securities are being sold pursuant to Rule 144 under the 1933 Act, the above legend may be removed by delivery to the Warrant Agent of an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to the effect that such legend is no longer required under applicable requirements of the 1933 Act or state securities laws.

2.2           Terms and Delivery of Warrants:

(a)          Terms: Each one Warrant issued hereunder shall entitle the holder thereof to subscribe for and purchase one Common Share at the Exercise Price at any time after the date of issue thereof until the Time of Expiry, subject to any adjustments required to be made pursuant to Article 5 hereof.

(b)          Delivery of Warrant Certificates: Warrant Certificates in definitive form representing the Warrants authorized to be issued in Section 2.1(a) hereof shall be created and executed by the Corporation, upon the closing of the offering of units under the short form prospectus of the Corporation dated April 8, 2014.

(c)          Adjustment: The Exercise Price and the number of Common Shares which can be subscribed for and purchased pursuant to the Warrants shall be adjusted in the events and in the manner specified in Article 5 hereof.

(d)          No Fractional Warrants: No Warrant Certificate representing a fractional Warrant shall be issued or otherwise provided for, and a holder of a Warrant Certificate shall not be entitled to subscribe for or purchase a fractional Common Share or be entitled to any cash or other consideration such holder might otherwise be entitled to based upon the holding of such Warrant Certificate. If the number of Warrants to which a Warrantholder would otherwise be entitled is not a whole number, then the number of Warrants to be issued to such Warrantholder shall be rounded down to the next whole number and the Warrantholder shall not be entitled to any compensation in respect of such fractional Warrant.

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(e)          Splits, Combinations: Subject to Section 2.7 hereof, the number of Warrants represented by any Warrant Certificate or any Warrant Certificates may be split, combined or exchanged for a Warrant Certificate or Warrant Certificates representing the same number of Warrants in the aggregate.

(f)          Issue of Common Shares: Subject to Section 4.4 hereof, the Corporation shall issue Common Shares upon the exercise of Warrants in accordance with the provisions hereof.

(g)          Authentication: No Warrant issued in uncertificated form shall be issued or, if issued, shall be valid for any purpose or entitle the registered holder to the benefit hereof or thereof, until it has been, upon receipt of a Written Direction of the Corporation, authenticated by entry on the register maintained by the Warrant Agent pursuant to Section 2.8 hereof of the particulars of such Warrant. Such entry on the register maintained by the Warrant Agent pursuant to Section 2.8 hereof of the particulars of a Warrant issued in uncertificated form shall be conclusive evidence that such Warrant is a valid and binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture. The authentication of the Warrant Agent with respect to Warrants issued in uncertificated form hereunder shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or the Warrants (except the due authentication thereof) 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 thereof except as otherwise specified herein.

2.3           Warrantholder not a Shareholder:

Nothing in this Indenture nor in the holding of a Warrant represented by a Warrant Certificate, or held in uncertificated form, shall be construed as conferring upon a Warrantholder any right or interest whatsoever as a Shareholder including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings of the Corporation or the right to receive dividends or other distributions.

2.4           Signing of Warrant Certificate:

Warrant Certificates shall be signed by (a) the Chief Executive Officer or any Director of the Corporation and, in addition, by (b) the Chief Financial Officer or any Director of the Corporation and may, but need not be, under the seal of the Corporation or a reproduction thereof (which shall be deemed to be the seal of the Corporation). The signatures of such officers or directors, as the case may be, may be mechanically reproduced in facsimile and Warrant Certificates bearing such facsimile signatures shall be binding upon the Corporation as if they had been manually signed by such officers or directors. Notwithstanding that any of the persons whose manual or facsimile signature appears on any Warrant Certificate as one of such officers or directors may no longer hold office at the date of such Warrant Certificate or at the date of the countersigning or delivery thereof, any Warrant Certificate signed as aforesaid and countersigned by the Warrant Agent shall be valid and binding upon the Corporation and the holder thereof shall be entitled to the benefits of this Indenture.

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2.5           Countersignature by the Warrant Agent:

(a)          Countersignature: No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the holder to the benefits hereof until it has been countersigned by the Warrant Agent by means of a manual signature of one or more of its authorized officers, substantially in the form of the countersignature contained on the Warrant Certificate or in some other form approved by the Corporation and the Warrant Agent and such countersignature by the Warrant Agent upon any Warrant Certificate shall be conclusive evidence as against the Corporation that the Warrant Certificate so countersigned has been issued hereunder and that the holder thereof is entitled to the benefits hereof.

(b)          No Representation: The countersignature by the Warrant Agent on Warrant Certificates issued hereunder shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of the Warrant Certificate (except the due countersignature 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 Warrant Certificates or any of them or of the consideration therefor, except as otherwise specified herein.

2.6           Issue in Substitution for Lost Warrant Certificate:

(a)          Substitution: In case any Warrant Certificate issued and countersigned hereunder shall become mutilated, lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Warrant Agent shall countersign and deliver a new certificate for the same class of Warrants and of like date and tenor, and bearing the same legends, if any, as the one mutilated, lost, destroyed or stolen (i) in exchange for and in place of and upon cancellation of such mutilated certificate, or (ii) in lieu of and in substitution for such lost, destroyed or stolen certificate and the substituted certificate shall be in a form approved by the Warrant Agent and shall be entitled to the benefit hereof and shall rank equally in accordance with its terms with all Warrants of the same class either issued or to be issued hereunder.

(b)          Issue of New Warrant Certificates: The applicant for the issue of a new Warrant Certificate pursuant to Section 2.6(a) hereof shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft, as the case may be, of the certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent in their discretion, acting reasonably, and such applicant may also be required to furnish an indemnity and a surety bond in amount and form satisfactory to the Corporation and the Warrant Agent in their discretion, acting reasonably, to save each of them harmless, and shall pay the reasonable expenses, charges and any taxes applicable thereto of the Corporation and the Warrant Agent in connection therewith.

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2.7           Exchange of Warrant Certificates:

(a)          Exchange: Warrant Certificates issued and countersigned hereunder representing any specified number of Warrants to subscribe for and purchase Common Shares may, upon compliance with the reasonable requirements of the Warrant Agent, be exchanged for Warrant Certificates representing in the aggregate the same number of Warrants and entitling the holder thereof to subscribe for and purchase an equal aggregate number of Common Shares at the same Exercise Price and on the same terms as the Warrant Certificates so exchanged.

(b)          Places of Exchange: Warrant Certificates may be exchanged at the principal office of the Warrant Agent in the City of Toronto, Ontario, 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 surrendered to the Warrant Agent and cancelled by the Warrant Agent. The Corporation shall sign and the Warrant Agent shall countersign all Warrant Certificates necessary to carry out such exchanges.

(c)          Charges for Exchange: For each Warrant Certificate exchanged, the Warrant Agent, except as otherwise herein provided shall, if required, charge the Corporation a reasonable amount for each new Warrant Certificate issued.

2.8           Registration and Transfer of Warrants:

(a)          Register: The Corporation will cause to be kept by the Warrant Agent at the principal office in Toronto, Ontario, of the Warrant Agent:

(i)           a register of holders in which shall be entered the names and addresses of the holders of Warrants and particulars of the Warrants held by them; and

(ii)          a register of transfers in which all transfers of Warrants and the date and other particulars of each such transfer shall be entered.

(b)          Valid Transfers: No transfer of any Warrant will be valid unless entered on the appropriate register of transfers referred to in Section 2.8(a) hereof, or on any branch registers maintained pursuant to Section 2.8(g) hereof, upon surrender to the Warrant Agent of the Warrant Certificate representing such Warrant (other than in the case of Warrants issued in uncertificated form), duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Warrant Agent executed by the registered holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed satisfactory to the Warrant Agent, and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be recorded on the appropriate register of transfers by the Warrant Agent.

(c)          Register of Transfers: The transferee of any Warrant will, after surrender to the Warrant Agent of the Warrant Certificate, if applicable, representing such Warrant as required by Section 2.8(b) hereof and upon compliance with all other conditions in respect thereof required by this Indenture or by law, be entitled to be entered on the appropriate register of holders referred to in Section 2.8(a) hereof, or on any branch registers of holders maintained pursuant to Section 2.8(g) hereof, as the owner of such Warrant free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Warrant, except in respect of equities of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

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(d)          Refusal of Registration: 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 registers referred to in Section 2.8(a) hereof, or on any branch registers maintained pursuant to Section 2.8(g) hereof, if such transfer would constitute a violation of the securities laws of any jurisdiction or the rules, regulations or policies of any regulatory authority having jurisdiction. In particular, none of the Warrants and none of the Common Shares issuable on the exchange of the Warrants has been or will be registered under the 1933 Act or any state securities laws and such securities may not be offered or sold to a U.S. Person, a Person in the United States or a Person for the account or benefit of a U.S. Person, or a Person in the United States absent an exemption from the registration provisions of the 1933 Act and all applicable state securities laws.

(e)          No Notice of Trusts: Subject to applicable law, neither the Corporation nor the Warrant Agent will be bound to take notice of or see to the execution of any trust, whether express, implied or constructive, in respect of any Warrant, and may transfer any Warrant on the direction of the person registered as the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.

(f)          Inspection: The registers referred to in Section 2.8(a) hereof, and any branch registers maintained pursuant to Section 2.8(g) hereof, will at all reasonable times be open for inspection by the Corporation and any Warrantholder. The Warrant Agent will from time to time when requested to do so in writing by the Corporation or any Warrantholder (upon payment of the reasonable charges of the Warrant Agent), furnish the Corporation or such Warrantholder with a list of the names and addresses of holders of Warrants (in the case of a Warrantholder of the same class as such Warrantholder) entered on such registers and showing the number of Warrants (in the case of a Warrantholder of the same class as such Warrantholder) held by each such holder thereof.

(g)          Location of Registers: The Corporation may at any time and from time to time change the place at which the registers referred to in Section 2.8(a) hereof are kept, cause branch registers of holders or transfers to be kept at other places and close such branch registers or change the place at which such branch registers are kept, in each case subject to the approval of the Warrant Agent. Notice of all such changes or closures shall be given by the Corporation to the Warrant Agent and to holders of Warrants in accordance with Article 12 hereof.

(h)          Restrictions on Transfer under United States Securities Laws: If a Warrant Certificate is tendered for transfer and bears the legend in form set forth in Section 2.1(c), the Warrant Agent shall only permit such transfer if it is (A) to the Corporation, (B) made outside the United States in accordance with the requirements of Rule 904 of Regulation S and in compliance with applicable local laws and regulations, (C) made in compliance with an exemption from registration under the 1933 Act provided by (i) Rule 144 thereunder, if available, or (ii) Rule 144A thereunder, if available, and, in both cases, in accordance with applicable state securities laws or (D) in another transaction that does not require registration under the 1933 Act or any applicable state securities laws and, in the case of (C)(i) and (D) above, after the holder has furnished to the Corporation an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect.

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(i)          Reliance by Warrant Agent: The Warrant Agent shall have no obligation to ensure or verify compliance with any Applicable Legislation or regulatory requirements on the issue, exercise or transfer of any Warrants or any Common Shares or other securities issued upon the exercise of any Warrants. The Warrant Agent shall be entitled to process all proferred transfers and exercises of Warrants upon the presumption that such transfers or exercises are permissible pursuant to all Applicable Legislation and regulatory requirements and the terms of the Indenture and the related Warrant Certificates in the absence of prima facie evidence to the contrary. The Warrant Agent may assume for the purposes of this Indenture that the address on the register of Warrantholders of any Warrantholder is the actual address of such Warrantholder and is also determinative of the residency of such Warrantholder and that the address of any transferee to whom any Warrants or Common Shares or other securities issuable upon the exercise of any Warrants are to be registered, as shown on the transfer document, is the actual address of the transferee and is also determinative of the residency of the transferee.

2.9           Ownership of Warrants:

(a)          Owner: The Corporation and the Warrant Agent may deem and treat the person in whose name any Warrant is registered as the absolute owner of such Warrant for all purposes, and such person will for all purposes of this Indenture be and be deemed to be the absolute owner thereof, and the Corporation and the Warrant Agent will not be affected by any notice or knowledge to the contrary except as required by statute or by order of a court of competent jurisdiction.

(b)          Rights of Registered Holder: The registered holder of any Warrant will be entitled to the rights evidenced thereby free from all equities and rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly, and the issue and delivery to any such registered holder of the Common Shares issuable pursuant thereto will be a good discharge to the Corporation and the Warrant Agent therefor and neither the Corporation nor the Warrant Agent will be bound to inquire into the title of any such registered holder.

2.10         Transfer of Warrants Represented by Global Warrant Certificates:

(a)          Transfer of Global Warrant Certificates: The provisions of this Article 2 with respect to the transfer of Warrants are subject to the provisions of Section 2.11.

2.11         Issue of Global Warrant Certificates:

(a)          Issuance of Global Warrant Certificates: With the exception of any Warrants issued to U.S. Persons, persons in the United States or persons acting for the account or benefit of persons in the United States or U.S. Persons which shall be issued using individual Warrant Certificates, the Corporation shall, at its sole option, specify, in a Written Direction of the Corporation delivered to the Warrant Agent, that some or all of the Warrants are to be represented by CDS Global Warrants registered in the name of CDS or its nominee, and in the event the Warrants are to be represented by a Global Warrant Certificate, the Corporation shall execute and the Warrant Agent shall certify and deliver one or more Global Warrant Certificates that shall:

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(i)         represent the aggregate number of outstanding Warrants to be represented by such  Global Warrant Certificate(s);

(ii)        be delivered by the Warrant Agent to CDS or pursuant to CDS’ instructions; and

(iii)       if applicable, bear a legend substantially to the following effect:

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO CYNAPSUS THERAPEUTICS INC. (THE “ISSUER”) OR THE WARRANT AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER, CDS & CO., HAS AN INTEREST HEREIN. THIS CERTIFICATE IS ISSUED PURSUANT TO A MASTER LETTER OF REPRESENTATION OF THE ISSUER TO CDS, AS SUCH LETTER MAY BE REPLACED OR AMENDED FROM TIME TO TIME.”

(b)          Transfers of Beneficial Ownership: Transfers of beneficial ownership in any Warrant represented by CDS Global Warrants will be effected only (i) with respect to the interest of a Participant, through records maintained by CDS or its nominee for such CDS Global Warrants , and (ii) with respect to the interest of any person other than a Participant, through records maintained by Participants. Beneficial Owners who are not Participants but who desire to sell or otherwise transfer ownership of or any other interest in Warrants represented by such CDS Global Warrants may do so only through a Participant.

(c)          Rights of Beneficial Owners: The rights of Beneficial Owners shall be limited to those established by applicable law and agreements between CDS and the Participants, and between such Participants and Beneficial Owners, and must be exercised through a Participant in accordance with the rules and procedures of CDS;

(d)          No Obligation to Deliver Certificates: Subject to subsection 2.11(e), neither the Corporation nor the Warrant Agent shall be under any obligation to deliver to any Participant or Beneficial Owner, nor shall any Participant or Beneficial Owner have any right to require the delivery of, a certificate or other instrument evidencing any interest in Warrants.

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(e)          New Certificates: If any Warrant is represented by CDS Global Warrants and any of the following events occurs:

(i) CDS or the Corporation has notified the Warrant Agent that (1) CDS is unwilling or unable to continue as depository or (2) CDS ceases to be a clearing agency in good standing under applicable laws and, in either case, the Corporation is unable to locate a qualified successor depository within 90 days of delivery of such notice;

(ii) the Corporation has determined, in its sole discretion, to terminate the Book-Entry-Only system in respect of such CDS Global Warrant and has communicated such determination to the Warrant Agent in writing;

(iii) the Corporation or CDS is required by applicable law to take the action contemplated in this subsection 2.11(e); or

(iv) the Book-Entry-Only system administered by CDS ceases to exist,

then one or more definitive fully registered Warrant Certificates shall be executed by the Corporation and certified and delivered by the Warrant Agent to CDS in exchange for the CDS Global Warrants held by CDS.

Fully registered Warrant Certificates issued and exchanged pursuant to this subsection 2.11(e) shall be registered in such names and in such denominations as CDS shall instruct the Warrant Agent, provided that the aggregate number of Warrants represented by such Warrant Certificates shall be equal to the aggregate number of Warrants represented by the CDS Global Warrants so exchanged. Upon exchange of a Global Warrant Certificate for one or more Warrant Certificates in definitive form, such Global Warrant Certificate shall be cancelled by the Warrant Agent.

(f)          No Liability: Notwithstanding anything herein or in the terms of the Warrant Certificates to the contrary, neither the Corporation nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for (i) the records maintained by CDS relating to any ownership interests or any other interests in the Warrants or the depository system maintained by CDS, or payments made on account of any ownership interest or any other interest of any Person in any Warrant represented by any CDS Global Warrants (other than CDS or its nominee). (ii) for maintaining, supervising or reviewing any records of CDS or any Participant relating to any such interest, or (iii) any advice or representation made or given by CDS or those contained herein that relate to the rules and regulations of CDS or any action to be taken by CDS on its own direction or at the direction of any Participant.

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2.12         Issue of Uncertificated Warrants to CDS:

(a)          Uncertificated Warrants: With the exception of any Warrants issued to U.S. Persons, persons in the United States or persons acting for the account or benefit of persons in the United States or U.S. Persons which shall be issued using individual physical Warrant Certificates, the Corporation may, in its sole option, specify, in a written direction of the Corporation delivered to the Warrant Agent, that some or all of the Warrants are to be issued in uncertificated form to CDS or its nominee.

(b)          Exercise of Warrants: A Beneficial Owner of Warrants issued in uncertificated form who desires to exercise his or her Warrants must do so by causing a Participant to deliver to CDS on behalf of the entitlement holder, notice of the owner’s intention to exercise Warrants in a manner acceptable to CDS. Forthwith upon receipt by CDS of such notice, as well as payment for the Exercise Price, CDS shall deliver to the Warrant Agent confirmation of its intention to exercise Warrants (a “Confirmation”) in a manner acceptable to the Warrant Agent, including by electronic means through the book based registration system. Upon exercise of the Warrants, such Participant will be deemed to be confirming that it (a) is not in the United States; (b) is not a U.S. Person and is not exercising such Warrants on behalf of a U.S. Person or Person in the United States; and (c) did not execute or deliver the notice of the owner’s intention to exercise such Warrants in the United States.

Payment representing the Exercise Price must be provided to the appropriate office of the Participant in a manner acceptable to it. A notice in form acceptable to the Participant (together with a written confirmation substantially the same as the Confirmation) and payment from such Beneficial Owner should be provided to the Participant sufficiently in advance so as to permit the Participant to deliver notice and payment to CDS and for CDS in turn to deliver notice and payment to the Warrant Agent prior to the Time of Expiry. CDS will initiate the exercise by way of the Confirmation and forward the Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to CDS through the book based registration system the Common Shares to which the exercising Beneficial Owner is entitled pursuant to the exercise. Any expense associated with the exercise process will be for the account of the Corporation.

Article 3 - WARRANTS TO RANK PARI PASSU

3.1           Warrants to Rank Pari Passu:

All Warrants shall rank pari passu, whatever may be the actual date of issue of the Warrant Certificates that evidence them, or the actual date of authentication of the Warrants issued in uncertificated form.

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Article 4 - EXERCISE OF WARRANTS

4.1           Method of Exercise of Warrants:

(a)          Exercise: Subject to Sections 4.1(b) and 4.1(c) hereof, the holder of any Warrant may exercise the right thereby conferred on such holder to subscribe for and purchase Common Shares by surrendering, after the date of issue of the Warrant but prior to the Time of Expiry, to the Warrant Agent at the place specified in Section 4.1(e) hereof or any other place or places that may be designated by the Corporation with the approval of the Warrant Agent:

(i) the Warrant Certificate, with a properly completed and executed subscription form in substantially the form contained on the Warrant Certificate; and

(ii) a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Corporation at par in the city where such Warrant Certificate is surrendered for exercise, in an amount equal to the product obtained by multiplying the Exercise Price by the number of Common Shares subscribed for pursuant to such Warrant Certificate.

A Warrant Certificate with the duly completed and executed subscription form referred to in Section 4.1(a)(i) above, together with the certified cheque, bank draft or money order referred to in Section 4.1(a)(ii) above, shall be deemed to be surrendered only upon delivery thereof or, if sent by mail or other means of transmission, upon receipt thereof, in each case at the office of the Warrant Agent provided for in Section 4.1(e) hereof or any such other place designated by the Corporation with the approval of the Warrant Agent.

A Beneficial Owner who desires to exercise his or her Warrants, must do so by causing a Participant to deliver to CDS (at its office in Toronto), on behalf of the Beneficial Owner, a written notice of the Beneficial Owner’s intention to exercise Warrants (the “Exercise Notice”). Any expenses associated with the preparation and delivery of Exercise Notices will be for the account of the Beneficial Owner exercising the Warrants.

(b)          Restrictions on Exercise under United States Securities Laws: The Warrants may not be exercised by or on behalf of a person in the United States or a U.S. Person unless registered under the 1933 Act or unless an exemption is available from the registration requirements of the 1933 Act and applicable state securities laws and the holder of the Warrants has furnished an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to such effect; provided, however, that a Warrantholder who is an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the 1933 Act (a "U.S. Accredited Investor"), at the time of exercise of Warrants and that purchased units ("Units"), with each Unit comprised of one common share and one Warrant, in the Corporation’s private placement of Units in the United States and to U.S. Persons will not be required to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants underlying those Units as long as the Warrantholder is a U.S. Accredited Investor and the other representations and warranties made by such Warrantholder at the time of purchase of the Units also remain true and correct.

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(c)          Limitations on Exercises – Maximum Ownership Percentage: Notwithstanding anything to the contrary contained in this Indenture, Warrants shall not be exercisable by U.S. Persons, persons in the United States and persons acting for the account or benefit of persons in the United States or U.S. Persons (“U.S. Warrantholders”) to the extent (but only to the extent) that after giving effect to such exercise the U.S. Warrantholder (together with any of its affiliates) would beneficially own in excess of 9.99% (the "Maximum Percentage") of the issued and outstanding Common Shares. For purposes of the foregoing sentence, the aggregate number of Common Shares beneficially owned by the U.S. Warrantholder and its affiliates shall include the number of Common Shares issuable upon exercise of Warrants with respect to which the determination of such sentence is being made, but shall exclude Common Shares which would be issuable upon (x) exercise of the remaining, unexercised portion of Warrants beneficially owned by the Holder and its affiliates, and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially owned by the U.S. Warrantholder and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. To the extent the above limitation applies, the determination of whether any Warrants shall be exercisable (vis-à-vis other convertible, exercisable or exchangeable securities owned by the U.S. Warrantholder or any of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as the case may be, as among all such securities owned by the U.S. Warrantholder) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Corporation for conversion, exercise or exchange (as the case may be). No prior inability to exercise Warrants pursuant to this Indenture shall have any effect on the applicability of the provisions of this Section with respect to any subsequent determination of exercisability.

For the purposes of this Section, beneficial ownership and all determinations and calculations shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. The provisions of this Section may be implemented in a manner otherwise than in strict conformity with the terms of this Section to correct this Section (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section shall apply to a successor to the U.S. Warrantholder.

The Corporation shall within two (2) Business Day of a request from a U.S. Warrantholder, confirm orally and in writing to the U.S. Warrantholder the number of Common Shares then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Shares, including, without limitation, pursuant to this Indenture (a “Confirmation of Issued Shares”).

As a result of these limitations, all Warrants (along with the duly completed subscription form) surrendered by U.S. Warrantholders to the Warrant Agent for exercise will be forwarded onto the Corporation for their approval. Such approval will be provided to the Warrant Agent in the form of a Certificate of the Corporation confirming that such U.S. Warrantholder will not beneficially own in excess of the Maximum Percentage of the issued and outstanding Common Shares as a result of such exercise and therefore instructing the Warrant Agent to proceed with the exercise requested and the Warrant Agent shall be fully protected in relying on such certificate.

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The Warrant Agent will not process any exercise of Warrants from U.S. Warrantholders unless it has received the above certificate from the Corporation. For greater certainty, the Warrant Agent will have no responsibility for monitoring the beneficial ownership level of the Common Shares held by U.S. Warrantholders and will have no liability in regards to the determinations made of whether or not a U.S. Warrantholder would become a beneficial holder in excess of the Maximum Percentage of the issued and outstanding Common Shares, such determinations will be the sole responsibility of the Corporation.

If the Corporation has provided written notice (the “Expiry Notice”) to the Warrantholders that the closing price of the Common Shares on the principal stock exchange of the Corporation has been three (3) times the Offering Price for twenty (20) consecutive Trading Days, then in the event that the exercise of all Warrants held by a U.S. Warrantholder would result in such U.S. Warrantholder (and its affiliates) beneficially owning a number of Common Shares in excess of the Maximum Percentage:

(i) such U.S. Warrantholder shall be required, within 30 days following receipt of the Expiry Notice, to exercise such number of Warrants such that the U.S. Warrantholder (and its affiliates) will, following such exercise, beneficially own a number of Common Shares equal to the Maximum Percentage; and

(ii) if the U.S. Warrantholder has complied with paragraph (i) above, the unexercised Warrants of each such U.S. Warrantholder will not be cancelled 30 days following delivery by the Corporation of the Expiry Notice. If the U.S. Warrantholder does not comply with paragraph (i) above, their remaining Warrants will become null and void on the accelerated Expiry Date.

In the instance of an Expiry Notice being delivered to Warrantholders, then prior to the Time of Expiry, the Corporation will provide the Warrant Agent with a Certificate of the Corporation confirming the registration particulars and the number of remaining Warrants held by each U.S. Warrantholder who has complied with Section 4.1(c)(i) and that as a result their Warrants will remain outstanding.

Notwithstanding any other provision hereof:

(iii) the provisions of this Section 4.1(c) shall not apply to a U.S. Warrantholder who, together with any of its affiliates, beneficially owns in excess of the Maximum Percentage of the issued and outstanding Common Shares on the date immediately prior to the Closing Date; and

(iv) in no event shall the Expiry Date of any unexercised Warrants be extended beyond (60) months from the Closing Date.

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(d)          Subscription Form Completion: Any subscription form referred to in Section 4.1(a) hereof shall be signed by the Warrantholder, or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent, acting reasonably, and shall specify (A) the number of Common Shares which the holder desires to subscribe for and purchase, such number being not more than the number which the holder is entitled to subscribe for and purchase pursuant to the Warrant Certificate surrendered, (B) the person or persons in whose name or names such Common Shares are to be issued, (C) the address or addresses of such person or persons, or the office of the Warrant Agent at which the Warrant Certificate was surrendered and the certificates representing such Common Shares are to be sent, and (D) the number of Common Shares to be issued to each such person if more than one is so specified. If any of the Common Shares subscribed for are to be issued to a person or persons other than the Warrantholder, the Warrantholder shall pay to the Warrant Agent all applicable transfer or similar taxes, if any, and, the Corporation and the Warrant Agent shall not be required to issue or deliver certificates representing Common Shares unless or until such Warrantholder shall have paid to the Warrant Agent the amount of such tax, if any, or shall have established to the satisfaction of the Warrant Agent that such tax has been paid or that no tax is due.

(e)          Places for Exercise: The Corporation has designated the Warrant Agent, at its principal office in the City of Toronto, Ontario, as the place at which the Warrants may be exercised. The Corporation will give notice to the Warrantholders pursuant to Article 12 hereof of the location of any other place appointed by the Corporation and approved by the Warrant Agent and of the change in the location of any new or existing place where Warrants may be exercised.

(f)          Accounting to Corporation: The Warrant Agent shall as soon as practicable account to the Transfer Agent and the Corporation with respect to Warrants exercised. All such monies, 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 as agent for, the Corporation. Within five Business Days of receipt thereof the Warrant Agent shall forward to the Corporation (or to an account or accounts of the Corporation with a bank or trust company designated in writing by the Corporation for that purpose) all monies received through the exercise of Warrants pursuant to this Article 4.

(g)          Record of Exercise: The Warrant Agent shall record the particulars of the Warrants exercised for Common Shares which particulars shall include the names and addresses of the persons who become holders of Common Shares, if any, on exercise, the number of Common Shares issued, the Exercise Date and the Exercise Price. Within five Business Days of each Exercise Date, the Warrant Agent shall provide such particulars in writing to the Corporation.

(h)          United States Legend on Common Share Certificate; Restrictions on Transfer under United States Securities Laws

(i)          Any certificates representing Common Shares issued to, or for the account or benefit of, a person who cannot make the representations set forth in Box A on the subscription form of the Warrant Certificate, and any certificates issued in exchange therefor or in substitution thereof, shall bear the following legend until such time as it is no longer required under the 1933 Act and applicable state securities laws:

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

provided, that if any such securities are being sold in compliance with the requirements of Rule 904 of Regulation S, and provided further that the Corporation is a "foreign issuer" within the meaning of Regulation S at the time of sale, the above legend may be removed by providing a declaration to the Warrant Agent to the following effect (or as the Corporation may prescribe from time to time):

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“The undersigned (a) acknowledges that the sale of Common Shares of Cynapsus Therapeutics Inc. (the “Corporation”) to which this declaration relates, represented by certificate number ________, is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and (b) certifies that (1) the undersigned is not an “affiliate” (as that term is defined in Rule 405 under the 1933 Act) of the Corporation, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to replace such securities with fungible unrestricted securities and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S under the 1933 Act, is part of a plan or scheme to evade the registration provisions of the 1933 Act. Unless otherwise defined herein, terms used herein have the meanings given to them by Regulation S under the 1933 Act.”;

notwithstanding the foregoing, the Corporation may impose additional requirements for the removal of legends from securities sold in accordance with Rule 904 of Regulation S in the future; and

provided further, that, if any of such securities are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the Corporation and the Warrant Agent of an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to the effect that the legend is no longer required under applicable requirements of the 1933 Act or state securities laws.

(ii)         If a certificate representing Common Shares is tendered for transfer and bears a legend in the form set forth in this Section 4.1(h), the Transfer Agent shall only permit such transfer if it is (A) to the Corporation, (B) made outside the United States in accordance with the requirements of Rule 904 of Regulation S and in compliance with applicable local laws and regulations, (C) made in compliance with an exemption from registration under the 1933 Act provided by (i) Rule 144 thereunder, if available, or (ii) Rule 144A thereunder, if available, and, in both cases, in accordance with applicable state securities laws or (D) in another transaction that does not require registration under the 1933 Act or any applicable state securities laws and, in the case of (C)(i) and (D) above, after it has furnished to the Corporation an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect.

4.2           Effect of Exercise of Warrants:

(a)          Effect of Exercise: Upon compliance by the holder of any Warrant Certificate with the provisions of Section 4.1 hereof, but subject to the provisions of Section 4.3(b) hereof, the number of Common Shares subscribed for and purchased 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 record of such Common Shares on the Exercise Date thereof unless the transfer books of the Corporation shall be closed on such date, in which case the Common Shares subscribed for and purchased shall be deemed to have been issued, and such person or persons shall be deemed to have become the holder or holders of record of such Common Shares on the date on which such transfer books are reopened but such Common Shares shall be issued at the Exercise Price in effect on the Exercise Date.

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(b)          Issue of Share Certificates: As soon as practicable, and in any event no later than the third Business Day on which the transfer books of the Corporation have been opened after the exercise of a Warrant as aforesaid, the Corporation shall forthwith (i) cause to be mailed to the person or persons in whose name or names the Common Shares so subscribed for and purchased are to be issued, as specified in the subscription completed on the Warrant Certificate, at the address specified in such subscription form, or (ii) if specified in such subscription form, cause to be delivered to such person or persons at the office of the Warrant Agent where such Warrant Certificate was surrendered, a certificate or certificates representing the appropriate number of Common Shares to which the Warrantholder is entitled and elected to subscribe for and purchase pursuant to the Warrant Certificate surrendered to the Warrant Agent.

4.3           Subscription for Less than Entitlement:

(a)          Exercise for Less Than Maximum: The holder of any Warrant Certificate may subscribe for and purchase a number of Common Shares less than the maximum number which the holder is entitled to subscribe for and purchase pursuant to the surrendered Warrant Certificate, provided that in no event shall fractional Common Shares be issued in connection with the exercise of Warrants. In such event, the holder thereof upon exercise thereof shall, in addition, be entitled to receive a new Warrant Certificate complying with Section 2.2 hereof in respect of the balance of the Warrants not then exercised.

(b)          No Fractional Common Shares: Notwithstanding any adjustment provided for in Article 5 hereof or otherwise, the Corporation shall not be required upon the exercise of a Warrant to issue fractions of Common Shares or to distribute certificates which evidence fractional Common Shares. If the number of Common Shares to which a Warrantholder would otherwise be entitled upon the exercise of a Warrant is not a whole number then, subject to Section 4.4 hereof, the number of Common Shares to be issued shall be rounded down to the next whole number and the holder of such Warrant Certificate shall not be entitled to any compensation in respect of any fractional Common Share.

4.4           Warrant Certificates for Fractions of Common Shares:

To the extent that the holder of a Warrant Certificate is entitled to receive on the exercise or partial exercise thereof a fraction of a Common Share, such right may only be exercised in respect of such fraction in combination with another Warrant Certificate which in the aggregate entitles the Warrantholder to receive a whole number of Common Shares.

4.5           Surrender of Warrant Certificates:

All Warrant Certificates surrendered to the Warrant Agent pursuant to Sections 2.6, 2.7, 2.8 and 4.1(a) shall be cancelled by the Warrant Agent. The Warrant Agent shall, if required by the Corporation, furnish the Corporation with a certificate identifying the Warrant Certificates so cancelled. All Warrants represented by Warrant Certificates which have been duly cancelled shall be without further force or effect whatsoever.

4.6           Expiration of Warrants:

After the Time of Expiry all rights under any Warrant in respect of which the right of subscription and purchase therein and herein provided shall not theretofore have been exercised shall wholly cease and terminate and such Warrant shall be void, of no force or effect and of no value whatsoever.

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Article 5 - ADJUSTMENTS

5.1           Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:

The Exercise Price and the number of Common Shares purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time in the events and in the manner provided in the following subsections:

(a)          Stock Dividend; Distribution of Common Shares; Subdivision; Consolidation: If at any time after the Effective Date but prior to the Expiry Date, the Corporation shall:

(i) fix a record date for the issue of, or issue, Common Shares or securities exchangeable for or convertible into Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend or otherwise, other than as a Dividend Paid In The Ordinary Course,

(ii) fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares, other than as a Dividend Paid In The Ordinary Course,

(iii) subdivide, redivide or change the outstanding Common Shares into a greater number of Common Shares, or

(iv) consolidate, reduce or combine the outstanding Common Shares into a lesser number of Common Shares,

(any of such events in Sections 5.1(a)(i), (ii), (iii) and (iv) above being herein called a "Common Share Reorganization"), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Common Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

(A) the numerator of which shall be the number of Common Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Common Share Reorganization; and

(B) the denominator of which shall be the number of Common Shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a distribution of securities exchangeable for or convertible into Common Shares the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such date).

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To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 5.1(a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable for or convertible into Common Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right. Any Warrantholder who has not exercised his right to subscribe for and purchase Common Shares on or prior to the record date of such stock dividend or distribution or the effective date of such subdivision or consolidation, as the case may be, upon the exercise of such right thereafter shall be entitled to receive and shall accept in lieu of the number of Common Shares then subscribed for and purchased by such Warrantholder, at the Exercise Price determined in accordance with this Section 5.1(a) the aggregate number of Common Shares that such Warrantholder would have been entitled to receive as a result of such Common Share Reorganization, if, on such record date or effective date, as the case may be, such Warrantholder had been the holder of record of the number of Common Shares so subscribed for and purchased.

(b)          Issue of Rights, Options or Warrants: If at any time after the Effective Date but prior to the Expiry Date, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Common Shares of rights, options or warrants pursuant to which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue (such period being the "Rights Period"), to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share to the holder (or in the case of securities exchangeable for or convertible into Common Shares, at an exchange or conversion price per share) at the date of issue of such securities of less than 95% of the Current Market Price of the Common Shares on such record date (any of such events being called a "Rights Offering"), the Exercise Price shall be adjusted effective immediately after the record date for such Rights Offering to the amount determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i) the numerator of which shall be the aggregate of

(A) the number of Common Shares outstanding on the record date for the Rights Offering, and

(B) the quotient determined by dividing

I. either (a) the product of the number of Common Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Common Shares are offered, or, (b) the product of the exchange or conversion price of the securities so offered and the number of Common Shares for or into which the securities offered pursuant to the Rights Offering may be exchanged or converted, as the case may be, by

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II. the Current Market Price of the Common Shares as of the record date for the Rights Offering; and

(ii) the denominator of which shall be the aggregate of the number of Common Shares outstanding on such record date and the number of Common Shares offered pursuant to the Rights Offering (including in the case of the issue or distribution of securities exchangeable for or convertible into Common Shares the number of Common Shares for or into which such securities may be exchanged or converted).

(c)          Special Distributions: If at any time after the Effective Date but prior to the Expiry Date, the Corporation shall fix a record date for the payment, issue or distribution to the holders of all or substantially all of the outstanding Common Shares of:

(i) shares of the Corporation or any other corporation of any class other than Common Shares;

(ii) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (other than rights, options or warrants pursuant to which holders of Common Shares are entitled, during a period expiring not more than forty-five (45) days after the record date for such issue, to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share (or in the case of securities exchangeable for or convertible into Common Shares at an exchange or conversion price per share) at the date of issue of such securities to the holder of at least 95% of the Current Market Price of the Common Shares on such record date);

(iii) evidences of indebtedness of the Corporation; or

(iv) any property or assets of the Corporation;

and if such issue or distribution does not constitute a Dividend Paid In The Ordinary Course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special Distribution"), the Exercise Price shall be adjusted effective immediately after the record date for the Special Distribution to the amount determined by multiplying the Exercise Price in effect on the record date for the Special Distribution by a fraction:

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(A) the numerator of which shall be the difference between:

I. the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date, and

II. the fair market value, as determined in good faith by the Directors (whose determination shall be conclusive, subject to the prior written consent, if required, of any stock exchange on which the Common Shares are then listed), of such dividend, cash, securities, rights, options, warrants, evidences of indebtedness or property or assets to be issued or distributed in the Special Distribution, and

(B) the denominator of which shall be the product obtained by multiplying the number of Common Shares outstanding on such record date by the Current Market Price of the Common Shares on such record date.

Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 5.1(c) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this Section 5.1(c), the Exercise Price shall be readjusted immediately after the expiry of any relevant exercise, exchange or conversion right to the amount which would then be in effect based upon the number of Common Shares issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

(d)          Reclassification of Common Shares; Consolidation; Amalgamation; Merger: If at any time after the Effective Date but prior to the Expiry Date there shall occur:

(i) a reclassification or redesignation of the Common Shares, a change of the Common Shares into other shares or securities or any other capital reorganization involving the Common Shares other than a Common Share Reorganization;

(ii) a consolidation, arrangement, amalgamation or merger of the Corporation with or into another body corporate which results in a reclassification or redesignation of the Common Shares or a change of the Common Shares into other shares or securities;

(iii) the transfer, sale or conveyance of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity;

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(any of such events being called a "Capital Reorganization"), after the effective date of the Capital Reorganization the Warrantholder shall be entitled to receive, and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Common Shares to which the Warrantholder was theretofor entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Warrantholder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Warrantholder had been the registered holder of the number of Common Shares which the Warrantholder was theretofor entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any such Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Indenture with respect to the rights and interests thereafter of the Warrantholder to the end that the provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of the Warrants. Any such adjustments shall be made by and set forth in an indenture supplemental hereto with its successor or such corporation or other entity, as applicable, contemporaneously with such reclassification, consolidation, amalgamation, arrangement, merger or other event and which supplemental indenture shall be approved by action by the directors and shall for all purposes be conclusively deemed to be an appropriate adjustment. To give effect to the provisions of this subsection, the Corporation shall or shall impose upon its successor or such purchasing corporation or entity, as the case may be, prior to or contemporaneously with the Capital Reorganization, an agreement or an undertaking which shall provide, to the extent possible, for the applications of the provisions set forth herein with respect to the rights and interests thereafter of the Warrantholder to the extent that the adjustment provisions set forth in this Warrant Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which the Warrantholder is entitled on exercise of acquisition rights hereunder. Any such agreement or undertaking shall provide that such adjustments shall apply to successive Capital Reorganizations.

(e)           If at any time after the Effective Date but prior to the Expiry Date any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Sections 5.1(a), 5.1(b) or 5.1(c) of this Indenture, then the number of Common Shares purchasable upon the subsequent exercise of Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Common Shares purchasable upon the exercise of Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

5.2 Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:

For the purposes of Section 5.1 hereof the following subsections shall apply:

(a)          Successive Adjustments: Any adjustment made pursuant to Section 5.1 hereof shall be cumulative and made successively whenever an event referred to therein shall occur, subject to the following provisions of this Section 5.2.

(b)          Minimum Adjustments: No adjustment in the Exercise Price shall be required unless such adjustment would result in a change of at least 1% in the Exercise Price and no adjustment shall be made in the number of Common Shares purchasable upon exercise of a Warrant unless it would result in a change of at least one one-hundredth of a Common Share; provided, however, that any adjustments which, except for the provisions of this Section 5.2(b), would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment, and provided further that in no event shall the Corporation be obligated to issue fractional Common Shares upon exercise of Warrants.

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(c)          Mutatis Mutandis Adjustment: Subject to the prior written consent, if required, of any stock exchange upon which the Common Shares or Warrants may be listed, no adjustment in the Exercise Price or in the number or kind of securities purchasable upon exercise of a Warrant shall be made in respect of any event described in Section 5.1 hereof if Warrantholders are entitled to participate in such event on the same terms mutatis mutandis as if Warrantholders had exercised their Warrants prior to or on the effective date or record date, as the case may be, of such event.

(d)          No Adjustment for Certain Events: No adjustment in the Exercise Price or in the number of Common Shares purchasable upon the exercise of Warrants shall be made pursuant to Section 5.1 hereof in respect of the issue from time to time of Common Shares pursuant to this Indenture or pursuant to any stock option, stock purchase or stock bonus plan in effect from time to time for directors, officers or employees of the Corporation and/or any Subsidiary of the Corporation and any such issue, and any grant of options in connection therewith, shall be deemed not to be a Common Share Reorganization, a Rights Offering nor any other event described in Section 5.1 hereof.

(e)          Other Actions: If at any time after the Effective Date but prior to the Expiry Date the Corporation shall take any action affecting the Common Shares, other than an action described in Section 5.1 hereof, which in the opinion of the Directors acting in good faith would materially affect the rights of Warrantholders, either or both the Exercise Price and the number of Common Shares purchasable upon exercise of Warrants shall be adjusted in such manner and at such time by action by the Directors, acting in good faith in their sole discretion, but subject to the prior written consent, if required, of any stock exchange upon which the Common Shares or Warrants may be listed, as may be equitable in the circumstances. Failure of the taking of action by the Directors so as to provide for an adjustment prior to the effective date of any action by the Corporation affecting the Common Shares shall be deemed to be conclusive evidence that the Directors have determined that it is equitable to make no adjustment in the circumstances.

(f)          Abandonment of Event: If the Corporation shall set a record date to determine the holders of Common Shares for the purpose of entitling such holders to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such Shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Common Shares purchasable upon exercise of any Warrant shall be required by reason of the setting of such record date.

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(g)          Deemed Record Date: In the absence of a resolution of the Directors fixing a record date for a Common Share Reorganization, a Rights Offering or a Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the earlier of the date on which holders of record of Common Shares are determined for the purpose of participating in the Common Share Reorganization, Rights Offering or Special Distribution and the date on which the Common Share Reorganization, Rights Offering or Special Distribution becomes effective.

(h)          Disputes: If a dispute shall at any time arise with respect to adjustments of the Exercise Price or the number of Common Shares purchasable upon exercise of Warrants, such disputes shall be conclusively determined by the Corporation's Auditors or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the Directors and acceptable to the Warrant Agent and any such determination shall be conclusive evidence of the correctness of any adjustment made under Section 5.1 hereof and shall be binding upon the Corporation, the Warrant Agent and the Warrantholders. Such auditors or accountants shall be provided access to all necessary records of the Corporation for the purpose of such determination. In the event any determination is made, the Corporation shall deliver a Certificate of the Corporation to the Warrant Agent describing such determination.

(i)          Corporate Affairs: As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to the Warrants, including the Exercise Price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of Counsel, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable all the shares or other securities which all holders of Warrants are entitled to receive in accordance with the provisions thereof.

5.3 Postponement of Subscription:

In any case in which this Article 5 shall require that an adjustment shall be effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event:

(a)          issuing to the holder of any Warrant, to the extent that Warrants are exercised after such record date and before the occurrence of such event, the additional Common Shares or other securities issuable upon such exercise by reason of the adjustment required by such event; and

(b)          delivering to such holder any distribution declared with respect to such additional Common Shares or other securities after such exercise date and before such event;

provided however, that the Corporation shall deliver to such holder an appropriate instrument evidencing the right of such holder upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable on the exercise of any Warrant and to such distributions declared with respect to any additional Common Shares issuable on the exercise of any Warrant.

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5.4 Notice of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise:

(a)          Notice of Effective or Record Date: At least 21 days prior to the effective date or record date, as the case may be, of any event which requires or might require an adjustment in any of the subscription rights pursuant to any of the Warrants, including the Exercise Price and the number of Common Shares which are purchasable upon the exercise thereof, the Corporation shall:

(i) file with the Warrant Agent a Certificate of the Corporation specifying the particulars of such event to the extent then known including, if determinable, the required adjustment and the computation of such adjustment; and

(ii) give notice to the Warrant Agent and the Warrantholders in the manner provided for in Article 12 hereof of the particulars of such event to the extent then known including, if determinable, the required adjustment.

(b)          Adjustment Not Determinable: In case any adjustment for which a notice pursuant to Section 5.4(a) hereof has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable:

(i) file with the Warrant Agent a computation of such adjustment; and

(ii) give notice to the Warrantholders in the manner provided for in Article 12 hereof of the adjustment.

Where a notice pursuant to this Section 5.4 has been given, the Warrant Agent shall be entitled to act and rely on any adjustment calculation of the Corporation or of the Corporation’s Auditors.

(c)          Duty of Warrant Agent: Subject to Section 11.2(a) hereof, the Warrant Agent shall not:

(i) at any time be under any duty or responsibility to any Warrantholder to determine whether any facts exist which may require any adjustment in the Exercise Price or number of Common Shares issuable upon the exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or which respect to the method employed in making such adjustment;

(ii) be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any time be issued or delivered upon the exercise of any Warrant; or

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(iii) be responsible for any failure of the Corporation to make any cash payment or to issue, transfer or deliver Common Shares or share certificates upon the surrender of any Warrants for the purpose of exercise, or to comply with any of the covenants contained in this Section 5.4.

Article 6 - PURCHASES BY THE CORPORATION

6.1 Optional Purchases by the Corporation:

Subject to applicable law, the Corporation may from time to time purchase Warrants on any stock exchange, in the open market, by private agreement or otherwise. Any such purchase may be made in such manner, from such persons, at such prices and on such terms as the Corporation in its sole discretion may determine.

6.2 Surrender of Warrant Certificates:

Warrant Certificates representing Warrants purchased pursuant to Section 6.1 hereof shall be surrendered to the Warrant Agent for cancellation and shall be accompanied by a direction of the Corporation to cancel the Warrants represented thereby.

Article 7 - COVENANTS OF THE CORPORATION

7.1 General Covenants of the Corporation:

The Corporation covenants with the Warrant Agent for the benefit of the Warrant Agent and the Warrantholders that so long as any Warrants remain outstanding:

(a)          the Corporation will at all times use its commercially reasonable efforts to maintain its corporate existence, remain a corporation in good standing under the Canada Business Corporations Act, will carry on and conduct its business in a proper, efficient and business-like manner and in accordance with good business practice and cause to be kept proper books of account in accordance with generally accepted accounting practices;

(b)          the Corporation will cause certificates representing the Common Shares, if any, from time to time subscribed and paid for pursuant to the exercise of Warrants to be issued and delivered in accordance with the terms hereof;

(c)          all Common Shares which are issued upon exercise of the right to subscribe for and purchase provided for herein, upon payment of the Exercise Price herein provided for, shall be fully paid and non-assessable shares;

(d)          the Corporation will reserve and keep available a sufficient number of Common Shares for the purpose of enabling the Corporation to satisfy its obligations to issue Common Shares upon the exercise of the Warrants;

(e)          the Corporation is duly authorized to create and issue the Warrants and that the Warrants, when issued and certified by the Warrant Agent will be valid and enforceable against the Corporation and that, subject to the provisions of this Indenture, the Corporation shall cause the Common Shares from time to time acquired pursuant to the exercise of Warrants to be duly issued, upon payment of the Exercise Price, to the Warrantholders;

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(f)           the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other acts, deeds and assurances in law as may reasonably be required for the better accomplishing and effecting of the intentions and provisions of this Indenture;

(g)          the Corporation is currently a reporting issuer not in default in the Qualifying Jurisdictions and will use its best efforts to maintain its status as a reporting issuer in the Qualifying Jurisdictions for a period of at least sixty (60) months, from the date hereof;

(h)          if any instrument is required to be filed with or any permission is required to be obtained from any securities regulatory authority or any other step is required under any federal or provincial law of a Qualifying Jurisdiction before any securities or property which a Warrantholder is entitled to receive pursuant to the exercise of a Warrant may properly and legally be delivered upon the due exercise of a Warrant, the Corporation covenants that it shall use its commercially reasonable efforts to take all such action, at its expense, as is required or appropriate in the circumstances;

(i)            from the date hereof until two years after the Expiry Date, the Corporation will use its commercially reasonable efforts to maintain the listing of the Common Shares on the Exchange to ensure that the Common Shares issued pursuant to the exercise of the Warrants are listed and posted for trading on the Exchange;

(j)            the Corporation will send to each Warrantholder a copy of all documents required to be delivered to holders of Common Shares pursuant to the Securities Act (Ontario) or other applicable law within the required time periods contemplated thereby;

(k)           each of this Indenture and the Warrant Certificates has been duly authorized, executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of, and is enforceable against, the Corporation in accordance with its terms;

(l)           the Corporation is a “foreign issuer” within the meaning of Regulation S under the 1933 Act and will use commercially reasonable efforts to remain a foreign issuer until the Time of Expiry;

(m)          the Corporation will comply with all covenants and satisfy all terms and conditions on its part to be performed and satisfied under this Indenture;

(n)          the issue of the Warrants, and the execution and delivery of the Warrant Certificates and this Indenture, does not and will not result in a breach by the Corporation of, and does not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach by the Corporation of any applicable laws, and does not and will not conflict with any of the terms, conditions or provisions of the articles or resolutions of the Corporation or any trust indenture, loan agreement or any other agreement or instrument to which the Corporation is a party or by which it is contractually bound on the date of this Indenture;

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(o)          the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all other acts, deeds and assurances in law as the Warrant Agent, acting on the advice of Counsel, may reasonably require for better accomplishing and effecting the intentions and provisions of this Indenture;

(p)          with respect to any notices to be given or other acts to be performed or which may be given or performed by the Warrant Agent under or pursuant to this Indenture, the Corporation shall provide to the Warrant Agent in a timely manner all such information and documents as the Warrant Agent may reasonably request and are within the knowledge or control of the Corporation in order to verify the factual circumstances relating to such notices or acts and, if requested, such notices of acts and, if requested, such information and documents shall be certified as correct by an officer of the Corporation;

(q)          generally, the Corporation will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture and will not take any action which might reasonably be expected to deprive Warrantholders of their rights to acquire Common Shares on the exercise of Warrants;

(r)           the Corporation will give to the Warrantholders, in the manner provided in Article 12 hereof, and to the Warrant Agent, notice of its intention to fix a record date, or effective date, as the case may be, for any event referred to in Section 5.1 hereof which may give rise to an adjustment in the Exercise Price or in the number of Common Shares purchasable upon the exercise of Warrants and, in each case, such notice shall specify the particulars of such event and the record date, or the effective date, for such event; provided that the Corporation shall only be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given, and such notice shall be given in each case not less than 21 days prior to the applicable record date or effective date, as the case may be;

(s)           the Corporation will not close its transfer books nor take any other action which might deprive a Warrantholder of the opportunity of exercising the right of purchase pursuant to the Warrants held by such person during the period of twenty-one (21) days after the giving of a notice required by this Section 7.1 or unduly restrict such opportunity;

(t)           if the Corporation is a party to any transaction in which the Corporation is not the continuing corporation, the Corporation shall use commercially reasonable efforts to obtain all consents which may be necessary or appropriate under Canadian law to enable the continuing corporation to give effect to the Warrants; and

(u)          generally, the Corporation will well and truly perform and carry out all of the acts or things to be done by the Corporation as provided in this Indenture.

7.2 Warrant Agent's Remuneration and Expenses:

The Corporation covenants that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and the Corporation will pay or reimburse the Warrant Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Warrant Agent in the administration or execution of its duties hereunder (including the reasonable compensation and the disbursements of its counsel and all other advisers not regularly in its employ) both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder shall be finally and fully performed, except any such expense, disbursement or advance as may arise out of or result from the Warrant Agent's own grossly negligent action, grossly negligent failure to act, wilful misconduct or bad faith.

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7.3 Notice of Issue:

The Corporation will give written notice of the issue of Common Shares pursuant to the exercise of any Warrants, in such detail as may be required, to each securities commission or similar regulatory authority in each jurisdiction in Canada in which there is legislation or regulations requiring the giving of any such notice in order that such issue of Common Shares and the subsequent disposition of the Common Shares so issued will not be subject to the prospectus requirements, if any, of such legislation or regulations.

7.4 Performance of Covenants by Warrant Agent:

If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Warrant Agent may notify the Warrantholders of such failure on the part of the Corporation or may itself perform any of the said covenants capable of being performed by it, but shall be under no obligation to do so or to notify the Warrantholders that it is so doing. All amounts so expended or advanced by the Warrant Agent shall be repayable upon request of the Warrant Agent as provided in Section 7.2 hereof. No such performance or advance by the Warrant Agent shall be deemed to relieve the Corporation of any default hereunder.

Article 8 - ENFORCEMENT

8.1 Suits by Warrantholders:

All or any of the rights conferred upon the holder of any Warrant by the terms of such Warrant Certificate or the provisions of this Indenture may be enforced by the holder of such Warrant by appropriate legal proceedings but without prejudice to the right which is hereby conferred upon the Warrant Agent to proceed in its own name to enforce each and all of the provisions herein contained for the benefit of the Warrantholder.

8.2 Immunity of Shareholders:

The Warrant Agent, and by the acceptance of the Warrants, the Warrantholders, hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any past, present or future incorporator, shareholder, director, officer, employee or agent of the Corporation for the issue of Common Shares pursuant to the exercise of any Warrant.

8.3 Limitation of Liability:

The obligations hereunder are not personally binding upon, nor shall resort hereunder be had to, the private property of any of the past, present or future officers, Directors or Shareholders of the Corporation or of any successor corporation or to any of the past, present or future officers, Directors, employees or agents of the Corporation or any successor corporation, but only the property of the Corporation or any successor corporation shall be bound in respect hereof.

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Article 9 - MEETINGS OF WARRANTHOLDERS

9.1 Right to Convene Meetings:

The Warrant Agent may at any time and from time to time and shall on receipt of a Written Request of the Corporation or of a Warrantholders' Request and upon receiving sufficient funds and being indemnified to its reasonable satisfaction by the Corporation or by the Warrantholders signing such Warrantholders' Request, as the case may be, against the costs which may be incurred by the Warrant Agent in connection with the calling and holding of such meeting, convene a meeting of the Warrantholders. In the event of the Warrant Agent failing within fifteen (15) days after receipt of such Written Request by the Corporation or of a Warrantholders' Request and of the required funds and indemnity as aforesaid to give notice to convene a meeting, the Corporation or such Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Toronto, Ontario, or at such other place as may be approved or determined by the Warrant Agent.

9.2 Notice:

At least 21 days’ notice of any meeting of Warrantholders shall be given to the Warrantholders in the manner provided in Article 12 hereof and a copy thereof shall be sent by prepaid mail to the Warrant Agent unless the meeting has been called by it and to the Corporation unless the meeting has been called by it. Such notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat. It shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article 9. The notice convening any such meeting may be signed by an appropriate officer of the Warrant Agent or of the Corporation or the person or persons designated by the Warrantholders signing such Warrantholders' Request, as the case may be.

9.3 Chairman:

An individual (who need not be a Warrantholder) nominated in writing by the Warrant Agent shall be chairman of the meeting and if no individual is so nominated, or if the individual so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, or if such person is unable or unwilling to act as chairman, the Warrantholders present in person or by proxy shall choose some individual to be chairman.

9.4 Quorum:

Subject to the provisions of Section 9.12 hereof, at any meeting of the Warrantholders a quorum shall consist of Warrantholders present in person or by proxy holding at least 50% of the aggregate number Warrants outstanding as of the date of the meeting, provided that at least two persons entitled to vote thereat (including proxyholders) are personally present. If a quorum of the Warrantholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Warrantholders or on a Warrantholders' Request, shall be dissolved, but in any other case the meeting shall be adjourned to the same day in the next following week (unless such day is not a Business Day in which case it shall be adjourned to the next following Business Day thereafter) at the same time and place. 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 called notwithstanding that they may not hold at least 50% of the aggregate number of Warrants then outstanding.

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9.5 Power to Adjourn:

Subject to the provisions of Section 9.4 hereof, the chairman of any meeting at which a quorum of the Warrantholders is present may, with the consent of the meeting, adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

9.6 Show of Hands:

Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on Extraordinary Resolutions shall be given in the manner hereinafter provided. At any such meeting, unless a poll is demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of such fact. Any Warrantholder present in person or by proxy can demand a poll at any meeting in accordance with the provisions of Section 9.7 hereof.

9.7 Poll:

On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands in respect of such question if requested by the chairman or by one of or more of the Warrantholders acting in person or by proxy, a poll shall be taken in such manner as the chairman shall direct. Questions other than Extraordinary Resolutions shall be decided by a majority of the votes cast on the poll.

9.8 Voting:

On a show of hands every person who is present and entitled to vote, whether as a Warrantholder or as a 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 appointed by instrument in writing shall be entitled to one vote in respect of each one Warrant held by him. 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.

9.9 Regulations:

The Warrant Agent or the Corporation with the approval of the Warrant Agent may from time to time make regulations and from time to time vary such regulations as it shall from time to time think fit:

(a)           for the deposit of instruments appointing proxies at such place and time as the Warrant Agent, the Corporation or the Warrantholder calling the meeting, as the case may be, may direct in the notice calling the meeting;

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(b)           for 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, cabled 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;

(c)          for the form of the instrument appointing a proxy, the manner in which it may be executed and verification of the authority of a person who executes it on behalf of a Warrantholder; and

(d)           generally for the calling of meetings of Warrantholders and the conduct of business thereat.

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 the holders of any Warrants, or as entitled to vote or be present at the meeting in respect thereof, shall be registered holders of Warrants or proxies thereof.

9.10 Corporation and Warrant Agent may be Represented:

The Corporation and the Warrant Agent, by their respective employees, officers or directors, and the legal advisers of the Corporation and the Warrant Agent, may attend any meeting of the Warrantholders, but shall have no vote as such.

9.11 Powers Exercisable by Extraordinary Resolution:

In addition to all other powers conferred upon them by any other provision of this Indenture or by law, the Warrantholders at a meeting shall have the following powers exercisable from time to time by Extraordinary Resolution:

(a)           power to consent and agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrantholders or, with the reasonable consent of the Warrant Agent, of the Warrant Agent (in its capacity as warrant agent hereunder or on behalf of the Warrantholders) with the Corporation, whether such rights arise under this Indenture or the Warrant Certificates or otherwise;

(b)           subject to arrangements as to financing and indemnity satisfactory to the Warrant Agent, power to direct or authorize the Warrant Agent (i) to enforce any of the covenants of the Corporation contained in this Indenture or the Warrant Certificates, (ii) to enforce any of the rights of the Warrantholders in any manner specified in such Extraordinary Resolution, or (iii) to refrain from enforcing any such covenant or right;

(c)           power to waive and direct the Warrant Agent to waive any default on the part of the Corporation in complying with any provision of this Indenture or the Warrant Certificates, either unconditionally or upon any conditions specified in such Extraordinary Resolution;

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(d)           power to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Corporation (i) for the enforcement of any of the covenants of the Corporation contained in this Indenture or the Warrant Certificates, or (ii) to enforce any of the rights of the Warrantholders;

(e)           power to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or discontinue or otherwise deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith;

(f)           power to appoint any persons (whether Warrantholders or not) as a committee to represent the interests of the Warrantholders and to confer upon such committee any powers or discretions which the Warrantholders could themselves exercise by Extraordinary Resolution or otherwise;

(g)          power from time to time and at any time to remove the Warrant Agent and to appoint a successor Warrant Agent;

(h)           power to amend, alter or repeal any Extraordinary Resolution previously passed;

(i)           power to assent to any change in or omission from the provisions contained in the Warrant Certificates and 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; and

(j)           power 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.

9.12 Extraordinary Resolution:

(a)          Extraordinary Resolution: If, at any meeting called for the purpose of passing an Extraordinary Resolution, Warrantholders holding 50% of the aggregate number of Warrants outstanding as of the date of such meeting are not present in person or by proxy within 30 minutes from the time fixed for holding the meeting, then the meeting, if called 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 five Business Days or more than 10 Business Days later, and to such place and time as may be determined by the chairman. Not less than three Business Days' notice to Warrantholders shall be given of the time and place of such adjourned meeting in the manner provided in Article 12 hereof. 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 notwithstanding the provisions of this Section 9.12(a) to the contrary and may transact the business for which the meeting was originally called and a motion proposed at such adjourned meeting and passed by the affirmative vote of Warrantholders holding not less than 66 2/3% of the aggregate number of Warrants represented at the adjourned meeting and voted on the motion shall be an Extraordinary Resolution within the meaning of this Indenture, notwithstanding that Warrantholders holding 50% of the aggregate number of Warrants then outstanding Warrant Certificates are not present in person or by proxy at such adjourned meeting.

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(b)          Poll to be Taken: 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.

9.13 Powers Cumulative:

It is hereby declared and agreed that any one or more of the powers in this Indenture, stated to be exercisable by the Warrantholders by Extraordinary Resolution or otherwise, may be exercised from time to time and the exercise of any one or more of such powers from time to time shall not be deemed to exhaust the right of the Warrantholders to exercise such power or powers then or thereafter from time to time.

9.14 Minutes:

Minutes of all resolutions and Extraordinary Resolutions and proceedings at every meeting of Warrantholders shall be made and entered in books to be from time to time provided for that purpose by the Warrant Agent at the expense of the Corporation, and any such minutes, if signed by the chairman of the meeting at which such resolutions or Extraordinary Resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the Warrantholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made, shall be deemed to have been called and held, and all resolutions passed thereat or proceedings taken, to have been passed and taken.

9.15 Instruments in Writing:

All actions which may be taken and all powers that may be exercised by the Warrantholders at a meeting held as provided in this Article 9 may also be taken and exercised by Warrantholders representing at least 66 2/3% of the aggregate number of then outstanding Warrants, by an instrument in writing signed in one or more counterparts by such Warrantholders in person or by attorney appointed in writing and the expression "Extraordinary Resolution" when used in this Indenture shall include an instrument so signed.

9.16 Binding Effect of Resolutions:

Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 9 at a meeting of Warrantholders shall be binding upon all of the Warrantholders, whether present or absent at such meeting, and every instrument in writing signed by Warrantholders in accordance with the provisions of Section 9.15 hereof shall be binding upon all of the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and the Warrant Agent (subject to the provisions for indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing.

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9.17 Holdings by Corporation and Warrant Agent Disregarded:

In determining whether Warrantholders are present at a meeting of Warrantholders for the purpose of determining a quorum or have concurred in any consent, resolution, Extraordinary Resolution, Warrantholders' Request, waiver or other action under this Indenture, Warrants owned by the Corporation or any Subsidiary of the Corporation and the Warrant Agent shall be deemed not to be outstanding and shall be disregarded. The Corporation shall provide the Warrant Agent with a Certificate of the Corporation providing details of any Warrants held by the Corporation or by a Subsidiary of the Corporation upon the written request of the Warrant Agent.

Article 10 - SUPPLEMENTAL INDENTURES

10.1 Provision for Supplemental Indentures for Certain Purposes:

From time to time the Corporation (when authorized by action by the Directors) and the Warrant Agent may, subject to the provisions of this Indenture and it shall, when so directed by the provisions of this Indenture, execute and deliver by its proper officers, indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:

(a)           setting forth adjustments pursuant to the provisions of Article 5 hereof;

(b)          increasing the number of Warrants, and the number of Common Shares issuable upon the exercise of Warrants, which the Corporation is authorized to issue under this Indenture and any consequential amendment thereto as may be required by the Warrant Agent, relying on the opinion of Counsel;

(c)           making such changes to the provisions hereof and of the Warrant Certificates as may be necessary or desirable in connection with the listing of the Warrants on any stock exchange;

(d)          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 opinion of Counsel, prejudicial to the interests of the Warrantholders;

(e)           giving effect to any resolution or Extraordinary Resolution passed as provided in Article 9 hereof;

(f)           making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder, provided that such provisions are not, in the opinion of the Warrant Agent, relying on the opinion of Counsel, prejudicial to the interests of the Warrantholders;

(g)          adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrant Certificates, or making any modification in the form of the Warrant Certificates which does not affect the substance thereof;

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(h)          modifying any of the provisions of this Indenture or relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that in the opinion of the Warrant Agent, relying on the opinion of Counsel,, no such modification or relief shall be or become operative or effective in such manner as to impair 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; or

(i)           any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective provisions, errors or omissions herein, provided that, in the opinion of the Warrant Agent, relying on the opinion of Counsel, the rights of the Warrant Agent and of the Warrantholders are in no way prejudiced thereby.

10.2 Successor Corporation:

In the case of a consolidation, amalgamation, arrangement, merger, separation or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety, the successor entity resulting from such consolidation, amalgamation, arrangement, merger, separation or transfer (if not the Corporation) shall expressly assume, by supplemental indenture satisfactory in form to the Warrant Agent and executed and delivered to the Warrant Agent, the performance and observance of each and every covenant and obligation contained in this Indenture to be performed by the Corporation, as the case may be. Without limiting the generality of the foregoing, the continuing entity resulting from such consolidation, amalgamation, arrangement, merger, separation or transfer shall be deemed to be a successor entity for purposes of this Indenture.

Article 11 - CONCERNING THE WARRANT AGENT

11.1 Trust Indenture Legislation:

(a)           Mandatory Requirements: 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.

(b)          Applicable Legislation: The Corporation and the Warrant Agent agree that each of them 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.

11.2 Rights and Duties of Warrant Agent:

(a)           Degree of Skill: 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 with a view to the best interests of the Warrantholders and shall 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 grossly negligent action, its own grossly negligent failure to act or its own wilful misconduct or bad faith.

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(b)           Conditions for Action: Subject to Section 11.2(a) hereof, the Warrant Agent shall not be bound to do anything or take any act or action for the enforcement of any of the obligations of the Corporation under this Indenture unless and until the Warrant Agent shall have received a Warrantholders' Request setting out the action which the Warrant Agent is required to take and the obligation of the Warrant Agent to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Warrant Agent or the Warrantholders hereunder shall be conditional upon the Warrantholders furnishing, when required by notice by the Warrant Agent, sufficient funds to commence or continue such act, action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to protect and hold harmless the Warrant Agent against the costs, charges, expenses and liabilities to be incurred thereby and any loss or damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the 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 unless indemnified as aforesaid.

The Warrant Agent shall not be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Warrant Agent and , in the absence of any such notice, the Warrant Agent may for all purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations, warranties, covenants, agreements, or conditions contained herein.

(c)           Deposit of Warrant Certificates: The Warrant Agent may, before commencing or at any time during the continuance of any act, action or proceeding for the purpose of enforcing any rights of the Warrant Agent or the Warrantholders hereunder, require the Warrantholders at whose instance it is acting to deposit with the Warrant Agent the Warrant Certificates held by them, for which Warrant Certificates the Warrant Agent shall issue receipts.

(d)           Supremacy of Applicable Legislation: 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 and of this Article 11.

11.3 Evidence:

(a)           Entitlement to Rely on Evidence: Whenever it is provided in this Indenture 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 of the facts and opinions stated in all 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. The Warrant Agent may rely and shall be protected in acting upon any such documents deposited with it in purported compliance with any such provision or for any other purpose hereof, but may, in its discretion, require further evidence before acting or relying thereon. The Warrant Agent may also rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, letter, telegram, cablegram or other paper or document believed by it to be genuine and to have been signed, sent or presented by or on behalf of the proper party or parties.

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(b)          Additional Evidence: In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Corporation shall furnish to the Warrant Agent such additional evidence of compliance with any provision hereof, and in such form, as may be prescribed by Applicable Legislation or as the Warrant Agent may reasonably require by written notice to the Corporation.

(c)          Statutory Declarations: Whenever Applicable Legislation requires that evidence referred to in Section 11.3(a) hereof 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 (a) the Chief Executive Officer or any Director of the Corporation and, in addition, by (b) the Chief Financial Officer or any Director of the Corporation.

(d)          Proof of Execution: Proof of execution of an instrument in writing by any Warrantholder may be made by the certificate of a notary public, 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 copy of the resolution of its board of directors authorizing the person who signs such instrument to sign such instrument

11.4 Experts and Advisers:

The Warrant Agent may employ or retain, at the expense of the Corporation, such counsel, accountants or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder, may pay reasonable remuneration for all services performed by any of them without taxation of any costs of any counsel and shall not be responsible for any misconduct on the part of any of them. The Warrant Agent may act and shall be protected in acting in good faith on the opinion or advice of or information obtained from any counsel, accountant or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in relation to this Indenture.

11.5 Warrant Agent not Required to give Security:

The Warrant Agent shall not be required to give any bond or security in respect of the execution of the duties, obligations and powers of this Indenture or otherwise in respect of these premises.

11.6 Protection of Warrant Agent:

(a)          Protection: By way of supplement to the provisions of any law for the time being relating to warrant agents, it is expressly declared and agreed as follows:

(i) the Warrant Agent shall not be liable for, or by reason of, any statement of fact or recital in this Indenture or in the Warrant Certificates (except the representation contained in Section 11.8 hereof and in the countersignature of the Warrant Agent on the Warrant Certificates) or required to verify the same, but all such statements or recitals are, and shall be deemed to be made by, the Corporation;

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(ii) the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof;

(iii) 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 the representations, warranties or covenants herein contained or of any acts of Directors, officers, employees, agents or servants of the Corporation;

(iv) the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in shares of the Corporation and in the Warrants and generally may contract and enter into financial transactions with the Corporation or any corporation related to the Corporation without being liable to account for any profit made thereby;

(v) 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; and

(vi) in the event that any of the funds provided to the Warrant Agent hereunder are received by it in the form of an uncertified cheque or bank draft, the Warrant Agent shall be entitled to delay the time for the release of such funds and the related Common Shares acquired upon the exercise of any Warrants until such uncertified cheque or bank draft has cleared the financial institution upon which the same is drawn.

(vii) The 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 herewith except arising out of its own gross negligence, bad faith or willful misconduct.

(b)          Indemnity: In addition to and without limiting any protection of the Warrant Agent hereunder or otherwise by law, the Corporation agrees to indemnify the Warrant Agent and its officers, directors and employees and save it harmless from all liabilities, suits, damages, costs, expenses and actions which may be brought against or suffered by it arising out of or connected with performance by it of its duties hereunder except to the extent that such liabilities, suits, damages, costs and actions are attributable to the gross negligence or wilful misconduct of the Warrant Agent. Notwithstanding any other provision hereof, this indemnity shall survive any removal or resignation of the Warrant Agent, discharge of this Indenture and termination of any duties and obligations hereunder.

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11.7 Replacement of Warrant Agent, Successor by Merger:

(a)           Resignation: The Warrant Agent may resign its duties and obligations and be discharged from all further duties and liabilities hereunder, subject to this Section 11.7(a), by giving to the Corporation not less than sixty (60) days prior notice in writing or such shorter prior notice as the Corporation may accept as sufficient. The Warrantholders, by Extraordinary Resolution, shall have power at any time to remove the Warrant Agent and to appoint a new warrant agent. In the event of the Warrant Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new warrant agent unless such Extraordinary Resolution has appointed a new warrant agent; failing such appointment by the Corporation, the retiring Warrant Agent, at the expense of the Corporation, or any Warrantholder may apply to a judge of the Ontario Court of Justice (General Division), on such notice as such judge may direct for the appointment of a new warrant agent; provided that any new Warrant Agent so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Warrantholders. Any new warrant agent appointed under this Section 11.7(a) shall be a corporation authorized to carry on the business of a trust company or transfer agent in the Province of Ontario and, if required by Applicable Legislation of any other province in Canada, in such other provinces. On any such appointment the new warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Warrant Agent without any further assurance, conveyance, act or deed, but there shall 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 the same to the new warrant agent, provided that, following any resignation or removal of the Warrant Agent and appointment of a successor warrant agent, the successor warrant agent shall have executed an appropriate instrument accepting such appointment and, at the request of the Corporation, upon payment of any outstanding fees, the predecessor Warrant Agent shall execute and deliver to the successor warrant agent an appropriate instrument transferring to such successor warrant agent all rights and powers of the Warrant Agent hereunder so ceasing to act.

(b)           Notice of Successor: Upon the appointment of a successor warrant agent, the Corporation shall promptly notify the Warrantholders thereof in the manner provided for in Article 12 hereof.

(c)           No Further Act for Merger: Any corporation into which the Warrant Agent is amalgamated or with which it is consolidated or to which all or substantially all of its corporate trust business is sold or is otherwise transferred or any corporation resulting from any consolidation or amalgamation to which the Warrant Agent is a party shall become the successor Warrant Agent under this Indenture, without the execution of any document or any further act; provided that such corporation would be eligible for appointment as a successor warrant agent under Section 11.7(a) hereof.

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Certification: Any Warrant Certificate countersigned but not delivered by a predecessor Warrant Agent may be delivered by the successor warrant agent in the name of the predecessor or successor warrant agent. In case at any time the name of the Warrant Agent is changed and at such time any of the Warrant Certificates have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates have not been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates will have the full force provided in the Warrant Certificates and in this Indenture.

11.8 Conflict of Interest:

(a)           Representation: The Warrant Agent represents to the Corporation that at the time of the execution and delivery hereof no material conflict of interest exists in the Warrant Agent's role hereunder and agrees that in the event of a material conflict of interest arising hereafter it will, within 90 days after ascertaining that it has such material conflict of interest, either eliminate the same or assign its duties and obligations hereunder to a successor warrant agent approved by the Corporation and meeting the requirements set forth in Section 11.7(a) hereof.

11.9 Acceptance of Duties and Obligations:

The Warrant Agent hereby accepts the duties and obligations in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions hereinbefore set forth unless and until discharged therefrom.

11.10 Actions by Warrant Agent to Protect Interest:

The Warrant Agent shall have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect or enforce its interest and the interests of the Warrantholders.

11.11 Documents, Moneys, etc. Held by Warrant Agent:

Any securities, documents of title or other instruments that may at any time be held by the Warrant Agent subject to the duties and obligations hereof may be placed in the deposit vaults of the Warrant Agent or of any bank listed in Schedule I of the Bank Act (Canada), as amended, or deposited for safekeeping with any such bank. Unless herein otherwise expressly provided, any moneys so held pending the application or withdrawal thereof under any provisions of this Indenture, may be deposited in the name of the Warrant Agent in any such bank at the rate of interest, if any, then current on similar deposits or, with the consent of the Corporation, may be deposited in the deposit department of the Warrant Agent or any other loan or trust company or chartered bank authorized to accept deposits under the laws of Canada or a province thereof. All interest or other income received by the Warrant Agent in respect of such deposits and investments shall belong to the Corporation.

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11.12 Warrant Agent Not to be Appointed Receiver:

The Warrant Agent and any person related to the Warrant Agent shall not be appointed a receiver or receiver and manager or liquidator of all or any part of the assets or undertaking of the Corporation.

11.13 Compliance with Applicable Legislation

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 judgement, 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 judgement, determine at any time that its acting under this Warrant 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 Corporation provided: (i) that the Warrant Agent’s written notice shall describe the circumstances of such non-compliance; and (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.

Article 12 - NOTICE TO WARRANTHOLDERS

12.1 Notice:

(a)          Notice: Unless herein otherwise expressly provided, a notice to be given hereunder to Warrantholders will be deemed to be validly given if the notice is sent by ordinary surface or air mail, postage prepaid, addressed to the Warrantholders or delivered (or so mailed to certain Warrantholders and so delivered to the other Warrantholders) at their respective addresses appearing on the registers of holders described in Section 2.8 hereof, provided, however, that if, by reason of a strike, lockout or other work stoppage, actual or threatened, involving Canadian postal employees, the notice could reasonably be considered unlikely to reach or likely to be delayed in reaching its destination, the notice will be valid and effective only if it is so delivered or is given by publication twice in the Report on Business section in the national edition of The Globe and Mail newspaper.

(b)          Date of Notice: A notice so given by mail or so delivered will be deemed to have been given on the first Business Day after it has been mailed or on the day on which it has been delivered, as the case may be, and a notice so given by publication will be deemed to have been given on the second day on which it has been published as required. In determining under any provision hereof the date when notice of a meeting or other event must be given, the date of giving notice will be included and the date of the meeting or other event will be excluded. Accidental failure or omission in giving notice or accidental failure to mail notice to any Warrantholder will not invalidate any action or proceeding founded thereon.

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Article 13 - GENERAL

13.1 Notice to the Corporation and the Warrant Agent:

(a)          Notices: Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or to the Warrant Agent shall be deemed to be validly given if delivered by prepaid courier, if transmitted by telecopier or other means of prepaid, transmitted, recorded communication or if sent by registered mail, postage prepaid:

(i) to the Corporation:

Cynapsus Therapeutics Inc.
828 Richmond Street West
Toronto, Ontario
M6J 1C9

Attention:          Chief Executive Officer

Telecopier:         416-703-2449

(ii) to the Warrant Agent:

Equity Financial Trust Company
Suite 300, 200 University Avenue
Toronto, Ontario
M5H 4H1

Attention:          Manager, Corporate Trust Department

Telecopier:         416-361-0470

and any such notice delivered or transmitted in accordance with the foregoing shall be deemed to have been received on the date of delivery or transmission or, if mailed, on the third Business Day following the date of the postmark on such notice. The original of any notice sent by facsimile transmission to the Warrant Agent shall be subsequently mailed to the Warrant Agent.

(b)           Change of Address: The Corporation or the Warrant Agent may from time to time notify the other in the manner provided in Section 13.1(a) hereof 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.

(c)           Postal Disruption: 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 by prepaid courier or transmitted by telecopier or other means of prepaid, transmitted, recorded communication, such notice to be deemed to have been received on the date of delivery or transmission.

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13.2 Time of the Essence:

Time shall be of the essence of this Indenture.

13.3 Counterparts:

The Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution shall be deemed to be dated as of the date hereof.

13.4 Satisfaction and Discharge of Indenture:

Upon all Common Shares required to be issued in respect of Warrants delivered to the Warrant Agent prior to the Expiry Date having been issued, this Indenture shall cease to be of further force or effect and the Warrant Agent, on demand of and at the cost and expense of the Corporation and upon delivery to the Warrant Agent of a Certificate of the Corporation stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture.

13.5 Provisions of Indenture and Warrant Certificate for the Sole Benefit of Parties and Warrantholders:

Nothing in this Indenture or the Warrant Certificates, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the holders of the Warrants, as the case may be, any legal or equitable right, remedy or claim under this Indenture or the Warrant Certificates, or under any covenant or provision therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Warrantholders.

13.6 Stock Exchange Consents:

Any action provided for in this Indenture requiring the prior consent of any stock exchange upon which the Common Shares or Warrants may be listed shall not be completed until the requisite consent is obtained.

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IN WITNESS WHEREOF the parties have executed this Indenture as of the day and year first above written.

CYNAPSUS THERAPEUTICS INC.
Per:	/s/ Anthony Giovinazzo
	Name: Anthony Giovinazzo
	Title: President and Chief Executive Officer
	Authorized Signing Officer
Per:	/s/ Andrew Williams
	Name: Andrew Williams
	Title: Chief Operating Officer and Chief Financial Officer
	Authorized Signing Officer
EQUITY FINANCIAL TRUST COMPANY
Per:	/s/ Donald Crawford
	Name: Donald Crawford
	Title: Corporate Trust Officer
	Authorized Signing Officer
Per:	/s/ Kathy Thorpe
	Name: Kathy Thorpe
	Title: Senior Trust Officer
	Authorized Signing Officer

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SCHEDULE A TO THE WARRANT

INDENTURE DATED AS OF APRIL 15, 2014 BETWEEN

CYNAPSUS THERAPEUTICS INC. AND EQUITY FINANCIAL TRUST COMPANY

FORM OF WARRANT CERTIFICATE

[For Warrants offered or sold to, or for the account or benefit of, persons in the United States or "U.S. persons," as such term is defined in Regulation S under the United States Securities Act of 1933, as amended, please include the following legend:

“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”]

EXERCISABLE ONLY PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE AFTER WHICH TIME THIS WARRANT CERTIFICATE SHALL BE NULL AND VOID.

NUMBER ________	CERTIFICATE FOR <>
	WARRANTS

CUSIP:

WARRANT

TO PURCHASE COMMON SHARES OF CYNAPSUS THERAPEUTICS INC.

THIS IS TO CERTIFY THAT, for value received, ___________ (the "holder") is entitled to subscribe for and to purchase, AT ANY TIME PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE (as hereinafter defined), fully paid and non-assessable common shares ("Common Shares") of Cynapsus Therapeutics Inc. (the "Corporation") as constituted on the date hereof (as hereinafter defined), on the basis of one Common Share for each one Warrant, at an exercise price of $0.81 (Canadian) per Common Share, by surrendering this Warrant Certificate to the warrant agent specified below with a subscription form (FORM 1) properly completed and executed, and a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Corporation, for the total purchase price of the Common Shares so subscribed for and purchased. In the event of any conflict or inconsistency between the provisions of this Warrant Certificate and the provisions of the Warrant Indenture (as hereinafter defined), the provisions of the Warrant Indenture shall prevail.

The Expiry Date is the earlier of: (i) the expiration of thirty (30) days after written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been three (3) times the Offering Price for twenty (20) consecutive Trading Days, subject to the provisions of Section 4.1(c) of the Warrant Indenture; and (ii) sixty (60) months from the Closing Date.

The holder of this Warrant Certificate may subscribe for and purchase less than the number of Common Shares entitled to be subscribed for and purchased on surrender of this Warrant Certificate. If the subscription does not exhaust the Warrants represented by this Warrant Certificate, a Warrant Certificate representing the balance of the Warrants will be issued to the holder. No Warrant Certificate representing fractional Warrants will be issued and the holder hereof understands and agrees that such holder will not be entitled to any cash payment or other form of compensation in respect of a fractional Warrant. By acceptance hereof, the holder expressly waives any right to receive fractional Common Shares upon exercise hereof. If the number of Common Shares to which a Warrantholder would otherwise be entitled upon the exercise of this Warrant Certificate is not a whole number, then the number of Common Shares to be issued will be rounded down to the next whole number.

The principal office of Equity Financial Trust Company (the "Warrant Agent") in the City of Toronto, Ontario, has been appointed as the office to receive subscriptions for Common Shares and payments from holders of Warrant Certificates. This Warrant Certificate, the subscription form (FORM 1), and a certified cheque, bank draft or money order shall be deemed to be surrendered to the Warrant Agent only upon personal delivery thereof or, if sent by post or other means of transmission, upon receipt thereof by the Warrant Agent at the office specified above. The Corporation may also provide for other places at which this Warrant Certificate may be surrendered for exchange or exercise. If mail is used for delivery of a Warrant Certificate, for the protection of the holder, registered mail should be used and sufficient time should be allowed to avoid the risk of late delivery. Subject to adjustment hereof in the events and in the manner set forth in the Warrant Indenture hereafter mentioned and summarized below, the price payable for each Common Share upon exercise of this Warrant Certificate shall be $0.81 (Canadian).

Certificates representing Common Shares subscribed for and purchased will be mailed to the persons specified in the subscription form (FORM 1) at the respective addresses specified therein or, if so specified in the subscription form (FORM 1), delivered to such persons at the office of the Warrant Agent where the applicable Warrant Certificate was surrendered, within three Business Days after the due surrender of such Warrant Certificate and payment as aforesaid, including any applicable taxes.

The Warrants represented by this Warrant Certificate may only be transferred, upon compliance with the conditions prescribed in the Warrant Indenture, on the register of transfers to be kept at the principal office of the Warrant Agent in Toronto, Ontario, by the holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be duly recorded on such register of transfers by the Warrant Agent. Notwithstanding the foregoing, the Corporation will be entitled, and may direct the Warrant Agent, to refuse to record any transfer of any Warrant on such register if such transfer would constitute a violation of the securities laws of any jurisdiction.

This Warrant Certificate represents warrants of the Corporation issued or issuable under the provisions of an indenture (which indenture together with all other instruments supplemental or ancillary thereto is herein referred to as the "Warrant Indenture") dated as of April 15, 2014, between the Corporation and the Warrant Agent, to which reference is hereby made for particulars of the rights of the holders of the Warrant Certificates, the Corporation and the Warrant Agent in respect thereof and the terms and conditions upon which the Warrants represented hereby are issued and held, all to the same effect as if the provisions of the Warrant Indenture were herein set forth in full, to all of which the holder of this Warrant Certificate by acceptance hereof assents, it being expressly understood that the provisions of the Warrant Indenture and this Warrant Certificate are for the sole benefit of the Corporation, the Warrant Agent and the Warrantholders. A copy of the Warrant Indenture may be obtained on request without charge from the secretary of the Corporation, at 828 Richmond Street West, Toronto, Ontario M6J 1C9, telephone: 416-703-2449. Words and terms in this Warrant Certificate with the initial letter or letters capitalized and not defined herein shall have the meanings ascribed to such capitalized words and terms in the Warrant Indenture.

Warrants may not be exercised by or on behalf of a person in the United States or a "U.S. person" (a "U.S. Person"), as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the "1933 Act"), unless an exemption from registration is available under the 1933 Act and any applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to such effect; provided, however, that a Warrantholder who is an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the 1933 Act (a "U.S. Accredited Investor"), at the time of exercise of Warrants and that purchased units ("Units"), with each Unit comprised of one Common Share and one Warrant, in the Corporation’s private placement of Units in the United States and to U.S. Persons will not be required to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants underlying those Units as long as the Warrantholder is a U.S. Accredited Investor and the other representations and warranties made by such Warrantholder at the time of purchase of the Units also remain true and correct.

2.

Common Shares issued upon exercise of Warrants to, or for the account or benefit of, a person in the United States or a U.S. Person will contain a legend restricting transfer under United States federal and state securities laws.

Nothing contained in this Warrant Certificate, the Warrant Indenture or otherwise shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or other shareholder of the Corporation or any other right or interest except as herein and in the Warrant Indenture expressly provided.

The Warrant Indenture provides for adjustments to the exercise price of the Warrants and to the number and kind of securities purchaseable upon exercise upon the happening of certain stated events including the subdivision or consolidation of the Common Shares, certain distributions of Common Shares or securities exchangeable for or convertible into Common Shares or of other assets or property of the Corporation, certain offerings of rights, warrants or options and certain reorganizations.

The Warrant Indenture provides for the giving of notice by the Corporation prior to taking certain actions specified therein. The Corporation may from time to time purchase any of the Warrants by private contract or otherwise. Any such Warrants purchased by the Corporation shall be cancelled.

This Warrant Certificate, the Warrants represented by this Warrant Certificate and the Warrant Indenture shall be governed by and performed, construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

This Warrant Certificate shall not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent for the time being under the Warrant Indenture.

3.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be executed by its respective authorized officers as of this            day of           , 2014.

CYNAPSUS THERAPEUTICS INC.
Per:
	Name:
	Title:
	Authorized Signing Officer
Per:
	Name:
	Title:
	Authorized Signing Officer

This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Indenture.

EQUITY FINANCIAL TRUST COMPANY
Per:
	Authorized Signing Officer
Date of Countersignature: ______________

4.

SUBSCRIPTION FORM

(FORM 1)

THE HOLDER HEREBY SUBSCRIBES FOR ___________ Common Shares of Cynapsus Therapeutics Inc. (the “Corporation”) at $0.81 (Canadian) per Common Share and on the other terms set out in the Warrant Certificate and Warrant Indenture and encloses herewith a certified cheque, bank draft or money order in Canadian dollars payable to "Cynapsus Therapeutics Inc." in payment of the aggregate subscription price therefor.

The undersigned hereby irrevocably directs that the Common Shares be delivered, subject to the conditions set out in this certificate and the provisions of the Warrant Indenture, and that the said Common Shares be registered as follows:

Name(s) in Full and Social Insurance Number(s)	Address(es) (include postal code)	Number of Common Shares
	TOTAL:

Please print full name in which certificate(s) are to be issued. If any of the Common Shares are to be issued to a person or persons other than the Warrantholder, the Warrantholder must pay to the Warrant Agent all requisite taxes or other government charges, if any.

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

A.  ¨     The undersigned holder (i) at the time of exercise of the Warrants is not in the United States and is not exercising the Warrants on behalf of a person in the United States; (ii) is not a "U.S. person" (a "U.S. Person"), as defined in Regulation S under the United States Securities Act of 1933, as amended (the "1933 Act"), and is not exercising the Warrants on behalf of a U.S. Person; and (iii) did not execute or deliver this exercise form in the United States.

B.  ¨     The undersigned holder (i) purchased these Warrants directly from the Corporation pursuant to a written subscription agreement for the purchase of units (the "Units"), with each Unit comprised of one Common Share of the Corporation and one Warrant; (ii) is exercising these Warrants solely for its own account and not on behalf of any other person; (iii) was an "accredited investor," as such term is defined in Rule 501(a) of Regulation D under the 1933 Act, both on the date the Units were purchased from the Corporation and on the date of exercise of these Warrants and (iv) the other representations and warranties made by the undersigned holder at the time of the purchase of the Units remain true and correct.

5.

C.  ¨     The undersigned holder has delivered to the Corporation and Equity Financial Trust Company an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available.

Note: The undersigned holder understands that unless Box A above is checked, the certificate representing the Common Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available. Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked. If Box C is checked, any opinion or other evidence tendered must be in form and substance reasonably satisfactory to the Corporation. Holders planning to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions or other evidence to be tendered will be acceptable to the Corporation.

DATED this      day of                                   , 20         .

Signature of Warrantholder Signature Guaranteed*

Print Name and Address in full below:

Name
Address
	(Include Postal Code)

¨           Please check box if certificates representing the Common Shares are to be delivered at the office of the Warrant Agent where this Warrant Certificate is surrendered, failing which the certificates will be mailed to the address set forth above.

*The signature of the Warrantholder must be signature guaranteed by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words "signature guarantee", or "signature medallion guaranteed" and otherwise be in accordance with industry standards

6.

FORM OF TRANSFER

(FORM 2)

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers                                                                         Warrants represented by this Warrant Certificate to:

Name
Address
	(Include Postal Code)

and hereby irrevocably constitutes and appoints                                                                                                                           

(leave this space blank)

as the attorney of the undersigned with full power of substitution to transfer the Warrants on the appropriate register of the Warrant Agent.

DATED this             day of                                           , 20          .

Signature Guaranteed	Signature of Transferor
	Name of Transferor

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

1. The Warrant Indenture contains certain other requirements relating to the transfer of Warrants, including, among other things, a requirement in certain cases that a declaration to the effect set forth in Section 2.1(c) of the Warrant Indenture (or as the Corporation may otherwise prescribe from time to time) or, in other cases, as set out in Section 2.8(h), that a written opinion of U.S. counsel of recognized standing in form and substance reasonably satisfactory to the Corporation be delivered in connection with the transfer of Warrants by a U.S. Person or a Person in the United States or a Person holding Warrants for the account or benefit of a U.S. Person or a Person in the United States.

2. The signature of the transferor must correspond in every particular with the surname and the first name(s) or initials shown on the face of this certificate and the endorsement must be signature guaranteed, in either case, by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words "signature guarantee", or "signature medallion guaranteed" and otherwise be in accordance with industry standards.

EX-4.8

Exhibit 4.8

SUPPLEMENTAL INDENTURE

THIS SUPPLEMENTAL INDENTURE is entered into as of the 15^th day of May, 2015.

AMONG:

CYNAPSUS THERAPEUTICS INC. a corporation governed by the laws of Canada (the “Corporation”)

- and -

EQUITY FINANCIAL TRUST COMPANY, a trust company governed by the laws of Canada (the “Warrant Agent”)

RECITALS:

A. The Corporation and the Warrant Agent entered into a warrant indenture (the “Original Indenture”) dated as of April 15, 2014 to provide for the creation and issuance of up to 38,461,538 Warrants to purchase 38,461,538 Common Shares;

B. Pursuant to a resolution passed at the annual and special meeting of the shareholders of the Corporation held on May 7, 2015, the shareholders of the Corporation approved by special majority, a resolution authorizing the Corporation to consolidate its existing issued and outstanding Common Shares at a consolidation ratio to be determined by the board of directors of the Corporation in its sole discretion, within a range between one post-consolidation share for every five pre-consolidation shares and one post-consolidation share for every 25 pre-consolidation shares;

C. At a meeting of the board of directors of the Corporation held on May 13, 2015, the board of directors of the Corporation unanimously approved and set the common share consolidation ratio at one post-consolidation share for every 16 pre-consolidation shares; and

D. Pursuant to articles of amendment dated May 15, 2015, the Corporation did consolidate its Common Shares at a ratio of one post-consolidation share for every 16 pre-consolidation shares

NOW THEREFORE in consideration of the mutual promises contained in this Supplemental Indenture and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties agree as follows:

1.1 References to Supplemental Indenture

As used herein “Supplemental Indenture”, “hereto”, “herein”, “hereof”, “hereby”, “hereunder” and similar expressions refer to this Supplemental Indenture and not to any particular Section or other portion hereof and include any and every instrument supplemental or ancillary hereto or in implementation hereof.

1.2 Definitions in Original Indenture

All terms contained in this Supplemental Indenture which are defined in the Original Indenture and not defined herein shall, for all purposes hereof, have the meanings given to such terms in the Original Indenture, as supplemented or amended by this Supplemental Indenture.

1.3 Supplemental Indenture of Original Indenture

The Original Indenture is hereby amended by:

(a) replacing the second recital on page 1 with the following:

“AND WHEREAS each Warrant entitles the holder to purchase, subject to adjustment in certain events, one Common Share at a price of $12.96 at any time prior to the Time of Expiry (as hereinafter defined), all upon the terms and conditions hereinafter set forth;”

(b) replacing the following definitions under Section 1.1 with the following:

““Exercise Price” means $12.96 per Common Share, unless such amount shall have been adjusted pursuant to the provisions of Article 5 hereof in which case such term shall mean the adjusted price in effect at the applicable time;”

““Expiry Date” means the earlier of: (i) the expiration of thirty (30) days after prior written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $31.20 per Common Share for twenty (20) consecutive Trading Days, subject to the provisions of Section 4.1(c); and (ii) sixty (60) months from the Closing Date;”

““Warrants” means the warrants issued hereunder, each one of which entitles the holder thereof to purchase one Common Share for an exercise price of $12.96 at any time up to the Time of Expiry, subject to adjustment in accordance with Article 5 hereof;”

(c) replacing Section 2.1(a) with the following:

“Authorization of Warrants: The Warrants authorized to be issued hereunder are limited in respect of the aggregate number of Common Shares which can be subscribed for and purchased pursuant thereto, and Warrants may be issued only upon and subject to the terms and conditions hereinafter set forth. The Corporation hereby creates for issuance up to 2,403,846 Warrants entitling the holders thereof to subscribe for and purchase up to an aggregate of 2,403,846 Common Shares together with such additional indeterminate number of Common Shares as may be required to be issued pursuant to any adjustment required to be made by the provisions of Article 5 hereof, and such Warrants are hereby authorized to be issued.”

- 2 -

(d) replacing the second paragraph on page 20 with the following:

“If the Corporation has provided written notice (the “Expiry Notice”) to the Warrantholders that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $31.20 for twenty (20) consecutive Trading Days, then in the event that the exercise of all Warrants held by a U.S. Warrantholder would result in such U.S. Warrantholder (and its affiliates) beneficially owning a number of Common Shares in excess of the Maximum Percentage:”

(e) deleting Schedule “A” and replacing it with Schedule “A” hereto.

1.4 Supplemental Indenture Supplemental to Original Indenture

This Supplemental Indenture is supplemental to the Original Indenture and the Original Indenture shall, from this date forward, be read in conjunction with this Supplemental Indenture. All other provisions of the Original Indenture shall remain in full force and effect, unamended as of the date hereof. The Original Indenture and this Supplemental Indenture shall, from this date forward, have effect so far as practicable as if all the provisions of the Original Indenture and this Supplemental Indenture were contained in the Original Indenture.

1.5 Counterparts and Formal Date

This Supplemental Indenture may be executed in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution shall be deemed to bear the date first above written.

[Signature page follows.]

- 3 -

IN WITNESS WHEREOF the parties have executed this Supplemental Indenture as of the day and year first above written.

CYNAPSUS THERAPEUTICS INC.
By:	/s/ Andrew Williams
	Name: Andrew Williams Title: Chief Operating Officer and Chief Financial Officer

EQUITY FINANCIAL TRUST COMPANY
By:	/s/ Donald Crawford
	Name: Donald Crawford Title: Corporate Trust Officer
By:	/s/ Carol Mikos
	Name: Carol Mikos
	Title: Vice President Trust Services

- 4 -

SCHEDULE “A”

CYNAPSUS THERAPEUTICS INC. AND EQUITY FINANCIAL TRUST COMPANY

FORM OF WARRANT CERTIFICATE

For Warrants offered or sold to, or for the account or benefit of, persons in the United States or “U.S. persons,” as such term is defined in Regulation S under the United States Securities Act of 1933, as amended, please include the following legend:

“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”

EXERCISABLE ONLY PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE AFTER WHICH TIME THIS WARRANT CERTIFICATE SHALL BE NULL AND VOID.

NUMBER ________	CERTIFICATE FOR <>
	WARRANTS

CUSIP:

WARRANT

TO PURCHASE COMMON SHARES OF CYNAPSUS THERAPEUTICS INC.

THIS IS TO CERTIFY THAT, for value received, ___________ (the “holder”) is entitled to subscribe for and to purchase, AT ANY TIME PRIOR TO 5:00 P.M., TORONTO TIME, ON THE EXPIRY DATE (as hereinafter defined), fully paid and non-assessable common shares (“Common Shares”) of Cynapsus Therapeutics Inc. (the “Corporation”) as constituted on the date hereof (as hereinafter defined), on the basis of one Common Share for each one Warrant, at an exercise price of $12.96 (Canadian) per Common Share, by surrendering this Warrant Certificate to the warrant agent specified below with a subscription form (FORM 1) properly completed and executed, and a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Corporation, for the total purchase price of the Common Shares so subscribed for and purchased. In the event of any conflict or inconsistency between the provisions of this Warrant Certificate and the provisions of the Warrant Indenture (as hereinafter defined), the provisions of the Warrant Indenture shall prevail.

The Expiry Date is the earlier of: (i) the expiration of thirty (30) days after prior written notice from the Corporation that the closing price of the Common Shares on the principal stock exchange of the Corporation has been $31.20 per Common Share for twenty (20) consecutive trading days, and (ii) April 15, 2019.

The holder of this Warrant Certificate may subscribe for and purchase less than the number of Common Shares entitled to be subscribed for and purchased on surrender of this Warrant Certificate. If the subscription does not exhaust the Warrants represented by this Warrant Certificate, a Warrant Certificate representing the balance of the Warrants will be issued to the holder. No Warrant Certificate representing fractional Warrants will be issued and the holder hereof understands and agrees that such holder will not be entitled to any cash payment or other form of compensation in respect of a fractional Warrant. By acceptance hereof, the holder expressly waives any right to receive fractional Common Shares upon exercise hereof. If the number of Common Shares to which a Warrantholder would otherwise be entitled upon the exercise of this Warrant Certificate is not a whole number, then the number of Common Shares to be issued will be rounded down to the next whole number.

The principal office of Equity Financial Trust Company (the “Warrant Agent”) in the City of Toronto, Ontario, has been appointed the warrant agent to receive subscriptions for Common Shares and payments from holders of Warrant Certificates. This Warrant Certificate, the subscription form (FORM 1), and a certified cheque, bank draft or money order shall be deemed to be surrendered to the Warrant Agent only upon personal delivery thereof or, if sent by post or other means of transmission, upon receipt thereof by the Warrant Agent at the office specified above. The Corporation may also provide for other places at which this Warrant Certificate may be surrendered for exchange or exercise. If mail is used for delivery of a Warrant Certificate, for the protection of the holder, registered mail should be used and sufficient time should be allowed to avoid the risk of late delivery. Subject to adjustment hereof in the events and in the manner set forth in the Warrant Indenture hereafter mentioned and summarized below, the price payable for each Common Share upon exercise of this Warrant Certificate shall be $12.96 (Canadian).

Certificates representing Common Shares subscribed for and purchased will be mailed to the persons specified in the subscription form (FORM 1) at the respective addresses specified therein or, if so specified in the subscription form (FORM 1), delivered to such persons at the office of the Warrant Agent where the applicable Warrant Certificate was surrendered, when the transfer books of the Corporation have been opened for five Business Days after the due surrender of such Warrant Certificate and payment as aforesaid, including any applicable taxes.

The Warrants represented by this Warrant Certificate may only be transferred, upon compliance with the conditions prescribed in the Warrant Indenture, on the register of transfers to be kept at the principal office of the Warrant Agent in Toronto, Ontario, by the holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be duly recorded on such register of transfers by the Warrant Agent. Notwithstanding the foregoing, the Corporation will be entitled, and may direct the Warrant Agent, to refuse to record any transfer of any Warrant on such register if such transfer would constitute a violation of the securities laws of any jurisdiction.

This Warrant Certificate represents warrants of the Corporation issued or issuable under the provisions of an indenture dated as of April 15, 2014 between the Corporation and the Warrant Agent, as supplemented by a supplemental warrant indenture dated as of May 15, 2015 between the Corporation and the Warrant Agent (which, collectively, together with all other instruments supplemental or ancillary thereto are herein referred to as the “Warrant Indenture”) to which reference is hereby made for particulars of the rights of the holders of the Warrant Certificates, the Corporation and the Warrant Agent in respect thereof and the terms and conditions upon which the Warrants represented hereby are issued and held, all to the same effect as if the provisions of the Warrant Indenture were herein set forth in full, to all of which the holder of this Warrant Certificate by acceptance hereof assents, it being expressly understood that the provisions of the Warrant Indenture and this Warrant Certificate are for the sole benefit of the Corporation, the Warrant Agent and the Warrantholders. A copy of the Warrant Indenture may be obtained on request without charge from the secretary of the Corporation, at 828 Richmond Street West, Toronto, Ontario M6J 1C9, telephone: 416-703-2449. Words and terms in this Warrant Certificate with the initial letter or letters capitalized and not defined herein shall have the meanings ascribed to such capitalized words and terms in the Warrant Indenture.

Warrants may not be exercised by or on behalf of a person in the United States or a “U.S. person” (a “U.S. Person”), as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), unless an exemption from registration is available under the 1933 Act and any applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to such effect; provided, however, that a Warrantholder who is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the 1933 Act (a “U.S. Accredited Investor”), at the time of exercise of Warrants and that purchased units (“Units”), with each Unit comprised of one Common Share and one Warrant, in the Corporation’s private placement of Units in the United States and to U.S. Persons will not be required to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants underlying those Units as long as the Warrantholder is a U.S. Accredited Investor and the other representations and warranties made by such Warrantholder at the time of purchase of the Units also remain true and correct.

Common Shares issued upon exercise of Warrants to, or for the account or benefit of, a person in the United States or a U.S. Person will contain a legend restricting transfer under United States federal and state securities laws.

Nothing contained in this Warrant Certificate, the Warrant Indenture or otherwise shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or other shareholder of the Corporation or any other right or interest except as herein and in the Warrant Indenture expressly provided.

The Warrant Indenture provides for adjustments to the exercise price of the Warrants and to the number and kind of securities purchaseable upon exercise upon the happening of certain stated events including the subdivision or consolidation of the Common Shares, certain distributions of Common Shares or securities exchangeable for or convertible into Common Shares or of other assets or property of the Corporation, certain offerings of rights, warrants or options and certain reorganizations.

The Warrant Indenture provides for the giving of notice by the Corporation prior to taking certain actions specified therein. The Corporation may from time to time purchase any of the Warrants by private contract or otherwise. Any such Warrants purchased by the Corporation shall be cancelled.

This Warrant Certificate, the Warrants represented by this Warrant Certificate and the Warrant Indenture shall be governed by and performed, construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

This Warrant Certificate shall not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent for the time being under the Warrant Indenture.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be executed by its respective authorized officers as of this         day of                   , 201  .

CYNAPSUS THERAPEUTICS INC.
Per:
	Name:
	Title:
	Authorized Signing Officer

This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Indenture.

EQUITY FINANCIAL TRUST COMPANY
Per:
	Authorized Signing Officer
Date of Countersignature: ______________________

SUBSCRIPTION FORM

(FORM 1)

THE HOLDER HEREBY SUBSCRIBES FOR ___________ Common Shares of Cynapsus Therapeutics Inc. (the “Corporation”) at $12.96 (Canadian) per Common Share and on the other terms set out in the Warrant Certificate and Warrant Indenture and encloses herewith a certified cheque, bank draft or money order in Canadian dollars payable to “Cynapsus Therapeutics Inc.” in payment of the aggregate subscription price therefor.

The undersigned hereby irrevocably directs that the Common Shares be delivered, subject to the conditions set out in this certificate and the provisions of the Warrant Indenture, and that the said Common Shares be registered as follows:

Name(s) in Full and Social Insurance Number(s)	Address(es) (include postal code)	Number of Common Shares
	TOTAL:

Please print full name in which certificate(s) are to be issued. If any of the Common Shares are to be issued to a person or persons other than the Warrantholder, the Warrantholder must pay to the Warrant Agent all requisite taxes or other government charges, if any.

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

A. ¨ The undersigned holder (i) at the time of exercise of the Warrants is not in the United States and is not exercising the Warrants on behalf of a person in the United States; (ii) is not a “U.S. person” (a “U.S. Person”), as defined in Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and is not exercising the Warrants on behalf of a U.S. Person; and (iii) did not execute or deliver this exercise form in the United States.

B. ¨ The undersigned holder (i) purchased these Warrants directly from the Corporation pursuant to a written subscription agreement for the purchase of units (the “Units”), with each Unit comprised of one Common Share of the Corporation and one Warrant; (ii) is exercising these Warrants solely for its own account and not on behalf of any other person; (iii) was an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the 1933 Act, both on the date the Units were purchased from the Corporation and on the date of exercise of these Warrants and (iv) the other representations and warranties made by the undersigned holder at the time of the purchase of the Units remain true and correct.

C. ¨ The undersigned holder has delivered to the Corporation and Equity Financial Trust Company an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available.

Note: The undersigned holder understands that unless Box A above is checked, the certificate representing the Common Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available. Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked. If Box C is checked, any opinion or other evidence tendered must be in form and substance reasonably satisfactory to the Corporation. Holders planning to deliver an opinion of counsel or other evidence in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions or other evidence to be tendered will be acceptable to the Corporation.

DATED this __day of __________________, 201 ..

Signature of Warrantholder Signature Guaranteed*

Print Name and Address in full below:

Name
Address
	(Include Postal Code)

¨         Please check box if certificates representing the Common Shares are to be delivered at the office of the Warrant Agent where this Warrant Certificate is surrendered, failing which the certificates will be mailed to the address set forth above.

*The signature of the Warrantholder must be signature guaranteed by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words “signature guarantee”, or “signature medallion guaranteed” and otherwise be in accordance with industry standards.

FORM OF TRANSFER

(FORM 2)

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers the Warrants represented by this Warrant Certificate to:

Name
Address
	(Include Postal Code)

and hereby irrevocably constitutes and appoints

(leave this space blank)

as the attorney of the undersigned with full power of substitution to transfer the Warrants on the appropriate register of the Warrant Agent.

DATED this _____day of_________________, 20__.

Signature Guaranteed	Signature of Transferor
	Name of Transferor

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

1. The Warrant Indenture contains certain other requirements relating to the transfer of Warrants, including, among other things, a requirement in certain cases that a declaration to the effect set forth in Section 2.1(c) of the Warrant Indenture (or as the Corporation may otherwise prescribe from time to time) or, in other cases, as set out in Section 2.8(h), that a written opinion of U.S. counsel of recognized standing be delivered in connection with the transfer of Warrants by a U.S. Person or a Person in the United States or a Person holding Warrants for the account or benefit of a U.S. Person or a Person in the United States to a Person in the United States or for the account or benefit of a U.S. Person or a Person in the United States.

2. The signature of the transferor must correspond in every particular with the surname and the first name(s) or initials shown on the face of this certificate and the endorsement must be signature guaranteed, in either case, by a Canadian Schedule 1 chartered bank or a member of a recognized securities transfer agents medallion program (STAMP). The stamp affixed thereon by the guarantor must bear the actual words “signature guarantee”, or “signature medallion guaranteed” and otherwise be in accordance with industry standards.

EX-10.1

Exhibit 10.1

THIS LEASE made the 1st day of MAY , 2008.

IN PURSUANCE OF THE SHORT FORMS OF LEASES ACT.

BETWEEN:

RICHMOND WALNUT BUSINESS CENTRE INC.

a Corporation Incorporated under the laws

of the Province of Ontario

(hereinafter called the “Landlord”)

OF THE FIRST PART

-and-

CANNASAT THERAPEUTICS INC.

a Corporation Incorporated under the laws

of the Province of Ontario.

(hereinafter called the “Tenant”)

OF THE SECOND PART

WITNESSETH that in consideration of the rents hereby reserved and the covenants herein contained on the part of the Tenant, the Landlord hereby leases to the Tenant a portion of the land and building municipally known as 828 Richmond Street West, in the City of Toronto, Province of Ontario (the “Premises”) established at 3200 square feet of useable area together with use of the common area, being the ground level, as outlined in red on the floor plan attached as Schedule “A”.

TERM

TO HAVE AND TO HOLD the Premises for a term of THREE (3) YEARS from the 1st day of May, 2008, to and including the 30th day of April 2011 (the“Term”).

RENT

The Tenant paying therefore as the basic rent during the Term, an annual rental, exclusive of GST, of lawful money of Canada, payable in advance in equal monthly installments, on the lst day of each month commencing May 1st, 2008, as follows:

TERM	RENT  P.S.F.	MONTHLY	ANNUALLY
Year 1 to 3	$23.00	$6,133.33	$73,600.00

1. TENANT’S COVENANTS TO PAY RENT AND ADDITIONAL RENT

The Tenant covenants with the Landlord as follows:

Rent

To pay the rent in the manner herein provided without any abatement, deductions or set-off.

ADDITIONAL RENT

a) Goods and Services Tax

To pay Goods and Services Tax payable with respect to such rent and additional rent due under this Lease.

b) Tax Escalation

To pay its proportionate share of realty taxes escalation over the 2007 base year.

c) Additional Services

To pay cost of such other additional services as may be requested by Tenant.

Page 2

d) Other Taxes

In every year of the Term, to pay when due, any new business taxes or other taxes and assessments levied in respect of the occupancy of the Premises. Provided that should any of said taxes or additional levies, new taxes or assessment be added to realty taxes and/or charged to Landlord, the Tenant shall reimburse to Landlord and/or cause to be paid promptly to the extent and amount which shall proportionately be determined by Landlord acting reasonably to be the Tenant’s share.

e) Maintenance and Upkeep

The Tenant at its own expense will keep in good order and condition throughout the Term, the interior of the Premises and all fixtures and appurtenances located in the Premises. The Tenant will not commit or allow waste or injury to the Premises and will not use or occupy or permit to be used or occupied the Premises for an unlawful purpose, or in a manner that result sin the cancellation of insurance, or in the refusal of an insurer or issue insurance as requested. The Tenant, at all times, at its own expenses, will keep the hallways, stairs, areaways, and rights-of-way over or adjacent to the premises reasonably free from rubbish and will not encumber or obstruct them or allow them to be encumbered or obstructed in any manner; and will not injure or disfigure the land or the building or allow them to be injured or disfigured in any way and at the expiration or other termination of this Lease, the Tenant, accept as otherwise expressly provided in this Lease, will surrender and deliver up the Premises in good order and condition.

f) Insurance

Without in any way limiting the liability of the Tenant under this Lease, the Tenant covenants and agrees to obtain and keep in force:

i)          Comprehensive general liability insurance covering Tenant’s liability for bodily injury and property damage arising from its use and occupation of the Premises, including liability assumed under this Lease, with limits of not less than $2M inclusive of any one occurrence, or such other amount as the Landlord may from time to time reasonably require.

ii)          The above insurance shall be written by insurers licensed to do business in Canada and shall be in a form satisfactory to Landlord. The Landlord is to be included as a named Insured. The Tenant shall provide certified copies of the policies to the Landlord. The policies are to be endorsed to provide that in the event of any change in them which could affect the Landlord, or in the event of any change in their which could affect the Landlord, or in the event of their cancellation, the insurer will give notice by registered mail to the Landlord 30 days prior to the effective date of such change or cancellation. If the Tenant shall fail to purchase and maintain the insurance required herein, the Landlord shall be free to place such insurance and the cost shall be payable to the Landlord as additional rent payable on demand. However, this right shall not impose upon the Landlord an obligation to obtain such insurance.

g) Compliance with Laws

To comply promptly with and conform to the requirements of all applicable statutes, laws, by-laws, regulations, ordinances and orders at any time in force during the Term which affect the condition, equipment, maintenance, use or occupation of the Premises, and with every applicable regulation, order and requirement of the Canadian Fire Underwriters Association or any body having similar functions or of any liability or fire insurance company by which either the Landlord or the Tenant may be insured any time during the Term; PROVIDED that if the Tenant defaults under the provisions of this clause, the Landlord may itself comply with the requirements of this clause and the Tenant shall forthwith pay all costs and expenses incurred by the Landlord in so doing and all such costs and expenses incurred by the Landlord in so doing and all such cost and expenses shall be recoverable by the Landlord as additional rent.

Page 3

h) Notice of Damage

In the event of any substantial damage to the Premises by any cause, to give notice in writing thereof to the Landlord forthwith upon becoming aware of it.

i) Viewing Premises

To permit the Landlord at all reasonable times to enter upon view the state of repair of the Premises and to comply with all reasonable requirements of the Landlord with regard to the care, maintenance and repair thereon, to the extent that the Tenant is responsible under this Lease of such care, maintenance and repair. The Tenant further covenants and agrees that the Tenant will allow or permit the Landlord or its agents to show the Premises to prospective Mortgagees, Purchasers or Tenants, at all reasonable times upon twenty-four (24) hours notice being given to the Tenant.

j) Utilities

To pay in every year during the term hereof any excess of charges for water, gas, electric lights and power and other public utilities or services supplied to or used on the Premises caused due to wasteful or exaggerated usage over and above normal usage, and to indemnify the Landlord and the building and the Premises against all cost sand charges in respect thereof.

k) Heat

To Assure Premises are kept at such temperature as may be necessary to prevent damage thereto by frost.

l) Surrender of Premises at Termination of Lease

The Tenant will, at the expiration or sooner determination of the said term, peaceably surrender and yield up to the Landlord the Premises with the appurtenances, together with all leasehold improvements or erections which at any time during the said Term shall be made therein or thereon in good and substantial repair and condition, save and except for reasonable wear and tear. The Tenant shall leave the Premises neat, tidy, free and clear of all refuse, waste or other loose or objectionable materials, all of said work to be done to the reasonable satisfaction of the Landlord. If the Premises are not left neat, tidy and free and clear by the Tenant, then the Landlord may carry out such work as agent of and at the expense of the Tenant and the Tenant shall pay to the Landlord all costs and expenses incurred in so doing.

m) Use of Premises

The leased Premises shall be used by the Tenant for the purpose of an office

or studio and the Tenant shall not carry on or permit to be carried on any business or activity which shall be deemed by the Landlord upon reasonable grounds, to be illegal or a nuisance.

n) Payments Recoverable as Arrears of Rent

That whenever any amount by the terms of this Lease is payable by the Tenant to the Landlord, whether as additional rent or otherwise, such amount shall be recoverable by the Landlord in the same manner as if such amounts were rent in arrears under this Lease, and that the landlord shall be entitled to take any action therefor which it may be entitled to take in respect of rent in arrears under this Lease, and that if the Tenant fails to pay any sum required to be paid by it under the provisions of this Lease to any person, firm or corporation other than the landlord, the Landlord shall have the right to pay any such sum and to recover it as if it were rent in arrears under this Lease and the Landlord shall be entitled to take any action therefor which it may be entitled to take with respect to rent in arrears under this Lease.

Page 4

o) Assignment

That the Tenant shall not assign, sublet, share or part with the possession of the whole or any part of the Premises without the written leave of the Landlord, which leave may not be unreasonably withheld. In all cases, the Tenant shall remain jointly and severally liable under all covenants of this Lease.

p) Tenant’s Goods Free from Encumbrance

That the Tenant is the sole owner of all goods and chattels that are to be brought upon the Premises and that such goods and chattels are free from any mortgage, lien or other charge or encumbrance.

q) Waiver of Exemptions

That notwithstanding anything contained in The Landlord and Tenant Act, or any amendments thereto, none of the goods or chattels of the Tenant at any time on the Premises shall be exempt from levy by distress for rent in arrears as provided for by any section of the Act above named, and that upon any claim being made for such exemption by the Tenant or on distress made by the Landlord or in any action brought to test the rights to the levy of distress upon goods exempt by that Act, this covenant may be pleaded as an estoppel against the Tenant and the Tenant waives every benefit that might have accrued to it by virtue of that Act but for this covenant.

r) Tenant Responsible for Condition of Premises

That the Tenant will assume the sole responsibility of the operation and maintenance of the Premises, and that the Landlord shall be under no liability for injury to any servant, agent or employee of the Tenant or any sub-lessee, licensee or invitee of the Tenant or for loss of or damage to the property of the Tenant or of any of the aforementioned persons, save and except for gross negligence or willful misconduct of the Landlord.

s) Indemnity

To indemnify the Landlord against all liabilities, costs, fines, suits, claims, demands and actions and causes of action of any kind for which the Landlord may become liable by reason of any breach, violation or non-performance by the Tenant of any covenant, term or provision of this Lease, or any injury, death, or damage to property, occasioned to our suffered by any person or any property by reason of any act, neglect or default by the Tenant or is servants, employees, agents, sub-lessees, or licensees or invitees on the Premises.

t) No Liability on Landlord

That the Landlord shall not, in any event be liable or responsible in any way for any personal injury or death that may be suffered or sustained by, or for any loss of or damage or injury to any property, including cars and contents thereof, belonging to any employee, servant, agent, sub-lessee, licensee or invitee of the Tenant on the Premises no matter how caused, and in particular, and without restricting the generality of the foregoing, which may be caused or occasioned by steam, electricity, gas, fumes, vapour, water works water, rain water, other water, sleet, snow, ice, melted sleet, snow or ice, which may leak, issue or flow from the Premises or from any water, steam, sprinkler or drainage pipe or plumbing works situate in the Premises or which may be caused or occasioned or attributable to the condition or arrangement of any electrical or other wiring or caused or occasioned by snow or ice or other substances or obstructions on the sidewalks, driveways, roads, streets and grounds or caused or occasioned by the defective condition or lack of repair or disrepair thereof or by any defect in any machinery or equipment in the Premises or in the operation thereof by the Tenant or by any defects in

Page 5

or the disrepair or non-repair of the Premises and the Tenant shall indemnify the Landlord from and against all liabilities, claims, demands and causes of action of any nature or any expense for such injury, death, loss or damage as aforesaid, and maintain proper policies of insurance indemnifying the Landlord against damage or loss occasioned by the maintenance or operation of any steam or hot water boiler in the Premises in a reasonable amount; PROVIDED however that nothing herein contained shall require the Tenant to indemnify the Landlord against any claims, demands or actions for damages arising out the willful acts or misconduct of the Landlord, its officer, employees, servants or agents.

u) Signs

That the Tenant shall not erect on or affix to the Premises any sings other than those currently existing, except with the approval of the Landlord, which approval shall not be unreasonably withheld, and provided that all such signs comply with all local and municipal by-laws and regulations.

v) Post-Dated Cheques

The Tenant shall deliver to the Landlord at the beginning of each new Lease year, a series of six (6) postdated cheques in payment of Rent and Additional Rent.

2. LANDLORD’S WORK

The Landlord and Tenant acknowledge that Tenant is in possession of premises and shall continue to occupy same as existing.

3. POSSESSION AND OCCUPANCY

a) The Tenant has possession of the premises and is herein extending the Term of its Tenancy Agreement.

b) The Landlord will provide to the Tenant access and use of a concrete enclosed storage area (approximately 3ft x 6ft) located in the basement back area of 822 Richmond Street West, for the duration of this Lease, at no additional charge.

4. LANDLORD’S COVENANTS

The Landlord hereby covenants with the Tenant as follows:

a) Quiet Enjoyment

For quiet enjoyment.

b) Gross Lease

The Landlord shall pay for regular charges for hydro, gas, and water consumption as required for the Premises and furthermore to pay realty taxes that are levied against the Premises, and premiums for standard fire insurance required to keep insured the Premises against fire and other perils, subject to provisions contained in this Lease.

c) Repair, Maintain & Replace

The Landlord covenants and agrees to maintain and keep the Premises, including structure, plumbing, electrical, heating and air conditioner, roof and entranceway in good order and condition both inside and out, as they would be kept by a reasonable owner and to make all needed repairs and replacements, reasonable wear and tear only excepted.

If however the Landlord is required to maintain, repair or replace any part or element of the Premises by reason of negligent acts or omissions of the Tenant, or of those for whom the Tenant is at law responsible, the Landlord may add the costs of such repair, replacement and maintenance to the Rent, which Rent shall thereafter immediately become due.

Page 6

d) Parking

The Tenant shall have the exclusive use of Four (4) designated and marked parking spaces in the Landlord’s above grade lot at the rate of One Hundred ($100.00) Dollars per car per month, or One Thousand Two Hundred ($1,200.00) Dollars per car per annum, to be paid in advance on the first day of each month. It is understood and agreed between the parties hereto that the Landlord shall have no obligation to police the aforesaid parking spaces and further that the Landlord shall not be liable for any damages, losses or injuries sustained by the Tenant or any property owned by the Tenant if the same is damaged, lost or injured in one of the parking spaces and the Tenant hereby indemnifies the Landlord against any claims which may be brought against the Landlord arising out of the Tenant’s use of the parking spaces. The Tenant shall furnish to the Landlord, upon request, the current license plate numbers of all vehicles used by the Tenant and its employees which will be parked in the said parking spaces. No. 2, 3, 4, 5, plus 1 and 22 as permitted by City authorities.

5. PROVISOS

Provided always and it is hereby agreed as follows:

a) Lease Subordinate to Mortgages

This Lease and everything herein contained shall be deemed to be subordinate to any charge or charges from time to time created by the Landlord by mortgage or charge on the Premises and the Tenant shall promptly at any time as required by the Landlord execute all documents and give such further assurance as may be reasonably required to postpone its rights and privileges to the holder of any charge or mortgage. Landlord will use best efforts to obtain a non-disturbance agreement from mortgagee, if requested.

b) Removal of Fixtures

The Tenant may remove its fixtures; PROVIDED that any erection, addition, structure or improvement erected upon the Premises shall become a part thereof, shall not be removed and shall be subject to all of the provisions of this Lease. AND FURTHER PROVIDED that no such erection, addition, structure or improvement shall be erected upon the Premises without the prior written consent of the Landlord.

c) Insolvency of Tenant

If the term of any of the goods or chattels of the Tenant shall be at any time seized or taken in execution or in attachment by any creditor of the Tenant, or if a writ of execution shall be issued against the goods and chattels of the Tenant and remain unsatisfied for ten days, or if the Tenant shall execute any chattel, mortgage or bill of sale of any of its goods or chattels, other than a bill of sale of goods in the ordinary course of the Tenant’s business, or if the Tenant shall make any assignment for the benefit of creditors of any bulk sale or shall be adjudged bankrupt or insolvent by any court of competent jurisdiction under any legislation then in force of shall take the benefit of any Act that may be in force for bankrupt or insolvent debtors or shall attempt to abandon the Premises, or to sell or dispose of its goods and chattels so that there would not remain after such sale or disposal a sufficient distress on the Premises in the opinion of the Landlord for the then accruing rent, then the current month’s rent, together with the rent for the three months next ensuing and all additional rent and other sums payable

hereunder for the said three months next ensuing shall immediately become due and payable, and the term shall, at the option of the Landlord forthwith be determined and in each of the above cases such accelerated rent, additional rent and other amounts shall be recoverable by the Landlord as if it were rent in arrears.

d) Following of Tenant’s Goods

If the Tenant removes its goods and chattels from the Premises except in the ordinary course of business, the Landlord may follow then for thirty (30) days in the manner provided for in the Landlord and Tenant Act or other applicable legislation.

Page 7

e) Re-Entry for Non-Payment of Rent

The Landlord may re-enter the Premises for non-payment of rent.

f) Re-Entry for Non-Performance of Covenants

Notwithstanding anything herein contained to the contrary, if the Tenant shall fail to comply with any of its covenants hereunder, except the covenant to pay rent, the Landlord may give to the Tenant notice in writing stating the default with reasonably sufficient particulars and requiring it to be remedied, and if such default is not remedied by the Tenant within Ten (10) days after the receipt of such notice, or such longer period as may be reasonably necessary in view o the nature of the default, the Landlord at is option may either enter the Premises or any part thereof in the name of the whole and repossess them or take such steps as may be necessary to remedy and correct such default and recover its costs and expenses incurred in so doing from the Tenant as additional rent.

g) Further Rights of Re-Entry

If the Term should be seized or forfeited for any of the causes set forth in proviso (d) above, the Landlord shall have the right of re-entry given by proviso (f).

h) Holding Over

Should the Tenant remain in occupation of the Premises after the determination of the Term with the consent of the Landlord and without other special agreement, it shall be as a monthly tenant at a rental of Seven Thousand ($7,000.00) Dollars per month, payable in advance on the 1^st day of each and every month and subject in other respects to the terms of this Lease.

i) Condonation no Waiver of Subsequent Default

Any condoning, excusing or overlooking by the Landlord of any default, breach or non-performance by the Tenant at any time of any covenant, proviso or condition herein contained, shall not operate to waive the Landlord’s rights under this Lease in respect of any later default, breach or non-observance so as to defeat in any way the rights of the Landlord under this Lease on any such later default, breach or non-observance, and all rights and remedies of the Landlord shall be deemed to be cumulative, not alternative.

6. RENEWAL

Provided the Tenant has duly and regularly performed all of the covenants on its part to be performed in the Lease, and is not in default thereunder, the Tenant shall be entitled to renew the Lease for a further term of THREE (3) years under the same terms and conditions, provided it has given at least THREE (3) months written notice to the Landlord, but not more than SIX (6) months, save and except that there shall be no further right of renewal and save and except the rental rate which shall be agreed upon by both parties herein, failing which the rental shall be determined by arbitration in accordance with the Arbitration Act of Ontario.

7. RIGHT TO CANCEL LEASE

The Tenant shall have the option, at its election, to terminate this Lease at any time without penalty, provided that the Tenant shall give the Landlord written notice ONE HUNDRED AND EIGHTY (180) days prior to the effective date of such termination.

Page 8

8. SUCCESSORS AND COVENANTS

This Lease and anything herein contained shall extend to, bind and enure to the benefit of successors and assigns of each of the parties hereto subject tot he consent of the Landlord being obtained, as hreinbefore provided, to any assignment of sub-lease by the Tenant, and, where there is more than one Landlord or Tenant or where the Landlord or Tenant is a male, female or a corporation, the provisions herein shall be read with all grammatical changes thereby rendered necessary. All covenants herein contained thereby rendered necessary. All covenants herein contained shall be deemed joint and several and all right s and powers reserved to the Landlord may be exercised by either the Landlord or its agents or representatives.

This Lease and all provisions herein shall be construed in accordance with the laws of the Province of Ontario.

IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective hands and corporate seals under the hands of their duly authorized officers as of the date first above written.

W I T N E S S:

CANNASAT THERAPEUTICS INC.
Per:	/s/ David Hill
	a.s.o.	(Tenant)
RICHMOND WALNUT BUSINESS CENTRE INC.
Per:	/s/ Guy Ritchie
	a.s.o.	(Landlord)
Per:
	a.s.o.	(Landlord)

EX-10.2

Exhibit 10.2

THIS LEASE EXTENTION AGREEMENT made effective as of the 1st day of May 2014

B E T W E E N:

RICHMOND WALNUT BUSINESS CENTRE INC.

A Corporation Incorporated under the laws of the Province of Ontario

(hereinafter called the “Landlord”)

-and-

CYNAPSUS THERAPEUTICS INC.

A Corporation Incorporated under the laws of the Province of Ontario.

(hereinafter called the “Tenant”)

W H E R E A S:

1. By a Lease dated the 1^st day of May 2008 (the Original Lease), the landlord granted to the tenant the premises known as the Richmond Walnut Business Centre, located at 828 Richmond Street West, on the 2^nd floor, Suite 200, in the City of Toronto, comprising of 3,200 sq. ft. and more particularly described in the original lease (the premises) for a term of Three (3) Years from the 1^st day of May, 2008 and ending 30^th day of April, 2011.

2. Thereafter the Tenant and Landlord agreed with each other to extend said Lease for the premises for a further term of TWO (2) YEARS from 1^st day of May, 2011, and ending April 30^th, 2013 on month to month base at a rental based at $24.00psf and including the right for either Party to terminate such tenancy upon 3 months written notice and with all other terms remaining the same as set in original lease. The Tenant during such period changed their operating name to “CYNAPSUS THERAPEUTICS INC.”.

3. Tenant and Landlord agreed with each other to further extend said Lease for an additional term of ONE (1) Year from May 1^st, 2013 and ending April 30^th, 2014.

4. And Whereas the Tenant has now requested the Landlord to grant another extension of the Original Lease for the premises for a further TWO (2) YEARs from May 1^st, 2014 and ending April 30, 2016 and the Landlord has agreed to do so at the following terms.

NOW THEREFORE:

1. The Landlord hereby leases to the Tenant the premises subject to the payment of Rent, to be paid commencing May 1^st, 2014 on the first day of each and every month as follows:

RENT;

TERM	RENT P.S.F. 3200sf	MONTHLY	ANNUALLY
May 1/14 to April 30/16	$28.00	$7,466.67	$89,600.00

In addition thereon, two (2) Parking spaces are provided at a rental rate of One Hundred and twenty five Dollars ($125.00) per month for each space, which rental shall be paid by Tenant to the Landlord in addition and in the same manner and same time as Rent.

Tenant shall also retain right to use two additional parking space, provided necessary arrangements are made with City by the Tenant.

2. Tenant acknowledges that this Lease Extension Agreement, shall include a demolition clause in favor of Landlord, allowing said Landlord the option and right to demolish, alter and/or expand the Building and/or Property upon which the Premises are located, without any compensation whatsoever, provided the Landlord shall give to the Tenant a prior six (6) months written notice, delivered by electronics communications or personal delivery to the Tenant at the premises, confirming such intentions and date by which Tenant is required to vacate Premises.

3. The Landlord and Tenant hereby covenant that they shall perform and observe the covenants, provisos and stipulations in the “Original Lease” as fully as if such covenants, provisos and stipulations had been repeated in full, save for revised RENT, that Tenant shall have no further option for Renewal of this Lease and with such modifications only as are necessary to make them applicable herein.

4. This Renewal Agreement shall enure to the benefit of and be binding upon the parties hereto, the successors and assigns of the Landlord and the successors and assigns of the Tenant.

IN WITNESS WHEREOF the Landlord and Tenant have agreed to this Renewal Agreement and have hereunto affixed their respective signature.

SIGNED, SEALED & DELIVERED at Toronto this 21^st day of March 2014

	RICHMOND WALNUT BUSINESS CENTRE INC.
)
)
)	Per:	/s/ John Zingaro
)		a.s.o.	(Landlord)
)
)
)	CYNAPSUS THERAPEUTICS INC.
)
)
)	Per:	/s/ Andrew Williams
)		a.s.o.	(Tenant)

EX-10.3

Exhibit 10.3

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

Confidential

March 17, 2015

Thierry Bilbault, PhD

Chief Scientific Officer and Executive VP CMC

Cynapsus Therapeutics Inc.

828 Richmond St W

Toronto, Ontario, M6J 3P7

Canada

Parties: ARx, LLC and Cynapsus Therapeutics Inc.

ARx, LLC (“ARx”) and Cynapsus Therapeutics Inc. (“Cynapsus”) wish to set out the terms of their agreement with respect to the provision of services by ARx to Cynapsus related to the Product (as defined below) and certain related matters (the “Agreement”). In addition to the terms of the Agreement hereinafter set forth, the Parties intend to negotiate and execute a mutually satisfactory agreement with respect to the commercial supply of the Product (“CSA”) and certain key terms of the proposed CSA are also set out below.

The terms of the Agreement are as follows:

TERMS:

I. Product

Bi-Layer sublingual soluble film containing one apomorphine layer and one pyridoxine layer in various strengths for treatment of OFF episodes in Parkinson’s patients as set forth in the draft product specifications. (Exhibit A) (the “Product”)

II. Responsibilities

Pursuant to the Agreement, ARx shall provide: · formulation, chemistry, manufacturing and control (“CMC”) support and documentation, · clinical unit production and · mixing, coating, slitting, manufacturing and testing Pursuant to the future CSA, ARx shall provide: · commercial supply With respect to the Agreement, Cynapsus shall provide: · final release of all Product manufactured by ARx, · fulfillment of clinical requirements, · analytical method development, validation, testing, and stability studies, · management of patent filings with respect to Cynapsus-Owned Patents (as defined below); and, · fulfillment of regulatory requirements, correspondence and documentation provided in support of Product filing The items listed above with respect to the Agreement are defined as the “Responsibilities”. Specific program activities and associated Responsibilities will be defined in mutually agreed upon Work Plans (“WP”), a template WP being attached to the Agreement as Exhibit B. In each WP, Cynapsus and ARx shall agree upon project scope, specifications, deliverables, price and timelines for the Responsibilities.

ARx Confidential 1

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

III. Work Plan Terms

Each Party shall execute their respective Responsibilities according to the WP, associated deliverables, and in accordance with applicable laws and regulatory requirements. ARx shall be the sole partner for formulation and process development activities for the Product during the term of the Agreement, unless otherwise agreed to by Parties in writing. Unless otherwise agreed by the Parties in a WP, if either Party reasonably believes that it cannot meet its obligations under a WP, it shall provide the other Party written notice of such inability as soon as it determines that it cannot meet such obligations. Failure to provide such notice shall be considered a material breach of the Agreement. In consideration of meeting the deliverable for the performance of the Responsibilities with respect to an individual WP, ARx will invoice Cynapsus in accordance with the deliverable specified in the WP and the terms and conditions specified in this Agreement.

IV. Term and Termination

The initial term of the Agreement shall begin on the effective date and continue for 5 years. Thereafter the Agreement shall automatically renew for successive one (1) year periods. The following Sections shall survive the termination of this Agreement: V. Future Commercial Supply, VI. Intellectual Property, XI. Indemnification XII. Insurance and XIII: Assignment. Convenience. At any time, a Party may terminate this Agreement effective upon one hundred and eighty (180) days prior written notice to the other Party. Material Breach. Either Party may terminate this Agreement effective upon sixty (60) days prior written notice to the other Party, if the other Party commits a material breach of this Agreement and fails to cure such breach by the end of such sixty (60) day period. Bankruptcy, etc. Either Party may terminate this Agreement effective upon written notice to the other Party, if the other Party becomes insolvent or admits in writing its inability to pay its debts as they become due, files a petition for bankruptcy, makes an assignment for the benefit of its creditors or has a receiver, trustee or other court officer appointed for its properties or assets. Consequences. Unless otherwise agreed to, upon termination of this Agreement in accordance with this Article IV, ARx will be reimbursed for all costs reasonably incurred to the date notice of termination, such reimbursement not to exceed the total estimated WP price specified in the relevant WP. At the same time, the Parties may also agree upon other matters with respect to the termination of the Agreement.

ARx Confidential 2

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

V. Future Commercial Supply The Parties anticipate entering into a CSA with respect to the United States of America (“Territory”), prior to Product filing with respect to U.S. Food and Drug Administration (“FDA”). The CSA shall contain the following material provisions and other terms and conditions typically included in commercial supply agreements with respect to pharmaceutical products.   ARx shall be the majority supplier of Product during the term of the CSA in the Territory, unless otherwise agreed to by the Parties in writing. Majority Supply shall be defined as [*****] % of demand or higher (“Majority Supply”).   As required by good commercial and supply practice, Cynapsus shall qualify a secondary supplier of the Product for contingency purposes (“Contingency Supplier”) in the Territory that shall be acceptable to ARx, acting reasonably. To enable the Contingency Supplier to successfully produce the Product, Cynapsus may request ARx’s technical transfer assistance for a mutually agreed upon cost. Continuing services provided by ARx to the Contingency Supplier with respect to the supply of the Product in the Territory shall be further defined in the CSA.   ARx shall have an option to provide to Cynapsus services in the Territory with respect to [*****] in connection with the Product (“Additional Services”), provided that (a) ARx has the regulatory authority and commercial capability to provide such Additional Services, in the opinion of Cynapsus, acting reasonably, and (b) the Additional Services that are offered are offered to Cynapsus on financial terms and conditions no less favorable than any other third party from which Cynapsus shall have solicited competing bids. In the event that ARx shall satisfy the conditions set out in the preceding sentence, the Parties shall negotiate in good faith such agreement(s) on commercially reasonable terms with respect to the Additional Services similar to those terms set forth in the CSA, to the extent relevant.   In the event that ARx shall obtain required regulatory approvals to manufacture the Product in one or more markets outside of the Territory and Cynapsus shall have decided to enter one or more such markets outside of the Territory, ARx shall be invited by Cynapsus to bid for the right to supply the Product in such market(s). Notwithstanding the above, Cynapsus shall retain the sole discretion to select one or more suppliers of the Product in markets outside of the Territory.   In consideration for the clarification of the intellectual property rights described in Section VI, Cynapsus, its successors and assigns shall pay to ARx [*****] % of the invoiced cost incurred by Cynapsus with respect to the manufacture of the Product, less the costs of the related active pharmaceutical ingredient and packaging, in the Territory by Contingency Supplier, or any other party outside of the Territory.   For as long as the CSA remains in force and the terms of this Article V are satisfied, ARx will not manufacture any apomorphine sublingual thin film generic Product applications in the Territory. Any additional exclusivity terms will be negotiated as part of the CSA.

ARx Confidential 3

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

VI. Intellectual Property	All rights, title, and interest to intellectual property, know how, trade secrets and data related to the Product are herein assigned and will be assigned as follows: (a) ARx shall assign and herein assigns to Cynapsus all rights, title, and interest to U.S. Patent Nos. 8,414,922 and 8,846,074 and their U.S. and foreign counterparts (“Cynapsus – Owned Patents”). A confirmatory assignment assigning ARx’s rights to Cynapsus – Owned Patents is attached to the Agreement as Exhibit C. (b) Cynapsus shall and herein grants ARx a non-exclusive, royalty- free, license to Cynapsus-Owned Patents in all fields, other than apomorphine sublingual thin film generic Product applications. (c) Cynapsus owns all Product-related formulation and process know how, trade secrets and data generated pursuant to the Agreement /WPs (“Agreement-IP”). (d) Cynapsus shall and herein grants ARx an exclusive, royalty-free, license to Agreement IP, in all fields, in respect of other products and formulations. As contemplated in V. Future Commercial Supply, ARx shall facilitate the transfer of the Agreement IP to the Contingent Supplier. (f) Product Filings: solely owned by Cynapsus.
VII. Confidentiality	The Parties shall enter into an updated CDA consistent with the nature and scope of the Agreement.
VIII. ARx GMP Facilities	ARx shall be responsible for maintaining facilities within which (i) materials for human clinical evaluation and related stability studies are manufactured, analyzed, and/or stored, and/or (ii) material, data or other information for inclusion in a regulatory filing is generated, according to cGMP requirements and applicable FDA laws.
IX. Quality Agreement	The Parties shall execute a Quality Agreement prior to Phase III Clinical Studies.
X. Representations & Warranties	Both Parties represent and warrant to the other that it has the experience, capability and resources to fulfill the Responsibilities and that the Responsibilities shall be performed in a workmanlike manner with professional diligence and skill and in conformance with applicable specifications or requirements as set forth in the Agreement or the WP(s). Both Parties represent and warrant to the other that the execution, delivery and performance of this Agreement have been authorized by all necessary corporate action, do not conflict with or result in a material breach of the articles of incorporation or by-laws of such Party or any material agreement by which such Party is bound, or any law, regulation or decree of any governmental entity or court that has jurisdiction over such Party. Both Parties represent and warrant to the other that it is not now nor has in the past been suspended, debarred, disqualified, restricted or excluded or proposed for suspension, debarment, disqualification, restriction or exclusion under applicable laws. Neither Party has never been convicted of a felony under U.S. federal law for conduct relating to the development or approval of a drug product and/or relating to a drug product; and representatives who perform Responsibilities under this Agreement on behalf of the Parties are not now nor have in the past been suspended, debarred, disqualified, restricted or excluded or proposed for suspension, debarment, disqualification, restriction or exclusion under applicable laws. Both Parties warrant that it and its representatives shall comply with all applicable laws during the term of and in the performance of the Agreement, and that both Parties’ actions in establishing and performing the Agreement have been and will be consistent with ethical business practices and without the influence of any association with any respective employee, officer or director that would amount to a conflict of interest. Both Parties represent that it is not a party to any existing agreement that would prevent it from entering into and performing this Agreement or any WP. Both Parties will not enter into any other agreement that is in conflict with its obligations under the Agreement.

ARx Confidential 4

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

XI. Indemnification

ARx: While this agreement is in place and for 2 years after the sale of the last ARx produced Product, except to the extent that it is proximately caused by the gross negligence, or intentional misconduct in the performance of its obligations under the Agreement by Cynapsus, ARx shall defend, indemnify and hold harmless Cynapsus and its officers, directors, employees, successors and assigns from and against any liabilities, claims, suits, actions, loss, damage, cost or expense (including reasonable attorneys’ fees and expenses) (“Loss”) arising from any third party claim, demand, assessment, action, suit or proceeding (“Claim”) arising from personal injury and/or death and/or loss of and/or damage to property as a result of ARx’s gross negligence or intentional misconduct in the performance of its obligations under the Agreement; provided, however, that ARx’s liability hereunder shall not exceed [*****] and, provided further, that ARx shall not provide an indemnity for infringement of any patent, copyright, trademark, trade secret or other intellectual property rights. Cynapsus: While this Agreement is in place and for 2 years after the sale of the last Product sold by Cynapsus, except to the extent that it is proximately caused by the gross negligence, or intentional misconduct in the performance of its obligations under the Agreement by ARx, Cynapsus shall defend, indemnify and hold harmless ARx and its officers, directors, employees, successors and assigns from and against any Loss relating to the Product or arising from the performance of its obligations under this Agreement. For greater certainty, the obligations of Cynapsus under this paragraph do extend to defending, indemnifying and holding harmless ARx and its officers, directors, employees, successors and assigns from and against any Loss or any Claim related to any infringing by ARx of a 3rd party patent related to its method of making Cynpasus’ Product.

XII. Insurance

While this Agreement is in place and for 2 years after the expiration date of the last unit of Product sold by Cynapsus, Cynapsus shall maintain in full force and effect the following insurance coverage: (i) products liability; (ii) contractual liability; and (iii) clinical trials insurance (including coverage for any negligence on the part of Cynapsus in the conduct of any clinical trials as well as for any defects or negligence in the design of the clinical trial process). Insurance coverage for each of the foregoing subsections (i), (ii) and (iii) shall be in the minimum amount of [*****] per occurrence with an annual aggregate amount of [*****]. ARx shall be named as an additional insured and the policy/ies shall be endorsed to provide that Cynapsus has assumed the liability set forth above. The policy/ies shall also provide for at least 30 days’ notice to ARx of cancellation or nonrenewal. Cynapsus will provide ARx with a copy of a certificate of insurance related to such policy/ies upon execution of the Agreement. While this Agreement is in place and for 2 years after the expiration date of the last unit of Product manufactured by ARx, ARx shall maintain in full force and effect the following insurance coverage for products liability. Insurance coverage for the foregoing shall be in the minimum amount of [*****] per occurrence with an annual aggregate amount of [*****]. The policy/ies shall also provide for at least 30 days’ notice to Cynapsus of cancellation or nonrenewal. ARx will provide Cynapsus with a copy of a certificate of insurance related to such policy/ies upon execution of the Agreement.

ARx Confidential 5

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

XIII. Assignment	Cynapsus may assign its rights and obligations under the Agreement, with written notice to ARx, provided that the terms and conditions of this Agreement shall be binding upon any assignee. ARx may not assign its rights and obligations under the Agreement, unless given written consent by Cynapsus. The terms of this Agreement shall be binding upon its successors and assigns.
XIV. Agreement Supersedes	The terms of the Agreement and WPs related hereto constitute the entire agreement between the Parties and will supersede the terms of the current agreement/agreements between ARx and Cynapsus, including WPs, whether oral or written, except for the CDA noted above.

Please indicate your acceptance and approval of the terms set forth above by signing and returning a copy of this letter.

Sincerely,

/s/ Tadgh Prendeville March 17, 2015

General Manager- ARx, LLC.

Cc: M. Greth (ARx)

CYNAPSUS ACCEPTANCE OF FOREGOING AGREEMENT:

Printed Name: Cynapsus Therapeutics Inc.

Title:	President and CEO
Signature:	/s/ Anthony Giovinazzo	Date:	April 6, 2015

ARx Confidential 6

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

EXHIBIT A – PRODUCT SPECIFICATIONS

Product Specification: APL-130277

Product Name: APL-130277

Active Pharmaceutical Ingredient: Apomorphine Hydrochloride USP

Dosage Form: Sublingual Thin Film

Description:

APL-130277 is a bilayer strip with one layer containing the active ingredient, apomorphine hydrochloride; and the other layer containing a buffer.

Dosage units of 10, 15, 20, 25, and 30 mg are achieved from a single formulation by cutting different sized rectangular strips from sheets of bulk film:

Apomorphine Hydrochloride Loading (mg)	Length (mm)	Width (mm)	Area (mm2)
10	[*****]	[*****]	[*****]
15	[*****]	[*****]	[*****]
20	[*****]	[*****]	[*****]
25	[*****]	[*****]	[*****]
30	[*****]	[*****]	[*****]

Proposed Indication:

On-demand management of “OFF” episodes in patients with Parkinson’s Disease.

Route of Administration: Sublingual

ARx Confidential 7

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

Proposed dose Range: 10, 15, 20, 25, and 30 mg APL-130277 per dose. Additional doses can be

provided based on multiple strips administration (eg 2x20 mg strips for 40 mg dose etc..)

Bulk Release Specifications (ARx Specifications):

Bulk Apomorphine HCl Hemihydrate / pH Regulating Oral Dissolvable Bulk and Coated Film AC-93133

Coated Film Test	Acceptance Criteria
Residual Solvents	[*****] [*****]
Assay - Apomorphine	[*****]
Related Substances	[*****]
Bulk Uniformity	[*****] [*****] [*****] [*****]
pH	[*****]
Appearance	[*****]
Karl Fischer	[*****]
Water Activity	[*****]

ARx Confidential 8

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

General Drug Release Specifications:

Test	Acceptance Criteria	Analytical Procedure Type
Appearance	[*****] [*****]	[*****]
Identity	[*****] [*****] [*****]	[*****]
Assay	[*****]	[*****]
Specified Degradation Products Unspecified Degradation Product Total Impurities	[*****] [*****] [*****] [*****]	[*****]
Content Uniformity	[*****]	[*****]
Disintegration	[*****]	[*****]
pH	[*****]	[*****] [*****]
Water Content	[*****]	[*****]
Bioburden	[*****] [*****] [*****] [*****]	[*****] [*****] [*****]

ARx Confidential 9

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

EXHIBIT B – TEMPLATE WORK PLAN 

Work Plan

CYNAPSUS THERAPEUTICS INC. (“Cynapsus”) and ARx, LLC (“ARx”) have entered into an Agreement dated March __, 2015 (the “Agreement”). Cynapsus and ARx enter into this Work Plan and Terms of Work as of , 20__ pursuant to Section 2 of the Agreement (“WP”). Except as modified by this WP, the terms and conditions of the Agreement are incorporated herein by reference and shall govern the performance of the duties of the Parties under this WP. Capitalized terms used herein and not otherwise defined are used as defined in the Agreement. In the event of any inconsistency between this WP and the Agreement, the terms of the Agreement shall govern.

PRODUCT DESCRIPTION: Bi-Layer sublingual soluble film containing one apomorphine layer and one pyridoxinelayer in various strengths for treatment of OFF episodes in Parkinson’s patients as set forth in the draft product specifications.

Project Name: Chill

Quotation Number______________

MAJOR EVENTS:

Key Activities & Responsibilities Chart

Major Events	Timing	Comments
I.
II.
III.

ARx Confidential 10

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

Event Details	Responsibilities
	Client or Other	ARx
I.
Objective:		Materials:
Activities:	Materials:	Testing: Mix:
Batch Size:	Testing:	Bi-Layer:
Deliverables:	Bi-Layer:
Invoicing:		Documentation: GMP  Batch Record Data Summary
II.
Objective:	Materials:	Materials:
Activities:	Testing:	Testing: Mix:
Batch Size:	Mix:	Apo Layer:

ARx Confidential 11

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

Event Details	Responsibilities
	Client or Other	ARx
Deliverables:	Apo Layer:	Bi-Layer:
Invoicing:	Bi-Layer	Documentation: GMP  Batch Record Data Summary
III.
Objective:	Materials:	Materials:
Activities:	Testing:	Testing: Mix:
Batch Size:	Mix:	Apo Layer:
Deliverables:	Apo Layer:	Bi-Layer:
Invoicing:	Bi-Layer	Documentation: GMP Batch Record Data Summary
Event Details	Responsibilities
	Cynapsus or Other	ARx
IV. TOTAL

Please indicate your acceptance and approval of the WP set forth above by signing and returning a copy of this letter.

Sincerely,

Business Manager- ARx, LLC.

Cc: J. Lind (ARx), B. Lucabaugh (ARx)

CYNAPSUS ACCEPTANCE OF FOREGOING WORK PLAN SCOPE, RESPONSIBILITIES, TERMS, AND COST:

Printed Name:	Anthony Giovinazzo
Title:	President and CEO
Signature:	/s/ Anthony Giovinazzo
Date:	April 6, 2015

ARx Confidential 12

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

EXHIBIT C – CONFIRMATORY ASSIGNMENT

CONFIRMATORY ASSIGNMENT

WHEREAS, I/We,

ARx, LLC

400 Seaks Run Road

Glen Rock, PA, 17327

USA

(referred to as “ASSIGNOR”), has right, title and interest in:

SUBLINGUAL FILMS

for which the following patent applications were filed:

Title	Serial No.	Territory
SUBLINGUAL FILMS	U.S.S.N. 13/445,656, Granted as US Pat. No. 8,414,922	United States	Granted
	U.S.S.N. 13/858,638 Granted as US Pat. No. 8,846,074	United States	Granted
	U.S.S.N. 14/478,975 Filed 09/05/14	United States	Pending

ARx Confidential 13

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

SUBLINGUAL FILMS Corresponding international applications based upon PCT/US2011/65665, Filed 12/16/11 PCT Publication No.  WO/2012/083269	Australia Appl. No. AU2011343429	Australia	Pending
	Brazil Appl. No. BR112013015204-4	Brazil	Pending
	Canada Appl. No. CA2821756	Canada	Pending
	China Appl. No. CN 103476372	China	Pending
	Hong Kong Appl. No. 14106298.0	Hong Kong	Pending
	Europe Appl. No. EP11848299.1	Europe	Pending
	Eurasia Appl. No. EA201390855	Eurasia	Pending
	Indonesia Appl. No. W00201303084	Indonesia	Pending
	India Appl. No. 6289/DELNP/2013	India	Pending
	Israel Appl. No. IL226962	Israel	Pending
	Japan Appl. No. JP2013-544855	Japan	Pending
	Mexico Appl. No. MX/a/2013/006911	Mexico	Pending
	New Zealand Appl. No. NZ612686	New Zealand	Pending
	South Africa Appl. No. ZA2013/04740	South Africa	Pending
	South Korea Appl. No. 2013-7018648	South Korea	Pending

and for which future applications may be filed, (collectively referred to as the “Application”),

and whereas

CYNAPSUS THERAPEUTICS, INC.

828 RICHMOND ST W

TORONTO, ON M6J 3P7

CANADA

ARx Confidential 14

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

(“ASSIGNEE”) desires to purchase all of ASSIGNOR’s rights in same;

NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good and valuable considerations paid by the said ASSIGNEE, the receipt and sufficiency of which are hereby acknowledged, ASSIGNOR has and by these presents does hereby sell, assign, transfer and convey unto said ASSIGNEE all of ASSIGNOR’s rights, title, and interest in and to said Application, including in and to any conventional, division, continuation, continuation-in-part, substitution, reissue, renewal, re-exam, continued prosecution application (“CPA”), or request for continued examination (“RCE”) thereof, and in and to all inventions, (herein collectively referred to as “Related U.S. Applications”), preparatory to obtaining Letters Patent of the United States therefore; and ASSIGNOR hereby requests the Commissioner of Patents and Trademarks to issue any and all Letters Patent of the United States resulting from said Application and Related U.S. Applications, to ASSIGNEE, for its interest and for the sole use and benefit of ASSIGNEE and its assigns and legal representatives.

For the same consideration, ASSIGNOR, by these presents does sell, assign, and transfer to ASSIGNEE all of ASSIGNOR’s rights, title and interest in and to any foreign and international applications related to and/or seeking benefit of said Application and Related U.S. Applications, and in and to all inventions (herein collectively referred to as “Related Foreign Applications”), in and to any Letters Patent and similar protective rights granted on said Related Foreign Applications, and in and to the right to claim any applicable priority rights arising from or required for said Related Foreign Applications under the terms of any applicable conventions, treaties, statutes, or regulations, said Related Foreign Applications to be filed and issued in the name of ASSIGNEE or its designee, insofar as permitted by applicable law.

For the same consideration, ASSIGNOR agrees, but at ASSIGNEE’S expense, to sign all lawful papers, execute said Application, Related U.S. Applications and Related Foreign Applications, make all assignments and rightful oaths, assist in prosecution of said Application, Related U.S. Applications and Related Foreign Applications, assist in prosecution of legal proceedings, and generally do everything reasonably possible to aid ASSIGNEE its successors, assigns, and nominees, to obtain and enforce proper protection for all said inventions in all countries throughout the world.

AND, for the same consideration, ASSIGNOR also hereby sells, assigns and transfers unto ASSIGNEE all of ASSIGNOR’s rights and claims to sue for damages and other remedies with respect to any and all past infringement of all said Application, Related U.S. Applications, and Related Foreign Applications, including said inventions which may have occurred before the date of this Assignment.

ARx Confidential 15

Portions herein identified by [*****] have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

Project Name: Chill

SIGNED this 20th day of March, 2015:
Tadgh Prendeville: General Manager, ARx, LLC	/s/ Tadgh Prendeville
Name	Signature
SIGNED this 20th day of March, 2015:
Anthony Giovinazzo, President and CEO	/s/ Anthony Giovinazzo
Name	Signature

ARx Confidential 16

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 13^th day of May, 2015.

BETWEEN:

CYNAPSUS THERAPEUTICS INC.

(hereinafter called “Cynapsus”)

- and -

ANTHONY GIOVINAZZO

(hereinafter called the “Executive”)

WHEREAS Cynapsus is developing a sublingual thin filmstrip for the acute rescue of OFF motor symptoms of Parkinson’s disease;

AND WHEREAS Cynapsus and the Executive entered into a consulting and advisory agreement dated as of November 16, 2009 (the “Consulting Agreement”);

AND WHEREAS the Consulting Agreement was superseded by an employment agreement dated as of January 1, 2012 between Cynapsus and the Executive, as amended on January 1, 2015;

AND WHEREAS Cynapsus and the Executive have agreed to further amend the terms of the employment relationship.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:

Article 1 - DUTIES

1.1                        The Executive will continue to be the President and Chief Executive Officer of Cynapsus and to exercise all of the duties and responsibilities of such office and to perform such other services as the board of directors of Cynapsus (the “Board”) may reasonably request the Executive from time to time. The duties of the Executive shall include, but are not limited to, ongoing management of the business, corporate strategy, finance, investor and board relations, merger and acquisition activities and the oversight of the continued development of Cynapsus’ drug candidate, APL-130277. In addition, the Executive shall serve in such other capacities, perform such other duties and exercise such other powers consistent with such activities as may from time to time be assigned to or vested in him by the Board.

1.2                        During his employment hereunder, the Executive shall devote his full time and attention to the business and affairs of Cynapsus and shall well and faithfully serve Cynapsus and use his best efforts to promote the interests and goodwill of Cynapsus. This does not preclude the Executive from investing in private investment opportunities, it being understood that such opportunities will take immaterial time commitment, and provided that such opportunities are not competitive with or suppliers to Cynapsus.

1.3                        The Executive hereby confirms his employment with Cynapsus on the terms and conditions set forth in this Agreement.

Article 2 - TERM

2.1                        The parties acknowledge that the Executive has already commenced employment with Cynapsus and that such employment shall continue for an indefinite term until terminated in accordance with the provisions of this Agreement.

Article 3 - COMPENSATION

3.1                        For the performance of his services hereunder and commencing on January 1, 2015, the Executive shall be paid:

(a)          A base salary (the “Base Salary”) of $350,000 per annum, less statutory withholdings, payable to the Executive in equal instalments on those dates on which Cynapsus normally makes salary payments to its employees and in accordance with Cynapsus’ regular practices in that regard.

(b)          A discretionary bonus (the “Annual Bonus”), as determined by the Board, for each year of the Executive’s employment hereunder, in an amount of 50% of the Base Salary, based on the achievement of agreed-upon corporate objectives. The Annual Bonus may be increased to up to 75% of the Base Salary, as determined by the Board, based on an overachievement of goals. The Annual Bonus shall be based on criteria to be approved by the Board, and relayed to the Executive, which criteria shall reflect the annual corporate goals of Cynapsus and the role of the Executive in attaining such goals.

3.2                        The Executive shall be entitled to annual reviews of his Base Salary and Annual Bonus or any changes to the bonus plan or other forms of compensation paid or granted to the Executive by Cynapsus as may be determined from time to time by the Board. The Base Salary will take into account the prevailing market conditions and comparative base salaries as well as changes in Cynapsus’ financial conditions, market capitalization, growth and corporate size however measured.

3.3                         The Executive may be granted options to acquire common shares in the capital of Cynapsus at the discretion of the Board and pursuant to the terms and conditions of Cynapsus’ stock option plan (the “Plan”). Upon a Change of Control (as defined below) of Cynapsus all stock options will vest immediately upon approval by the Board.

- 2 -

Article 4 - EXPENSES

4.1                        It is understood and agreed that the Executive will incur expenses in connection with performing his duties hereunder. Cynapsus will reimburse the Executive for all expenses reasonably and properly incurred by the Executive on behalf of Cynapsus provided that the Executive provides to Cynapsus receipts acceptable to Cynapsus within a reasonable period after they have been incurred. All expenses shall be incurred in accordance with agreed corporate policies and budgets.

Article 5 - BENEFITS

5.1 During the period of the employment of the Executive hereunder:

(a)          The Executive shall be entitled to five weeks’ vacation per year to be taken at such times and for such durations as are acceptable to Cynapsus and the Executive. Up to two weeks’ vacation which if not taken in any year may be taken in any subsequent year or the Executive shall be entitled to such vacation pay as may be required pursuant to the Employment Standards Act, 2000 (Ontario).

(b)          The Executive shall be eligible to participate in the group insurance and benefit plan provided to all senior executives of Cynapsus, to the extent he qualifies for such benefits. The Executive’s insurance and benefit entitlements shall be subject to and governed by the terms and conditions of the plan, as amended from time to time.

(c)          The Executive shall be entitled, at the cost of Cynapsus, to the additional benefits set out in Schedule “A” hereto.

Article 6 - TERM AND TERMINATION

6.1 Termination with Cause

(a)          Cynapsus shall be entitled, in its sole discretion, to terminate the employment of the Executive hereunder, without notice or payment in lieu of notice, for Cause (as hereinafter defined). Cynapsus shall have no obligation to the Executive after the effective date of termination pursuant to this Section 6.1 except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid in accordance with any benefit plan prior to the date of termination. The Executive shall not be entitled to receive any bonus in the event of termination pursuant to this Section 6.1.

- 3 -

(b) For the purposes hereof, “Cause” shall mean:

(i) the continued or habitual failure by the Executive to substantially perform his duties according to the terms of his employment hereunder (other than resulting from the Executive’s Disability (as hereinafter defined), after Cynapsus has given the Executive reasonable written notice of such failure and a reasonable opportunity to correct the failure and the Executive fails to substantially remedy the failure;

(ii) the Executive hereinafter does (or causes or permits to be done) or hereinafter omits (or causes or permits to be omitted) any act or thing that is materially or significantly harmful or injurious to Cynapsus or any of its affiliates, monetarily or otherwise;

(iii) the Executive hereinafter engages in any criminal act of dishonesty, or any reprehensible behaviour or activity, that could have an adverse effect, either directly or indirectly, on Cynapsus; or

(iv) any regulatory sanction that precludes the Executive from fulfilling his duties under this Agreement.

6.2 Termination by Cynapsus without Cause

(a)          Except as otherwise provided, Cynapsus shall be entitled in its sole discretion to terminate this Agreement at any time upon 18 months’ notice to the Executive, or payment in lieu of notice.

(b)          Upon termination by Cynapsus in accordance with this Section 6.2, Cynapsus shall provide the Executive with written notice or payment in lieu thereof and an amount equal to the average of the Annual Bonus paid to the Executive in each of the three most recent completed financial years of Cynapsus, divided by 12 and multiplied by 18 (the “Deemed Annual Bonus”), together with all amounts which the Executive would have been entitled to during such period and a continuation of: (i) benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws; and (ii) the benefits set out in Schedule “A” for a period of 18 months. Cynapsus shall pay the amount equal to the 18 months of Base Salary on its regular payroll dates or in a lump sum as of the effective date of termination.

- 4 -

6.3 Termination by the Executive

(a)          The Executive shall be entitled in his sole discretion to terminate this Agreement for any reason whatsoever at any time upon 60 days’ prior written notice to Cynapsus.

(b)          Upon termination by the Executive in accordance with this Section 6.3, Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination, the Deemed Annual Bonus and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan and as set out in Schedule “A”.

6.4 Termination by either Party

(a) Either party shall have the right to terminate this Agreement:

(i) if the other party breaches a term of this Agreement and such breach is not cured within 10 days after the date of written notice; or

(ii) if the other party files an assignment in bankruptcy or a proposal under the Bankruptcy and Insolvency Act (Canada) or if a petition in bankruptcy is filed or presented against the other party under the Bankruptcy and Insolvency Act (Canada) or comparable legislation and such petition is not discharged within 90 days, or if a receiver is appointed for all or substantially all of the assets or property of the other party and such appointment is not contested and the receiver discharged within 30 days.

(b)          In the event of termination by the Executive in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall pay to the Executive a lump sum equal to 18 months of Base Salary and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of: (i) benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws; and (ii) the benefits set out in Schedule “A” for a period of 18 months.

(c)          In the event of termination by Cynapsus in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan. The Executive shall not be entitled to receive any bonus in the event of termination by Cynapsus pursuant to Section 6.4(a)(i) or 6.4(a)(ii).

- 5 -

6.5 Change of Control

(a)          Upon a Change of Control (as defined below) and for a period of nine months thereafter, in the event of termination of this Agreement by Cynapsus, or the purchaser or other third party, as the case may be, other than for Cause, or by the Executive for Good Reason (as defined below), Cynapsus, or the purchaser or other third party, as the case may be, shall pay to the Executive a lump sum equal to 18 months of Base Salary and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation during such period of: (i) benefits coverage in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws; and (ii) the benefits set out in Schedule “A” in accordance with the terms of any applicable benefit plan then in place and applicable laws.

(b) For the purposes hereof, “Change of Control” shall mean:

(i) a reorganization, amalgamation or merger, or a plan of arrangement in connection with any of the foregoing, with respect to which all or substantially all of the persons who were the beneficial owners of the then outstanding voting shares of Cynapsus (“Shares”) immediately prior to such transaction do not, following such transaction, beneficially own, directly or indirectly, more than 50 percent of the resulting voting shares;

(ii) the acquisition of Shares by a person or group of persons acting in concert as a result of which the acquiror beneficially owns, directly or indirectly, 50 percent or more of the Shares then outstanding; or

(iii) the sale to a third party of all or substantially all of the assets of Cynapsus.

(c)          For the purposes hereof, “Good Reason” shall mean an adverse material change to the terms and conditions of the Executive’s employment including, but not limited to:

(i) removal from, or re-assignment of, the Executive’s position as set forth in Section 1.1 without the agreement of the Executive;

(ii) a substantive change in the Executive’s duties as described in Section 1.1 without the agreement of the Executive;

(iii) a change in the Executive’s reporting relationships, the result of such change not having a reasonable remedy;

(iv) relocation of the Executive to a location that is more than 60 kilometres from Toronto, Ontario without the agreement of the Executive; or

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(v) a breach by Cynapsus, or the purchaser or other third party, as the case may be, of Section 6.4(a) hereof which is not cured or remedied within the applicable time periods set forth therein.

6.6 Termination for Death or Disability

(a)          In the event of the Executive’s death then this Agreement shall immediately terminate. In the event of the Disability (as hereinafter defined) of the Executive, Cynapsus shall have the right to terminate this Agreement upon written notice given to the Executive while the Disability is continuing which shall be effective on the date that the notice is given.

(b)          In the event of the death or Disability of the Executive, Cynapsus shall pay to the Executive an amount equal to the Base Salary accrued to the date of termination and the Deemed Annual Bonus, together with all amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

(c) For the purposes hereof, “Disability” shall mean that:

(i) the Executive has been and continues to be disabled as a result of illness, disease or mental or physical disability or for other causes beyond his control such that he has been unable or unwilling or has failed to perform or fulfil all or a material portion of his duties or the requirements of his employment hereunder on a full-time basis for:

(A) a period of 105 consecutive days or more, or

(B) an aggregate of 105 days or more in any 12 month period

in the opinion of a qualified medical practitioner who shall be satisfactory to Cynapsus, acting reasonably; or

(ii) the Executive has been declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

6.7                        Upon termination of this Agreement by either party for any reason, other than termination by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), the Executive shall have the right to exercise any options granted by Cynapsus in accordance with the Plan.

6.8                        Upon termination of this Agreement by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), any options granted by Cynapsus or any unexercised portion thereof shall immediately terminate.

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6.9 Remedies

(a)          The parties confirm that the provisions contained in this Article 6, including the notice and pay in lieu of notice provisions contained therein, are valid and reasonable and are fair and equitable. The parties agree that upon any termination of the Executive’s employment by Cynapsus, in compliance with the provisions of this Agreement, the Executive shall have no action, cause of action, claim or demand against Cynapsus or any other person as a consequence of such termination. The Executive further acknowledges and agrees that the payments and/or notices required pursuant to this shall be in full satisfaction of all claims for termination of his employment, including termination pay and/or severance pay pursuant to the Employment Standards Act, 2000 (Ontario) (as the same may be amended or replaced, from time to time). Except as otherwise provided in this Article 6, the Executive shall not be entitled to any further termination or severance payments, damages or other compensation whatsoever.

(b)          As a condition precedent to any payment pursuant to this Article 6, the Executive agrees to deliver to Cynapsus contemporaneously with any such payment, a full and final release of and from all actions or claims in connection therewith in favour of Cynapsus and their respective directors, officers, employees and agents, in form and substance satisfactory to Cynapsus, acting reasonably. If the Executive is an officer or director of Cynapsus at the relevant time of termination of his employment in accordance with the terms hereof, the Executive agrees that contemporaneously with or as soon as is practicable after the termination of his employment hereunder for any reason whatsoever, he will tender his resignation from any position he may hold as an officer and/or director of Cynapsus.

Article 7 - NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION AGREEMENT

7.1                        The Executive has entered into a Non-Disclosure, Non-Solicitation and Non-Competition Agreement in substantially the same form entered into between Cynapsus and its other senior officers.

7.2                        The Executive acknowledges and agrees that the employment relationship will be governed by this Agreement and the standards and terms established by Cynapsus’ policies as they are amended from time to time. The Executive agrees to comply with the terms of Cynapsus’ current and future policies so long as they are not inconsistent with the provisions of this Agreement. In the event Cynapsus’ policies or procedures are in conflict with this Agreement the terms of this Agreement shall prevail.

Article 8

8.1                        The Executive acknowledges and agrees that the increase in the amount payable to the Executive pursuant to this Agreement upon a Change of Control constitutes new and additional consideration in favour of the Executive in connection with the execution and delivery of this Agreement by the Executive.

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Article 9 - NOTICES

9.1                        Any notice required or permitted to be given to the Executive shall be sufficiently given if delivered to the Executive personally or if mailed by registered mail to the Executive’s address last known to Cynapsus or by e-mail at AJG@cynapsus.ca.

9.2                        Any notice required or permitted to be given to Cynapsus shall be sufficiently given if mailed by registered mail to Cynapsus’ head office at its address last known to the Executive.

Article 10 - GENERAL

10.1 Severability

In the event that any provision or part of this Agreement shall be deemed void or invalid by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full force and effect.

10.2 Binding Effect; Assignment

This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs, administrators, executors, successors and permitted assigns. Cynapsus shall have the right to assign this Agreement to any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Cynapsus provided that such entity assumes all obligations of Cynapsus hereunder. The Executive shall not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of the Executive’s rights or obligations under this Agreement.

10.3 Entire Agreement

This Agreement, together with the Non-Disclosure, Non-Solicitation and Non-Competition Agreement dated November 16, 2009, constitutes the entire agreement between the parties with respect to the employment and appointment of the Executive and any and all other previous agreements, written or oral, express or implied, between the parties or on their behalf, relating to the employment and appointment of the Executive by Cynapsus, including but not limited to any previous Consulting Agreements between the Executive and Cynapsus, are hereby terminated and cancelled and each of the parties releases and forever discharges the other of and from all manner of actions, causes of action, claims and demands whatsoever, under or in respect of any such agreements so terminated and cancelled.

10.4 Modification and Waiver

Any modification to this Agreement must be in writing and signed by the parties or it shall have no effect and shall be void. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

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10.5 Headings

The headings used in this Agreement are for convenience only and are not to be construed in any way as additions to or limitations of the covenants and agreements contained in it.

10.6 Governing Law

This Agreement shall be construed in accordance with the laws of the Province of Ontario.

10.7 Time of Essence

Time shall be of the essence of this Agreement.

10.8 Currency

All amounts payable pursuant to this Agreement are expressed in and shall be paid in Canadian currency.

10.9 Legal Advice

The Executive acknowledges that he has had an opportunity to seek independent legal advice prior to their execution of this Agreement. The Executive acknowledges that he has sought and obtained such independent advice, or has declined seeking such advice, despite having been given the opportunity to do so.

10.10 Counterparts

This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution or transmission of any counterpart, each counterpart shall be deemed to have the effective date first written above.

[Signature Page Follows]

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IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first written above.

SIGNED, SEALED & DELIVERED	)
in the presence of:	)
	)
	)
	)
/s/ Andrew Williams	)	/s/ Anthony Giovinazzo
Witness		ANTHONY GIOVINAZZO

CYNAPSUS THERAPEUTICS INC.
Per:	/s/ Anthony Giovinazzo
	Authorized Signing Officer
Per:	/s/ Andrew Williams
	Authorized Signing Officer

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SCHEDULE “A”

Additional Benefits

The Executive will be entitled to receive the following additional benefits:

1. Life insurance coverage in the amount of $1,500,000 as part of an “extended health” benefits plan failing which Cynapsus agrees to pay the current monthly premium of $864 per month in respect of the Executive’s existing life insurance policy.

2. Car allowance in the amount of $1,000 per month and reimbursement for related expenses, including gas and insurance.

3. Six personal days, with pay, including sick days.

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 13^th day of May, 2015.

BETWEEN:

CYNAPSUS THERAPEUTICS INC.

(hereinafter called “Cynapsus”)

- and -

ANDREW WILLIAMS

(hereinafter called the “Executive”)

WHEREAS Cynapsus is developing a sublingual thin filmstrip for the acute rescue of OFF motor symptoms of Parkinson’s disease;

AND WHEREAS Cynapsus and the Executive entered into an original employment agreement dated as of January 1, 2006, as amended on January 1, 2012, as further amended on May 1, 2013, and as further amended on January 1, 2015;

AND WHEREAS Cynapsus and the Executive have agreed to further amend the terms of the employment relationship.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:

Article 1 - DUTIES

1.1                        The Executive will continue to be the Chief Operating Officer and Chief Financial Officer of Cynapsus and to exercise all of the duties and responsibilities of such office and to perform such other services as the board of directors of Cynapsus (the “Board”) may reasonably request the Executive from time to time. The duties of the Executive shall include, but are not limited to, the company’s public company operations on the Toronto Stock Exchange and the U.S. OTCQX, as well as all regulatory, finance, accounting, tax, audit, legal, information systems, communications and administrative functions. The Executive will report to the President and CEO and also serve as the Corporate Secretary, working closely with the Board and Board Committees. In addition, the Executive shall serve in such other capacities, perform such other duties and exercise such other powers consistent with such activities as may from time to time be assigned to or vested in him by the Board.

1.2                        During his employment hereunder, the Executive shall devote his full time and attention to the business and affairs of Cynapsus and shall well and faithfully serve Cynapsus and use his best efforts to promote the interests and goodwill of Cynapsus. This does not preclude the Executive from investing in private investment opportunities, it being understood that such opportunities will take immaterial time commitment, and provided that such opportunities are not competitive with or suppliers to Cynapsus.

1.3                        The Executive hereby confirms his employment with Cynapsus on the terms and conditions set forth in this Agreement.

Article 2 - TERM

2.1                        The parties acknowledge that the Executive has already commenced employment with Cynapsus and that such employment shall continue for an indefinite term until terminated in accordance with the provisions of this Agreement.

Article 3 - COMPENSATION

3.1                        For the performance of his services hereunder and commencing on January 1, 2015, the Executive shall be paid:

(a)          A base salary (the “Base Salary”) of $225,000 per annum, less statutory withholdings, payable to the Executive in equal instalments on those dates on which Cynapsus normally makes salary payments to its employees and in accordance with Cynapsus’ regular practices in that regard.

(b)          A discretionary bonus (the “Annual Bonus”), as determined by the President and CEO and the Board, for each year of the Executive’s employment hereunder, in an amount of 30% of the Base Salary, based on the achievement of agreed corporate objectives. The Annual Bonus may be increased to up to 40% of the Base Salary, as determined by the Board, based on an overachievement of goals. The Annual Bonus shall be based on criteria to be approved by the Board, and relayed to the Executive, which criteria shall reflect the annual corporate goals of Cynapsus and individual goals relating to the Executive’s areas of oversight.

3.2                        The Executive shall be entitled to annual reviews of his Base Salary and Annual Bonus or any changes to the bonus plan or other forms of compensation paid or granted to the Executive by Cynapsus as may be determined from time to time by the Board. The Base Salary will take into account the prevailing market conditions and comparative base salaries as well as changes in Cynapsus’ financial conditions, market capitalization, growth and corporate size however measured.

3.3                        The Executive may be granted options to acquire common shares in the capital of Cynapsus at the discretion of the Board and pursuant to the terms and conditions of Cynapsus’ stock option plan (the “Plan”). Upon a Change of Control (as defined below) of Cynapsus all stock options will vest immediately upon approval by the Board.

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Article 4 - EXPENSES

4.1                        It is understood and agreed that the Executive will incur expenses in connection with performing his duties hereunder. Cynapsus will reimburse the Executive for all expenses reasonably and properly incurred by the Executive on behalf of Cynapsus provided that the Executive provides to Cynapsus receipts acceptable to Cynapsus within a reasonable period after they have been incurred. All expenses shall be incurred in accordance with agreed corporate policies and budgets.

Article 5 - BENEFITS

5.1 During the period of the employment of the Executive hereunder:

(a)          The Executive shall be entitled to four weeks’ vacation per year to be taken at such times and for such durations as are acceptable to Cynapsus and the Executive. Up to two weeks’ vacation which if not taken in any year may be taken in any subsequent year or the Executive shall be entitled to such vacation pay as may be required pursuant to the Employment Standards Act, 2000 (Ontario).

(b)          The Executive shall be eligible to participate in the group insurance and benefit plan provided to all senior executives of Cynapsus, to the extent he qualifies for such benefits. The Executive’s insurance and benefit entitlements shall be subject to and governed by the terms and conditions of the plan, as amended from time to time.

(c)          The Executive shall be entitled, at the cost of Cynapsus, to the additional benefits set out in Schedule “A” hereto.

Article 6 - TERM AND TERMINATION

6.1 Termination with Cause

(a)          Cynapsus shall be entitled, in its sole discretion, to terminate the employment of the Executive hereunder, without notice or payment in lieu of notice, for Cause (as hereinafter defined). Cynapsus shall have no obligation to the Executive after the effective date of termination pursuant to this Section 6.1 except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid in accordance with any benefit plan prior to the date of termination. The Executive shall not be entitled to receive any bonus in the event of termination pursuant to this Section 6.1.

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(b) For the purposes hereof, “Cause” shall mean:

(i) the continued or habitual failure by the Executive to substantially perform his duties according to the terms of his employment hereunder (other than resulting from the Executive’s Disability (as hereinafter defined), after Cynapsus has given the Executive reasonable written notice of such failure and a reasonable opportunity to correct the failure and the Executive fails to substantially remedy the failure;

(ii) the Executive hereinafter does (or causes or permits to be done) or hereinafter omits (or causes or permits to be omitted) any act or thing that is materially or significantly harmful or injurious to Cynapsus or any of its affiliates, monetarily or otherwise;

(iii) the Executive hereinafter engages in any criminal act of dishonesty, or any reprehensible behaviour or activity, that could have an adverse effect, either directly or indirectly, on Cynapsus; or

(iv) any regulatory sanction that precludes the Executive from fulfilling his duties under this Agreement.

6.2 Termination by Cynapsus without Cause

(a)          Except as otherwise provided, Cynapsus shall be entitled in its sole discretion to terminate this Agreement at any time upon four months’ plus one additional month’s notice to the Executive for every full year of employment (starting from January 1, 2006), to a maximum of 14 months, or payment in lieu of notice.

(b)          Upon termination by Cynapsus in accordance with this Section 6.2, Cynapsus shall provide the Executive with written notice or payment in lieu thereof and an amount equal to the average of the Annual Bonus paid to the Executive in each of the three most recent completed financial years of Cynapsus, divided by 12 and multiplied by 14 (the “Deemed Annual Bonus”), together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws. Cynapsus shall have the option to pay the amount equal to the 14 months of Base Salary on its regular payroll dates or in a lump sum as of the effective date of termination.

6.3 Termination by the Executive

(a)          The Executive shall be entitled in his sole discretion to terminate this Agreement for any reason whatsoever at any time upon 60 days’ prior written notice to Cynapsus.

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(b)          Upon termination by the Executive in accordance with this Section 6.3, Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination, the Deemed Annual Bonus and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

6.4 Termination by Either Party

(a) Either party shall have the right to terminate this Agreement:

(i) if the other party breaches a term of this Agreement and such breach is not cured within 10 days after the date of written notice; or

(ii) if the other party files an assignment in bankruptcy or a proposal under the Bankruptcy and Insolvency Act (Canada) or if a petition in bankruptcy is filed or presented against the other party under the Bankruptcy and Insolvency Act (Canada) or comparable legislation and such petition is not discharged within 90 days, or if a receiver is appointed for all or substantially all of the assets or property of the other party and such appointment is not contested and the receiver discharged within 30 days.

(b)          In the event of termination by the Executive in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall pay to the Executive a lump sum equal to four months plus one additional month for every full year of employment (starting from January 1, 2006) of Base Salary, to a maximum of 14 months, and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws.

(c)          In the event of termination by Cynapsus in accordance with 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan. The Executive shall not be entitled to receive any bonus in the event of termination by Cynapsus pursuant to Section 6.4(a)(i) or 6.4(a)(ii).

6.5 Change of Control

(a)          Upon a Change of Control (as defined below) and for a period of nine months thereafter, in the event of termination of this Agreement by Cynapsus, or the purchaser or other third party, as the case may be, other than for Cause, or by the Executive for Good Reason (as defined below), Cynapsus, or the purchaser or other third party, as the case may be, shall pay to the Executive a lump sum equal to 14 months of Base Salary and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws.

- 5 -

(b) For the purposes hereof, “Change of Control” shall mean:

(i) a reorganization, amalgamation or merger, or a plan of arrangement in connection with any of the foregoing, with respect to which all or substantially all of the persons who were the beneficial owners of the then outstanding voting shares of Cynapsus (“Shares”) immediately prior to such transaction do not, following such transaction, beneficially own, directly or indirectly, more than 50 percent of the resulting voting shares;

(ii) the acquisition of Shares by a person or group of persons acting in concert as a result of which the acquiror beneficially owns, directly or indirectly, 50 percent or more of the Shares then outstanding; or

(iii) the sale to a third party of all or substantially all of the assets of Cynapsus.

(c)          For the purposes hereof, “Good Reason” shall mean an adverse material change to the terms and conditions of the Executive’s employment including, but not limited to:

(i) removal from, or re-assignment of, the Executive’s position as set forth in Section 1.1 without the agreement of the Executive;

(ii) a substantive change in the Executive’s duties as described in Section 1.1 without the agreement of the Executive;

(iii) a change in the Executive’s reporting relationships, the result of such change not having a reasonable remedy;

(iv) relocation of the Executive to a location that is more than 60 kilometres from Toronto, Ontario without the agreement of the Executive; or

(v) a breach by Cynapsus, or the purchaser or other third party, as the case may be, of Section 6.4(a) hereof which is not cured or remedied within the applicable time periods set forth therein.

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6.6 Termination for Death or Disability

(a)          In the event of the Executive’s death then this Agreement shall immediately terminate. In the event of the Disability (as hereinafter defined) of the Executive, Cynapsus shall have the right to terminate this Agreement upon written notice given to the Executive while the Disability is continuing which shall be effective on the date that the notice is given.

(b)          In the event of the death or Disability of the Executive, Cynapsus shall pay to the Executive an amount equal to the Base Salary accrued to the date of termination and the Deemed Annual Bonus, together with all amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

(c) For the purposes hereof, “Disability” shall mean that:

(i) the Executive has been and continues to be disabled as a result of illness, disease or mental or physical disability or for other causes beyond his control such that he has been unable or unwilling or has failed to perform or fulfil all or a material portion of his duties or the requirements of his employment hereunder on a full-time basis for:

(A) a period of 105 consecutive days or more, or

(B) an aggregate of 105 days or more in any 12 month period

in the opinion of a qualified medical practitioner who shall be satisfactory to Cynapsus, acting reasonably; or

(ii) the Executive has been declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

6.7                        Upon termination of this Agreement by either party for any reason, other than termination by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), the Executive shall have the right to exercise any options granted by Cynapsus in accordance with the Plan.

6.8                        Upon termination of this Agreement by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), any options granted by Cynapsus or any unexercised portion thereof shall immediately terminate.

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6.9 Remedies

(a)          The parties confirm that the provisions contained in this Article 6, including the notice and pay in lieu of notice provisions contained therein, are valid and reasonable and are fair and equitable. The parties agree that upon any termination of the Executive’s employment by Cynapsus, in compliance with the provisions of this Agreement, the Executive shall have no action, cause of action, claim or demand against Cynapsus or any other person as a consequence of such termination. The Executive further acknowledges and agrees that the payments and/or notices required pursuant to this shall be in full satisfaction of all claims for termination of his employment, including termination pay and/or severance pay pursuant to the Employment Standards Act, 2000 (Ontario) (as the same may be amended or replaced, from time to time). Except as otherwise provided in this Article 6, the Executive shall not be entitled to any further termination or severance payments, damages or other compensation whatsoever.

(b)          As a condition precedent to any payment pursuant to this Article 6, the Executive agrees to deliver to Cynapsus contemporaneously with any such payment, a full and final release of and from all actions or claims in connection therewith in favour of Cynapsus and their respective directors, officers, employees and agents, in form and substance satisfactory to Cynapsus, acting reasonably. If the Executive is an officer or director of Cynapsus at the relevant time of termination of his employment in accordance with the terms hereof, the Executive agrees that contemporaneously with or as soon as is practicable after the termination of his employment hereunder for any reason whatsoever, he will tender his resignation from any position he may hold as an officer and/or director of Cynapsus.

Article 7 - NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION AGREEMENT

7.1                        The Executive has entered into a Non-Disclosure, Non-Solicitation and Non-Competition Agreement in substantially the same form entered into between Cynapsus and its other senior officers.

7.2                        The Executive acknowledges and agrees that the employment relationship will be governed by this Agreement and the standards and terms established by Cynapsus’ policies as they are amended from time to time. The Executive agrees to comply with the terms of Cynapsus’ current and future policies so long as they are not inconsistent with the provisions of this Agreement. In the event Cynapsus’ policies or procedures are in conflict with this Agreement the terms of this Agreement shall prevail.

Article 8 - NEW AND ADDITIONAL CONSIDERATION

8.1                        The Executive acknowledges and agrees that the health and insurance benefits provided to the Executive under Cynapsus’s group insurance and benefit plan constitute new and additional consideration in favour of the Executive in connection with the execution and delivery of this Agreement by the Executive.

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Article 9 - NOTICES

9.1                        Any notice required or permitted to be given to the Executive shall be sufficiently given if delivered to the Executive personally or if mailed by registered mail to the Executive’s address last known to Cynapsus or by e-mail at awilliams@cynapsus.ca.

9.2                        Any notice required or permitted to be given to Cynapsus shall be sufficiently given if mailed by registered mail to Cynapsus’ head office at its address last known to the Executive.

Article 10 - GENERAL

10.1 Severability

In the event that any provision or part of this Agreement shall be deemed void or invalid by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full force and effect.

10.2 Binding Effect; Assignment

This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs, administrators, executors, successors and permitted assigns. Cynapsus shall have the right to assign this Agreement to any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Cynapsus provided that such entity assumes all obligations of Cynapsus hereunder. The Executive shall not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of the Executive's rights or obligations under this Agreement.

10.3 Entire Agreement

This Agreement, together with the Non-Disclosure, Non-Solicitation and Non-Competition Agreement dated January 1^st, 2006, constitutes the entire agreement between the parties with respect to the employment and appointment of the Executive and any and all other previous agreements, written or oral, express or implied, between the parties or on their behalf, relating to the employment and appointment of the Executive by Cynapsus, are terminated and cancelled and each of the parties releases and forever discharges the other of and from all manner of actions, causes of action, claims and demands whatsoever, under or in respect of any such agreements so terminated and cancelled.

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10.4 Modification and Waiver

Any modification to this Agreement must be in writing and signed by the parties or it shall have no effect and shall be void. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

10.5 Headings

The headings used in this Agreement are for convenience only and are not to be construed in any way as additions to or limitations of the covenants and agreements contained in it.

10.6 Governing Law

This Agreement shall be construed in accordance with the laws of the Province of Ontario.

10.7 Time of Essence

Time shall be of the essence of this Agreement.

10.8 Currency

All amounts payable pursuant to this Agreement are expressed in and shall be paid in Canadian currency.

10.9 Legal Advice

The Executive acknowledges that he has had an opportunity to seek independent legal advice prior to their execution of this Agreement. The Executive acknowledges that he has sought and obtained such independent advice, or has declined seeking such advice, despite having been given the opportunity to do so.

10.10 Counterparts

This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution or transmission of any counterpart, each counterpart shall be deemed to have the effective date first written above.

[Signature Page Follows]

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IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first written above.

SIGNED, SEALED & DELIVERED	)
in the presence of:	)
	)
	)
	)
/s/ Susan Thompson	)	/s/ Andrew Williams
Witness		ANDREW WILLIAMS

CYNAPSUS THERAPEUTICS INC.
Per:	/s/ Anthony Giovinazzo
	Authorized Signing Officer
Per:	/s/ Andrew Williams
	Authorized Signing Officer

- 11 -

SCHEDULE “A”

Additional Benefits

The Executive will be entitled to receive the following additional benefits:

1. Six personal days, with pay, including sick days.

EX-10.7

Exhibit 10.7

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 13^th day of May, 2015.

BETWEEN:

CYNAPSUS THERAPEUTICS INC.

(hereinafter called “Cynapsus”)

- and -

Albert Agro

(hereinafter called the “Executive”)

WHEREAS Cynapsus is developing a sublingual thin filmstrip for the acute rescue of OFF motor symptoms of Parkinson’s disease;

AND WHEREAS Cynapsus and the Executive entered into an original employment agreement dated as of June 1, 2013, as amended on January 1, 2015;

AND WHEREAS Cynapsus and the Executive have agreed to further amend the terms of the employment relationship.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:

Article 1 - DUTIES

1.1                        The Executive will be the Chief Medical Officer of Cynapsus and will exercise all of the duties and responsibilities of such office and will perform such other services as the board of directors of Cynapsus (the “Board”) may reasonably request of the Executive from time to time. The duties of the Executive shall include, but are not limited to, assisting with strategic planning, clinical research and development, management of the Clinical Advisory Board, clinical and technical publications, regulatory affairs, intellectual property support, supporting the President and CEO on business development interactions and communicating with institutional investors and biotechnology analysts. The Executive will report to the President and CEO. In addition, the Executive shall serve in such other capacities, perform such other duties and exercise such other powers consistent with such activities as may from time to time be assigned to or vested in him by the Board.

1.2                        The Executive shall devote eighty percent (80%) of his time and attention to the business and affairs of Cynapsus. The Executive shall well and faithfully serve Cynapsus and use his best efforts to promote the interests and goodwill of Cynapsus. The Executive shall not be precluded from involvement in other business or commercial opportunities, provided that such opportunities will not take more than twenty percent (20%) of his time commitment, and provided further that such opportunities are not competitive with the business of Cynapsus.

1.3                        The Executive hereby confirms his employment with Cynapsus on the terms and conditions set forth in this Agreement.

Article 2 - TERM

2.1                        The parties acknowledge that the Executive has already commenced employment with Cynapsus and that such employment shall continue for an indefinite term until terminated in accordance with the provisions of this Agreement.

Article 3 - COMPENSATION

3.1                        For the performance of his services hereunder and commencing on January 1, 2015, the Executive shall be paid:

(a)          A base salary (the “Base Salary”) for eighty percent (80%) of the Executive’s time, of $260,000 per annum, less statutory withholdings, in equal instalments on those dates on which Cynapsus normally makes salary payments to its employees and in accordance with Cynapsus’ regular practices in that regard.

(b)          A discretionary bonus (the “Annual Bonus”), as determined by the President and CEO and the Board, for each year of the Executive’s employment hereunder, in an amount equal to 30% of the Base Salary, based on the achievement of agreed-upon corporate objectives. The Annual Bonus may be increased to up to 40% of the Base Salary, as determined by the Board, based on an overachievement of goals. The Annual Bonus shall be based on criteria to be approved by the Board, and relayed to the Executive, which criteria shall reflect the annual corporate goals of Cynapsus and individual goals relating to the Executive’s areas of oversight.

3.2                        The Executive shall be entitled to annual reviews of his Base Salary and Annual Bonus or any changes to the bonus plan or other forms of compensation paid or granted to the Executive by Cynapsus as may be determined from time to time by the Board. The Base Salary will take into account the prevailing market conditions and comparative base salaries as well as changes in Cynapsus’ financial conditions, market capitalization, growth and corporate size, however measured.

3.3                        The Executive may be granted options to acquire common shares in the capital of Cynapsus at the discretion of the Board and pursuant to the terms and conditions of Cynapsus’ stock option plan (the “Plan”). Upon a Change of Control (as defined below) of Cynapsus all stock options will vest immediately upon approval by the Board.

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Article 4 - EXPENSES

4.1                        It is understood and agreed that the Executive will incur expenses in connection with performing his duties hereunder. Cynapsus will reimburse the Executive for all expenses reasonably and properly incurred by the Executive on behalf of Cynapsus, provided that the Executive provides to Cynapsus receipts acceptable to Cynapsus within a reasonable period after they have been incurred. All expenses shall be incurred in accordance with agreed-upon corporate policies and budgets.

Article 5 - BENEFITS

5.1 During the period of the employment of the Executive hereunder:

(a)          The Executive shall be entitled to four weeks’ vacation per year to be taken at such times and for such durations as are mutually acceptable to Cynapsus and the Executive. Up to two weeks’ vacation, which, if not taken in any year, may be taken in any subsequent year, or the Executive shall be entitled to such vacation pay as may be required pursuant to the Employment Standards Act, 2000 (Ontario)\

(b)          The Executive shall be eligible to participate in the group insurance and benefit plan provided to all senior executives of Cynapsus, to the extent he qualifies for such benefits. The Executive’s insurance and benefit entitlements shall be subject to and governed by the terms and conditions of the plan, as amended from time to time.

(c)          The Executive shall be entitled, at the cost of Cynapsus, to the additional benefits set out in Schedule “A” hereto.

Article 6 - TERM AND TERMINATION

6.1 Termination with Cause

(a)          Cynapsus shall be entitled, in its sole discretion, to terminate the employment of the Executive hereunder, without notice or payment in lieu of notice, for Cause (as hereinafter defined). Cynapsus shall have no obligation to the Executive after the effective date of termination pursuant to this Section 6.1 except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid in accordance with any benefit plan prior to the date of termination. The Executive shall not be entitled to receive any bonus whatsoever in the event of termination pursuant to this Section 6.1.

(b)          For the purposes hereof, “Cause” shall mean:

(i) the continued or habitual failure by the Executive to substantially perform his duties according to the terms of his employment hereunder (other than resulting from the Executive’s Disability (as hereinafter defined), after Cynapsus has given the Executive reasonable written notice of such failure and a reasonable opportunity to correct the failure and the Executive fails to substantially remedy the failure;

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(ii) the Executive hereinafter does (or causes or permits to be done) or hereinafter omits (or causes or permits to be omitted) any act or thing that is materially or significantly harmful or injurious to Cynapsus or any of its affiliates, monetarily or otherwise;

(iii) the Executive hereinafter engages in any criminal act of dishonesty, or any reprehensible behaviour or activity, that could have an adverse effect, either directly or indirectly, on Cynapsus; or

(iv) any regulatory sanction that precludes the Executive from fulfilling his duties under this Agreement.

6.2 Termination by Cynapsus without Cause

(a)          Except as otherwise provided, Cynapsus shall be entitled in its sole discretion to terminate this Agreement at any time without Cause upon four months’ plus one additional month’s notice to the Executive for every full year of employment (starting from April 8, 2013), to a maximum of 12 months, or payment in lieu of notice.

(b)          Upon termination by Cynapsus in accordance with this Section 6.2, Cynapsus shall provide the Executive with written notice or payment in lieu thereof and an amount equal to the average of the Annual Bonus paid to the Executive in each of the three most recent completed financial years of Cynapsus (or such fewer number of recent completed financial years if the Executive was employed for less than the three most recent completed financial years), pro-rated to the effective date of termination (the “Deemed Annual Bonus”), together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws. Cynapsus shall have the option to pay the amount equal to the Base Salary on its regular payroll dates or in a lump sum as of the effective date of termination.

6.3 Termination by the Executive

(a)          The Executive shall be entitled in his sole discretion to terminate this Agreement for any reason whatsoever at any time upon 60 days’ prior written notice to Cynapsus.

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(b)          Upon termination by the Executive in accordance with this Section 6.3, Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination, the Deemed Annual Bonus and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

6.4 Termination by either Party

(a)          Either party shall have the right to terminate this Agreement:

(i) if the other party breaches a term of this Agreement and such breach is not cured within 10 days after the date of written notice; or

(ii) if the other party files an assignment in bankruptcy or a proposal under the Bankruptcy and Insolvency Act (Canada) or if a petition in bankruptcy is filed or presented against the other party under the Bankruptcy and Insolvency Act (Canada) or comparable legislation and such petition is not discharged within 90 days, or if a receiver is appointed for all or substantially all of the assets or property of the other party and such appointment is not contested and the receiver discharged within 30 days.

(b)          In the event of termination by the Executive in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall pay to the Executive a lump sum equal to four months plus one additional month for every full year of employment (starting from April 8, 2013) of Base Salary, to a maximum of 12 months, and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws.

(c)          In the event of termination by Cynapsus in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan. The Executive shall not be entitled to receive any bonus whatsoever in the event of termination by Cynapsus pursuant to Section 6.4(a)(i) or 6.4(a)(ii).

6.5 Change of Control

(a)          Upon a Change of Control (as defined below) and for a period of nine months thereafter, in the event of termination of this Agreement by Cynapsus, or the purchaser or other third party, as the case may be, other than for Cause, or by the Executive for Good Reason (as defined below), Cynapsus, or the purchaser or other third party, as the case may be, shall pay to the Executive a lump sum equal to 12 months of Base Salary and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws.

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(b)          For the purposes hereof, “Change of Control” shall mean:

(i) a reorganization, amalgamation or merger, or a plan of arrangement in connection with any of the foregoing, with respect to which all or substantially all of the persons who were the beneficial owners of the then outstanding voting shares of Cynapsus (“Shares”) immediately prior to such transaction do not, following such transaction, beneficially own, directly or indirectly, more than 50 percent of the resulting voting shares;

(ii) the acquisition of Shares by a person or group of persons acting in concert as a result of which the acquiror beneficially owns, directly or indirectly, 50 percent or more of the Shares then outstanding; or

(iii) the sale to a third party of all or substantially all of the assets of Cynapsus.

(c)          For the purposes hereof, “Good Reason” shall mean an adverse material change to the terms and conditions of the Executive’s employment including, but not limited to:

(i) removal from, or re-assignment of, the Executive’s position as set forth in Section 1.1 without the agreement of the Executive;

(ii) a substantive change in the Executive’s duties as described in Section 1.1 without the agreement of the Executive;

(iii) a change in the Executive’s reporting relationships, the result of such change not having a reasonable remedy;

(iv) relocation of the Executive to a location that is more than 60 kilometres from Toronto, Ontario without the agreement of the Executive; or

(v) a breach by Cynapsus, or the purchaser or other third party, as the case may be, of Section 6.4(a) hereof which is not cured or remedied within the applicable time periods set forth therein.

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6.6 Termination for Death or Disability

(a)          In the event of the Executive’s death then this Agreement shall immediately terminate. In the event of the Disability (as hereinafter defined) of the Executive, Cynapsus shall have the right to terminate this Agreement upon written notice given to the Executive while the Disability is continuing, which termination shall be effective on the date that the notice is given.

(b)          In the event of the death or Disability of the Executive, Cynapsus shall pay to the Executive an amount equal to the Base Salary accrued to the date of termination and the Deemed Annual Bonus, together with all amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

(c)          For the purposes hereof, “Disability” shall mean that:

(i) the Executive has been and continues to be disabled as a result of illness, disease or mental or physical disability or for other causes beyond his control such that he has been unable or unwilling or has failed to perform or fulfil all or a material portion of his duties or the requirements of his employment hereunder on a full-time basis for:

(A) a period of 105 consecutive days or more, or

(B) an aggregate of 105 days or more in any 12 month period

in the opinion of a qualified medical practitioner who shall be satisfactory to Cynapsus, acting reasonably; or

(ii) the Executive has been declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

6.7                        Upon termination of this Agreement by either party for any reason, other than termination by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), the Executive shall have the right to exercise any options granted by Cynapsus in accordance with the Plan.

6.8                        Upon termination of this Agreement by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), any options granted by Cynapsus or any unexercised portion thereof shall immediately terminate.

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6.9 Remedies

(a)          The parties confirm that the provisions contained in this Article 6, including the notice and pay in lieu of notice provisions contained therein, are valid and reasonable and are fair and equitable. The parties agree that upon any termination of the Executive’s employment by Cynapsus in accordance with the provisions of this Agreement, the Executive shall have no action, cause of action, claim or demand against Cynapsus or any other person as a consequence of such termination. The Executive further acknowledges and agrees that the payments and/or notices required pursuant to this Agreement shall be in full satisfaction of all claims for termination of his employment, including termination pay and/or severance pay pursuant to the Employment Standards Act, 2000 (Ontario) (as the same may be amended or replaced, from time to time). Except as otherwise provided in this Article 6, the Executive shall not be entitled to any further termination or severance payments, damages or other compensation whatsoever.

(b)          As a condition precedent to any payment pursuant to this Article 6, the Executive agrees to deliver to Cynapsus contemporaneously with any such payment, a full and final release of and from all actions or claims in connection therewith in favour of Cynapsus and their respective directors, officers, employees and agents, in form and substance satisfactory to Cynapsus, acting reasonably. If the Executive is an officer or director of Cynapsus at the relevant time of termination of his employment in accordance with the terms hereof, the Executive agrees that contemporaneously with or as soon as is practicable after the termination of his employment hereunder for any reason whatsoever, he will tender his resignation from any position he may hold as an officer and/or director of Cynapsus.

Article 7 - NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION AGREEMENT

7.1                        The Executive has entered into a Non-Disclosure, Non-Solicitation and Non-Competition Agreement in substantially the same form entered into between Cynapsus and its other senior officers.

7.2                        The Executive acknowledges and agrees that the employment relationship will be governed by this Agreement and the standards and terms established by Cynapsus’ policies as they are amended from time to time. The Executive agrees to comply with the terms of Cynapsus’ current and future policies so long as they are not inconsistent with the provisions of this Agreement. In the event Cynapsus’ policies or procedures are in conflict with this Agreement the terms of this Agreement shall prevail.

Article 8 - NEW AND ADDITIONAL CONSIDERATION

8.1                        The Executive acknowledges and agrees that the increase in the amount payable to the Executive pursuant to this Agreement upon a Change of Control constitutes new and additional consideration in favour of the Executive in connection with the execution and delivery of this Agreement by the Executive.

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Article 9 - NOTICES

9.1                        Any notice required or permitted to be given to the Executive shall be sufficiently given if delivered to the Executive personally or if mailed by registered mail to the Executive’s address last known to Cynapsus or by e-mail at aagro@cynapsus.ca.

9.2                        Any notice required or permitted to be given to Cynapsus shall be sufficiently given if mailed by registered mail to Cynapsus’ head office at its address last known to the Executive.

Article 10 - GENERAL

10.1 Severability

In the event that any provision or part of this Agreement shall be deemed void or invalid by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full force and effect.

10.2 Binding Effect; Assignment

This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs, administrators, executors, successors and permitted assigns. Cynapsus shall have the right to assign this Agreement to any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Cynapsus provided that such entity assumes all obligations of Cynapsus hereunder. The Executive shall not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of the Executive’s rights or obligations under this Agreement.

10.3 Entire Agreement

This Agreement, together with the Non-Disclosure, Non-Solicitation and Non-Competition Agreement dated April 8, 2013, constitutes the entire agreement between the parties with respect to the employment and appointment of the Executive and any and all other previous agreements, written or oral, express or implied, between the parties or on their behalf, relating to the employment and appointment of the Executive by Cynapsus, including but not limited to any previous Consulting Agreements between the Executive and Cynapsus, are hereby terminated and cancelled and each of the parties releases and forever discharges the other of and from all manner of actions, causes of action, claims and demands whatsoever, under or in respect of any such agreements so terminated and cancelled.

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10.4 Modification and Waiver

Any modification to this Agreement must be in writing and signed by the parties or it shall have no effect and shall be void. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

10.5 Headings

The headings used in this Agreement are for convenience only and are not to be construed in any way as additions to or limitations of the covenants and agreements contained in it.

10.6 Governing Law

This Agreement shall be construed in accordance with the laws of the Province of Ontario.

10.7 Time of Essence

Time shall be of the essence of this Agreement.

10.8 Currency

All amounts payable pursuant to this Agreement are expressed in and shall be paid in Canadian currency.

10.9 Legal Advice

The Executive acknowledges that he has had an opportunity to seek independent legal advice prior to their execution of this Agreement. The Executive acknowledges that he has sought and obtained such independent advice, or has declined seeking such advice, despite having been given the opportunity to do so.

10.10 Counterparts

This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution or transmission of any counterpart, each counterpart shall be deemed to have the effective date first written above.

[Signature Page Follows]

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IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first written above.

SIGNED, SEALED & DELIVERED	)
in the presence of:	)
	)
	)
	)
/s/ Andrew Williams	)	/s/ Albert Agro
Witness		ALBERT AGRO

CYNAPSUS THERAPEUTICS INC.
Per:	/s/ Anthony Giovinazzo
	Authorized Signing Officer
Per:	/s/ Andrew Williams
	Authorized Signing Officer

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SCHEDULE “A”

Additional Benefits

The Executive will be entitled to receive the following additional benefits:

1. Three personal days, with pay, including sick days.

EX-10.8

Exhibit 10.8

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 13^th day of May, 2015.

BETWEEN:

CYNAPSUS THERAPEUTICS INC.

(hereinafter called “Cynapsus”)

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thierry bilbault

(hereinafter called the “Executive”)

WHEREAS Cynapsus is developing a sublingual thin filmstrip for the acute rescue of OFF motor symptoms of Parkinson’s disease;

AND WHEREAS Cynapsus and the Executive entered into an original employment agreement dated as of October 6^th, 2014, as amended on January 1, 2015;

AND WHEREAS Cynapsus and the Executive have agreed to further amend the terms of the employment relationship.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:

Article 1 - DUTIES

1.1                        The Executive will be the Chief Scientific Officer and Executive Vice President, Chemistry, Manufacturing and Controls, and will exercise all of the duties and responsibilities of such office and will perform such other services as the board of directors of Cynapsus (the “Board”) may reasonably request of the Executive from time to time. The duties of the Executive shall include, but are not limited to, assisting with strategic planning, vendor selection, product formulation and development, API sourcing, specifications and analytics, bioanalytics, packaging, intellectual property, supporting clinical research activities and regulatory affairs, partnering, and communicating with institutional investors and biotechnology analysts. The Executive will report to the President and CEO. In addition, the Executive shall serve in such other capacities, perform such other duties and exercise such other powers consistent with the Executive’s position, training and experience as may from time to time be assigned to or vested in him by the Board. In carrying out his duties hereunder, the Executive agrees to comply with all applicable laws.

1.2                        During his employment hereunder, the Executive shall devote his full time and attention to the business and affairs of Cynapsus and shall well, honestly and faithfully serve Cynapsus and use his best efforts to promote the best interests and goodwill of Cynapsus. This does not preclude the Executive from investing in private investment opportunities it being understood that such opportunities will take immaterial time commitments, and provided that such opportunities are not competitive with Cynapsus or its suppliers.

1.3                        During his employment hereunder, the Executive agrees to spend no less than four working days per work week working in the office of Cynapsus in Toronto, Ontario, unless otherwise mutually agreed between the Executive and Cynapsus, and subject to travel required in connection with his duties hereunder.

1.4                        The Executive hereby confirms his employment with Cynapsus on the terms and conditions set forth in this Agreement.

Article 2 - TERM

2.1                        The parties acknowledge that the Executive has already commenced employment with Cynapsus and that such employment shall continue for an indefinite term until terminated in accordance with the provisions of this Agreement.

Article 3 - COMPENSATION

3.1                        For the performance of his services hereunder and commencing on January 1, 2015, the Executive shall be paid:

(a)          A base salary (the “Base Salary”) of $267,500 per annum, less statutory withholdings, which Cynapsus shall pay to the Executive in equal instalments on those dates on which Cynapsus normally makes salary payments to its employees and in accordance with Cynapsus’ regular practices in this regard.

(b)          A discretionary bonus (the “Annual Bonus”), as determined by the President and CEO and the Board, for each year of the Executive’s employment hereunder, in an amount equal to 30% of the Base Salary, based on the achievement of agreed-upon corporate objectives. The Annual Bonus may be increased to up to 40% of the Base Salary, as determined by the Board, based on an overachievement of goals. The Annual Bonus shall be based on criteria to be approved by the Board, and relayed to the Executive, which criteria shall reflect the annual corporate goals of Cynapsus and individual goals relating to the Executive’s areas of oversight.

3.2                        The Executive shall be entitled to annual reviews of his Base Salary and Annual Bonus or any changes to the bonus plan or other forms of compensation paid or granted to the Executive by Cynapsus as may be determined from time to time by the Board. The Base Salary will take into account the prevailing market conditions and comparative base salaries as well as changes in Cynapsus’ financial conditions, market capitalization, growth and corporate size, however measured.

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3.3                         The Executive may be granted options to acquire common shares in the capital of Cynapsus at the discretion of the Board and pursuant to the terms and conditions of Cynapsus’ stock option plan (the “Plan”). Upon a Change of Control (as defined below) of Cynapsus all stock options will vest immediately upon approval by the Board.

Article 4 - EXPENSES

4.1                        It is understood and agreed that the Executive will incur expenses in connection with performing his duties hereunder. Cynapsus will reimburse the Executive for all expenses reasonably and properly incurred by the Executive on behalf of Cynapsus, provided that the Executive provides to Cynapsus receipts acceptable to Cynapsus within a reasonable period after they have been incurred. All expenses shall be incurred in accordance with agreed-upon corporate policies and budgets.

Article 5 - BENEFITS

5.1                        The Executive shall be entitled to five weeks’ paid vacation per year to be taken at such times and for such durations as are acceptable to Cynapsus and the Executive. Up to two weeks’ vacation which, if not taken in any year, may be taken in any subsequent year or the Executive shall be entitled to such vacation pay as may be required pursuant to the Employment Standards Act, 2000 (Ontario). The Executive shall also be entitled to vacation time: (i) during the week between Christmas day and New Year’s day during which Cynapsus’s office is closed; and (ii) on all statutory holidays in the Province of Ontario.

5.2                        The Executive shall be eligible to participate in the group insurance and benefit plan provided to all senior executives of Cynapsus, to the extent he qualifies for such benefits. The Executive’s insurance and benefit entitlements shall be subject to and governed by the terms and conditions of the plan, as amended from time to time.

Article 6 - TERMINATION

6.1 Termination with Cause

(a)          Cynapsus shall be entitled, in its sole discretion, to terminate the employment of the Executive hereunder, without notice or payment in lieu of notice, for Cause (as hereinafter defined). Cynapsus shall have no obligation to the Executive after the effective date of termination pursuant to this Section 6.1 except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid in accordance with any benefit plan prior to the date of termination. The Executive shall not be entitled to receive any bonus whatsoever in the event of termination pursuant to this Section 6.1.

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(b) For the purposes hereof, “Cause” shall mean:

(i) the continued or habitual failure by the Executive to substantially perform his duties according to the terms of his employment hereunder (other than resulting from the Executive’s Disability (as hereinafter defined), after Cynapsus has given the Executive reasonable written notice of such failure and a reasonable opportunity to correct the failure and the Executive fails to substantially remedy the failure;

(ii) the Executive hereinafter does (or causes or permits to be done) or hereinafter omits (or causes or permits to be omitted) any act or thing that is materially or significantly harmful or injurious to Cynapsus or any of its affiliates, monetarily or otherwise;

(iii) the Executive hereinafter engages in any criminal act of dishonesty, or any reprehensible behaviour or activity, that could have an adverse effect, either directly or indirectly, on Cynapsus; or

(iv) any regulatory sanction that precludes the Executive from fulfilling his duties under this Agreement.

6.2 Termination by Cynapsus without Cause

(a)          Except as otherwise provided, Cynapsus shall be entitled in its sole discretion to terminate this Agreement at any time without Cause upon six months’ plus one additional month’s notice to the Executive for every full year of employment (starting from October 4, 2014), to a maximum of 12 months, or payment in lieu of notice.

(b)          Upon termination by Cynapsus in accordance with this Section 6.2, Cynapsus shall provide the Executive with written notice or payment in lieu thereof and an amount equal to the average of the Annual Bonus paid to the Executive in each of the three most recent completed financial years of Cynapsus (or such fewer number of recent completed financial years if the Executive was employed for less than the three most recent completed financial years), pro-rated to the effective date of termination (the “Deemed Annual Bonus”), together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of any benefit plan then in place and applicable laws. Cynapsus shall have the option to pay the amount equal to the Base Salary on its regular payroll dates or in a lump sum as of the effective date of termination.

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6.3 Termination by the Executive

(a)          The Executive shall be entitled in his sole discretion to terminate this Agreement for any reason whatsoever at any time upon 60 days’ prior written notice to Cynapsus.

(b)          Upon termination by the Executive in accordance with this Section 6.3, Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination, the Deemed Annual Bonus and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

6.4 Termination by either Party

(a) Either party shall have the right to terminate this Agreement:

(i) if the other party breaches a term of this Agreement and such breach is not cured within 10 days after the date of written notice; or

(ii) if the other party files an assignment in bankruptcy or a proposal under the Bankruptcy and Insolvency Act (Canada) or if a petition in bankruptcy is filed or presented against the other party under the Bankruptcy and Insolvency Act (Canada) or comparable legislation and such petition is not discharged within 90 days, or if a receiver is appointed for all or substantially all of the assets or property of the other party and such appointment is not contested and the receiver discharged within 30 days.

(b)          In the event of termination by the Executive in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall pay to the Executive a lump sum equal to six months plus one additional month for every full year of employment (starting from October 4, 2014) of Base Salary, to a maximum of 12 months, and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of any benefit plan then in place and applicable laws.

(c)          In the event of termination by Cynapsus in accordance with Section 6.4(a)(i) or 6.4(a)(ii), Cynapsus shall have no obligation to the Executive after the effective date of termination except for payment of any Base Salary accrued to the date of termination and any other amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan. The Executive shall not be entitled to receive any bonus whatsoever in the event of termination by Cynapsus pursuant to Section 6.4(a)(i) or 6.4(a)(ii).

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6.5 Change of Control

(a)          Upon a Change of Control (as defined below) and for a period of nine months thereafter, in the event of termination of this Agreement by Cynapsus, or the purchaser or other third party, as the case may be, other than for Cause, or by the Executive for Good Reason (as defined below), Cynapsus, or the purchaser or other third party, as the case may be, shall pay to the Executive a lump sum equal to 12 months of Base Salary and the Deemed Annual Bonus, together with all amounts which the Executive would have been entitled to during such period and a continuation of benefits coverage during such period in respect of the elements which are permitted to be continued in accordance with the terms of the benefit plan then in place and applicable laws.

(b) For the purposes hereof, “Change of Control” shall mean:

(i) a reorganization, amalgamation or merger, or a plan of arrangement in connection with any of the foregoing, with respect to which all or substantially all of the persons who were the beneficial owners of the then outstanding voting shares of Cynapsus (“Shares”) immediately prior to such transaction do not, following such transaction, beneficially own, directly or indirectly, more than 50 percent of the resulting voting shares;

(ii) the acquisition of Shares by a person or group of persons acting in concert as a result of which the acquiror beneficially owns, directly or indirectly, 50 percent or more of the Shares then outstanding; or

(iii) the sale to a third party of all or substantially all of the assets of Cynapsus.

(c)          For the purposes hereof, “Good Reason” shall mean an adverse material change to the terms and conditions of the Executive’s employment including, but not limited to:

(i) removal from, or re-assignment of, the Executive’s position as set forth in Section 1.1 without the agreement of the Executive;

(ii) a substantive change in the Executive’s duties as described in Section 1.1 without the agreement of the Executive;

(iii) a change in the Executive’s reporting relationships, the result of such change not having a reasonable remedy;

(iv) relocation of the Executive to a location that is more than 60 kilometres from Toronto, Ontario without the agreement of the Executive; or

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(v) a breach by Cynapsus, or the purchaser or other third party, as the case may be, of Section 6.4(a) hereof which is not cured or remedied within the applicable time periods set forth therein.

6.6 Termination for Death or Disability

(a)          In the event of the Executive’s death then this Agreement shall immediately terminate. In the event of the Disability (as hereinafter defined) of the Executive, Cynapsus shall have the right to terminate this Agreement upon written notice given to the Executive while the Disability is continuing, which termination shall be effective on the date that the notice is given.

(b)          In the event of the death or Disability of the Executive, Cynapsus shall pay to the Executive an amount equal to the Base Salary accrued to the date of termination and the Deemed Annual Bonus, together with all amounts which have accrued but not yet been paid prior to the date of termination, including any amounts owing in accordance with any benefit plan.

(c) For the purposes hereof, “Disability” shall mean that:

(i) the Executive has been and continues to be disabled as a result of illness, disease or mental or physical disability or for other causes beyond his control such that he has been unable or unwilling or has failed to perform or fulfil all or a material portion of his duties or the requirements of his employment hereunder on a full-time basis for:

(A) a period of 105 consecutive days or more, or

(B) an aggregate of 105 days or more in any 12 month period

in the opinion of a qualified medical practitioner who shall be satisfactory to Cynapsus, acting reasonably; or

(ii) the Executive has been declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

6.7                        Upon termination of this Agreement by either party for any reason, other than termination by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), the Executive shall have the right to exercise any options granted by Cynapsus in accordance with the Plan.

6.8                        Upon termination of this Agreement by Cynapsus pursuant to Section 6.1 or Section 6.4(a)(i), any options granted by Cynapsus or any unexercised portion thereof shall immediately terminate.

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6.9 Remedies

(a)          The parties confirm that the provisions contained in this Article 6, including the notice and pay in lieu of notice provisions contained therein, are valid and reasonable and are fair and equitable. The parties agree that upon any termination of the Executive’s employment by Cynapsus in accordance with the provisions of this Agreement, the Executive shall have no action, cause of action, claim or demand against Cynapsus or any other person as a consequence of such termination. The Executive further acknowledges and agrees that the payments and/or notices required pursuant to this Agreement shall be in full satisfaction of all claims for termination of his employment, including termination pay and/or severance pay pursuant to the Employment Standards Act, 2000 (Ontario) (as the same may be amended or replaced, from time to time). Except as otherwise provided in this Article 6, the Executive shall not be entitled to any further termination or severance payments, damages or other compensation whatsoever.

(b)          As a condition precedent to any payment pursuant to this Article 6, the Executive agrees to deliver to Cynapsus contemporaneously with any such payment, a full and final release of and from all actions or claims in connection therewith in favour of Cynapsus and their respective directors, officers, employees and agents, in form and substance satisfactory to Cynapsus, acting reasonably. If the Executive is an officer or director of Cynapsus at the relevant time of termination of his employment in accordance with the terms hereof, the Executive agrees that contemporaneously with or as soon as is practicable after the termination of his employment hereunder for any reason whatsoever, he will tender his resignation from any position he may hold as an officer and/or director of Cynapsus.

Article 7 - NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION AGREEMENT

7.1                        The Executive has entered into a Non-Disclosure, Non-Solicitation and Non-Competition Agreement in substantially the same form entered into between Cynapsus and its other senior officers.

7.2                        The Executive acknowledges and agrees that the employment relationship will be governed by this Agreement and the standards and terms established by Cynapsus’ policies as they are amended from time to time. The Executive agrees to comply with the terms of Cynapsus’ current and future policies so long as they are not inconsistent with the provisions of this Agreement. In the event Cynapsus’ policies or procedures are in conflict with this Agreement the terms of this Agreement shall prevail.

Article 8 - NEW AND ADDITIONAL CONSIDERATION

8.1                        The Executive acknowledges and agrees that the increase in the amount payable to the Executive pursuant to this Agreement upon a Change of Control constitutes new and additional consideration in favour of the Executive in connection with the execution and delivery of this Agreement by the Executive.

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Article 9 - NOTICES

9.1                        Any notice required or permitted to be given to the Executive shall be sufficiently given if delivered to the Executive personally or if mailed by registered mail to the Executive’s address last known to Cynapsus or by e-mail at tbilbault@cynapsus.ca.

9.2                        Any notice required or permitted to be given to Cynapsus shall be sufficiently given if mailed by registered mail to Cynapsus’ head office at its address last known to the Executive.

Article 10 - GENERAL

10.1 Severability

In the event that any provision or part of this Agreement shall be deemed void or invalid by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full force and effect.

10.2 Binding Effect; Assignment

This Agreement shall enure to the benefit of, and be binding on, the parties and their respective heirs, administrators, executors, successors and permitted assigns. Cynapsus shall have the right to assign this Agreement to any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Cynapsus provided that such entity assumes all obligations of Cynapsus hereunder. The Executive shall not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of the Executive’s rights or obligations under this Agreement.

10.3 Entire Agreement

This Agreement, together with the Non-Disclosure, Non-Solicitation and Non-Competition Agreement dated as of October 6, 2014, constitutes the entire agreement between the parties with respect to the employment and appointment of the Executive and any and all other previous agreements, written or oral, express or implied, between the parties or on their behalf, relating to the employment and appointment of the Executive by Cynapsus, including but not limited to any previous Consulting Agreements between the Executive and Cynapsus, are hereby terminated and cancelled and each of the parties releases and forever discharges the other of and from all manner of actions, causes of action, claims and demands whatsoever, under or in respect of any such agreements so terminated and cancelled.

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10.4 Modification and Waiver

Any modification to this Agreement must be in writing and signed by the parties or it shall have no effect and shall be void. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

10.5 Headings

The headings used in this Agreement are for convenience only and are not to be construed in any way as additions to or limitations of the covenants and agreements contained in it.

10.6 Governing Law

This Agreement shall be construed in accordance with the laws of the Province of Ontario.

10.7 Time of Essence

Time shall be of the essence of this Agreement.

10.8 Currency

All amounts payable pursuant to this Agreement are expressed in and shall be paid in Canadian currency.

10.9 Legal Advice

The Executive acknowledges that he has had an opportunity to seek independent legal advice prior to their execution of this Agreement. The Executive acknowledges that he has sought and obtained such independent advice, or has declined seeking such advice, despite having been given the opportunity to do so.

10.10 Counterparts

This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution or transmission of any counterpart, each counterpart shall be deemed to have the effective date first written above.

[Signature Page Follows]

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IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first written above.

SIGNED, SEALED & DELIVERED	)
in the presence of:	)
	)
	)
	)
/s/ Andrew Williams	)	/s/ Thierry Bilbault
Witness		THIERRY BILBAULT

CYNAPSUS THERAPEUTICS INC.
Per:	/s/ Anthony Giovinazzo
	Authorized Signing Officer
Per:	/s/ Andrew Williams
	Authorized Signing Officer

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EX-10.9

Exhibit 10.9

Director and Officer Indemnification Agreement

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of this 6^th day of May, 2013, between Cynapsus Therapeutics Inc. (the “Corporation”), a corporation amalgamated under the Canada Business Corporations Act and _________________________________ (the “Indemnified Party”).

RECITALS:

A. The Board of Directors of the Corporation (the “Board”) has determined that the Corporation should act to assure the Indemnified Party of reasonable protection through indemnification against certain risks arising out of service to, and activities on behalf of, the Corporation to the extent permitted by law and the Corporation’s by-laws.

NOW THEREFORE the parties agree as follows:

1. Indemnification. The Corporation will indemnify and save harmless the Indemnified Party and the heirs and legal representatives of the Indemnified Party to the fullest extent permitted by applicable law:

1.1 from and against all Expenses (as defined below) reasonably sustained or incurred by the Indemnified Party in respect of any civil, criminal, administrative, investigative or other Proceeding (as defined below), whether or not brought by the Corporation, to which the Indemnified Party is made a party by reason of being or having been a director or officer of the Corporation except for any Expense attributable to the Indemnified Party’s not having acted honestly and in good faith with a view to the best interests of the Corporation and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Indemnified Party’s not having had reasonable grounds for believing that his or her conduct was lawful; and

1.2 from and against all Expenses reasonably sustained or incurred by the Indemnified Party as a result of serving as a director or officer of the Corporation in respect of any act, matter, deed or thing whatsoever made, done, committed, permitted or acquiesced in by the Indemnified Party as a director or officer of the Corporation, whether before or after the effective date of this Agreement and whether or not related to a Proceeding brought by the Corporation.

Subject to applicable law, this indemnity will apply without reduction regardless of whether the Indemnified Party committed any fault or omitted to do anything that the Indemnified Party ought to have done. This indemnity will not apply to (a) claims initiated by the Indemnified Party against the Corporation or any subsidiary except for claims relating to the enforcement of this Agreement, and (b) claims by the Corporation for the forfeiture and recovery by the Corporation of compensation, including bonuses, received by the Indemnified Party from the Corporation due to the Indemnified Party's violation of applicable securities or other laws. To the extent prior court or other approval is required in connection with any indemnification obligation of the Corporation hereunder, the Corporation will seek and use all reasonable efforts to obtain that approval as soon as reasonably possible in the circumstances.

“Expenses” means all costs, charges, damages, awards, settlements, liabilities, fines, penalties, statutory obligations, professional fees and other expenses of whatever nature or kind, provided that any costs, expenses and professional fees included as Expenses hereunder shall be reasonable.

“Proceeding” will include a claim, demand, suit, proceeding, complaint, inquiry, hearing, discovery or investigation, of whatever nature or kind, whether anticipated, threatened, pending, commenced, continuing or completed, and any appeal or appeals therefrom.

The indemnities in this Agreement also apply to an Indemnified Party in respect of his or her service at the Corporation’s request as (a) an officer or director of another corporation or (b) a similar role with another entity, including a partnership, trust, joint venture or other unincorporated entity.

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The foregoing indemnities will not apply to any Proceeding initiated by the Indemnified Party against (a) the Corporation unless it is brought to establish or enforce any right under this Agreement; or (b) any other person or entity unless the Corporation or other party described in the previous paragraph has joined with the Indemnified Party in or consented to the initiation of that Proceeding.

2. Presumptions/Knowledge

2.1 For purposes of any determination hereunder the Indemnified Party will be deemed, subject to compelling evidence to the contrary, to have acted in good faith and/or in the best interests of the Corporation. The Corporation will have the burden of establishing the absence of good faith.

2.2 The knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Corporation or any other entity will not be imputed to the Indemnified Party for purposes of determining the right to indemnification under this Agreement.

2.3 The Corporation will have the burden of establishing that any Expense it wishes to challenge is not reasonable.

3. Notice by Indemnified Party. As soon as is practicable, upon the Indemnified Party becoming aware of any Proceeding which may give rise to indemnification under this Agreement other than a Proceeding commenced by the Corporation, the Indemnified Party will give written notice to the Corporation. Failure to give notice in a timely fashion will not disentitle the Indemnified Party to indemnification.

4. Investigation by Corporation. The Corporation may conduct any investigation it considers appropriate of any Proceeding of which it receives notice under Section 3, and will pay all costs of that investigation. Upon receipt of reasonable notice from the Corporation, the Indemnified Party will, acting reasonably, co-operate fully with the investigation provided that the Indemnified Party will not be required to provide assistance that would materially prejudice: (a) his or her defence; (b) his or her ability to fulfill his or her business obligations; or (c) conduct his or her business and/or personal affairs. The Indemnified Party will, for the period of time that he/she cooperates with the Corporation with respect to an investigation, be compensated by the Corporation at the rate of $1,500 per day (or partial day) plus reasonable out-of-pocket Expenses actually incurred provided that the Indemnified Party will not be entitled to the per diem if he/she is employed as an officer of the Corporation when co-operation is sought.

5. Payment for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that the Indemnified Party is, by reason of the fact that the Indemnified Party is or was a director or officer of the Corporation or of another entity at the Corporation's request, a witness or participant other than as a named party in a Proceeding, the Corporation will pay to the Indemnified Party all out-of-pocket Expenses actually and reasonably incurred by the Indemnified Party or on the Indemnified Party’s behalf in connection therewith. The Indemnified Party will also be compensated by the Corporation at the rate of $1,500 per day (or partial day) provided that the Indemnified Party will not be entitled to the per diem if he/she is employed as an officer of the Corporation when co-operation is sought.

6. Expense Advances. The Corporation will, upon request by the Indemnified Party, make advances ("Expense Advances") to the Indemnified Party of all amounts for which the Indemnified Party seeks indemnification under this Agreement before the final disposition of the relevant Proceeding. Expense Advances include anticipated Expenses. In connection with such requests, the Indemnified Party will provide the Corporation with a written affirmation of the Indemnified Party's good faith belief that the Indemnified Party is legally entitled to indemnification, along with sufficient particulars of the Expenses to be covered by the proposed Expense Advance to enable the Corporation to make an assessment of its reasonableness. The Indemnified Party's entitlement to such Expense Advance will include those Expenses incurred in connection with any Proceeding by the Indemnified Party against the Corporation seeking an adjudication or award pursuant to this Agreement. The Corporation will make payment to the Indemnified Party within 10 days after the Corporation has received the foregoing information from the Indemnified Party. All Expenses for which indemnification is sought must be reasonable and Expense Advances must relate to Expenses anticipated within a reasonable time of the request.

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The Indemnified Party will repay to the Corporation all Expense Advances not actually required, and all Expense Advances if and to the extent that it is finally determined by a court of competent jurisdiction that the Indemnified Party is not entitled to indemnification under this Agreement. If requested by the Corporation, the Indemnified Party will provide a written undertaking to the Corporation confirming the Indemnified Party's obligations under the preceding sentence as a condition to receiving an Expense Advance.

7. Indemnification Payments. The Corporation will pay to the Indemnified Party any amounts to which the Indemnified Party is entitled hereunder promptly upon the Indemnified Party providing the Corporation with reasonable details of the claim. The Corporation will, forthwith after any request for payment to or for an Indemnified Party, seek any court approval that may be required to permit payment. The Corporation will not be required to pay any amounts under this section to an Indemnified Party if a court of competent jurisdiction has finally determined that that Indemnified Party is not entitled to indemnification.

8. Right to Independent Legal Counsel. If the Indemnified Party is named as a party or a witness to any Proceeding, or the Indemnified Party is questioned or any of his or her actions, omissions or activities are in any way investigated, reviewed or examined in connection with or in anticipation of any actual or potential, to any Proceeding, the Indemnified Party will be entitled to retain independent legal counsel at the Corporation’s expense to act on the Indemnified Party’s behalf to provide an initial assessment to the Indemnified Party of the appropriate course of action for the Indemnified Party. The Indemnified Party will be entitled to continued representation by independent counsel at the Corporation’s expense beyond the initial assessment unless the parties agree that there is no conflict of interest between the Corporation and the Indemnified Party that necessitates independent representation.

9. Settlement. The parties will act reasonably in pursuing the settlement of any Proceeding. The Corporation may not negotiate or effect a settlement of claims against the Indemnified Party without the consent of the Indemnified Party, acting reasonably. The Indemnified Party may negotiate and effect a settlement without the consent of the Corporation but the Corporation will not be liable for any settlement negotiated without its prior written consent, which consent will not be unreasonably withheld.

10. Directors’ & Officers’ Insurance. The Corporation will ensure that its liabilities under this Agreement, and the potential liabilities of Indemnified Parties that are subject to indemnification by the Corporation pursuant to this Agreement, are at all times supported by a directors’ and officers’ liability insurance policy that has been approved by the Board. In the event the Corporation is sold or enters into any business combination as a result of which the directors' and officers' liability insurance policy is terminated and not replaced with a substantially similar policy equally applicable to the Indemnified Party, the Corporation will cause run off "tail" insurance to be purchased for the benefit of the Indemnified Party with substantially the same coverage for the balance of the 6-year term set out in Section 16 without any gap in coverage. The Corporation will provide to the Indemnified Party a copy of each policy of insurance providing the coverages contemplated by this Section promptly after coverage is obtained, and will promptly notify the Indemnified Party if the insurer cancels, makes material changes to coverage or refuses to renew coverage (or any part of the coverage).

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11. Arbitration. All disputes, disagreements, controversies or claims arising out of or relating to this Agreement, including, without limitation, with respect to its formation, execution, validity, application, interpretation, performance, breach, termination or enforcement will be determined by arbitration before a single arbitrator under the Arbitration Act, 1991 (Ontario). The arbitrator will determine, based on the outcome of the arbitration, the breakdown between the Corporation and the Indemnified Party of the costs for conducting the arbitration.

12. Tax Adjustment. Should any payment made pursuant to this Agreement, including the payment of insurance premiums or any payment made by an insurer under an insurance policy, be deemed to constitute a taxable benefit or otherwise be or become subject to any tax or levy, then the Corporation will pay any amount necessary to ensure that the amount received by or on behalf of the Indemnified Party, after the payment of or withholding for tax, fully reimburses the Indemnified Party for the actual cost, expense or liability incurred by or on behalf of the Indemnified Party.

13. Cost of Living Adjustment. The $1,500 per diem payable pursuant to Sections 4 and 5 will be adjusted to reflect changes from March 1, 2013 in the All-items Cost of Living Index for Toronto prepared by Statistics Canada or any successor index or government agency.

14. Governing Law. This Agreement will be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein.

15. Priority and Term. This Agreement will supersede any previous agreement between the Corporation and the Indemnified Party dealing with this subject matter, and will be deemed to be effective as of the date on which the Indemnified Party first became a director or officer of the Corporation.

16. Survival. The obligations of the Corporation under this Agreement, other than Section 10, will continue until the later of (a) 15 years after the Indemnified Party ceases to be a director or officer of the Corporation or any other entity in which he serves in a similar capacity at the request of the Corporation and (b) one year after the final termination of all Proceedings with respect to which the Indemnified Party is entitled to claim indemnification hereunder. The obligations of the Corporation under Section 10 of this Agreement will continue for 6 years after the Indemnified Party ceases to be a director of the Corporation or any other entity in which he serves in a similar capacity at the request of the Corporation.

IN WITNESS WHEREOF the parties hereto have executed this Agreement.

	CYNAPSUS THERAPEUTICS INC.
	Per:
		Authorized Signing Officer
Witness Signature		*
Witness Name

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Anthony Giovinazzo, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Cynapsus Therapeutics Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2015	/s/ Anthony Giovinazzo
	Anthony Giovinazzo
	President and Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Williams, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Cynapsus Therapeutics Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2015
	/s/ Andrew Williams
	Andrew Williams
	Chief Operating Officer and Chief Financial Officer (principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Cynapsus Therapeutics Inc. (the “Company”) for the period ended June 30, 2015 (the “Report”), the undersigned hereby certify in their capacities as Chief Executive Officer and Chief Financial Officer of the Company, respectively, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

1.          the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.          the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2015	By:	/s/ Anthony Giovinazzo
		Anthony Giovinazzo
		President and Chief Executive Officer
		(principal executive officer)
Dated: August 14, 2015	By:	/s/ Andrew Williams
		Andrew Williams
		Chief Operating Officer and Chief Financial Officer
		(principal financial officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.