FLORA GROWTH CORP.
as the Corporation
and
TSX TRUST COMPANY
as the Warrant Agent
WARRANT INDENTURE
Providing for the Issue of Warrants
Providing for the Issue of Warrants
Dated as of January 20, 2020
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TABLE OF CONTENTS
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Page
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ARTICLE 1 INTERPRETATION
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1.1 Definitions.
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6
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1.2 Gender and Number.
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11
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1.3 Headings, Etc.
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11
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1.4 Day not a Business Day.
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11
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1.5 Time of the Essence.
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11
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1.6 Monetary References.
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12
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1.7 Applicable Law.
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12
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1.8 Meaning of “outstanding” for Certain Purposes
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12
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1.9 Conflicts
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13
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ARTICLE 2 ISSUE OF WARRANTS
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2.1 Creation and Issue of Warrants.
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13
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2.2 Terms of Warrants.
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2.3 Warrantholder not a Shareholder.
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2.4 Warrants to Rank Pari Passu.
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14
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2.5 Form of Warrants.
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14
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2.6 Book Entry Only Warrants.
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14
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2.7 Warrant Certificate.
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16
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2.8 Legends.
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17
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2.9 Register of Warrants
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21
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2.10 Issue in Substitution for Warrant Certificates Lost, etc.
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21
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2.11 Exchange of Warrant Certificates.
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22
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2.12 Transfer and Ownership of Warrants.
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22
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2.13 Cancellation of Surrendered Warrants.
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24
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ARTICLE 3 EXERCISE OF WARRANTS
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3.1 Right of Exercise.
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25
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3.2 Warrant Exercise.
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25
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3.3 U.S. Restrictions; Legended Certificates
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27
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3.4 Transfer Fees and Taxes.
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29
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3.5 Warrant Agency.
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30
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3.6 Effect of Exercise of Warrant Certificates.
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30
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3.7 Partial Exercise of Warrants; Fractions.
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31
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3.8 Expiration of Warrants.
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31
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3.9 Accounting and Recording.
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31
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3.10 Securities Restrictions.
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31
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-3-
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ARTICLE 4 ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE
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4.1 Adjustment of Number of Common Shares and Exercise Price.
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32
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4.2 Entitlement to Common Shares on Exercise of Warrant.
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36
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4.3 No Adjustment for Certain Transactions.
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36
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4.4 Determination by Independent Firm.
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36
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4.5 Proceedings Prior to any Action Requiring Adjustment.
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36
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4.6 Certificate of Adjustment.
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37
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4.7 Notice of Special Matters.
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37
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4.8 No Action after Notice.
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37
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4.9 Other Action.
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37
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4.10 Protection of Warrant Agent.
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38
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4.11 Participation by Warrantholder.
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38
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ARTICLE 5 RIGHTS OF THE CORPORATION AND COVENANTS
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5.1 Optional Purchases by the Corporation.
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38
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5.2 General Covenants.
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39
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5.3 Warrant Agent’s Remuneration and Expenses.
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40
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5.4 Performance of Covenants by Warrant Agent.
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40
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5.5 Enforceability of Warrants.
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41
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ARTICLE 6 ENFORCEMENT
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6.1 Suits by Warrantholders.
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41
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6.2 Suits by the Corporation.
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41
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6.3 Immunity of Shareholders, etc.
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6.4 Waiver of Default.
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42
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ARTICLE 7 MEETINGS OF WARRANTHOLDERS
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7.1 Right to Convene Meetings.
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42
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7.2 Notice.
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42
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7.3 Chairman.
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43
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7.4 Quorum.
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43
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7.5 Power to Adjourn.
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43
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7.6 Show of Hands.
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43
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7.7 Poll and Voting.
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44
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7.8 Regulations.
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44
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7.9 Corporation and Warrant Agent May be Represented.
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45
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7.10 Powers Exercisable by Extraordinary Resolution.
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7.11 Meaning of Extraordinary Resolution.
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7.12 Powers Cumulative.
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7.13 Minutes.
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47
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7.14 Instruments in Writing.
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47
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7.15 Binding Effect of Resolutions.
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7.16 Holdings by Corporation Disregarded.
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ARTICLE 8 SUPPLEMENTAL INDENTURES
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8.1 Provision for Supplemental Indentures for Certain Purposes.
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48
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8.2 Successor Entities.
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49
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ARTICLE 9 CONCERNING THE WARRANT AGENT
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9.1 Indenture Legislation.
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49
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9.2 Rights and Duties of Warrant Agent.
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49
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9.3 Evidence, Experts and Advisers.
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50
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9.4 Documents, Monies, etc. Held by Warrant Agent.
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51
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9.5 Actions by Warrant Agent to Protect Interest.
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51
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9.6 Warrant Agent Not Required to Give Security.
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51
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9.7 Protection of Warrant Agent.
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9.8 Replacement of Warrant Agent; Successor by Merger.
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52
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9.9 Conflict of Interest.
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53
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9.10 Acceptance of Agency
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54
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9.11 Warrant Agent Not to be Appointed Receiver.
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54
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9.12 Authorization to Carry on Business
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9.13 Warrant Agent Not Required to Give Notice of Default.
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54
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9.14 Anti-Money Laundering.
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9.15 Compliance with Privacy Code.
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9.16 Securities Exchange Commission Certification.
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ARTICLE 10 GENERAL
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10.1 Notice to the Corporation and the Warrant Agent.
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56
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10.2 Notice to Warrantholders.
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57
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10.3 Ownership of Warrants.
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57
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10.4 Counterparts and Electronic Copies.
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57
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10.5 Satisfaction and Discharge of Indenture.
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58
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10.6 Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders.
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58
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10.7 Warrants Owned by the Corporation - Certificate to be Provided.
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10.8 Severability
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10.9 Force Majeure
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59
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10.10 Assignment, Successors and Assigns
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10.11 Rights of Rescission and Withdrawal for Holders
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59
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SCHEDULE “A” FORM OF WARRANT CERTIFICATE
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SCHEDULE “B” FORM OF DECLARATION FOR REMOVAL OF LEGEND
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-5-
1.1 THIS WARRANT INDENTURE is dated as of January 20, 2020,
BETWEEN:
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FLORA GROWTH CORP., a corporation existing under the laws
of the Province of Ontario (the “Corporation”),
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- and -
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TSX TRUST COMPANY, a trust company existing under the laws
of Canada (the “Warrant Agent”)
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1.2 WHEREAS in connection with the private placement of Units (as defined herein), the Corporation is proposing to issue up to 20,000,000 Warrants (as defined herein) pursuant to this
Indenture;
1.3 AND WHEREAS pursuant to this Indenture, each Warrant shall, subject to adjustment, entitle the holder thereof to acquire one Common Share (as defined herein) upon payment of the Exercise
Price (as defined herein) prior to the Expiry Time upon the terms and conditions herein set forth;
1.4 AND WHEREAS all acts and deeds necessary have been done and performed to make the Warrants, when created and issued as provided in this Indenture, legal, valid and binding upon the
Corporation with the benefits and subject to the terms of this Indenture;
1.5 AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Corporation and not by the Warrant Agent;
1.6 NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Corporation hereby appoints the Warrant Agent as warrant agent to hold the rights, interests and benefits contained herein for and on behalf of those persons who from time to time become the holders of Warrants issued pursuant to
this Indenture and the parties hereto agree as follows:
In this Indenture, including the recitals and schedules attached hereto, and in all indentures supplemental hereto:
“Adjustment Period” means the period from the Effective Date up to and including the Expiry Time;
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“Applicable Legislation” means any statute of Canada or a province thereof, and the regulations
under any such named or other statute, relating to warrant indentures or to the rights, duties and obligations of warrant agents under warrant indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;
“Auditors” means a firm of chartered accountants duly appointed as auditors of the Corporation;
“Authenticated” means (a) with respect to the issuance of a Warrant Certificate, one which has
been duly signed by the Corporation and authenticated by manual signature of an authorized officer of the Warrant Agent, and (b) with respect to the issuance of an Uncertificated Warrant, one in respect of which the Warrant Agent has completed all
Internal Procedures such that the particulars of such Uncertificated Warrant as required by Section 2.7 are entered in the register of holders of Warrants, “Authenticate”, “Authenticating”
and “Authentication” have the appropriate correlative meanings;
“Book Entry Only Participants” means institutions that participate directly or indirectly in the
Depository’s book entry registration system for the Warrants;
“Book Entry Only Warrants” means Warrants that are to be held only by or on behalf of the
Depository;
“Business Day” means any day other than Saturday, Sunday or a statutory or civic holiday, or any
other day on which the banks are open for business in the City of Toronto, Ontario;
“CDS Global Warrants” means Warrants representing all or a portion of the aggregate number of
Warrants issued in the name of the Depository represented by an Uncertificated Warrant, or if requested by the Depository or the Corporation, by a Warrant Certificate;
“Certificated Warrant” means a Warrant evidenced by a writing or writings substantially in the
form of Schedule “A”, attached hereto;
“Common Shares” or “Shares” means, subject to
Article 4, fully paid and non-assessable common shares in the capital of the Corporation as presently constituted;
“Confirmation” has the meaning set forth in Section 3.2(2);
“Counsel” means a barrister or solicitor or a firm of barristers and solicitors retained by the
Warrant Agent or retained by the Corporation and acceptable to the Warrant Agent, acting reasonably, which may or may not be counsel for the Corporation;
“Current Market Price” means, at any date, the weighted average price per share at which the
Common Shares have traded:
(i) on a Recognized Stock Exchange;
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(i) if the Common Shares are not listed on a Recognized Stock Exchange, on any stock exchange upon which the Common Shares are listed as may be selected for this purpose by the Directors of the Corporation, acting reasonably;
or;
(i) if the Common Shares are not listed on any stock exchange, on any over-the-counter market on which the Common Shares are trading, as may be selected for this purpose by the Directors of the Corporation acting reasonably;
during the 20 consecutive Trading Days (on each of which at least 500 Common Shares are traded in board lots) ending the third Trading
Day before such date and the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold in board lots on the exchange or market, as the case may be, during the 20 consecutive Trading Days by the number
of Common Shares sold or, if not traded on any recognized market or exchange, as determined by the Directors of the Corporation, acting reasonably. Whenever the Current Market Price is required to be determined hereunder, the Corporation shall
deliver to the Warrant Agent a certificate of the Corporation specifying such Current Market Price and setting out the details of its calculation. In the event of any subsequent dispute as to the determination of the Current Market Price, the
Corporation’s Auditors shall make such determination which, absent manifest error, shall be binding for all purposes hereunder;
“Depository” means CDS Clearing and Depository Services Inc. or such other person as is
designated in writing by the Corporation to act as depository in respect of the Warrants;
“Directors” means the board of directors of the Corporation;
“Dividends” means any dividends paid by the Corporation;
“DRS” means the Direct Registration System maintained by the Warrant Agent, in the case of the
Warrants, or the Corporation’s transfer agent, in the case of the Common Shares;
“DRS Advice” means the notification produced by the DRS
evidencing ownership of the Warrants or Common Shares, as the case may be;
“Effective Date” means the date of this Indenture;
“Exchange Rate” means the number of Common Shares subject to the right of purchase under each
Warrant which as of the date hereof is one;
“Exercise Date” means, in relation to a Warrant, the Business Day on which such Warrant is
validly exercised or deemed to be validly exercised in accordance with Article 3 hereof;
“Exercise Notice” has the meaning set forth in Section 3.2(1);
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“Exercise Price” means US$1.00 for each Common Share payable in immediately available United
States funds, subject to adjustment in accordance with the provisions of Article 4;
“Expiry Date”, for a particular Warrant, means such date as is eighteen months from the
particular Issue Date of such Warrant;
“Expiry Time” means 5:00 p.m. (Toronto time) on the Expiry Date;
“Extraordinary Resolution” has the meaning set forth in Section 7.11;
“Internal Procedures” means in respect of the making of any one or more entries to, changes in or
deletions of any one or more entries in the register at any time (including without limitation, original issuance or registration of transfer of ownership) the minimum number of the Warrant Agent’s internal procedures customary at such time for the
entry, change or deletion made to be complete under the operating procedures followed at the time by the Warrant Agent;
“Issue Date” for a particular Warrant means the date on which the Warrant is actually issued by
or on behalf of the Corporation;
“person” means an individual, body corporate, partnership, trust, agent, executor, administrator,
legal representative or any unincorporated organization;
“Recognized Stock Exchange” means the Toronto Stock Exchange, TSX Venture Exchange, Canadian
Securities Exchange or any other recognized exchange in Canada or the United States within the meaning of applicable securities laws;
“register” means the one set of records and accounts maintained by the Warrant Agent pursuant to
Section 2.9;
“Regulation D” means Regulation D under the U.S. Securities Act;
“Regulation S” means Regulation S under the U.S. Securities Act;
“Shareholders” mean holders of Common Shares;
“this Warrant Indenture”, “this Indenture”, “this Agreement”, “hereto” “herein”, “hereby”, “hereof”
and similar expressions mean and refer to this Indenture and any indenture, deed or instrument supplemental hereto; and the expressions “Article”, “Section”, “subsection” and “paragraph” followed by a number, letter or both mean and refer to the specified article, section, subsection or paragraph of this Indenture;
“Trading Day” means a day on which the Recognized Stock Exchange on which the Common Shares are
listed and which forms the primary trading market for such shares is open for trading, and if the Common Shares are not listed on a stock exchange, a day on which an over-the-counter market where such shares are traded is open for business;
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“Uncertificated Warrant” means any Warrant which is not a Certificated Warrant, including DRS
Advices;
“United States” means the United States of America, its territories and possessions, any state of
the United States, and the District of Columbia;
“Unit” means units of the Corporation, each consisting of one Common Share and one-half of one
Warrant;
“U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended and the
rules and regulations promulgated thereunder;
“U.S. Person” means a “U.S. person” as set forth in Regulation S and includes, subject to certain
exclusions set out therein, the following: (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or
administrator is a U.S. Person; (iv) any trust of which any trustee is a U.S. Person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. Person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual)
resident in the United States; (viii) any partnership or corporation if (A) organized or incorporated under the laws of any jurisdiction other than the United States and (B) formed by a U.S. Person principally for the purpose of investing in
securities not registered under the U.S. Securities Act, unless it is organized or incorporated, and owned, by “accredited investors” (as defined in Rule 501(a) of Regulation D) who are not natural persons, estates or trusts;
“U.S. Purchaser” is (a) any U.S. Person that purchased Units, (b) any person that purchased Units
on behalf of any U.S. Person or any person in the United States, (c) any purchaser of Units that received an offer of the Units while in the United States, (d) any person that was in the United States at the time the purchaser’s buy order was made or
the subscription agreement for Units was executed or delivered;
“U.S. Securities Act” means the United States Securities Act of 1933, as amended and the rules
and regulations promulgated thereunder;
“U.S. Securities Laws” means all applicable securities legislation in the United States,
including without limitation, the U.S. Securities Act, the U.S. Exchange Act and the rules and regulations promulgated thereunder, and any applicable state securities laws;
“Warrant Agency” means the principal offices of the Warrant Agent in the City of Toronto or such
other place as may be designated in accordance with Section 3.5;
“Warrant Agent” means TSX Trust Company, in its capacity as warrant agent of the Warrants, or its
successors from time to time;
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“Warrant Certificate” means a certificate, substantially in the form set forth in Schedule “A”
attached hereto or such other form as may be approved by the Corporation and the Warrant Agent, to evidence those Warrants that will be evidenced by a certificate;
“Warrantholders”, or “holders” without reference to
Warrants, means the persons entered in the register hereinafter mentioned as holders of Warrants outstanding at such time;
“Warrantholders’ Request” means an instrument signed in
one or more counterparts by Warrantholders holding in the aggregate not less than 25% of the aggregate number of all Warrants then unexercised and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein;
“Warrants” means the Common Share purchase warrants created by and authorized by and issuable
under this Indenture, to be issued and Authenticated hereunder as a Certificated Warrant and/or Uncertificated Warrant, entitling the holder thereof to purchase one Common Share (subject to adjustment as herein provided) per Warrant at the Exercise
Price prior to the Expiry Time;
“Warrant Shares” has the meaning ascribed to such term in Section 2.8(1) hereof; and
“written order of the Corporation”, “written request of the
Corporation”, “written consent of the Corporation” and “certificate of the Corporation” mean, respectively, a written
order, request, consent and certificate signed in the name of the Corporation by at least one duly authorized signatory, or a person acting in any such capacity for the Corporation and may consist of one or more instruments so executed.
Words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice
versa.
The division of this Indenture into Articles and Sections, the provision of a 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 or of the Warrants.
If any day on or before which any action or notice is required to be taken or given hereunder is not a Business Day, then such action or
notice shall be required to be taken or given on or before the requisite time on the next succeeding day that is a Business Day.
Time shall be of the essence of this Indenture.
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Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise
expressed.
This Indenture, the Warrants and the Warrant Certificates (including all documents relating thereto, which by common accord have been and
will be drafted in English) shall be construed in accordance with the laws of the Province of Ontario and the federal laws applicable therein. Each of the parties hereto, which shall include the Warrantholders, irrevocably attorns to the exclusive
jurisdiction of the courts of the Province of Ontario with respect to all matters arising out of this Indenture and the transactions contemplated herein.
Except as otherwise provided herein, every Warrant Certificate Authorized and delivered by the Warrant Agent under this Indenture shall
be deemed to be outstanding until it has been surrendered to the Warrant Agent pursuant to this Indenture, provided however that:
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(a)
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a Warrant Certificate that has been partially exercised or exchanged shall be deemed to be outstanding only to the extent of the unexercised or
unexchanged, as the case may be, part of the Warrants evidenced thereby;
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(b)
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where a Warrant Certificate has been issued in substitution for a Warrant Certificate that has been lost, stolen or destroyed, only one of them
shall be counted for the purpose of determining the Warrants outstanding; and
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(c)
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for the purpose of any provision of this Indenture entitling holders of outstanding Warrants to vote, sign consents, requests or other instruments
or take any other action under this Indenture, Warrants owned legally or beneficially by the Corporation shall be disregarded, except that:
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(i)
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for the purpose of determining whether the Warrant Agent will be protected in relying on any vote, consent, request or other instrument or other
action, only the Warrants of which the Warrant Agent has written notice that they are so owned shall be so disregarded; and
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(ii)
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Warrants so owned that have been pledged in good faith other than to the Corporation shall not be so disregarded if the pledgee establishes to the
satisfaction of the Warrant Agent, relying on the written statement of the Corporation, the pledgee's right to vote the Warrants in the pledgee's discretion free from the control of the Corporation to the terms of the pledge.
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-12-
In the event of any conflict or inconsistency between the provisions of this Indenture and the Warrant Certificates, the provisions of
this Indenture will govern.
A maximum of 20,000,000 Warrants (subject to adjustment as herein provided) are hereby created and authorized to be issued in accordance
with the terms and conditions hereof. By written order of the Corporation, the Warrant Agent shall deliver Authenticated Warrants to Warrantholders and record the name of the Warrantholders on the Warrant register. Registration of interests in
Warrants held by the Depository may be evidenced by a position appearing on the register for Warrants for an amount representing the aggregate number of such Warrants outstanding from time to time.
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(1)
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Subject to the applicable conditions for exercise set out in Article 3 having been satisfied and subject to adjustment in accordance with
Article 4, each Warrant shall entitle each Warrantholder thereof, upon exercise at any time after the Issue Date and prior to the Expiry Time, to acquire one Common Share upon payment of the Exercise Price.
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(2)
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No fractional Warrants shall be issued or otherwise provided for hereunder and Warrants may only be exercised in a sufficient number to acquire
whole numbers of Common Shares. Any fractional Warrants or Common Shares shall be rounded down to the nearest whole number and the holder shall not be entitled to any compensation in respect of any fractional Warrant or Common Share which
is not issued.
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(3)
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Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture.
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(4)
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Except as may be specifically provided herein, nothing in this Indenture or in the holding of a Warrant Certificate, entitlement to a
Warrant or otherwise, shall, in itself, confer or 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 Dividends and other allocations.
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All Warrants shall rank equally and without preference over each other, whatever may be the actual date of issue thereof.
The Warrants may be issued in either certificated or uncertificated form. Each Warrant originally issued to, or for the account or
benefit of, a U.S. Purchaser must be evidenced by a Warrant Certificate or a DRS Advice and bear the applicable legend set forth in Section 2.8(1). All Warrants issued in certificated form shall be evidenced by a Warrant Certificate (including all
replacements issued in accordance with this Indenture), substantially in the form set out in Schedule “A” attached hereto, which shall be dated as of the Issue Date, shall bear such distinguishing letters and numbers as the Corporation may, with the
approval of the Warrant Agent, prescribe, and shall be issuable in any denomination excluding fractions. All Warrants issued to the Depository may be in either a certificated or uncertificated form, such uncertificated form being evidenced by a book
position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with Section 2.9.
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(1)
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Registration of beneficial interests in and transfers of Warrants held by the Depository shall be made only through the book entry registration
system and no Warrant Certificates shall be issued in respect of such Warrants except where physical certificates evidencing ownership in such securities are required or as set out herein or as may be requested by the Depository, as
determined by the Corporation, from time to time. Except as provided in this Section 2.6, owners of beneficial interests in any CDS Global Warrants shall not be entitled to have Warrants registered in their names and shall not receive or be
entitled to receive Warrants in definitive form or to have their names appear in the register referred to in Section 2.9 herein. Notwithstanding any terms set out herein, Warrants having the legend set forth in Section 2.8(1) herein may not
be held in the name of the Depository or in the form of Uncertificated Warrants.
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(a)
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the Depository notifies the Corporation that it is unwilling or unable to continue to act as depository in connection with the Book Entry Only
Warrants and the Corporation is unable to locate a qualified successor;
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(b)
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the Corporation determines that the Depository is no longer willing, able or qualified to discharge properly its responsibilities as holder of the
CDS Global Warrants and the Corporation is unable to locate a qualified successor;
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(c)
|
the Depository ceases to be a clearing agency or otherwise ceases to be eligible to be a depository and the Corporation is unable to locate a
qualified successor;
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-14-
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(d)
|
the Corporation determines that the Warrants shall no longer be held as Book Entry Only Warrants through the Depository;
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(e)
|
such right is required by applicable law, as determined by the Corporation and the Corporation’s Counsel; or
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(f)
|
the Warrant is to be Authenticated to or for the account or benefit of a person in the United States or a U.S. Person (in which case, the Warrant
Certificate shall contain the legend set forth in Section 2.8(1), if applicable);
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following which, Warrants Certificates shall be registered and issued to the beneficial owners of such Warrants or their nominees as directed by the
Depository. The Corporation shall provide a certificate of the Corporation giving notice to the Warrant Agent of the occurrence of any event outlined in this Section 2.6(2)(a) to (f).
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(3)
|
Subject to the provisions of this Section 2.6, any transfer of CDS Global Warrants for Warrants which are not CDS Global Warrants may be made in
whole or in part in accordance with the provisions of Section 2.12, mutatis mutandis. All such Warrants issued in exchange for a CDS Global Warrant or any portion thereof shall be registered in such names as the Depository for such CDS
Global Warrants shall direct and shall be entitled to the same benefits and subject to the same terms and conditions (except insofar as they relate specifically to CDS Global Warrants or to any legend required by Section 2.8(1) and the
restrictions set out in such legend) as the CDS Global Warrants or portion thereof surrendered upon such exchange.
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|
(4)
|
Every Warrant that is Authenticated upon registration or transfer of a CDS Global Warrant, or in exchange for or in lieu of a CDS Global Warrant
or any portion thereof, whether pursuant to this Section 2.6, or otherwise, shall be Authenticated in the form of, and shall be, a CDS Global Warrant, unless such Warrant is registered in the name of a person other than the Depository for
such CDS Global Warrant or a nominee thereof.
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|
(5)
|
Notwithstanding anything to the contrary in this Indenture, subject to applicable law, the CDS Global Warrant will be issued as an Uncertificated
Warrant, unless otherwise requested in writing by the Depository or the Corporation.
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|
(6)
|
The rights of beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system
shall be limited to those established by applicable law and agreements between the Depository and the Book Entry Only Participants and between such Book Entry Only Participants and the beneficial owners of Warrants who hold securities
entitlements in respect of the Warrants through the book entry registration system, and such rights must be exercised through a Book Entry Only Participant in accordance with the rules and procedures of the Depository.
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-15-
|
(7)
|
Notwithstanding anything herein to the contrary, neither the Corporation nor the Warrant Agent nor any agent thereof shall have any responsibility
or liability for:
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|
(a)
|
the electronic records maintained by the Depository relating to any ownership interests or any other interests in the Warrants or the depository
system maintained by the Depository, or payments made on account of any ownership interest or any other interest of any person in any Warrant represented by an electronic position in the book entry registration system (other than the
Depository or its nominee);
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|
(b)
|
maintaining, supervising or reviewing any records of the Depository or any Book Entry Only Participant relating to any such interest; or
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|
(c)
|
any advice or representation made or given by the Depository or those contained herein that relate to the rules and regulations of the Depository
or any action to be taken by the Depository on its own direction or at the direction of any Book Entry Only Participant.
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|
(8)
|
The Corporation may terminate the application of this Section 2.6 in its sole discretion in which case all Warrants shall be evidenced by Warrant
Certificates registered in the name of a person other than the Depository.
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|
(1)
|
For Warrants issued in certificated form, the form of certificate representing Warrants shall be substantially as set out in Schedule “A” attached
hereto or such other form as is authorized from time to time by the Warrant Agent. Each Warrant Certificate shall be Authenticated manually on behalf of the Warrant Agent. Each Warrant Certificate shall be signed by either of the Chief
Executive Officer or Chief Financial Officer of the Corporation whose signature shall appear on the Warrant Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event, certificates so signed
are as valid and binding upon the Corporation as if it had been signed manually. Any Warrant Certificate which has the applicable signatures as hereinbefore provided shall be valid notwithstanding that one or more of the persons whose
signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in
another, as the Warrant Agent may determine.
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|
(2)
|
The Warrant Agent shall Authenticate Uncertificated Warrants by completing its Internal Procedures and the Corporation shall, and hereby
acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Warrants under this Indenture. Such Authentication shall be conclusive evidence that such Uncertificated Warrant has been duly issued
hereunder and that the holder or holders are entitled to the benefits of this Indenture. The register shall be final and conclusive evidence as to all matters relating to Uncertificated Warrants with respect to which this Indenture requires
the Warrant Agent to maintain records or accounts. In case of differences between the register at any time and any other time the register at the later time shall be controlling, absent manifest error and such Uncertificated Warrants are
binding on the Corporation.
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-16-
|
(3)
|
Any Warrant Certificate validly issued in accordance with the terms of this Indenture in effect at the time of issue of such Warrant Certificate
shall, subject to the terms of this Indenture and applicable law, validly entitle the holder to acquire Common Shares, notwithstanding that the form of such Warrant Certificate may not be in the form currently required by this Indenture.
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|
(4)
|
No Warrant shall be considered issued and shall be valid or obligatory or shall entitle the holder thereof to the benefits of this Indenture,
until it has been Authenticated by the Warrant Agent. Authentication by the Warrant Agent shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrant Certificates or
Uncertificated Warrants (except the due Authentication thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the
Warrants or any of them or of the consideration thereof. Authentication by the Warrant Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated have been duly issued hereunder and that the holder
thereof is entitled to the benefits of this Indenture.
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|
(5)
|
No Certificated Warrant shall be considered issued and shall be obligatory or shall entitle the holder thereof to the benefits of this Indenture,
until it has been Authenticated by manual signature by or on behalf of the Warrant Agent. Such Authentication on any such Certificated Warrant shall be conclusive evidence that such Certificated Warrant is duly Authenticated and is valid
and a binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture.
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|
(6)
|
No Uncertificated Warrant shall be considered issued and shall be obligatory or shall entitle the holder thereof to the benefits of this
Indenture, until it has been Authenticated by entry on the register of the particulars of the Uncertificated Warrant. Such entry on the register of the particulars of an Uncertificated Warrant shall be conclusive evidence that such
Uncertificated Warrant is a valid and binding obligation of the Corporation and that the beneficial owner is entitled to the benefits of this Indenture.
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-17-
Subject to the terms of the Warrant Certificate, and applicable law, certificates representing the Warrants until such time as the same
is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, bear a legend in substantially the following form:
“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN QUALIFIED PURSUANT TO
REGULATION A OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) AND ARE EXEMPT FROM REGISTRATION UNDER STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT UNLESS SUCH SECURITIES ARE REGISTERED OR CONTINUE TO BE QUALIFIED PURSUANT TO REGULATION A UNDER THE U.S. SECURITIES ACT, SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY PURSUANT TO OTHER EXEMPTIONS FROM THE U.S. SECURITIES
ACT AND STATE SECURITIES LAWS.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE
DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) [THE DISTRIBUTION DATE]; AND (II) THE DATE THE COMPANY BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.”
Subject to the terms of the Warrant Certificate, and applicable law, certificates representing any Warrant Shares issued on exercise of
Warrants originally issued in the United States or to, or for the account or benefit of, a U.S. Person, and any certificates issued in replacement thereof or in substitution therefor, shall, until such time as the same is no longer required under
applicable requirements of the U.S. Securities Act or applicable state securities laws, bear a legend in substantially the following form:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
-18-
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B) TO NON-“U.S. PERSONS” (AS DEFINED IN RULE 902 OF REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S PROMULGATED UNDER THE
U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 PROMULGATED THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE COMPANY AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK
EXCHANGE.”
provided that, if any such Warrants and any Warrant Shares issued on exercise of Warrants are being sold outside the United States in
accordance with Rule 904 of Regulation S, if available, and in compliance with applicable local securities laws and regulations, and provided that the Corporation is a “foreign issuer” within the meaning of Regulation S at the time of sale, the
legend set forth above may be removed by providing a declaration to the Corporation’s registrar and the Warrant Agent to the effect set forth in Schedule “B” attached hereto together with such documentation as the Corporation or Warrant Agent may
reasonably request; provided, further, that, if any securities are being sold pursuant to Rule 144 under the U.S. Securities Act or with the prior written consent of the Corporation pursuant to another exemption from registration under the U.S.
Securities Act and applicable state securities laws, the legend may be removed by delivery to the Corporation and to the Warrant Agent of an opinion of counsel, satisfactory in form and substance to the Corporation, to the effect that such legend is
no longer required under applicable requirements of the U.S. Securities Act or state securities laws.
-19-
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4
MONTHS AND A DAY AFTER THE LATER OF (I) [DISTRIBUTION DATE], AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”
provided that if, at any time, in the opinion of Counsel to the Corporation, such legend is no longer necessary or advisable under
applicable securities laws, or the holder of any such legended certificate, at the holder’s expense, provides the Corporation with evidence satisfactory in form and substance to the Corporation (which may include an opinion of counsel satisfactory to
the Corporation) to the effect that such legend is not required, such legended certificate may thereafter be surrendered to the Corporation in exchange for a certificate which does not bear such legend.
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(3)
|
Each CDS Global Warrant if issued as a Certificated Warrant originally issued in Canada and held by the Depository and each
Warrant Certificate issued in exchange therefor or in substitution thereof shall bear the following legend or such variations thereof as the Corporation may prescribe from time to time:
|
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND
DEPOSITORY SERVICES INC. (“CDS”) TO FLORA GROWTH CORP. (THE “ISSUER”) OR ITS 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 REQUESTED 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 HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS
CERTIFICATE.”
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(4)
|
Notwithstanding any other provisions of this Indenture, in processing and registering transfers of Warrants, no duty or responsibility whatsoever shall rest upon
the Warrant Agent to determine the compliance by any transferor or transferee with the terms of the legend contained in subsections 2.8(1), 2.8(2) or 2.8(3), or with the relevant securities laws or regulations, including, without
limitation, Regulation S and the Warrant Agent shall be entitled to assume that all transfers that are processed in accordance with this Indenture are legal and proper.
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-20-
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(a)
|
the name and address of the holder of the Warrants, the date of Authentication thereof and the number of Warrants;
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(b)
|
whether such Warrant is a Certificated Warrant or an Uncertificated Warrant and, if a Warrant Certificate, the unique number or code assigned to
and imprinted thereupon and, if an Uncertificated Warrant, the unique number or code assigned thereto if any;
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(c)
|
whether such Warrant has been cancelled; and
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(d)
|
a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered.
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The register shall be available for inspection by the Corporation and/or any Warrantholder during the Warrant Agent’s regular business
hours on a Business Day and upon payment to the Warrant Agent of its reasonable fees. Any Warrantholder exercising such right of inspection shall first provide an affidavit in form satisfactory to the Corporation and the Warrant Agent stating the
name and address of the Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders or to influence the voting of Warrantholders at any meeting of Warrantholders.
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(1)
|
If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and
thereupon the Warrant Agent shall certify and deliver, a new Warrant Certificate of like tenor, and bearing the same legend, if applicable, as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon
cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Warrant Agent and the
Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder.
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(2)
|
The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.10 shall bear the cost of the issue thereof and in case of
mutilation shall, as a condition precedent to the issue thereof, deliver to the Warrant Agent the mutilated Warrant Certificate, and in case of loss, destruction or theft shall, as a condition precedent to the issuance thereof, furnish to
the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent, in their
sole discretion, acting reasonably, and such applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation and the Warrant Agent, in their sole discretion, and shall pay the
reasonable charges of the Corporation and the Warrant Agent in connection therewith.
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-21-
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(1)
|
Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Warrant
Agent (including compliance with applicable securities legislation), be exchanged for one or more other Warrant Certificates representing the same aggregate number of Warrants, and bearing the same legend, if applicable, as represented by
the Warrant Certificate or Warrant Certificates so exchanged.
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(2)
|
Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is designated by the Corporation with the approval of
the Warrant Agent. Any Warrant Certificate tendered for exchange shall be cancelled and surrendered to the Warrant Agent.
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(1)
|
The Warrants may only be transferred on the register kept by the Warrant Agent at the Warrant Agency by the holder or its legal representatives or
its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Warrant Agent only upon:
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| (a) |
in the case of a Warrant Certificate, surrendering to the Warrant Agent at the Warrant Agency the Warrant Certificates representing the Warrants to be transferred together with a duly
executed transfer form as set forth in Schedule “A” attached hereto (together with a declaration for removal of legend or opinion of counsel, if required by Sections 2.8(1));
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| (b) |
in the case of Book Entry Only Warrants, in accordance with procedures prescribed by the Depository under the book entry registration system;
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| (c) |
in the case of DRS Advices, in accordance with the procedures prescribed by the Warrant Agent; and
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| (d) |
upon compliance with:
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|
(i)
|
the conditions herein;
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(ii)
|
such reasonable requirements as the Warrant Agent may prescribe; and
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(iii)
|
all applicable securities legislation and requirements of regulatory authorities;
|
-22-
and, in the case of a Certificated Warrant, such transfer shall be duly noted in such register by the Warrant Agent. Upon compliance with
such requirements, the Warrant Agent shall issue to the transferee of a Certificated Warrant, a Warrant Certificate or a DRS Advice, as applicable, representing the Warrants transferred.
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(2)
|
If a Warrant Certificate tendered for transfer bears the legend set forth in 2.8(1), the Warrant Agent shall not register such transfer unless the
transferor has provided the Warrant Agent with the Warrant Certificate and such securities may be transferred only (A) to the Corporation, (B) outside the United States in accordance with Rule 904 of Regulation S and in compliance with
applicable local securities laws and regulations, if available, (C) within the United States in accordance with the exemption from registration under the U.S. Securities Act provided by (i) Rule 144 or (ii) Rule 144A and in compliance with
applicable local laws and regulations, if available, or (D) with the prior written consent of the Corporation pursuant to another exemption from registration under the U.S. Securities Act and applicable state securities laws after first
providing to the Corporation and the Warrant Agent (1) in the case of a transfer pursuant to clause B, a declaration in the form of Schedule “B” attached hereto together with such additional documentation as the Corporation and the Warrant
Agent may reasonably prescribe, OR (2) in the case of a transfer pursuant to clause C(i) or clause D, an opinion of U.S. counsel of recognized standing in form and substance satisfactory to the Corporation and the Warrant Agent that the
offer, sale, pledge or other transfer does not require registration under the U.S. Securities Act or applicable state securities laws, or after first providing to the Corporation such other evidence of compliance with applicable securities
laws as the Corporation shall reasonably request. Warrants and, if applicable, Warrant Shares, issued to, or for the account or benefit of, a U.S. Purchaser (and any certificates issued in replacement thereof or in substitution therefor)
must be issued only in individually certificated form.
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(3)
|
Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled to the rights and privileges attaching to the
Warrants, and the issue of Common Shares by the Corporation upon the exercise of Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and the Warrant Agent with
respect to such Warrants and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder.
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|
(4)
|
The Corporation will be entitled, and may direct the Warrant Agent, to refuse to recognize any transfer, or enter the name of any transferee, of
any Warrant on the register kept by the Warrant Agent, if such transfer would constitute a violation of securities laws or the rules, regulations or policies of any regulatory authority having jurisdiction. The Warrant Agent is entitled to
assume compliance with all applicable Securities Laws unless otherwise notified in writing by the Corporation. No duty shall rest with the Warrant Agent to determine compliance of the transferee or transferor of any Warrant with securities
laws.
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-23-
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(5)
|
The Corporation will be entitled, and may direct the Warrant Agent, to refuse to allow the exercise of Warrants, in whole or in part, and the
Corporation and the Warrant Agent acting on the direction of the Corporation will not give effect to any such exercise, if, after giving effect to such exercise, the Warrantholder, together with any person or company acting jointly or in
concert with the Warrantholder (the “Joint Actors”) would in the aggregate beneficially own, or exercise control or direction over that number of voting securities of the Corporation which is 20% or
greater of the total issued and outstanding voting securities of the Corporation, immediately after giving effect to such exercise. For greater certainty, a Warrantholder may not exercise their Warrants in whole or in part, and the Warrant
Agent and the Corporation will not give effect to any such exercise, if, after giving effect to such exercise, the Holder, together with its Joint Actors, would be deemed to hold a number of voting securities sufficient to materially affect
the control of the Corporation.
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|
(6)
|
Notwithstanding any provision to the contrary contained herein, no Shares will be issued pursuant to the exercise of any Warrant if the issuance
of such securities would constitute a violation of the securities laws of any applicable jurisdiction, and the certificates evidencing the Shares thereby issued may bear such legend as may, in the opinion of legal counsel to the Company, be
necessary in order to avoid a violation of any securities laws of any applicable jurisdiction or to comply with the requirements of any Recognized Stock Exchange on which the Shares of the Company are listed, provided that, at any time, in
the opinion of legal Counsel to the Company, such legends are no longer necessary in order to avoid a violation of any such laws, or the holder of any such legended certificate, at that holder's expense, provides the Company with evidence
satisfactory in form and substance to the Company (which may include an opinion of legal counsel satisfactory to the Company) to the effect that such holder is entitled to sell or otherwise transfer such Shares in a transaction in which
such legends are not required, such legended certificate may thereafter be surrendered to the Company in exchange for a certificate which does not bear such legend.
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All Warrant Certificates surrendered pursuant to Article 3 or transferred or exchanged pursuant to Article 2 shall be cancelled by the
Warrant Agent and upon such circumstances all such Uncertificated Warrants shall be deemed cancelled and so noted on the register by the Warrant Agent. Upon request by the Corporation, the Warrant Agent shall furnish to the Corporation a cancellation
certificate identifying the Warrant Certificates so cancelled, the number of Warrants evidenced thereby, the number of Common Shares, if any, issued pursuant to such Warrants, as applicable, and the details of any Warrant Certificates issued in
substitution or exchange for such Warrant Certificates cancelled.
-24-
Subject to the provisions hereof, each Warrantholder may exercise the right conferred on such holder to subscribe for and purchase one
Common Share for each Warrant after the Issue Date and prior to the Expiry Time and in accordance with the conditions herein; provided, however, that if a Warrant Certificate tendered for exercise bears the legend set forth in 2.8(1), such exercise
must be permitted under applicable U.S. Securities Laws.
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(3)
|
Payment representing the aggregate Exercise Price must be provided to the appropriate office of the Book Entry Only Participant in a manner
acceptable to it. A notice in form acceptable to the Book Entry Only Participant and payment from such beneficial holder should be provided to the Book Entry Only Participant sufficiently in advance so as to permit the Book Entry Only
Participant to deliver notice and payment to the Depository and for the Depository in turn to deliver notice and payment to the Warrant Agent prior to the Expiry Time. The Depository will initiate the exercise by way of the Confirmation and
forward the aggregate Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to the Depository through the book entry registration system the Common Shares to which the exercising
Warrantholder is entitled pursuant to the exercise. Any expense associated with the exercise process will be for the account of the entitlement holder exercising the Warrants and/or the Book Entry Only Participant exercising the Warrants on
its behalf.
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-25-
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(4)
|
By causing a Book Entry Only Participant to deliver notice to the Depository, a Warrantholder shall be deemed to have irrevocably surrendered his
or her Warrants so exercised and appointed such Book Entry Only Participant to act as his or her exclusive settlement agent with respect to the exercise and the receipt of Common Shares in connection with the obligations arising from such
exercise.
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|
(5)
|
Any notice which the Depository determined to be incomplete, not in proper form or not duly executed shall for all purposes be void and of no
effect and the exercise to which it relates shall be considered for all purposes not to have been exercised thereby. A failure by a Book Entry Only Participant to exercise or to give effect to the settlement thereof in accordance with the
Warrantholder’s instructions will not give rise to any obligations or liability on the part of the Corporation or Warrant Agent to the Book Entry Only Participant or the beneficial owner.
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|
(6)
|
The Exercise Notice referred to in this Section 3.2 shall be signed by the Warrantholder, or its executors or administrators or other legal
representatives or an attorney of the Warrantholder, duly appointed by an instrument in writing satisfactory to the Warrant Agent but such Exercise Notice need not be executed by the Depository.
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|
(7)
|
Any exercise referred to in this Section 3.2 shall require that the entire Exercise Price for Common Shares subscribed for must be paid at the
time of subscription and such Exercise Price and original Exercise Notice executed by the Warrantholder or the Confirmation from the Depository must be received by the Warrant Agent prior to the Expiry Time.
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|
(8)
|
Notwithstanding the foregoing in this Section 3.2, Warrants may only be exercised pursuant to this Section 3.2 by or on behalf of a Warrantholder
(excluding the Depository), who is permitted to and makes one of the certifications set forth on the Exercise Notice and delivers, if applicable, any opinion or other evidence as required by the Corporation.
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|
(9)
|
If the form of Exercise Notice set forth in the Warrant Certificate shall have been amended, the Corporation shall cause the amended Exercise
Notice to be forwarded to all Warrantholders.
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|
(10)
|
Exercise Notices and Confirmations must be delivered to the Warrant Agent at any time during the Warrant Agent’s actual business hours on any Business Day prior to the Expiry Time. Any
Exercise Notice or Confirmations received by the Warrant Agent after business hours on any Business Day will be deemed to have been received by the Warrant Agent on the next following Business Day.
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-26-
|
(11)
|
Any Warrant with respect to which an Exercise Notice or Confirmation is not received by the Warrant Agent before the Expiry Time shall be deemed to have expired and become void and all
rights with respect to such Warrants shall terminate and be cancelled.
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-27-
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(iv)
|
|
(2)
|
No certificates representing Common Shares will be registered or delivered to an address in the United States unless the Warrantholder complies
with the requirements set forth in subsection 3.3(1)(ii), 3.3(1)(iii) or 3.3(1)(iv) and, in the case of 3.3(1)(iv), the Corporation has confirmed in writing to the Warrant Agent that the opinion of counsel and such other evidence required
by the Corporation is reasonably satisfactory to the Corporation. The certificates representing any Common Shares issued in connection with the exercise of Warrants pursuant to subsection 3.3(1)(ii), 3.3(1)(iii) or 3.3(1)(iv) shall bear the
legend set forth in subsection 3.3(3) of this Indenture. Certificates representing Common Shares issued in connection with the exercise of Warrants pursuant to subsection 3.3(1)(i) shall not bear the legend set forth in subsection 3.3(3).
Warrant Shares, issued to, or for the account or benefit of, a U.S. Purchaser that is an “accredited investor” (and any certificates issued in replacement thereof or in substitution therefor) must be issued only in individually certificated
form.
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|
(3)
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Certificates representing Common Shares issued upon the exercise of Warrants which bear the legend set forth in 2.8(1) and which are issued and
delivered pursuant to Section 3.3(1)(ii), 3.3(1)(iii) and 3.3(1)(iv) (and each certificate issued in exchange therefor or in substitution thereof) shall bear the following legend:
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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B) TO NON-“U.S. PERSONS” (AS DEFINED IN
RULE 902 OF REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND
REGULATIONS; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 PROMULGATED THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.”
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(4)
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Common Shares issued upon the exercise of Warrants prior to the expiration of applicable hold periods shall bear or be deemed to bear the
following legend:
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“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4
MONTHS AND A DAY AFTER THE LATER OF (I) [DISTRIBUTION DATE], AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”
provided that if, at any time, in the opinion of counsel to the Corporation, such legend is no longer necessary or advisable under
applicable securities laws, or the holder of any such legended certificate, at the holder’s expense, provides the Corporation with evidence satisfactory in form and substance to the Corporation (which may include an opinion of counsel satisfactory to
the Corporation) to the effect that such legend is not required, such legended certificate may thereafter be surrendered to the Corporation in exchange for a certificate which does not bear such legend.
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(5)
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Any unexercised Warrants must be re-issued in certificated form and bear the legend set out in Section 2.8(1) and Section 2.8(2), as applicable.
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If any of the Common Shares subscribed for are to be issued to a person or persons other than the Warrantholder, the Warrantholder shall
execute the form of transfer and will comply with such reasonable requirements as the Warrant Agent may stipulate and will pay to the Corporation or the Warrant Agent on behalf of the Corporation, all applicable transfer or similar taxes and the
Corporation will not be required to issue or deliver certificates evidencing Common Shares unless or until such Warrantholder shall have paid to the Corporation or the Warrant Agent on behalf of the Corporation, the amount of such tax or shall have
established to the satisfaction of the Corporation and the Warrant Agent that such tax has been paid or that no tax is due.
-29-
To facilitate the exchange, transfer or exercise of Warrants and compliance with such other terms and conditions hereof as may be
required, the Corporation has appointed the Warrant Agency, as the agency at which Warrants may be surrendered for exchange or transfer or at which Warrants may be exercised and the Warrant Agent has accepted such appointment. The Corporation may
from time to time designate alternate or additional places as the Warrant Agency (subject to the Warrant Agent’s prior approval) and will give notice to the Warrant Agent of any proposed change of the Warrant Agency. Branch registers shall also be
kept at such other place or places, if any, as the Corporation, with the approval of the Warrant Agent, may designate. The Warrant Agent will from time to time when requested to do so by the Corporation or any Warrantholder, subject to Section
2.9(1), upon payment of the Warrant Agent’s reasonable charges, furnish a list of the names and addresses of Warrantholders showing the number of Warrants held by each such Warrantholder.
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(1)
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Upon the exercise of Warrants pursuant to and in compliance with Section 3.2 and subject to Section 3.3 and Section 3.4, the Common Shares to be
issued pursuant to the Warrants exercised shall be deemed to have been issued and the person or persons to whom such Common Shares are to be issued upon exercise of the Warrants shall be deemed to have become the holder or holders of such
Common Shares as of the Exercise Date, unless the registers shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such person or persons deemed to have become the holder or
holders of record of such Common Shares, on the date on which such registers are reopened. It is hereby understood that in order for persons to whom Common Shares are issued to become holders of Common Shares of record on the Exercise Date,
beneficial holders must commence the exercise process sufficiently in advance so that the Warrant Agent is in receipt of all items of exercise at least one Business Day prior to such Exercise Date.
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(2)
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As soon as practicable, and in any event no later than within 10 Business Days after the Exercise Date with respect to a Warrant, the Warrant
Agent shall cause to be delivered or mailed to the person or persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such person or persons at the Warrant Agency where
the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for, or any other appropriate evidence of the issuance of Common Shares to such person or persons in respect of
Common Shares issued under the book entry registration system.
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(1)
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The holder of any Warrants may exercise his right to acquire a number of whole Common Shares less than the aggregate number which the holder is
entitled to acquire. In the event of any exercise of a number of Warrants less than the number which the holder is entitled to exercise, the holder of Warrants upon such exercise shall, in addition, be entitled to receive, without charge
therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate evidence of Warrants, in respect of the balance of the Warrants held by such holder and which were not then exercised.
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(2)
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Notwithstanding anything herein contained including any adjustment provided for in Article 4, the Corporation shall not be required, upon the
exercise of any Warrants, to issue fractions of Common Shares. Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Common Shares shall be rounded down to the nearest whole number
and the holder of such Warrants shall not be entitled to any compensation in respect of any fractional Common Share which is not issued.
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(1)
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(1)
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The Warrant Agent shall promptly account to the Corporation with respect to Warrants exercised, and shall promptly forward to the Corporation (or
into an account or accounts of the Corporation with the bank or trust company designated by the Corporation for that purpose), all monies received by the Warrant Agent on the subscription of Common Shares through the exercise of Warrants
and any securities or other instruments, from time to time received by the Warrant Agent shall be received for the benefit of, and shall be segregated and kept apart by the Warrant Agent for, the Warrantholders and the Corporation as their
interests may appear.
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(2)
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The Warrant Agent shall record the particulars of Warrants exercised, which particulars shall include the names and addresses of the persons who
become holders of Common Shares on exercise and the Exercise Date, in respect thereof. The Warrant Agent shall provide such particulars in writing to the Corporation within five Business Days of any request by the Corporation therefor.
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Notwithstanding anything herein contained, Common Shares will be issued upon exercise of a Warrant only in compliance with the securities
laws of any applicable jurisdiction.
-31-
The subscription rights in effect under the Warrants for Common Shares issuable upon the exercise of the Warrants shall be subject to
adjustment from time to time as follows:
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(i)
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(ii)
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(iii)
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(any of such events in Section 4.1(a) being called a “Common Share Reorganization”) then the
Exercise Price shall be adjusted as of the effective date or record date of such subdivision, re-division, change, reduction, combination, consolidation, distribution or stock dividend, as the case may be, by multiplying the Exercise Price in effect
immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding as of the effective date or record date after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible into Common
Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date or effective date).
Such adjustment shall be made successively whenever any event referred to in this Section 4.1(a) shall occur. Upon any adjustment of the Exercise Price
pursuant to Section 4.1(a), the Exchange Rate shall be contemporaneously adjusted by multiplying the number of Common Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;
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(b)
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if and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the issuance of rights, options or
warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities
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-32-
-33-
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less the excess, if any, of the fair market value on such record date, as determined by the Directors (whose determination shall be
conclusive), of such securities or other assets so issued or distributed over the fair market value of any consideration received therefor by the Corporation from the holders of the Common Shares, and of which the denominator shall be
the total number of Common Shares outstanding on such record date multiplied by such Current Market Price; and Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of
any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that such distribution is not so made, the Exercise Price shall be readjusted to the Exercise Price which would then be
in effect if such record date had not been fixed. Upon any adjustment of the Exercise Price pursuant to this Section 4.1(c), the Exchange Rate will be adjusted immediately after such record date so that it will equal the rate determined
by multiplying the Exchange Rate in effect on such record date by a fraction, of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting
from such adjustment;
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the Warrantholders to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as
may reasonably be, with respect to any shares, other securities or property to which a Warrantholder is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Warrant
Agent pursuant to the provisions of this Section 4.1(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 8 hereof. Any indenture entered into between the Corporation, any successor to the Corporation or
such purchasing body corporate, partnership, trust or other entity and the Warrant Agent shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which
shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, sales or conveyances;
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(f)
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in any case in which Section 4.1(a)(iii), Section 4.1(b) or Section 4.1(c) require that an adjustment be made to the Exercise Price, no such
adjustment shall be made if the Warrantholders of the outstanding Warrants receive, subject to the approval of the Recognized Stock Exchange on which the Common Shares are listed if required, the rights or warrants referred to in
Section 4.1(a)(iii), Section 4.1(b) or the shares, rights, options, warrants, evidences of indebtedness or assets referred to in Section 4.1(c), as the case may be, in such kind and number as they would have received if they had been
holders of Common Shares on the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised into Common Shares at the Exercise Price in effect on the applicable record date
or effective date, as the case may be;
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(h)
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after any adjustment pursuant to this Section 4.1, the term “Common Shares” where used in this Indenture shall be interpreted to mean securities
of any class or classes which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Warrantholder is entitled to receive upon the exercise of his Warrant, and the number of Common Shares indicated by
any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to
this Section 4.1, upon the full exercise of a Warrant.
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All Common Shares or shares of any class or other securities, which a Warrantholder is at the time in question entitled to receive on the
permitted exercise of its Warrant, whether or not as a result of adjustments made pursuant to this Article 4, shall, for the purposes of the interpretation of this Indenture, be deemed to be Common Shares which such Warrantholder is entitled to
acquire pursuant to such Warrant.
Notwithstanding anything in this Article 4, no adjustment shall be made in the acquisition rights attached to the Warrants if the issue
of Common Shares is being made pursuant to this Indenture or in connection with (a) any share incentive plan or restricted share plan or share purchase plan in force from time to time for directors, officers, employees, consultants or other service
providers of the Corporation; or (b) the satisfaction of existing instruments issued at the date hereof.
In the event of any question or dispute arising with respect to the adjustments provided for in this Article 4 such question shall be
conclusively determined by the Auditors, or if the Auditors decline to so act, an independent firm of chartered accountants in the Province of Ontario, who shall have access to all necessary records of the Corporation, and such determination shall be
binding upon the Corporation, the Warrant Agent, all holders and all other persons interested therein.
As a condition precedent to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any
of the Warrants, including the number of Common Shares 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 has unissued and
reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Common Shares which the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions
hereof.
-36-
The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as
provided in Article 4, deliver a certificate of the Corporation to the Warrant Agent specifying the nature of the event requiring the same and the amount of the adjustment or readjustment necessitated thereby and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based. The Warrant Agent shall rely, and shall be protected in so doing, upon the certificate of the Corporation and any other document filed by the Corporation pursuant to this
Article 4 for all purposes.
The Corporation covenants with the Warrant Agent that, so long as any Warrant remains outstanding, it will give notice to the Warrant
Agent and to the Warrantholders of its intention to fix a record date that is prior to the Expiry Date for any matter for which an adjustment may be required pursuant to Section 4.1. Such notice shall specify the particulars of such event and the
record date for such event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which the notice is given. The Corporation shall give such
notice in each case not less than 10 Business Days prior to such applicable record date. If notice has been given and the adjustment is not then determinable, the Corporation shall promptly, after the adjustment is determinable, file with the Warrant
Agent a computation of the adjustment and give notice to the Warrantholders of such adjustment computation.
The Corporation covenants with the Warrant Agent that it will not close its transfer books or take any other corporate action which might
deprive the Warrantholder of the opportunity to exercise its right of acquisition pursuant thereto during the period of 10 Business Days after the giving of the certificate or notices set forth in Section 4.6 and Section 4.7.
If the Corporation, after the date hereof, shall take any action affecting the Common Shares other than action described in Section 4.1,
which in the reasonable opinion of the Directors would materially affect the rights of Warrantholders, the Exercise Price and/or Exchange Rate, the number of Common Shares which may be acquired upon exercise of the Warrants shall be adjusted in such
manner and at such time, by action of the Directors, acting reasonably and in good faith, in their sole discretion as they may determine to be equitable to the Warrantholders in the circumstances, provided that no such adjustment will be made unless
any requisite prior approval of any stock exchange on which the Common Shares are listed for trading has been obtained.
-37-
The Warrant Agent shall not:
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(a)
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at any time be under any duty or responsibility to any Warrantholder to determine whether any facts exist which may require any adjustment
contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;
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(b)
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be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any other securities or property which may
at any time be issued or delivered upon the exercise of the rights attaching to any Warrant;
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(c)
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be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of
any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article; and
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(d)
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incur any liability or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations,
warranties or covenants herein contained or of any acts of the directors, officers, employees, agents or servants of the Corporation.
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No adjustments shall be made pursuant to this Article 4 if the Warrantholders are entitled to participate in any event described in this
Article 4 on the same terms, mutatis mutandis, as if the Warrantholders had exercised their Warrants prior to, or on the effective date or record date of, such event.
Subject to compliance with applicable securities legislation and approval of applicable regulatory authorities, if any, the Corporation
may from time to time purchase by private contract or otherwise any of the Warrants. Any such purchase shall be made at the lowest price or prices at which, in the opinion of the Directors, such Warrants are then obtainable, plus reasonable costs of
purchase, and may be made in such manner, from such persons and on such other terms as the Corporation, in its sole discretion, may determine. In the case of Certificated Warrants, Warrant Certificates representing the Warrants purchased pursuant to
this Section 5.1 shall forthwith be delivered to and cancelled by the Warrant Agent and reflected accordingly on the register of Warrants. In the case of Uncertificated Warrants, the Warrants purchased pursuant to this Section 5.1 shall be reflected
accordingly on the register of Warrants in accordance with procedures prescribed by the Depository under the book entry registration system. No Warrants shall be issued in replacement thereof.
-38-
The Corporation covenants with the Warrant Agent that so long as any Warrants remain outstanding:
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(a)
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it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common
Shares upon the exercise of the Warrants;
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(b)
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it will cause the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance
with the Warrants and the terms hereof;
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(c)
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all Common Shares which shall be issued upon exercise of the right to acquire provided for herein shall be fully paid and non-assessable;
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(d)
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it will use reasonable commercial efforts to maintain its existence and carry on its business in the ordinary course, provided that this clause
shall not be construed as limiting or restricting the Corporation from agreeing to a consolidation, amalgamation, arrangement, takeover bid or merger that would result in the Corporation winding up, dissolving or ceasing to exist, so long
as the holders of Common Shares receive securities of an entity which is listed on a Recognized Stock Exchange, or cash, or the holders of Common Shares have approved the transaction in accordance with the requirements of applicable
corporate and securities laws;
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(e)
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it will make all requisite filings under applicable Canadian and U.S. securities legislation, including those necessary to remain a reporting
issuer not in default in each of the provinces and other jurisdictions where it is or becomes a reporting issuer;
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(f)
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it will give notice to the Warrant Agent and Warrantholders of a default under the terms of the Indenture which remains unrectified for a period
of 5 Business Days;
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(g)
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generally, it will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture;
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(h)
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it will engage in cannabis-related activities in Canada only in accordance with the Cannabis Act
(Canada) and all other applicable laws in Canada;
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(i)
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it does not and will not invest or engage (directly or indirectly) in any business or activity that is focused on serving the non-medical or
medical cannabis market internationally unless and until such time as the production and sale of non-medical and/or medical cannabis, as applicable, becomes legal under the applicable laws in the respective international jurisdiction;
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(j)
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it does not and will not invest or engage (directly or indirectly) in any business or activity that is focused on serving the medical or
non-medical cannabis market in the United States unless and until such time as the production and sale of medical and/or non-medical cannabis, as applicable, becomes legal under applicable state and federal laws in the United States;
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(k)
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it does not and will not specifically target or derive (or reasonably expect to derive) revenues or funds from any of the prohibited activities
described in items (h) and (i), above, unless and until such time that any such activities become legal under all applicable laws in the United States and/or internationally, as applicable; and
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(l)
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it will provide the Warrant Agent with reasonable prior notice if it decides to engage in any of the activities described in items (h), (i) or
(j), above, and the Corporation agrees that the Warrant Agent may, in its sole discretion, immediately terminate any contract for services between the Corporation and the Warrant Agent upon receipt of any information relating to the
Corporation’s cannabis-related business activities, or as otherwise permitted under any such contract for service.
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The Corporation covenants that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder as
may agreed upon between the Corporation and the Warrant Agent and 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 the duties hereby created (including the reasonable compensation and the disbursements of its Counsel and all other advisers and assistants 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 advance as may arise from the gross negligence, wilful misconduct or fraud of the Warrant Agent. Any amount owing hereunder and remaining unpaid
after 30 days from the invoice date will bear interest at the then current rate charged by the Warrant Agent against unpaid invoices and shall be payable upon demand. This Section shall survive the resignation or removal of the Warrant Agent and/or
the termination of this Indenture.
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 and may itself perform any of the covenants capable of being performed by it but, subject to Section 9.2, shall be under no obligation to perform said covenants or to notify the
Warrantholders of such performance by it. All sums expended or advanced by the Warrant Agent in so doing shall be repayable as provided in Section 5.3. No such performance, expenditure or advance by the Warrant Agent shall relieve the Corporation of
any default hereunder or of its continuing obligations under the covenants herein contained.
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The Corporation covenants and agrees that it is duly authorized to create and issue the Warrants to be issued hereunder and that the
Warrants, when issued and Authenticated as herein provided, will be valid and enforceable against the Corporation in accordance with the provisions hereof and the terms hereof and that, subject to the provisions of this Indenture, the Corporation
will cause the Common Shares from time to time acquired upon exercise of Warrants issued under this Indenture to be duly issued and delivered in accordance with the terms of this Indenture.
All or any of the rights conferred upon any Warrantholder by any of the terms of this Indenture may be enforced by the Warrantholder by
appropriate 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 Warrantholders.
The Corporation shall have the right to enforce full payment of the Exercise Price of all Common Shares issued to a Warrantholder
hereunder and shall be entitled to demand such payment from the Warrantholder or alternatively to instruct the Warrant Agent to cancel the share certificates and amend the securities register of the Corporation accordingly.
The Warrant Agent and the Warrantholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any
jurisdiction against any incorporator or any past, present or future shareholder, trustee, employee or agent of the Corporation or any successor Corporation on any covenant, agreement, representation or warranty by the Corporation herein. 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 Directors or Shareholders or any of the past, present or future officers, employees or agents of
the Corporation, but only the property of the Corporation (or any successor person) shall be bound in respect hereof.
-41-
Upon the happening of any default hereunder:
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(a)
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the Warrantholders of not less than 51% of the Warrants then outstanding shall have power (in addition to the powers exercisable by Extraordinary
Resolution) by requisition in writing to instruct the Warrant Agent to waive any default hereunder and the Warrant Agent shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or
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(b)
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the Warrant Agent shall have power to waive any default hereunder upon such terms and conditions as the Warrant Agent may deem advisable, on the
advice of Counsel, if, in the Warrant Agent’s opinion, based on the advice of Counsel, the same shall have been cured or adequate provision made therefor;
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provided that no delay or omission of the Warrant Agent or of the Warrantholders to exercise any right or power accruing upon any default
shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act or omission either of the Warrant Agent or of the Warrantholders in the premises shall extend to or
be taken in any manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.
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 being indemnified and funded to its reasonable satisfaction by the Corporation or by the Warrantholders signing such Warrantholders’ Request against the costs which may be incurred in connection with the calling and
holding of such meeting, convene a meeting of the Warrantholders. If the Warrant Agent fails to so call a meeting within seven days after receipt of such written request of the Corporation or such Warrantholders’ Request and the indemnity and funding
given as aforesaid, 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 or at such other place as may be mutually approved or determined by the Warrant Agent
and the Corporation.
At least 21 days’ prior written notice of any meeting of Warrantholders shall be given to the Warrantholders in the manner provided for
in Section 10.2 and a copy of such notice shall be sent by mail to the Warrant Agent (unless the meeting has been called by the Warrant Agent) and to the Corporation (unless the meeting has been called by the Corporation). Such notice shall state the
time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Warrantholders to make a reasoned
decision on the matter, but 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 Section 7.2.
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An individual (who need not be a Warrantholder) designated in writing by the Warrant Agent and the Corporation shall be chairman of the
meeting and if no individual is so designated, or if the individual so designated is not present within fifteen minutes from the time fixed for the holding of the meeting, the Warrantholders present in person or by proxy shall choose an individual
present to be chairman.
Subject to the provisions of Section 7.11, at any meeting of the Warrantholders a quorum shall consist of Warrantholder(s) present in
person or by proxy and holding at least 25% of the aggregate number of all the then outstanding Warrants. If a quorum of the Warrantholders shall not be present within thirty minutes from the time fixed for holding any meeting, the meeting, if
summoned by 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 week (unless such day is not a Business Day, in which case it shall be adjourned to the
next following Business Day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance
with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum and may
transact the business for which the meeting was originally convened, notwithstanding that they may not be holding at least 25% of the aggregate number of all then outstanding Warrants.
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.
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 an Extraordinary Resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly 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 the fact.
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(1)
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On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the
chairman or by one or more of the Warrantholders acting in person or by proxy and holding in the aggregate at least 5% of all the Warrants then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other
than those required to be determined by Extraordinary Resolution shall be decided by a majority of the votes cast on the poll.
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(2)
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On a show of hands, every person who is present and entitled to vote, whether as a Warrantholder or as proxy for one or more absent
Warrantholders, or both, shall have one vote. On a poll, each Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each Warrant then held or
represented by it. A proxy need not be a Warrantholder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him or her.
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(1)
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The Warrant Agent, or the Corporation with the approval of the Warrant Agent, may from time to time make and from time to time vary such
regulations as it shall think fit for:
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(a)
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the setting of the record date for a meeting for the purpose of determining Warrantholders entitled to receive notice of and to vote at the
meeting;
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(b)
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the deposit of instruments appointing proxies at such place and time as the Warrant Agent, the Corporation or the Warrantholders convening the
meeting, as the case may be, may in the notice convening the meeting direct;
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(c)
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the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and
enabling particulars of such instruments appointing proxies to be mailed or telecopied before the meeting to the Corporation or to the Warrant Agent at the place where the same is to be held and for the voting of proxies so deposited as
though the instruments themselves were produced at the meeting;
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(d)
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the form of the instrument of proxy; and
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(e)
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generally for the calling of meetings of Warrantholders and the conduct of business thereat.
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(2)
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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 a Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to Section 7.9), shall be Warrantholders or proxies of
Warrantholders.
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-44-
The Corporation and the Warrant Agent, by their respective directors, officers, agents and employees and the Counsel for the Corporation
and for the Warrant Agent may attend any meeting of the Warrantholders.
In addition to all other powers conferred upon them by any other provisions of this Indenture or by law, the Warrantholders at a meeting
shall, subject to the provisions of Section 7.11, have the power exercisable from time to time by Extraordinary Resolution:
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(a)
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to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrantholders or the Warrant Agent in its
capacity as warrant agent hereunder (subject to the Warrant Agent’s prior consent, acting reasonably) or on behalf of the Warrantholders against the Corporation whether such rights arise under this Indenture or otherwise;
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(b)
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to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Warrantholders;
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(c)
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to direct or to authorize the Warrant Agent, subject to Section 9.2(2) hereof, to enforce any of the covenants on the part of the Corporation
contained in this Indenture or to enforce any of the rights of the Warrantholders in any manner specified in such Extraordinary Resolution or to refrain from enforcing any such covenant or right;
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(d)
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to waive, and to direct the Warrant Agent to waive, any default on the part of the Corporation in complying with any provisions of this Indenture
either unconditionally or upon any conditions specified in such Extraordinary Resolution;
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(e)
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to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the
covenants on the part of the Corporation in this Indenture or to enforce any of the rights of the Warrantholders;
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(f)
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to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same
upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith;
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(g)
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to assent to any change in or omission from the provisions contained in this Indenture or any ancillary or supplemental instrument which may be
agreed to by the Corporation, and to authorize the Warrant Agent to concur in and execute any ancillary or supplemental indenture embodying the change or omission;
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-45-
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(h)
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with the consent of the Corporation, such consent not to be unreasonably withheld, to remove the Warrant Agent or its successor in office and to
appoint a new warrant agent or warrant agents to take the place of the Warrant Agent so removed; and
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(i)
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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.
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(2)
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If, at the meeting at which an Extraordinary Resolution is to be considered, Warrantholders holding at least 25% of the aggregate number of all
then outstanding Warrants are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any
other case it shall stand adjourned to such day, being not less than 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 14 days’ prior notice shall be given of the time and place of
such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the
purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally
convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Section 7.11(1) shall be an Extraordinary Resolution within the meaning of this Indenture notwithstanding that Warrantholders
holding at least 25% of the aggregate number of all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.
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(3)
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Subject to Section 7.14, votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary
Resolution shall be necessary.
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Any one or more of the powers or any combination 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 or any combination of powers from time to time shall not be deemed to exhaust the right of the Warrantholders to exercise such
power or powers or combination of powers then or thereafter from time to time.
-46-
Minutes of all resolutions and proceedings at every meeting of Warrantholders shall be made and duly entered in books to be provided from
time to time for that purpose by the Warrant Agent at the expense of the Corporation, and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had 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 duly convened and held, and all resolutions passed
thereat or proceedings taken shall be deemed to have been duly passed and taken.
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 7
may also be taken and exercised by Warrantholders holding at least 66 2/3% of the aggregate number of all then outstanding Warrants by an instrument in writing signed in one or more counterparts by such Warrantholders in person or by attorney duly
appointed in writing, and the expression “Extraordinary Resolution” when used in this Indenture shall include an instrument so signed.
Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 7 at a meeting of
Warrantholders shall be binding upon all the Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed by Warrantholders in accordance with Section 7.14 shall be binding upon all 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 and instrument in writing.
In determining whether Warrantholders holding Warrants evidencing the required number of Warrants are present at a meeting of
Warrantholders for the purpose of determining a quorum or have concurred in any consent, waiver, Extraordinary Resolution, Warrantholders’ Request or other action under this Indenture, Warrants owned legally or beneficially by the Corporation shall
be disregarded in accordance with the provisions of Section 10.7.
-47-
From time to time, the Corporation (when authorized by action of the Directors) and the Warrant Agent may, subject to approval from the
Recognized Stock Exchange on which the Common Shares are listed, if required, and to the provisions hereof and they shall, when so directed in accordance with the provisions hereof, execute and deliver by their proper officers, indentures or
instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:
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(a)
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providing for the issuance of additional Warrants hereunder and any consequential amendments hereto as may be required by the Warrant Agent
relying on the advice of Counsel;
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(b)
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setting forth any adjustments resulting from the application of the provisions of Article 4;
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(c)
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adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of Counsel, are necessary or advisable in
the premises, provided that the same are not in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Warrantholders;
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(d)
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giving effect to any Extraordinary Resolution passed as provided in Section 7.11;
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(e)
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making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising
hereunder or for the purpose of obtaining a listing or quotation of the Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the
interests of the Warrantholders;
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(f)
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adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrants, and making any
modification in the form of the Warrant Certificates which does not affect the substance thereof;
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(g)
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modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions
herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such modification or relief in no way prejudices any of
the rights of the Warrantholders or of the Warrant Agent, and provided further that the Warrant Agent may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection
to the Warrant Agent when the same shall become operative; and
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-48-
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(h)
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for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective
or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Warrant Agent, relying on the advice of Counsel, the rights of the Warrant Agent and of the Warrantholders are in no way prejudiced
thereby.
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In the case of the consolidation, amalgamation, arrangement, merger or transfer of the undertaking or assets of the Corporation as an
entirety or substantially as an entirety to or with another entity (“successor entity”), the successor entity resulting from such consolidation, amalgamation, arrangement, merger 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 due and punctual performance and observance of each and every covenant and condition of this
Indenture to be performed and observed by the Corporation.
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(1)
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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.
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(2)
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The Corporation and the Warrant Agent agree that each will, at all times in relation to this Indenture and any action to be taken hereunder,
observe and comply with and be entitled to the benefits of Applicable Legislation.
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(1)
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In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Warrant Agent shall act honestly and in good
faith and exercise that degree of care, diligence and skill that a reasonably prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Warrant Agent from liability
for its own gross negligent action, wilful misconduct, bad faith or fraud under this Indenture.
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-49-
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(3)
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The Warrant Agent may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Warrantholders,
at whose instance it is acting to deposit with the Warrant Agent the Warrants Certificates held by them, for which Warrant Certificates the Warrant Agent shall issue receipts.
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(4)
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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.
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(1)
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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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(2)
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In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good faith, rely as to the truth of the statements
and the accuracy of the opinions expressed in statutory declarations, opinions, reports, written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Warrant Agent pursuant to
a request of the Warrant Agent, provided that such evidence complies with Applicable Legislation and that the Warrant Agent complies with Applicable Legislation and that the Warrant Agent examines the same and determines that such evidence
complies with the applicable requirements of this Indenture.
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(3)
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Whenever it is provided in this Indenture or under Applicable Legislation that the Corporation shall deposit with the Warrant Agent resolutions,
certificates, reports, opinions, requests, orders or other documents, it is intended that the truth, accuracy and good faith on the effective date thereof and the facts and opinions stated in all such documents so deposited shall, in each
and every such case, be conditions precedent to the right of the Corporation to have the Warrant Agent take the action to be based thereon.
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(4)
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The Warrant Agent may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the
purpose of discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct or negligence on the
part of any such experts or advisers who have been appointed with due care by the Warrant Agent.
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(5)
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The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained
from any Counsel, accountant, appraiser, engineer or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in the administration of the agency hereof.
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-50-
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(6)
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Proof of the execution of an instrument in writing, including a Warrantholders' Request, by any Warrantholder may be made by the certificate of a
notary, solicitor or commissioner for oaths, or other officer with similar powers, that the person signing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution or in any other manner
which the Warrant Agent may consider adequate and in respect of a corporate Warrantholder, shall include a certificate of incumbency of such Warrantholder together with a certified resolution authorizing the person who signs such instrument
to sign such instrument.
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(7)
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Whenever Applicable Legislation requires that evidence referred to in subsection 9.3(3) 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 any one or more duly authorized representative of the Corporation.
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Any monies, securities, documents of title or other instruments that may at any time be held by the Warrant Agent shall be placed in the
deposit vaults of the Warrant Agent or of any Canadian chartered bank listed in Schedule I of the Bank Act (Canada), or deposited for safekeeping with any such bank. Any monies held pending the application or
withdrawal thereof under any provisions of this Indenture, shall be held in a segregated non-interest bearing account.
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 interests and the interests of the Warrantholders.
The Warrant Agent shall not be required to give any bond or security in respect of the execution of the agency and powers of this
Indenture or otherwise in respect of the premises.
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:
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(a)
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the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates
(except the representation contained in Section 9.9) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation;
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-51-
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(b)
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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;
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(c)
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the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof;
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(d)
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the Warrant Agent shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the
part of the Corporation of any of its covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation;
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(e)
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the Corporation hereby indemnifies and agrees to hold harmless the Warrant Agent, its affiliates, their current and former officers, directors,
employees, agents, successors and assigns from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including legal fees and disbursements of whatever kind and nature
which may at any time be imposed on or incurred by or asserted against the Warrant Agent, whether groundless or otherwise, arising from or out of any act, omission or error of the Warrant Agent, provided that the Corporation shall not be
required to indemnify the Warrant Agent in the event of the gross negligence, wilful misconduct or fraud of the Warrant Agent, and this provision shall survive the resignation or removal of the Warrant Agent or the termination or discharge
of this Indenture;
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(f)
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notwithstanding the foregoing or any other provision of this Indenture, any liability of the Warrant Agent, other than gross negligence, wilful
misconduct and fraud, shall be limited, in the aggregate, to the amount of annual retainer fees paid by the Corporation to the Warrant Agent under this Indenture in the 12 months immediately prior to the Warrant Agent receiving the first
notice of the claim. Notwithstanding any other provision of this Indenture, and whether such losses or damages are foreseeable or unforeseeable, the Warrant Agent shall not be liable under any circumstances whatsoever for any (a) breach by
any other party of securities law or other rule of any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages; and
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(g)
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the forwarding of a cheque or the sending of funds by wire transfer by the Warrant Agent will satisfy and discharge the liability of any amounts
due to the extent of the sum represented thereby unless such cheque is not honoured on presentation, provided that in the event of the non-receipt of such cheque by the payee, or the loss or destruction thereof, the Warrant Agent, upon
being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to it, will issue to such payee a replacement cheque for the amount of such cheque.
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-52-
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(1)
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The Warrant Agent may resign its agency and be discharged from all further duties and liabilities hereunder, subject
to this Section 9.8, by giving to the Corporation not less than 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 existing 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 a new Warrant Agent has already been appointed by the Warrantholders; failing such appointment by the Corporation, the retiring Warrant Agent
or any Warrantholder may apply to a judge of the Ontario Superior Court of Justice of the Province of Ontario on such notice as such judge may direct, for the appointment of a new Warrant Agent; but 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 any provision of this Section 9.8 shall be an entity authorized to carry on the business of a trust company in
the Province of Ontario and, if required by the Applicable Legislation for any other provinces, 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 hereunder.
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(2)
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Upon the appointment of a successor Warrant Agent, the Corporation shall promptly notify the Warrantholders thereof in the manner provided for in
Section 10.2.
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(3)
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Any Warrant Certificates Authenticated but not delivered by a predecessor Warrant Agent may be Authenticated by the successor Warrant Agent in the
name of the predecessor or successor Warrant Agent.
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(4)
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Any corporation in to which the Warrant Agent may be merged or consolidated or amalgamated or to which all or substantially all of its corporate
trust business is sold or otherwise transferred, or any corporation resulting therefrom to which the Warrant Agent shall be a party, or any corporation succeeding to substantially the corporate trust business of the Warrant Agent shall be
the successor to the Warrant Agent hereunder without any further act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as successor Warrant Agent under Section 9.8(1).
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-53-
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(2)
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Subject to Section 9.9(1), the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in securities of the Corporation
and generally may contract and enter into financial transactions with the Corporation without being liable to account for any profit made thereby.
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The Warrant Agent hereby accepts the agency in this Indenture declared and provided for and agrees to perform the same upon the terms and
conditions herein set forth.
The Warrant Agent and any person related to the Warrant Agent shall not be appointed a receiver, a receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation.
The Warrant Agent represents to the Corporation that as at the date of the execution and delivery of this Indenture, it is duly authorized and qualified to
carry on the business of a trust company in the Province of Ontario.
The Warrant Agent shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless
and until it shall have been required so to do under the terms hereof; nor shall the Warrant Agent 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. Any such notice shall in no way limit any discretion herein given to the Warrant Agent to determine whether or not the Warrant Agent shall take action with
respect to any default.
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(1)
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Each party to this Indenture other than the Warrant Agent hereby represents to the Warrant Agent that any account to be opened by, or interest to
be held by the Warrant Agent in connection with this Indenture, for or to the credit of such party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party,
in which case such party hereto agrees to complete and execute forthwith a declaration in the Warrant Agent’s prescribed form as to the particulars of such third party.
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-54-
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(2)
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The Warrant Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other
reason whatsoever, the Warrant Agent, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, economic sanction, regulation or guideline.
Further, should the Warrant Agent, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation,
economic sanction, regulation or guideline, then it shall have the right to resign on 10 days written notice to the other parties to this Indenture, provided (i) that the Warrant Agent’s written notice shall describe the circumstances of
such non-compliance; 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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The Corporation acknowledges that the Warrant Agent may, in the course of providing services hereunder, collect or receive financial and
other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:
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(a)
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to provide the services required under this Indenture and other services that may be requested from time to time;
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(b)
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to help the Warrant Agent manage its servicing relationships with such individuals;
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(c)
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to meet the Warrant Agent’s legal and regulatory requirements; and
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(d)
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if Social Insurance Numbers are collected by the Warrant Agent, to perform tax reporting and to assist in verification of an individual’s identity
for security purposes.
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The Corporation acknowledges and agrees that the Warrant Agent may receive, collect, use and disclose personal information provided to it
or acquired by it in the course of its acting as agent hereunder for the purposes described above and, generally, in the manner and on the terms described in its privacy code, which the Warrant Agent shall make available on its website or upon
request, including revisions thereto. Further, the Corporation agrees that it shall not provide or cause to be provided to the Warrant Agent any personal information relating to an individual who is not a party to this Indenture unless the
Corporation has assured itself that such individual understands and has consented to the aforementioned uses and disclosures.
The Corporation is required to file reports with the SEC under the requirements of Regulation A, Tier 2, however represents and warrants
that it is not currently filing reports with the SEC pursuant to Section 13(a) or 15(d) of the United States Securities Exchange Act of 1934, as amended, and covenants that, in the event that it shall begin to so file, the Corporation shall promptly
deliver to the Warrant Agent a certificate of the Corporation certifying such “reporting issuer” status and other information as the Warrant Agent may require at such given time. The Corporation understands that the Warrant Agent is relying upon the
foregoing representation, warranty and covenant in order to meet certain SEC obligations with respect to those clients who are filing with the SEC.
-55-
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(1)
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(a)
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If to the Corporation:
00 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx
Email: xxxxxx.xxxxx@xxxxxxxxxxx.xx If to the Warrant Agent:
Attention: Vice-President, Trust Services
Facsimile: (000) 000-0000 |
and any such notice delivered in accordance with the foregoing shall be deemed to have been received and given on the date of delivery
or, if mailed, on the fifth Business Day following the date of mailing such notice or, if faxed, emailed or transmitted by other electronic means, on the next Business Day following the date of transmission.
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(2)
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The Corporation or the Warrant Agent, as the case may be, may from time to time notify the other in the manner provided in Section 10.1(1) of a
change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Warrant Agent, as the case may be, for all purposes of this Indenture.
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(3)
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If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrant
Agent or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed, as provided
in Section 10.1(1), or given by fax, email or other means of prepaid, transmitted and recorded communication.
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-56-
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(1)
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Unless otherwise provided herein, notice to the Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or
sent by ordinary post addressed to such holders at their post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively received and given on the date of delivery or, if mailed, on the
third Business Day following the date of mailing such notice. In the event that Warrants are held in the name of the Depository, a copy of such notice shall also be sent by electronic communication to the Depository and shall be deemed
received and given on the day it is so sent.
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(2)
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If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the
Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to such Warrantholders to the address for such Warrantholders contained in the
register maintained by the Warrant Agent or such notice may be given, at the Corporation’s expense, by means of publication in the Globe and Mail, National Edition, or any other English language daily newspaper or newspapers of general
circulation in Canada, in each two successive weeks, and any so notice published shall be deemed to have been received and given on the latest date the publication takes place.
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(3)
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Accidental error or omission in giving notice or accidental failure to mail notice to any Warrantholder will not invalidate any action or
proceeding founded thereon.
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The Corporation and the Warrant Agent may deem and treat the Warrantholders as the absolute owner thereof for all purposes, and the
Corporation and the Warrant Agent shall not be affected by any notice or knowledge to the contrary except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction. The receipt
of any such Warrantholder of the Common Shares which may be acquired pursuant thereto shall be a good discharge to the Corporation and the Warrant Agent for the same and neither the Corporation nor the Warrant Agent shall be bound to inquire into the
title of any such holder except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction.
This 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 they shall be deemed to be dated as of the date hereof.
Each of the parties hereto shall be entitled to rely on delivery of a facsimile or PDF copy of this Indenture and acceptance by each such
party of any such facsimile or PDF copy shall be legally effective to create a valid and binding agreement between the parties hereto in accordance with the terms hereof.
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Upon the earlier of:
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(a)
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the date by which there shall have been delivered to the Warrant Agent for exercise or cancellation all Warrants theretofore Authenticated
hereunder, in the case of Certificated Warrants or by way of standard processing through the book entry only system in the case of a CDS Global Warrant; and
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(b)
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the Expiry Time;
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this Indenture shall cease to be of further 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. Notwithstanding the foregoing, the indemnities provided to the Warrant Agent by the Corporation hereunder shall remain in full force and effect and survive the termination of this Indenture.
Nothing in this Indenture or in the Warrants, expressed or implied, shall give or be construed to give to any person other than the
parties hereto and the Warrantholders, as the case may be, any legal or equitable right, remedy or claim under this Indenture, or under any covenant or provision herein or therein contained, all such covenants and provisions being for the sole
benefit of the parties hereto and the Warrantholders.
For the purpose of disregarding any Warrants owned legally or beneficially by the Corporation in Section 7.16, the Corporation shall
provide to the Warrant Agent, from time to time, a certificate of the Corporation setting forth as at the date of such certificate:
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(a)
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the names (other than the name of the Corporation) of the Warrantholders which, to the knowledge of the Corporation, are owned by or held for the
account of the Corporation; and
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(b)
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the number of Warrants owned legally or beneficially by the Corporation;
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and the Warrant Agent, in making the computations in Section 7.16, shall be entitled to rely on such certificate without any additional
evidence.
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If, in any jurisdiction, any provision of this Indenture or its application to any party or circumstance is restricted, prohibited or
unenforceable, such provision will, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Indenture and without affecting the validity or
enforceability of such provision in any other jurisdiction or without affecting its application to other parties or circumstances.
No party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or
observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or
communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.
Neither of the parties hereto may assign its rights or interest under this Indenture without the consent of the other party, except as
provided in Section 9.8 in the case of the Warrant Agent, or as provided in Section 8.2 in the case of the Corporation. Subject thereto, this Indenture shall enure to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
Should a holder of Warrants exercise any legal, statutory, contractual or other right of withdrawal or rescission that may be available
to it, and the holder’s funds which were paid on exercise have already been released to the Corporation by the Warrant Agent, the Warrant Agent shall not be responsible for ensuring the exercise is cancelled and a refund is paid back to the holder.
In such cases, the Corporation, upon surrender to the Corporation or the Warrant Agent of any underlying shares that may have been issued, or such other procedure as agreed to by the parties hereto, shall instruct the Warrant Agent in writing, to
cancel the exercise transaction and any such underlying shares on the register, which may have already been issued upon the Warrant exercise. In the event that any payment is received from the Corporation by virtue of the holder being a shareholder
for such Warrants that were subsequently rescinded, the Warrant Agent shall not be under any duty or obligation to take any steps to ensure or enforce that the funds are returned pursuant to this section, nor shall the Warrant Agent be in any other
way responsible in the event that any payment is not delivered or received pursuant to this section.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF the parties hereto have executed this Indenture under the hands of their proper
officers in that behalf as of the date first written above.
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By:/s/Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
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Title: President & CEO
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TSX TRUST COMPANY
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By: /s/Xxxxx Xxxxx
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Authorized Signatory
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By: /s/Xxxxxx Xxxxxxxx
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Authorized Signatory
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-1-
(Please see attached)
-1-
| TO: |
TSX TRUST COMPANY
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as registrar and transfer agent for the Warrants and Common Shares issuable upon exercise of the Warrants of Flora Growth Corp. (the “Corporation”).
AND TO: The Corporation
The undersigned (A) acknowledges that the sale of the securities of Flora Growth Corp. represented by certificate number ______________ to which this
declaration relates is being made in reliance on Rule 904 of Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”),
and (B) certifies that (1) it is not an “affiliate” (as defined in Rule 405 under the U.S. Securities Act) of the Corporation; (2) the offer of such securities was not made to a person in the United States or to a U.S. person and either (a) at the
time the buy order was originated, the buyer was outside the United States and was not a U.S. person, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States and was not a U.S. person or (b)
the transaction was executed on or through the facilities of a designated offshore securities market as designated by Rule 902(b) of Regulation S (such as the TSX Venture Exchange) 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 or a U.S. person, (3) neither the seller nor any person or agent acting on its behalf engaged or will engage in any directed selling efforts 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 that term is defined in Rule 144(a)(3) under the U.S. Securities Act), (5)
the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S under the U.S. Securities Act 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 U.S. Securities Act, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act.
Unless otherwise specified, terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.
DATED this ____day of _____, 20__.
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(Name of Seller)
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By:
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| Name: | ||
