Exhibit 4.1
CLS HOLDINGS USA, INC.
SPECIAL WARRANT INDENTURE
June 20, 2018
TABLE OF CONTENTS
Article 1 INTERPRETATION | 2 | |
1.1 | Definitions | 2 |
1.2 | Headings | 8 |
1.3 | Gender | 8 |
1.4 | Weekends and Holidays | 8 |
1.5 | Meaning of "Outstanding" | 8 |
1.6 | Time | 8 |
1.7 | Applicable Law | 8 |
1.8 | Severability | 8 |
1.9 | Currency | 8 |
1.10 | Conflicts | 8 |
1.11 | Schedules | 9 |
Article 2 ISSUE AND PURCHASE OF SPECIAL WARRANTS | 9 | |
2.1 | Creation, Form and Terms of Special Warrants | 9 |
2.2 | Form of Special Warrants, Certificated Special Warrants | 9 |
2.3 | Book Entry Only Special Warrants | 9 |
2.4 | Special Warrant Certificate | 9 |
2.5 | Transferability and Ownership of Special Warrants | 10 |
2.6 | Special Warrantholders Not Shareholders | 10 |
2.7 | Loss, Mutilation, Destruction or Theft of Special Warrants | 13 |
2.8 | Exchange of Special Warrants | 13 |
2.9 | Ranking | 13 |
2.10 | Purchase of Special Warrants for Cancellation | 14 |
2.11 | Cancellation of Surrendered Special Warrants | 14 |
Article 3 representations, warranties and COVENANTS OF THE CORPORATION | 14 | |
3.1 | To Issue Special Warrants and Reserve Common Shares | 14 |
3.2 | To Execute Further Assurances | 15 |
3.3 | To Carry On Business | 15 |
3.4 | No Breach of Constating Documents | 15 |
3.5 | Filing Prospectus and Related Matters | 15 |
3.6 | Notices to Special Warrant Agent and Agent | 16 |
3.7 | Securities Qualification Requirements | 16 |
3.8 | Obtain Listing | 16 |
3.9 | Satisfy Covenants | 16 |
3.10 | Performance of Covenants by Special Warrant Agent | 16 |
3.11 | Special Warrant Agent's Remuneration and Expenses | 17 |
3.12 | Notice to Special Warrantholders of Certain Events | 17 |
3.13 | Closure of Share Transfer Books | 18 |
3.14 | Payment of Commissions | 18 |
3.15 | Contractual Right of Rescission | 18 |
Article 4 RELEASE OF ESCROWED FUNDS | 19 | |
4.1 | Escrowed Proceeds and Distribution Amounts | 19 |
4.2 | Satisfaction of Escrow Release Conditions | 19 |
4.3 | Release of Escrowed Funds | 19 |
4.4 | Failure to Satisfy Escrow Release Conditions by the Escrow Release Deadline | 20 |
4.5 | Direction | 20 |
4.6 | Method of Disbursement and Delivery | 20 |
4.7 | Acknowledgements of Escrowed Funds | 21 |
4.8 | Miscellaneous | 21 |
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Article 5 ADJUSTMENT OF NUMBER OF Underlying SCURITIES | 22 | |
5.1 | Adjustment of Number of Underlying Securities | 22 |
5.2 | Proceedings Prior to any Action Requiring Adjustment | 27 |
5.3 | Notice of Adjustment | 28 |
5.4 | No Action After Notice | 28 |
5.5 | Protection of Special Warrant Agent | 28 |
5.6 | Notice of Special Matters | 28 |
5.7 | Underlying Warrants and Warrant Shares Treated Separately | 29 |
Article 6 EXERCISE AND CANCELLATION OF SPECIAL WARRANTS | 29 | |
6.1 | Notice of Deemed Exercise to Special Warrantholders | 29 |
6.2 | No Voluntary Exercise of Special Warrants | 29 |
6.3 | Deemed Exercise of Special Warrants | 29 |
6.4 | Effect of Exercise of Special Warrants | 29 |
6.5 | Special Warrants Void After Exercise | 30 |
6.6 | Fractions of Underlying Securities | 30 |
6.7 | Accounting and Recording | 30 |
6.8 | Legending of Special Warrants and Underlying Securities | 31 |
6.9 | Securities Restrictions | 32 |
Article 7 MEETINGS OF SPECIAL WARRANTHOLDERS | 32 | |
7.1 | Definitions | 32 |
7.2 | Convening Meetings | 32 |
7.3 | Place of Meeting | 32 |
7.4 | Notice | 33 |
7.5 | Persons Entitled to Attend | 33 |
7.6 | Quorum | 33 |
7.7 | Chairman | 33 |
7.8 | Power to Adjourn | 33 |
7.9 | Adjourned Meeting | 34 |
7.10 | Show of Hands | 34 |
7.11 | Poll | 34 |
7.12 | Regulations | 34 |
7.13 | Powers of Special Warrantholders | 35 |
7.14 | Powers Cumulative | 36 |
7.15 | Minutes of Meetings | 36 |
7.16 | Written Resolutions | 37 |
7.17 | Binding Effect | 37 |
7.18 | Holdings by the Corporation or Subsidiaries of the Corporation Disregarded | 37 |
Article 8 SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS | 37 | |
8.1 | Provision for Supplemental Indentures for Certain Purposes | 37 |
8.2 | Corporation May Consolidate, etc. on Certain Terms | 38 |
8.3 | Successor Body Corporate Substituted | 39 |
Article 9 CONCERNING THE SPECIAL WARRANT AGENT | 39 | |
9.1 | Duties of Special Warrant Agent | 39 |
9.2 | Action by Special Warrant Agent | 39 |
9.3 | Certificate of the Corporation | 39 |
9.4 | Special Warrant Agent May Employ Experts | 40 |
9.5 | Resignation and Replacement of Special Warrant Agent | 40 |
9.6 | Indenture Legislation | 41 |
9.7 | Notice | 41 |
9.8 | Use of Proceeds | 41 |
9.9 | No Inquiries | 42 |
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9.10 | Actions by Special Warrant Agent to Protect Interest | 42 |
9.11 | Special Warrant Agent Not Required to Give Security | 42 |
9.12 | No Conflict of Interest | 42 |
9.13 | Special Warrant Agent Not Ordinarily Bound | 42 |
9.14 | Special Warrant Agent May Deal in Instruments | 43 |
9.15 | Recitals or Statements of Fact Made by Corporation | 43 |
9.16 | Special Warrant Agent's Discretion Absolute | 43 |
9.17 | No Representations as to Validity | 43 |
9.18 | Special Warrant Agent's Authority to Carry on Business | 44 |
9.19 | Indemnification of Special Warrant Agent | 44 |
9.20 | Third Party Interests | 44 |
9.21 | Compliance with Anti-Money Laundering Legislation | 44 |
9.22 | Not Appointed Receiver | 45 |
9.23 | Compliance with Privacy Policy | 45 |
Article 10 NOTICES | 46 | |
10.1 | Notice to Corporation, Special Warrant Agent and Agent | 46 |
10.2 | Notice to Special Warrantholders | 47 |
Article 11 POWER OF BOARD OF DIRECTORS | 48 | |
11.1 | Board of Directors | 48 |
Article 12 MISCELLANEOUS PROVISIONS | 48 | |
12.1 | Further Assurances | 48 |
12.2 | Unenforceable Terms | 48 |
12.3 | No Waiver | 48 |
12.4 | Waiver of Default | 49 |
12.5 | Immunity of Shareholders | 49 |
12.6 | Limitation of Liability | 49 |
12.7 | Suits by Special Warrantholders | 49 |
12.8 | Force Majeure | 50 |
12.9 | Enurement | 50 |
12.10 | Counterparts and Formal Date | 50 |
12.11 | Satisfaction and Discharge of Indenture | 50 |
12.12 | Provisions of Indenture and Special Warrants for the Sole Benefit of Parties and Special Warrantholders | 51 |
12.13 | Formal Date and Effective Date | 51 |
SCHEDULE “A” FORM OF SPECIAL WARRANT CERTIFICATE
SCHEDULE “B” COMPLETION NOTICE AND DIRECTION
SCHEDULE “C” FORM OF TERMINATION NOTICE
SCHEDULE “D” NOTICE FOLLOWING DEEMED EXERCISE OF SPECIAL WARRANTS
SCHEDULE “E” NOTICE OF RECEIPTED PROSPECTUS
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SPECIAL WARRANT INDENTURE
THIS SPECIAL WARRANT INDENTURE made as of June 20, 2018.
BETWEEN:
CLS HOLDINGS USA, INC., a corporation existing under the laws of the State of Nevada, and includes any successor corporation
(the “Corporation”)
OF THE FIRST PART
AND:
ODYSSEY TRUST COMPANY, a trust company existing under the laws of Alberta
(the “Special Warrant Agent”)
OF THE SECOND PART
WHEREAS pursuant to the terms of the Agency Agreement, the Corporation proposes to issue and sell an aggregate of up to 30,421,670 Special Warrants at the purchase price of $0.45 per Special Warrant;
AND WHEREAS each Special Warrant shall entitle the holder thereof to acquire, upon deemed exercise thereof, one Unit without the payment of additional consideration and subject to adjustment in accordance with Article 4 hereof;
AND WHEREAS the Corporation is authorized to create and issue the Special Warrants;
AND WHEREAS if the Escrow Release Conditions (as defined herein) are satisfied prior to the Escrow Release Deadline (as defined herein), then the Escrowed Funds (as defined herein) will be released to the Corporation and the Agent in accordance with the terms of this Indenture;
AND WHEREAS the Corporation represents to the Special Warrant Agent that all necessary resolutions of the directors of the Corporation have been or will be duly enacted, passed or confirmed and all other proceedings taken and conditions complied with to authorize the execution and delivery of this Indenture and the execution and issue of the Special Warrants and to make the same legal, valid and binding on the Corporation in accordance with the laws relating to the Corporation;
AND WHEREAS if a Termination Event (as defined herein) occurs, then the Special Warrants will be cancelled and each Special Warrantholder’s Escrowed Funds (as defined herein) will be refunded to each Special Warrantholder (as defined herein) and the Corporation shall fund any shortfall;
AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Corporation and not by the Special Warrant Agent;
AND WHEREAS the Special Warrant Agent has been appointed by the Corporation and has agreed to act as agent on behalf of the Special Warrantholders and to hold in escrow the Escrowed Funds
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for an on behalf of the Corporation, the Agent and the Special Warrantholders, on the terms and conditions set forth herein.
NOW THEREFORE THIS INDENTURE WITNESSETH THAT, in consideration of the premises and in further consideration of the mutual covenants herein set forth, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
INTERPRETATION
In this Indenture, unless there is something in the subject matter or context inconsistent therewith, the following words have the respective meaning indicated below:
(a) | “1933 Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; |
(b) | “Acquisition Date” means the date on which Proposed Acquisition is completed; |
(c) | “Agency Agreement” means the agency agreement dated as of June 20, 2018 between the Corporation and the Agent; |
(d) | “Agent” means Canaccord Genuity Corp., the agent with respect to the Private Placement; |
(e) | “Agent’s Commission” means $1,043,029, being an amount equal to 8% of the aggregate gross proceeds from the Private Placement; |
(f) | “Applicable Legislation” means the provisions, if any, for the time being, of any statute of Canada or a province or territory thereof, and of the regulations under such statute, relating to special warrant indentures and to the rights, duties and obligations of special warrant agents under special warrant indentures, and of corporations issuing their securities under special warrant indentures, to the extent that any such provisions are in force and applicable to this Indenture; |
(g) | “Authenticated” means with respect to the issuance of a Special Warrant Certificate, one which has been duly signed by the Corporation and authenticated by manual signature of an authorized officer of the Special Warrant Agent, and “Authenticate”, “Authenticating” and “Authentication” have the appropriate correlative meanings; |
(h) | “Business Day” means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in Toronto, Ontario are not open for business; |
(i) | “Capital Reorganization” has the meaning ascribed thereto in subsection 5.1(d); |
(j) | “Closing” means the closing on the applicable Closing Date of the Private Placement; |
(k) | “Closing Date” means June 20, 2018, or such other date as agreed to by the Corporation and the Agent; |
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(l) | “Common Share Reorganization” has the meaning ascribed thereto in subsection 5.1(a); |
(m) | “Common Shares” means common shares in the capital of the Corporation; |
(n) | “Completion Notice and Direction” means the certificate executed by the Corporation and the Agent in the form attached as Schedule “B” hereto and addressed to the Special Warrant Agent confirming that the Escrow Release Conditions have been satisfied; |
(o) | “Convertible Securities” has the meaning ascribed thereto in subsection 5.1(a); |
(p) | “Corporate Finance Fee” means $651,893, being an amount equal to 5% of the aggregate gross proceeds from the Private Placement, payable in Special Warrants; |
(q) | “Corporation” means CLS Holding USA, Inc., a corporation existing under the laws of the State of Nevada; |
(r) | “Corporation’s auditors” means the firm of accountants serving as the auditors of the Corporation at the relevant time; |
(s) | “Counsel” means a barrister or solicitor or a firm of barristers and solicitors retained by the Special Warrant Agent or retained by the Corporation and acceptable to the Special Warrant Agent, which may or may not be counsel for the Corporation; |
(t) | “CSE” means the Canadian Securities Exchange; |
(v) | “Deemed Exercise Date” means, subject to Section 5.1(f), the earlier of: |
(i) | the date that is the fifth Business Day after the Qualification Date; and |
(ii) | the date that is four months and one day following the Acquisition Date; |
(w) | “Deemed Exercise Time” means 5:00 p.m. (Toronto time) on the Deemed Exercise Date; |
(x) | “Designated Jurisdictions” means, collectively, each of the provinces of Canada (which shall not include Québec) where Special Warrants are sold; |
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(y) | “director” means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to an action by the directors means an action by the directors of the Corporation as a board or, whenever duly empowered, action by a committee of such board; |
(z) | “Earnings” means any income (including interest or gains) derived from investing the Escrowed Proceeds; |
(aa) | “Escrow Release Conditions” means all of the following conditions: |
(i) | completion of the Proposed Acquisition; |
(ii) | receipt of audited financial statements, in a form acceptable to the Agent, for the Oasis Subsidiaries for the preceding 2 years; |
(iii) | the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Proposed Acquisition; |
(iv) | the Corporation shall not be in breach or default of any of its covenants or obligations under this Indenture or the Agency Agreement; |
(v) | the Corporation having delivered a certificate to the Agent that the conditions set forth in (i), (ii) (iii) and (iv) have been satisfied; and |
(vi) | the Corporation and the Agent having delivered the Completion Notice and Direction to the Special Warrant Agent; |
(bb) | “Escrow Release Deadline” means 5:00 p.m. (Toronto time) on June 30, 2018; |
(cc) | “Escrow Release Event” means the satisfaction of the Escrow Release Conditions on or prior to the Escrow Release Deadline; |
(dd) | “Escrowed Funds” at any time means the aggregate of: (i) the Escrowed Proceeds, and (ii) any Earnings derived directly or indirectly from time to time from holding the Escrowed Proceeds; |
(ee) | “Escrowed Proceeds” means the amount of $12,181,538, representing the gross proceeds of the Private Placement (being $13,037,859) less (i) approximately 50% of the Agent’s Commission (being $496,582); (ii) all of the Agent’s estimated costs and expenses with respect to the Private Placement to date (being $300,000); and (iii) a portion of the fees (including disbursements and applicable taxes) incurred to date by Cassels Brock & Blackwell LLP; |
(ff) | “Exercise Notice” has the meaning ascribed thereto in subsection 3.6(a); |
(gg) | “Indenture”, “herein”, “hereto”, “hereunder”, “hereof”, “hereby” and similar expressions mean or refer to this special warrant indenture and not to any particular Article, Section, paragraph, clause, subdivision or portion hereof and include any indenture, deed or instrument supplemental or ancillary hereto, in each case, as may be amended from time to time; and the expressions “Article”, “Section” and “paragraph” followed by a number mean and refer to the specified Article, Section or paragraph of this Indenture; |
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(hh) | “Listing Date” means the date the Common Shares are listed for trading on the CSE; |
(ii) | “Oasis Subsidiaries” means (i) Serenity Wellness Center, LLC dba Oasis Cannabis Dispensary/Retail Store; (ii) Serenity Wellness Products, LLC dba City Trees Fresh Cannabis Production, Wholesale; and (iii) Serenity Wellness Growers, LLC dba City Trees Fresh Cannabis Cultivation, Wholesale. |
(jj) | “Officer’s Certificate” means a certificate signed by a senior officer of the Corporation; |
(kk) | “Passport System” means the passport system procedures provided for under Multilateral Instrument 11-102 - Passport System and National Policy 11-202 - Process for Prospectus Reviews in Multiple Jurisdictions; |
(ll) | “person” means an individual, body corporate, partnership, trust, warrant agent, executor, administrator, legal representative or any unincorporated organization; |
(mm) | “Preliminary Prospectus” means a preliminary prospectus of the Corporation (in the English language), including documents incorporated or deemed to be incorporated by reference therein (if any), filed with the Securities Regulators by the Corporation in connection with qualifying the distribution of the Underlying Securities underlying the Special Warrants in the Designated Jurisdictions; |
(nn) | “Private Placement” means the private placement of 28,973,019 Special Warrants pursuant to the Agency Agreement and the subscription agreements entered into on the Initial Closing Date between the Corporation and the purchasers of Special Warrants; |
(oo) | “Proposed Acquisition” means the transaction between the Corporation and Alternative Solutions, LLC whereby the Corporation will acquire the outstanding equity interests in the Oasis Subsidiaries from Alternative Solutions, LLC for total remaining consideration of approximately USD$16,200,000 in accordance with the terms of a definitive agreement that has been entered into between the Corporation and Alternative Solutions, LLC; |
(pp) | “Prospectus” means a final prospectus of the Corporation (in the English language) including documents incorporated or deemed to be incorporated by reference therein (if any), filed with the Securities Regulators by the Corporation which qualifies the distribution of the Underlying Shares underlying the Special Warrants in the Designated Jurisdictions; |
(qq) | “Qualification Deadline” means 5:00 p.m. (Toronto time) on August 20, 2018; |
(rr) | “Qualification Date” means the date on which the Ontario Securities Commission, as the principal regulator under the Passport System, issues the Receipt evidencing that each Securities Regulator has issued a receipt for the Prospectus; |
(ss) | “Receipt” means the receipt issued by the Ontario Securities Commission, which is deemed to also be a receipt of the Securities Regulators of the other Designated Jurisdictions pursuant to the Passport System; |
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(tt) | “Rights Offering” has the meaning ascribed thereto in subsection 5.1(b); |
(uu) | “Rights Period” has the meaning ascribed thereto in subsection 5.1(b); |
(vv) | “Securities Regulators” means, collectively, the securities commissions or other applicable securities regulatory authorities of each of the Designated Jurisdictions; |
(ww) | “SEC” means the United States Securities and Exchange Commission; |
(xx) | “Special Distribution” has the meaning ascribed thereto in subsection 5.1(c); |
(yy) | “Special Warrant” means a special warrant of the Corporation created by the Corporation, issued and Authenticated hereunder and entitling the holder thereof to acquire one Unit (provided that if a Receipt for the Prospectus is not issued prior to the Qualification Deadline then each holder of a Special Warrant will be entitled to 1.1 Units per Special Warrant instead of one Unit) upon deemed exercise thereof, in accordance with this Indenture, without payment of additional consideration or further action on the part of the holder of Special Warrants, subject to adjustment as set out herein; provided, however, that any fractional entitlement to Units will be rounded down to the nearest whole Unit; |
(zz) | “Special Warrant Agent” means the special warrant agent under this Indenture, initially being Odyssey Trust Company, in its capacity as special warrant agent hereunder, having an office in Calgary, Alberta or such other address as it shall inform the Corporation and Special Warrantholders from time to time; |
(aaa) | “Special Warrant Certificate” means a certificate evidencing one or more Special Warrants issuable hereunder, substantially in the form attached hereto as Schedule “A”; |
(bbb) | “Special Warrantholder” means the registered holder from time to time of an outstanding Special Warrant; |
(ccc) | “Subscription Price” means the price paid per Special Warrant by each subscriber in the Private Placement; |
(ddd) | “Subsidiary of the Corporation” means a corporation of which voting securities carrying a majority of the votes attached to all outstanding voting securities of such corporation are owned, directly or indirectly, by the Corporation or by one or more subsidiaries of the Corporation, or by the Corporation and one or more subsidiaries of the Corporation and, as used in this definition, voting securities means securities, other than debt securities, carrying a voting right to elect directors either under all circumstances or under some circumstances that may have occurred and are continuing; |
(eee) | “Termination Date” means the date on which the Termination Event occurs; |
(fff) | “Termination Event” means any one of: |
(i) |
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(ii) |
(ggg) | “Termination Notice” means the notice to be provided to the Special Warrant Agent, the Agent and each Special Warrantholder by the Corporation in the form attached as Schedule “C” hereto forthwith following a Termination Event pursuant to Section 4.4 confirming that a Termination Event has occurred; |
(hhh) | “Trading Day” means any day on which the facilities of the CSE, or, if the Common Shares are not listed thereon, the facilities of any stock exchange on which the Common Shares are listed, or, if the Common Shares are not listed thereon, an over-the-counter market in Canada as may be selected by the directors on which the Common Shares are traded, is open for trading; |
(iii) | “Underlying Security” means any of an Underlying Share and an Underlying Warrant; |
(jjj) | “Underlying Share” means one Common Share, subject to adjustment in accordance with Article 5 ; |
(kkk) | “Underlying Warrant” means one common share purchase warrant, each being exercisable to acquire one Common Share for a period of 36 months following the Listing Date at a price of $0.65 per Common Share, subject to adjustment in accordance with Article 5; |
(lll) | “Unit” means a unit of the Corporation, consisting of one Underlying Share and one-half of one Underlying Warrant, subject to adjustment in accordance with Article 5; |
(mmm) | “U.S. Person” and “United States” have the meanings ascribed thereto in Regulation S under the 1933 Act; |
(nnn) | “Warrant Indenture” means the warrant indenture governing the terms of the Underlying Warrants between the Corporation and Odyssey Trust Company in its capacity as warrant agent, dated June 20, 2018, and |
(ooo) | “written order of the Corporation”, “written direction of the Corporation”, “written request of the Corporation”, “written consent of the Corporation” and “certificate of the Corporation” and “any other document required to be signed by the Corporation”, means, respectively, a written order, direction, request, consent, certificate or other document signed in the name of the Corporation by any officer or director and may consist of one or more instruments so executed. |
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The division of this Indenture into Articles, Sections or other subdivisions, 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 the Special Warrants.
Words importing the singular number also include the plural and vice versa and words importing a particular gender or neuter include both genders and neuters.
If the date for the taking of any action under this Indenture expires on a day which is not a Business Day, such action may be taken on the next succeeding Business Day with the same force and effect as if taken within the period for the taking of such action.
Every Special Warrant represented by a Special Warrant Certificate countersigned by the Special Warrant Agent that has been Authenticated and delivered to the holder thereof is deemed to be outstanding until it is cancelled or delivered to the Special Warrant Agent for cancellation or until the Deemed Exercise Time. Where a new Special Warrant Certificate has been issued pursuant to Section 2.8 to replace one which has been mutilated, lost, stolen or destroyed, the Special Warrants represented by only one of such Special Warrant Certificates are counted for the purpose of determining the aggregate number of Special Warrants outstanding. A Special Warrant Certificate representing a number of Special Warrants which has been partially exercised will be deemed to be outstanding only to the extent of the unexercised portion of the Special Warrants.
Time is of the essence hereof and of each Special Warrant Certificate.
This Indenture and each Special Warrant Certificate are subject to and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under Applicable Legislation. In the event that any provision hereof shall be determined to be invalid, illegal or unenforceable in any respect under Applicable Legislation the validity, legality and enforceability of the remainder of such provision and any other provision hereof shall not be affected or impaired thereby.
All references to currency herein and in the Special Warrant Certificates are to Canadian dollars unless otherwise indicated.
In the event of any conflict or inconsistency between the provisions of this Indenture and the Special Warrant Certificates, the provisions of this Indenture will govern.
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The attached Schedule “A”, Schedule “B”, Schedule “C”, Schedule “D” and Schedule “E” are incorporated into and form part of this Indenture.
(b) | The Special Warrants shall be executed by the Corporation and Authenticated by, or on behalf of, the Special Warrant Agent upon the written order of the Corporation and delivered by the Special Warrant Agent to the Corporation or to the order of the Corporation in accordance with the written order of the Corporation. |
(c) |
(d) | Subject to the provisions hereof, the Special Warrants issued under this Indenture are limited in the aggregate to 30,421,670 Special Warrants, provided that the number and type of securities to be issued upon deemed exercise of the Special Warrants is subject to increase or decrease so as to give effect to the adjustments as required by Article 4. |
(e) | No fractional Special Warrants shall be issued or otherwise provided for hereunder. |
The Special Warrants may be issued only in certificated form. All Special Warrants issued in certificated form shall be evidenced by a Special Warrant Certificate (including all replacements issued in accordance with this Indenture), substantially in the form set out in Schedule “A” hereto, which shall be dated as of the applicable Closing Date, shall bear such distinguishing letters and numbers as the Corporation may, with the approval of the Special Warrant Agent, prescribe, and shall be issuable in any denomination excluding fractions.
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the Special Warrantholder entitled to the benefits, notwithstanding that one or more of the persons whose signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Special Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Corporation, with the approval of the Special Warrant Agent, may determine. |
(c) |
2.6 | Transferability and Ownership of Special Warrants |
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the Special Warrantholder’s residency and that the address of any transferee to whom any Special Warrants or any Underlying Securities are to be registered, as shown on the transfer document, is the transferee’s actual address and is also determinative of the transferee’s residency. |
(h) |
(i) |
(ii) |
may, as hereinafter stated, by surrendering such evidence together with the Special Warrant Certificate in question to the Special Warrant Agent (by delivery or mail as set forth in Section 10.1 hereof), and subject to such reasonable requirements as the Special Warrant Agent may prescribe and all applicable securities legislation and requirements of regulatory authorities, become noted upon the register of Special Warrantholders. Forthwith after the new holder becomes noted on the register, the Special Warrant Agent shall issue a new Special Warrant Certificate to and send such certificate to the new holder.
(j) |
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Special Warrants in accordance with the terms and conditions herein contained discharges all responsibilities of the Corporation and the Special Warrant Agent with respect to such Special Warrants and neither the Corporation nor the Special Warrant Agent is bound to inquire into the title of any such registered holder. |
(k) |
A Special Warrantholder is not deemed or regarded as a shareholder of the Corporation nor is such Special Warrantholder entitled to any right or interest except as is expressly provided in this Indenture and on the Special Warrant Certificates.
In case any of the Special Warrant Certificates issued and countersigned hereunder is mutilated or lost, destroyed or stolen, the Corporation, in its discretion, may issue and thereupon the Special Warrant Agent will countersign and deliver a new Special Warrant Certificate of like date and tenor in exchange for and in place of the one mutilated, lost, destroyed or stolen and upon surrender and cancellation of such mutilated Special Warrant Certificate or in lieu of and in substitution for such lost, destroyed or stolen Special Warrant Certificate and the substituted Special Warrant Certificate shall entitle the holder thereof to the benefits hereof and rank equally in accordance with its terms with all other Special Warrants issued hereunder.
The Special Warrantholder applying for the issue of a new Special Warrant Certificate pursuant to this Section shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation and the Special Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Special Warrant Certificate so lost, destroyed or stolen as is satisfactory to the Corporation and the Special Warrant Agent in their discretion. The Corporation and the Special Warrant Agent may also, as a condition precedent to issuing a new Special Warrant Certificate, require such applicant to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation and the Special Warrant Agent in their discretion, and the applicant shall pay the reasonable charges of the Corporation and the Special Warrant Agent in connection therewith.
A Special Warrantholder may at any time prior to the Deemed Exercise Time, by written instruction delivered to the Special Warrant Agent at the office of the Special Warrant Agent set forth in Section 10.1, exchange his Special Warrant Certificates for Special Warrant Certificates evidencing Special Warrants in other denominations representing the same number of Special Warrants as under the Special Warrant Certificates so surrendered, in which case the Special Warrant Agent may make a charge sufficient to reimburse it for any government fees or charges required to be paid and such reasonable fees
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as the Special Warrant Agent may determine for every Special Warrant Certificate issued upon exchange. The Special Warrantholder surrendering such Special Warrant Certificate shall bear such fee and charge. Payment of the charges is a condition precedent to the exchange of the Special Warrant Certificate. The Corporation shall sign and the Special Warrant Agent shall countersign all Special Warrant Certificates necessary to carry out exchanges as aforesaid.
All Special Warrants will have the same attributes and rank pari passu regardless of the date of actual issue.
Subject to Applicable Legislation, the Corporation may, at any time or from time to time, purchase all or any of the Special Warrants in the market, by private contract or otherwise, on such terms as the Corporation may determine. Any such purchase shall be made at the lowest price or prices at which, in the opinion of the directors, such Special Warrants are then obtainable plus reasonable costs of purchase. The Special Warrants (and if applicable, the Special Warrant Certificates representing the Special Warrants) purchased hereunder by the Corporation shall, immediately following purchase, be delivered to and cancelled by the Special Warrant Agent and no Special Warrants shall be issued in substitution therefor.
All Special Warrants Certificates surrendered pursuant to Section 2.5, 2.8, 2.9 and 2.11 and Article 6 shall be cancelled by the Special Warrant Agent and upon such circumstances all such Uncertificated Special Warrants shall be deemed cancelled and so noted on the register by the Special Warrant Agent.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
Until the termination of this Indenture, the Corporation represents, warrants, covenants and agrees with the Special Warrant Agent for the benefit of the Special Warrant Agent and Special Warrantholders as follows:
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(c) | That Odyssey Trust Company is the warrant agent of the Underlying Warrants, and is duly authorized to countersign, register and issue certificates representing, or document such other evidence of ownership of, such Underlying Warrants, in each case in accordance with and pursuant to the terms of this Indenture and the Warrant Indenture. |
That it shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other acts, deeds and assurances in law as may reasonably be required for the better accomplishing and effecting of the intentions and provisions of this Indenture.
That subject to the express provisions hereof, it shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, provided, however, that (subject to Article 4 hereof) nothing herein contained shall prevent any winding-up or liquidation of the Corporation or any Subsidiary of the Corporation or the abandonment of any rights and franchises of the Corporation or any Subsidiary of the Corporation or any corporate reorganization, amalgamation, consolidation, merger, sale, or take-over bid or other business combination from being completed by the Corporation or any Subsidiary of the Corporation in accordance with applicable corporate and securities laws (and none of which are presently contemplated by the Corporation or any Subsidiary of the Corporation at the date hereof) if, in the opinion of the directors or officers of the Corporation or any Subsidiary of the Corporation, as the case may be, it is advisable and in the best interest of the Corporation or of such Subsidiary of the Corporation to do so.
That the issue of the Special Warrants and the issue of the Underlying Securities do not or will not conflict with any of the terms, conditions or provisions of the constating documents of the Corporation or a Subsidiary of the Corporation or the resolutions of the board of directors, committees of the board of directors or shareholders of the Corporation or a Subsidiary of the Corporation or any trust indenture, loan agreement or any other agreement or instrument to which the Corporation or any Subsidiary of the Corporation is contractually bound.
That following the Initial Closing Date, the Corporation shall, in accordance with the terms of the Agency Agreement, use its best efforts to:
(a) |
(b) |
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(c) |
(d) |
That upon obtaining the Receipt for the Prospectus as contemplated in Section 3.5, the Corporation shall forthwith, and in any event not later than the Business Day thereafter:
(a) |
(b) |
That, if any instrument is required to be filed with or any permission, order or ruling is required to be obtained from the Securities Regulators or any other step is required under any applicable law of the Designated Jurisdictions or any other applicable jurisdiction before any securities or property which a Special Warrantholder is entitled to receive pursuant to the deemed exercise of a Special Warrant may properly and legally be delivered upon the deemed exercise of a Special Warrant, the Corporation covenants that it shall use its best efforts to make such filing, obtain such permission, order or ruling and take all such action, at its expense, as is required or appropriate in the circumstances.
That the Corporation will use its best efforts to ensure that the Underlying Shares underlying the Special Warrants and the Common Shares underlying the Underlying Warrants will be approved for listing and trading on the CSE.
That the Corporation will comply with all covenants and satisfy all terms and conditions on its part to be performed and satisfied under this Indenture and advise the Special Warrant Agent and the Special Warrantholders promptly in writing of any default under the terms of this Indenture.
That if the Corporation shall fail to perform any of its covenants contained in this Indenture and the Corporation has not rectified such failure within 10 Business Days after receiving notice of such failure by the Special Warrant Agent, the Special Warrant Agent may notify the Special Warrantholders of such failure on the part of the Corporation or may itself perform any of the covenants capable of being performed by it, but shall be under no obligation to perform said covenants or to notify the Special Warrantholders of such performance by it. No such performance, expenditure or advance by the Special
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Warrant Agent shall relieve the Corporation of any default hereunder or of its continuing obligations under the covenants herein contained.
That the Corporation will pay the Special Warrant Agent from time to time such reasonable remuneration for its services hereunder as may be agreed upon between the Corporation and the Special Warrant Agent and will pay or reimburse the Special Warrant Agent upon its request for all reasonable expenses and disbursements and advances properly incurred or made by the Special Warrant Agent in the administration or execution of its duties hereunder (including the reasonable compensation and 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 Special Warrant Agent hereunder shall be finally and fully performed, except any such expense, disbursement, or advance as may arise from the gross negligence, willful misconduct or fraud of the Special Warrant Agent. Any amount owing hereunder and remaining unpaid after 30 Business Days from the invoice date will bear interest at the then current rate charged by the Special Warrant Agent against unpaid invoices and shall be payable upon demand. This Section shall survive the resignation or removal of the Special Warrant Agent and/or the termination of this Indenture.
That the Corporation covenants with the Special Warrant Agent for the benefit of the Special Warrant Agent and the Special Warrantholders that, so long as any of the Special Warrants are outstanding, it will not:
(a) |
(b) |
(c) |
(d) |
unless, in each such case, the Corporation will have given notice, in the manner specified in Section 10.1 and Section 10.2, to the Special Warrant Agent, the Agent and each Special Warrantholder, of the action proposed to be taken and the date on which (a) the books of the Corporation will close or a record will be taken for such dividend, repayment, distribution, subscription rights or other securities, rights, warrants or options, or (b) such subdivision, consolidation, reclassification, amalgamation, merger, sale or lease, dissolution, liquidation or winding-up will take place, as the case may be, provided that the Corporation will only be required to specify in the notice those particulars of the action as will have been fixed and determined at the date on which the notice is given. The notice will also specify the date as of which the holders of Common Shares of record will participate in the dividend, repayment, distribution, subscription of rights or other securities, rights, warrants or options, or will be entitled to exchange their
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Common Shares for securities or other property deliverable upon such subdivision, consolidation, reclassification, amalgamation, merger, sale or lease, other disposition, dissolution, liquidation or winding-up, as the case may be. The notice will be given, with respect to the actions described in Sections (a), (b), (c), (d), (e) and (f) above not less than 14 days prior to the earliest of the record date, the date on which the Corporation’s transfer books are to be closed, or the effective date with respect thereto.
That the Corporation further covenants and agrees that it will not during the period of any notice given under Section 10.1 close its share transfer books or take any other corporate action which might deprive the Special Warrantholders of the opportunity of the deemed exercise of their Special Warrants; provided that nothing contained in this Section 3.13 will be deemed to affect the right of the Corporation to do or take part in any of the things referred to in Section 3.12.
That the Corporation will not pay or give any commission or other remuneration within the meaning of Section 3(a)(9) of the 1933 Act to any person, directly or indirectly, for soliciting the deemed exercise of the Special Warrants.
The Corporation covenants and agrees with the Special Warrant Agent to provide and hereby provides a right of rescission to each Special Warrantholder as hereinafter set forth, which right shall be exercisable by a Special Warrantholder directly.
The Corporation hereby agrees that in the event that a holder of a Special Warrant who acquires Underlying Shares upon deemed exercise of the Special Warrants is or becomes entitled under applicable securities laws in the Designated Jurisdictions to the remedy of rescission by reason of a misrepresentation in the Prospectus filed by the Corporation in connection herewith or any amendment thereto, qualifying the distribution of the Underlying Shares to be issued on deemed exercise of the Special Warrants in the Designated Jurisdictions, such holder shall be entitled, subject to available defences and any limitation period under applicable securities laws in the Designated Jurisdictions, to rescission not only of the holder’s deemed exercise of its Special Warrants but also of the private placement transaction pursuant to which the Special Warrants were initially acquired, and shall be entitled in connection with such rescission to a full refund from the Corporation of all consideration paid to the Corporation on the acquisition of the Special Warrants. In the event that such holder is a permitted assignee of the interest of the original purchaser of the corresponding Special Warrants, or the Special Warrants, as applicable, such permitted assignee shall be permitted to exercise the rights of rescission and refund granted hereunder as if such permitted assignee was such original purchaser. The foregoing right, which is extended by the Corporation in respect of the Special Warrants issued by the Corporation, is in addition to any other right or remedy available to a holder of Special Warrants under applicable securities laws in the Designated Jurisdictions, or otherwise at law, and is subject to the defences and limitations described under such applicable laws.
Should a holder of Special Warrants exercise any legal, statutory, contractual or other right of withdrawal or rescission that may be available to it, the Special 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 holder shall seek a refund directly from the Corporation and subsequently, the Corporation, upon surrender to the Corporation or the transfer agent for the Corporation of any Underlying Shares that may have been issued, or such other procedure as agreed to by the parties hereto, shall instruct the Special Warrant Agent
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in writing, to cancel the exercise transaction and to cause the cancellation of any such Underlying Shares on the appropriate registers, which may have already been issued upon the Special Warrant exercise. The Special 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 Special Warrant Agent be in any other way responsible in the event that any payment is not delivered or received pursuant to this Section. Notwithstanding the foregoing, in the event that the Corporation provides the refund to the Special Warrant Agent for distribution to the holder, the Special Warrant Agent shall return such funds to the holder as soon as reasonably practicable, and in so doing, the Special Warrant Agent shall incur no liability with respect to the delivery or non-delivery of any such funds.
ARTICLE 4
RELEASE OF ESCROWED FUNDS
RELEASE OF ESCROWED FUNDS
On the Closing Date, the Corporation shall direct the Agent to provide in aggregate the Escrowed Proceeds to the Special Warrant Agent by way of certified cheque, bank draft, or electronic wire, and the Special Warrant Agent shall accept and hold the Escrowed Funds in escrow for and on behalf of the persons who have an interest therein pursuant hereto, shall disburse and deal with the Escrowed Funds in the manner contemplated by this Article 4 and at all times shall keep the Escrowed Funds in a segregated interest-bearing account, all on the terms and subject to the conditions hereof. The Corporation acknowledges and agrees that it is a condition of the payment by the holders of Special Warrants of the Subscription Price that the Escrowed Funds are held in escrow by the Special Warrant Agent in accordance with the provisions of this Article 4. The Corporation further acknowledges and confirms that it has no interest in the Escrowed Funds or in the Earnings thereon unless and until the Completion Notice and Direction is delivered to the Special Warrant Agent.
Upon receipt of the Completion Notice and Direction on or before the Escrow Release Deadline, the Escrowed Funds shall be released from escrow and paid by the Special Warrant Agent as follows: (a) an amount equal to 50% of the Agent’s Commission as specified in such notice in Subsection 4.2(a), above, together with any remaining expenses of the Agent, shall be paid to the Agent, and (b) the balance of the Escrowed Funds less any amounts payable to the Special Warrant Agent equal to its fees for services rendered and disbursements incurred shall be paid to the Corporation, or as otherwise directed by the Agent and the Corporation in the Completion Notice and Direction, upon receipt by the Special
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Warrant Agent of the Completion Notice and Direction and any requisite instructions in connection therewith. Provided that the Completion Notice and Direction and any requisite instructions in connection therewith are provided to the Special Warrant Agent by 8:30 a.m. (Toronto time), with wire instructions to be provided the Business Day prior, the wire transfer(s) of Escrowed Funds in accordance with the Completion Notice and Direction shall be initiated on the same Business Day.
In the event that a Termination Event occurs, the Corporation shall forthwith deliver a Termination Notice to each of the Special Warrantholders, the Special Warrant Agent and the Agent stating the Termination Date and that a Termination Event has occurred. The Special Warrant Agent and the Corporation shall return to each such holder the Special Warrantholder’s Escrowed Funds. Each Special Warrantholder’s Escrowed Funds shall be paid to such holder within five (5) Business Days following the Termination Date. In the event that the Escrowed Funds are not sufficient to fund the Special Warrantholder’s Escrowed Funds payable to all Special Warrantholders, at least one (1) Business Day prior to the Business Day on which the Special Warrant Agent is to pay each Special Warrantholder’s Escrowed Funds, the Corporation shall fund the Special Warrant Agent in a sufficient amount to pay any such shortfall and any available funds will be paid to Special Warrantholders on a pro rata basis. For greater certainty, the Special Warrant Agent shall not be responsible for any such shortfall. Payment made in accordance with this Article 4 shall be made in accordance with Section 4.6 hereof and the Special Warrant Agent shall mail such payment to such Special Warrantholders at their address last appearing on the register of the Special Warrants maintained by the Special Warrant Agent. All Special Warrants in respect of which the Special Warrantholder’s Escrowed Funds have been paid to the Special Warrantholders shall be deemed to have been cancelled on the Termination Date and the Special Warrant Agent shall record the deemed cancellation of such Special Warrants on the register of the Special Warrants. Upon request the Special Warrant Agent shall furnish the Corporation with a certificate identifying the Special Warrants deemed to have been cancelled. All Special Warrants represented by Special Warrant Certificates which have been deemed to have been cancelled pursuant to this Section 4.4 shall be without further force and effect whatsoever.
In order to permit the Special Warrant Agent to carry out its obligations under this Article 4, the Corporation hereby specifically authorizes and directs the Special Warrant Agent to make any stipulated payment or to take any stipulated action in accordance with the provisions of this Agreement.
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(ii) |
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unless otherwise specified, shall, in the case of the Corporation, refer to a certificate of any officer of director of the Corporation, and, in the case of any other party, refer to a certificate of an authorized officer of such party. The Special Warrant Agent shall not be liable for any error in judgment or for any act done or step taken or omitted by it in good faith or for any mistake, in fact or law, or for anything which it may do or refrain from doing in connection therewith, except arising out of its own gross negligence, wilful misconduct or fraud. None of the provisions of this Agreement shall require the Special Warrant Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. The Special Warrant Agent shall not be responsible for any losses which may occur as a result of the investment of the Escrowed Funds where the Escrowed Funds have been invested in accordance with the terms of this Agreement. |
If the Receipt for the Prospectus is not issued prior to the Qualification Deadline then each holder of a Special Warrant will be entitled to receive upon deemed exercise of each Special Warrant, without payment of any additional consideration, 1.1 Units per Special Warrant, on the Deemed Exercise Date; provided, however, that any fractional entitlement to Units will be rounded down to the nearest whole Unit.
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In addition, the rights to acquire Underlying Securities in effect at any date attaching to the Special Warrants are subject to adjustment from time to time as follows:
(a) |
(ii) |
(iii) |
(any of the above being an “Common Share Reorganization”), the number of Underlying Shares issuable upon the exercise of each Special Warrant is adjusted immediately after the effective date of the Common Share Reorganization or on the record date for the issue of Common Shares or Convertible Securities by way of stock dividend, by multiplying the number of Underlying Shares previously obtainable on the exercise of a Special Warrant by the fraction of which:
(B) |
and the Corporation and Special Warrant Agent, upon receipt of notice pursuant to Section 5.3, shall make such adjustment successively whenever any event referred to in this Section 5.1(a) occurs and any such issue of Common Shares or Convertible Securities by way of a stock dividend is deemed to have occurred on the record date for the stock dividend for the purpose of calculating the number of outstanding Common Shares under this Section 5.1(a). Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any computation. To the extent that any Convertible Securities are not converted into or exchanged for Common Shares, prior to the expiration thereof, the number of Underlying Shares obtainable under each Special Warrant shall be readjusted to the number of Underlying Shares that is then obtainable based upon the number of Common Shares actually issued on conversion or exchange of such Convertible Securities;
(b) |
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during a period expiring not more than 45 calendar days after the record date for such issue (“Rights Period”), to subscribe for or acquire Common Shares (or securities convertible or exchangeable into Common Shares) at a price per share (or having a conversion or exchange price per share) to the holder of less than 95% of the Current Market Price for the Common Shares on such record date (any such issuance being herein called a “Rights Offering), then the number of Underlying Shares obtainable upon the exercise of each Special Warrant shall be adjusted effective immediately after the end of the Rights Period to a number determined by multiplying the number of Underlying Shares obtainable upon the exercise thereof immediately prior to the end of the Rights Period by a fraction: |
Any offered securities owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any computation. If all the rights, options or warrants are not so issued or if all rights, options or warrants are not exercised prior to the expiration thereof, the number of Underlying Shares obtainable shall be readjusted to the number of Underlying Shares obtainable in effect immediately prior to the record date and such number shall be further adjusted based upon the number of Common Shares (or securities convertible or exchangeable into Common Shares) actually delivered upon the exercise of the rights, options or warrants, as the case may be, but subject to any other adjustment required hereunder by reason of any event arising after that record date;
(c) |
(iii) |
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and if such issuance or distribution does not constitute a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the number of Underlying Shares obtainable upon the exercise of each Special Warrant shall be adjusted effective immediately after the record date at which the holders of affected Common Shares are determined for purposes of the Special Distribution to a number determined by multiplying the number of Underlying Shares obtainable upon the exercise thereof in effect on such record date by a fraction:
(A) |
(1) |
Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any computation. If the distribution of shares, rights, options, warrants, evidences of indebtedness, property or other assets is not so made or to the extent that any rights, options or warrants so distributed are not exercised, the number of Underlying Shares obtainable shall be readjusted to the number of Underlying Shares obtainable in effect immediately prior to the record date and such number shall be further adjusted based upon the number of shares, rights, options, warrants, evidences of indebtedness, property or other assets actually distributed or based upon the number of securities actually delivered upon the exercise of the rights, options or warrants, as the case may be, but subject to any other adjustment required hereunder by reason of any event arising after that record date;
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shall accept, in lieu of the number of Underlying Securities obtainable under the Special Warrants to which it was previously entitled, the kind and number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such Capital Reorganization, that the Special Warrantholder would have been entitled to receive on such Capital Reorganization if, on the record date or the effective date thereof, as the case may be, the Special Warrantholder had been the registered holder of the number of Underlying Securities obtainable upon the exercise of Special Warrants then held, subject to adjustment thereafter in accordance with provisions of the same, as nearly as may be possible, as those contained in this Article 4. The Corporation shall not carry into effect any action requiring an adjustment pursuant to this Section 5.1(d) unless all necessary steps have been taken so that the Special Warrantholders are thereafter entitled to receive such kind and number of shares, other securities or property. The Corporation will not enter into a Capital Reorganization unless its successor, or the purchasing body corporate, partnership, trust or other entity, as the case may be, prior to or contemporaneously with any such Capital Reorganization, enters into an indenture which provides, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Special Warrantholders to the end that the provisions set forth in this Indenture are correspondingly made applicable, as nearly as may reasonably be possible, with respect to any shares, other securities or property to which a Special Warrantholder is entitled on the exercise of his acquisition rights thereafter. An indenture entered into by the Corporation pursuant to the provisions of this Section 5.1(d) is deemed a supplemental indenture entered into pursuant to the provisions of Article 8. An indenture entered into between the Corporation, any successor to the Corporation or any purchasing body corporate, partnership, trust or other entity and the Special Warrant Agent must provide for adjustments which are as nearly equivalent as may be practicable to the adjustments provided in this Article 4 and which apply to successive Capital Reorganizations; |
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As a condition precedent to the taking of any action which requires an adjustment in any of the acquisition rights pursuant to the Special Warrants, including the number of Underlying Securities obtainable upon the exercise thereof, the Corporation shall take any corporate action which may in its opinion be necessary in order that the Corporation or any successor to the Corporation has reserved, allotted and set aside for issuance Common Shares in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Underlying Securities and may validly and legally deliver all
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other securities or property which the Special Warrantholders are entitled to receive on the full exercise of the Special Warrants in accordance with the provisions hereof.
As soon as practicable and in any event not more than three business days following the occurrence of any event which requires an adjustment as provided in Section 5.1, the Corporation shall forthwith deliver a written notice to the Special Warrantholders, the Special Warrant Agent and the Agent specifying the nature of the event requiring the adjustment, the amount of the adjustment necessitated thereby, and setting forth in reasonable detail the method of calculation and the facts upon which the calculation is based.
The Corporation covenants with the Special Warrant Agent that it will not close its transfer books or take any other corporate action which might deprive the holder of a Special Warrant of the opportunity of exercising their Special Warrants during the period of 14 calendar days after giving of the notice set forth in Section 5.3 hereof and 5.6 hereof.
The Special Warrant Agent:
(a) | is entitled to act and rely, and shall be protected in so doing, on any adjustment calculation of the Corporation or the Corporation’s auditors and any other documents filed by the Corporation pursuant to this Article 4 for all purposes; |
(c) |
(e) |
The Corporation covenants with the Special Warrant Agent that so long as any Special Warrants remain outstanding it will give not less than 14 calendar days’ prior written notice in the manner provided for in Article 9 to the Special Warrant Agent, each Special Warrantholder and to the Agent of any event
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which requires an adjustment pursuant to this Article 4. The Corporation covenants and agrees that such notice shall contain the particulars of such event in reasonable detail and, if determinable, the required adjustment. The Corporation further covenants and agrees that it shall promptly, as soon as the adjustment calculations are reasonably determinable, file a certificate of the Corporation with the Special Warrant Agent, on which the Special Warrant Agent may act and rely, showing how such adjustment shall be computed and give notice to the Special Warrantholders and the Agent of such adjustment computation.
Other than an adjustment to the Underlying Warrants issuable upon exercise of the Special Warrants pursuant to Section 5.1(d), the parties hereto agree the rights of Special Warrantholders to acquire Underlying Warrants (including the exercise price thereof) and/or Common Shares underlying the Underlying Warrants in effect at any date attaching to the Special Warrants shall be subject to adjustment from time to time in accordance with the provisions of the warrant indenture governing the Underlying Warrants.
ARTICLE 6
EXERCISE AND CANCELLATION OF SPECIAL WARRANTS
EXERCISE AND CANCELLATION OF SPECIAL WARRANTS
Upon receipt of the Exercise Notice from the Corporation in accordance with Section 3.6, the Special Warrant Agent shall give written notice, in the form to be provided by the Corporation to the Special Warrant Agent, to each holder of a Special Warrant concurrently with delivery of the certificates or other evidence of ownership representing the Underlying Securities in accordance with Section 6.3.
No Special Warrants may be voluntarily exercised by the holders thereof at any time after their issuance, unless agreed to by the Corporation pursuant to a Supplemental Indenture entered into with the Special Warrant Agent providing for such exercise and subject to any certificates issued prior to the Deemed Exercise Date bearing the legends set out in Section 6.8.
All Special Warrants will be deemed to have been exercised immediately prior to the Deemed Exercise Time and surrendered by the Special Warrantholders without any further action on the part of the Special Warrantholders. Upon the occurrence of that event, the Special Warrant Agent shall in respect of the Special Warrant Certificates, mail within one Business Day, one or more certificates representing the Underlying Securities issued upon deemed exercise of the Special Warrants, registered in the name of the Special Warrantholders, to the addresses of the Special Warrantholders as specified in the register for the Special Warrants or to such address as the Corporation may specify in writing to the Special Warrant Agent prior to the Deemed Exercise Time.
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(c) |
After the deemed exercise of a Special Warrant as provided in this Article 5, the holder of a Special Warrant no longer has any rights either under this Indenture or the Special Warrant Certificate, other than the right to receive certificates or other evidence of ownership as provided herein representing an Underlying Security and the Special Warrant is void and of no value or effect.
Where a Special Warrantholder is entitled to receive, as a result of the adjustments provided for in Section 5.1 or otherwise, on the deemed exercise of its Special Warrants a fraction of an Underlying Security, such right may only be exercised in respect of such fraction in combination with another Special Warrant or other Special Warrants which in the aggregate entitle the Special Warrantholder to receive a whole number of Underlying Securities. If a Special Warrantholder is not able to, or elects not to, combine Special Warrants so as to be entitled to acquire a whole number of Underlying Securities, the Special Warrantholder may not acquire a fractional Underlying Security on the deemed exercise of such Special Warrants, and, as a result, has the right to acquire only that number of Underlying Securities equal to the nearest whole number of Underlying Securities and no cash will be paid in lieu of any fractional Underlying Security.
The Special Warrant Agent shall record the particulars of the deemed exercise of the Special Warrants, which include the name or names and addresses of the persons who become holders of Underlying Securities on exercise of the Special Warrants pursuant to this Article 6 and the number of Underlying Securities issued. If requested by the Corporation, upon the deemed exercise of the Special Warrants pursuant to this Article 6, the Special Warrant Agent shall provide those particulars in writing to the Corporation.
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(a) | All Special Warrant Certificates and all certificates issued in exchange therefor or in substitution thereof will have the following legends endorsed thereon: |
“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) [CLOSING DATE], AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”
(b) | All Special Warrant Certificates and all certificates issued in exchange therefor or in substitution thereof and any certificates representing the Underlying Securities issued upon deemed exercise thereof will have the following legend endorsed thereon in addition to the legend set forth in 6.8(a): |
“THE SECURITIES REPRESENTED HEREBY [IN THE CASE OF WARRANTS: AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF] HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY. THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES ACT.”
[IN THE CASE OF WARRANTS ONLY: “THE SECURITIES EVIDENCED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR U.S. STATE SECURITIES LAWS. THIS SPECIAL WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS SPECIAL WARRANT HAVE BEEN REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE.”]
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Notwithstanding anything herein contained, the certificates representing the Underlying Securities thereby issued will bear such legends as set forth in Section 6.8(b) above and as may, in the opinion of counsel to the Corporation, acting reasonably, be necessary in order to avoid a violation of any applicable securities laws or to comply with the requirements of any stock exchange on which the Underlying Securities are listed, provided that if, at any time, in the opinion of counsel to the Corporation, such legends are no longer necessary or advisable in order to avoid violation of such laws, or the holder of any such legended certificates representing the Underlying Securities, at the holder’s expense, provides the Corporation and the Special Warrant Agent 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 holder is entitled to sell or otherwise transfer such Underlying Securities in a transaction in which such legends are not required, such legended certificates representing Underlying Securities may thereafter be surrendered to the transfer agent in exchange for certificates which do not bear such legend.
ARTICLE 7
MEETINGS OF SPECIAL WARRANTHOLDERS
MEETINGS OF SPECIAL WARRANTHOLDERS
In this Article 7 or otherwise in this Indenture:
(b) |
(c) |
The Special Warrant Agent or the Corporation may convene a Meeting at any time at the expense of the Corporation. Upon receipt of a written requisition signed in one or more counterparts by Special Warrantholders holding not less than 10% of the aggregate number of the then outstanding Special Warrants or upon a written request of the Corporation, the Special Warrant Agent shall convene a Meeting, provided that, it has been indemnified and funded to its reasonable satisfaction by the Corporation or the Special Warrantholders for the costs of convening and holding a Meeting. If the Special Warrant Agent fails to convene the Meeting within 5 Business Days after being duly requisitioned to do so and indemnified and funded as aforesaid, the Special Warrantholders may themselves convene a Meeting, the notice for which must be signed by a person that those Special Warrantholders specify, provided that the Special Warrant Agent and Corporation receive notice of the Meeting in accordance with Section 7.4. A written requisition must state, generally, the reason for the Meeting and business to be transacted at the Meeting.
Every Meeting must be held in Toronto, Ontario or at such other place that the Special Warrant Agent and Corporation approve.
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The Special Warrant Agent or the Corporation, as the case may be, shall give written notice of each Meeting to each Special Warrantholder, the Special Warrant Agent (unless the Meeting has been called by the Special Warrant Agent) and the Corporation (unless the Meeting has been called by the Corporation) in the manner specified in Article 10 at least 10 Business Days before the date of the Meeting. The Special Warrant Agent shall give written notice of each Adjourned Meeting to each Special Warrantholder in the manner specified in Article 10 at least five calendar days before the date of the Adjourned Meeting. The notice for a Meeting must state the time and place of the Meeting and, generally, the reason for the Meeting and the business to be transacted at the Meeting, together with such additional information as may be required to sufficiently inform the Special Warrantholders regarding the business to be transacted at the Meeting. The notice for an Adjourned Meeting must state the time and place of the Adjourned Meeting but need not specify the business to be transacted at an Adjourned Meeting. The accidental omission by the Special Warrant Agent or the Corporation, as the case may be, to give notice of a Meeting or an Adjourned Meeting to a Special Warrantholder does not invalidate a resolution passed at a Meeting or Adjourned Meeting.
The Corporation and the Agent may and the Special Warrant Agent shall, each by its authorized representatives including directors, officers, employees, and agents, attend every Meeting and Adjourned Meeting but neither the Corporation, the Agent nor the Special Warrant Agent have the right to vote unless they are acting in their capacity as a Special Warrantholder or a proxy for a Special Warrantholder. The legal advisors of the Corporation, the Agent, the Special Warrant Agent, and any Special Warrantholders, respectively, may also attend a Meeting or Adjourned Meeting but do not have the right to vote, unless they have the right to vote as a Special Warrantholder or as a proxy for a Special Warrantholder.
Subject to the provisions of Section 7.18, a quorum for a Meeting shall consist of two or more persons present in person and owning or representing by proxy, not less than 25% of the aggregate number of the then outstanding Special Warrants.
The Special Warrant Agent shall nominate a natural person as the chairman of a Meeting or Adjourned Meeting. If the person so nominated is not present within 15 minutes after the time set for holding the Meeting or Adjourned Meeting, the Special Warrantholders present in person or represented by proxy shall choose one of their number to be chairman. The chairman may vote any Special Warrants for which he or she is the registered holder.
The chairman of any Meeting at which a quorum of the Special Warrantholders is present may, with the consent of the Meeting, adjourn any such meeting. Notice of such adjournment will be given in accordance with Section 7.4 with such other requirements, if any, as the Meeting may prescribe.
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If a quorum of the Special Warrantholders shall not be present within 30 minutes from the time fixed for holding any Meeting, the Meeting, if summoned by the Special Warrantholders or on the written direction of any Special Warrantholders holding not less than 10% of the aggregate number of the then outstanding Special Warrants, 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 place and time. 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 is present at the commencement of the Meeting. At the Adjourned Meeting the Special Warrantholders present in person or represented by proxy shall form a quorum and may transact the business for which the Meeting was originally convened, notwithstanding that they may not hold at least 10% of the aggregate number of the then outstanding Special Warrants.
Every question submitted to a meeting, other than an Extraordinary Resolution, will be decided in the first place by a majority of the votes given on a show of hands and, 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 will be conclusive evidence of the fact. On a show of hands, every person who is present and entitled to vote, whether as a Special Warrantholder or as proxy for one or more absent Special Warrantholders, or both, shall have one vote.
When requested by one or more Special Warrantholders acting in person or by proxy and holding in the aggregate at least 5% of the aggregate number of the then outstanding Special Warrants, on every Extraordinary Resolution, or as directed by the chairman of a Meeting or Adjourned Meeting, the chairman of a Meeting or Adjourned Meeting shall request a poll on a question submitted to the Meeting. Except as otherwise required herein, if a question has been put to a poll, that question shall be decided by the affirmative vote of not less than a majority of the votes given on the poll. If the vote is tied, the motion shall not be carried. On a poll, each Special Warrantholder or person representing a Special Warrantholder by proxy shall be entitled to one vote for every Special Warrant of which he is the registered holder or of which the person being represented by proxy is the registered holder, as the case may be. A declaration made by the chairman that a resolution has been carried or lost is conclusive evidence thereof. In the case of joint registered Special Warrantholders, any one of them present in person or represented by proxy may vote in the absence of the other or others but when more than one of them is present in person or by proxy, they may only vote together in respect of the Special Warrants of which they are joint registered holders.
Subject to the provisions of this Indenture, the Special Warrant Agent, or the Corporation with the approval of the Special Warrant Agent, may from time to time make and, thereafter, vary regulations not contrary to the provisions of this Indenture as it deems fit providing for and governing the following:
(a) |
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(b) |
(c) |
A regulation so made is binding and effective and votes given in accordance with such a regulation shall be valid and counted. The Special Warrant Agent may permit Special Warrantholders to make proof of ownership in the manner the Special Warrant Agent approves.
By Extraordinary Resolution passed pursuant to this Article 7, the Special Warrantholders may:
(b) |
(d) |
(e) |
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(h) |
(j) |
(k) |
(l) | amend, alter, or repeal any Extraordinary Resolution previously passed pursuant to this Section 7.13; or |
(m) |
Any one or more of the powers or any combination of the powers in this Indenture stated to be exercised by the Special 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 Special Warrantholders to exercise such power or combination of powers then or thereafter from time to time.
The Special Warrant Agent shall make and maintain minutes and records of all resolutions and proceedings at a Meeting or Adjourned Meeting at the expense of the Corporation and shall make available those minutes and records at the office of the Special Warrant Agent for inspection by a Special Warrantholder or his authorized representative and the Agent at reasonable times. If signed by the chairman of the Meeting or by the chairman of the next succeeding Meeting, such minutes shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such Meeting in respect of which minutes shall have been made shall be deemed to have been duly convened and held, and all the resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.
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Notwithstanding the foregoing, a written resolution or instrument signed in one or more counterparts by the Special Warrantholders holding not less than a majority of the Special Warrants outstanding in the case of an ordinary resolution, or not less than 66⅔% of the Special Warrants outstanding in the case of an Extraordinary Resolution, is deemed to be the same as, and to have the same force and effect as, an ordinary resolution or Extraordinary Resolution, as the case may be, duly passed at a Meeting or Adjourned Meeting.
Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 7 at a meeting of Special Warrantholders shall be binding upon all the Special Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed by Special Warrantholders in accordance with Section 7.16 shall be binding upon all the Special Warrantholders, whether signatories thereto or not, and each and every Special Warrantholder, the Corporation and the Special 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 Special Warrantholders are present at a Meeting for the purpose of determining a quorum or have concurred in any consent, waiver, resolution, Extraordinary Resolution or other action under this Indenture, Special Warrants owned legally or beneficially by the Corporation or any Subsidiary of the Corporation shall be disregarded. The Corporation will provide the Special Warrant Agent with, upon request, a certificate of the Corporation detailing its holdings and those of its subsidiaries and the various registrations.
ARTICLE 8
SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS
SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS
From time to time, the Corporation (when authorized by action of the directors) and the Special Warrant Agent may, subject to the provisions hereof and 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:
(b) |
(c) |
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(i) |
(j) | to allow for the voluntary exercise of Special Warrants if agreed to by the Corporation in accordance with Section 5.2; or |
(k) |
Subject to Sections 3.12 and 5.1(d), nothing in this Indenture prevents any consolidation, amalgamation, arrangement or merger of the Corporation with or into any other body corporate or bodies corporate, or a conveyance or transfer of all or substantially all the properties and assets of the Corporation as an entirety to another body corporate lawfully entitled to acquire and operate the same, provided, however, that the body corporate formed by such consolidation, amalgamation, arrangement or into which such merger has been made, or which has acquired by conveyance or transfer all or substantially all the properties and assets of the Corporation as an entirety in circumstances resulting in the Special Warrantholders being entitled to receive property from or securities of such body corporate, shall execute prior to or contemporaneously with such consolidation, amalgamation, arrangement, merger, conveyance or transfer, an indenture supplemental hereto wherein the due and punctual performance and observance of all the covenants, obligations and conditions of this Indenture to be performed or observed by the Corporation are assumed by the successor body corporate. The Special Warrant Agent is entitled to receive and is fully protected in relying upon an opinion of Counsel that any
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such consolidation, amalgamation, arrangement, merger, conveyance or transfer, and a supplemental indenture executed in connection therewith, complies with the provisions of this Section.
Where the Corporation, pursuant to Section 8.2 hereof, is consolidated, amalgamated, arranged or merged with or into any other body corporate or bodies corporate or conveys or transfers all or substantially all of the properties and assets of the Corporation as an entirety to another body corporate, the successor body corporate formed by such consolidation, amalgamation, arrangement or into which the Corporation has been merged or which has received a conveyance or transfer as aforesaid succeeds to and is substituted for the Corporation hereunder with the same effect as nearly as may be possible as if it had been named herein. Such changes may be made in the Special Warrants as may be appropriate in view of such consolidation, amalgamation, arrangement, merger, conveyance or transfer.
ARTICLE 9
CONCERNING THE SPECIAL WARRANT AGENT
CONCERNING THE SPECIAL WARRANT AGENT
By way of supplement to the provisions of any statute for the time being relating to special warrant agents, and notwithstanding any other provision of this Indenture, in the exercise of the rights, duties and obligations prescribed or conferred by the terms of this Indenture, the Special Warrant Agent shall act honestly and in good faith and shall exercise that degree of care, diligence and skill that a reasonably prudent special warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Special Warrant Agent from, or require any other person to indemnify the Special Warrant Agent against, any liability for its own gross negligence, wilful misconduct or fraud.
The Special Warrant Agent is not obligated to do any act or thing except where required to do so by this Indenture and, in the case of a default, only when it has actual notice thereof.
If, in the administration of its duties hereunder, the Special Warrant Agent deems it necessary or desirable that any matter be proved or established by the Corporation, prior to taking or suffering any action hereunder, the Special Warrant Agent may accept, act, and rely upon, and shall be protected in accepting, acting, and relying upon, a certificate of the Corporation as conclusive evidence of the truth of any fact relating to the Corporation or its assets therein stated and proof of the regularity of any proceedings or actions associated therewith, but the Special Warrant Agent may in its discretion require further evidence or information before acting or relying on any such certificate. In addition to the reports, certificates, opinions, and other evidence required by this Indenture, the Corporation shall furnish to the Special Warrant Agent such additional evidence of compliance with any provision hereof, and in such form as may be prescribed by Applicable Legislation, under Section 9.6, or as the Special Warrant Agent may reasonably require by written notice to the Corporation. Whenever Applicable Legislation requires that evidence referred to in this Section 9.3 be in the form of a statutory declaration, the Special 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 of the Chairman of the Board and Chief Executive Officer, President or Chief Financial Officer of the Corporation or by any
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other officer or director of the Corporation to whom such authority is delegated by the directors from time to time.
The Special Warrant Agent may, at the Corporation’s expense, employ or retain such lawyers, accountants, engineers, appraisers or other experts, advisers or agents as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay reasonable remuneration for such services rendered to it but it is not responsible for any misconduct, mistake or error of judgment on the part of any of them and the Corporation shall pay or reimburse the Special Warrant Agent for any reasonable fees, expenses and disbursements of such experts or advisors. The Corporation shall reimburse the Special Warrant Agent for all disbursements, costs and expenses made or incurred by the Special Warrant Agent in the discharge of its duties and in the management of its duties hereunder. The Special Warrant Agent may rely upon and act upon, and shall be protected from relying and acting upon, the opinion or advice of, or information obtained from, any such lawyer, accountant, engineer, appraiser or other expert, adviser or agent in relation to any matter arising in the administration of its duties hereunder. The Special Warrant Agent shall not incur any liability for the acts or omissions of such lawyers, accountants, engineers, appraisers or other experts, advisers or agents employed by the Special Warrant Agent in good faith.
(b) | Failing such appointment by the Corporation or by the Special Warrantholders by Extraordinary Resolution, the retiring Special Warrant Agent, at the expense of the Corporation, or any Special Warrantholder may apply to a Judge of the Ontario Superior Court of Justice on such notice as such Judge may direct, for the appointment of a new special warrant agent. The Special Warrantholders may, by Extraordinary Resolution, remove the Special Warrant Agent (including a special warrant agent appointed by the Corporation or by a Judge as aforesaid) and appoint a new special warrant agent. |
(c) | Any new Special Warrant Agent appointed under the provisions of this Section 9.5 shall be a corporation authorized to carry on the business of a trust company in one or more provinces of Canada and, if required by Applicable Legislation of any province, in such province. |
(d) | On any new appointment, the new Special Warrant Agent is vested with the same powers, rights, duties and obligations as if it had been originally named as Special Warrant Agent without any further assurance, conveyance, act or deed; but there will be immediately executed, at the expense of the Corporation, all such conveyances or other instruments as may, in the opinion of Counsel, be necessary or advisable for the purpose of assuring such powers, rights, duties, and responsibilities of the new Special Warrant Agent, provided that, any successor Special Warrant Agent shall have executed an appropriate instrument accepting such appointment and, at the request of the Corporation, |
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the predecessor Special Warrant Agent, upon payment of its outstanding remuneration and expenses, shall execute and deliver to the successor Special Warrant Agent an appropriate instrument transferring to such successor Special Warrant Agent all rights and powers of the Special Warrant Agent hereunder. |
(e) | On the appointment of a new Special Warrant Agent, the Corporation will promptly give notice thereof to the Special Warrantholders. |
(f) | Any Special Warrant Certificates certified but not delivered by a predecessor Special Warrant Agent may be delivered by the successor Special Warrant Agent in the name of the predecessor or successor Special Warrant Agent. |
The Corporation and the Special Warrant Agent agree that each shall at all times in relation to this Indenture and to any action to be taken hereunder, observe and comply with and be entitled to the benefits of all Applicable Legislation. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with any mandatory requirement of Applicable Legislation, such mandatory requirement prevails.
The Special 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 is required to do so under the terms hereof; nor shall the Special 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 Special Warrant Agent and in the absence of any such notice the Special 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 will in no way limit any discretion herein given the Special Warrant Agent to determine whether or not the Special Warrant Agent will take action with respect to any default. The Special Warrant Agent shall not be bound to give notice to any person of execution hereof.
The Special Warrant Agent is in no way responsible for the use by the Corporation of the proceeds of the issue hereunder.
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In the exercise of any right or duty hereunder the Special Warrant Agent, if it is acting in good faith, may act and rely, as to the truth of any statement or the accuracy of any opinion expressed therein, on any statutory declaration, opinion, report, certificate or other evidence furnished to the Special Warrant Agent pursuant to a provision hereof or of Applicable Legislation or pursuant to a request of the Special Warrant Agent, if the Special Warrant Agent examines such evidence and determines that it complies with the applicable requirements of this Indenture. The Special Warrant Agent may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. Proof of execution of any document or instrument in writing by a holder may be made by the certificate of a notary public, or other officer with similar powers, that the person signing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution, or in any other manner the Special Warrant Agent considers adequate and in respect of a corporate Special Warrantholder, shall include a certificate of incumbency of such Special Warrantholder together with a certified resolution authorizing the person who signs such instrument to sign such instrument. The Special Warrant Agent is not bound to make any inquiry or investigation as to the performance by the Corporation of the Corporation’s covenants hereunder.
The Special Warrant Agent shall have the 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 Special Warrantholders.
The Special Warrant Agent is not required to give any bond or security with respect to the execution or administration of its duties and powers of this Indenture.
The Special Warrant Agent represents to the Corporation that, to the best of its knowledge, at the time of the execution and delivery by it of this Indenture, there exists no material conflict of interest in the role of the Special Warrant Agent hereunder but if, notwithstanding the provisions of this Section 9.12, such a material conflict of interest exists or arises, the validity and enforceability of this Indenture and the instruments issued hereunder are not affected in any manner whatsoever by reason only that such material conflict of interest exists or arises. The Special Warrant Agent shall, within 30 calendar days after ascertaining that it has a material conflict of interest, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 9.5.
No provision of this Indenture shall require the Special Warrant Agent (and its officers, directors, employees and agents) to expend or risk its (or their) own funds or otherwise incur financial liability in the performance of any of its (or their) duties or in the exercise of any of its (or their) rights or powers unless it is (or they are) so indemnified and funded. The obligation of the Special Warrant Agent to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Special Warrantholders hereunder, is conditional upon Special Warrantholders furnishing, when required in writing so to do by the Special Warrant Agent, funds sufficient for commencing or continuing the act, action or proceeding and an indemnity reasonably satisfactory to the Special Warrant Agent to protect and hold harmless the Special Warrant Agent against any costs, charges, expenses, loss, damage or liability by
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reason thereof. The Special Warrant Agent may, before commencing or at any time during the continuance of any such act, action, or proceeding, require the Special Warrantholders at whose instance it is acting to deposit with the Special Warrant Agent the Special Warrant Certificates held by them, for which Special Warrant Certificates the Special Warrant Agent shall issue receipts.
Subject to Section 9.12, the Special Warrant Agent may in its personal or other capacity, buy, sell, lend upon and deal in and hold securities of the Corporation, including the Special Warrants and generally contract and enter into financial transactions with the Corporation or otherwise, without being liable to account for any profits made thereby.
Except for the representations contained in Sections 9.12 and in the certification or Authentication of the Special Warrant Agent of the Special Warrants Certificates and the Uncertificated Special Warrants, subject to the provisions hereof, the Special Warrant Agent is not liable for or by reason of any of the statements of fact or recitals contained in this Indenture or in the Special Warrant Certificates and is not required to verify the same, but all such statements and recitals are and are deemed to have been made by the Corporation only.
The Special Warrant Agent, except as herein otherwise provided, has, as regards to all the powers, authorities and discretions vested in it, absolute discretion as to the exercise thereof, whether in relation to the manner or as to the mode and time for the exercise thereof.
The Special Warrant Agent is not:
(a) |
(b) | under any obligation to see to, or to require evidence of, the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto; |
(d) | responsible for any breach by the Corporation of any covenant or condition contained in this Indenture or in any Special Warrant Certificate and will not incur any liability or responsibility whatever or be in any way responsible for the consequences of any breach by the Corporation of any obligation herein contained or of any act of any director, officer, employee, or agent of the Corporation; or |
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The Special Warrant Agent represents to the Corporation that at the date hereof it is authorized to carry on the business of a trust company in Alberta. If, notwithstanding the provisions of this Section 9.18, it ceases to be authorized to carry on such business in Alberta, the validity and enforceability of this Indenture and of the Special Warrants issued hereunder are not affected in any manner whatsoever by reason only of such event, provided that the Special Warrant Agent shall, within 30 calendar days after ceasing to be authorized to carry on such business in Alberta, either become so authorized or resign in the manner and with the effect specified in Section 9.5.
Without limiting any protection or indemnity of the Special Warrant Agent under any other provision hereof, or otherwise at law, the Corporation hereby agrees to indemnify and hold harmless the Special Warrant Agent and its affiliates, their successors, assigns, and each of their directors, officers, employees and agents (the “Indemnified Parties”) and save them harmless from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, charges, payments, expenses and disbursements, including reasonable legal or advisor fees and disbursements, of whatever kind and nature which may at any time be imposed on, incurred by or asserted against the Indemnified Parties in connection with the performance of its duties and obligations hereunder, other than such liabilities, losses, damages, penalties, claims, actions, suits, costs, charges, payments, expenses and other disbursements arising by reason of the gross negligence, wilful misconduct or fraud of the Special Warrant Agent. This provision shall survive the resignation or removal of the Special Warrant Agent, or the termination of this Indenture. In the absence of gross negligence, wilful misconduct, or fraud on its part, the Special Warrant Agent will not be liable for any action taken, suffered, or omitted by it or for any error of judgment made by it in performance of its duties under this Agreement. In no event will the Special Warrant Agent be liable for special, indirect, consequential, or punitive loss or damages of any kind whatsoever (including but not limited to lost profits), even if the Special Warrant Agent has been advised of the possibility of such damages. The Special Warrant Agent shall not be under any obligation to prosecute or to defend any action or suit in respect of the relationship which, in the opinion of its Counsel, may involve it in expense or liability, unless the Corporation shall, so often as required, furnish the Special Warrant Agent with satisfactory indemnity and funding against such expense or liability.
The Corporation hereby represents to the Special Warrant Agent that any account to be opened by, or interest to be held by the Special 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 the Corporation agrees to complete and execute forthwith a declaration in the Special Warrant Agent’s prescribed form as to the particulars of such third party.
The Special 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 Special Warrant Agent, in its
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sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering, anti-terrorist legislation, or economic sanctions legislation, regulation or guideline. Further, should the Special 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, anti-terrorist legislation, or economic sanctions legislation, regulation or guideline, then it shall have the right to resign on 10 calendar days’ written notice to the Corporation, provided (i) that the Special Warrant Agent’s written notice shall describe the circumstances of such non-compliance; and (ii) that if such circumstances are rectified to the Special Warrant Agent’s satisfaction within such 10-day period, then such resignation shall not be effective.
The Special Warrant Agent and any person related to the Special Warrant Agent will not be appointed a receiver or receiver and manager or liquidator of all or any part of the assets or undertaking of the Corporation.
The Corporation acknowledges that the Special Warrant Agent may, in the course of providing services hereunder, collect or receive financial and other personal information about such party and/or its representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:
(a) | to provide the services required under this Indenture and other services that may be requested from time to time; |
(b) | to help the Special Warrant Agent manage its servicing relationships with such individuals; |
(c) | to meet the Special Warrant Agent’s legal and regulatory requirements; and |
(d) | if Social Insurance Numbers are collected by the Special Warrant Agent, to perform tax reporting and to assist in verification of an individual’s identity for security purposes. |
The Corporation acknowledges and agrees that the Special 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 policy, which the Special 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 Special 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.
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ARTICLE 10
NOTICES
NOTICES
Any notice, direction or other instrument addressed to the Corporation, Special Warrant Agent or Agent under the provisions of this Indenture is valid and effective if in writing delivered personally, sent by registered letter, postage prepaid or sent by facsimile or pdf via email:
(a) | If to the Corporation: |
CLS HOLDINGS USA, INC.
11767 South Dixie Highway, Suite 115
Miami, Florida
11767 South Dixie Highway, Suite 115
Miami, Florida
33156
Attention: Jeff Binder, Chairman & CEO
Email: jb@power3net.com
with a copy to (which shall not constitute notice):
Cassels Brock & Blackwell LLP
40 King Street West, Suite 2100
Toronto, Ontario M5H 3C2
40 King Street West, Suite 2100
Toronto, Ontario M5H 3C2
Attention: Cam Mingay
Email: cmingay@casselsbrock.com
Email: cmingay@casselsbrock.com
Odyssey Trust Company
Stock Exchange Tower
350-300 5th Avenue SW
Calgary, Alberta T2P 3C4
Stock Exchange Tower
350-300 5th Avenue SW
Calgary, Alberta T2P 3C4
Attention: Dan Sander
Email: dsander@odysseytrust.com
Email: dsander@odysseytrust.com
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(c) | If to the Agent: |
Canaccord Genuity Corp.
161 Bay Street, Suite 3000
Toronto, Ontario M5J 2S1
161 Bay Street, Suite 3000
Toronto, Ontario M5J 2S1
Attention: Michael Graham
Email: MJGraham@canaccordgenuity.com
Email: MJGraham@canaccordgenuity.com
with a copy to (which shall not constitute notice):
Bennett Jones LLP
3400 One First Canadian Place, P.O. Box 130,
Toronto, Ontario M5X 1A4
Attention: Aaron Sonshine
Email: sonshinea@bennettjones.com
Email: sonshinea@bennettjones.com
Any notice, direction or other instrument aforesaid will, if delivered personally, be deemed to have been given and received on the day it was delivered and, if mailed, be deemed to have been received on the third Business Day following the date of the postmark on such notice, direction or other instrument and, if sent by facsimile or pdf via email, be deemed to have been given and received on the day it was so sent unless it was sent:
in which cases it will be deemed to have been given and received on the next day which is a business day in the place to which it was sent.
The Corporation, the Special Warrant Agent or the Agent, as the case may be, may from time to time notify the others in the manner provided in this Section 10.1 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, the Special Warrant Agent or the Agent, as the case may be, for all purposes of this Indenture.
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Special Warrant Agent, to the Corporation or to the Agent hereunder could reasonably be considered unlikely to reach or likely to be delayed in reaching 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 or, if it is delivered to such party at the appropriate address provided in this Section 10.1, or by facsimile or electronic transmission or other means of prepaid, transmitted and recorded communication.
Any notice to the Special Warrantholders under the provisions of this Indenture is valid and effective if delivered, sent by regular mail or sent by courier, to each Special Warrantholder at its address appearing on the register of Special Warrants kept by the Special Warrant Agent or, in the case of joint holders, to the first such address, and, if delivered or couriered, shall be deemed to have been given and received on the day it was delivered and, if mailed, shall be deemed to have been received on the third Business Day following the date of the postmark on such notice. Accidental error or omission in giving notice or accidental failure to mail notice to any Special Warrantholder will not invalidate any action or proceeding founded thereon. All notices may be given to whichever one of the Special Warrantholders (if more than one) is named first in the appropriate register hereinbefore mentioned, and any notice so given
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shall be sufficient notice to all Special Warrantholders of and any other persons (if any) interested in such Special Warrants.
If, by reason of any interruption of mail service, actual or threatened, any notice to be given to the Special Warrantholders by the Special Warrant Agent or the Corporation would be unlikely to reach or likely to be delayed in reaching its destination in the ordinary course of mail, such notice shall be valid and effective only if published twice (i) in the Report on Business section in the national edition of The Globe & Mail newspaper; and (ii) in such other place or places and manner, if any, as the Corporation may require. Any notice given to Special Warrantholders by publication shall be deemed to have been given on the last day on which publication shall have been effected.
A copy of any notice provided to the Special Warrantholders shall be concurrently provided to the Agent in the manner specified in Section 10.1.
ARTICLE 11
POWER OF BOARD OF DIRECTORS
POWER OF BOARD OF DIRECTORS
In this Indenture, where the Corporation is required or empowered to exercise any acts, all such acts may be exercised by the directors of the Corporation, by any duly appointed committee of the directors of the Corporation or by those officers of the Corporation authorized to exercise such acts.
ARTICLE 12
MISCELLANEOUS PROVISIONS
MISCELLANEOUS PROVISIONS
The parties covenant and agree from time to time, as may be reasonably required by any party hereto, to execute and deliver such further and other documents and do all matters and things which are convenient or necessary to carry out the intention of this Indenture more effectively and completely.
If any term, covenant or condition of this Indenture or the application thereof to any party or circumstance is invalid or unenforceable to any extent, the remainder of this Indenture or application of such term, covenant or condition to a party or circumstance other than those to which it is held invalid or unenforceable is not affected thereby and each remaining term, covenant or condition of this Indenture is valid and enforceable to the fullest extent permitted by law.
No consent or waiver, express or implied, by either party to or of any breach or default by the other party in the performance by the other party of its obligations hereunder is deemed or construed to be a consent or waiver to or of any other breach or default in the performance of obligations hereunder by such party. Failure on the part of either party to complain of any act or failure to act by the other party or to declare the other party in default, irrespective of how long such failure continues, does not constitute a waiver by such party of its rights hereunder.
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Notwithstanding Section 12.3 above, upon the happening of any default hereunder:
provided that no delay or omission of the Special Warrant Agent or of the Special 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 Special Warrant Agent or of the Special Warrantholders shall extend to or be taken in any manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.
Subject to the contractual right of action given by the Corporation to the Special Warrantholders in the subscription agreements between the Corporation and the purchasers of the Special Warrants, given in Section 3.15 herein and to be contained in the Prospectus, and subject to any other rights or remedies available to the Special Warrantholders under applicable securities legislation or otherwise, the Special Warrant Agent and, by the acceptance of the Special Warrant Certificate and as part of the consideration for the issue of the Special Warrants, the Special 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, director, officer, employee or agent of the Corporation or of any successor corporation on any covenant, agreement, representation or warranty by the Corporation contained herein or in the Special Warrant Certificates.
Subject to Section 12.5, 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 of the Corporation or of any successor corporation or any of the past, present or future officers, employees or agents of the Corporation or of any successor corporation, but only the property of the Corporation or of any successor corporation shall be bound in respect hereof.
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request to the Special Warrant Agent and the Special Warrant Agent has been afforded reasonable opportunity to proceed or complete any action or suit for any such purpose whether or not in its own name and the Special Warrantholders or any of them have furnished to the Special Warrant Agent, when so requested by the Special Warrant Agent, sufficient funds and security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby and the Special Warrant Agent has failed to act within a reasonable time or the Special Warrant Agent has failed to actively pursue any such act or proceeding. |
Except for the payment obligations of the Corporation contained herein, neither 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, 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.
This Indenture enures to the benefit of and is binding upon the parties hereto and their respective successors and assigns and, subject to Sections 5.1(d), 8.2 and 9.5(g), may not be assigned by either party hereto without the consent in writing of the other party, such consent not to be unreasonably withheld.
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 shall be deemed to be dated as of the Initial Closing Date.
Upon the occurrence of the Deemed Exercise Time and if and once all Underlying Securities required to be issued in compliance with the provisions hereof have been issued and delivered hereunder, this Indenture (except for any indemnities given to the Special Warrant Agent) shall cease to be of further effect and the Special Warrant Agent, on demand of and at the cost and expense of the Corporation and upon delivery to the Special 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, and upon payment to the Special Warrant Agent of the fees and other remuneration payable to the Special Warrant Agent, the Special Warrant Agent shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. Notwithstanding the foregoing, the indemnities provided to the Special Warrant Agent by the Corporation hereunder, Section 2.6(g) and Section 3.15 shall remain in full force and effect and survive the termination of this Indenture.
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12.12 |
Nothing in this Indenture or the Special Warrants, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the holders from time to time of the Special Warrants any legal or equitable right, remedy or claim under this Indenture, or under any covenant or provision therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Special Warrantholders.
For the purpose of convenience, this Indenture is referred to as bearing the formal date of June 20, 2018; however, notwithstanding such formal date, this Indenture becomes effective as between the Corporation and any particular Special Warrantholder upon the date of issuance of a Special Warrant to such Special Warrantholder.
[Remainder of page intentionally left blank.]
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The parties hereto have executed this Indenture under the hands of their proper officers in that behalf as of the date first written above.
CLS HOLDINGS USA, INC. | |
Per: | /s/ Jeffrey I. Binder |
Authorized Signatory | |
ODYSSEY TRUST COMPANY | |
Per: | /s/ Dan Sander |
Authorized Signatory | |
Per: | /s/ Lisa Scotland |
Authorized Signatory |
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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) [CLOSING DATE], AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.
[All Special Warrants are required to bear the following legend:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).�� THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY. THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES ACT.”
SPECIAL WARRANT CERTIFICATE
CLS HOLDINGS USA, INC.
(a corporation existing under the laws of the State of Nevada)
(a corporation existing under the laws of the State of Nevada)
No. [l] | «Number» SPECIAL WARRANTS entitling the holder to acquire one Unit (comprised of one Underlying Share and one-half of one Underlying Warrant) for each Special Warrant, subject to adjustment as set out below |
THIS IS TO CERTIFY that, for value received, «Name» (the “Special Warrantholder”) is the registered holder of the number of special warrants (the “Special Warrants”) stated above and is entitled to acquire in the manner and at the time, and subject to the restrictions contained in the Indenture (as defined below), one common share and one common share purchase warrant (collectively, the “Underlying Securities”) of CLS Holdings USA, Inc. (the “Corporation”) per Special Warrant represented hereby (subject to adjustment as set out below and in the Indenture), all without payment of any additional consideration.
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The Special Warrants represented by this certificate are issued under and pursuant to a certain indenture (the “Indenture”) made as of June 20, 2018 between the Corporation and Odyssey Trust Company (the “Special Warrant Agent”) (which expression includes any successor special warrant agent appointed under the Indenture), to which Indenture and any instruments supplemental thereto reference is hereby made for a full description of the rights of the holders of the Special Warrants and the terms and conditions upon which such Special Warrants are, or are to be, issued and held, all to the same effect as if the provisions of the Indenture and all instruments supplemental thereto were herein set forth, to all of which provisions the holder of these Special Warrants by acceptance hereof assents. All terms defined in the Indenture are used herein as so defined. In the event of any conflict or inconsistency between the provisions of the Indenture and the provisions of this Special Warrant Certificate, except those that are necessary by context, the provisions of the Indenture shall prevail. The Corporation will furnish to the holder of this Special Warrant Certificate, upon request and without charge, a copy of the Indenture.
The Special Warrants represented by this Special Warrant Certificate will be deemed to be automatically exercised at 5:00 p.m. (Toronto time) on the earlier of:
(i) | the date that is the fifth Business Day after the date on which the receipt (the “Receipt”) for a (final) prospectus qualifying the distribution of the Underlying Shares issuable upon deemed exercise of the Special Warrants (the “Prospectus”) has been issued by the securities commissions or similar regulatory authority (the “Securities Regulators”) in each of the provinces of Canada in which Special Warrants are sold (the “Designated Jurisdictions”); and |
(ii) | the date that is 4 months and one day after the Acquisition Date (as defined in the Indenture) (the “Deemed Exercise Time”). |
The Special Warrants will be deemed to have been exercised, delivered and surrendered by the holders thereof immediately prior to the Deemed Exercise Time without any further action on the part of the holders.
As provided in the Special Warrant Indenture, if the Escrow Release Conditions are satisfied on or prior to the Escrow Release Deadline, the Escrowed Funds will be released to the Corporation and the Agent in accordance with the terms of the Special Warrant Indenture.
In the event that a Termination Event occurs, the Special Warrants will be cancelled and each Special Warrantholder’s Escrowed Funds will be refunded to each Special Warrantholder and the Corporation shall pay any shortfall. The Corporation shall forthwith deliver a Termination Notice to each of the Special Warrantholders, the Special Warrant Agent and the Agent and the Special Warrant Agent shall return to such holder the Special Warrantholder’s Escrowed Funds. The Special Warrant Agent shall pay to each Special Warrantholder the Special Warrantholder’s Escrowed Funds within five (5) Business Days following the Termination Date.
The Corporation will use its commercially reasonable efforts to obtain the Receipt for the Prospectus on or before 5:00 p.m. (Toronto time) on August 20, 2018 (the “Qualification Deadline”). If the Receipt for the Prospectus is not issued prior to the Qualification Deadline then each holder of a Special Warrant will be entitled to receive upon the deemed exercise of each Special Warrant, without payment of any additional consideration, 1.1 Units per Special Warrant, on the Deemed Exercise Date; provided, however, that any fractional entitlement to Units will be rounded down to the nearest whole Unit;.
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The Underlying Securities in respect of which the Special Warrants are deemed exercised will be deemed to have been issued on the date of such exercise, at which time each Special Warrantholder will be deemed to have become the holder of record of such Underlying Securities.
After the deemed exercise of Special Warrants, the Special Warrant Agent shall within three Business Days of such deemed exercise cause to be mailed or delivered to each Special Warrantholder at its address specified in the register for the Special Warrants maintained by the Special Warrant Agent or to such address as the Corporation may specify in writing to the Special Warrant Agent prior to the exercise of such Special Warrants, certificates for the appropriate number of Underlying Securities issuable in respect of such Special Warrants, not exceeding those which such Special Warrantholder is entitled to acquire pursuant to the Special Warrants so exercised.
The holder of this Special Warrant Certificate may at any time up to the Deemed Exercise Time, upon written instruction delivered to the Special Warrant Agent and payment of the charges provided for in the Indenture and otherwise in accordance with the provisions of the Indenture, exchange this Special Warrant Certificate for other Special Warrant Certificates evidencing the same number of Special Warrants represented by this Special Warrant Certificate.
The number of Underlying Securities which may be acquired by a Special Warrantholder upon deemed exercise of Special Warrants is also subject to and governed by Article 4 of the Indenture with respect to anti-dilution provisions, including provisions for the appropriate adjustment of the class, number and price of the securities issuable hereunder upon the occurrence of certain events including any subdivision, consolidation, or reclassification of the shares, payment of stock dividends, or amalgamation of the Corporation.
The holding of the Special Warrants evidenced by this Special Warrant Certificate does not constitute the Special Warrantholder a shareholder of the Corporation or entitle such holder to any right or interest in respect thereof except as expressly provided herein and in the Indenture.
The Special Warrants may only be transferred by the Special Warrantholder (or its legal representatives or its attorney duly appointed), on the register kept at the office of the Special Warrant Agent, in accordance with applicable laws and upon compliance with the conditions set out in the Indenture, by delivering to the Special Warrant Agent’s Calgary office the Special Warrant Certificate, along with a duly executed Form of Transfer attached as Appendix “1” hereto, and complying with such other reasonable requirements as the Corporation and the Special Warrant Agent may prescribe and such transfer shall be duly noted on the register by the Special Warrant Agent.
The holder understands and acknowledges that the Special Warrants and Underlying Securities issuable hereunder upon deemed exercise of the Special Warrants (together, the “Securities”) have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or under the securities laws of any state of the United States, and that Special Warrants and any Securities issued upon the deemed exercise of such Special Warrants will be “restricted securities” within the meaning of Rule 144(a)(3) of the 1933 Act and cannot be offered, sold or otherwise transferred, directly or indirectly, except pursuant to regsitration under the 1933 Act or pursuant to an available exemption from such registration requirements and any transfer of the Special Warrants and any Securities issued upon the deemed exercise of such Special Warrants may only be (A) to the Corporation, (B) pursuant to an effective registration statement under the 1933 Act, (C) pursuant to the exemption from the registration requirements of the 1933 Act provided by Rule 144, if available, and in accordance with any applicable state securities laws or (D) pursuant to a transaction that doesn’t require registration under the 1933 Act and in accordance with any applicable state securities laws and in each case, the holder has furnished to the Corporatoin and the Special Warrant Agent such documentation as the Coroporation and
A-3
the Special Warrant Agent may reasonably require, including but not limited to, an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation and the Special Warrant Agent.
This Special Warrant Certificate shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.
After the deemed exercise of any of the Special Warrants represented by this Special Warrant Certificate, the Special Warrantholder shall no longer have any rights under either the Indenture or this Special Warrant Certificate with respect to such Special Warrants, other than the right to receive certificates representing the Underlying Securities issuable on the deemed exercise of those Special Warrants, and those Special Warrants shall be void and of no further value or effect.
The Indenture contains provisions making binding upon all Special Warrantholders resolutions passed at meetings of such holders in accordance with such provisions or by instruments in writing signed by the Special Warrantholders holding a specified percentage of the Special Warrants.
Time shall be of the essence hereof.
The Corporation has caused this Special Warrant Certificate to be executed and the Special Warrant Agent has caused this Special Warrant Certificate to be countersigned by its duly authorized officers as of this _____ day of ________________, 2018.
CLS HOLDINGS USA, INC. | |
Per: | |
Authorized Signatory |
COUNTERSIGNED BY:
ODYSSEY TRUST COMPANY | |
Per: | |
Authorized Signatory |
A-4
APPENDIX “1”
SPECIAL WARRANT CERTIFICATE - FORM OF TRANSFER
SPECIAL WARRANT CERTIFICATE - FORM OF TRANSFER
TO: CLS HOLDINGS USA, INC. (the “Corporation”)
AND TO: ODYSSEY TRUST COMPANY
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (name) _________________ (the “Transferee”), of ___________________________________ (residential address) _____________ Special Warrants of CLS Holdings USA, Inc. registered in the name of the undersigned on the records of Odyssey Trust Company represented by the attached certificate, and irrevocably appoints _________________ as the attorney of the undersigned to transfer the said securities on the books or register of transfer, with full power of substitution.
The undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
£ (A) the transfer is being made only to the Corporation;
£ (B) the transfer is being made pursuant to an effective registration statement under the 1933 Act, and in compliance with any applicable local securities laws and regulations;
£ (C) the transfer is being made pursuant to the exemption from the registration requirements of the 1933 Act provided by Rule 144 under the 1933 Act andin accordance with applicable state securities laws; or
£ (D) the transfer is being made in another transaction that does not require registration under the 1933 Act or any applicable state securities laws.
in each case, the Corporation and the Special Warrant Agent shall first have received such documentation as the Corporation and the Special Warrant may reasonably require including but not limited to an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation and the Special Warrant Agent, to such effect.
Signature Guaranteed | (Signature of Special Warrantholder) |
Name of Special Warrantholder: | |
Address (Please print): | |
A-5
Note to Special Warrantholders:
(1) | In order to transfer the Special Warrants represented by this Special Warrant Certificate, this transfer form must be delivered to the Special Warrant Agent, together with this Special Warrant Certificate at the following address: |
Odyssey Trust Company
Stock Exchange Tower
350-300 5th Avenue SW
Calgary, Alberta T2P 3C4
Stock Exchange Tower
350-300 5th Avenue SW
Calgary, Alberta T2P 3C4
Attention: Dan Sander
A-6
TO: | Odyssey Trust Company, as Special Warrant Agent (the “Special Warrant Agent”) |
RE: | Special Warrant Indenture (the “Special Warrant Indenture”) dated June 20, 2018 among CLS Holdings USA, Inc. (the “Corporation”), Canaccord Genuity Corp. (the “Agent”) and the Special Warrant Agent |
Capitalized terms used in this Completion Notice and Direction and not otherwise defined shall have the meanings ascribed to them in the Special Warrant Indenture.
Pursuant to Sections 4.2(b) and 4.3 of the Special Warrant Indenture, each of the undersigned hereby certifies that the Escrow Release Conditions have been satisfied and further instructs that payment of the Escrowed Funds be made as follows:
(a) |
This Completion Notice and Direction, which may be signed in counterparts and delivered by facsimile or pdf, is irrevocable and shall constitute your good and sufficient authority for taking the actions described herein.
DATED this day of , 201__.
CLS HOLDINGS USA, INC. | |
By: | |
Authorized Signing Officer |
CANACCORD GENUITY CORP. | |
By: | |
Authorized Signing Officer |
B-1
TO: | Odyssey Trust Company, as Special Warrant Agent (the “Special Warrant Agent”) |
AND TO: | Canaccord Genuity Corp. |
AND TO: | Special Warrantholders |
RE: | Special Warrant Indenture (the “Special Warrant Indenture”) dated June 20, 2018 among CLS Holdings USA, Inc. (the “Corporation”), Canaccord Genuity Corp. (the “Agent”) and the Special Warrant Agent |
Capitalized terms used in this Termination Notice and not otherwise defined shall have the meanings ascribed to them in the Special Warrant Indenutre.
Pursuant to the Special Warrant Indenture, the undersigned hereby confirms that a Termination Event has occurred as of , 2018, being the Termination Date and hereby instructs the Special Warrant Agent to return the Escrowed Funds to the Special Warrantholders all in accordance with Section 4.4 of the Special Warrant Indenture.
The undersigned further confirms that the amount of $__________________ will be deposited with the Special Warrant Agent for delivery to the Special Warrantholders to make up the shortfall in the Escrowed Funds.
This Termination Notice is irrevocable and shall constitute your good and sufficient authority for taking the actions described herein.
DATED this day of , 201__.
CLS HOLDINGS USA, INC. | |
By: | |
Authorized Signing Officer |
C-1
Reference is made to the Special Warrant Indenture (the “Indenture”) dated June 20, 2018 between CLS Holdings USA, Inc. (the “Corporation”) and Odyssey Trust Company, as Special Warrant Agent. All capitalized terms used but not defined herein shall have the meaning ascribed thereto in the Indenture. The Corporation, a corporation existing under the laws of the State of Nevada, hereby gives notice to the registered holders of the Underlying Securities issued upon the deemed exercise of the Special Warrants in accordance with the terms of the Indenture of the following:
(a) |
(b) |
(c) |
(2) |
CLS HOLDINGS USA, INC. | |
Per: | |
Authorized Signatory |
D-1
TO: | Odyssey Trust Company, as Special Warrant Agent (the “Special Warrant Agent”) |
AND TO: | Canaccord Genuity Corp. |
______________________________________________________________________________
Reference is made to the special warrant indenture dated June 20, 2018 (the “Special Warrant Indenture”) between CLS Holding USA, Inc. (the “Corporation”) and the Special Warrant Agent. Capitalized terms used herein that are not otherwise defined have the meanings ascribed to such terms in the Special Warrant Indenture.
Pursuant to Section 3.7 of the Special Warrant Indenture, the Corporation hereby provides notice to the Special Warrant Agent and the Agents, that a Receipt for the Prospectus has been issued as of [l] and that the Special Warrants will be deemed to be exercised effective as of [l].
The Corporation hereby confirms that no adjustment has occurred pursuant to the terms of the Special Warrant Indenture.
CLS HOLDINGS USA, INC. | |
Per: | |
Authorized Signatory |
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