Akanda Corp 6-K, filed Aug 22, 2025
Akanda Corp. (AKAN)
About this 6-K
Akanda Corp filed this 6-K on August 22, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2025
Commission File Number: 001-41324
AKANDA CORP.
(Name of registrant)
100 King Street W, Suite 1600
Toronto, Ontario M5X 1G5, Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
☒ Form 20-F ☐ Form 40-F
First Towers Closing
On March 5, 2025, Akanda Corp. (the “Company”) entered into a Share Exchange Agreement (the “SEA”) with First Towers & Fiber Corp., a corporation existing under the laws of the Province of British Columbia (“FTFC”) and the common shareholders of FTFC (the “Shareholders”). Subject to the terms and conditions set forth in the SEA, the parties agreed to enter into a business combination transaction (the “Business Combination”), pursuant to which, among other things, all of the common shares of FTFC shall be exchanged for either common shares, no par value, of the Company (the “Purchaser Shares”), or cash payable over time and evidenced by a promissory note (the “Consideration Note”), and FTFC shall continuing as a wholly owned subsidiary of the Company.
On August 21, 2025 but dated as of August 19, 2025, the Company and FTFC, individually and on behalf of the Shareholders, entered into an amendment to the SEA (the “Amendment”, and combined with the SEA as amended, the “Amended SEA”), which amends certain terms of the SEA, including the following:
| 1. | Instead of issuing Purchaser Shares to the Shareholders at the closing pursuant to the SEA, the Company will issue instead, subject to post-closing shareholder approvals as described below, (a) newly authorized Class A Special Shares of the Company (the “Class A Special Shares”), that convert into an aggregate number of common shares of the Company equal to 19.9% of the common shares of the Company issued and outstanding at the Closing (as defined below) and (b) newly authorized Class B Special Shares of the Company (the “Class B Special Shares” and, with the Class A Special Shares, the “Special Shares”), that convert into the remaining Purchaser Shares otherwise issuable to the Shareholders under the SEA. |
| 2. | The closing date, as defined in the SEA, has been amended to mean the date the Amendment was entered into. Accordingly, the closing of the Business Combination was August 21, 2025 but dated as of August 19, 2025 (the “Closing”), and FTFC is a wholly-owned subsidiary of the Company as of such date. |
| 3. | The common shares underlying the Class A Special Shares and the Class B Special Shares (collectively, the “Common Shares”), shall be registered for resale pursuant to the terms of a Registration Rights Agreement entered into at the Closing by the Company and FTFC on behalf of the Shareholders (the “Registration Rights Agreement”). |
| 4. | The Company will convene and conduct a special meeting of shareholders (the “First Shareholder Meeting”) within forty-five days of the Closing, to solicit proxies in support of a special resolution of the Company’s shareholders approving an amendment of the articles of incorporation of the Company to provide for the issuance of the Special Shares. The First Shareholder Meeting is currently scheduled for August 29, 2025. |
| 5. | The Company’s Board of Directors and its executive officers as of immediately prior to the Closing, will remain as the Company’s Board of Directors and executive officers. Management of FTFC, as a wholly-owned subsidiary of the Company, will include Christopher Cooper, President, Francisco Juarez, VP and Chief Operating Officer, and Edgar Contreras, Country Manager. |
| 6. | Certain closing conditions in the SEA, including with respect to a pre-closing financing and the filing of a Registration Statement on Form F-4, have been either waived or deleted as a covenant in the Amendment. |
| 7. | In addition to holding the First Shareholder Meeting, the Company shall hold a special meeting of shareholders (the “Second Shareholder Meeting”), for the purpose of obtaining such approval as may be required by the applicable rules and regulations of Nasdaq from the common shareholders of the Company with respect to the issuance of (a) the Common Shares issuable upon conversion of the Class B Special Shares and (b) common shares of the Company underlying certain promissory notes of FTFC to be recapitalized at Closing and assumed by the Company pursuant to the terms of the Amended SEA, as described further below. If the Company does not obtain such shareholder approval at the first such meeting, the Company shall call a meeting every thirty days thereafter to seek such approval until obtained. |
A copy of each of the Amendment and the Registration Rights Agreement is filed with this Form 6-K as Exhibit 10.1 and 10.2, respectively, and the foregoing description of the Amendment and the Registration Rights Agreement is qualified in its entirety by reference thereto.
Assumption of FTFC Indebtedness
Dated as of August 19, 2025, in connection with the Business Combination and the Closing, the Company entered into a Debt Settlement Agreement (the “PGC DSA”) and a Convertible Promissory Note (the “PGC Note”) with PGC Finco Inc. (“PGC”), and a Debt Settlement Agreement (the “Dunstan DSA”) and a Convertible Promissory Note (the “Dunstan Note”) with Dunstan Holdings Ltd. (“Dunstan”).
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Pursuant to the PGC DSA, in satisfaction of all indebtedness of FTFC to PGC through the Closing, the Company assumed indebtedness of FTFC in the aggregate principal amount of US$4,153,078 which is evidenced by the PGC Note, and the Company agreed to pay to PGC a cash payment of $500,000 and issue to PGC, upon shareholder approval therefor, 1,741,129 Class B Special Shares.
Pursuant to the Dunstan DSA, in satisfaction of all indebtedness of FTFC to Dunstan through the Closing, the Company assumed indebtedness of FTFC in the aggregate principal amount of US$756,917.28 which is evidenced by the Dunstan Note, and the Company agreed to issue to PGC, upon shareholder approval therefor, 547,569 Class B Special Shares.
Each of the PGC Note and the Dunstan Note (collectively, the “Notes”) has a maturity date of August 19, 2031, has an interest rate of 8-1/2% per annum payable semiannually in arrears, and are secured by all of the assets of the Company. The Notes are subject to customary events of default.
Each Note may be converted from time to time by either the Company or the holder of the Note, into common shares of the Company, subject to first obtaining approval from the shareholders of the Company at the Second Shareholder Meeting. The conversion price shall be a price per share equal to the greater of (a) $0.2720 and (b) a ten percent discount to the seven trading day VWAP immediately prior to receipt of the conversion notice.
A copy of each of the PGC DSA, the Dunstan DSA, the PGC Note and the Dunstan Note is filed with this Form 6-K as Exhibit 10.3. 10.4, 10.5 and 10.6, respectively, and the foregoing description of the PGC DSA, the Dunstan DSA, the PGC Note and the Dunstan Note is qualified in its entirety by reference thereto.
Consideration Note
Dated as of August 19, 2025, in connection with the Business Combination and the Closing, the Company entered into the Consideration Note with a Shareholder. The Consideration Note is in the principal amount of US$14,133,966. It has a maturity date of August 19, 2027 and has an interest rate of 16% per annum payable quarterly. The Notes are subject to customary events of default.
In addition, the Company paid to the holder of the Consideration Note a commitment fee of $424,018.98.
The Consideration Note is secured by all of the assets of the Company pursuant to a General Security Agreement dated as of August 19, 2025 (the “GSA”), but such security interest has been subordinated to the Notes and the security interest held by PGC and Dunstan.
A copy of the Consideration Note and the GSA is filed with this Form 6-K as Exhibit 10.7 and Exhibit 10.8, and the foregoing description of the Consideration Note and the GSA is qualified in its entirety by reference thereto.
Press Release
On August 22, 2025, the Company issued a press release announcing the consummation of the Business Combination. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
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Forward-Looking Statements
This Report on Form 6-K contains “forward-looking statements.” Such statements which are not purely historical (including, but not limited to statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “intends,” “would,” “could” and “estimates”) are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to, the post-closing covenants of the Company under the Amended SEA.
Important factors, among others, that may affect actual results or outcomes include: (i) changes in domestic and foreign business, market, financial, political and legal conditions; (ii) the inability of the Company and FTFC to successfully obtain the required Nasdaq and shareholder approvals under the post-closing covenants in the Amended SEA, which could adversely affect the combined company or the expected benefits of the Business Combination; (iii) failure to realize the anticipated benefits of the Business Combination; (iv) the limited operating history of each of the Company and FTFC; (v) the ability of each of the Company and FTFC to grow and manage its growth effectively; (vi) the ability of each of the Company and FTFC to execute their respective business plan; (vii) estimates of the size of the markets for their respective products; (viii) the rate and degree of market acceptance of their respective products; (ix) the Company’s ability to identify and integrate acquisitions, including the integration of FTFC; (x) future investments in technology and operations; (xi) potential litigation involving the Company or FTFC; (xii) risks relating to the uncertainty of the projected financial information with respect to FTFC; (xiii) the effects of competition on FTFC’s business; (xiv) developments and changes in laws and regulations; (xv) the impact of significant investigative, regulatory or legal proceedings; (xvi) general economic and market conditions impacting demand for either party’s products and services; (xvii) the ability to meet Nasdaq’s listing standards following the consummation of the Business Combination; (xviii) the ability the Company or the combined company to issue equity or equity-linked securities in connection with the Business Combination or in the future; and (xix) such other risks and uncertainties as are discussed in the Company’s Annual Report on Form 20-F filed with the SEC. Other factors include the possible failure to receive required security holder approvals. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
Actual results could differ from those projected in any forward-looking statements due to numerous factors. These forward-looking statements are made as of the date of this Form 6-K, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements, except as required by law. Although the Company believes that the beliefs, plans, expectations and intentions contained in this Form 6-K are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in the Company’s reports and statements filed from time-to-time with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AKANDA CORP. | |||
| (Registrant) | |||
| Date: August 22, 2025 | By: | /s/ Katie Field | |
| Name: | Katie Field | ||
| Title: | Interim Chief Executive Officer and Director | ||
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Exhibit 10.1
SECOND AMENDMENT TO
SHARE EXCHANGE AGREEMENT
This Second Amendment (this “Amendment”) to the Share Exchange Agreement dated as of March 5, 2025 and amended as of March 31, 2025 (the “Agreement”), among Akanda Corp., a corporation existing under the laws of the Province of Ontario, First Towers & Fiber Corp., a corporation existing under the laws of the Province of British Columbia, and certain common shareholders of the Company listed in Schedule “A” of the Agreement, is made as of the 19th day of August, 2025, by and among the Purchaser, the Company and the Shareholders (capitalized terms used herein and not otherwise defined shall have the meanings ascribed to those terms in the Agreement).
RECITALS
WHEREAS, the Company, the Purchaser and the Shareholders, are parties to the Agreement; and
WHEREAS, the Company, the Purchaser and the Shareholders desire to amend the Agreement as more particularly set forth herein; and
WHEREAS, Section 12.1 of the Agreement provides, among other things, that the Agreement may be amended by mutual written agreement of the Parties.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties hereto agree as follows:
1. Amendments to Agreement.
| (a) | Paragraph B under the heading “WHEREAS” in the Agreement is hereby amended and restated as follows: |
“B. The Purchaser has agreed to purchase all the issued and outstanding Company Shares (the “Purchased Shares”), in exchange for cash, common shares in the capital of the Purchaser (“Purchaser Common Shares”) and/or Class A Special Shares and/or Class B Special Shares (the Class A Special Shares and Class B Special Shares collectively, the “Special Shares” and together with the Purchaser Common Shares, the “Purchaser Shares”) on the terms and conditions set forth in this Agreement; and”
| (b) | The following definitions in Section 1.1 of the Agreement are hereby amended and restated as follows: |
““Closing Date” means the date of Closing, which shall be the date of this Amendment.”
““Purchaser Shareholder Approval Resolution” means the special resolution of the Purchaser Shareholders approving the amendment of the articles of incorporation of the Purchaser to provide for the issuance of the Special Shares.”
| (c) | Section 1.1 of the Agreement is hereby amended by adding the following new definitions in appropriate alphabetical order: |
““Class A Special Shares” means a newly authorized and designated class of shares in the capital of the Purchaser, which shall be in the form of, and shall have the rights, preferences and designations, set forth in the attached Exhibit 2.”
““Class B Special Shares” means a newly authorized and designated class of shares in the capital of the Purchaser, which shall be in the form of, and shall have the rights, preferences and designations, set forth in the attached Exhibit 2.”
““Further Stockholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the stockholders of the Purchaser with respect to the issuance of the Conversion Shares and the Note Conversion Shares.”
| (d) | Section 2.2 of the Agreement is hereby amended and restated in its entirety as follows: |
“2.2. Consideration. In consideration for the acquisition of the Purchased Shares, Purchaser shall:
(a) allot and issue (i) Purchaser Shares equal to 19.9% of the issued and outstanding Common Shares of Purchaser at Closing, as Class A Special Shares (the “Payment Shares”) to the Shareholders in the amounts set out opposite each Shareholder’s name in Schedule “A” attached hereto, for Schedule A to be updated to reflect 19.9%, and closing free and clear of any encumbrances, in exchange for the Purchased Shares, subject to obtaining the Purchaser Shareholder Approval Resolution to so authorize and issue the Payment Shares, and (ii) allot and issue Class B Special Shares to the Shareholders that convert into the remaining Purchaser Shares as Purchaser Common Shares (the “Conversion Shares”) in the amounts set out opposite each Shareholder’s name in Schedule “A” attached hereto, free and clear of any encumbrances, in exchange for the Purchased Shares, provided that the Class B Special Shares shall only be issued when, and shall be issued promptly after, the Purchaser obtains Stockholder Approval; or
(b) on the date that is twenty-four months after the Closing Date, pay to the Shareholders in the amounts set out opposite each Shareholder’s name in Schedule “A” attached hereto (the “Cash Payment”), the payment obligation for which shall be evidenced by a promissory note issued by the Purchaser, a form of which is attached here to as Exhibit 1 (the “Promissory Note”).
The Purchased Shares issued and outstanding immediately prior to the Closing Time that will be exchanged for the applicable Payment Shares and Class B Special Shares, will be exchanged at the Exchange Ratio. To the extent the calculation of Payment Shares and/or Class B Special Shares payable to a Shareholder results in a fractional Payment Share or share of Class B Special Shares, as the case may be, such entitlement for a fractional share shall be rounded down to the nearest whole number and no additional consideration shall be payable therefor. For the avoidance of doubt and notwithstanding anything to the contrary herein, any and all issuances of securities by the Purchaser hereunder issued subsequent to the Closing Date shall be subject to, and appropriately adjusted by, any applicable stock split, reverse stock split, consolidation or other adjustment made by the Purchaser to its securities.”
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| (e) | Section 2.7 of the Agreement is hereby amended and restated in its entirety as follows: |
“2.7 Registration of the Purchaser Shares and the Conversion Shares. On the Closing Date, in addition to any other deliverables described elsewhere in this Agreement, Purchaser shall deliver to the Company a duly executed Registration Rights Agreement, in the form of Exhibit 3 attached hereto and made a part hereof (the “Registration Rights Agreement”).”
| (f) | Section 3.1 of the Agreement is hereby amended and restated in its entirety as follows: |
“3.1. Listing Application. The Purchaser shall, promptly after Closing, (a) prepare and submit to NASDAQ a notification form for the listing of the Purchaser Common Shares issuable upon conversion of the Class A Special Shares (“Class A Underlying Shares”) once authorized and issued, and to cause such Class A Underlying Shares to be approved for listing (subject to official notice of issuance) and (b) to the extent required by NASDAQ Marketplace Rule 5110, to file an initial listing application (the “NASDAQ Listing Application”) and to use commercially reasonable efforts to cause such NASDAQ Listing Application to be approved. The Parties will use commercially reasonable efforts to coordinate with respect to compliance with NASDAQ rules and regulations. The Purchaser agrees to pay all NASDAQ fees associated with the NASDAQ Listing Application. The Company will cooperate with the Purchaser as reasonably requested by the Purchaser with respect to the NASDAQ Listing Application and promptly furnish to the Purchaser all information concerning the Company and its shareholders that may be required or reasonably requested in connection with any action contemplated by this Section 3.1.”
| (g) | Section 3.2 of the Agreement is hereby amended and restated in its entirety as follows: |
“3.2 Purchaser Meeting. The Purchaser will convene and conduct the Purchaser Meeting on or before forty-five (45) days after the Closing Date, and not adjourn, postpone or cancel (or propose the adjournment, postponement or cancellation of) the Purchaser Meeting without the prior written consent of the Company, which shall not be unreasonably withheld, except in the case of an adjournment, if reasonably required to solicit proxies in support of the Purchaser Shareholder Approval Resolution.”
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| (h) | Section 3.3 of the Agreement is hereby amended and restated in its entirety as follows: |
“3.3 Directors and Officers of Purchaser
(a) Effective as of the Closing Date, the Purchaser’s board of directors shall remain as the board of directors of Purchaser in accordance with applicable law.
(b) Effective as of the Closing Date, the officers of the Purchaser shall remain as officers of Purchaser in accordance with applicable law.
(c) The Board of Directors and executive officers of the Company upon the Closing Date shall consist of:
| Christopher Cooper | President and Director | ||
| Francisco Juarez | VP and Chief Operating Officer, Director | ||
| Edgar Contreras | Country Manager and Director | ||
| Jatinder Dhaliwal | Director | ||
| Davin Jenkins | Director” |
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| (i) | ARTICLE 9-CONDITIONS of the Agreement is hereby amended and restated in its entirety as follows: |
“ARTICLE
9
CONDITIONS
9.1 Mutual Conditions Precedent. The Parties are not required to complete the Acquisition unless each of the following conditions is satisfied at or prior to the Closing, which conditions may only be waived, in whole or in part, by the mutual consent of each of the Parties:
(a) Company Board Approval. The Company Board Approval shall have been obtained.
(b) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order (whether temporary, preliminary or permanent) issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Acquisition will be in effect, nor will any Proceeding brought by any administrative agency or commission or other Governmental Authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending. There will not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Acquisition, which makes the consummation of the Acquisition illegal.
(c) Regulatory Approvals. Each required Regulatory Approval has been made, given or obtained and each such Regulatory Approval is in force and has not been modified. Any waiting period applicable to the consummation of the Acquisition under any Regulatory Approval will have expired or been terminated.
9.2 Additional Conditions Precedent to the Obligations of the Purchaser. The Purchaser is not required to complete the Acquisition unless each of the following conditions is satisfied at or prior to the Closing, which conditions are for the exclusive benefit of the Purchaser and may only be waived, in whole or in part, by the Purchaser in its sole discretion:
(a) Representations and Warranties of the Company. The representations and warranties of the Company set forth in Article 4, qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects as of the Execution Date and the Closing Date as though made on and as of the Execution Date and the Closing Date (as applicable), except to the extent such representations and warranties speak as of another date (in which case, such representations and warranties shall be true and correct as of such date).
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(b) Performance of Covenants by the Company. The Company has fulfilled or complied in all material respects with each of the covenants of the Company contained in this Agreement to be fulfilled or complied with by it on or prior to the Closing Date.
(c) Material Adverse Effect. There shall not have been or occurred a Material Adverse Effect with respect to the Company that has not been disclosed by the Company prior to the Execution Date.
(d) Representations and Warranties of the Shareholders. The representations and warranties of the Shareholders set forth in Article 6, qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects as of the Execution Date and the Closing Date as though made on and as of the Execution Date and the Closing Date (as applicable), except to the extent such representations and warranties speak as of another date (in which case, such representations and warranties shall be true and correct as of such date), and delivery by each Shareholder of the documents described in Section 9.2(j) required to be delivered by such Shareholder shall constitute a reaffirmation and confirmation by such Shareholder of such representations and warranties.
(e) Performance of Covenants by Shareholders. The Shareholders have fulfilled or complied in all material respects with each of the covenants of the Shareholders contained in this Agreement to be fulfilled or complied with by it on or prior to the Closing Date, and delivery of the documents described in Section 9.2(j) shall constitute confirmation of such compliance and performance.
(f) Certificate. The Company shall have delivered a certificate signed by an executive officer of the Company (without personal liability), in form and substance reasonably satisfactory to the Purchaser, dated as of the Closing Date, to the effect that each of the conditions specified in Section 9.2(a) – (c) have been satisfied in all respects.
(g) No Legal Action. There is no Proceeding (whether, for greater certainty, by a Governmental Authority or any other Person), excluding any Proceeding initiated by the Purchaser, pending or threatened in any jurisdiction to:
| (i) | cease trade, enjoin, prohibit, or impose any limitations, damages or conditions on, the Purchaser’s ability to acquire, hold, or exercise full rights of ownership over, any Company Shares, including the right to vote the Company Shares; |
| (ii) | prohibit, restrict or impose terms or conditions on, the Acquisition, or the ownership or operation by the Purchaser of the business or assets of the Company, or compel the Purchaser to dispose of or hold separate any of the business or assets of the Purchaser (or its Subsidiaries) or the Company as a result of the Acquisition; or |
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| (iii) | prevent or materially delay the consummation of the Acquisition, or if the Acquisition were to be consummated, have a Material Adverse Effect with respect to the Company. |
(h) Officer’s Certificate. The Purchaser shall have received a certificate in form and substance reasonably satisfactory to the Purchaser executed by an officer of the Company (without personal liability) certifying as to (i) an attached copy of the Company Board Approval and stating that Company Board Approval has not been amended, modified, revoked or rescinded, (ii) the incumbency, authority and specimen signature of each officer of the Company executing this Agreement and (iii) true and complete attached copies of the Organizational Documents of the Company.
(i) Certified Company Securityholder Lists. An officer of the Company will have executed and delivered to Purchaser a certificate in a form and substance reasonably satisfactory to the Purchaser which sets forth (i) a true and complete list of the Company Shareholders immediately prior to the Closing Time and the number and type of Company Shares and (ii) each Company Shareholders’ pro rata share of the Payment Shares, shares of Class B Special Shares (and underlying Conversion Shares) and/or Cash Payment.
(j) Share Certificates. Each of the Shareholders will cause to be delivered, with respect to each Shareholder, share certificates evidencing the Purchased Shares owned by such Shareholder, duly endorsed in blank for transfer or accompanied by duly executed stock transfer powers.
(k) Certificate of Good Standing. The Company shall have provided the Purchaser a certificate of good standing (or equivalent) from the appropriate Governmental Authority of the jurisdiction of incorporation of the Company.
(l) Consents. Evidence in form and substance reasonably satisfactory to the Purchaser that (i) the Company shall have obtained or made any consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority required to be obtained or made in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby and (ii) the Company shall have obtained all consents, waivers and approvals in a form and substance reasonably satisfactory to the Purchaser and copies thereof shall have been delivered to the Purchaser.
(m) Conversion of Accrued Interest on Loans. The Company shall enter into debt settlement agreements with respect to the accrued interest owing to Dunstan Holdings Ltd. (the “Dunstan Loan”) and to Plenary Group (Canada) Finco Inc. or its successors or assigns (the “Plenary Loan” and with the Dunstan Loan, the “Settled Loans”), whereby:
(i) Interest on the Settled Loans will be calculated at a rate of 8.5% per annum from the date each loan was advanced to the Company until Closing and such interest will be capitalised into a new loan, being the “Dunstan Interest Loan” and the “Plenary Interest Loan” respectively;
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(ii) A payment of $500,000 will be paid against the Plenary Interest Loan;
(iii) The remaining balance of the Plenary Interest Loan and the Dunstan Interest Loan shall be converted into Class B Special Shares at a conversion price of $1.10 per share (with the Purchaser Common Shares underlying the Convertible Notes referred to in Section 8.15 below, the “Note Conversion Shares”), provided, however, that such right to convert the Settled Loans into Note Conversion Shares shall be subject to Further Stockholder Approval.
(n) Convertible Notes. The Company shall enter into a debt settlement agreement subsequent to Closing with respect to the principal amount of US$756,917.28owed by the Company to Dunstan Holdings Ltd. and with respect to the principal amount of US$4,153,078 owed by the Company to Plenary Group (Canada) Finco Inc (or its successors or assigns), whereby the loan balances due will be satisfied by the issue of convertible notes (each, a “Convertible Note”) by the Purchaser. The principal amount of the Convertible Notes will be repaid six years from the date of issuance (the “Maturity Date”), together with accrued and unpaid interest in cash. The Convertible Notes shall bear interest at a rate equal to 8.5% payable semi-annual in arrears on June 30 and December 31 of each year. The Convertible Notes will be convertible into Purchaser Common Shares pursuant to terms specified in the Convertible Notes, provided, however, that such right to convert the Convertible Note into Note Conversion Shares shall be subject to Further Stockholder Approval.
9.3 Additional Conditions Precedent to the Obligations of the Company and Shareholders. The Company and Shareholders are not required to complete the Acquisition unless each of the following conditions is satisfied on or before the Closing Time, which conditions are for the exclusive benefit of the Company and Shareholders and may only be waived, in whole or in part, by the Company and Shareholders, acting severally, in their sole discretion:
(a) Representations and Warranties. The representations and warranties of the Purchaser set forth in Article 5 shall be true and correct as of the Execution Date and the Closing Date as though made on and as of the Execution Date and the Closing Date (as applicable), except to the extent such representations and warranties speak as of another date (in which case, such representations and warranties shall be true and correct as of such date), and the Purchaser has delivered a certificate confirming same to the Company, executed by an officer of the Purchaser (without personal liability) addressed to the Company and dated as of the Closing Date.
(b) Performance of Covenants. The Purchaser has fulfilled or complied in all material respects with each of the covenants of the Purchaser contained in this Agreement to be fulfilled or complied with by it on or prior to the Closing Date, and has delivered a certificate confirming same to the Company, executed by an officer of the Purchaser (without personal liability) addressed to the Company and dated as of the Closing Date.
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(c) Material Adverse Effect. There shall not have been or occurred a Material Adverse Effect with respect to the Purchaser that has not been disclosed by the Purchaser prior to the Execution Date.
(d) Certificate. The Purchaser shall have delivered a certificate signed by an executive officer of the Purchaser (without personal liability), in form and substance reasonably satisfactory to the Company, dated as of the Closing Date, to the effect that each of the conditions specified in Section 9.3(a) – (c) have been satisfied in all respects.
(e) Consents. Evidence in form and substance reasonably satisfactory to the Company that the Purchaser (i) shall have obtained or made any consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority required to be obtained or made in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby and (ii) shall have obtained all consents, waivers and approvals in a form and substance reasonably satisfactory to the Company and copies thereof shall have been delivered to the Company.
(f) Officer’s Certificate. The Company shall have received a certificate executed by an officer of the Purchaser (without personal liability) certifying as to (i) an attached copy of the Purchaser Board Approval and stating that the Purchaser Board Approval has not been amended, modified, revoked or rescinded, (ii) the incumbency, authority and specimen signature of each officer of the Purchaser executing this Agreement and (iii) true and complete attached copies of the Organizational Documents of the Purchaser.
(g) Certificate of Good Standing. The Purchaser shall have provided the Company a certificate of good standing (or equivalent) from the appropriate Governmental Authority of the jurisdiction of incorporation or formation of the Purchaser.
(h) Form 6-K. The Purchaser shall have prepared a Form 6-K as required by the SEC rules and regulations, in a form and substance reasonably satisfactory to the Company.
(i) Promissory Note. The Purchaser shall have executed and delivered the Promissory Note evidencing the Cash Payment.
9.4 Satisfaction of Conditions. The conditions precedent set out in this Article 9 are inserted for the benefit of the respective Parties. Any Party may refuse to proceed with the Closing if the conditions precedent inserted for its benefit are not fulfilled to its reasonable satisfaction at or prior to the Closing, and it will incur no liability to any other Party by reason of such refusal.
9.5 Right of Waiver. The conditions precedent set out in this Article 9 may be waived in whole or in part by the Party for whose benefit they are inserted, in such Party’s absolute discretion. No such waiver will be of any effect unless it is in writing signed by the Party granting the waiver or if such Party determines to proceed with the Closing.’
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| (j) | Section 8.10 of the Agreement is hereby amended and restated in its entirety as follows: |
“8.10. Listing of Common Shares. The Purchaser hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Purchaser Common Shares on the Exchange, and promptly after the Closing, the Purchaser shall apply to list or quote all of the Payment Shares on the Exchange and promptly secure the listing of all of the Payment Shares on the Exchange. Promptly after obtaining both approval of the Purchaser Shareholder Approval Resolution and the Stockholder Approval and issuing the Special Shares pursuant to the terms hereof, the Purchaser shall apply to list or quote all of the Conversion Shares and Note Conversion Shares on the Exchange and promptly secure the listing of all of the Conversion Shares and Note Conversion Shares on the Exchange.”
| (k) | The Agreement is hereby amended to include the following new sections: |
“8.11. Further Stockholder Meeting(s). In addition to holding a Purchaser Meeting to seek the Purchaser Shareholder Approval pursuant to Section 3.2 hereof, the Purchaser shall hold a special meeting of stockholders on or prior to October 15, 2025, for the purpose of obtaining Further Stockholder Approval, with the recommendation of the Board of Directors that such proposals are approved, and the Purchaser shall solicit proxies from its stockholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposals. If the Purchaser does not obtain Further Stockholder Approval at the first such meeting, the Purchaser shall call a meeting every thirty (30) days thereafter to seek Further Stockholder Approval until the date on which Further Stockholder Approval is obtained.
8.12. F-4 Registration Statement. The parties agree that the Purchaser shall not be required to file the F-4 Registration Statement and all obligations hereunder with respect to the F-4 Registration Statement are hereby terminated.
8.13. Financings. The parties agree that the Purchaser shall not be required to effect the Concurrent Financing or any other financing contemplated by the Agreement.
8.16. Financial Statements. The Company shall use its commercially reasonable efforts to deliver audited financial statements for the Company Financial Statements in accordance with IFRS to the Purchaser as required by the SEC rules, as well as any other financial statements as may be required by the rules and regulations of the 1933 Act and the U.S. Exchange Act.
8.17. Fairness Opinion. The Purchaser shall receive a fairness opinion from a reputable valuation firm or investment bank expert in preparing fairness opinions for transactions similar to the transactions contemplated by this Agreement, showing that the Company is valued at a price of at least US$19 million.
(d) ARTICLE 11-POST-CLOSING MATTERS of the Agreement is hereby deleted in its entirety.
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2. Miscellaneous.
(a) Except as expressly set forth herein, the Agreement shall remain in full force and effect.
(b) The headings of the sections of this Amendment have been inserted for convenience of reference only and shall not be deemed to be a part of this Amendment.
(c) This Amendment, together with the Agreement, contain the entire agreement among the Parties with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements and understandings with respect thereto.
(d) This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Electronic signatures shall be deemed originals for all purposes hereof.
(e) This Amendment will be governed by and interpreted and enforced in accordance with the laws of the Province of British Columbia. Each Party irrevocably attorns and submits to the exclusive jurisdiction of the courts of competent jurisdiction of the Province of British Columbia in any Proceeding hereunder, and waives objection to the venue of any Proceeding in such court or that such court provides an inconvenient forum..
[Remainder Of This Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed and delivered this Amendment as of the day and year first written above.
| AKANDA CORP. | ||
| By: | /s/ Katharyn Field | |
| Name: | Katharyn Field | |
| Title: | Interim CEO | |
| FIRST TOWERS & FIBER CORP., | ||
| on its own behalf and pursuant to powers of attorney on behalf of the Shareholders pursuant to Section 12.7 of the Agreement | ||
| By: | /s/ Christopher Cooper | |
| Name: | Christopher Cooper | |
| Title: | CEO | |
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 19, 2025, is by and among Akanda Corp., a corporation existing under the laws of the Province of Ontario (the “Company”), and First Towers & Fiber Corp., a corporation existing under the laws of the Province of British Columbia (“First Towers”), on behalf of certain of the common shareholders of First Towers listed in Schedule “A” of the SEA (as defined below) pursuant to Section 12.7 of the SEA (each, a “Buyer,” and collectively, the “Buyers”).
RECITALS
A. In connection with the Share Exchange Agreement dated as of March 5, 2025 and amended as of March 31, 2025 and as further amended as of the date hereof (the “SEA”), among the Company, First Towers and the Buyers, the Company has agreed, upon the terms and subject to the conditions of the SEA, to issue and sell to each Buyer, Payment Shares, Class A Special Shares and/or Class B Special Shares which converts into Conversion Shares (each as defined in the SEA).
B. To induce the Buyers to consummate the transactions contemplated by the SEA, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
| 1. | Definitions. |
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the SEA. As used in this Agreement, the following terms shall have the following meanings:
(a) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.
(b) “Post-Closing Date” shall mean a date that is ten (10) Business Days after the latest of (i) First Towers having delivered financial statements for the fiscal years ended December 31, 2024 and 2023 audited by a PCAOB-registered accounting firm, and unaudited financial statements for any applicable stub period, in all cases adequate for purposes of inclusion in a Registration Statement under applicable SEC rules and regulations, (ii) the date that NASDAQ has approved the transactions contemplated by the SEA as applicable, pursuant to the terms and conditions of the SEA and (iii) the issuance of the Class B Special Shares pursuant to the terms and conditions of the SEA.
(c) “Effective Date” means the date that the applicable Registration Statement has been declared effective by the SEC.
(d) “Effectiveness Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the earlier of the (A) 90th calendar day after the Post-Closing Date and (B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement, the earlier of the (A) 90th calendar day following the date on which the Company was required to file such additional Registration Statement and (B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review.
(e) “Filing Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the 30th calendar day after the Post-Closing Date and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional Registration Statement pursuant to the terms of this Agreement or the date on which the holder of the Registrable Securities included therein may transfer such shares after the expiration of a leak-out or lock-up provision.
(f) “Investor” means a Buyer or any transferee or assignee of any Registrable Securities, as applicable, to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities, as applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.
(g) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof.
(h) “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by the SEC.
(i) “Registrable Securities” means the Class A Underlying Shares (as defined in the SEA), the Conversion Shares and the Note Conversion Shares (as defined in the SEA) and (ii) any capital stock of the Company issued or issuable with respect to such shares, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock are converted or exchanged and shares of capital stock of a successor entity into which the shares of Common Stock are converted or exchanged.
(j) “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering Registrable Securities.
(m) “Rule 144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration.
(n) “Rule 415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
(o) “SEC” means the United States Securities and Exchange Commission or any successor thereto.
| 2. | Registration. |
(a) Mandatory Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with the SEC an initial Registration Statement on Form F-3 covering the resale of all of the Registrable Securities; provided that if Form F-3 is unavailable for such a registration, the Company shall use such other form as is required by Section 2(c). Such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain the “Selling Stockholders” and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit A. The Company shall use its best efforts to have such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as soon as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement. Notwithstanding anything to the contrary herein, in furtherance of Sections 2(d) and 2(f) below, the Company may, and it shall not be a violation of this agreement in the event the Company does, limit the number of Registrable Securities in the initial Registration Statement to the Class A Underlying Shares and file one or more subsequent Registration Statements for the Conversion Shares and/or the Note Conversion Shares.
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(b) [Intentionally Omitted].
(c) Ineligibility to Use Form F-3. In the event that Form F-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on Form F-1 or another appropriate form reasonably acceptable to the Company and (ii) undertake to register the resale of the Registrable Securities on Form F-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of all Registration Statements then in effect until such time as a Registration Statement on Form F-3 covering the resale of all the Registrable Securities has been declared effective by the SEC and the prospectus contained therein is available for use.
(d) Sufficient Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated portion of the Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible), or file with the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, as soon as practicable, but in any event not later than fifteen (15) days after the necessity therefor arises (but taking account of any Staff (as defined below) position with respect to the date on which the Staff will permit such amendment to the Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC). The Company shall use its best efforts to cause such amendment to such Registration Statement and/or such new Registration Statement (as the case may be) to become effective as soon as practicable following the filing thereof with the SEC, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.
(e) [Intentionally Omitted].
(f) Offering. Notwithstanding anything to the contrary contained in this Agreement, in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by all Investors until such time as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making such reduction, the Company shall reduce the number of shares to be included by all Investors on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of shares by a particular Investor or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction (and if by a set of Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least number of shares by all such Investors); provided, that, with respect to such pro rata portion allocated to any Investor, such Investor may elect the allocation of such pro rata portion among the Registrable Securities of such Investor. In addition, in the event that the Staff or the SEC requires any Investor seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Investor, until such time as the Staff or the SEC does not require such identification or until such Investor accepts such identification and the manner thereof. Any reduction pursuant to this paragraph will first reduce all Registrable Securities other than those issued pursuant to the SEA. In the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to require, upon delivery of a written request to the Company signed by such Investor, the Company to file a registration statement within twenty (20) days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale by such Investor in a manner acceptable to such Investor, and the Company shall following such request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an effective Registration Statement in a manner acceptable to such Investor or (ii) all Registrable Securities may be resold by such Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff position with respect to “affiliate” status) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any such Registration Statement in a manner acceptable to such Investor as to all Registrable Securities held by such Investor and that have not theretofore been included in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Investor as contemplated above).
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(g) [Intentionally Omitted].
(h) Allocation of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable Securities, each transferee or assignee (as the case may be) that becomes an Investor shall be allocated a pro rata portion of the then-remaining number of Registrable Securities included in such Registration Statement for such transferor or assignee (as the case may be). Any shares of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which are covered by such Registration Statement.
(i) No Inclusion of Other Securities. The Company shall in no event include any securities other than Registrable Securities on any Registration Statement filed in accordance herewith without the prior written consent of First Towers.
| 3. | Related Obligations. |
The Company shall use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the SEC one or more Registration Statement with respect to the Registrable Securities (but in no event later than the applicable Filing Deadline) and use its best efforts to cause such Registration Statement(s) to become effective as soon as practicable after such filing(s) (but in no event later than the applicable Effectiveness Deadline). Subject to Allowable Grace Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein available for use) pursuant to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and not fixed prices) at all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities required to be covered by such Registration Statement (disregarding any reduction pursuant to Section 2(f)) without restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”). Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement (1) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the extent permitted) all material information regarding the Company and its securities. The Company shall submit to the SEC, within one (1) Business Day after the date that (i) the Company learns that no review of a particular Registration Statement will be made by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be), a request for acceleration of effectiveness of such Registration Statement to a time and date not later than twenty-four (24) hours after the submission of such request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement as soon as practicable, but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment is required in order for a Registration Statement to be declared effective.
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(b) Subject to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation, post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep each such Registration Statement effective at all times during the Registration Period for such Registration Statement, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day immediately following each Effective Date, the Company shall file with the SEC in accordance with Rule 424(b) under the 1933 Act the final prospectus to be used in connection with sales pursuant to the applicable Registration Statement (whether or not such a prospectus is technically required by such rule). In the case of amendments and supplements to any Registration Statement which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a report on Form 8-K, Form 10-Q or Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall, if permitted under the applicable rules and regulations of the SEC, have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.
(c) The Company shall (A) permit legal counsel for First Towers on behalf of the Investors (“Legal Counsel”) to review and comment upon (i) each Registration Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto or to any prospectus contained therein without the prior consent of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall promptly furnish to Legal Counsel, without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives relating to each Registration Statement, provided that such correspondence shall not contain any material, non-public information regarding the Company or any of its Subsidiaries, (ii) after the same is prepared and filed with the SEC, one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this Section 3.
(d) The Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
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(e) The Company shall use its best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f) The Company shall notify Legal Counsel in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, may include an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement and such prospectus contained therein to correct such untrue statement or omission and deliver a copy of such supplement or amendment to Legal Counsel (or such other number of copies as Legal Counsel may reasonably request). The Company shall also promptly notify Legal Counsel in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel, by e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information relating to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as promptly as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it being understood and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than fifteen (15) Business Days after the receipt thereof).
(g) The Company shall (i) use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(h) If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor may reasonably request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investors.
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(i) If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available for inspection by (i) such Investor and (ii) legal counsel for such Investor (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure (except to such Investor) or use of any Record or other information which the Company’s board of directors determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (1) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (3) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. Such Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor, if any) shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.
(j) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(k) Without limiting any obligation of the Company under the SEA, the Company shall use its best efforts either to (i) cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, (ii) secure designation and quotation of all of the Registrable Securities covered by each Registration Statement on the Exchange, or (iii) if, despite the Company’s best efforts to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the preceding clauses (i) or (ii), without limiting the generality of the foregoing, to use its best efforts to arrange for at least two market makers to register with the Financial Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable Securities. In addition, the Company shall cooperate with each Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 3(k).
(l) The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.
(m) If requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to Section 3(r) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or prospectus contained therein if reasonably requested by an Investor holding any Registrable Securities.
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(n) The Company shall use its best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(o) [Intentionally Omitted].
(p) The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
(q) Within one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to First Towers on behalf of the Buyers whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.
(r) Notwithstanding anything to the contrary herein (but subject to the last sentence of this Section 3(r)), at any time after the Effective Date of a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”), provided that the Company shall promptly notify the Investors in writing of the (i) existence of material, non-public information giving rise to a Grace Period (provided that in each such notice the Company shall not disclose the content of such material, non-public information to any of the Investors) and the date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided further that (I) no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period all such Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period and (III) no Grace Period may exist during the sixty (60) Trading Day period immediately following the Effective Date of such Registration Statement (provided that such sixty (60) Trading Day period shall be extended by the number of Trading Days during such period and any extension thereof contemplated by this proviso during which such Registration Statement is not effective or the prospectus contained therein is not available for use) (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the SEA in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, prior to such Investor’s receipt of the notice of a Grace Period and for which the Investor has not yet settled.
(s) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable Securities pursuant to each Registration Statement.
(t) Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
| 4. | Obligations of the Investors. |
(a) At least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify First Towers on behalf of each Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
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(b) Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the SEA in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f) and for which such Investor has not yet settled.
| 5. | Expenses of Registration. |
All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company.
| 6. | Indemnification. |
(a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each of its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Indemnified Person”), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of such Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d); and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities by any of the Investors pursuant to Section 9.
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(b) In connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed, provided further that such Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the applicable sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities by any of the Investors pursuant to Section 9.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Indemnified Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Indemnified Person or Indemnified Party (as the case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party, provided further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as the case may be)). The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person (as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.
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(d) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
| 7. | Contribution. |
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission or alleged omission.
| 8. | Reports Under the 1934 Act. |
With a view to making available to the Investors the benefits of Rule 144, the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations of the Company under the SEA) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and
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(c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting, submission and posting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report (if applicable) of the Company and such other reports and documents so filed by the Company with the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.
| 9. | Assignment of Registration Rights. |
All or any portion of the rights under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case may be) of all or any portion of such Investor’s Registrable Securities, if: (i) such Investor agrees in writing with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such transfer or assignment (as the case may be); (ii) the Company is, within a reasonable time after such transfer or assignment (as the case may be), furnished with written notice of (a) the name and address of such transferee or assignee (as the case may be), and (b) the securities with respect to which such registration rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer or assignment (as the case may be) the further disposition of such securities by such transferee or assignee (as the case may be) is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall have been made in accordance with the applicable requirements of the SEA; and (vi) such transfer or assignment (as the case may be) shall have been conducted in accordance with all applicable federal and state securities laws.
| 10. | Amendment of Registration Rights. |
Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and First Towers; provided that any such amendment or waiver that complies with the foregoing, but that disproportionately, materially and adversely affects the rights and obligations of any Investor relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company, provided that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of Registrable Securities or (2) imposes any obligation or liability on any Investor without such Investor’s prior written consent (which may be granted or withheld in such Investor’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to this Agreement.
| 11. | Miscellaneous. |
(a) Solely for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such Registrable Securities.
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(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Akanda Corp.
c/o Gowling WLG
100 King St. W, Suite 1600
Toronto, ON M5X 1G5, Canada
Telephone: +1 (202) 498 7917
Attention: Chief Executive Officer
Email: katie@akandacorp.com
With a Copy to:
Ruskin Moscou Faltischek PC
1425 RXR Plaza
East Tower, 15th Floor
Uniondale, NY 11556
Attention: Stephen E. Fox, Esq.
Email: sfox@rmfpc.com
If to the Transfer Agent:
VStock Transfer, LLC
18 Lafayette Place
Woodmere, New York 11598
Phone: (212) 828-8436
Facsimile: (646) 536-3179
If to a Buyer, to its mailing address and/or email address set forth in the books and records of the Company, with copies to such Buyer’s representatives as set forth on such Buyer’s signature page attached thereto, or to such other mailing address and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which any party may be entitled by law or equity.
(d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York, New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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(e) If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(f) This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Investor in the Company, (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Investor and all such agreements shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.
(g) Subject to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections 6 and 7 hereof.
(h) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(i) This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original, but all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an email which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(j) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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(k) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms used in this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Post-Closing Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All consents and other determinations required to be made by the Buyers pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by First Towers.
(m) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(n) The obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Investor. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and an Investor, solely, and not between the Company and the Investors collectively and not between and among Investors.
[signature page follows]
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IN WITNESS WHEREOF, First Towers and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
| COMPANY: | ||
| Akanda Corp. | ||
| By: | /s/ Katie Field | |
| Name: | Katie Field |
|
| Title: | Interim CEO | |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
| BUYERS: | ||
| First Towers & Fiber Corp., on behalf of the Buyers | ||
| By: | /s/ Chris Cooper |
|
| Name: | Chris Cooper | |
| Title: | CEO |
|
EXHIBIT A
SELLING STOCKHOLDERS
We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. [Except for the ownership of the common stock issued pursuant to the SEA, the selling stockholders have not had any material relationship with us within the past three years.]
The table below lists the selling stockholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock held by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by the selling stockholders, based on their respective ownership of shares of common stock, as of ________, 20__.
The third column lists the shares of common stock being offered by this prospectus by the selling stockholders.
The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Name of Selling Stockholder | Number of Shares of Common Stock Owned Prior to Offering |
Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus |
Number of Shares of Common Stock of Owned After Offering | |||
| [BUYER] (1) | ||||||
| [BUYERS] |
| (1) | [ ] |
PLAN OF DISTRIBUTION
We are registering the shares of common stock to permit the resale of these shares of common stock by the holders of the common stock from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
| ● | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| ● | in the over-the-counter market; |
| ● | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| ● | through the writing or settlement of options, whether such options are listed on an options exchange or otherwise; |
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | short sales made after the date the Registration Statement is declared effective by the SEC; |
| ● | broker-dealers may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share; |
| ● | a combination of any such methods of sale; and |
| ● | any other method permitted pursuant to applicable law. |
The selling stockholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described in this prospectus. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.
The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.
We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.
Exhibit 10.3
DEBT SETTLEMENT AGREEMENT
THIS DEBT SETTLEMENT AGREEMENT is made effective the 19th day of August 2025.
BETWEEN:
FIRST TOWERS & FIBERS CORP., a company incorporated pursuant to the laws of the Province of British Columbia (the “Company”)
AND:
pgc finco inC. (as successor to PLENARY GROUP (CANADA) FINCO INC.), a company incorporated pursuant to the laws of the Province of British Columbia (the “Creditor”)
AND:
AKANDA CORP., a company incorporated pursuant to the laws of the Province of Ontario (“Akanda”)
WHEREAS:
| A. | The Company entered into a Share Exchange Agreement dated March 5, 2025 and amended as of March 30, 2025 with Akanda Corp. (“Akanda”) and the Company’s shareholders (as amended on March 31, 2025, the “Share Exchange Agreement”) in connection with the acquisition by Akanda of all the issued and outstanding shares of the Company (the “Acquisition”), such Share Exchange Agreement further amended as of the date hereof (the “Amendment” and, with the Share Exchange Agreement, the “Amended Agreement”); |
| B. | The Company is indebted to the Creditor for the principal amounts of US$1,990,000.00, which was advanced to the Company under a loan agreement dated on November 10, 2020 (the “USD Debt”) and CAD$2,986,345.00 which was advanced to the Company under a loan agreement dated on April 15, 2019, in each case with Plenary Group (Canada) Finco Inc. (the “CAD Debt”, and together with the USD Debt, the “Debt”); |
| C. | Under the terms of the loan agreements between the Company and the Creditor, as at the date of this Agreement, the Company owes the Creditor accrued interest of US$3,719,264.68 on the USD Debt and accrued interest of CAD$5,044,761.36 on the CAD Debt; |
| D. | If the closing conditions as set forth in the Amended Agreement are satisfied or waived, the Creditor agrees to: |
| a. | reduce the current interest that is currently applicable to the Debt; |
| b. | convert the CAD Debt and the Canadian dollar dominated accrued and unpaid interest into US dollars; |
| c. | accept as full settlement of the USD Debt and the CAD Debt a convertible note issued by Akanda with a principal amount of US$4,127,072 on the terms set out in this Agreement; and |
| d. | accept as full settlement of the accrued interest owing on the Debt a cash payment of US$500,000 and issuance of Class B Special Shares of Akanda (the “Class B Shares”) with a value calculated in accordance with the terms of this Agreement. |
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the premises and of the mutual covenants and agreements set out herein, the parties hereto covenant and agree as follows:
| 1. | ACKNOWLEDGEMENT OF DEBT |
1.1 The Company acknowledges and agrees that, as of the date of this Agreement, it is indebted to the Creditor in the amount of the Debt and the accrued and unpaid interest thereon in amounts equal to US$3,719,264.68 on the US Debt and CAD$5,044,761.36 on the CAD Debt.
| 2. | REDUCTION OF INTEREST OF DEBT |
2.1 [Intentionally Omitted]
2.2 The Parties acknowledge and agrees that, as of date hereof (a) the accrued and unpaid interest on the USD Debt would be US$800,416.18, and (b) the accrued and unpaid interest on the CAD Debt would be CAD$1,755,718.72.
2.3 For greater certainty, the Company acknowledges that if the Acquisition does not occur as contemplated in the Amended Agreement, then there will be no adjustment made to terms of the Debt and the Creditor’s agreements herein.
| 3. | CONVERSION OF CAD LOAN TO USD |
3.1 Subject to the terms of this Agreement, and conditional upon the closing of the Acquisition, the Creditor and the Company agree that the CAD Debt and all accrued and unpaid interest thereon, adjusted as set forth herein, shall be converted into USD, based upon the currency exchange rate as of the Closing Date of the Acquisition using the Bank of Canada rate.
3.2 Accordingly, the CAD Debt and the accrued and unpaid interest thereon through to the date hereof, would be converted into US$2,157,140.26 and US$1,268,216.35, respectively.
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| 4. | ISSUE OF CONVERTIBLE NOTE |
4.1 Immediately following the Acquisition and after giving effect to Sections 2 and 3, in full settlement of the Debt (but not, for greater certainty, the accrued and unpaid interest thereon, which shall be addressed pursuant to Section 5 below), Akanda will issue to the Creditor a convertible promissory note (the “Convertible Note”) with a principal value of equal to the US dollar amount of the Debt (being, for greater certainty, the principal amount of the USD Debt plus the US dollar equivalent of the CAD Debt as converted in accordance with Section 3 on the Closing Date). The Convertible Note will be issued in the form attached as Appendix 1 to this Agreement.
| 5. | PAYMENT AND ISSUANCE OF ISSUED SHARES |
5.1 The Company and Akanda agree that immediately following the Acquisition and after giving effect to Sections 2 and 3, the Company and Akanda will make a cash payment of US$500,000 (the “Cash Payment”) to the Creditor by way of wire transfer in immediately available funds to an account designated by the Creditor, which amount will be applied by the Creditor against the amount of US dollar accrued and unpaid interest on the USD Debt.
5.2 The Company and Akanda agree that immediately following requisite shareholder approval pursuant to the Amendment and after giving effect to Sections 2 and 3, the Company and Akanda will issue 1,741,129 Class B Shares to the Creditor (the “Issued Shares”). The Issued Shares will be issued at an assumed price per share of $1.10. For the avoidance of doubt and notwithstanding anything to the contrary herein, any and all issuances of securities by the Purchaser hereunder computed as of the date hereof but issued subsequent to the date hereof shall be subject to, and appropriately adjusted by, any applicable stock split, reverse stock split, consolidation or other adjustment made by Akanda to its securities.
| 6. | RELEASE OF CLAIMS |
6.1 The Creditor agrees that subject to and following receipt by the Creditor of the Convertible Note, the Cash Payment and the Issued Shares in accordance with Sections 4 and 5 above:
| (a) | the USD Debt and CAD Debt (for avoidance of doubt, including all accrued and unpaid interest thereon) will be fully satisfied and extinguished; and |
| (b) | the Creditor will be deemed to have released and forever discharged the Company, its subsidiaries and their respective directors, officers, employees, representatives and advisors from and against any and all claims, actions, obligations, and damages whatsoever which the Creditor may have against any of in respect of the USD Debt and/or the CAD Debt. |
This release will be operative from and after the date of completion of the transactions contemplated by this Agreement and shall be effective without the delivery of any further release or other documents by the Creditor to the Company.
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6.2 Promptly following receipt by the Creditor of the Convertible Note, the Cash Payment and the Issued Shares in accordance with Sections 4 and 5 above, the Creditor agrees to release any and all security interests held by the Creditor in with respect to the Debt and shall, at the cost and expense of the Company and Akanda, provide any documents or financing statements evidencing such release that the Company may reasonably require.
| 7. | Legending of ISSUED Shares |
7.1 The Creditor acknowledges that the Issued Shares will be subject to resale restrictions contained in the Applicable Securities Laws (as defined herein) applicable to the Company and the Creditor (and any beneficial purchaser for which the Creditor is contracting hereunder). The Creditor will receive a certificate (or evidence of book-entry at the transfer agent of Akanda) bearing the following legend imprinted thereon:
“Unless permitted under securities legislation, the holder of this security must not trade the security before the date that is four months and a day after the later of (i) [insert the distribution date], and (ii) the date the issuer became a reporting issuer in any province or territory.
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH (I) AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, IF AVAILABLE OR (II) UNDER AN EFFECTIVE REGISTRATION STATEMENT, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY (AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF) MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
7.2 The Issued Shares shall be:
| (a) | issued as fully paid, non-assessable shares in the capital of the Company, free and clear of all encumbrances; |
| (b) | “restricted securities” as such term is defined in Rule 144(a)(3), as amended, and accordingly shall bear a U.S. restrictive legend, as applicable; and |
| (c) | subject to the restricted period required by the Applicable Securities Laws. |
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| 8. | PRIVACY LEGISLATION |
8.1 The Creditor acknowledges and consents to the fact that the Company and/or Akanda is collecting the Creditor’s (and any beneficial purchaser for which the Creditor is contracting hereunder) personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) and any other applicable similar replacement or supplemental provincial or federal legislation or laws in effect from time to time) for the purpose of completing the Creditor’s shares pursuant to Section 5. The Creditor acknowledges and consents to the Company retaining the personal information for so long as permitted or required by applicable law or business practices. The Creditor further acknowledges and consents to the fact that the Creditor may be required by Applicable Securities Laws, stock exchange rules and/or Investment Dealers Association of Canada rules to provide regulatory authorities any personal information provided by the Creditor respecting itself (and any beneficial purchaser for which the Creditor is contracting hereunder). The Creditor represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers for which the Creditor is contracting. In addition to the foregoing, the Creditor agrees and acknowledges that the Company may use and disclose the Creditor’s personal information, or that of each beneficial purchaser for whom the Creditor are contracting hereunder, as follows:
| (a) | for internal use with respect to managing the relationships between and contractual obligations of the Company and the Creditor or any beneficial purchaser for whom the Creditor is contracting hereunder; |
| (b) | for use and disclosure to the Company’s transfer agent and registrar; |
| (c) | for use and disclosure for income tax related purposes, including without limitation, where required by law, disclosure to Canada Revenue Agency; |
| (d) | disclosure to securities regulatory authorities and other regulatory bodies with jurisdiction with respect to reports of trade and similar regulatory filings; |
| (e) | disclosure to a governmental or other authority to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure; |
| (f) | disclosure to professional advisers of the Company in connection with the performance of their professional services; |
| (g) | disclosure to any person where such disclosure is necessary for legitimate business reasons and is made with the Subscriber’s prior written consent; |
| (h) | disclosure to a court determining the rights of the parties under this Debt Settlement Agreement; or |
| (i) | for use and disclosure as otherwise required or permitted by law. |
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8.2 The Creditor further acknowledges that the British Columbia Securities Commission collects personal information in forms submitted to it by the Company, including information about the Creditor, the Creditor’s address and contact information, and the Creditor’s share issuance pursuant to Section 5. The Creditor acknowledges that the British Columbia Securities Commission is entitled to collect the information under authority granted to it under Applicable Securities Laws (defined below) for the purpose of administration and enforcement of the Applicable Securities Laws in British Columbia. The Creditor acknowledges that it may obtain information regarding the collection of this information by contacting the FOI Inquiries, British Columbia Securities Commission, P.O. Box 10142, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2, Telephone: (604) 899-6854, Facsimile: (604) 899-6581. The Creditor consents to the collection of personal information by the British Columbia Securities Commission.
“Applicable Securities Laws” means the securities legislation having application and the rules, policies, notices and orders issued by applicable securities regulatory authorities.
| 9. | Representations and Warranties of the Creditor |
9.1 The Creditor represents, warrants and acknowledges to the Company that:
| (a) | as at the date hereof, the Debt and the Interest Debt constitute the entire outstanding indebtedness of the Company to the Creditor including principal, interest to the date hereof and costs; |
| (b) | the Debt and Interest Debt are beneficially owned by the Creditor, free and clear of all trade restrictions, liens, charges or encumbrances of any kind whatsoever; |
| (c) | the Creditor has not conveyed, transferred or assigned any portion of the Debt or the Interest Debt to any third party, and has full right, power and authority to enter into this Agreement and to accept the Cash Payment and the Issued Shares in full and final satisfaction of the Interest Debt; |
| (d) | no third party has any right to payment for all or any portion of the Debt or the Interest Debt; |
| (e) | all necessary corporate or other action has been taken by the Creditor to approve this Agreement; |
| (f) | the Creditor is an “accreditor investor” as such term is defined under National Instrument 45-106 – Prospectus Exemptions of the Canadian Securities Administrators; |
| (g) | the Creditor is not acquiring the Issued Shares as a result of any material information that the Company has not generally disclosed to the public and the Creditor is acquiring the Issued Shares as principal; and |
| (h) | the release contained in Section 6 is fully enforceable by the Company against the Creditor. |
9.2 The Company’s obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct in all material respect at the date of this Agreement and at the time of delivery of the Cash Payment, the Convertible Note and Issued Shares by Akanda to the Creditor. Such representations and warranties will survive the closing of the transaction contemplated hereby.
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| 10. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
10.1 The Company represents, warrants and acknowledges to the Creditor that:
| (a) | the Company is a corporation duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and has the corporate power to own and operate its property, carry on its business and enter into and perform its obligations under this agreement. |
| (b) | the performance and consummation of this Agreement and the transactions contemplated hereby |
| (i) | do not and will not constitute or result in a violation or breach of, or conflict with, or allow any person to exercise any rights under, any of the terms or provisions of the constating documents of the Company; |
| (ii) | do not and will not constitute or result in a material breach of, or allow any person to exercise any rights under any contract that the Company is a party to; and |
| (iii) | do not and will not result in a breach of any applicable law; |
| (c) | this Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding agreement of it enforceable against it in accordance with its respective terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; |
| (d) | no filing with, notice to, or authorization of, any governmental entity or regulatory body is required by the Company as a condition to the lawful completion of the transactions contemplated by this Agreement; |
| (e) | there is no requirement to obtain or provide any consent under any contract to which the Company is a party in order to complete the transactions contemplated by this Agreement; |
| (f) | the Company has provided the Creditor with a true and complete copy of the Amended Agreement; |
| (g) | the Amended Agreement has not been terminated or amended and remains in full force and effect; and |
| (h) | the representations and warranties of the Company contained in Article 4 of the Amended Agreement are true and correct. |
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10.2 The Creditors’ obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct at the date of this Agreement and at the time of delivery of the Cash Payment, the Convertible Note and Issued Shares by Akanda to the Creditor. Such representations and warranties will survive the closing of the transaction contemplated hereby.
| 11. | REPRESENTATIONS AND WARRANTIES OF AKANDA |
11.1 Akanda represents, warrants and acknowledges to the Creditor that:
| (a) | Akanda is a corporation duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and has the corporate power to own and operate its property, carry on its business and enter into and perform its obligations under this agreement. |
| (b) | the performance and consummation of this Agreement and the transactions contemplated hereby |
| (i) | do not and will not constitute or result in a violation or breach of, or conflict with, or allow any person to exercise any rights under, any of the terms or provisions of the constating documents of Akanda; |
| (ii) | do not and will not constitute or result in a material breach of, or allow any person to exercise any rights under any contract that Akanda is a party to; and |
| (iii) | do not and will not result in a breach of any applicable law; |
| (c) | this Agreement has been duly executed and delivered by Akanda and constitutes a legal, valid and binding agreement of it enforceable against it in accordance with its respective terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; |
| (d) | no filing with, notice to, or authorization of, any governmental entity or regulatory body is required by Akanda as a condition to the lawful completion of the transactions contemplated by this Agreement, other than with respect to applicable securities laws, under applicable Nasdaq rules and regulations and obtaining requisite shareholder approval of Akanda’s common shareholders; |
| (e) | there is no requirement to obtain or provide any consent under any contract to which Akanda is a party in order to complete the transactions contemplated by this Agreement; |
| (f) | Akanda has provided the Creditor with a true and complete copy of the Amended Agreement; |
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| (g) | the Amended Agreement has not been terminated or amended and remains in full force and effect; |
| (h) | following its issue, the Convertible Note will be duly executed and delivered by Akanda and, subject to approval of Akanda shareholders to authorize and approve the issuance of the common shares thereunder upon conversion, will constitute a legal, valid and binding agreement of it enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; |
| (i) | following their issue, the Issued Shares will be validly issued, fully paid and non-assessable shares of Akanda, registered in the name of the Creditor; and |
| (j) | the representations and warranties of Akanda in Article 5 of the Amended Agreement are true and correct. |
11.2 The Creditors’ obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct at the date of this Agreement and at the time of delivery of the Cash Payment, the Convertible Note and Issued Shares by Akanda to the Creditor. Such representations and warranties will survive the closing of the transaction contemplated hereby.
| 12. | TERMINATION |
12.1 This Agreement will terminate immediately if:
| (a) | the Acquisition is terminated; |
| (b) | the Acquisition has not closed on or before September 30, 2025; or |
| (c) | the parties hereto mutually agree in writing. |
| 13. | GENERAL PROVISIONS |
13.1 The words “herein”, “hereof”, and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular part, clause, subclause or other subdivision.
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13.2 The Company, the Creditor and Akanda will execute such further assurances and other documents and instruments and will do such further and other things as may be necessary to implement and carry out the intent of this Agreement.
13.3 This Agreement is not assignable without the written consent of all parties.
13.4 The headings are for convenience only, do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions.
13.5 The provisions herein contained constitute the entire agreement between the parties and supersede all previous understandings, communications, representations and agreements, whether written or verbal, between the parties with respect to the subject matter of this Agreement.
13.6 This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia.
13.7 Unless otherwise indicated to the contrary, all dollar amounts referred to in this Agreement have been expressed in United States of America currency.
13.8 This Agreement may be executed in any number of counterparts with the same effect as if all the parties to this Agreement had signed the same document and all counterparts will be construed together and constitute one and the same instrument.
13.9 A facsimile or e-mail copy of this Agreement executed by all parties hereto in counterpart or otherwise, will be deemed to be a valid and binding agreement and accepted as an original Agreement until such time as each of the parties has an originally executed Agreement in its possession.
13.10 This Agreement will enure to the benefit of and be binding upon each of the parties and their respective heirs, executors, administrators, successors and permitted assigns, as the case may be.
13.11 Time is of the essence.
13.12 Akanda hereby confirms to the Creditor that it has received a duly executed lock-up agreement from each of Chris Cooper and Francisco Juarez (collectively, the “Lock-up Agreements” and each shareholder party thereto, a “Locked-up Shareholder”), true and complete copies of which have been provided to the Creditor. Akanda agrees in favour of the Creditor (a) to strictly enforce the terms of the Lock-up Agreements against each Locked-up Shareholder, and (b) not to amend, waive, or otherwise modify any term of the Lock-up Agreements without the prior consent of the Creditor. Akanda acknowledges that the Creditor is relying on Akanda’s representation and covenant contained in this Section in connection with Creditor’s agreement to enter into this Agreement and to perform its obligations hereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement effective as of the day and year first above written.
| FIRST TOWERS & FIBERS CORP. | |||
| Per: | /s/ Chris Cooper | ||
| Authorized Signatory | |||
| Name: | Chris Cooper | ||
| Title: | CEO | ||
| PGC FINCO INC (as successor to PLENARY GROUP (CANADA) FINCO INC.) | |||
| Per: | /s/ Phil Dreaver | ||
| Authorized Signatory | |||
| Name: | Phil Dreaver |
||
| Title: | Director | ||
| Per: | /s/ Paul Dunstan | ||
| Authorized Signatory | |||
| Name: | Paul Dunstan | ||
| Title: | Director | ||
| AKANDA CORP. | |||
| Per: | /s/ Katie Field | ||
| Authorized Signatory | |||
| Name: | Katie Field | ||
| Title: | Interim CEO & Director | ||
APPENDIX 1: AKANDA CONVERTIBLE PROMISSORY NOTE
Schedule “A”
| Issued Share Registration and Delivery Instructions: | |
| Registered Name of Shareholder: | PGC FINCO INC |
| Address of Record for Shareholder: | |
| Delivery Address (if different from address of record): | |
| Contact Person Name: | Paul Dunstan |
| Contact Person Telephone: | |
| Contact Person Email Address: | paul.dunstan@dunstan.ca |
Exhibit 10.4
DEBT SETTLEMENT AGREEMENT
THIS DEBT SETTLEMENT AGREEMENT is made effective the 19th day of August 2025.
BETWEEN:
FIRST TOWERS & FIBERS CORP., a company incorporated pursuant to the laws of the Province of British Columbia
(the “Company”)
AND:
DUNSTAN HOLDINGS LTD., a company incorporated pursuant to the laws of the Province of British Columbia
(the “Creditor”)
AND:
AKANDA CORP., a company incorporated pursuant to the laws of the Province of Ontario
(“Akanda”)
WHEREAS:
| A. | The Company entered into a Share Exchange Agreement dated March 5, 2025 and amended as of March 30, 2025 with Akanda Corp. (“Akanda”) and the Company’s shareholders (as amended on March 31, 2025, the “Share Exchange Agreement”) in connection with the acquisition by Akanda of all the issued and outstanding shares of the Company (the “Acquisition”), such Share Exchange Agreement further amended as of the date hereof (the “Amendment” and, with the Share Exchange Agreement, the “Amended Agreement”); |
| B. | The Company is indebted to the Creditor for the principal amounts of CAD$170,000.00, which was advanced to the Company under a loan agreement dated on February 19, 2019 (the “CAD Debt1”) and CAD$875,000.00 which was advanced to the Company under a loan agreement dated on August 16, 2018 (the “CAD Debt2”, and together with the CAD Debt1, the “Debt”); |
| C. | Under the terms of the loan agreements between the Company and the Creditor, as at the date of this Agreement, the Company owes the Creditor accrued interest of CAD$438,625.07 on the CAD Debt1 and accrued interest of CAD$2,462,077.27 on the CAD Debt2; |
| D. | If the closing conditions as set forth in the Amended Agreement are satisfied or waived, the Creditor agrees to: |
| a. | reduce the current interest that is currently applicable to the Debt; |
| b. | convert the CAD Debt and the Canadian dollar dominated accrued and unpaid interest into US dollars; |
| c. | accept as full settlement of the CAD Debt1 and the CAD Debt2 a convertible note issued by Akanda with a principal amount of US$756,917.28 on the terms set out in this Agreement; and |
| d. | accept as full settlement of the accrued interest owing on the Debt the issuance of Class B Special Shares of Akanda (the “Class B Shares”) with a value calculated in accordance with the terms of this Agreement. |
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the premises and of the mutual covenants and agreements set out herein, the parties hereto covenant and agree as follows:
| 1. | ACKNOWLEDGEMENT OF DEBT |
1.1 The Company acknowledges and agrees that, as of the date of this Agreement, it is indebted to the Creditor in the amount of the Debt and the accrued and unpaid interest thereon in amounts equal to CAD$608,625.07 on the CAD Debt1 and CAD$3,337,077.27 on the CAD Debt2.
| 2. | REDUCTION OF INTEREST OF DEBT |
2.1 [Intentionally Omitted]
2.2 The Parties acknowledge and agree that, as of date hereof (a) the accrued and unpaid interest on the CAD Debt1 would be $124,579.10, and (b) the accrued and unpaid interest on the CAD Debt2 would be CAD$706,991.37.
2.3 For greater certainty, the Company acknowledges that if the Acquisition does not occur as contemplated in the Amended Agreement, then there will be no adjustment made to terms of the Debt and the Creditor’s agreements herein.
| 3. | CONVERSION OF CAD LOAN TO USD |
3.1 Subject to the terms of this Agreement, and conditional upon the closing of the Acquisition, the Creditor and the Company agree that the CAD Debt and all accrued and unpaid interest thereon, adjusted as set forth herein, shall be converted into USD, based upon the currency exchange rate as of the Closing Date of the Acquisition using the Bank of Canada rate.
3.2 Accordingly, the CAD Debt1 and CAD Debt2 and the accrued and unpaid interest thereon through to the date hereof, would be converted into US$123,134.87 and US$633,782.41, respectively.
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| 4. | ISSUE OF CONVERTIBLE NOTE |
4.1 Immediately following the Acquisition and after giving effect to Sections 2 and 3, in full settlement of the Debt (but not, for greater certainty, the accrued and unpaid interest thereon, which shall be addressed pursuant to Section 5 below), Akanda will issue to the Creditor a convertible promissory note (the “Convertible Note”) with a principal value of equal to the US dollar amount of the Debt (being, for greater certainty, the principal amount of the USD Debt plus the US dollar equivalent of the CAD Debt as converted in accordance with Section 3 on the Closing Date). The Convertible Note will be issued in the form attached as Appendix 1 to this Agreement.
| 5. | ISSUANCE OF ISSUED SHARES |
5.1 [Intentionally Omitted]
5.2 The Company and Akanda agree that immediately following requisite shareholder approval pursuant to the Amendment and after giving effect to Sections 2 and 3, the Company and Akanda will issue 547,569 Class B Shares to the Creditor (the “Issued Shares”). The Issued Shares will be issued at an assumed price per share of $1.10. For the avoidance of doubt and notwithstanding anything to the contrary herein, any and all issuances of securities by the Purchaser hereunder computed as of the date hereof but issued subsequent to the date hereof shall be subject to, and appropriately adjusted by, any applicable stock split, reverse stock split, consolidation or other adjustment made by Akanda to its securities.
| 6. | RELEASE OF CLAIMS |
6.1 The Creditor agrees that subject to and following receipt by the Creditor of the Convertible Note and the Issued Shares in accordance with Sections 4 and 5 above:
| (a) | the USD Debt and CAD Debt (for avoidance of doubt, including all accrued and unpaid interest thereon) will be fully satisfied and extinguished; and |
| (b) | the Creditor will be deemed to have released and forever discharged the Company, its subsidiaries and their respective directors, officers, employees, representatives and advisors from and against any and all claims, actions, obligations, and damages whatsoever which the Creditor may have against any of in respect of the USD Debt and/or the CAD Debt. |
This release will be operative from and after the date of completion of the transactions contemplated by this Agreement and shall be effective without the delivery of any further release or other documents by the Creditor to the Company.
6.2 Promptly following receipt by the Creditor of the Convertible Note and the Issued Shares in accordance with Sections 4 and 5 above, the Creditor agrees to release any and all security interests held by the Creditor in with respect to the Debt and shall, at the cost and expense of the Company and Akanda, provide any documents or financing statements evidencing such release that the Company may reasonably require.
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| 7. | Legending of ISSUED Shares |
7.1 The Creditor acknowledges that the Issued Shares will be subject to resale restrictions contained in the Applicable Securities Laws (as defined herein) applicable to the Company and the Creditor (and any beneficial purchaser for which the Creditor is contracting hereunder). The Creditor will receive a certificate (or evidence of book-entry at the transfer agent of Akanda) bearing the following legend imprinted thereon:
“Unless permitted under securities legislation, the holder of this security must not trade the security before the date that is four months and a day after the later of (i) [insert the distribution date], and (ii) the date the issuer became a reporting issuer in any province or territory.
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH (I) AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, IF AVAILABLE OR (II) UNDER AN EFFECTIVE REGISTRATION STATEMENT, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY (AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF) MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
7.2 The Issued Shares shall be:
| (a) | issued as fully paid, non-assessable shares in the capital of the Company, free and clear of all encumbrances; |
| (b) | “restricted securities” as such term is defined in Rule 144(a)(3), as amended, and accordingly shall bear a U.S. restrictive legend, as applicable; and |
| (c) | subject to the restricted period required by the Applicable Securities Laws. |
| 8. | PRIVACY LEGISLATION |
8.1 The Creditor acknowledges and consents to the fact that the Company and/or Akanda is collecting the Creditor’s (and any beneficial purchaser for which the Creditor is contracting hereunder) personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) and any other applicable similar replacement or supplemental provincial or federal legislation or laws in effect from time to time) for the purpose of completing the Creditor’s shares pursuant to Section 5. The Creditor acknowledges and consents to the Company retaining the personal information for so long as permitted or required by applicable law or business practices. The Creditor further acknowledges and consents to the fact that the Creditor may be required by Applicable Securities Laws, stock exchange rules and/or Investment Dealers Association of Canada rules to provide regulatory authorities any personal information provided by the Creditor respecting itself (and any beneficial purchaser for which the Creditor is contracting hereunder). The Creditor represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers for which the Creditor is contracting. In addition to the foregoing, the Creditor agrees and acknowledges that the Company may use and disclose the Creditor’s personal information, or that of each beneficial purchaser for whom the Creditor are contracting hereunder, as follows:
| (a) | for internal use with respect to managing the relationships between and contractual obligations of the Company and the Creditor or any beneficial purchaser for whom the Creditor is contracting hereunder; |
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| (b) | for use and disclosure to the Company’s transfer agent and registrar; |
| (c) | for use and disclosure for income tax related purposes, including without limitation, where required by law, disclosure to Canada Revenue Agency; |
| (d) | disclosure to securities regulatory authorities and other regulatory bodies with jurisdiction with respect to reports of trade and similar regulatory filings; |
| (e) | disclosure to a governmental or other authority to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure; |
| (f) | disclosure to professional advisers of the Company in connection with the performance of their professional services; |
| (g) | disclosure to any person where such disclosure is necessary for legitimate business reasons and is made with the Subscriber’s prior written consent; |
| (h) | disclosure to a court determining the rights of the parties under this Debt Settlement Agreement; or |
| (i) | for use and disclosure as otherwise required or permitted by law. |
8.2 The Creditor further acknowledges that the British Columbia Securities Commission collects personal information in forms submitted to it by the Company, including information about the Creditor, the Creditor’s address and contact information, and the Creditor’s share issuance pursuant to Section 5. The Creditor acknowledges that the British Columbia Securities Commission is entitled to collect the information under authority granted to it under Applicable Securities Laws (defined below) for the purpose of administration and enforcement of the Applicable Securities Laws in British Columbia. The Creditor acknowledges that it may obtain information regarding the collection of this information by contacting the FOI Inquiries, British Columbia Securities Commission, P.O. Box 10142, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2, Telephone: (604) 899-6854, Facsimile: (604) 899-6581. The Creditor consents to the collection of personal information by the British Columbia Securities Commission.
“Applicable Securities Laws” means the securities legislation having application and the rules, policies, notices and orders issued by applicable securities regulatory authorities.
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| 9. | Representations and Warranties of the Creditor |
9.1 The Creditor represents, warrants and acknowledges to the Company that:
| (a) | as at the date hereof, the Debt and the Interest Debt constitute the entire outstanding indebtedness of the Company to the Creditor including principal, interest to the date hereof and costs; |
| (b) | the Debt and Interest Debt are beneficially owned by the Creditor, free and clear of all trade restrictions, liens, charges or encumbrances of any kind whatsoever; |
| (c) | the Creditor has not conveyed, transferred or assigned any portion of the Debt or the Interest Debt to any third party, and has full right, power and authority to enter into this Agreement and to accept the Issued Shares in full and final satisfaction of the Interest Debt; |
| (d) | no third party has any right to payment for all or any portion of the Debt or the Interest Debt; |
| (e) | all necessary corporate or other action has been taken by the Creditor to approve this Agreement; |
| (f) | the Creditor is an “accreditor investor” as such term is defined under National Instrument 45-106 – Prospectus Exemptions of the Canadian Securities Administrators; |
| (g) | the Creditor is not acquiring the Issued Shares as a result of any material information that the Company has not generally disclosed to the public and the Creditor is acquiring the Issued Shares as principal; and |
| (h) | the release contained in Section 6 is fully enforceable by the Company against the Creditor. |
9.2 The Company’s obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct in all material respect at the date of this Agreement and at the time of delivery of the Convertible Note and Issued Shares by Akanda to the Creditor. Such representations and warranties will survive the closing of the transaction contemplated hereby.
| 10. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
10.1 The Company represents, warrants and acknowledges to the Creditor that:
| (a) | the Company is a corporation duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and has the corporate power to own and operate its property, carry on its business and enter into and perform its obligations under this agreement. |
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| (b) | the performance and consummation of this Agreement and the transactions contemplated hereby |
| (i) | do not and will not constitute or result in a violation or breach of, or conflict with, or allow any person to exercise any rights under, any of the terms or provisions of the constating documents of the Company; |
| (ii) | do not and will not constitute or result in a material breach of, or allow any person to exercise any rights under any contract that the Company is a party to; and |
| (iii) | do not and will not result in a breach of any applicable law; |
| (c) | this Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding agreement of it enforceable against it in accordance with its respective terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; |
| (d) | no filing with, notice to, or authorization of, any governmental entity or regulatory body is required by the Company as a condition to the lawful completion of the transactions contemplated by this Agreement; |
| (e) | there is no requirement to obtain or provide any consent under any contract to which the Company is a party in order to complete the transactions contemplated by this Agreement; |
| (f) | the Company has provided the Creditor with a true and complete copy of the Amended Agreement; |
| (g) | the Amended Agreement has not been terminated or amended and remains in full force and effect; and |
| (h) | the representations and warranties of the Company contained in Article 4 of the Amended Agreement are true and correct. |
10.2 The Creditors’ obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct at the date of this Agreement and at the time of delivery of the Convertible Note and Issued Shares by Akanda to the Creditor. Such representations and warranties will survive the closing of the transaction contemplated hereby.
| 11. | REPRESENTATIONS AND WARRANTIES OF AKANDA |
11.1 Akanda represents, warrants and acknowledges to the Creditor that:
| (a) | Akanda is a corporation duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and has the corporate power to own and operate its property, carry on its business and enter into and perform its obligations under this agreement. |
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| (b) | the performance and consummation of this Agreement and the transactions contemplated hereby |
| (i) | do not and will not constitute or result in a violation or breach of, or conflict with, or allow any person to exercise any rights under, any of the terms or provisions of the constating documents of Akanda; |
| (ii) | do not and will not constitute or result in a material breach of, or allow any person to exercise any rights under any contract that Akanda is a party to; and |
| (iii) | do not and will not result in a breach of any applicable law; |
| (c) | this Agreement has been duly executed and delivered by Akanda and constitutes a legal, valid and binding agreement of it enforceable against it in accordance with its respective terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; |
| (d) | no filing with, notice to, or authorization of, any governmental entity or regulatory body is required by Akanda as a condition to the lawful completion of the transactions contemplated by this Agreement, other than with respect to applicable securities laws, under applicable Nasdaq rules and regulations and obtaining requisite shareholder approval of Akanda’s common shareholders; |
| (e) | there is no requirement to obtain or provide any consent under any contract to which Akanda is a party in order to complete the transactions contemplated by this Agreement; |
| (f) | Akanda has provided the Creditor with a true and complete copy of the Amended Agreement; |
| (g) | the Amended Agreement has not been terminated or amended and remains in full force and effect; |
| (h) | following its issue, the Convertible Note will be duly executed and delivered by Akanda and, subject to approval of Akanda shareholders to authorize and approve the issuance of the common shares thereunder upon conversion, will constitute a legal, valid and binding agreement of it enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction; |
| (i) | following their issue, the Issued Shares will be validly issued, fully paid and non-assessable shares of Akanda, registered in the name of the Creditor; and |
| (j) | the representations and warranties of Akanda in Article 5 of the Amended Agreement are true and correct. |
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11.2 The Creditors’ obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct at the date of this Agreement and at the time of delivery of the Convertible Note and Issued Shares by Akanda to the Creditor. Such representations and warranties will survive the closing of the transaction contemplated hereby.
| 12. | TERMINATION |
12.1 This Agreement will terminate immediately if:
| (a) | the Acquisition is terminated; |
| (b) | the Acquisition has not closed on or before September 30, 2025; or |
| (c) | the parties hereto mutually agree in writing. |
| 13. | GENERAL PROVISIONS |
13.1 The words “herein”, “hereof”, and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular part, clause, subclause or other subdivision.
13.2 The Company, the Creditor and Akanda will execute such further assurances and other documents and instruments and will do such further and other things as may be necessary to implement and carry out the intent of this Agreement.
13.3 This Agreement is not assignable without the written consent of all parties.
13.4 The headings are for convenience only, do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions.
13.5 The provisions herein contained constitute the entire agreement between the parties and supersede all previous understandings, communications, representations and agreements, whether written or verbal, between the parties with respect to the subject matter of this Agreement.
13.6 This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia.
13.7 Unless otherwise indicated to the contrary, all dollar amounts referred to in this Agreement have been expressed in United States of America currency.
13.8 This Agreement may be executed in any number of counterparts with the same effect as if all the parties to this Agreement had signed the same document and all counterparts will be construed together and constitute one and the same instrument.
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13.9 A facsimile or e-mail copy of this Agreement executed by all parties hereto in counterpart or otherwise, will be deemed to be a valid and binding agreement and accepted as an original Agreement until such time as each of the parties has an originally executed Agreement in its possession.
13.10 This Agreement will enure to the benefit of and be binding upon each of the parties and their respective heirs, executors, administrators, successors and permitted assigns, as the case may be.
13.11 Time is of the essence.
13.12 Akanda hereby confirms to the Creditor that it has received a duly executed lock-up agreement from each of Chris Cooper and Francisco Juarez (collectively, the “Lock-up Agreements” and each shareholder party thereto, a “Locked-up Shareholder”), true and complete copies of which have been provided to the Creditor. Akanda agrees in favour of the Creditor (a) to strictly enforce the terms of the Lock-up Agreements against each Locked-up Shareholder, and (b) not to amend, waive, or otherwise modify any term of the Lock-up Agreements without the prior consent of the Creditor. Akanda acknowledges that the Creditor is relying on Akanda’s representation and covenant contained in this Section in connection with Creditor’s agreement to enter into this Agreement and to perform its obligations hereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement effective as of the day and year first above written.
| FIRST TOWERS & FIBERS CORP. | |||
| Per: | /s/ Chris Cooper | ||
| Authorized Signatory | |||
| Name: | Chris Cooper | ||
| Title: | CEO | ||
| DUNSTAN HOLDINGS LTD. | |||
| Per: | /s/ Paul Dunstan | ||
| Authorized Signatory | |||
| Name: | Paul Dunstan | ||
| Title: | Director | ||
| AKANDA CORP. | |||
| Per: | /s/ Katie Field | ||
| Authorized Signatory | |||
| Name: | Katie Field | ||
| Title: | Interim CEO & Director | ||
APPENDIX 1: AKANDA CONVERTIBLE PROMISSORY NOTE
Schedule “A”
Issued Share Registration and Delivery Instructions:
| Registered Name of Shareholder: | DUNSTAN HOLDINGS LTD. | |
| Address of Record for Shareholder: | ||
| Delivery Address (if different from address of record): | ||
| Contact Person Name: | Paul Dunstan | |
| Contact Person Telephone: | ||
| Contact Person Email Address: | paul.dunstan@dunstan.ca |
Exhibit 10.5
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR THE LAWS OF ANY OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
| Principal Amount: US$4,153,078.00 | Issue Date: August 19, 2025 |
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, AKANDA CORP., an Ontario corporation (hereinafter called the “Borrower”), hereby promise to pay to the order of PGC FINCO INC. (as successor to Plenary Group (Canada) Finco Inc.), a company incorporated pursuant to the laws of the Province of British Columbia or registered assigns (the “Holder”) the sum of Four Million One Hundred Fifty Three Thousand Seventy Eight United States Dollars (US$4,153,078.00) together with accrued and unpaid interest (the “Interest”) on the principal balance hereof, on August 19, 2031 (the “Maturity Date”), in the amount of eight and one-half percent (8½%) per calendar year from the date hereof (the “Issue Date”) and as may be set forth herein. Interest shall be payable semi-annually in arrears on June 30th and December 31st of each Calendar Year. This Note may be prepaid in whole or in part without penalty. All payments due hereunder (to the extent not converted in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note.
This Note replaces and evidences the aggregate principal Plenary Group (Canada) Finco Inc., a successor of the Holder, advanced to First Towers & Fiber Corp., a company incorporated pursuant to the laws of the Province of British Columbia (“First Towers”), on August 16, 2018 and February 18, 2019 (collectively, the “Original Loans”), which the Company is assuming as part of a Debt Settlement Agreement between First Towers and the Holder, dated August 19, 2025, a copy of which is attached hereto as Exhibit A (the “Debt Settlement Agreement”), and that certain Share Exchange Agreement dated February 25, 2025 between the Borrower, First Towers and the other signatories thereto, as amended through the date hereof (the “Share Exchange Agreement”). By entering into this Note, and pursuant to the Share Exchange Agreement and the Debt Settlement Agreement, the parties hereto, Plenary Group (Canada) Finco Inc. and First Towers acknowledge and agree that the Original Loans and related transactions are terminated and of no further force or effect, and First Towers has no further obligation to the Holder with respect to the Original Loans except as set forth in the Debt Settlement Agreement (this paragraph, the “First Towers Acknowledgement”).
The following additional terms shall apply to this Note:
Article I. CERTAIN DEFINITIONS
1.1 “Common Shares” means the common shares, no par value, of the Borrower.
1.2 “Trading Day” means a day on which the principal Trading Market is open for trading.
1.3 “Trading Market” means any of the following markets or exchanges on which the Common Shares will, in accordance with the terms hereof, be listed or quoted for trading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market; or the New York Stock Exchange (or any successors to any of the foregoing).
1.4 “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and if the Common Shares are traded on the OTCQB or OTCQX Markets, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the OTCQB or OTCQX Markets as applicable, or (c) if the Common Shares are not then listed or quoted for trading on the OTCQB or OTCQX Markets and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Shares so reported.
Article II. EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following events shall be an “Event of Default” under this Note: any default in the payment of (1) the principal amount hereunder when due and payable; (2) interest on this Note, as and when the same shall become due and payable; (3) Borrower’s dissolution or termination of existence, or discontinuance of a material portion of such entity’s business operations; (4) the appointment of a receiver for any material part or all of the property of such entity; (5) an assignment for the benefit of creditors by the Borrower; (6) the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Borrower, which results in the entry of an order for relief or which remains undismissed, undischarged or unbonded for a period of 60 days or more;(7) material breach of any representations and/or covenants in this Note that are not cured within thirty (30) days; and (8) the Borrower’s Common Shares cease being listed on a national securities exchange or quoted on an interdealer quotation system.
2.2 Upon the occurrence and during the continuation of any Event of Default, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, the then outstanding principal amount of this Note plus accrued and unpaid Interest on the unpaid principal amount of this Note to the date of payment (all collectively known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
2.3 During an Event of Default, the Holder shall continue to have the right at any time, to convert the balance owed pursuant to the Note including the Default Amount into Common Shares at the Conversion Price (as defined below).
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Article III. CONVERSION RIGHTS
3.1 Conversion Rights. The Borrower and the Holder (as such, the “Converting Party”) shall each have the right to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable Common Shares, or any shares of capital stock or other securities of the Borrower into which such Common Shares shall hereafter be changed or reclassified at the conversion price determined as provided herein (a “Conversion”). The number of Common Shares to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the Conversion Price, which shall be specified in a notice of conversion in substantially the form attached hereto as Annex A (the “Notice of Conversion”), delivered by the Converting Party to the other party in accordance with Section 4.2 below. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of the principal amount of this Note to be converted in such conversion plus accrued and unpaid interest on such principal amount to the Conversion Date. Notwithstanding anything in this Agreement to the contrary, and in addition to the limitations set forth herein, no party may convert, and Borrower shall not issue the Common Shares under, this Note until the later of (a) the Borrower obtaining requisite shareholder approval pursuant to Amendment No. 2 to the Share Exchange Agreement and (b) the five (5) month anniversary of the Issue Date (such later date, the “Conversion Threshold Date”).
3.2 Conversion Price. The conversion price (the “Conversion Price”) shall mean a price per share equal to the greater of (a) $0.2720 and (b) a ten percent (10%) discount to the seven (7) Trading Day VWAP immediately prior to receipt of the Notice of Conversion.
3.3 Authorized Shares. The Borrower covenants that during the period that the Note is outstanding, the Borrower will reserve from its authorized and unissued Common Shares a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Shares upon the full conversion of this Note (the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Common Shares in accordance with the terms and conditions of this Note.
3.4 Method of Conversion.
(a) Mechanics of Conversion. As set forth in Section 3.4 hereof, at any time after the Conversion Threshold Date, the balance due pursuant to this Note may be converted (i) by the Converting Party in whole or in part at any time from time to time, by submitting to the other party a Notice of Conversion.
(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.
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(c) Delivery of Common Shares Upon Conversion. Upon receipt from the Converting Party to the other party of the Notice of Conversion meeting the requirements for conversion as provided in this Article III, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates (or evidence of book entry) for the Common Shares issuable upon such conversion within one (1) business day after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount and any and all accrued and unpaid Interest hereof, surrender of this Note) in accordance with the terms hereof. Upon receipt of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Shares issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Shares on such conversion. Upon delivery of a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates (or evidence of book entry) for Common Shares shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the Holder, or any setoff, counterclaim, recoupment, limitation or termination, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
(d) Delivery of Common Shares by Electronic Transfer. In lieu of delivering physical certificates (or evidence of book-entry issuance) representing the Common Shares issuable upon conversion of this Note, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program and the Common Shares may be issued upon Conversion without restriction under applicable law, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Shares issuable upon Conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit and Withdrawal at Custodian (“DWAC”) system.
3.5 Concerning the Shares. The Common Shares issuable upon conversion of this Note may not be sold or transferred unless: (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”); or (iii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Holder who agrees to sell or otherwise transfer the shares only in accordance with this Section 3.5 and who is an Accredited Investor (as defined below).
Any restrictive legend on certificates representing Common Shares issuable upon conversion of this Note shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Shares may be made without registration under the Act, which opinion if reasonable shall be accepted by the Borrower so that the sale or transfer is effected; or (ii) in the case of the Common Shares issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act; or otherwise may be sold pursuant to an exemption from registration. In the event that the Borrower does not reasonably accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration (such as Rule 144), it will be considered an Event of Default pursuant to this Note.
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3.6 Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which Common Shares shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the Common Shares immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 3.6(b) unless (a) it first gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
Article IV. Miscellaneous
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery or electronic mail, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by electronic mail, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Borrower, to:
AKANDA CORP.
c/o Gowling WLG
100 King St. W, Suite 1600
Toronto, ON M5X 1G5
Attn: Katie Field
Email: katie@akandacorp.com
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If to the Holder:
PGC FINCO INC.
Attention: Paul Oppenheim
Email: paul.oppenheim@plenary.com
4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.
4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission; “Accredited Investor”). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement; and may be assigned by the Holder without the consent of the Borrower.
4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
4.6 Governing Law. This Note will be governed by and interpreted and enforced in accordance with the laws of the Province of British Columbia. Each party irrevocably attorns and submits to the exclusive jurisdiction of the courts of competent jurisdiction of the Province of British Columbia in any action or proceeding hereunder, and waives objection to the venue of any action or proceeding in such court or that such court provides an inconvenient forum.
4.7 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.
4.8 Entire Agreement. This Note, including the exhibits hereto and the agreements, documents and instruments referred to herein, constitutes the entire agreement between the parties with respect to the transactions contemplated by this Note and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the parties in connection with the subject matter of this Note, except as specifically set forth in this Note and the agreements, documents and instruments referred to herein. The parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Note.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, Borrower and Holder have caused this Note to be signed in their name by its duly authorized officer on the Issue Date set forth above.
| AKANDA CORP. | ||
| By: | /s/ Katie Field | |
| Name: | Katie Field | |
| Title: | Interim CEO | |
| PGC FINCO INC. | ||
| By: | /s/ Phil Dreaver | |
| Name: | Phil Dreaver | |
| Title: | Director | |
Solely For Purposes of the
First Towers Acknowledgement:
| FIRST TOWERS & FIBER CORP. | ||
| By: | /s/ Chris Cooper | |
| Name: | Chris Cooper | |
| Title: | CEO | |
Exhibit A
Debt Settlement Agreement
Annex A
Notice of Conversion
The undersigned hereby elects to convert principal under the Convertible Promissory Note due August 19, 2031 of Akanda Corp., a Ontario corporation (the “Company”), into common shares (“Common Shares”), of the Company according to the conditions hereof, as of the date written below. If Common Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid Common Shares.
| Conversion calculations: | ||
| Date: | ||
| Principal Amount of Note to be Converted: | ||
| Payment of Interest in Common Shares __ yes __ no | ||
| If yes, US$_____ of Interest Accrued on Account of Conversion at Issue. | ||
| Number of Common Shares to be issued based on Conversion Price: | ||
| Signature: | ||
| Name: | ||
| Address: | ||
| Or | ||
| DWAC Instructions (if applicable): | ||
| Broker No.: __________________________ | ||
| Account No.: ________________________ | ||
Exhibit 10.6
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR THE LAWS OF ANY OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
| Principal Amount: US$756,917.28 | Issue Date: August 19, 2025 |
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, AKANDA CORP., an Ontario corporation (hereinafter called the “Borrower”), hereby promise to pay to the order of DUNSTAN HOLDINGS LTD., a company incorporated pursuant to the laws of the Province of British Columbia or registered assigns (the “Holder”) the sum of Seven Hundred Fifty Six Thousand Nine Hundred Seventeen United States Dollars and Twenty Eight Cents (US$756,917.28) together with accrued and unpaid interest (the “Interest”) on the principal balance hereof, on August 19, 2031 (the “Maturity Date”), in the amount of eight and one-half percent (8½%) per calendar year from the date hereof (the “Issue Date”) and as may be set forth herein. Interest shall be payable semi-annually in arrears on June 30th and December 31st of each Calendar Year. This Note may be prepaid in whole or in part without penalty. All payments due hereunder (to the extent not converted in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note.
This Note replaces and evidences the aggregate principal the Holder advanced to First Towers & Fiber Corp., a company incorporated pursuant to the laws of the Province of British Columbia (“First Towers”), on August 16, 2018 and February 18, 2019 (collectively, the “Original Loans”), which the Company is assuming as part of a Debt Settlement Agreement between First Towers and the Holder, dated August 19, 2025, a copy of which is attached hereto as Exhibit A (the “Debt Settlement Agreement”), and that certain Share Exchange Agreement dated February 25, 2025 between the Borrower, First Towers and the other signatories thereto, as amended through the date hereof (the “Share Exchange Agreement”). By entering into this Note, and pursuant to the Share Exchange Agreement and the Debt Settlement Agreement, the parties hereto and First Towers acknowledge and agree that the Original Loans and related transactions are terminated and of no further force or effect, and First Towers has no further obligation to the Holder with respect to the Original Loans except as set forth in the Debt Settlement Agreement (this paragraph, the “First Towers Acknowledgement”).
The following additional terms shall apply to this Note:
Article I. CERTAIN DEFINITIONS
1.1 “Common Shares” means the common shares, no par value, of the Borrower.
1.2 “Trading Day” means a day on which the principal Trading Market is open for trading.
1.3 “Trading Market” means any of the following markets or exchanges on which the Common Shares will, in accordance with the terms hereof, be listed or quoted for trading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market; or the New York Stock Exchange (or any successors to any of the foregoing).
1.4 “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and if the Common Shares are traded on the OTCQB or OTCQX Markets, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the OTCQB or OTCQX Markets as applicable, or (c) if the Common Shares are not then listed or quoted for trading on the OTCQB or OTCQX Markets and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Shares so reported.
Article II. EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following events shall be an “Event of Default” under this Note: any default in the payment of (1) the principal amount hereunder when due and payable; (2) interest on this Note, as and when the same shall become due and payable; (3) Borrower’s dissolution or termination of existence, or discontinuance of a material portion of such entity’s business operations; (4) the appointment of a receiver for any material part or all of the property of such entity; (5) an assignment for the benefit of creditors by the Borrower; (6) the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Borrower, which results in the entry of an order for relief or which remains undismissed, undischarged or unbonded for a period of 60 days or more;(7) material breach of any representations and/or covenants in this Note that are not cured within thirty (30) days; and (8) the Borrower’s Common Shares cease being listed on a national securities exchange or quoted on an interdealer quotation system.
2.2 Upon the occurrence and during the continuation of any Event of Default, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, the then outstanding principal amount of this Note plus accrued and unpaid Interest on the unpaid principal amount of this Note to the date of payment (all collectively known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
2.3 During an Event of Default, the Holder shall continue to have the right at any time, to convert the balance owed pursuant to the Note including the Default Amount into Common Shares at the Conversion Price (as defined below).
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Article III. CONVERSION RIGHTS
3.1 Conversion Rights. The Borrower and the Holder (as such, the “Converting Party”) shall each have the right to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable Common Shares, or any shares of capital stock or other securities of the Borrower into which such Common Shares shall hereafter be changed or reclassified at the conversion price determined as provided herein (a “Conversion”). The number of Common Shares to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the Conversion Price, which shall be specified in a notice of conversion in substantially the form attached hereto as Annex A (the “Notice of Conversion”), delivered by the Converting Party to the other party in accordance with Section 4.2 below. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of the principal amount of this Note to be converted in such conversion plus accrued and unpaid interest on such principal amount to the Conversion Date. Notwithstanding anything in this Agreement to the contrary, and in addition to the limitations set forth herein, no party may convert, and Borrower shall not issue the Common Shares under, this Note until the later of (a) the Borrower obtaining requisite shareholder approval pursuant to Amendment No. 2 to the Share Exchange Agreement and (b) the five (5) month anniversary of the Issue Date (such later date, the “Conversion Threshold Date”).
3.2 Conversion Price. The conversion price (the “Conversion Price”) shall mean a price per share equal to the greater of (a) $0.2720 and (b) a ten percent (10%) discount to the seven (7) Trading Day VWAP immediately prior to receipt of the Notice of Conversion.
3.3 Authorized Shares. The Borrower covenants that during the period that the Note is outstanding, the Borrower will reserve from its authorized and unissued Common Shares a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Shares upon the full conversion of this Note (the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Common Shares in accordance with the terms and conditions of this Note.
3.4 Method of Conversion.
(a) Mechanics of Conversion. As set forth in Section 3.4 hereof, at any time after the Conversion Threshold Date, the balance due pursuant to this Note may be converted (i) by the Converting Party in whole or in part at any time from time to time, by submitting to the other party a Notice of Conversion.
(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.
(c) Delivery of Common Shares Upon Conversion. Upon receipt from the Converting Party to the other party of the Notice of Conversion meeting the requirements for conversion as provided in this Article III, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates (or evidence of book entry) for the Common Shares issuable upon such conversion within one (1) business day after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount and any and all accrued and unpaid Interest hereof, surrender of this Note) in accordance with the terms hereof. Upon receipt of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Shares issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Shares on such conversion. Upon delivery of a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates (or evidence of book entry) for Common Shares shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the Holder, or any setoff, counterclaim, recoupment, limitation or termination, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
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(d) Delivery of Common Shares by Electronic Transfer. In lieu of delivering physical certificates (or evidence of book-entry issuance) representing the Common Shares issuable upon conversion of this Note, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program and the Common Shares may be issued upon Conversion without restriction under applicable law, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Shares issuable upon Conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit and Withdrawal at Custodian (“DWAC”) system.
3.5 Concerning the Shares. The Common Shares issuable upon conversion of this Note may not be sold or transferred unless: (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”); or (iii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Holder who agrees to sell or otherwise transfer the shares only in accordance with this Section 3.5 and who is an Accredited Investor (as defined below).
Any restrictive legend on certificates representing Common Shares issuable upon conversion of this Note shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Shares may be made without registration under the Act, which opinion if reasonable shall be accepted by the Borrower so that the sale or transfer is effected; or (ii) in the case of the Common Shares issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act; or otherwise may be sold pursuant to an exemption from registration. In the event that the Borrower does not reasonably accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration (such as Rule 144), it will be considered an Event of Default pursuant to this Note.
3.6 Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which Common Shares shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the Common Shares immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 3.6(b) unless (a) it first gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
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Article IV. Miscellaneous
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery or electronic mail, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by electronic mail, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Borrower, to:
AKANDA CORP.
c/o Gowling WLG
100 King St. W, Suite 1600
Toronto, ON M5X 1G5
Attn: Katie Field
Email: katie@akandacorp.com
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If to the Holder:
DUNSTAN HOLDINGS LTD.
Attention: Paul Dunstan
Email: paul.dunstan@dunstan.ca
4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.
4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission; “Accredited Investor”). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement; and may be assigned by the Holder without the consent of the Borrower.
4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
4.6 Governing Law. This Note will be governed by and interpreted and enforced in accordance with the laws of the Province of British Columbia. Each party irrevocably attorns and submits to the exclusive jurisdiction of the courts of competent jurisdiction of the Province of British Columbia in any action or proceeding hereunder, and waives objection to the venue of any action or proceeding in such court or that such court provides an inconvenient forum.
4.7 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.
4.8 Entire Agreement. This Note, including the exhibits hereto and the agreements, documents and instruments referred to herein, constitutes the entire agreement between the parties with respect to the transactions contemplated by this Note and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the parties in connection with the subject matter of this Note, except as specifically set forth in this Note and the agreements, documents and instruments referred to herein. The parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Note.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, Borrower and Holder have caused this Note to be signed in their name by its duly authorized officer on the Issue Date set forth above.
| AKANDA CORP. | ||
| By: | /s/ Katie Field | |
| Name: | Katie Field | |
| Title: | Interim CEO | |
| DUNSTAN HOLDINGS LTD. | ||
| By: | /s/ Paul Dunstan | |
| Name: | Paul Dunstan | |
| Title: | President | |
Solely For Purposes of the
First Towers Acknowledgement:
| FIRST TOWERS & FIBER CORP. | ||
| By: | /s/ Chris Cooper | |
| Name: | Chris Cooper | |
| Title: | CEO | |
Exhibit A
Debt Settlement Agreement
Annex A
Notice of Conversion
The undersigned hereby elects to convert principal under the Convertible Promissory Note due August 19, 2031 of Akanda Corp., a Ontario corporation (the “Company”), into common shares (“Common Shares”), of the Company according to the conditions hereof, as of the date written below. If Common Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid Common Shares.
| Conversion calculations: | ||
| Date: | ||
| Principal Amount of Note to be Converted: | ||
| Payment of Interest in Common Shares __ yes __ no | ||
| If yes, US$_____ of Interest Accrued on Account of Conversion at Issue. | ||
| Number of Common Shares to be issued based on Conversion Price: | ||
| Signature:_______________________________ | ||
| Name: | ||
| Address: | ||
| Or | ||
| DWAC Instructions (if applicable): | ||
| Broker No.:________________________ | ||
| Account No.:______________________ | ||
Exhibit 10.7
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY, BEFORE THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE LATER OF (I) AUGUST 19, 2025, AND (II) THE DATE THE CORPORATION BECAME A REPORTING ISSUER
| Issue Date: August 19, 2025 | Principal Amount: US$14,133,966 |
PROMISSORY NOTE DUE AUGUST 19, 2027
AKANDA CORP.
A corporation existing under the laws of the Province of Ontario
Article 1
Interpretation
| 1.1 | Definitions |
In this Promissory Note, the following expressions shall have the following meanings, namely:
| (a) | “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by or is under common control with such Person, including any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, such Person; |
| (b) | “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; |
| (c) | “Corporation” means Akanda Corp., a corporation existing under the laws of the Province of Ontario; |
| (d) | “Promissory Note” means this instrument issued to the Holder; |
| (e) | “Event of Default” means the occurrence of any one or more of the following events or circumstances: |
| (i) | Default under Promissory Note. The Corporation defaults in the payment of any Principal Amount or any interest owing under this Promissory Note as and when it becomes due and payable, whether at the Maturity Date or otherwise, or any other amount due under this Promissory Note, and any such default with respect to the nonpayment of interest under this Promissory Note continues for five (5) Business Days thereafter; |
| (ii) | Cross-Default. The Corporation or any of its Affiliates defaults in the payment of borrowed money under any other agreement, bond, hypothec, debenture, note or other evidence of indebtedness for money borrowed, under any guarantee hypothec, mortgage or indenture pursuant to which there shall be issued or by which there shall be secured or evidenced any indebtedness for money borrowed by the Corporation or any Affiliate, whether such indebtedness now exists or shall hereafter be created; |
| (iii) | Breaches of Representations and Warranties. Any representation or warranty made or deemed to be made in this Promissory Note by the Corporation proves to have been incorrect or misleading in any material respect when made or deemed to be made hereunder and not cured within thirty (30) Business Days after notice in writing thereof is delivered to the Corporation; |
| (iv) | Breaches of Other Covenants. The Corporation fails to observe or perform any other covenant, obligation, condition or agreement in any material respect contained in this Promissory Note, and such failure continues for thirty (30) Business Days after notice in writing thereof is delivered to the Corporation; |
| (v) | Voluntary Bankruptcy or Insolvency Proceedings. The Corporation: |
| (A) | applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property; |
| (B) | is unable, or admits in writing its inability, to pay its debts generally as they mature; |
| (C) | makes a general assignment for the benefit of its creditors; |
| (D) | is wound-up, dissolved or liquidated; |
| (E) | becomes insolvent (as such term may be defined or interpreted under any applicable bankruptcy, insolvency or related statute); |
| (F) | commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it; or |
| (G) | takes any action for the purpose of effecting any of the foregoing; |
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| (vi) | Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Corporation or of all or a substantial part of the property thereof, or an involuntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Corporation or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered, or such case or proceeding shall not be dismissed or discharged within 60 days of commencement; |
| (f) | “Holder” has the meaning ascribed in Section 2.1 hereto; |
| (g) | “Issue Date” means August 19, 2025; |
| (h) | “Maturity Date” means August 19, 2027; |
| (i) | “Principal Office” means the principal office of the Corporation from time to time, located as of the date hereof at c/o Gowling WLG, 100 King St. W, Suite 1600, Toronto, ON M5X 1G5, Canada; and |
| (j) | “Person” includes an individual, corporation, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof. |
| 1.2 | Currency |
Unless otherwise indicated herein, “$” or “dollars” shall refer to lawful currency of Canada and “US$” shall refer to lawful currency of the United States of America.
Article 2
Promise To Pay
| 2.1 | Indebtedness |
The Corporation, for value received, hereby acknowledges itself indebted and promises and covenants to pay to 1353744 B.C. LTD.., having an address at 5660 Monarch Street, Burnaby, BC V5G 2A3 Canada, the registered holder hereof for the time being (the “Holder”):
| (a) | the principal sum of US$14,133,966 (the “Principal Amount”) on the Maturity Date or upon such other date as specified herein at the Corporation’s Principal Office; |
| (b) | interest on any monies owing by the Corporation to the Holder hereunder, all as specifically calculated hereunder; and |
| (c) | all other monies which may be owing by the Corporation to the Holder pursuant to this Promissory Note. |
| 2.2 | Share Exchange Agreement |
This Promissory Note is being issued to the Holder pursuant to that certain Share Exchange Agreement, effective as of March 5, 2025 and as further amended, among the Corporation, First Towers & Fiber Corp., a corporation existing under the laws of the Province of British Columbia, and the other parties signatory thereto.
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| 2.3 | Upon the occurrence or existence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Holder may declare all outstanding obligations payable by the Corporation hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind (save for notices that are required to trigger an Event of Default), all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described in paragraphs (v) and (vi) of the definition of “Event of Default”, immediately and without notice, all outstanding obligations payable by the Corporation hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other transaction documents to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, the Holder may exercise any other right, power or remedy granted to it by the transaction documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both. |
Article 3
Interest
| 3.1 | Calculation and Payment of Interest, etc. |
The Corporation shall pay interest quarterly and upon maturity, on the first date of such relevant quarter, on that portion of the Principal Amount outstanding from time to time from the Issue Date up to and including the date of repayment of the Principal Amount at the rate of 16% per annum, in like money at the Corporation’s Principal Office, calculated quarterly in arrears until the Principal Amount is repaid in full in accordance with the terms hereof.
| 3.2 | Taxation |
The Corporation shall make all payments of the Principal Amount and interest on this Promissory Note, free and clear of, and without withholding of or deduction for or on account of any present or future taxes, levies, imposts, deductions, charges, withholdings and all related liabilities (“Taxes”) imposed or levied by any taxing authority with jurisdiction over the payment (“Taxing Authority”) unless such Taxes are required to be withheld or deducted by the Corporation by law or by interpretation or administration thereof, or upon demand of any such Taxing Authority. The Corporation shall make any withholdings or deductions in respect of the Taxes required by law or by the interpretation or administration thereof, and shall remit the full amount withheld or deducted to the relevant Taxing Authority in accordance with applicable law and shall provide the Holder with full particulars thereof in writing.
| 3.3 | No Merger In Judgement |
The covenant of the Corporation to pay interest at the rate provided herein shall not merge in any judgement in respect of any obligation of the Corporation hereunder and such judgement shall bear interest in the manner set out in Section 3.1 and be payable on the same days when interest is payable hereunder.
| 3.4 | Commitment Fee |
The Corporation will pay a total commitment fee of $424,018.98 (representing 3% of the $14,133,966) (the “Commitment Fee”) to be paid to the Holder within two (2) Business Days of the date hereof. The Commitment Fee is non-refundable and will be absolute property as consideration for the time, effort and expense required of our employees and agents incurred in the review and study of the documents pertaining to the this Promissory Note, review of appraisals, credit reports and financial statements, physical inspections, legal review and costs of reserving the monies necessary to fund this loan and potential profits lost because of the Holder’s inability to commit such funds to other projects.
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Article 4
Seniority
| 4.1 | The obligations of the Corporation under this Promissory Note shall be effectively junior to all senior secured indebtedness of the Corporation, pari passu to all other senior indebtedness of the Corporation and senior to all subordinated indebtedness of the Corporation. Upon any Event of Default, the Holder will be entitled to receive, before any distribution or payment is made upon, or set apart with respect to, any indebtedness of the Corporation junior to this Note, an amount equal to the principal amount plus all accrued and unpaid interest thereon and any and all other amounts due hereunder. For the avoidance of doubt, this Promissory Note is junior to (a) that certain convertible promissory note dated on or about the date hereof, in the principal amount of US$756,917.28, in favor of Dunstan Holdings Ltd. and (b) that certain convertible promissory note dated on or about the date hereof, in the principal amount of US$4,153,078.00, in favor of PGC Finco Inc. |
Article 5
Administrative Provisions
| 5.1 | Registered Holder |
The Person in whose name this Promissory Note shall be registered shall be deemed and regarded as the owner and holder hereof for all purposes, and the payment to and/or receipt of the Holder for any Principal Amount or interest hereby evidenced shall be a good discharge of the Corporation for the same, and the Corporation shall not be bound to enter in the register notice of any trust or to enquire into the title of the Holder or to recognize any trust or equity affecting the title hereof save as ordered by some court of competent jurisdiction or as required by statute.
| 5.2 | Transfer |
This Promissory Note is transferable, in whole or in part, at the Holder’s option upon prior written notice to the Corporation, subject in all cases to applicable law.
| 5.3 | Replacement of Promissory Note |
If this Promissory Note shall become mutilated or be lost, stolen or destroyed and in the absence of notice that this Promissory Note has been acquired by a bona fide purchaser, the Corporation in its discretion may issue a new Promissory Note upon surrender and cancellation of the mutilated Promissory Note, or, in the event that this Promissory Note is lost, stolen or destroyed, in lieu of and in substitution for the same, and the substituted Promissory Note shall be in the form hereof. In case of loss, theft or destruction the Holder shall furnish to the Corporation such evidence of such loss, theft or destruction as shall be satisfactory to it in its discretion acting reasonably and shall also furnish an indemnity in amount and form satisfactory to the Corporation in its discretion acting reasonably.
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Article 6
Covenants
| 6.1 | Affirmative Covenants |
The Corporation covenants that the Corporation shall, and shall cause its Affiliates, as applicable, to:
| (a) | Performance Under the Promissory Note. Pay, observe or perform any other covenant, obligation, condition or agreement contained in this Promissory Note; |
| (b) | Preservation of Corporate Existence. Preserve and maintain its and its Affiliates’ corporate existence, rights and privileges in their respective jurisdictions, and qualify and remain qualified as a foreign corporation in good standing in each jurisdiction in which such qualification is required; and |
| (c) | Compliance with Applicable Laws. Comply with all applicable laws of any governmental authority, non-compliance with which could materially adversely affect the business or condition of the Corporation, financial or otherwise, on a consolidated basis, except non-compliance being contested in good faith through appropriate proceedings so long as the Corporation has set up and funded sufficient reserves, if any, required under International Financial Reporting Standards with respect to such items. |
Article 7
Miscellaneous
| 7.1 | Binding Obligation |
This Promissory Note shall constitute a binding obligation of the Corporation as and from the date hereof until the repayment of the Promissory Notes in their entirety in accordance with the terms hereof.
| 7.2 | Time |
Time shall be of the essence of this Promissory Note.
| 7.3 | Governing Law |
This Promissory Note shall be governed by, interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Holder irrevocably attorns and submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matters arising out of this Promissory Note and waives objection to the venue of any proceeding in such court or that court provides an inconvenient forum.
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| 7.4 | Severability |
If any one or more of the provisions or parts thereof contained in this Promissory Note should be or become invalid, illegal or unenforceable, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, severable therefrom and the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed.
| 7.5 | Headings |
The headings of the articles, sections, subsections and clauses of this Promissory Note have been inserted for convenience and reference only and do not define, limit, alter or enlarge the meaning of any provision of this Promissory Note.
| 7.6 | Assignment; Binding Effect |
This Promissory Note may be transferred or assigned by the Corporation, in whole or in part, without the prior written consent of the Holder. Subject thereto, this Promissory Note and all of its provisions shall enure to the benefit of the Holder, its successors and assigns, and shall be binding upon the Corporation and its successors and permitted assigns.
| 7.7 | Right of acceleration |
The Corporation may prepay (or accelerate payment of) the Promissory Note in whole or in part.
| 7.8 | Expenses |
The Corporation will pay all reasonable costs and expenses incurred by the Holder in collecting any amount due, and enforcing its rights and remedies under this Promissory Note and applicable law, including reasonable legal fees and disbursements.
Article 8
Notice
| 8.1 | Notices |
Any notice, direction or other instrument required or permitted to be given to any party hereto shall be in writing and shall be sufficiently given if delivered personally, or transmitted by facsimile tested prior to transmission, or via email to such party, as follows:
| (a) | in the case of the Corporation, to: |
Akanda Corp.
c/o Gowling WLG
100 King St. W, Suite 1600
Toronto, ON M5X 1G5, Canada
Attention: Chris Cooper, CEO
Email: cooper@canadiantowers.ca
| (b) | in the case of the Holder, to the address specified in Section 2.1. |
Any such notice, direction or other instrument, if delivered personally, shall be deemed to have been given and received on the day on which it was delivered, provided that if such day is not a Business Day then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following such day and if transmitted by email, shall be deemed to have been given and received on the day of its transmission, provided that if such day is not a Business Day or if it is transmitted or received after the end of normal business hours then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following the day of such transmission.
Any party hereto may change its address for service from time to time by notice given to each of the other parties hereto in accordance with the foregoing provisions
[Remainder of page intentionally left blank; Signature page follows]
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IN WITNESS WHEREOF the Corporation has duly executed this Promissory Note as of the date first above written.
| AKANDA CORP. | ||
| Per: | /s/ Katie Field | |
| Authorized Signatory | ||
| 1353744 B.C. LTD. | ||
| Per: | /s/ Sandra Wong | |
| Authorized Signatory | ||
Exhibit 10.8
GENERAL SECURITY AGREEMENT
This General Security Agreement is made as of August 19, 2025
| TO: | 1353744 B.C. Ltd. (the “Lender”) |
RECITALS:
A. Akanda Corp. (the “Borrower”) is, or may become, indebted or liable to the Lender pursuant to the terms of the Promissory Note.
B. To secure the payment and performance of the Secured Liabilities, the Borrower has agreed to grant to the Lender the Security Interests in respect of the Collateral in accordance with the terms of this Agreement.
For good and valuable consideration, the receipt and adequacy of which are acknowledged by the Borrower, the Borrower agrees with and in favour of the Lender as follows:
1. Definitions. In this Agreement capitalized terms used but not otherwise defined in this Agreement shall have the meanings given to them in the Promissory Note, and the following terms have the following meanings:
“Accessions”, “Account”, “Chattel Paper”, “Consumer Goods”, “Document of Title”, “Equipment”, “Goods”, “Instrument”, “Intangible”, “Inventory”, “Investment Property”, “Money”, “Proceeds”, Security”, and “Security Entitlement” have the meanings given to them in the PPSA.
“Agreement” means this agreement, including the schedules and recitals to this agreement, as it or they may be amended, supplemented, restated or replaced from time to time, and the expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer to this Agreement and not to any particular section or other portion of this Agreement.
“Books and Records” means all books, records, files, papers, disks, documents and other repositories of data recording in any form or medium, evidencing or relating to the Personal Property of the Borrower which are at any time owned by the Borrower or to which the Borrower (or any Person on the Borrower’s behalf) has access.
“Borrower” has the meaning set out in the recitals hereto.
“Collateral” means all of the present and future:
| (a) | undertaking; and |
| (b) | Personal Property (including any Personal Property that may be described in any schedule to this Agreement or any schedules, documents or listings that the Borrower may from time to time provide to the Lender in connection with this Agreement),of the Borrower (including Books and Records, Contracts, Intellectual Property Rights and Permits), including all such property in which the Borrower now or in the future has any right, title or interest whatsoever, whether owned, leased, licensed, possessed or otherwise held by the Borrower, and all Proceeds thereof, wherever located. |
General Security Agreement
“Contracts” means all contracts and agreements to which the Borrower is at any time a party or pursuant to which the Borrower has at any time acquired rights, and includes (i) all rights of the Borrower to receive money due and to become due to it in connection with a contract or agreement, (ii) all rights of the Borrower to damages arising out of, or for breach or default in respect of, a contract or agreement, and (iii) all rights of the Borrower to perform and exercise all remedies in connection with a contract or agreement.
“Event of Default” means the failure of the Borrower to pay any of the Secured Liabilities when due.
“Intellectual Property Rights” means all industrial and intellectual property rights of the Borrower or in which the Borrower has any right, title or interest, including copyrights, patents, inventions (whether or not patented), trade-marks, get-up and trade dress, industrial designs, integrated circuit topographies, plant breeders’ rights, know how and trade secrets, registrations and applications for registration for any such industrial and intellectual property rights, and all Contracts related to any such industrial and intellectual property rights.
“Promissory Note” means the Promissory Note dated as of August 19, 2025 between the Borrower, as borrower, and the Lender, as lender, as amended, supplemented, restated or replaced from time to time.
“Lender” has the meaning set out in the recitals hereto.
“Permits” means all permits, licences, waivers, exemptions, consents, certificates, authorizations, approvals, franchises, rights-of-way, easements and entitlements that the Borrower has, requires or is required to have, to own, possess or operate any of its property or to operate and carry on any part of its business.
“Person” includes any natural person, corporation, company, limited liability company, unlimited liability company, trust, joint venture, association, incorporated organization, partnership or other entity.
“Personal Property” means personal property and includes Accounts, Chattel Paper, Documents of Title, Equipment, Goods, Instruments, Intangibles, Inventory, Investment Property and Money.
“PPSA” means the Personal Property Security Act (Ontario), as such legislation may be amended, renamed or replaced from time to time, and includes all regulations from time to time made under such legislation.
“Receiver” means a receiver, a manager or a receiver and manager.
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“Secured Liabilities” means all present and future indebtedness, liabilities and obligations of any and every kind, nature and description (whether direct or indirect, joint or several, absolute or contingent, matured or unmatured) of the Borrower to the Lender wherever and however incurred, and any unpaid balance thereof.
“Security Interests” means the security interests created by the Borrower in favour of the Lender under this Agreement.
2. Grant of Security Interests. As general and continuing collateral security for the due payment and performance of the Secured Liabilities, the Borrower pledges, mortgages, charges and assigns (by way of security) to the Lender, and grants to the Lender a security interest in, the Collateral.
3. Limitations on Grant of Security Interests. If the grant of the Security Interests in respect of any Contract, Intellectual Property Right or Permit under Section 2 would result in the termination or breach of such Contract, Intellectual Property Right or Permit or is otherwise prohibited or ineffective (whether by the terms thereof or under applicable law), then such Contract, Intellectual Property Right or Permit shall not be subject to the Security Interests but shall be held in trust by the Borrower for the benefit of the Lender and, on the exercise by the Lender of any of its rights or remedies under this Agreement following an Event of Default shall be assigned by the Borrower as directed by the Lender; provided that: (a) the Security Interests shall attach to such Contract, Intellectual Property Right or Permit, or applicable portion thereof, immediately at such time as the condition causing such termination or breach is remedied, and (b) if a term in a Contract that prohibits or restricts the grant of the Security Interests in the whole of an Account or Chattel Paper forming part of the Collateral is unenforceable against the Lender under applicable law, then the exclusion from the Security Interests set out above shall not apply to such Account or Chattel Paper. In addition, the Security Interests do not attach to Consumer Goods or extend to the last day of the term of any lease or agreement for lease of real property. Such last day shall be held by the Borrower in trust for the Lender and, on the exercise by the Lender of any of its rights or remedies under this Agreement following an Event of Default, shall be assigned by the Borrower as directed by the Lender. For greater certainty, no Intellectual Property Right in any trade-mark, get-up or trade dress is presently assigned to the Lender by sole virtue of the grant of the Security Interests contained in Section 2.
4. Attachment; No Obligation to Advance. The Borrower confirms that value has been given by the Lender to the Borrower, that the Borrower has rights in the Collateral existing at the date of this Agreement and that the Borrower and the Lender have not agreed to postpone the time for attachment of the Security Interests to any of the Collateral. The Security Interests shall have effect and be deemed to be effective whether or not the Secured Liabilities or any part thereof are owing or in existence before or after or upon the date of this Agreement. Neither the execution and delivery of this Agreement nor the provision of any financial accommodation by the Lender shall oblige the Lender to make any financial accommodation or further financial accommodation available to the Borrower or any other Person.
5. Representations and Warranties. The Borrower represents and warrants to the Lender that, as of the date of this Agreement, all of the information set out in Schedule A is accurate and complete.
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6. Covenants. The Borrower covenants and agrees with the Lender that:
| (a) | Further Documentation. The Borrower shall from time to time, at the expense of the Borrower, promptly and duly authorize, execute and deliver such further instruments and documents, and take such further action, as the Lender may request for the purpose of obtaining or preserving the full benefits of, and the rights and powers granted by, this Agreement (including the filing of any financing statements or financing change statements under any applicable legislation with respect to the Security Interests). The Borrower acknowledges that this Agreement has been prepared based on the existing laws in the Province referred to in the “Governing law” section of this Agreement and that a change in such laws, or the laws of other jurisdictions, may require the execution and delivery of different forms of security documentation. Accordingly, the Borrower agrees that the Lender shall have the right to require that this Agreement be amended, supplemented, restated or replaced, and that the Borrower shall immediately on request by the Lender authorize, execute and deliver any such amendment, supplement, restatement or replacement (i) to reflect any changes in such laws, whether arising as a result of statutory amendments, court decisions or otherwise, (ii) to facilitate the creation and registration of appropriate security in all appropriate jurisdictions, or (iii) if the Borrower merges or amalgamates with any other Person or enters into any corporate reorganization, in each case in order to confer on the Lender security interests similar to, and having the same effect as, the Security Interests. |
| (b) | Notices. The Borrower shall advise the Lender promptly, in reasonable detail, of any: |
| (i) | change in the location of the jurisdiction of incorporation or amalgamation, chief executive office or domicile of the Borrower; |
| (ii) | change in the name of the Borrower; |
| (iii) | merger, consolidation or amalgamation of the Borrower with any other Person; or |
| (iv) | additional jurisdiction in which the Borrower carries on business or has tangible Personal Property. |
The Borrower shall not effect or permit any of the changes referred to above unless all filings have been made and all other actions taken that are required in order for the Lender to continue at all times following such change to have a valid and perfected first priority Security Interest in respect of all of the Collateral. Any notice to be provided in accordance with this section shall be made in accordance with the terms of the Promissory Note.
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7. Rights on Event of Default. If an Event of Default has occurred and is continuing, then and in every such case the Security Interests shall become enforceable and the Lender, in addition to any rights now or hereafter existing under applicable law may, personally or by agent, at such time or times as the Lender in its discretion may determine, do any one or more of the following:
| (a) | Rights under PPSA, etc. Exercise all of the rights and remedies granted to secured parties under the PPSA and any other applicable statute, or otherwise available to the Lender by contract, at law or in equity. |
| (b) | Demand Possession. Demand possession of any or all of the Collateral, in which event the Borrower shall, at the expense of the Borrower, immediately cause the Collateral designated by the Lender to be assembled and made available and/or delivered to the Lender at any place designated by the Lender. |
| (c) | Take Possession. Enter on any premises where any Collateral is located and take possession of, disable or remove such Collateral. |
| (d) | Deal with Collateral. Hold, store and keep idle, or operate, lease or otherwise use or permit the use of, any or all of the Collateral for such time and on such terms as the Lender may determine, and demand, collect and retain all earnings and other sums due or to become due from any Person in respect of any of the Collateral. |
| (e) | Carry on Business. Carry on, or concur in the carrying on of, any or all of the business or undertaking of the Borrower and enter on, occupy and use (without charge by the Borrower) any of the premises, buildings, plant and undertaking of, or occupied or used by, the Borrower. |
| (f) | Enforce Collateral. Seize, collect, receive, enforce or otherwise deal with any Collateral in such manner, on such terms and conditions and at such times as the Lender deems advisable. |
| (g) | Dispose of Collateral. Realize on any or all of the Collateral and sell, lease, assign, give options to purchase, or otherwise dispose of and deliver any or all of the Collateral (or contract to do any of the above), in one or more parcels at any public or private sale, at any exchange, broker’s board or office of the Lender or elsewhere, with or without advertising or other formality, except as required by applicable law, on such terms and conditions as the Lender may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery. |
| (h) | Court-Approved Disposition of Collateral. Obtain from any court of competent jurisdiction an order for the sale or foreclosure of any or all of the Collateral. |
| (i) | Purchase by Lender. At any public sale, and to the extent permitted by law on any private sale, bid for and purchase any or all of the Collateral offered for sale and, upon compliance with the terms of such sale, hold, retain, sell or otherwise dispose of such Collateral without any further accountability to the Borrower or any other Person with respect to such holding, retention, sale or other disposition, except as required by law. In any such sale to the Lender, the Lender may, for the purpose of making payment for all or any part of the Collateral so purchased, use any claim for any or all of the Secured Liabilities then due and payable to it as a credit against the purchase price. |
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| (j) | Collect Accounts. Notify (whether in its own name or in the name of the Borrower) the account Borrowers under any Accounts of the Borrower of the assignment of such Accounts to the Lender and direct such account Borrowers to make payment of all amounts due or to become due to the Borrower in respect of such Accounts directly to the Lender and, upon such notification and at the expense of the Borrower, enforce collection of any such Accounts, and adjust, settle or compromise the amount or payment of such Accounts, in such manner and to such extent as the Lender deems appropriate in the circumstances. |
| (k) | Transfer of Collateral. Transfer any Collateral that is Investment Property into the name of the Lender or its nominee. |
| (l) | Voting. Vote any or all of the Securities (whether or not transferred to the Lender or its nominee) and Security Entitlements that are Collateral and give or withhold all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof. |
| (m) | Exercise Other Rights. Exercise any and all rights, privileges, entitlements and options pertaining to any Collateral that is Investment Property as if the Lender were the absolute owner of such Investment Property. |
| (n) | Dealing with Contracts and Permits. Deal with any and all Contracts and Permits to the same extent as the Borrower might (including the enforcement, realization, sale, assignment, transfer and requirement for continued performance), all on such terms and conditions and at such time or times as may seem advisable to the Lender. |
| (o) | Payment of Liabilities. Pay any liability secured by any security interest against any Collateral. The Borrower shall immediately on demand reimburse the Lender for all such payments and, until paid, any such reimbursement obligation shall form part of the Secured Liabilities and shall be secured by the Security Interests. |
| (p) | Appoint Receiver. Appoint by instrument in writing one or more Receivers of the Borrower or any or all of the Collateral with such rights, powers and authority (including any or all of the rights, powers and authority of the Lender under this Agreement) as may be provided for in the instrument of appointment or any supplemental instrument, and remove and replace any such Receiver from time to time. To the extent permitted by applicable law, any Receiver appointed by the Lender shall (for purposes relating to responsibility for the Receiver’s acts or omissions) be considered to be the agent of the Borrower and not of the Lender. |
| (q) | Court-Appointed Receiver. Obtain from any court of competent jurisdiction an order for the appointment of a Receiver of the Borrower or of any or all of the Collateral. |
The Lender may exercise any or all of the foregoing rights and remedies without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except as required by applicable law) to or on the Borrower or any other Person, and the Borrower hereby waives each such demand, presentment, protest, advertisement and notice to the extent permitted by applicable law. None of the above rights or remedies shall be exclusive of or dependent on or merge in any other right or remedy, and one or more of such rights and remedies may be exercised independently or in combination from time to time. The Borrower acknowledges and agrees that any action taken by the Lender hereunder following the occurrence and during the continuance of an Event of Default shall not be rendered invalid or ineffective as a result of the curing of the Event of Default on which such action was based.
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8. Continuing Liability of Borrower. The Borrower shall remain liable for any Secured Liabilities that are outstanding following realization of all or any part of the Collateral and the application of the Proceeds thereof.
9. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
10. Dealings by Lender. The Lender shall not be obliged to exhaust its recourse against the Borrower or any other Person or against any other security it may hold in respect of the Secured Liabilities or any part thereof before realizing upon or otherwise dealing with the Collateral in such manner as the Lender may consider desirable. The Lender may grant extensions of time and other indulgences, take and give up security, accept compositions, grant releases and discharges and otherwise deal with the Borrower and any other Person, and with any or all of the Collateral, and with other security and sureties, as the Lender may see fit, all without prejudice to the Secured Liabilities or to the rights and remedies of the Lender under this Agreement. The powers conferred on the Lender under this Agreement are solely to protect the interests of the Lender in the Collateral and shall not impose any duty upon the Lender to exercise any such powers.
11. Additional Security. This Agreement is in addition to, and not in substitution of, any and all other security previously or concurrently delivered by the Borrower or any other Person to the Lender, all of which other security shall remain in full force and effect.
12. Governing law; Attornment. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. Without prejudice to the ability of the Lender to enforce this Agreement in any other proper jurisdiction, the Borrower irrevocably submits and attorns to the non-exclusive jurisdiction of the courts of such province. To the extent permitted by applicable law, the Borrower irrevocably waives any objection (including any claim of inconvenient forum) that it may now or hereafter have to the venue of any legal proceeding arising out of or relating to this Agreement in the courts of such Province.
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13. Amalgamation. The Borrower acknowledges that if it amalgamates or merges with any other corporation or corporations, then (i) the Collateral and the Security Interests shall extend to and include all the property and assets of the amalgamated corporation and to any property or assets of the amalgamated corporation thereafter owned or acquired, (ii) the term “Borrower”, where used in this Agreement, shall extend to and include the amalgamated corporation, and (iii) the term “Secured Liabilities”, where used in this Agreement, shall extend to and include the Secured Liabilities of the amalgamated corporation.
14. Acknowledgment of Receipt/Waiver. The Borrower acknowledges receipt of an executed copy of this Agreement and, to the extent permitted by applicable law, waives the right to receive a copy of any financing statement or financing change statement registered in connection with this Agreement or any verification statement issued with respect to any such financing statement or financing change statement.
15. Successors and Assigns. This Agreement shall extend to and enure to the benefit of the parties hereto and their successors and assigns and shall be binding upon the parties and their successors and assigns.
16. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same instrument.
17. Electronic Signature. Delivery of an executed signature page to this Agreement by the Borrower by facsimile or other electronic form of transmission shall be as effective as delivery by the Borrower of a manually executed copy of this Agreement by the Borrower.
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IN WITNESS WHEREOF the undersigned has caused this Agreement to be duly executed as of the date first written above.
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|
AKANDA CORP. | |
| By: | /s/ Jatinder Dhaliwal | |
| Name: | Jatinder Dhaliwal | |
| Title: | Director | |
Exhibit 99.1
AKANDA CORP. ANNOUNCES CLOSING OF SHARE EXCHANGE WITH FIRST TOWERS AND FIBER CORP.
First Towers develops, constructs and owns telecommunications infrastructure in Mexico
Akanda Reaffirms its Continued Focus on the Growth of its Pre-Revenue Canadian Farming Property in British Columbia, at which the Company Plans to Develop THC and CBD Facilities
Toronto, Ontario, August 22, 2025 (Newsfile) - Akanda Corp. (“Akanda” or the “Company”) (NASDAQ: AKAN) today announced that it consummated the transactions pursuant to the Share Exchange Agreement, dated March 5, 2025 and as amended to date, with First Towers & Fiber Corp., pursuant to which all of the common shares of First Towers have been acquired by Akanda and in exchange, Akanda will issue to all but one of the former First Towers shareholders a combination of its convertible Class A Special Shares and convertible Class B Special Shares, as, if and when Akanda receives post-closing shareholder approval to issue the Class A Special Shares and Class B Special Shares. In addition, Akanda is issuing a 24-month promissory note to one former First Towers shareholder equal to the value of its First Towers shares acquired by Akanda, and is assuming the existing indebtedness and other liabilities of First Towers.
As a result of the closing, which was effective on August 21, 2025 but dated as of August 19, 2025, First Towers became a wholly owned subsidiary of the Company (the “Transaction”).
Akanda did not issue any of its common shares as of the closing of the Transaction, as originally contemplated by the Share Exchange Agreement. The Class A Special Shares expected to be issued to the former First Towers shareholders, which would be convertible into no more than 19.9% of Akanda’s common shares issued and outstanding at closing, may only be issued after it receives requisite shareholder approval, which is being sought at its upcoming August 29, 2025 Special Meeting of Shareholders. Akanda intends to hold a second special meeting of shareholders to seek approval for the issuance of the Class B Special Shares as part of the Transaction, which are expected to be convertible into the remaining common shares otherwise issuable to the former First Towers shareholders pursuant to the terms of the Share Exchange Agreement.
The Company expects that at the closing of the Transaction, its common shares will continue to be listed on the Nasdaq Capital Market under AKAN.
Other Information
Additional information about the closing of the Transaction, including amendments to the Share Exchange Agreement, will be provided in a Report on Form 6-K to be filed by Akanda with the U.S. Securities and Exchange Commission and available at www.sec.gov.
Reaffirmation of Existing Akanda Business
The Company reaffirms its commitment to continue its focus on the growth of its pre-revenue Canadian farming property in British Columbia, at which the Company plans to develop THC and CBD facilities. To date, the Company has not yet cultivated any product from this land.
Forward-Looking Statements
This press release contains “forward-looking statements.” Such statements which are not purely historical (including, but not limited to statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “intends,” “would,” “could” and “estimates”) are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to, post-closing obligations of the Company with respect to the Transaction.
Important factors, among others, that may affect actual results or outcomes include: (i) changes in domestic and foreign business, market, financial, political and legal conditions; (ii) risks that could adversely affect the combined company or the expected benefits of the Transaction or that the approval of the stockholders of the Company to authorize and issue the Class A Special Shares and Class B Special Shares, or to approve the Transaction, is not obtained; (iii) failure to realize the anticipated benefits of the Transaction; (iv) the limited operating history of each of the Company and First Towers; (v) the ability of each of the Company and First Towers to grow and manage its growth effectively; (vi) the ability of the combined company to execute their business plans; (vii) estimates of the size of the markets for the combined company’s products and services; (viii) the rate and degree of market acceptance of the combined company’s products and services; (ix) the Company’s ability to identify and integrate acquisitions; (x) future investments in technology and operations; (xi) potential litigation involving the combined company; (xii) risks relating to the uncertainty of the projected financial information with respect to First Towers; (xiii) the effects of competition on the combined company’s business; (xiv) developments and changes in laws and regulations; (xv) the impact of significant investigative, regulatory or legal proceedings; (xvi) general economic and market conditions impacting demand for the combined company’s products and services; (xvii) the ability to meet Nasdaq’s listing standards following the consummation of the Transaction; (xviii) the ability the combined company to issue equity or equity-linked securities in connection with the Transaction or in the future; and (xix) such other risks and uncertainties as are discussed in the Company’s Annual Report on Form 20-F filed with the SEC or in other documents the Company files from time to time with the SEC. Other factors include the possibility that the Company fails to receive required security holder approvals, or the failure of other post-closing conditions. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
Actual results could differ from those projected in any forward-looking statements due to numerous factors. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements, except as required by law. Although the Company believes that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in the Company’s reports and statements filed from time-to-time with the Securities and Exchange Commission.