Cardiol Therapeutics Inc 6-K, filed Feb 2, 2026
Cardiol Therapeutics Inc. (CRDL)
About this 6-K
Cardiol Therapeutics Inc filed this 6-K on February 2, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR lSd-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2026
Commission File Number: 001-40712
Cardiol Therapeutics Inc.
(Translation of registrant's name into English)
602-2265 Upper Middle Road East, Oakville, Ontario, Canada L6H 0GS
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
¨ Form 20-F x Form 40-F
SUBMITTED HEREWITH
Exhibits
| Exhibit | Description | |
| 99.1 | Underwriting Agreement dated January 23, 2026 | |
| 99.2 | Warrant Indenture dated January 23, 2026 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of I 934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CARDIOL THERAPEUTICS INC. | ||
| (Registrant) | ||
| Date: February 2, 2026 | By: | /s/ Chris Waddick |
| Chris Waddick | ||
| Title: | Chief Financial Officer | |
Exhibit 99.1
Execution Version
UNDERWRITING AGREEMENT
January 23, 2026
Cardiol Therapeutics Inc.
602-2265 Upper Middle Road East
Oakville, Ontario
Canada L6H 0G5
Attention: David Elsley, President & Chief Executive Officer
Canaccord Genuity Corp. (the “Underwriter”), as sole underwriter and bookrunner, understands that Cardiol Therapeutics Inc. (the “Corporation”) proposes to issue and sell, and the Underwriter hereby offers to purchase, on a “bought deal” private placement basis, or find Substituted Purchasers (as defined below) to purchase on their behalf, 11,423,078 units (the “Offered Units”) of the Corporation at a price of $1.30 per Offered Unit for aggregate gross proceeds of $14,850,001.40 pursuant to Part 5A NI 45-106 (as defined below) and Coordinated Blanket Order 45-935 - Exemptions from Certain Conditions of the Listed Issuer Financing Exemption of the Canadian Securities Administrators (collectively, the “Listed Issuer Financing Exemption”) or other available prospectus exemptions under NI 45-106 (the “Offering”). The number of Offered Units includes 1,038,462 Offered Units to be issued and sold by the Corporation pursuant to the exercise by the Underwriter of the option granted to the Underwriter under the terms of the Engagement Letter.
Each Offered Unit consists of one Common Share (as defined herein) (a “Unit Share”) and one-half (½) Common Share purchase warrant of the Corporation (a “Warrant”). The Warrants will be governed by a warrant indenture between the Corporation and the Warrant Agent (as defined herein) dated the Closing Date pursuant to which the Warrants will be issued and providing for the definitive terms of the Warrants (the “Warrant Indenture”). Each Warrant shall entitle the holder thereof to acquire one additional Common Share (a “Warrant Share”) at a price of $1.75 until the Expiry Time (as defined herein).
The Underwriter shall have the right to solicit orders and obtain substituted purchasers (the “Substituted Purchasers”) in place of the Underwriter in which case (a) the Corporation will sell such Offered Units (or part thereof) to such Substituted Purchasers; and (b) the obligation of the Underwriter to purchase the Offered Units from the Corporation shall be reduced by the number of Offered Units purchased by the Substituted Purchasers. It is understood that the Underwriter agrees to purchase or cause to be purchased the Offered Units, and that this commitment is not subject to the Underwriter being able to arrange Substituted Purchasers. Any reference in this Agreement hereafter to “Purchasers” shall be taken to be a reference to the Substituted Purchasers, if any, and the Underwriter, as the initial committed Purchaser.
The Offered Units will be distributed to the Underwriter or to the Substituted Purchasers on a private placement basis. To the extent that Substituted Purchasers purchase the Offered Units, the Underwriter shall not be obligated to purchase the Offered Units so purchased by such Substituted Purchaser. For greater certainty, to the extent that the Underwriter arranges for Substituted Purchasers to purchase the Offered Units, and such Offered Units are so purchased, the Underwriter will be acting as the Corporation’s exclusive agent to offer the Offered Units and to the extent that Substituted Purchasers acquire any of the Offered Units, the Underwriter shall not be deemed to have acquired (at any time) or have any obligation to acquire any of such Offered Units, but in respect of which, the Commission (as defined below) shall be payable.
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In consideration of the services to be rendered by the Underwriter hereunder in connection with the Offering, the Underwriter will receive the Underwriter’s Commission (as defined herein) as set out in Section 9 of this Agreement. The obligation of the Corporation to pay the Underwriter’s Commission shall arise at the Closing Time and the Underwriter’s Commission shall be fully earned by the Underwriter upon the completion of the Offering.
The Underwriter shall be entitled to appoint other registered dealers acceptable to the Corporation (“Selling Firms”), acting reasonably, as agents to assist in the Offering and the Underwriter shall determine the remuneration payable to such Selling Firms, such remuneration to be the sole responsibility of the Underwriter.
DEFINITIONS
In this Agreement, in addition to the terms defined above, the following terms shall have the following meanings:
“Agreement” means this agreement, including all schedules hereto, as amended or supplemented from time to time;
“Anti-Corruption Laws” has the meaning ascribed to such term in Section 4(a)(lx);
“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;
“Canadian Securities Laws” means the Securities Laws of each of the provinces and territories of Canada;
“CDS” means CDS Clearing and Depository Services Inc.;
“CIPO” has the meaning ascribed thereto in Section 4(a)(xl);
“Closing” means the completion of the purchase and sale of the Offered Units, as contemplated by this Agreement;
“Closing Date” means January 23, 2026, or such other date as may be agreed upon by the Corporation and the Underwriter;
“Closing Time” means 8:00 a.m. (Toronto time) on the Closing Date, or such other time as may be agreed upon by the Corporation and the Underwriter;
“Common Shares” means the common shares in the capital of the Corporation;
“Corporation” has the meaning ascribed to such term above;
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“Dalton” has the meaning ascribed thereto in Section 4(a)(lvii);
“Debt Instrument” means any note, loan, bond, debenture, indenture, promissory note or other instrument evidencing indebtedness (demand or otherwise) for borrowed money to which the Corporation is a party or otherwise bound;
“Designated Jurisdictions” means, collectively, each of the provinces and territories of Canada, other than Quebec, and such other jurisdictions as the Corporation and the Underwriter may agree;
“Directed Selling Efforts” means “directed selling efforts” as defined in Rule 902(c) of Regulation S under the U.S. Securities Act;
“Distribution Compliance Period” means the 40-day period that begins on the later of (i) the date the Offered Units are first offered to persons other than Distributors in reliance on Regulation S or (ii) the Closing Date; provided that, all offers and sales by a Distributor of an unsold allotment or subscription shall be deemed to be made during the Distribution Compliance Period;
“Distributor” means any underwriter, dealer, or other person who participates, pursuant to a contractual arrangement, in the distribution of the Offered Units offered or sold in reliance on Regulation S under the U.S. Securities Act;
“DPSP” means a deferred profit sharing plan as defined for purposes of the Tax Act;
“EMA” has the meaning ascribed thereto in Section 4(a)(xliv);
“Employee Plans” has the meaning ascribed to such term in Section 4(a)(lv);
“Engagement Letter” means the engagement letter between the Underwriter and the Corporation dated January 16, 2025;
“Environmental Laws” has the meaning ascribed thereto in Section 4(a)(liii);
“Expiry Time” means 5:00 p.m. (Toronto time) on January 23, 2028;
“FCPA” has the meaning ascribed to such term in Section 4(a)(lx);
“FDA” has the meaning ascribed to such term in Section 4(a)(xxxii);
“FHSA” means a first home savings account as defined for purposes of the Tax Act;
“Financial Statements” means (i) the unaudited consolidated condensed interim financial statements for the three and nine month period ended September 30, 2025, and (ii) the audited consolidated financial statements of the Corporation for the years ended December 31, 2024 and 2023, together with the notes thereto and the report of the Corporation’s auditors thereon;
“Governmental Authority” means any governmental authority and includes, without limitation, any national or federal government, province, state, municipality or other political subdivision of any of the foregoing, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing;
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“Gross Proceeds” means the gross proceeds from the Offering;
“Hazardous Materials” has the meaning ascribed thereto in Section 4(a)(liii);
“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board;
“Indemnitor” has the meaning ascribed to such terms in Section 12;
“Intellectual Property” has the meaning ascribed thereto in Section 4(a)(xl);
“Investor Questionnaire” means the investor questionnaire in the form agreed to by the Underwriter and the Corporation prior to the date hereof pursuant to which Purchasers shall subscribe for Offered Units;
“IT Systems and Data” has the meaning ascribed to such term in Section 4(a)(lxiii);
“Licenses” has the meaning ascribed thereto in Section 4(a)(lvii);
“Listed Issuer Financing Exemption” has the meaning ascribed to such term on the face page of this Agreement;
“Material Adverse Effect” means the effect resulting from any change (including a decision to implement such a change made by the board of directors or by senior management who believe that confirmation of the decision of the board of directors is probable), event, fact, violation, inaccuracy, circumstance, or state of affairs, individually or in the aggregate, that is or would reasonably be expected to be, materially adverse to the business, assets (including intangible assets), liabilities, capitalization, ownership, prospects, or condition (financial or otherwise) of the Corporation;
“Material Agreement” means any Debt Instrument, contract, commitment, joint venture, subscription or investment agreement, lease or other documents or agreement (written or oral), to which the Corporation is a party or otherwise bound and which is material to the Corporation, including this Agreement;
“misrepresentation”, “material fact”, “material change”, “affiliate”, “associate”, and “distribution” have the respective meanings ascribed thereto in the Securities Act (Ontario) in effect on the date hereof;
“Money Laundering Laws” means, for the relevant Person, any applicable anti-money laundering laws, including the Bank Secrecy Act of 1970, as amended by the USA Patriot Act of 2001, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), Part II.1 of the Criminal Code (Canada) and, in each case, the rules and regulations promulgated thereunder, and the anti-money laundering laws of the various jurisdictions in which the Person operates, including any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority;
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“NI 45-102” means National Instrument 45-102 – Resale of Securities;
“NI 45-106” means National Instrument 45-106 – Prospectus Exemptions;
“NI 51-102” means National Instrument 51-102 – Continuous Disclosure Obligations;
“OBCA” means the Business Corporations Act (Ontario);
“Offered Units” has the meaning ascribed to such term above;
“Offering” has the meaning ascribed to such term above;
“Offering Document” means the Form 45-106F19 Listed Issuer Financing Document dated January 16, 2026 prepared in connection with the Offering and filed on the Corporation’s website and on the Corporation’s profile on SEDAR+;
“Offshore Transaction” means an “offshore transaction” as that term is defined in Rule 902(h) of Regulation S;
“Person” includes any individual (whether acting as an executor, trustee administrator, legal representative or otherwise), corporation, firm, partnership, sole proprietorship, syndicate, joint venture, trustee, trust, unincorporated organization or association, and pronouns have a similar extended meaning;
“Personnel” has the meaning ascribed to such terms in Section 12;
“Public Record” means all information contained in any press release, material change report (excluding any confidential material change report), financial statements, management’s discussion and analysis, annual information form, management information circular, business acquisition report, or other document which has been publicly filed by or on behalf of the Corporation pursuant to applicable Securities Laws with the securities regulators in each of the Designated Jurisdictions or otherwise by or on behalf of the Corporation since its date of incorporation;
“Purchasers” means the persons in the Designated Jurisdictions who, as purchasers or beneficial purchasers, acquire the Offered Units pursuant to the Offering;
“RDSP” means a registered disability savings plan as defined for purposes of the Tax Act;
“Registered Plan” means a RRSP, RRIF, RESP, RDSP, FHSA or TFSA;
“Regulation S” means Regulation S under the U.S. Securities Act;
“RESP” means a registered education savings plan as defined for purposes of the Tax Act;
“RRIF” means a registered retirement income fund as defined for purposes of the Tax Act;
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“RRSP” means a registered retirement savings plan as defined for purposes of the Tax Act;
“Sanctions” has the meaning ascribed to such term in Section 4(a)(lxi);
“Sanctioned Country” has the meaning ascribed to such term in Section 4(a)(lxi);
“Securities Laws” means, unless the context otherwise requires, all applicable securities laws in each of the Designated Jurisdictions, the respective regulations made thereunder, together with applicable published fee schedules, prescribed forms, policy statements, multilateral and national instruments, orders, blanket rulings, notices and other regulatory instruments of the Securities Regulators;
“Securities Regulators” means, collectively, the securities regulators or other securities regulatory authorities in the Designated Jurisdictions (including the TSX);
“Selling Firms” has the meaning ascribed to such term above;
“SR&ED” has the meaning ascribed to such term in Section 4(a)(xxxvii);
“subsidiary” has the meaning ascribed to such term in the Securities Act (Ontario);
“Substituted Purchasers” has the meaning ascribed to such term on the face page of this Agreement;
“Tax Act” means the Income Tax Act (Canada) and the regulations thereunder;
“TFSA” means a tax-free savings account as defined for purposes of the Tax Act;
“TSX” means the Toronto Stock Exchange;
“Underwriter” has the meaning ascribed to such term above;
“Underwriter’s Commission” has the meaning ascribed to such term in Section 9;
“Underwriter’s Expenses” has the meaning ascribed to such term in Section 10;
“Unit Share” has the meaning ascribed to such term on the face page of this Agreement;
“United States” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
“U.S. Person” means a “U.S. person” as such term is defined in Rule 902(k) of Regulation S under the U.S. Securities Act;
“USPTO” has the meaning ascribed thereto in Section 4(a)(xl);
“U.S. Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
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“Warrant” has the meaning ascribed to such term on the face page of this Agreement;
“Warrant Agent” means Odyssey Trust Company, in its capacity as warrant agent in respect of the Warrants at its principal office in Toronto, Ontario;
“Warrant Indenture” has the meaning ascribed to such term on the face page of this Agreement; and
“Warrant Shares” has the meaning ascribed to such term on the face page of this Agreement.
TERMS AND CONDITIONS
| 1. | (a) | Offering and Sale of the Offered Units. Upon and subject to the terms and conditions set forth herein, the Underwriter hereby agrees to purchase from the Corporation, and the Corporation hereby agrees to issue and sell to the Underwriter, all (but not less than all) of the Offered Units at the Closing Time at a price of $1.30 per Offered Unit, for aggregate gross proceeds of $14,850,001.40. The Underwriter will have the right to arrange for Substituted Purchasers to purchase the Offered Units and to the extent that Substituted Purchasers purchase Offered Units, the obligation of the Underwriter to do so will be reduced by the number of Offered Units purchased by the Substituted Purchasers from the Corporation. |
| (b) | Filings. The Corporation undertakes to file or cause to be filed all forms or undertakings required to be filed by the Corporation in connection with the issue and sale of the Offered Units such that the distribution of the Offered Units may lawfully occur without the necessity of filing a prospectus or a registration statement in Canada or elsewhere, and the Underwriter undertakes to use its best efforts to cause Purchasers to complete any forms required by Securities Laws or other applicable securities laws. All fees payable in connection with such filings under all applicable Securities Laws shall be at the expense of the Corporation. |
| (c) | No Offering Memorandum. Neither the Corporation nor the Underwriter shall: (i) provide to prospective Purchasers any document or other material or information that would constitute an offering memorandum within the meaning of Canadian Securities Law except for the Offering Document; or (ii) engage in any form of Directed Selling Efforts in connection with the offer and sale of the Offered Units. |
| (d) | U.S. Matters. Each of the Corporation and the Underwriter acknowledge and agree that the Offered Units, Unit Shares, Warrants and Warrant Shares have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and may be offered and sold only in transactions not subject to the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. Each of the Corporation and the Underwriter agree that all offers and sales of Offered Units have been and will be made in an Offshore Transaction, in accordance with Rule 903 of Regulation S under the U.S. Securities Act. |
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| 2. | (a) | Material Changes. Until the Closing Time, the Corporation shall promptly: |
| (i) | notify the Underwriter in writing if the Corporation becomes aware of any material fact not previously disclosed, any material change or change in a material fact related to the Corporation (in any case, whether actual, anticipated, or to its knowledge, contemplated or threatened) or any event or development that would have a Material Adverse Effect or that would result in a material change or change in a material fact related to the disclosure in the Offering Document; |
| (ii) | notify the Underwriter in writing of the full particulars of any actual, anticipated, or, to the knowledge of the Corporation, contemplated, threatened or prospective material change or change in material fact referred to in Section 2(a)(i) above; |
| (iii) | if required to do so, issue or file promptly and, in any event, within all applicable time limitation periods with the applicable Securities Regulators in Canada, such press release or document as may be required under Canadian Securities Laws and shall comply with all other applicable filing and other requirements under Canadian Securities Laws; and |
| (iv) | in good faith discuss with the Underwriter within a reasonable amount of time any circumstance or event that is of such a nature that there is or ought to be consideration given as to whether there may be a material change or change in a material fact described in Sections 2(a)(i) or (ii) above. |
| 3. | (a) | Covenants of the Corporation. The Corporation hereby covenants to the Underwriter and to the Purchasers and their successors and permitted assigns, and acknowledges that each of them is relying on such covenants in connection with the transactions contemplated by this Agreement, that the Corporation (including its successors and assigns if applicable) will: |
| (i) | allow the Underwriter and its representatives to conduct all due diligence regarding the Corporation which the Underwriter may reasonably require to be conducted prior to the Closing Date, including making its senior management and legal counsel available to answer any questions which the Underwriter or its counsel may have and to participate in one or more due diligence sessions to be held prior to Closing; |
| (ii) | use its commercially reasonable efforts to fulfil or cause to be fulfilled, at or prior to the Closing Time, each of the conditions required to be fulfilled by it as set out in Section 6; |
| (iii) | at the Closing Time, duly execute and deliver this Agreement and the Warrant Indenture and comply with and satisfy all terms, conditions and covenants herein and therein contained to be complied with or satisfied by it in all material respects; |
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| (iv) | use its commercially reasonable efforts to obtain all consents, approvals, permits, authorizations or filings as may be required under Securities Laws or otherwise necessary for the execution and delivery of and the performance by the Corporation of its obligations hereunder (other than customary post-closing filings required to be submitted within the applicable time frame pursuant to Securities Laws and the rules of the TSX); |
| (v) | subject to applicable law, obtain the prior approval of the Underwriter as to the content and form of any press release relating to the Offering, such approval not to be unreasonably conditioned, withheld, or delayed; if required by Securities Laws, any press release announcing or otherwise referring to the Offering shall comply with the requirements of the U.S. Securities Act and Rule 135e under the U.S. Securities Act; |
| (vi) | following the Closing Date, use the net proceeds of the Offering substantially in the manner described in the Offering Document; |
| (vii) | ensure that the Unit Shares, on payment therefor, are duly and validly created, authorized and issued as fully-paid and non-assessable Common Shares; |
| (viii) | ensure that the Warrants, when paid for, are duly and validly created, authorized and issued, and have the attributes corresponding to the description thereof set forth in this Agreement and the Warrant Indenture; |
| (ix) | ensure that at all times prior to the Expiry Time, sufficient Warrant Shares are allotted and reserved for issuance upon the due and proper exercise of the Warrants. The Warrant Shares, upon issuance in accordance with the terms of the Warrant Indenture and when paid for, shall be duly and validly authorized and issued as fully paid and non-assessable Common Shares; |
| (x) | ensure that, upon issuance, the Unit Shares are listed and posted for trading on the TSX; |
| (xi) | for a period of 24 months from the Closing Date, use its commercially reasonable efforts to maintain (i) the listing of the Common Shares on the TSX or the Nasdaq Capital Market LLC (“NASDAQ”) and (ii) the Corporation’s status as a “reporting issuer” (or the equivalent thereof) not in default of the requirements of applicable Securities Laws, provided that each of the foregoing requirements (i) and (ii) is subject to the obligations of the directors to comply with their fiduciary duties to the Corporation and shall not prevent the Corporation from completing a merger, amalgamation, arrangement, take-over bid, going private transaction or other similar transaction involving the purchase or sale of all of the outstanding Common Shares (including the Unit Shares) in compliance with all applicable corporate laws and Canadian Securities Laws; |
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| (xii) | execute and deliver or file with the Securities Regulators as required all forms, notices and certificates relating to the Offering required to be filed pursuant to the Securities Laws in the time required by applicable Securities Laws, including all forms, notices, offering memoranda, certificates, and any such documents required to permit and enable the Offered Units to be lawfully distributed on an exempt basis in the Designated Jurisdictions; and |
| (xiii) | promptly notify the Underwriter of the receipt by the Corporation of any notice by any judicial or regulatory authority or any stock exchange, including the TSX, requesting any material information or any meeting or hearing relating to the Corporation or the Offering. |
| 4. | (a) | Representations and Warranties of the Corporation. The Corporation represents and warrants to the Underwriter and to the Purchasers, and acknowledges that each of them is relying upon such representations and warranties in connection with the transactions contemplated by this Agreement, that: |
| (i) | the Corporation is a corporation duly formed and validly existing under the OBCA, has all requisite corporate power and corporate authority and is duly qualified, and is not in violation of its constating documents or in material breach or default in the performance of or observance of any obligation, agreement, covenant or condition contained in any Material Agreement and the Corporation is not a party to or otherwise bound by any instrument or agreement which restricts or otherwise conflicts with the performance by the Corporation of its obligations under this Agreement. Neither the Corporation nor, to the knowledge of the Corporation, any other person, has taken any steps or proceedings, voluntary or otherwise, requiring or authorizing the Corporation’s dissolution or winding up. |
| (ii) | the Corporation holds or has applied for all permits, licences, registrations, qualifications, consents and authorizations necessary or required to carry on its business or activities as currently conducted and to own or lease and to operate its properties, assets and related business and operations and to carry out its obligations under the Material Agreements to which it is a party, except where any such failure to be so qualified or to hold, own or lease such items would not reasonably be expected to have a Material Adverse Effect, and the Offering (including the proposed use of proceeds) will not have any adverse impact on any such permits, licences, registrations, qualifications, consents and authorizations nor require the Corporation to obtain any new permits, licences, registrations, qualifications, consents or authorizations. |
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| (iii) | the Corporation does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any corporation or have any equity interest in any corporation, firm, partnership, joint venture, association or other entity, other than those identified in the Public Record. Each subsidiary of the Corporation has been duly incorporated, is validly existing and in good standing under the laws of the jurisdiction of its formation, has the corporate or other similar power and capacity to own its property and to conduct its business as described in the Public Record and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification. The Corporation is the direct or indirect registered and beneficial owner of all of the issued and outstanding shares and other voting securities of each of its subsidiaries, free and clear of all encumbrances, liens, mortgages, hypothecations, security interests, charges or adverse interests whatsoever. None of the Corporation’s subsidiaries nor, to the knowledge of the Corporation, any other person, has taken any steps or proceedings, voluntary or otherwise, requiring or authorizing such subsidiaries’ dissolution or winding up. No subsidiary of the Corporation is prohibited or restricted, directly or indirectly, from paying dividends to the Corporation, or from making any other distribution with respect to such subsidiary’s equity securities or from repaying to the Company or any other subsidiary of the Corporation any amounts that may from time to time become due under any loans or advances to such subsidiary from the Corporation or from transferring any property or assets to the Company or to any other subsidiary; |
| (iv) | the Corporation has all requisite corporate power and capacity to enter into this Agreement and the Warrant Indenture and to perform the transactions contemplated herein and therein, including, without limitation, to issue the Offered Units; |
| (v) | the Corporation has conducted and is conducting its business in material compliance with all applicable laws and regulations of the Province of Ontario; the Corporation has not received a written notice of non-compliance nor does it know of, nor have reasonable grounds to know of, any facts that could give rise to a notice of non-compliance with any such laws and regulations which would have a Material Adverse Effect; |
| (vi) | the Corporation is currently a “reporting issuer” in each of the provinces and territories of Canada and is in compliance, in all material respects, with all of its obligations under applicable Canadian Securities Laws, and is not included on a list of defaulting reporting issuers maintained by Securities Regulators in any of the Designated Jurisdictions in Canada; the Corporation has not, since January 1, 2025, been the subject of any investigation by any stock exchange (including the TSX and NASDAQ) or any Securities Regulator; the Corporation is current with all filings required to be made by it under Canadian Securities Laws and other laws and is not aware of any material deficiencies in the filing of any documents or reports with any Securities Regulators in Canada, and there is no material change relating to the Corporation which has occurred and with respect to which the requisite news release or material change report has not been filed with the Securities Regulators in Canada; |
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| (vii) | all documents filed by the Corporation pursuant to Canadian Securities Laws and the rules and regulations of the TSX, including all continuous disclosure documents, as of their respective dates, were true and correct in all material respects and did not contain any misrepresentation at the time of their respective filings, there has not occurred any Material Adverse Effect which has not been publicly disclosed and the Corporation has not made any confidential material change report filings with the TSX or any Securities Regulator in Canada that are still maintained on a confidential basis; |
| (viii) | the Common Shares are listed and posted for trading on the TSX and NASDAQ and all necessary notices and filings have been made with and all necessary consents, approvals, and authorizations obtained from the TSX to ensure that the Unit Shares and Warrant Shares will be posted for trading on the TSX upon their issuance; |
| (ix) | the Unit Shares, the Warrants and the Warrant Shares will be qualified investments for the purposes of the Tax Act at the time of their acquisition under the Offering for trusts governed by a Registered Plan or a DPSP, provided that (A) in the case of the Unit Shares and Warrant Shares, the Unit Shares or the Warrant Shares, as applicable, are listed on a “designated stock exchange” for the purposes of the Tax Act (which currently includes the TSX), or the Corporation is a “public corporation” other than a “mortgage investment corporation” (each as defined in the Tax Act), and (B) in the case of the Warrants, the Warrant Shares acquired on the due exercise of the Warrants in accordance with the terms and conditions of the Warrant Indenture are qualified investments as described in (A) above, and neither the Corporation, nor any person with whom the Corporation does not deal at arm’s length for the purposes of the Tax Act, is an annuitant, a beneficiary, an employer or a subscriber under, or a holder of, such Registered Plan or DPSP; |
| (x) | there are no material actions, suits, judgments, investigations, inquiries or proceedings of any kind whatsoever outstanding or, to the best of the Corporation’s knowledge, pending or threatened against or affecting the Corporation or any of its directors, officers or employees, at law or in equity before or by any third party commission, board, bureau or agency of any kind whatsoever and the Corporation is not subject to any judgment, order, writ, injunction, decree, award, rule, policy or regulation of any Governmental Authority, which, either separately or in the aggregate, may have a Material Adverse Effect or that would materially adversely affect the ability of the Corporation to perform its obligations under this Agreement; |
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| (xi) | at the Closing Time, all consents, approvals, permits, authorizations or filings as may be required to be made or obtained by the Corporation under Canadian Securities Laws or the rules and regulations of the TSX necessary for the execution and delivery of this Agreement and the Warrant Indenture and the issuance and sale of the Offered Units, and the consummation of the transactions contemplated hereby, under the Warrant Indenture and under the Investor Questionnaires will have been made or obtained, as applicable (other than the filing of reports required under applicable Canadian Securities Laws within the prescribed time periods, which documents shall be filed as soon as practicable after the Closing Date and, in any event, within such deadline imposed by applicable Canadian Securities Laws); |
| (xii) | the Unit Shares will not be subject to a restricted period or to a statutory hold period under Canadian Securities Laws; |
| (xiii) | the execution and delivery of this Agreement and the Warrant Indenture, the performance by the Corporation of its obligations hereunder and thereunder, the issue and sale of the Offered Units hereunder and the consummation of the transactions contemplated in this Agreement, do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under (whether after notice or lapse of time or both): (A) any statute, rule or regulation applicable to the Corporation including, without limitation, Canadian Securities Laws; (B) the constating documents, by-laws or resolutions of the Corporation which are in effect at the date hereof; (C) any mortgage, Debt Instrument, contract, agreement, instrument, lease or other document to which the Corporation is a party or by which it is bound, including a Material Agreement; or (D) any judgment, decree or order binding the Corporation or the property or assets of the Corporation; |
| (xiv) | at the Closing Time, this Agreement and the Warrant Indenture shall have been duly authorized and executed and delivered by the Corporation and upon such execution and delivery each shall constitute a valid and binding obligation of the Corporation enforceable against the Corporation in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally; |
| (xv) | at the Closing Time, all necessary corporate action will have been taken by the Corporation to authorize and allot for issuance the Unit Shares, the Warrants and the Warrant Shares as fully paid and non-assessable and validly created and issued, and shall have the attributes corresponding in all material respects to the description thereof set forth in the Offering Document, this Agreement and the Warrant Indenture; |
| (xvi) | no order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of the Corporation has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of the Corporation, are pending, contemplated or threatened by any regulatory authority; |
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| (xvii) | no acquisition has been made by the Corporation during its three most recently completed fiscal years that would be a significant acquisition for the purposes of Canadian Securities Laws or that would require the financial statement disclosure in respect of the acquired business for the purposes of Canadian Securities Laws, and no proposed acquisition by the Corporation has progressed to a state where a reasonable person would believe that the likelihood of the Corporation completing the acquisition is high and that: (i) if completed by the Corporation at the date hereof, would be a significant acquisition for the purposes of Canadian Securities Laws, or (ii) would require the financial statement disclosure in respect of the acquired business for the purposes of Canadian Securities Laws; |
| (xviii) | the authorized capital of the Corporation consists of an unlimited number of Common Shares without par value, of which, as at the date hereof, 100,257,009 Common Shares are issued and outstanding as fully paid and non-assessable shares in the capital of the Corporation. The outstanding shares in the capital of the Corporation have been duly authorized and validly issued and are fully paid and non-assessable. None of the outstanding shares in the capital of the Corporation were issued in violation of the pre- emptive or other similar rights of any securityholder of the Corporation or other person. Other than as set forth in the Public Record, no person, firm, corporation or entity has any agreement, option, right or privilege (whether pre-emptive or contractual) capable of becoming an agreement or option, for the purchase from the Corporation or any of its subsidiaries of any of the shares or other securities of the Corporation or any such subsidiary, or to require the Corporation or any of its subsidiaries to purchase, redeem or otherwise acquire any of the outstanding securities in the share capital of the Corporation or any of its subsidiaries. To the knowledge of the Corporation, no agreement is in force or effect which in any manner affects the voting or control of any of the securities of the Corporation or any of its subsidiaries. The form and terms of the certificate representing the Common Shares have been approved and adopted by the board of directors of the Corporation and the form and terms of the certificate representing the Common Shares do not and will not conflict with any applicable laws or the rules and by-laws of the TSX; |
| (xix) | Odyssey Trust Company, at its principal office in the City of Toronto, Ontario, has been duly appointed as the transfer agent of the Corporation; |
| (xx) | during the 12 months prior to the date of this Agreement, the Corporation has raised $0 using the Listed Issuer Financing Exemption and is not otherwise raising funds under the Listed Issuer Financing Exemption other than in the Offering; |
| (xxi) | all information and statements contained in the Offering Document are true and correct, in all material respects. The Offering Document, together with any document filed under applicable Securities Laws on or after January 16, 2025, contains disclosure of all material facts about the securities being distributed in the Offering and does not contain a misrepresentation. The Offering Document complies with the requirements of applicable Securities Laws; |
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| (xxii) | the Corporation is and has been a reporting issuer in at least one jurisdiction of Canada for the 12 months immediately before the date that the Corporation filed the news release announcing the Offering; |
| (xxiii) | the Corporation has a class of securities listed for trading on an exchange recognized by a securities regulatory authority in a jurisdiction of Canada; |
| (xxiv) | the Corporation’s operations have not ceased or its principal asset is not cash or cash equivalents, or its exchange listing; |
| (xxv) | the Corporation has filed all periodic and timely continuous disclosure documents that it is required to have filed by each of the following: |
| (A) | applicable securities legislation; |
| (B) | an order issued by the regulator or securities regulatory authority; and |
| (C) | an undertaking to the regulator or securities regulatory authority; |
| (xxvi) | the Corporation does not plan to use the proceeds from the Offering towards: |
| (A) | an acquisition that is a significant acquisition under Part 8 of NI 51-102; |
| (B) | a restructuring transaction as such term is defined in NI 51-102; and |
| (C) | any other transaction that requires approval of any security holder under the corporate law of the jurisdiction in which the Corporation is incorporated or continued, any requirement of the exchange on which the Corporation’s listed equity securities are listed for trading, or the Corporation’s constating documents; |
| (xxvii) | the total dollar amount of the Offering, combined with the dollar amount of all other distributions made by the Corporation under section 5A.2 of NI 45-106 during the 12 months immediately before the date of the issuance of the news release announcing the Offering, will not exceed the greater of the following: (i) $50,000,000; or (ii) 20% of the aggregate market value of the Corporation’s listed securities on the date the Corporation issued the news release announcing the Offering, to a maximum total dollar amount of $50,000,000; |
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| (xxviii) | the Offering, combined with all other distributions made by the Corporation under section 5A.2 of National Instrument 45-106 – Prospectus Exemptions during the 12 months immediately before the date of the issuance of the news release announcing the Offering, will not result in an increase of more than 100% of the number, or, in the case of debt, of the principal amount, of the Corporation’s issued and outstanding securities, as of the date that is 12 months before the date of the issuance of such news release; |
| (xxix) | the Corporation reasonably expects that, on completion of the Offering, the Corporation will have sufficient available funds to meet its business objectives and all liquidity requirements for a period of 12 months; |
| (xxx) | copies of the minute books and records of the Corporation and its subsidiaries made available to counsel for the Underwriter in connection with the due diligence investigation of the Corporation and its subsidiaries for the period from the date requested by the Underwriter to the date hereof are all of the minute books of the Corporation and its subsidiaries and contain copies of all material proceedings (or certified copies thereof or drafts thereof pending approval) of the shareholders, the directors and all committees of directors of the Corporation and its subsidiaries to the date hereof to the extent that minutes exist and there have been no other meetings, resolutions or proceedings of the shareholders, directors or any committees of the directors of the Corporation or its subsidiaries to the date hereof not reflected in such minute books. The Corporation has not withheld from the Underwriter any material facts relating to the Corporation, any of its subsidiaries or the offering of the Offered Units; |
| (xxxi) | the Corporation and its subsidiaries have good and marketable title to all real property owned by them and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (A) are described in Public Record or (B) do not, singly or in the aggregate, materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Corporation or its subsidiaries; and all of the leases and subleases material to the business of the Corporation and its subsidiaries, considered as one enterprise, and under which the Corporation or its subsidiaries holds properties described in the Public Record, are in full force and effect, and neither the Corporation nor any such subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Corporation or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Corporation or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease; |
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| (xxxii) | there is no action, suit, proceeding, inquiry or investigation before or brought by any Governmental Authority (including, without limitation, any action, suit proceeding, inquiry or investigation before or brought by Health Canada or the U.S. Food and Drug Administration (the “FDA”)) now pending or, to the knowledge of the Corporation, threatened, against or affecting the Corporation or its subsidiaries, which would reasonably be expected to result in a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Corporation or any such subsidiaries is a party or of which any of their respective properties or assets is the subject which are not described in the Public Record, including ordinary routine litigation incidental to the business, would not reasonably be expected to result in a Material Adverse Effect; |
| (xxxiii) | the Financial Statements, together with the related schedules and notes, present fairly, in all material respects, the financial position of the Corporation and its consolidated subsidiaries at the dates indicated and the statement of operations, shareholders’ equity and cash flows of the Corporation and its consolidated subsidiaries for the periods specified; the Financial Statements have been prepared in conformity with IFRS applied on a consistent basis throughout the periods involved. There has been no change in accounting policies or practices of the Corporation since January 1, 2025, except as disclosed in the Financial Statements; |
| (xxxiv) | except as set out in the Financial Statements or as incurred in the ordinary course of business since September 30, 2025 and as would not individually or in the aggregate have a Material Adverse Effect, the Corporation does not have any outstanding indebtedness or any liabilities or obligations, including any unfunded obligation under any Employee Plan, whether accrued, absolute, contingent or otherwise as of the date of the applicable Financial Statements; |
| (xxxv) | the accountants who certified the Financial Statements are (i) independent public accountants as required by the Securities Act and the Public Company Accounting Oversight Board, and (ii) independent with respect to the Corporation as required by applicable Canadian professional standards; and in the period of three years prior to the date hereof, there has not been any reportable event (within the meaning of NI 51-102) between the Corporation and such accountants; |
| (xxxvi) | the Corporation has a validly appointed audit committee whose composition and responsibilities satisfy the requirements of National Instrument 52-110 Audit Committees; |
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| (xxxvii) | all federal, provincial and foreign income tax returns of the Corporation and its subsidiaries required by law to be filed have been filed (in Canada, the United States and otherwise) and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid (except for any failure to so pay that would be immaterial), except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided. All tax returns, declarations, remittances and filings required to be filed by the Corporation and its subsidiaries have been filed with all appropriate Governmental Authorities, all such returns, declarations, remittances and filings are complete and accurate in all material respects and no material fact or facts have been omitted therefrom which would make any of them misleading and no assessment in connection therewith has been made against the Corporation or any of its subsidiaries. To the knowledge of the Corporation, there are no issues or disputes outstanding with any Governmental Authority respecting any taxes that have been paid, or may be payable, by the Corporation or any of its subsidiaries. There are no agreements, waivers or other arrangements with any taxation authority providing for an extension of time for any assessment or reassessment of taxes with respect to the Corporation or any of its subsidiaries. The Corporation and its subsidiaries have each established on their books and records reserves that are adequate for the payment of all taxes not yet due and payable and there are no liens for taxes on the assets and properties of the Corporation or any of its subsidiaries (other than liens for taxes that are not yet due and payable or that are being contested in good faith), and, to the knowledge of the Corporation, there are no audits pending of the tax returns of the Corporation or any of its subsidiaries (whether federal, state, provincial, local or foreign) and there are no claims which have been asserted relating to any such tax returns, which audits and claims, if determined adversely, would result in the assertion by any governmental agency of any material deficiency. All scientific research and experimental development (“SR&ED”) tax incentives applied for by the Corporation or any of its subsidiaries are bona fide and the Corporation has no knowledge that Canada Revenue Agency will disallow, reassess or reduce any SR&ED incentives applied for by or previously granted to the Corporation or any of its subsidiaries; |
| (xxxviii) | the Corporation and its subsidiaries maintain effective internal control over financial reporting and have established and maintain “disclosure controls and procedures” and “internal control over financial reporting” within the meaning of such terms under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings and are in compliance with the certification requirements thereof with respect to the Corporation’s annual and interim filings with the Securities Regulators. the Corporation maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since the end of the Corporation’s most recent audited fiscal year, there has been (1) no material weakness in the Corporation’s internal control over financial reporting (whether or not remediated) and (2) no change in the Corporation’s internal control over financial reporting that has materially adversely affected, or is reasonably likely to materially adversely affect, the Corporation’s internal control over financial reporting; |
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| (xxxix) | since September 30, 2025, other than as disclosed in the Public Record, (A) there has not been any Material Adverse Effect and there has been no event or occurrence that could reasonably be expected to result in a Material Adverse Effect, (B) there have been no transactions entered into by the Corporation or its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Corporation and its subsidiaries considered as one enterprise, (C) there has been no dividend or distribution of any kind declared, paid or made by the Corporation on any class of its securities, and (D) neither the Corporation nor any of its subsidiaries has incurred any obligation or liability, direct or indirect, contingent or otherwise, except in the ordinary course of business and which is not, and which in the aggregate are not, material; |
| (xl) | the Corporation and its subsidiaries own or have valid, binding and enforceable licenses or other rights under the patents, patent applications, licenses, inventions, copyrights, know how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property described in the Public Record, or any other such intellectual property which, to the knowledge of the Corporation, is necessary for, or used in the conduct, or the proposed conduct, of the business of the Corporation and its subsidiaries in the manner described in the Public Record (collectively, the “Intellectual Property”); the patents, trademarks, and copyrights, if any, included within the Intellectual Property are valid, enforceable, and subsisting; other than as disclosed in the Public Record, (A) the Corporation is not obligated to pay a material royalty, grant a license to, or provide other material consideration to any third party in connection with the Intellectual Property, (B) the Corporation has not received any notice of any claim of infringement, misappropriation or conflict with any asserted rights of others with respect to any of the Corporation’s Intellectual Property, (C) to the knowledge of the Corporation, neither the sale nor use of any of the discoveries, inventions, devices or processes of the Corporation referred to in the Public Record do or will, infringe, misappropriate or violate any right or valid patent claim of any third party, and (D) to the knowledge of the Corporation, no third party has any ownership right in or to any Intellectual Property that is owned by the Corporation, other than any co- owner of any patent constituting Intellectual Property who is listed on the records of the U.S. Patent and Trademark Office (the “USPTO”) or the Canadian Intellectual Property Office (“CIPO”) and any co-owner of any patent application constituting Intellectual Property who is named in such patent application, and, to the knowledge of the Corporation, no third party has any ownership right in or to any Intellectual Property in any field of use that is exclusively licensed to the Corporation, other than any licensor to the Corporation of such Intellectual Property; |
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| (xli) | to the extent that (A) any of the Intellectual Property that is owned by the Corporation or any of its subsidiaries is licensed or (B) any of the Intellectual Property that is owned by the Corporation or any of its subsidiaries, and that is treated by the Corporation or any of its subsidiaries as confidential, is disclosed, in either case, to any other person by the Corporation or any of its subsidiaries, the Corporation or any of its subsidiaries, as applicable, has entered into a valid and subsisting written agreement with any such person which contains terms and conditions prohibiting the unauthorized use, disclosure or transfer of such Intellectual Property by such person. Other than such agreements that have expired in accordance with their respective terms, all such agreements are in full force and effect and, to the knowledge of the Corporation, none of the Corporation, any of its subsidiaries or, any other party, is in material default or material breach of its obligations thereunder; |
| (xlii) | all patents and patent applications owned by or licensed to the Corporation or under which the Corporation has rights and which are necessary and material in the conduct, or proposed conduct, of the business of the Corporation and its subsidiaries in the manner described in the Public Record have, to the knowledge of the Corporation, been duly and properly filed and maintained; to the knowledge of the Corporation, the parties prosecuting such applications have complied with their duty of candor and disclosure to the USPTO and/or the CIPO (as applicable) in connection with such applications; and the Corporation is not aware of any facts which were required to be disclosed to the USPTO and/or the CIPO (as applicable) that were not disclosed to the USPTO and/or the CIPO (as applicable) and which would preclude the grant of a patent in connection with any such application or would reasonably be expected to form the basis of a finding of invalidity with respect to any patents that have issued with respect to such applications; |
| (xliii) | to the knowledge of the Corporation, the completed studies, tests, preclinical studies and clinical trials conducted by or on behalf of the Corporation that are described in the Public Record were conducted, in all material respects, in accordance with experimental protocols, procedures and controls pursuant to, where applicable, accepted professional and scientific standards for products or product candidates comparable to those being developed by the Corporation; or that the drug substances used in the clinical trials have not been manufactured, in all material respects, under “current good manufacturing practices”, when required, in the United States, Canada and other jurisdictions in which such clinical trials have been and are being conducted; |
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| (xliv) | the Corporation is not in violation in any material respect, of any material law, order, rule, regulation, writ, injunction or decree of any court or governmental agency or body, applicable to the investigation of new drugs, cell or tissue products, or medical devices in humans and animals, including, but not limited to, those promulgated by the FDA, Health Canada or the European Medicines Agency (the “EMA”) or any other Governmental Authority; | |
| (xlv) | there are no pending or, to the knowledge of the Corporation, threatened (whether written, oral or otherwise), civil, criminal or administrative actions, suits, demands, claims, hearings, investigations, proceedings, complaints, material adverse inspections, material findings of deficiency, warning letters, requests for information or other compliance or enforcement actions by the FDA, Health Canada, the EMA or any other Governmental Authority related to any of the Corporation’s products, or the services or facilities of the Corporation and there is no act, omission, event, or circumstance that would reasonably be expected to give rise to any such action, suit, demand, claim, hearing, investigation, proceeding, complaint, material adverse inspection, material finding of deficiency, warning letter, requests for information, other compliance or enforcement action or any such liability; | |
| (xlvi) | to the knowledge of the Corporation, the research, pre-clinical and clinical validation studies and other studies and tests conducted or being planned by or on behalf of or sponsored by the Corporation or in which the Corporation participated or plans to participate were and, if still pending, are being conducted or planned in all material respects in accordance with good clinical practice and medical standard-of-care procedures including in accordance with the protocols submitted to the FDA, Health Canada, the EMA or any other Governmental Authority and the Corporation does not have knowledge of any other trials, studies or tests, the results of which reasonably call into question, in any material respect, the results of such studies and tests. The Corporation has not received any notices or other correspondence from such Governmental Authorities or any other person requiring the termination, suspension or material modification of any such research, pre-clinical and clinical validation studies or other studies and tests. The Corporation has not received any information from the FDA, Health Canada, the EMA or any other Governmental Authority that would reasonably be expected to lead to the denial of any clinical trial application or application for marketing approval before the FDA, Health Canada, the EMA or any other Governmental Authority. The Corporation has not failed to submit to the FDA, Health Canada, the EMA or any other Governmental Authority any necessary clinical trial application or investigational new drug application for a clinical trial it is conducting or sponsoring. All such submissions and any new drug submission or new drug application submission, if submitted, were in material compliance with applicable laws when submitted and no material deficiencies have been asserted by the FDA, Health Canada, the EMA or any other Governmental Authority with respect to any such submissions, except any deficiencies which could not, individually or in the aggregate, have a Material Adverse Effect. |
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| (xlvii) | all product research and development activities, including quality assurance, quality control, testing, and research and analysis activities, conducted by the Corporation and its subsidiaries in connection with their business is being conducted, in all material respects, in accordance with best industry practices and in compliance, in all material respects, with all industry, laboratory safety, management and training standards applicable to the Corporation’s current and proposed business, and all such processes, procedures and practices, required in connection with such activities are in place as necessary and are being complied with, in all material respects. | |
| (xlviii) | all product candidates developed, tested, investigated, fabricated, manufactured, packaged, labelled, stored, transported, handled, imported, exported or distributed by or on behalf of the Corporation, and all of the services performed by the Corporation in relation to the product candidates that are subject to the jurisdiction of Health Canada, the Canadian provincial Ministries of Health, the FDA, the EMA or any comparable Governmental Authority are in material compliance with all applicable legal requirements, including those regarding (if and as applicable) non-clinical testing, clinical research, good manufacturing practices, good laboratory practices, labeling, packaging, record-keeping, adverse event reporting and reporting of corrections and removals; | |
| (xlix) | the descriptions in the Public Record of the research results are consistent in all material respects with such results and no other studies or other clinical trials whose results are known to the Corporation are materially inconsistent with or otherwise materially call into question the results described or referred to in the Public Record; | |
| (l) | the Corporation has not received any notice or communication from any customer or Health Canada alleging a defect or claim in respect of any products supplied or sold by the Corporation to a customer and, to the knowledge of the Corporation, there are no circumstances that would give rise to any reports, recalls, public disclosure, announcements or customer communications that are required to be made by the Corporation in respect of any products supplied or sold by the Corporation; | |
| (li) | to the knowledge of the Corporation, neither the Corporation nor any of its subsidiaries has unlawfully disclosed the personal health information of any person, nor committed any other breach of applicable laws concerning the privacy and/or security of personal health information; nor, to the knowledge of the Corporation, is there any investigation of the Corporation or any of its subsidiaries by any Governmental Authority for a violation of applicable laws concerning the privacy and/or security of personal health information. Neither the Corporation nor any of its subsidiary has notified, either voluntarily or as required by applicable laws, any affected individual, any Governmental Authority or the media of any breach of personal health information. To the knowledge of the Corporation, neither the Corporation nor any of its subsidiaries has suffered any unauthorized acquisition, access, use or disclosure of any personal information that, individually or in the aggregate, materially compromises the security or privacy of such personal information. |
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| (lii) | no material supplier or customer of the Corporation has cancelled, materially modified, threatened to materially modify or, to the knowledge of the Corporation, intends to materially modify its relationship with or supplies to the Corporation, except any such cancellation, modification, or threatened modification which could not, individually or in the aggregate, have a Material Adverse Effect; |
| (liii) | except as such would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Corporation nor its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold that are applicable to their businesses (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Corporation and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the knowledge of the Corporation threatened, administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Corporation or its subsidiaries and (D) there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or Governmental Authority, against or affecting the Corporation or its subsidiaries relating to Hazardous Materials or any Environmental Laws; | |
| (liv) | the Corporation and its subsidiaries carry or are entitled to the benefits of insurance, with reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance is in full force and effect. Neither the Corporation nor any of its subsidiaries is in default in any respect with respect to the payment of any premium or compliance with any of the provisions contained in any such insurance policy and has not failed to give any notice or present any claim within the appropriate time therefor. There are no circumstances under which the Corporation or any of its subsidiaries would be required to or, in order to maintain its coverage, to give any notice to the insurers under any such insurance policy which has not been given. Neither the Corporation nor any of its subsidiaries has received notice from any of the insurers regarding cancellation of such insurance policy or has been denied any insurance coverage which it has sought or for which it has applied; |
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| (lv) | except as otherwise as disclosed in the Public Record, neither the Corporation nor its subsidiaries have agreements, plans or practices relating to the payment of any management, consulting, service or other fees or any bonuses, pensions, share of profits or retirement allowance, insurance, health or other employee benefits or any plan for retirement, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, incentive or otherwise contributed to, or required to be contributed to, by the Corporation or any of its subsidiaries for the benefit of any current or former director, officer, employee or consultant of the Corporation or any of its subsidiaries (“Employee Plans”). The Corporation has made available to the Underwriter true and complete copies of documents, contracts and arrangements relating to the Employee Plans. The Employee Plans have been established, operated in the ordinary course and administered in all material respects in accordance with their terms and applicable laws; | |
| (lvi) | no labor dispute with the employees of the Corporation or its subsidiaries exists or, to the knowledge of the Corporation, is imminent, which would result in a Material Adverse Effect. Neither the Corporation nor any of its subsidiaries is a party to or bound by any collective agreement and is not currently conducting negotiations with any labor union or employee association. The Corporation and each of its subsidiaries are in compliance in all material respects with all laws respecting employment and employment practices, terms and conditions of employment, pay equity and wages and have not and are not engaged in any unfair labor practice; | |
| (lvii) | the Corporation has provided the Underwriter with copies of all material documents and correspondence relating to the current licenses (the “Licenses”) issued by Health Canada pursuant to the Cannabis Act (Canada) and the regulations promulgated thereunder to Dalton Chemical Laboratories, Inc., operating as Dalton Pharma Services (“Dalton”). To the knowledge of the Corporation, Dalton is in compliance, in all material respects, with the terms and conditions of all such Licenses and Dalton has advised the Corporation that it does not anticipate any variations or difficulties in renewing such Licenses or any other required license or permit. The offering of the Offered Units (including the proposed use of proceeds of the offering) will not have any material adverse impact on the Licenses or, to the knowledge of the Corporation, require Dalton to obtain any new License under the Cannabis Act; |
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| (lviii) | the Corporation is not required to obtain any permits or licenses (other than the Licenses issued to Dalton) pursuant to the Cannabis Act (Canada) or any other permits from HC or any similar federal, provincial or municipal regulatory body or self-regulatory body in connection with the current and proposed conduct of its business. | |
| (lix) | the Corporation has not committed an act of bankruptcy or sought protection from its creditors from any court or pursuant to any legislation, proposed a compromise or arrangement to its creditors generally, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to have itself declared bankrupt or wound up, as the case may be, taken any proceeding to have a receiver appointed for any part of its assets, had any encumbrance or receiver take possession of any of its property, had an execution or distress become enforceable or levied upon any portion of its property or had any petition for a receiving order in bankruptcy or application for a bankruptcy order filed against it, and at the Closing Time, the Corporation will not be an insolvent person (as that term is defined in the Bankruptcy and Insolvency Act (Canada) or equivalent legislation in other jurisdictions); | |
| (lx) | none of the Corporation, any of its subsidiaries or, to the knowledge of the Corporation, any director, officer, agent, employee, affiliate or other person acting on behalf of the Corporation or any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of Canada’s Corruption of Foreign Public Officials Act, the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), or any other applicable anti-bribery or anti-corruption laws (the “Anti-Corruption Laws”) including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the Anti- Corruption Laws and the Corporation and, to the knowledge of the Corporation, its affiliates have conducted their businesses in compliance, in all material respects, with the Anti-Corruption Laws and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith; |
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| (lxi) | none of the Corporation, any of its subsidiaries or, to the knowledge of the Corporation, any director, officer, agent, employee, affiliate or representative of the Corporation or any of its subsidiaries is an individual or entity, or is more than 50 percent owned in the aggregate by or acting on behalf of one or more persons that are, currently the subject of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Corporation located, organized or resident in a country or territory that is the subject of Sanctions, including, without limitation, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Crimea and the non- government controlled areas of the Zaporizhzhia and Kherson Regions of Ukraine, Cuba, Iran, North Korea and Syria (each, a “Sanctioned Country”); and the Corporation will not directly or indirectly use the proceeds of the offering of the Offered Units hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. The Corporation and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not engage in, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country; | |
| (lxii) | the operations of the Corporation and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Money Laundering Laws; and no action, suit or proceeding by or before any Governmental Authority involving the Corporation or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Corporation, threatened; | |
| (lxiii) | there has been no security breach or other compromise of or relating to any information technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of them), equipment or technology of the Corporation or its subsidiaries (collectively, “IT Systems and Data”) and the Corporation and its subsidiaries have not been notified of, and have no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise to their IT Systems and Data. The Corporation and its subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material Adverse Effect. The Corporation and its subsidiaries have implemented backup and disaster recovery technology consistent with industry standards and practices; |
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| (lxiv) | there are no business relationships or related-party transactions involving the Corporation, any subsidiary or any other person required by applicable securities laws to be described in the Public Record that have not been described as required. To the Corporation’s knowledge, none of the directors, officers or employees of the Corporation, any of its subsidiaries or any associate or affiliate of any of the foregoing has any interest, direct or indirect, in any transaction with the Corporation or any of its subsidiaries that materially affects, is material to or would reasonably be expected to materially affect the Corporation or any of its subsidiaries. Except for wages, salaries and other compensation-related payments in the ordinary course, and other than as disclosed in the Public Record, neither the Corporation nor any of its subsidiaries is indebted to: (i) any director, officer or shareholder of the Corporation; (ii) any individual related to any of the foregoing by blood, marriage or adoption; or (iii) any corporation controlled, directly or indirectly, by any one or more of those persons referred to in this Section 4(a)(lxiv). None of those persons referred to in this Section 4(a)(lxiv) is indebted to the Corporation or any of its subsidiaries. Neither the Corporation nor any of its subsidiaries is currently a party to any material contract, agreement or understanding with any officer, director, employee, shareholder or any other person not dealing at arm’s length with the Corporation or its subsidiaries other than employment agreements. | |
| (lxv) | except to the extent disclosed in the Public Record or for discussions or negotiations in the ordinary course of business, the Corporation is not currently party to any agreement in respect of: (i) the purchase of any material assets and properties or any interest therein or the sale, transfer or other disposition of any material assets and properties or any interest therein currently owned, directly or indirectly, by the Corporation whether by asset sale, transfer of shares or otherwise; or (ii) the change of control of the Corporation (whether by sale or transfer of shares or sale of all or substantially all of the assets and properties of the Corporation or otherwise). |
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| (lxvi) | other than the Material Agreements disclosed in the Public Record, the Corporation is not a party to any other material contract, Debt Instrument, trust deed, mortgage, lease, licence or other agreement or instrument; | |
| (lxvii) | other than the Underwriter or any Selling Firm, there is no Person acting or purporting to act at the request or on behalf of the Corporation that is entitled to any brokerage or finder’s fee or other compensation in connection with the transactions contemplated by this Agreement; and | |
| (lxviii) | none of the Corporation, its affiliates, or any person acting on any of their behalf (other that the Underwriter, its affiliates and any person acting on any of their behalf, as to whom the Corporation make no representation or warranty), has made or will make (i) any offer to sell or any solicitation of an offer to buy, any Offered Units to, or for the account or benefit of, any person in the United States or any U.S. Person, or (ii) any sale of Offered Units to any Purchaser unless, at the time the buy order was or will have been originated, the Purchaser was outside the United States and not a U.S. Person, or the Corporation, its affiliates, or any person acting on any of their behalf reasonably believed that such Purchaser was outside the United States and not a U.S. Person. |
It is further agreed by the Corporation that all representations, warranties and covenants contained in this Agreement made by the Corporation to the Underwriter shall also be deemed to be made for the benefit of Purchasers as if the Purchasers were also parties to this Agreement (it being agreed that the Underwriter is acting for and on behalf of the Purchasers for this purpose).
| (b) | Representations, Warranties and Covenants of the Underwriter. The Underwriter hereby represents, warrants and covenants to the Corporation, and acknowledges that the Corporation is relying upon such representations and warranties in connection with the completion of the Offering, that: |
| (i) | it has and will conduct its activities in connection with the offer and sale of the Offered Units under the Offering in compliance with Canadian Securities Laws and the provisions of this Agreement; |
| (ii) | it is duly registered or licensed pursuant to the requirements of Canadian Securities Laws in those jurisdictions in which it is required to be so registered or licensed in order to perform the services contemplated by this Agreement, or if or where not so registered or licensed, it will act only through selling group members who are so registered or licensed; |
| (iii) | it is duly incorporated and is in good standing in its jurisdiction of incorporation, has all requisite corporate power and authority to enter into and carry out its obligations under this Agreement; |
| (iv) | it has not solicited offers to purchase or sell the Offered Units pursuant to the Offering so as to require the filing of a prospectus or registration statement with respect thereto; |
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| (v) | it has not delivered to any prospective Purchaser any document or material which constitutes an offering memorandum under applicable Canadian Securities Laws, other than the Offering Document; |
| (vi) | the Underwriter and its representatives have not engaged in or authorized, and will not engage in or authorize any Directed Selling Efforts with respect to the offer and sale of the Offered Units; |
| (vii) | the Underwriter has not offered or sold, and will not offer or sell, at any time any Offered Units except in Offshore Transactions in compliance with Rule 903 of Regulation S. None of the Underwriter, its affiliates, or any person acting on any of their behalf, has made or will make (i) any offer to sell or any solicitation of an offer to buy, any Offered Units to, or for the account or benefit of, any person in the United States or any U.S. Person, (ii) any sale of Offered Units to any Purchaser unless, at the time the buy order was or will have been originated, the Purchaser was outside the United States and not a U.S. Person, or the Underwriter, its affiliates, or any person acting on any of their behalf reasonably believed that such Purchaser was outside the United States and not a U.S. Person; |
| (viii) | the Underwriter agrees that, at or prior to confirmation of the sale of the Offered Units, it will have sent to each Distributor, “dealer” (as defined in Section 2(a)(12) of the U.S. Securities Act), or other person receiving a selling concession, fee or other remuneration that purchases Offered Units from it during the Distribution Compliance Period a confirmation or notice to substantially the following effect: | |
| “The securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be offered or sold to, or for the account or benefit of, persons in the United States or U.S. Persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and closing date, except in either case in accordance with Regulation S under the U.S. Securities Act. Terms used herein have the meanings given to them in Regulation S under the U.S. Securities Act.” |
| (ix) | the Underwriter agrees that, prior to the expiration of the Distribution Compliance Period, all subsequent offers and sales of the Offered Units by the Underwriter or its affiliates shall be made only in accordance with the provisions of Rule 903 or 904 of Regulation S; pursuant to registration of the Offered Units under the U.S. Securities Act; or pursuant to an available exemption from the registration requirements of the U.S. Securities Act; |
| (x) | the Underwriter agrees to obtain substantially identical undertakings from each selling group member and to comply with the offering restriction requirements of Regulation S. |
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5. Closing Deliveries. The purchase and sale of the Offered Units shall be completed at the Closing Time electronically or as otherwise determined by the Underwriter and the Corporation. At the Closing Time, the Corporation shall, subject to the provisions of Section 6, issue the Offered Units by way of electronic deposit in accordance with the “non-certificated inventory” rules and procedures of CDS, and shall direct CDS to credit the Offered Units to the accounts of participants of CDS as designated by the Underwriter, against delivery to the Corporation of the Gross Proceeds (less the amounts payable to the Underwriter provided in Section 9 and Section 10, all of which the Underwriter will deduct from the Gross Proceeds to be delivered to the Corporation), in lawful money of Canada by electronic money transfer; provided that, if agreed by the Underwriter or as required pursuant to applicable law, the Corporation shall deliver physical certificates or DRS advices to such Purchasers as the Underwriter may direct. The Underwriter and the Corporation may discharge their payment obligations under this section by delivery of certified cheques or bank drafts from the Underwriter to the Corporation, or by electronic money transfer.
6. Closing Conditions. The Underwriter’s obligation to purchase the Offered Units shall be conditional upon the fulfilment at or before the Closing Time of the following conditions:
| (a) | the Underwriter shall have received a certificate, dated as of the Closing Date signed by an appropriate officer or director of the Corporation certifying for and on behalf of the Corporation (without personal liability), to the best of their knowledge, information and belief, after due inquiry, that: |
| (i) | no order, ruling or determination having the effect of suspending sale or ceasing the trading in any securities of the Corporation or prohibiting the issue and sale of the Offered Units or any of the Corporation’s issued securities has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending or, to the knowledge of each such officer, contemplated or threatened by any Governmental Authority; |
| (ii) | since the date of this Agreement, (A) there has been no material adverse change (financial or otherwise) in the business, affairs, operations, assets, liabilities (contingent or otherwise), capital or prospects of the Corporation; and (B) no transaction has been entered into by the Corporation which is or would be material to the Corporation, other than in the ordinary course of business; |
| (iii) | as to the number of Common Shares issued and outstanding as at a date not more than one Business Day prior to the Closing Date; |
| (iv) | the Corporation has complied in all material respects (except where already qualified by a materiality qualification, in which case the Corporation has complied in all respects) with all the covenants and satisfied in all material respects (except where already qualified by a materiality qualification, in which case the Corporation has satisfied in all respects) all covenants and the terms and conditions of this Agreement on its part to be complied with and satisfied at or prior to the Closing Time; and |
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| (v) | the representations and warranties of the Corporation contained in this Agreement and any certificate of the Corporation delivered hereunder are true and correct in all material respects (or, in the case of any representation or warranty containing a materiality qualification, in all respects) as at the Closing Time, with the same force and effect as if made on and as at the Closing Time; |
| (b) | the Underwriter shall have received a certificate dated the Closing Date, signed by an appropriate officer or director of the Corporation (without personal liability) addressed to the Underwriter, with respect to the articles, by-laws and other constating documents of the Corporation, all resolutions of the Corporation’s board of directors (or a committee validly established by the board of directors of the Corporation) relating to the Offering, this Agreement and the Warrant Indenture, and otherwise pertaining to the purchase and sale of the Offered Units and the transactions contemplated hereby and thereby, and the incumbency and specimen signatures of the signing officers; |
| (c) | the Underwriter shall have received a certificate of status dated one Business Day prior to the Closing Date from the Corporation with respect to the Province of Ontario, being the jurisdiction in which the Corporation is in existence; |
| (d) | the Underwriter shall have received satisfactory evidence that all requisite approvals have been obtained by the Corporation in order to complete the Offering; |
| (e) | the Underwriter shall have received legal opinions addressed to the Underwriter and the Purchasers, in form and substance satisfactory to the Underwriter, acting reasonably, dated as of the Closing Date, from Borden Ladner Gervais LLP, Canadian counsel to the Corporation, which counsel in turn may rely, as to matters of fact, on certificates of public officials and officers of the Corporation, as appropriate, with respect to the following matters: |
| (i) | as to the incorporation and valid existence of the Corporation; |
| (ii) | as to the authorized capital of the Corporation; |
| (iii) | the Corporation is a reporting issuer under Canadian Securities Laws the Province of Ontario and is not on the list of defaulting issuers maintained under such legislation; |
| (iv) | the corporate power, capacity and authority of the Corporation to carry on business and to own, lease and operate properties and assets, and to carry out its obligations under this Agreement and to issue the Offered Units; |
| (v) | all necessary corporate action has been taken by the Corporation to authorize the execution and delivery of this Agreement and the Warrant Indenture and the performance by the Corporation of each of its obligations hereunder and thereunder, and the issuance of the Offered Units; |
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| (vi) | this Agreement and the Warrant Indenture have been duly authorized and executed and delivered by the Corporation and each constitutes a valid and legally binding agreement of the Corporation enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally; |
| (vii) | that no approval, authorization, consent or other order of, and no filing, registration or recording with, any Governmental Authority is required of the Corporation under the laws of the Province of Ontario and the federal laws of Canada applicable therein in connection with: (1) the execution and delivery of this Agreement or the Warrant Indenture and the performance of the Corporation’s obligations hereunder and thereunder, and (2) the issuance and delivery to the Purchasers of the Offered Units pursuant to this Agreement; |
| (viii) | the execution and delivery of this Agreement, the Warrant Indenture, the performance by the Corporation of its obligations hereunder and thereunder and the issuance and sale of the Offered Units does not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, whether after notice or lapse of time or both, (A) the constating documents of the Corporation, or (B) the OBCA; |
| (ix) | that the provisions of the Offered Units conform, in all material respects, with the descriptions thereof in the Offering Document and the Investor Questionnaire; |
| (x) | the Unit Shares, have been authorized and reserved for issuance and, upon payment, validly created and issued as fully paid and non-assessable Common Shares; |
| (xi) | the Warrants have been duly and validly created and issued and the Warrant Shares have been reserved for issuance and upon the receipt of payment therefor by the Corporation and the issue thereof upon exercise of the Warrants in accordance with the provisions of the Warrant Indenture, the Warrant Shares will be duly and validly issued as fully paid and non-assessable Common Shares; |
| (xii) | the issuance and sale by the Corporation of the Unit Shares and the Warrants to the Purchasers is exempt from the prospectus requirements of Canadian Securities Laws and no documents are required to be filed, no proceedings are required to be taken and no approvals, permits, consents or authorizations are required to be obtained by the Corporation under Canadian Securities Laws to permit such issuance and sale; it being noted however that the Corporation is required to file a report of exempt distribution with certain Securities Regulators in Canada in accordance Canadian Securities Laws and the requirements of the TSX within the required time frame; |
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| (xiii) | the first trade in the Unit Shares being exempt from the prospectus requirements of applicable Canadian Securities Laws and no prospectus, offering memorandum or other document is required to be filed, no proceeding is required to be taken and no approval, permit, consent or authorization of regulatory authorities is required to be obtained by the Corporation under Canadian Securities Laws to permit such trade through registrants registered under applicable Canadian Securities Laws who have complied with such laws and the terms and conditions of their registration, provided that at the time of such trade: |
| (A) | the trade is not a “control distribution” (as defined in NI 45-102); |
| (B) | no unusual effort is made to prepare the market or to create a demand for the security that is the subject of the trade; |
| (C) | no extraordinary commission or consideration is paid to a person or company in respect of the trade; and |
| (D) | if the selling security holder is an insider or officer of the Corporation, the selling securityholder has no reasonable grounds to believe that the Corporation is in default of “securities legislation” (as defined in National Instrument 14-101 – Definitions); and |
| (xiv) | Odyssey Trust Company, at its principal office in the City of Toronto, Ontario, has been duly appointed as the transfer agent of the Corporation in respect of the Common Shares and as Warrant Agent in respect of the Warrants. |
The Corporation agrees that the conditions contained in Section 6 will be complied with insofar as the same relate to acts to be performed or caused to be performed by the Corporation, and the Corporation will use its commercially reasonable efforts to cause all such conditions to be complied with. Any material breach or failure to comply with any of the conditions set out in Section 6 shall entitle the Underwriter to terminate its obligation under this Agreement by written notice to that effect given to the Corporation at or prior to the Closing Time. It is understood that the Underwriter may waive, in whole or in part, or extend the time for compliance with, any of such terms and conditions without prejudice to the rights of the Underwriter in respect of any such terms and conditions or any other or subsequent breach or non-compliance, provided that to be binding on the Underwriter any such waiver or extension must be in writing and signed by the Underwriter.
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7. Rights of Termination. The Underwriter shall be entitled to terminate its obligations hereunder by written notice to that effect given to the Corporation at or prior to the Closing Time if:
| (a) | any inquiry, action, suit, investigation or other proceeding (whether formal or informal) is commenced, announced or threatened or any order made by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality including, without limitation, the TSX, the NASDAQ, or any securities regulatory authority or any law or regulation is enacted or changed, or there is any announced change in the interpretation or administration thereof by the TSX, the NASDAQ or any securities regulatory authority, which in the opinion of the Underwriter, acting reasonably, operates or could operate to prevent or restrict the distribution of the Offered Units under the Offering, the trading of the Unit Shares or Warrant Shares or materially and adversely affects or could reasonably be expected to or will materially and adversely affect the market price or value of the Offered Units; |
| (b) | there should develop, occur or come into effect or existence any event, action, state, circumstance, condition, catastrophe, accident, natural disaster, public health crisis, public protest, financial occurrence, war or act of terrorism or any other occurrence of national or international consequence or any new or change in any law or regulation or governmental action which, in the opinion of the Underwriter, acting reasonably, seriously adversely affects or involves, or could reasonably be expected to, or will, seriously adversely affect or involve, the financial markets or the business, operations or affairs of the Corporation or the market price or value of the securities of the Corporation; |
| (a) | an order shall have been made or threatened to cease or suspend trading in the Offered Units or any other securities of the Corporation, or to otherwise prohibit or restrict in any manner the distribution or trading of the Offered Units, or actions or proceedings are announced or commenced for the making of any such order by any securities regulatory authority or similar regulatory or judicial authority or the TSX, which order has not been rescinded, revoked or withdrawn; |
| (b) | there shall be any material change in the affairs of the Corporation, or the Underwriter become aware of any previously undisclosed material fact or change in a material fact or there should occur a change in any material fact in each case which, in the opinion of the Underwriter, acting reasonably, has or would be expected to have a Material Adverse Effect or a significant adverse effect on the market price or value of the securities of the Corporation; or |
| (c) | the Corporation is in breach of a material term, condition or covenant of this Agreement or the Engagement Letter or any representation or warranty given by the Corporation in this Agreement or the Engagement Letter becomes or is false in any material respect and cannot be cured prior to the Closing Date. |
8. Exercise of Termination Right. The rights of termination contained in Section 7 are in addition to any other rights or remedies the Underwriter may have in respect of any of the matters contemplated by this Agreement or otherwise. Any such termination shall not discharge or otherwise affect any obligation or liability of the Corporation provided herein or prejudice any other rights or remedies any party may have as a result of any breach, default or non-compliance by any other party. If the obligations of the Underwriter are terminated under this Agreement pursuant to the termination rights provided for in Section 7, the Corporation’s liabilities to the Underwriter shall be limited to the obligations under the indemnity, contribution and expense provisions of this Agreement.
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9. Underwriter’s Commission. As consideration for the Underwriter’s services in connection with the Offering, the Corporation agrees to pay and deliver to the Underwriter (the “Underwriter’s Commission”) a cash fee equal to 6.0% of the aggregate Gross Proceeds from the sale of the Offered Units. The obligation of the Corporation to pay the Underwriter’s Commission shall arise at the Closing Time. If the Corporation agrees to pay a commission or fee to anyone other than pursuant to this Agreement (including without limitation any other financial advisor), such commission or fee shall not reduce the amount payable to the Underwriter under this Agreement and shall be solely of the account of the Corporation.
10. Expenses. The Corporation will be responsible for all of its own expenses related to the Offering (whether incurred before or after the date hereof), including, but not limited to: (i) the fees, taxes, disbursements of the Corporation and the Corporation’s legal counsels, auditors, and other consultants and service providers retained in connection with the Offering; (ii) all expenses of or incidental to the issue, sale or distribution of the Offered Units; and (iii) all costs incurred in connection with the preparation of documentation relating to the Offering. In addition, the Corporation will be responsible for all the Underwriter’s reasonable expenses of the Offering, including, but not limited to, fees and disbursements of accountants and auditors, technical consultants, translators and other applicable experts; all costs and expenses related to roadshows and marketing activities, printing, filing, issue, sale and distribution, stock exchange approval and other regulatory compliance; other out-of-pocket expenses of the Underwriter (including, but not limited to, travel expenses in connection with due diligence and marketing activities, and fees and disbursements of the Underwriter’s Canadian legal counsel, up to the maximum set out in Section 10 of the Engagement Letter (collectively, the “Underwriter’s Expenses”). On the Closing Date, the Underwriter’s Expenses incurred to such date shall be paid to the Underwriter by the Underwriter deducting such amount from the aggregate proceeds to be paid to the Corporation pursuant to Section 5 of this Agreement.
11. Survival. All terms, warranties, representations, covenants and agreements herein contained or contained in any documents delivered pursuant to this Agreement shall survive the issue and sale of the Offered Units and continue in full force and effect for the benefit of the Underwriter, the Purchasers and the Corporation, regardless of the Closing of the Offering and of any investigations carried out by the Underwriter in connection with the issue and sale of the Offered Units or otherwise, for a period ending on the date that is two years following the Closing Date; provided that the provisions contained Sections 10 and 12 shall survive and continue in full force and effect, indefinitely. In this regard, the Underwriter shall act as trustees for the Purchasers and accept these trusts and shall hold and enforce such rights on behalf of the Purchasers.
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| 12. | Indemnity. |
| (a) | The Corporation and its affiliates (together, the “Indemnitor”) hereby agrees to jointly and severally indemnify and hold harmless the Underwriter and any Selling Firms, each of their subsidiaries and affiliates, and each of their respective directors, officers, advisors, employees, partners, shareholders/unitholders and agents, and each person, if any, controlling the Underwriter, or any of its respective subsidiaries and affiliates (hereinafter referred to as the “Personnel”) from and against any and all expenses, losses, fees, claims, actions (including shareholder actions, derivative actions or otherwise), penalties, damages, obligations, and liabilities, whether joint or several, and the reasonable fees and expenses of their counsel, that may be incurred in advising with respect to and/or defending any actual or threatened claims, actions, suits, investigations or proceedings to which the Underwriter, Selling Firms, and/or their Personnel may become subject or otherwise involved in any capacity under any statute or common law, or otherwise insofar as such expenses, losses, claims, penalties, damages, liabilities or actions arise out of or are based, directly or indirectly, upon the performance of professional services rendered to the Indemnitor by the Underwriter, Selling Firms, and their Personnel hereunder, or otherwise in connection with the matters referred to in this Agreement (including the aggregate amount paid in reasonable settlement of any such actions, suits, investigations, proceedings or claims that may be made against the Underwriter and/or its Personnel, including legal proceedings or investigations by or on behalf of any governmental commission, regulatory authority, stock exchange or other entity having regulatory authority, either domestic or foreign), except that, if and to the extent that a court of competent jurisdiction in a final judgment from which no appeal can be made or a Governmental Authority in a final ruling from which no appeal can be made determines that an actual or threatened claim, action, suit, investigation or proceeding resulted from the gross negligence or willful misconduct of the Underwriter, Selling Firm, or Personnel claiming indemnity, such Person shall promptly reimburse to the Corporation any funds advanced to the indemnified party in respect of such claim, action, suit, investigation or proceeding and the indemnity provided for in this Section 12(a) shall cease to apply to such Person in respect of such claim, action, suit, investigation or proceeding. Without limiting the generality of the foregoing, this indemnity shall apply to all expenses (including legal fees and expenses), losses, claims and liabilities that the Underwriter, Selling Firms, and/or their Personnel may incur as a result of any action or litigation that may be threatened or brought against the Underwriter, Selling Firms, and/or their Personnel in respect of, caused by, result from, arise out of or based upon, directly or indirectly, this Agreement or the professional services rendered to the Indemnitor by the Underwriter, Selling Firms, and/or their Personnel hereunder, whether performed before or after the Indemnitor’s execution of this Agreement. |
| (b) | The Indemnitor agrees to waive any right the Indemnitor may have of first requiring the Underwriter, Selling Firms, and/or their Personnel to proceed against or enforce any other right, power, remedy or security or claim payment from any other Person before claiming under this indemnity. The Indemnitor also agrees that none of the Underwriter, Selling Firms, and/or their Personnel shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Indemnitor or any Person asserting a claim on behalf of or in right of the Indemnitor for or in connection with the professional services rendered to the Indemnitor by the Underwriter, Selling Firms, and/or their Personnel hereunder, whether performed before or after the Indemnitor’s execution of this Agreement. |
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| (c) | Promptly after receipt of notice of the commencement of any legal proceeding against the Underwriter, Selling Firms, or their Personnel or after receipt of notice of the commencement of any investigation, which is based, directly or indirectly, upon any matter in respect of which indemnification may be sought from the Indemnitor, the Underwriter, Selling Firms, or their Personnel will notify the Indemnitor in writing of the particulars thereof. However, the failure by the Underwriter, Selling Firms, or their Personnel to notify the Indemnitor will not relieve the Indemnitor of its obligations to jointly and severally indemnify the Underwriter, Selling Firms, and/or any Personnel, unless and only to the extent that any delay or failure to give notice herein materially and directly prejudices the defence of such action, suit, proceeding, claim or investigation or directly results in any material increase in the liability hereunder. The Indemnitor shall have 14 days after receipt of the notice to undertake, conduct and control, through the counsel of its own choosing and at its own expense, the settlement or defence of such action, suit, proceeding, claim or investigation. If the Indemnitor undertakes, conducts or controls the settlement or defense of the action, suit, proceeding, claim or investigation, the Underwriter, Selling Firms, and/or their Personnel shall have the right to participate in the settlement or defense of such action, suit, proceeding, claim or investigation and the Indemnitor shall throughout the course thereof provide copies of all relevant documentation to the Underwriter, Selling Firms, and/or their Personnel and will keep the Underwriter, Selling Firms and/or their Personnel advised of the progress thereof. The Indemnitor shall on behalf of itself and the Underwriter, Selling Firms, and/or any Personnel, as applicable, be entitled to (but not required) to assume the defence of any action, suit, proceeding, claim or investigation; provided, however, that (i) the defence shall be conducted through legal counsel acceptable to the Underwriter, Selling Firms, and/or any Personnel, as applicable, acting reasonably, and (ii) no settlement of any such action, suit, proceeding, claim or investigation may be made by the Indemnitor, and the Indemnitor shall not compromise, consent to the entry of any judgment in or otherwise seek to terminate any such action, suit, proceeding, claim or investigation in respect of which indemnification may be sought under this indemnity (whether or not the Underwriter, Selling Firms, and/or any Personnel are party to such action, suit, proceeding, claim or investigation), without the prior written consent of the Underwriter, Selling Firms, and/or any Personnel, as applicable, unless the Indemnitor has acknowledged in writing that the Underwriter, Selling Firms, and any Personnel are entitled to be indemnified in respect of any such action, suit, proceeding, claim or investigation and such settlement, compromise, consent or termination includes an unconditional release of the Underwriter, Selling Firms, and any Personnel from any liabilities arising out of such action, suit, proceeding, claim or investigation without any admission of negligence, misconduct, liability by or on behalf of the Underwriter, Selling Firms, and any Personnel. |
| - 38 - |
| (d) | The Indemnitor agrees that in case any legal proceeding shall be brought against the Indemnitor and/or the Underwriter, Selling Firms, or their Personnel by any governmental commission or regulatory authority or any stock exchange or other entity having regulatory authority, either domestic or foreign, or shall investigate the Indemnitor and/or the Underwriter, Selling Firms, and/or any Personnel or shall require the Indemnitor and/or the Underwriter, Selling Firms, and/or any Personnel to testify in connection therewith or respond to procedures designed to discover information regarding, in connection with, or by reason of the performance of professional services rendered to the Indemnitor by the Underwriter, the Underwriter shall have the right to retain counsel of their choice to separately represent them in the defense of a claim, which shall be at the Indemnitor’s expense if (i) the Indemnitor does not promptly assume the defence of the claim (using experienced and competent counsel) no later than 14 days after receiving actual notice of the claim (as set forth in Section 12(c) above), (ii) the Indemnitor agrees to separate representation, or (iii) the Underwriter is advised by counsel that there is an actual or potential conflict in the Indemnitor’s and the Underwriter’s respective interests or additional defences are available to the Underwriter which makes representation by the same counsel inappropriate. The Indemnitor also agrees to reimburse the Underwriter and/or its Personnel for time spent in connection with any claim at their normal per diem rates and the reasonable out-of-pocket expenses incurred by the Underwriter and/or its Personnel in connection therewith. |
| (e) | If for any reason, the foregoing indemnification is unavailable to the Underwriter, Selling Firms, any Personnel or insufficient to hold harmless the Underwriter, Selling Firms, or any Personnel, then the Indemnitor shall contribute to the amount paid or payable by the Underwriter, Selling Firms, or any Personnel as a result of such expense, loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnitor on the one hand, and the Underwriter, Selling Firms, or any Personnel on the other hand, but also the relative fault of the Indemnitor and the Underwriter, Selling Firms, or any Personnel, as well as any relevant equitable considerations; provided that the Indemnitor shall in any event contribute to the amount paid or payable by the Underwriter, Selling Firms, or any Personnel as a result of such expense, loss, claim, damage or liability any excess of such amount over the aggregate amount of the fees received by the Underwriter under this Agreement. |
| (f) | The Indemnitor hereby constitutes the Underwriter as trustees for each of the other indemnified parties (being any of the Underwriter, Selling Firms, and/or their Personnel) of the Indemnitor’s covenants under this indemnity with respect to those Persons and the Underwriter agrees to accept that trust and to hold and enforce those covenants on behalf of those Persons. The indemnity, contribution and other obligations of the Indemnitor hereunder shall be in addition to any liabilities which the Indemnitor may otherwise have to the Underwriter, Selling Firms, and/or their Personnel, shall extend upon the same terms and conditions to the Personnel of the Underwriter and Selling Firms and shall be binding upon and enure to the benefit of any successors, assigns, heirs and personal representatives of the Indemnitor, the Underwriter, Selling Firms, and any of the Personnel. The foregoing provisions shall survive the completion or termination of professional services rendered under this Agreement or any termination of the authorization given by this Agreement. |
| - 39 - |
13. Advertisements. If the Offering is successfully completed, the Corporation acknowledges and agrees that the Underwriter will be permitted to publish, at their own expense, public announcements or other communications relating to their services in connection with the Offering as they consider appropriate, in compliance with all laws, including Securities Laws.
14. Notices. Unless otherwise expressly provided in this Agreement, any notice or other communication to be given under this Agreement (a “notice”) shall be in writing addressed as follows:
| (a) | If to the Corporation, to: | |
| Cardiol Therapeutics Inc. | ||
| 602-2265 Upper Middle Road East | ||
| Oakville, Ontario L6H 0G5 |
| Attention: | Dan Crandall | ||
| Email: | [Redacted - Contact Information] |
| with a copy (which shall not constitute notice) to: | ||
| Borden Ladner Gervais LLP | ||
| Bay Adelaide Centre, East Tower | ||
| 22 Adelaide St. W., Suite 3400 | ||
| Toronto, Ontario M5H 4E3 |
| Attention: | Phillipe Tardif and Colin Cameron-Vendrig | ||
| Email: | [Redacted - Contact Information] |
| (b) | If to the Underwriter, as follows: |
| Canaccord Genuity Corp. | ||
| 40 Temperance St. | ||
| Toronto, Ontario M5H 0B4 |
| Attention: | Jason Sleeth, Managing Director, Head of Private Placement Platform | ||
| Email: | [Redacted - Contact Information] |
| with a copy (which shall not constitute notice) to: | ||
| Goodmans LLP | ||
| Bay Adelaide Centre | ||
| 333 Bay Street, Suite 3400 | ||
| Toronto, Ontario M5H 2S7 |
| Attention: | David Coll-Black | ||
| Email: | [Redacted - Contact Information] |
| - 40 - |
or to such other address as any of the parties may designate by notice given to the others.
Each notice shall be personally delivered to the addressee or sent by email transmission to the addressee and (i) a notice which is personally delivered shall, if delivered on a Business Day, be deemed to be given and received on that day and, in any other case, be deemed to be given and received on the first Business Day following the day on which it is delivered; and (ii) a notice which is sent by email transmission shall be deemed to be given and received on the first Business Day following the day on which it is confirmed to have been sent.
15. Relationship between the Corporation and the Underwriter. In connection with the services described herein, the Underwriter shall act as an independent contractor, and any duties of the Underwriter arising out of this Agreement shall be owed solely to the Corporation. The Corporation acknowledges that the Underwriter is a securities firm engaged in securities trading and brokerage activities, as well as providing investment banking and financial advisory services, which may involve services provided to other companies engaged in businesses similar or competitive to the business of the Corporation. The Corporation acknowledges and agrees that in connection with all aspects of the engagement contemplated hereby, and any communications in connection therewith, the Corporation, on the one hand, and the Underwriter and any of its affiliates through which the Underwriter may be acting, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of any of the Underwriter or such affiliates, and each party hereto agrees that no such duty will be deemed to have arisen in connection with any such transactions or communications. Information which is held elsewhere within the Underwriter, but of which none of the individuals in the investment banking department or division of the Underwriter involved in providing the services contemplated by this Agreement actually has knowledge (or without breach of internal procedures can properly obtain), will not for any purpose be taken into account in determining any of the responsibilities of the Underwriter to the Corporation under this Agreement.
16. Time of the Essence. Time shall, in all respects, be of the essence hereof.
17. Currency. All references herein to dollar amounts and expressed as ’$’ are to the lawful money of Canada, unless indicated otherwise.
18. Headings. The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof.
19. Singular and Plural, etc. Where the context so requires, words importing the singular number include the plural and vice versa, and words importing gender shall include the masculine, feminine and neuter genders.
20. Entire Agreement. This Agreement constitutes the only agreement among the parties with respect to the subject matter hereof and shall supersede any and all prior agreements, negotiations, understandings and discussions, including the Engagement Letter (except as explicitly set forth herein and therein). This Agreement may be amended or modified in any respect by written instrument only. For greater certainty, the Parties agree that the Engagement Letter and all other pre-contractual materials, negotiations and communications shall not be used to interpret, construe, supplement or vary this Agreement and shall have no force or effect unless, and only to the extent, expressly incorporated by specific reference herein.
| - 41 - |
21. Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.
22. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Corporation and the Underwriter irrevocably attorn to the jurisdiction of the courts of the Province of Ontario with respect to any matters arising out of this Agreement.
23. Successors and Assigns. The terms and provisions of this Agreement shall be binding upon and enure to the benefit of the Corporation, the Underwriter and the Purchasers and their respective executors, heirs, successors and permitted assigns; provided that, this Agreement shall not be assignable by any party without the written consent of the others.
24. Further Assurances. Each of the parties hereto shall do or cause to be done all such acts and things and shall execute or cause to be executed all such documents, agreements and other instruments as may reasonably be necessary or desirable for the purpose of carrying out the provisions and intent of this Agreement.
25. Absence of Fiduciary Relationship. The Corporation acknowledges and agrees that: (a) the Underwriter has not assumed nor will it assume a fiduciary responsibility in favour of the Corporation with respect to the Offering contemplated hereby or the process leading thereto and the Underwriter has no obligation to the Corporation with respect to the Offering contemplated hereby except the obligations expressly set forth in this Agreement; (b) the Underwriter and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Corporation; and (c) the Underwriter has not provided any legal, accounting, regulatory or tax advice with respect to the Offering contemplated hereby and the Corporation has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.
26. Language. The parties confirm their express wish that this Agreement and all related documents be drafted in the English language. Les Parties confirment leur volunté express que la présente convention et tous les documents s’y rattachant soient rédigé en langue anglaise.
27. Effective Date. This Agreement is intended to and shall take effect as of the date first set forth above, notwithstanding its actual date of execution or delivery.
28. Counterparts and Facsimile. This Agreement may be executed in any number of counterparts and delivered by email or facsimile, each of which so executed and delivered shall constitute an original and all of which taken together shall form one and the same agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
If the Corporation is in agreement with the foregoing terms and conditions, please so indicate by executing a copy of this Agreement where indicated below and delivering the same to the Underwriter.
Yours very truly,
| CANACCORD GENUITY CORP. | ||
| Per: | “Jason Sleeth” | |
| Jason Sleeth | ||
| Managing Director, Head of Private Placement Platform | ||
Signature Page – Underwriting Agreement
The foregoing is hereby accepted on the terms and conditions herein set forth.
| CARDIOL THERAPEUTICS INC. | ||
| Per: | “David Elsley” | |
| Authorized Signatory | ||
Signature Page – Underwriting Agreement
Exhibit 99.2
Executed Version
CARDIOL THERAPEUTICS INC.
as the Corporation and
ODYSSEY TRUST COMPANY
as the Warrant Agent
WARRANT INDENTURE
Providing for the Issue of Warrants
Dated as of January 23, 2026
TABLE OF CONTENTS
| Page No. | ||
| ARTICLE 1 INTERPRETATION | ||
| Section 1.1 | Definitions | 1 |
| Section 1.2 | Gender and Number | 5 |
| Section 1.3 | Headings, Etc. | 5 |
| Section 1.4 | Day not a Business Day | 5 |
| Section 1.5 | Time of the Essence | 5 |
| Section 1.6 | Monetary References | 6 |
| Section 1.7 | Applicable Law | 6 |
| ARTICLE 2 ISSUE OF WARRANTS | ||
| Section 2.1 | Creation and Issue of Warrants | 6 |
| Section 2.2 | Terms of Warrants | 6 |
| Section 2.3 | Warrantholder not a Shareholder | 6 |
| Section 2.4 | Warrants to Rank Pari Passu | 7 |
| Section 2.5 | Form of Warrants, Certificated Warrants | 7 |
| Section 2.6 | Book Entry Warrants | 7 |
| Section 2.7 | Warrant Certificate | 9 |
| Section 2.8 | Legends | 10 |
| Section 2.9 | Register of Warrants | 12 |
| Section 2.10 | Issue in Substitution for Warrant Certificates Lost, etc. | 13 |
| Section 2.11 | Exchange of Warrant Certificates | 13 |
| Section 2.12 | Transfer and Ownership of Warrants | 13 |
| Section 2.13 | Cancellation of Surrendered Warrants | 14 |
| ARTICLE 3 EXERCISE OF WARRANTS | ||
| Section 3.1 | Right of Exercise | 15 |
| Section 3.2 | Warrant Exercise | 15 |
| Section 3.3 | Restrictions on Exercise by U.S. Warrantholders | 17 |
| Section 3.4 | Transfer Fees and Taxes | 17 |
| Section 3.5 | Warrant Agency | 17 |
| Section 3.6 | Effect of Exercise of Warrant Certificates | 18 |
| Section 3.7 | Partial Exercise of Warrants; Fractions | 18 |
| Section 3.8 | Expiration of Warrants | 18 |
| Section 3.9 | Accounting and Recording | 19 |
| Section 3.10 | Securities Restrictions | 19 |
| ARTICLE 4 ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE | ||
| Section 4.1 | Adjustment of Number of Common Shares and Exercise Price | 19 |
| Section 4.2 | Entitlement to Common Shares on Exercise of Warrant | 23 |
| Section 4.3 | No Adjustment for Certain Transactions | 23 |
| Section 4.4 | Determination by Independent Firm | 24 |
| Section 4.5 | Proceedings Prior to any Action Requiring Adjustment | 24 |
| Section 4.6 | Certificate of Adjustment | 24 |
| Section 4.7 | Notice of Special Matters | 24 |
| Section 4.8 | No Action after Notice | 24 |
| Section 4.9 | Other Action | 25 |
| Section 4.10 | Protection of Warrant Agent | 25 |
| Section 4.11 | Participation by Warrantholder | 25 |
| Section 4.12 | Regulatory Approval of Adjustments | 25 |
| ARTICLE 5 RIGHTS OF THE CORPORATION AND COVENANTS | ||
| Section 5.1 | Optional Purchases by the Corporation | 25 |
TABLE OF CONTENTS
| Page No. | ||
| Section 5.2 | General Covenants | 26 |
| Section 5.3 | Warrant Agent’s Remuneration and Expenses | 27 |
| Section 5.4 | Performance of Covenants by Warrant Agent | 27 |
| Section 5.5 | Enforceability of Warrants | 27 |
| ARTICLE 6 ENFORCEMENT | ||
| Section 6.1 | Suits by Registered Warrantholders | 27 |
| Section 6.2 | Suits by the Corporation | 28 |
| Section 6.3 | Immunity of Shareholders, etc. | 28 |
| Section 6.4 | Waiver of Default | 28 |
| ARTICLE 7 MEETINGS OF REGISTERED WARRANTHOLDERS | ||
| Section 7.1 | Right to Convene Meetings | 28 |
| Section 7.2 | Notice | 29 |
| Section 7.3 | Chairman | 29 |
| Section 7.4 | Quorum | 29 |
| Section 7.5 | Power to Adjourn | 29 |
| Section 7.6 | Show of Hands | 29 |
| Section 7.7 | Poll and Voting | 30 |
| Section 7.8 | Regulations | 30 |
| Section 7.9 | Corporation and Warrant Agent May be Represented | 30 |
| Section 7.10 | Powers Exercisable by Extraordinary Resolution | 30 |
| Section 7.11 | Meaning of Extraordinary Resolution | 31 |
| Section 7.12 | Powers Cumulative | 32 |
| Section 7.13 | Minutes | 32 |
| Section 7.14 | Instruments in Writing | 32 |
| Section 7.15 | Binding Effect of Resolutions | 32 |
| Section 7.16 | Holdings by Corporation Disregarded | 33 |
| ARTICLE 8 SUPPLEMENTAL INDENTURES | ||
| Section 8.1 | Provision for Supplemental Indentures for Certain Purposes | 33 |
| Section 8.2 | Successor Entities | 34 |
| ARTICLE 9 CONCERNING THE WARRANT AGENT | ||
| Section 9.1 | Trust Indenture Legislation | 34 |
| Section 9.2 | Rights and Duties of Warrant Agent | 34 |
| Section 9.3 | Evidence, Experts and Advisers | 35 |
| Section 9.4 | Documents, Monies, etc. Held by Warrant Agent | 36 |
| Section 9.5 | Actions by Warrant Agent to Protect Interest | 36 |
| Section 9.6 | Warrant Agent Not Required to Give Security | 36 |
| Section 9.7 | Protection of Warrant Agent | 36 |
| Section 9.8 | Replacement of Warrant Agent; Successor by Merger | 37 |
| Section 9.9 | Acceptance of Agency | 38 |
| Section 9.10 | Warrant Agent Not to be Appointed Receiver | 38 |
| Section 9.11 | Warrant Agent Not Required to Give Notice of Default | 38 |
| Section 9.12 | Anti-Money Laundering | 38 |
| Section 9.13 | Compliance with Privacy Code | 39 |
| Section 9.14 | Securities Exchange Commission Certification | 40 |
| ARTICLE 10 GENERAL | ||
| Section 10.1 | Notice to the Corporation and the Warrant Agent | 40 |
ii
TABLE OF CONTENTS
| Page No. | ||
| Section 10.2 | Notice to Registered Warrantholders | 41 |
| Section 10.3 | Ownership of Warrants | 41 |
| Section 10.4 | Counterparts | 42 |
| Section 10.5 | Satisfaction and Discharge of Indenture | 42 |
| Section 10.6 | Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders | 42 |
| Section 10.7 | Common Shares or Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided | 43 |
| Section 10.8 | Severability | 43 |
| Section 10.9 | Force Majeure | 43 |
| Section 10.10 | Assignment, Successors and Assigns | 44 |
| Section 10.11 | Rights of Rescission and Withdrawal for Holders | 44 |
| SCHEDULE “A” FORM OF WARRANT | ||
| SCHEDULE “B” EXERCISE FORM | ||
| SCHEDULE “C” FORM OF DECLARATION FOR REMOVAL OF LEGEND | ||
iii
WARRANT INDENTURE
THIS WARRANT INDENTURE is dated as of January 23, 2026
BETWEEN:
CARDIOL THERAPEUTICS INC., a corporation incorporated under the laws of Ontario (the “Corporation”),
- and -
ODYSSEY TRUST COMPANY, a trust company continued under the laws of Canada with an office in the City of Toronto in the Province of Ontario (the “Warrant Agent”)
WHEREAS the Corporation is completing a brokered private placement of 11,423,078 units of the Corporation (the “Units”) at a price of $1.30 per Unit (the “Offering”) with each Unit comprised of one Common Share (as defined below) and one half of one Warrant (as defined below);
AND WHEREAS in connection with the Offering, the Corporation proposes to issue 5,711,539 Warrants pursuant to this Indenture;
AND WHEREAS pursuant to this Indenture, each Warrant shall, subject to adjustment, entitle the holder thereof to acquire one (1) Common Share upon payment of the Exercise Price upon the terms and conditions herein set forth;
AND WHEREAS all acts and deeds necessary have been done and performed to make the Warrants, when created and issued as provided in this Indenture, legal, valid and binding upon the Corporation with the benefits and subject to the terms of this Indenture;
AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Corporation and not by the Warrant Agent;
NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Corporation hereby appoints the Warrant Agent as warrant agent to hold the rights, interests and benefits contained herein for and on behalf of those persons who from time to time become the holders of Warrants issued pursuant to this Indenture and the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions.
In this Indenture, including the recitals and schedules hereto, and in all indentures supplemental hereto:
“Adjustment Period” means the period from the Effective Date up to and including the Expiry Time;
“Applicable Legislation” means any statute of Canada or a province thereof, and the regulations under any such named or other statute, relating to warrant indentures or to the rights, duties and obligations of warrant agents under warrant indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;
2
“Auditors” means BDO Canada LLP or such other firm of chartered professional accountants duly appointed as auditors of the Corporation, from time to time;
“Authenticated” means (a) with respect to the issuance of a Warrant Certificate, one which has been duly signed by the Corporation and authenticated by signature of an authorized officer of the Warrant Agent, and (b) with respect to the issuance of an Uncertificated Warrant, one in respect of which the Warrant Agent has completed all Internal Procedures such that the particulars of such Uncertificated Warrant as required by Section 2.7 are entered in the register of holders of Warrants, “Authenticate”, “Authenticating” and “Authentication” have the appropriate correlative meanings;
“Book Entry Participants” means institutions that participate directly or indirectly in the Depository’s book entry registration system for the Warrants;
“Book Entry Warrants” means Warrants that are to be held only by or on behalf of the Depository;
“Business Day” means any day other than Saturday, Sunday or a statutory or civic holiday, or any other day on which banks are not open for business in the City of Toronto in the Province of Ontario, and shall be a day on which the Exchange is open for trading;
“CDS Global Warrants” means Warrants representing all or a portion of the aggregate number of Warrants issued in the name of the Depository represented by an Uncertificated Warrant, or if requested by the Depository or the Corporation, by a Warrant Certificate;
“CDSX” means the settlement and clearing system of CDS Clearing and Depository Services Inc. for equity and debt securities in Canada;
“Certificated Warrant” means a Warrant evidenced by a writing or writings substantially in the form of Schedule “A”, attached hereto;
“Common Shares” means, subject to Article 4, fully paid and non-assessable Class A common shares of the Corporation as presently constituted;
“Corporation” means Cardiol Therapeutics Inc.;
“Counsel” means a barrister and/or solicitor or a firm of barristers and/or solicitors retained by the Warrant Agent or retained by the Corporation, which may or may not be counsel for the Corporation;
“Current Market Price” of the Common Shares at any date means the volume weighted average of the trading price per Common Share for such Common Shares for each day there was a closing price for the twenty (20) consecutive Trading Days ending five (5) Trading Days prior to such date on the Exchange, or, if such Common Shares are not listed on any stock exchange then on such over-the-counter market as may be selected for such purpose by the directors of the Corporation acting reasonably, or, if not traded on any recognized market or exchange or over-the-counter market, as determined by the Corporation, acting reasonably;
“Depository” means CDS Clearing and Depository Services Inc. or such other person as is designated in writing by the Corporation to act as depository in respect of the Warrants;
“Distribution Compliance Period” means the 40-calendar day period after the later of (A) the day on which the Units were first offered to persons other than Distributors in the Offering in reliance on Regulation S under the U.S. Securities Act and (B) the closing date of the Offering;
3
“Distributor” means any underwriter, dealer, or other person who participates, pursuant to a contractual arrangement, in the distribution of the Units offered or sold in the Offering in reliance on Regulation S under the U.S. Securities Act;
“Dividends” means any dividends paid by the Corporation;
“DRS” means the direct registration statement;
“Effective Date” means the date of this Indenture;
“Exchange” means the Toronto Stock Exchange or such other stock exchange on which trading of the Common Shares principally occurs;
“Exchange Rate” means the number of Common Shares subject to the right of purchase under each Warrant;
“Exercise Date” means, in relation to a Warrant, the Business Day on which such Warrant is validly exercised or deemed to be validly exercised in accordance with Article 3 hereof;
“Exercise Notice” has the meaning set forth in Section 3.2(1);
“Exercise Price” at any time means the price at which a Common Share may be purchased by the exercise of a Warrant, which is initially $1.75 per Common Share, payable in immediately available Canadian funds, subject to adjustment in accordance with the provisions of Section 4.1;
“Expiry Date” means January 23, 2028;
“Expiry Time” means 4:00 p.m. (Eastern time) on the Expiry Date;
“Extraordinary Resolution” has the meaning set forth in Section 7.12(1);
“Internal Procedures” means in respect of the making of any one or more entries to, changes in or deletions of any one or more entries in the register at any time (including without limitation, original issuance or registration of transfer of ownership) the minimum number of the Warrant Agent’s internal procedures customary at such time for the entry, change or deletion made to be complete under the operating procedures followed at the time by the Warrant Agent;
“Issue Date” means in relation to a Warrant, the date of issue of the Warrant as per written order of the Corporation;
“person” means an individual, body corporate, partnership, trust, warrant agent, executor, administrator, legal representative or any unincorporated organization;
“register” means the one set of records and accounts maintained by the Warrant Agent pursuant to Section 2.9;
“Registered Warrantholders” means the persons who are registered owners of Warrants as such names appear on the register, and for greater certainty, shall include the Depository as well as the holders of Uncertificated Warrants appearing on the register of the Warrant Agent;
“Regulation D” means Regulation D as promulgated by the United States Securities and Exchange Commission under the U.S. Securities Act;
4
“Regulation S” means Regulation S as promulgated by the United States Securities and Exchange Commission under the U.S. Securities Act;
“Right” has the meaning set forth in Section 4.1 (i);
“Shareholders” means holders of Common Shares;
“Successor Assumption” has the meaning set forth in Section 4.1 (i);
“Successor Entity” has the meaning set forth in Section 4.1 (i);
“Tax Act” means the Income Tax Act (Canada) and the regulations thereunder;
“this Warrant Indenture”, “this Indenture”, “this Agreement”, “hereto” “herein”, “hereby”, “hereof” and similar expressions mean and refer to this Indenture and any indenture, deed or instrument supplemental hereto; and the expressions “Article”, “Section”, “subsection” and “paragraph” followed by a number, letter or both mean and refer to the specified article, section, subsection or paragraph of this Indenture;
“Trading Day” means, with respect to the Exchange, a day on which such exchange is open for the transaction of business and with respect to another exchange or an over-the-counter market means a day on which such exchange or market is open for the transaction of business;
“Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the NYSE American, the OTCQB, OTCQX, Pink Open Market (or any successors to any of the foregoing);
“Uncertificated Warrant” means any Warrant which is not a Certificated Warrant;
“United States” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
“U.S. Accredited Investor” means an “accredited investor” as defined in Rule 501(a) of Regulation D;
“U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended;
“U.S. Offering” means, if applicable, the offer and sale of units of the Corporation (with each unit comprised of one Common Share and one half of one Warrant) issuable on the date of this Indenture to, or for the account or benefit of, persons in the United States and U.S. Persons;
“U.S. Person” has the meaning set forth in Rule 902(k) of Regulation S;
“U.S. Securities Act” means the United States Securities Act of 1933, as amended;
“U.S. Warrantholder” means, if applicable, any purchaser of units of the Corporation in the U.S. Offering or any other Warrantholder that is, or is acting for the account or benefit of, a person in the United States or a U.S. Person that did not acquire the Warrants directly from the Corporation on the date of this Indenture;
“Warrants” means the Common Share purchase warrants created by and authorized by and issuable under this Indenture, to be issued and countersigned hereunder as a Certificated Warrant and /or Uncertificated Warrant held through the book entry registration system on a no certificate issued basis, entitling the holder or holders thereof to purchase up to 5,711,539 Common Shares (subject to adjustment as herein provided) at the Exercise Price prior to the Expiry Time and, where the context so requires, also means the warrants issued and Authenticated hereunder, whether by way of Warrant Certificate or Uncertificated Warrant;
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“Warrant Agency” means the principal office of the Warrant Agent in the City of Toronto, Ontario or such other place as may be designated in accordance with Section 3.5;
“Warrant Agent” means Odyssey Trust Company, in its capacity as warrant agent of the Warrants, or its successors from time to time;
“Warrant Certificate” means a certificate, substantially in the form set forth in Schedule “A” hereto or such other form as may be approved by the Corporation and the Warrant Agent, to evidence those Warrants that will be evidenced by a certificate;
“Warrantholders”, or “holders” without reference to Warrants, means the warrantholders as and in respect of Warrants registered in the name of the Depository and includes owners of Warrants who beneficially hold securities entitlements in respect of the Warrants through a Book Entry Participant or means, at a particular time, the persons entered in the register hereinafter mentioned as holders of Warrants outstanding at such time; and
“Warrantholders’ Request” means an instrument signed in one or more counterparts by Registered Warrantholders entitled to acquire in the aggregate not less than 50% of the aggregate number of Common Shares which could be acquired pursuant to all Warrants then unexercised and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein; and “written order of the Corporation”, “written request of the Corporation”, “written consent of the “Corporation”, “Officer’s Certificate” and “certificate of the Corporation” mean, respectively, a written order, request, consent and certificate signed in the name of the Corporation by any two duly authorized signatories of the Corporation and may consist of one or more instruments so executed.
Section 1.2 Gender and Number.
Words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa.
Section 1.3 Headings, Etc.
The division of this Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Warrants.
Section 1.4 Day not a Business Day.
If any day on or before which any action or notice is required to be taken or given hereunder is not a Business Day, then such action or notice shall be required to be taken or given on or before the requisite time on the next succeeding day that is a Business Day.
Section 1.5 Time of the Essence.
Time shall be of the essence of this Indenture.
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Section 1.6 Monetary References.
Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise expressed.
Section 1.7 Applicable Law.
This Indenture, the Warrants, the Warrant Certificates (including all documents relating thereto, which by common accord have been and will be drafted in English) shall be construed in accordance with the laws of the Province of Ontario, and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts. Each of the parties hereto, which shall include the Warrantholders, irrevocably attorns to the exclusive jurisdiction of the courts of the Province of Ontario with respect to all matters arising out of this Indenture and the transactions contemplated herein.
ARTICLE 2
ISSUE OF WARRANTS
Section 2.1 Creation and Issue of Warrants.
A maximum of 5,711,539 Warrants (subject to adjustment as herein provided) are hereby created and authorized to be issued in accordance with the terms and conditions hereof. By written order of the Corporation, the Warrant Agent shall deliver Warrants to Registered Warrantholders and record the name of the Registered Warrantholders on the Warrant register. Registration of interests in Warrants held by the Depository may be evidenced by a position appearing on the register for Warrants of the Warrant Agent for an amount representing the aggregate number of such Warrants outstanding from time to time.
Section 2.2 Terms of Warrants.
| (1) | Subject to the applicable conditions for exercise set out in Article 3 having been satisfied and subject to adjustment in accordance with Section 4.1, each Warrant shall entitle each Warrantholder thereof, upon exercise at any time after the Issue Date and prior to the Expiry Time, to acquire one (1) Common Share upon payment of the Exercise Price. |
| (2) | No fractional Warrants shall be issued or otherwise provided for hereunder and Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Warrants shall be rounded down to the nearest whole number and no consideration shall be paid for any such fractional Warrant. |
| (3) | Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture. |
| (4) | The number of Common Shares which may be purchased pursuant to the Warrants and the Exercise Price therefor shall be adjusted upon the events and in the manner specified in Section 4.1. |
Section 2.3 Warrantholder not a Shareholder.
Except as may be specifically provided herein, nothing in this Indenture or in the holding of a Warrant Certificate, entitlement to a Warrant or otherwise, shall, in itself, confer or be construed as conferring upon a Warrantholder any right or interest whatsoever as a Shareholder, including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings of the Corporation, or the right to Dividends and other allocations.
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Section 2.4 Warrants to Rank Pari Passu.
All Warrants shall rank equally and without preference over each other, whatever may be the actual date of issue thereof.
Section 2.5 Form of Warrants, Certificated Warrants.
The Warrants may be issued in both certificated and uncertificated form. Each Warrant originally issued pursuant to this Indenture will be evidenced in certificated form or uncertificated. The Warrants will not be issued as CDS Global Warrants until such time as the Warrants are confirmed eligible by the Depositary to be issued in the name of the Depositary. All Warrants issued in certificated form shall be evidenced by a Warrant Certificate (including all replacements issued in accordance with this Indenture), substantially in the form set out in Schedule “A” hereto, which shall be dated as of the Issue Date, shall bear such distinguishing letters and numbers as the Corporation may, with the approval of the Warrant Agent, prescribe, and shall be issuable in any denomination excluding fractions. All Warrants issued to the Depository may be in either a certificated or uncertificated form, such uncertificated form being evidenced by a book position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with Section 2.6.
Section 2.6 Book Entry Warrants.
| (1) | Registration of beneficial interests in and transfers of Warrants held by the Depository shall be made only through the book entry registration system and no Warrant Certificates shall be issued in respect of such Warrants except where physical certificates evidencing ownership in such securities are required or as set out herein or as may be requested by the Depository, as determined by the Corporation, from time to time. Except as provided in this Section 2.6, owners of beneficial interests in any CDS Global Warrants shall not be entitled to have Warrants registered in their names and shall not receive or be entitled to receive Warrants in definitive form or to have their names appear in the register referred to in Section 2.9 herein. |
| (2) | Notwithstanding any other provision in this Indenture, no CDS Global Warrants may be exchanged in whole or in part for Warrants registered, and no transfer of any CDS Global Warrants in whole or in part may be registered, in the name of any person other than the Depository for such CDS Global Warrants or a nominee thereof unless: |
| (a) | the Depository notifies the Corporation that it is unwilling or unable to continue to act as depository in connection with the Book Entry Warrants and the Corporation is unable to locate a qualified successor; |
| (b) | the Corporation determines that the Depository is no longer willing, able or qualified to discharge properly its responsibilities as holder of the CDS Global Warrants and the Corporation is unable to locate a qualified successor; |
| (c) | the Depository ceases to be a clearing agency or otherwise ceases to be eligible to be a depository and the Corporation is unable to locate a qualified successor; |
| (d) | the Corporation determines that the Warrants shall no longer be held as Book Entry Warrants through the Depository; |
| (e) | such right is required by applicable law, as determined by the Corporation and the Corporation’s Counsel; |
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| (f) | the Warrant is to be Authenticated to or for the account or benefit of a U.S. Warrantholder; |
| (g) | the Warrantholder intends to exercise the Warrants in accordance with the terms of the Indenture; or |
| (h) | such registration is effected in accordance with the internal procedures of the Depository and the Warrant Agent, |
following which, Warrants for those holders requesting the same shall be registered and issued to the beneficial owners of such Warrants or their nominees as directed by the holder. The Corporation shall provide an Officer’s Certificate giving notice to the Warrant Agent of the occurrence of any event outlined in this Section 2.6(2)(a)-(h).
| (3) | Subject to the provisions of this Section 2.6, any exchange of CDS Global Warrants for Warrants which are not CDS Global Warrants may be made in whole or in part in accordance with the provisions of Section 2.11, mutatis mutandis. All such Warrants issued in exchange for a CDS Global Warrant or any portion thereof shall be registered in such names as the Depository for such CDS Global Warrants shall direct and shall be entitled to the same benefits and subject to the same terms and conditions (except insofar as they relate specifically to CDS Global Warrants) as the CDS Global Warrants or portion thereof surrendered upon such exchange. |
| (4) | Every Warrant that is Authenticated upon registration or transfer of a CDS Global Warrant, or in exchange for or in lieu of a CDS Global Warrant or any portion thereof, whether pursuant to this Section 2.6, or otherwise, shall be Authenticated in the form of, and shall be, a CDS Global Warrant, unless such Warrant is registered in the name of a person other than the Depository for such CDS Global Warrant or a nominee thereof. |
| (5) | Notwithstanding anything to the contrary in this Indenture, subject to Applicable Legislation, the CDS Global Warrant will be issued as an Uncertificated Warrant, unless otherwise requested in writing by the Depository or the Corporation. |
| (6) | The rights of beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system shall be limited to those established by applicable law and agreements between the Depository and the Book Entry Participants and between such Book Entry Participants and the beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system, and such rights must be exercised through a Book Entry Participant in accordance with the rules and procedures of the Depository. |
| (7) | Notwithstanding anything herein to the contrary, neither the Corporation nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for: |
| (a) | the electronic records maintained by the Depository relating to any ownership interests or any other interests in the Warrants or the depository system maintained by the Depository, or payments made on account of any ownership interest or any other interest of any person in any Warrant represented by an electronic position in the book entry registration system (other than the Depository or its nominee); |
| (a) | maintaining, supervising or reviewing any records of the Depository or any Book Entry Participant relating to any such interest; or |
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| (b) | any advice or representation made or given by the Depository or those contained herein that relate to the rules and regulations of the Depository or any action to be taken by the Depository on its own direction or at the direction of any Book Entry Participant. |
| (8) | The Corporation may terminate the application of this Section 2.6 in its sole discretion in which case all Warrants shall be evidenced by Warrant Certificates registered in the name of a Person other than the Depository. |
Section 2.7 Warrant Certificate.
| (1) | For Warrants issued in certificated form, the form of certificate representing Warrants shall be substantially as set out in Schedule “A” hereto or such other form as is authorized from time to time by the Warrant Agent and the Corporation. Each Warrant Certificate shall be Authenticated on behalf of the Warrant Agent. Each Warrant Certificate shall be signed by any two duly authorized signatories of the Corporation whose signature shall appear on the Warrant Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event, certificates so signed are as valid and binding upon the Corporation as if it had been signed manually. Any Warrant Certificate which has two signatures as hereinbefore provided shall be valid notwithstanding that one or more of the persons whose signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Warrant Agent may determine. |
| (2) | The Warrant Agent shall Authenticate Uncertificated Warrants (whether upon original issuance, exchange, registration of transfer, partial payment, or otherwise) by completing its Internal Procedures and the Corporation shall, and hereby acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Warrants under this Indenture. Such Authentication shall be conclusive evidence that such Uncertificated Warrant has been duly issued hereunder and that the holder or holders are entitled to the benefits of this Indenture. The register shall be final and conclusive evidence as to all matters relating to Uncertificated Warrants with respect to which this Indenture requires the Warrant Agent to maintain records or accounts. In case of differences between the register at any time and any other time the register at the later time shall be controlling, absent manifest error and such Uncertificated Warrants are binding on the Corporation. |
| (3) | Any Warrant Certificate validly issued in accordance with the terms of this Indenture in effect at the time of issue of such Warrant Certificate shall, subject to the terms of this Indenture and applicable law, validly entitle the holder to acquire Common Shares, notwithstanding that the form of such Warrant Certificate may not be in the form currently required by this Indenture. |
| (4) | No Warrant shall be considered issued and shall be valid or obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by the Warrant Agent. Authentication by the Warrant Agent, including by way of entry on the register, shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrant Certificates or Uncertificated Warrants (except the due Authentication thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the Warrants or any of them or of the consideration thereof. Authentication by the Warrant Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated have been duly issued hereunder and that the holder thereof is entitled to the benefits of this Indenture. |
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| (5) | No Certificated Warrant shall be considered issued and Authenticated or, if Authenticated, shall be obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by signature by or on behalf of the Warrant Agent substantially in the form of the Warrant set out in Schedule “A” hereto. Such Authentication on any such Certificated Warrant shall be conclusive evidence that such Certificated Warrant is duly Authenticated and is valid and a binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture. |
| (6) | No Uncertificated Warrant shall be considered issued and shall be obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by entry on the register of the particulars of the Uncertificated Warrant. Such entry on the register of the particulars of an Uncertificated Warrant shall be conclusive evidence that such Uncertificated Warrant is a valid and binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture. |
| (7) | The Authentication by the Warrant Agent of any Warrants whether by way of entry on the register or otherwise shall not be construed as a representation or warranty by the Warrant Agent as to the validity of the Indenture or such Warrants (except the due Authentication thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the Warrants or any of them or the proceeds thereof. |
Section 2.8 Legends.
| (1) | Neither the Warrants nor the Common Shares issuable upon exercise of the Warrants have been or will be registered under the U.S. Securities Act or under any United States state securities laws. Each Warrant Certificate originally issued to a U.S. Warrantholder and each Warrant Certificate issued in exchange therefor or in substitution thereof shall bear the following legend or such variations thereof as the Corporation may prescribe from time to time: |
“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR (E) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
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provided that, if the Warrants are being sold outside the United States in accordance with Rule 904 of Regulation S, this legend may be removed by the transferor providing a declaration to the Corporation and the Warrant Agent in the form set forth in Schedule “C” or as the Corporation may prescribe from time to time, together with any other evidence, which may, without limitation, include an opinion of counsel of recognized standing reasonably satisfactory to the Corporation, required by the Warrant Agent, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act.
The Warrant Agent shall be entitled to request any other documents that it may reasonably require in accordance with its internal policies for the removal of the legend set forth above.
| (2) | Each CDS Global Warrant originally issued in Canada and held by the Depository, and each CDS Global Warrant issued in exchange therefor or in substitution thereof shall bear or be deemed to bear the following legend or such variations thereof as the Corporation may prescribe from time to time: |
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO CARDIOL THERAPEUTICS INC. (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO, OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.”
| (3) | Notwithstanding any other provisions of this Indenture, in processing and registering transfers of Warrants, no duty or responsibility whatsoever shall rest upon the Warrant Agent to determine the compliance by any transferor or transferee with the terms of the legend contained in Sections 2.8(1) or 2.8(2), or with the relevant securities laws or regulations, including, without limitation, Regulation S, and the Warrant Agent shall be entitled to assume that all transfers made in compliance with the terms of this Indenture are legal and proper. The Corporation shall direct the Warrant Agent in writing as to matters related to any applicable hold periods and applicable securities legislation and legending restrictions and requirements. Notwithstanding any other provisions of this Indenture, on the issuance or transfer of any Warrants and Common Shares, no duty or responsibility whatsoever shall rest upon the Warrant Agent or transfer agent to determine or verify the compliance with any applicable laws or regulatory requirements including, without limitation, Regulation S, and the Warrant Agent shall be entitled to assume that all transfers of Warrants and Common Shares issuable upon exercise thereof made in accordance with this Indenture are permissible pursuant to all applicable laws and regulatory requirements. |
| (4) | The Warrant Agent may assume that the address on the register of Warrantholders is the actual address of the Warrantholder and is also determinative of the residence of such Warrantholder and the address of any transferee to whom securities are transferred as shown on the transfer form is also determinative of the residence of such transferee. |
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Section 2.9 Register of Warrants.
| (1) | The Warrant Agent shall maintain records and accounts concerning the Warrants, whether certificated or uncertificated, which shall contain the information called for below with respect to each Warrant, together with such other information as may be required by law or as the Warrant Agent may elect to record. All such information shall be kept in one set of accounts and records which the Warrant Agent shall designate (in such manner as shall permit it to be so identified as such by an unaffiliated party) as the register of the holders of Warrants. The information to be entered for each account in the register of Warrants at any time shall include (without limitation): |
| (a) | the name and address of the Registered Warrantholder, the date of Authentication thereof and the number of Warrants; |
| (b) | whether such Warrant is a Certificated Warrant or an Uncertificated Warrant and, if a Warrant Certificate, the unique number or code assigned to and imprinted thereupon and, if an Uncertificated Warrant, the unique number or code assigned thereto if any; |
| (c) | whether such Warrant has been cancelled; and |
| (d) | a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered. |
The register shall be available for inspection by the Corporation and or any Warrantholder during the Warrant Agent’s regular business hours on a Business Day and upon payment to the Warrant Agent of its reasonable fees. Any Warrantholder exercising such right of inspection shall first provide an affidavit in form satisfactory to the Corporation and the Warrant Agent stating the name and address of the Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders or to influence the voting of Warrantholders at any meeting of Warrantholders.
| (2) | Once an Uncertificated Warrant has been Authenticated, the information set forth in the register with respect thereto at the time of Authentication may be altered, modified, amended, supplemented or otherwise changed only to reflect exercise or proper instructions to the Warrant Agent from the holder as provided herein, except that the Warrant Agent may act unilaterally to make purely administrative changes internal to the Warrant Agent and changes to correct errors. Each person who becomes a holder of an Uncertificated Warrant, by his, her or its acquisition thereof shall be deemed to have irrevocably (i) consented to the foregoing authority of the Warrant Agent to make such minor error corrections and (ii) agreed to pay to the Warrant Agent, promptly upon written demand, the full amount of all loss and expense (including without limitation reasonable legal fees of the Corporation and the Warrant Agent plus interest, at an appropriate then prevailing rate of interest to the Warrant Agent), sustained by the Corporation or the Warrant Agent as a proximate result of such error if but only if and only to the extent that such present or former holder realized any benefit as a result of such error and could reasonably have prevented, forestalled or minimized such loss and expense by prompt reporting of the error or avoidance of accepting benefits thereof whether or not such error is or should have been timely detected and corrected by the Warrant Agent; provided, that no person who is a bona fide purchaser shall have any such obligation to the Corporation or to the Warrant Agent. |
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Section 2.10 Issue in Substitution for Warrant Certificates Lost, etc.
| (1) | If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Warrant Agent shall certify and deliver, a new Warrant Certificate of like tenor, and bearing the same legend, if applicable, as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Warrant Agent and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder. |
| (2) | The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.10 shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issuance thereof, furnish to the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent, in their sole discretion, acting reasonably, and such applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation and the Warrant Agent, in their sole discretion, and shall pay the reasonable charges of the Corporation and the Warrant Agent in connection therewith. |
Section 2.11 Exchange of Warrant Certificates.
| (1) | Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Warrant Agent (including compliance with applicable securities legislation), be exchanged for one or more other Warrant Certificates representing the same aggregate number of Warrants, and bearing the same legend, if applicable, as represented by the Warrant Certificate or Warrant Certificates so exchanged. |
| (2) | Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is designated by the Corporation with the approval of the Warrant Agent. Any Warrant Certificate from the holder (or such other instructions, in form satisfactory to the Warrant Agent), tendered for exchange shall be surrendered to the Warrant Agency and cancelled by the Warrant Agent. |
| (3) | Warrant Certificates exchanged for Warrant Certificates that bear the legend set forth in Section 2.8(1) shall bear the same legend, unless the Warrant Agent is otherwise instructed by counsel to the Corporation or the Corporation. |
Section 2.12 Transfer and Ownership of Warrants.
| (1) | The Warrants may only be transferred on the register kept by the Warrant Agent at the Warrant Agency by the holder or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Warrant Agent only upon (a) in the case of a Warrant Certificate, surrendering to the Warrant Agent at the Warrant Agency the Warrant Certificates representing the Warrants to be transferred together with a duly executed transfer form as set forth in Schedule “A” attached hereto, and (b) in the case of Book Entry Warrants, in accordance with procedures prescribed by the Depository under the book entry registration system, and (c) upon compliance with: |
| (i) | the conditions herein; |
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| (ii) | such reasonable requirements as the Warrant Agent may prescribe; and |
| (iii) | all applicable securities legislation and requirements of regulatory authorities; |
and such transfer shall be duly noted in such register by the Warrant Agent. Upon compliance with such requirements, the Warrant Agent shall issue to the transferee a Warrant Certificate and to the transferee of an Uncertificated Warrant, an Uncertificated Warrant (and Uncertificated Warrants that are held as Book Entry Warrants shall be transferred and recorded through the relevant Book Entry Participant in accordance with the book entry registration system as the entitlement holder in respect of such Warrants), or the Warrant Agent shall Authenticate and deliver a Warrant Certificate upon request that part of the CDS Global Warrant be certificated. Transfers within the systems of the Depository are not the responsibility of the Warrant Agent and will not be noted on the register maintained by the Warrant Agent.
| (2) | If a Warrant Certificate tendered for transfer bears the legend set forth in Section 2.8(1), the Warrant Agent shall not register such transfer unless the transferor has provided the Warrant Agent with the Warrant Certificate and (A) the transfer is made to the Corporation, (B) a declaration to the effect set forth in Schedule “C” to this Warrant Indenture, or in such other form as the Corporation may from time to time prescribe, is delivered to the Corporation and the Warrant Agent, together with any other evidence, which may, without limitation, include an opinion of counsel of recognized standing reasonably satisfactory to the Corporation, required by the Warrant Agent, to the effect that the transfer is being made pursuant to Regulation S, or (C) an opinion of counsel or other evidence, in each case reasonably satisfactory to the Corporation, that the transfer is not required to be registered under the U.S. Securities Act. |
| (3) | Subject to the provisions of this Indenture and Applicable Legislation, the Warrantholder shall be entitled to the rights and privileges attaching to the Warrants, and the issue of Common Shares by the Corporation upon the exercise of Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and the Warrant Agent with respect to such Warrants and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder. |
| (4) | Furthermore, the Warrant Agent shall be under no obligation to process a transfer of a Warrant where such transfer would be in violation of applicable securities laws. |
Section 2.13 Cancellation of Surrendered Warrants.
All Warrant Certificates surrendered pursuant to Article 3 shall be cancelled by the Warrant Agent and upon such circumstances all such Uncertificated Warrants shall be deemed cancelled and so noted on the register by the Warrant Agent. Upon request by the Corporation, the Warrant Agent shall furnish to the Corporation a cancellation certificate identifying the Warrant Certificates so cancelled, the number of Warrants evidenced thereby, the number of Common Shares, if any, issued pursuant to such Warrants and the details of any Warrant Certificates issued in substitution or exchange for such Warrant Certificates cancelled.
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ARTICLE 3
EXERCISE OF WARRANTS
Section 3.1 Right of Exercise.
Subject to the provisions hereof, each Registered Warrantholder may exercise the right conferred on such holder to subscribe for and purchase one (1) Common Share for each Warrant after the Issue Date and prior to the Expiry Time and in accordance with the conditions herein.
Section 3.2 Warrant Exercise.
| (1) | Other than Warrants held by the Depository, Registered Warrantholders of Warrant Certificates who wish to exercise the Warrants held by them in order to acquire Common Shares must complete (i) the exercise form (the “Exercise Notice”) attached to the Warrant Certificate(s) which form is attached hereto as Schedule “B”, which may be amended by the Corporation with the consent of the Warrant Agent, if such amendment does not, in the reasonable opinion of the Corporation and the Warrant Agent, which may be based on the advice of Counsel, materially and adversely affect the rights, entitlements and interests of the Warrantholders, and deliver such certificate(s), the executed Exercise Notice and, a certified cheque, bank draft, wire transfer or money order payable to or to the order of the Corporation for the aggregate Exercise Price to the Warrant Agent at the Warrant Agency prior to the Expiry Time. The Warrants represented by a Warrant Certificate shall be deemed to be surrendered upon personal delivery of such certificate, Exercise Notice, and aggregate Exercise Price or, if such documents are sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the office referred to above. |
| (2) | The Warrants may not be exercised by or on behalf of a person in the United States or a U.S. Person unless an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available to the Warrantholder, and the Warrantholder follows the applicable procedures set forth in Section 3.3(2) below. |
| (3) | A Registered Warrantholder of Uncertificated Warrants evidenced by a security entitlement in respect of Warrants must complete the Exercise Notice and deliver the executed Exercise Notice and a certified cheque, bank draft or money order payable to or to the order of the Corporation for the aggregate Exercise Price to the Warrant Agent at the Warrant Agency. The Uncertificated Warrants shall be deemed to be surrendered upon receipt of the Exercise Notice and aggregate Exercise Price or, if such documents are sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the office referred to above. |
| (4) | A beneficial owner of Uncertificated Warrants evidenced by a security entitlement in respect of Warrants in the book entry registration system who desires to exercise his or her Warrants must do so by causing a Book Entry Participant to deliver to the Depository on behalf of the entitlement holder, notice of the owner’s intention to exercise Warrants in a manner acceptable to the Depository. Forthwith upon receipt by the Depository of such notice, as well as payment for the aggregate Exercise Price, the Depository shall deliver to the Warrant Agent confirmation of its intention to exercise Warrants (a “Confirmation”) in a manner acceptable to the Warrant Agent, including by electronic means through a book based registration system, including CDSX. An electronic exercise of the Warrants initiated by the Book Entry Participant through a book based registration system, including CDSX, shall constitute a representation to both the Corporation and the Warrant Agent that the beneficial owner at the time of exercise of such Warrants is not a U.S. Warrantholder. If the Book Entry Participant is not able to make or deliver the foregoing representations by initiating the electronic exercise of the Warrants, then such Warrants shall be withdrawn from the book based registration system, including CDSX, by the Book Entry Participant and an individually registered Warrant Certificate shall be issued by the Warrant Agent to such beneficial owner or Book Entry Participant and the exercise procedures set forth in Section 3.2(1) shall be followed (and in the case of a U.S. Warrantholder, Section 3.3(2) shall be followed). |
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| (5) | Payment representing the aggregate Exercise Price must be provided to the appropriate office of the Book Entry Participant in a manner acceptable to it. A notice in form acceptable to the Book Entry Participant and payment from such beneficial holder should be provided to the Book Entry Participant sufficiently in advance so as to permit the Book Entry Participant to deliver notice and payment to the Depository and for the Depository in turn to deliver notice and payment to the Warrant Agent prior to the Expiry Time. The Depository will initiate the exercise by way of the Confirmation and forward the aggregate Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to the Depository through the book entry registration system the Common Shares to which the exercising Warrantholder is entitled pursuant to the exercise. Any expense associated with the exercise process will be for the account of the entitlement holder exercising the Warrants and/or the Book Entry Participant exercising the Warrants on its behalf. |
| (6) | By causing a Book Entry Participant to deliver notice to the Depository, a Warrantholder shall be deemed to have irrevocably surrendered his or her Warrants so exercised and appointed such Book Entry Participant to act as his or her exclusive settlement agent with respect to the exercise and the receipt of Common Shares in connection with the obligations arising from such exercise. |
| (7) | Any notice which the Depository determines to be incomplete, not in proper form or not duly executed shall for all purposes be void and of no force and effect and the exercise to which it relates shall be considered for all purposes not to have been exercised thereby. A failure by a Book Entry Participant to exercise or to give effect to the settlement thereof in accordance with the Warrantholder’s instructions will not give rise to any obligations or liability on the part of the Corporation or Warrant Agent to the Book Entry Participant or the Warrantholder. |
| (8) | Any exercise form or Exercise Notice referred to in this Section 3.2 shall be signed by the Registered Warrantholder, or its executors or administrators or other legal representatives or an attorney of the Registered Warrantholder, duly appointed by an instrument in writing satisfactory to the Warrant Agent but such Exercise Notice need not be executed by the Depository. |
| (9) | Any exercise referred to in this Section 3.2 shall require that the entire Exercise Price for Common Shares subscribed must be paid at the time of subscription and such Exercise Price and original Exercise Notice executed by the Registered Warrantholder or Confirmation from the Depository must be received by the Warrant Agent prior to the Expiry Time. |
| (10) | Warrants may only be exercised pursuant to this Section 3.2 by or on behalf of a Registered Warrantholder who makes the certifications set forth on the Exercise Notice set out in Schedule “B” and otherwise complies with the provisions of the Exercise Notice, including, without limitation, the delivery of any opinion of counsel required thereby. |
| (11) | If the form of Exercise Notice set forth in the Warrant Certificate shall have been amended, the Corporation shall cause the amended Exercise Notice to be forwarded to all Registered Warrantholders. |
| (12) | Exercise Notices and Confirmations must be delivered to the Warrant Agent at any time during the Warrant Agent’s actual business hours on any Business Day prior to the Expiry Time. Any Exercise Notice or Confirmations received by the Warrant Agent after business hours on any Business Day other than the Expiry Date will be deemed to have been received by the Warrant Agent on the next following Business Day. |
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| (13) | Any Warrant with respect to which an Exercise Form is not received by the Warrant Agent before the Expiry Time shall be deemed to have expired and become void and all rights with respect to such Warrants shall terminate and be cancelled. |
Section 3.3 Restrictions on Exercise by U.S. Warrantholders.
| (1) | Subject to Section 3.3(2) below, (i) Warrants may not be exercised within the United States or by or on behalf of any person in the United States or U.S. Person; and (ii) no Common Shares issued upon exercise of Warrants may be delivered to any address in the United States. |
| (2) | Notwithstanding Section 3.2(2) or Section 3.3(1), (i) Warrants may be exercised by or on behalf of a person in the United States or a U.S. Person, and (ii) Common Shares issued upon exercise of any such Warrants may be delivered to an address in the United States, provided that (A) (1) the person exercising the Warrants is a U.S. Warrantholder that acquired the Warrants in the U.S. Offering, (2) the person exercising the Warrants is a U.S. Accredited Investor at the time of exercise of the Warrants, (3) the representations, warranties and covenants made by the U.S. Warrantholder in the U.S. Offering remain true and correct, and (4) the U.S. Warrantholder provides a certification to the foregoing effect in the Exercise Notice; or (B) the person exercising the Warrants has delivered to the Corporation an opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance satisfactory to the Corporation and the Warrant Agent, each acting reasonably) to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available. |
| (3) | If certificates representing Common Shares are issued upon the exercise of Certificated Warrants which bear the legend set forth in Section 2.8(1) and which are issued pursuant to Box B or C of the Exercise Form, upon such issuance of certificated Common Shares they shall bear the legend set forth in Section 2.8(1). |
Section 3.4 Transfer Fees and Taxes.
If any of the Common Shares subscribed for are to be issued to a person or persons other than the Registered Warrantholder, the Registered Warrantholder shall execute the form of transfer and will comply with such reasonable requirements as the Warrant Agent may stipulate and will pay to the Corporation or the Warrant Agent on behalf of the Corporation, all applicable transfer or similar taxes and the Corporation will not be required to issue or deliver certificates evidencing Common Shares unless or until such Warrantholder shall have paid to the Corporation or the Warrant Agent on behalf of the Corporation, the amount of such tax or shall have established to the satisfaction of the Corporation and the Warrant Agent that such tax has been paid or that no tax is due.
Section 3.5 Warrant Agency.
To facilitate the exchange, transfer or exercise of Warrants and compliance with such other terms and conditions hereof as may be required, the Corporation has appointed the Warrant Agency, as the agency at which Warrants may be surrendered for exchange or transfer or at which Warrants may be exercised and the Warrant Agent has accepted such appointment. The Corporation may from time to time designate alternate or additional places as the Warrant Agency (subject to the Warrant Agent’s prior approval) and will give notice to the Warrant Agent of any proposed change of the Warrant Agency. Branch registers shall also be kept at such other place or places, if any, as the Corporation, with the approval of the Warrant Agent, may designate. The Warrant Agent will from time to time when requested to do so by the Corporation or any Registered Warrantholder, upon payment of the Warrant Agent’s reasonable charges, furnish a list of the names and addresses of Registered Warrantholders showing the number of Warrants held by each such Registered Warrantholder.
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Section 3.6 Effect of Exercise of Warrant Certificates.
| (1) | Upon the exercise of Warrants Certificates or Uncertificated Warrants pursuant to and in compliance with Section 3.2 and subject to Section 3.3 and Section 3.4, the Common Shares to be issued pursuant to the Warrants exercised shall be deemed to have been issued and the person or persons to whom such Common Shares are to be issued shall be deemed to have become the holder or holders of such Common Shares on the Exercise Date unless the register shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such person or persons deemed to have become the holder or holders of record of such Common Shares, on the date on which such register is reopened. It is hereby understood that in order for persons to whom Common Shares are to be issued, to become holders of Common Shares on record on the Exercise Date, beneficial holders must commence the exercise process sufficiently in advance so that the Warrant Agent is in receipt of all items of exercise at least one Business Day prior to such Exercise Date. |
| (2) | Within five Business Days after the Exercise Date with respect to a Warrant, the Warrant Agent shall cause to be delivered or mailed to the person or persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such person or persons at the Warrant Agency where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for, or any other appropriate evidence of the issuance of Common Shares to such person or persons in respect of Common Shares issued under the book entry registration system. |
Section 3.7 Partial Exercise of Warrants; Fractions.
| (1) | The holder of any Warrants may exercise his right to acquire a number of whole Common Shares less than the aggregate number which the holder is entitled to acquire. In the event of any exercise of a number of Warrants less than the number which the holder is entitled to exercise, the holder of Warrants upon such exercise shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate evidence of Warrants, in respect of the balance of the Warrants held by such holder and which were not then exercised. |
| (2) | Notwithstanding anything herein contained including any adjustment provided for in Section 4.1, the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Common Shares. Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Common Shares shall be rounded down to the nearest whole number and the holder of such Warrants shall not be entitled to any compensation in respect of any fractional Common Shares which is not issued. |
Section 3.8 Expiration of Warrants.
Immediately after the Expiry Time, all rights under any Warrant in respect of which the right of acquisition provided for herein shall not have been exercised shall cease and terminate and each Warrant shall be void and of no further force or effect.
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Section 3.9 Accounting and Recording.
| (1) | The Warrant Agent shall promptly account to the Corporation with respect to Warrants exercised, and shall as soon as practicable forward to the Corporation (or into an account or accounts of the Corporation with the bank or trust company designated by the Corporation for that purpose), all monies received by the Warrant Agent on the subscription of Common Shares through the exercise of Warrants. All such monies and any securities or other instruments, from time to time received by the Warrant Agent, shall be received for the benefit of, and shall be segregated and kept apart by the Warrant Agent, for the benefit of, the Warrantholders and the Corporation as their interests may appear. |
| (2) | The Warrant Agent shall record the particulars of Warrants exercised, which particulars shall include the names and addresses of the persons who become holders of Common Shares on exercise and the Exercise Date, in respect thereof. The Warrant Agent shall provide such particulars in writing to the Corporation within three Business Days of any request by the Corporation therefor. |
Section 3.10 Securities Restrictions.
Notwithstanding anything herein contained, Common Shares will be issued upon exercise of a Warrant only in compliance with the securities laws of any applicable jurisdiction.
ARTICLE 4
ADJUSTMENT OF NUMBER OF COMMON SHARES
AND EXERCISE
PRICE
Section 4.1 Adjustment of Number of Common Shares and Exercise Price.
The subscription rights in effect under the Warrants for Common Shares issuable upon the exercise of the Warrants shall be subject to adjustment from time to time as follows:
| (a) | if, at any time during the Adjustment Period, the Corporation shall: |
| (i) | subdivide, re-divide or change its outstanding Common Shares into a greater number of Common Shares; |
| (ii) | reduce, combine or consolidate its outstanding Common Shares into a lesser number of Common Shares; or |
| (iii) | issue Common Shares or securities exchangeable for, or convertible into, Common Shares to all or substantially all of the holders of Common Shares by way of stock dividend or other distribution (other than a distribution of Common Shares upon the exercise of Warrants or any outstanding options); |
(any of such events in Section 4.1(a)(i), (ii) or (iii) being called a “Common Share Reorganization”) then the Exercise Price shall be adjusted as of the effect on the effective date or record date of such subdivision, re-division, change, reduction, combination, consolidation or distribution, as the case may be, shall in the case of the events referred to in (i) or (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, re-division, change or distribution, or shall, in the case of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding as of the effective date or record date after giving effect to such Common Shares Reorganization (including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Share that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date or effective date). Such adjustment shall be made successively whenever any event referred to in this Section 4.1(a) shall occur. Upon any adjustment of the Exercise Price pursuant to Section 4.1(a), the Exchange Rate shall be contemporaneously adjusted by multiplying the number of Common Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;
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| (b) | if and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible or exchangeable into Common Shares) at a price per Common Share (or having a conversion or exchange price per Common Share) less than 95% of the Current Market Price on such record date (a “Rights Offering”), the Exercise Price shall be adjusted immediately after such record date so that it shall equal the amount determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered) by the Current Market Price, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase or into which the convertible or exchangeable securities so offered are convertible or exchangeable; any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that no such rights or warrants are exercised prior to the expiration thereof, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or, if any such rights or warrants are exercised, to the Exercise Price which would then be in effect based upon the number of Common Shares (or securities convertible or exchangeable into Common Shares) actually issued upon the exercise of such rights or warrants, as the case may be. Upon any adjustment of the Exercise Price pursuant to this Section 4.1(b), the Exchange Rate will be adjusted immediately after such record date so that it will equal the rate determined by multiplying the Exchange Rate in effect on such record date by a fraction, of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment. Such adjustment will be made successively whenever such a record date is fixed, provided that if two or more such record dates or record dates referred to in this Section 4.1(b) are fixed within a period of 25 Trading Days, such adjustment will be made successively as if each of such record dates occurred on the earliest of such record dates; |
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| (c) | if and whenever at any time during the Adjustment Period the Corporation shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of (i) securities of any class, whether of the Corporation or any other entity (other than Common Shares), (ii) rights, options or warrants to subscribe for or purchase Common Shares (or other securities convertible into or exchangeable for Common Shares), other than pursuant to a Rights Offering; (iii) evidences of its indebtedness or (iv) any property or other assets then, in each such case, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date multiplied by the Current Market Price on such record date, less the excess, if any, of the fair market value on such record date, as determined by the Corporation (acting reasonably and in good faith), of such securities or other assets so issued or distributed over the fair market value of any consideration received therefor by the Corporation from the holders of the Common Shares, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by the Current Market Price; and Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that such distribution is not so made, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed. Upon any adjustment of the Exercise Price pursuant to this Section 4.1(c), the Exchange Rate will be adjusted immediately after such record date so that it will equal the rate determined by multiplying the Exchange Rate in effect on such record date by a fraction, of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment; |
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| (d) | if and whenever at any time during the Adjustment Period, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 4.1(a) or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity, any Registered Warrantholder who has not exercised its right of acquisition prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, upon the exercise of such right thereafter, shall be entitled to receive upon payment of the Exercise Price and shall accept, in lieu of the number of Common Shares that prior to such effective date the Registered Warrantholder would have been entitled to receive, the number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such merger, amalgamation or consolidation, or to which such sale or conveyance may be made, as the case may be, that such Registered Warrantholder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, if, on the effective date thereof, as the case may be, the Registered Warrantholder had been the registered holder of the number of Common Shares to which prior to such effective date it was entitled to acquire upon the exercise of the Warrants. If determined appropriate by the Warrant Agent, relying on advice of Counsel, to give effect to or to evidence the provisions of this Section 4.1(d), the Corporation, its successor, or such purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Registered Warrantholders to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which a Registered Warrantholder is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Warrant Agent pursuant to the provisions of this Section 4.1(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 8 hereof. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Warrant Agent shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, sales or conveyances; |
| (e) | in any case in which this Section 4.1 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the Registered Warrantholder of any Warrant exercised after the record date and prior to completion of such event the additional Common Shares issuable by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such Registered Warrantholder an appropriate instrument evidencing such Registered Warrantholder’s right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the relevant date of exercise or such later date as such Registered Warrantholder would, but for the provisions of this Section 4.1(e), have become the holder of record of such additional Common Shares pursuant to Section 4.1; |
| (f) | in any case in which Section 4.1(a)(iii), Section 4.1(b) or Section 4.1(c) require that an adjustment be made to the Exercise Price, no such adjustment shall be made if the Registered Warrantholders of the outstanding Warrants receive, subject to any required stock exchange or regulatory approval, the rights or warrants referred to in Section 4.1(a)(iii), Section 4.1(b) or the shares, rights, options, warrants, evidences of indebtedness or assets referred to in Section 4.1(c), as the case may be, in such kind and number as they would have received if they had been holders of Common Shares on the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised into Common Shares at the Exercise Price in effect on the applicable record date or effective date, as the case may be; |
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| (g) | the adjustments provided for in this Section 4.1 are cumulative, and shall, in the case of adjustments to the Exercise Price be computed to the nearest whole cent and shall apply to successive subdivisions, re-divisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section 4.1, provided that, notwithstanding any other provision of this Section, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect or a change in the number of Common Shares purchasable upon exercise by at least one one-hundredth (1/100th) of a Common Share, as the case may be; provided, however, that any adjustments which by reason of this Section 4.1(g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; |
| (h) | after any adjustment pursuant to this Section 4.1, the term “Common Shares” where used in this Indenture shall be interpreted to mean securities of any class or classes which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Registered Warrantholder is entitled to receive upon the exercise of his Warrant, and the number of Common Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Registered Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant; and |
| (i) | the purpose and intent of the adjustments provided for in this Section 4.1 is to ensure that the rights and obligations of the Registered Warrantholder are neither diminished nor enhanced as a result of any of the events set forth in this Section 4.1 and, accordingly, the provisions of this Section 4.1 shall be interpreted and applied in accordance with such purpose and intent. |
Section 4.2 Entitlement to Common Shares on Exercise of Warrant.
All Common Shares or shares of any class or other securities, which a Registered Warrantholder is at the time in question entitled to receive on the exercise of its Warrant, whether or not as a result of adjustments made pursuant to this Article 4 shall, for the purposes of the interpretation of this Indenture, be deemed to be Common Shares which such Registered Warrantholder is entitled to acquire pursuant to such Warrant.
Section 4.3 No Adjustment for Certain Transactions.
Notwithstanding anything in this Article 4, no adjustment shall be made in the acquisition rights attached to the Warrants if the issue of Common Shares is being made pursuant to this Indenture or in connection with (a) any share incentive plan or restricted share plan or share purchase plan in force from time to time for directors, officers, employees, consultants or other service providers of the Corporation; or (b) the satisfaction of existing instruments issued at the date hereof.
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Section 4.4 Determination by Independent Firm.
In the event of any question arising with respect to the adjustments provided for in this Article 4 such question shall be conclusively determined by an independent firm of chartered accountants other than the Auditors, who shall have access to all necessary records of the Corporation, and such determination shall be binding upon the Corporation, the Warrant Agent, all holders and all other persons interested therein.
Section 4.5 Proceedings Prior to any Action Requiring Adjustment.
As a condition precedent to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any of the Warrants, including the number of Common Shares which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of Counsel, be necessary in order that the Corporation has unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Common Shares which the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions hereof.
Section 4.6 Certificate of Adjustment.
The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 4.1, deliver a certificate of the Corporation to the Warrant Agent specifying the nature of the event requiring the same and the amount of the adjustment or readjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate shall, if deemed necessary by the Corporation or Warrant Agent, be supported by a certificate of the Corporation’s Auditors verifying such calculation. The Warrant Agent shall rely, and shall be protected in so doing, upon the certificate of the Corporation or of the Corporation’s Auditor (if applicable) and any other document filed by the Corporation pursuant to this Article 4 for all purposes.
Section 4.7 Notice of Special Matters.
The Corporation covenants with the Warrant Agent that, so long as any Warrant remains outstanding, it will give notice to the Warrant Agent and to the Registered Warrantholders of its intention to fix a record date that is prior to the Expiry Date for any matter for which an adjustment may be required pursuant to Section 4.1. Such notice shall specify the particulars of such event and the record date for such event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which the notice is given. The notice shall be given in each case not less than fourteen (14) days prior to such applicable record date. If notice has been given and the adjustment is not then determinable, the Corporation shall promptly, after the adjustment is determinable, file with the Warrant Agent a computation of the adjustment and give notice to the Registered Warrantholders of such adjustment computation.
Section 4.8 No Action after Notice.
The Corporation covenants with the Warrant Agent that it will not close its transfer books or take any other corporate action which might deprive the Registered Warrantholder of the opportunity to exercise its right of acquisition pursuant thereto during the period of fourteen (14) days after the giving of the certificate or notices set forth in Section 4.6 and Section 4.7.
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Section 4.9 Other Action.
If the Corporation, after the date hereof, shall take any action affecting the Common Shares other than action described in Section 4.1, which in the reasonable opinion of the directors of the Corporation would materially affect the rights of Registered Warrantholders, the Exercise Price and/or Exchange Rate, the number of Common Shares which may be acquired upon exercise of the Warrants shall be adjusted in such manner and at such time, by action of the directors, acting reasonably and in good faith, in their sole discretion as they may determine to be equitable to the Registered Warrantholders in the circumstances, provided that no such adjustment will be made unless any requisite prior approval of any stock exchange on which the Common Shares are listed for trading has been obtained.
Section 4.10 Protection of Warrant Agent.
The Warrant Agent shall not:
| (a) | at any time be under any duty or responsibility to any Registered Warrantholder to determine whether any facts exist which may require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same; |
| (b) | be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Warrant; |
| (c) | be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article; and |
| (d) | incur any liability or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations, warranties or covenants herein contained or of any acts of the directors, officers, employees, agents or servants of the Corporation. |
Section 4.11 Participation by Warrantholder.
Subject to Exchange approval, no adjustments shall be made pursuant to this Article 4 if the Registered Warrantholders are entitled to participate in any event described in this Article 4 on the same terms, mutatis mutandis, as if the Registered Warrantholders had exercised their Warrants prior to, or on the effective date or record date of, such event.
Section 4.12 Section 4.12 Regulatory Approval of Adjustments.
Notwithstanding the foregoing, any adjustment to the Exercise Price and/or Exchange Rate shall be subject to the prior written consent of the Exchange, if required.
ARTICLE 5
RIGHTS OF THE CORPORATION AND COVENANTS
Section 5.1 Optional Purchases by the Corporation.
Subject to compliance with applicable securities legislation and approval of applicable regulatory authorities, if any, the Corporation may from time to time purchase by private contract or otherwise any of the Warrants. Any such purchase shall be made at the lowest price or prices at which, in the reasonable opinion of the Corporation’s directors, such Warrants are then obtainable, plus reasonable costs of purchase, and may be made in such manner, from such persons and on such other terms as the Corporation, in its sole discretion, may determine. In the case of Certificated Warrants, Warrant Certificates representing the Warrants purchased pursuant to this Section 5.1 shall forthwith be delivered to and cancelled by the Warrant Agent and reflected accordingly on the register of Warrants. In the case of Uncertificated Warrants, the Warrants purchased pursuant to this Section 5.1 shall be reflected accordingly on the register of Warrants and in accordance with procedures prescribed by the Depository under the book entry registration system. No Warrants shall be issued in replacement thereof.
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Section 5.2 General Covenants.
The Corporation covenants with the Warrant Agent that so long as any Warrants remain outstanding:
| (a) | it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common Shares upon the exercise of the Warrants; |
| (b) | it will cause the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance with the Warrants and the terms hereof; |
| (c) | all Common Shares which shall be issued upon exercise of the right to acquire provided for herein shall be fully paid and non-assessable, free and clear of all encumbrances; |
| (d) | it will use reasonable commercial efforts to maintain its existence and carry on its business in the ordinary course; |
| (e) | it will use reasonable efforts to ensure that all Common Shares outstanding or issuable from time to time (including, without limitation, the Common Shares issuable on the exercise of the Warrants) continue to be listed and posted for trading on the Exchange, provided that this clause shall not be construed as limiting or restricting the Corporation from agreeing to a consolidation, amalgamation, arrangement, take-over bid, merger or other like transaction, even if the consideration being offered are not securities that are so listed and posted for trading; |
| (f) | it will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture; |
| (g) | it will make all requisite filings under applicable Canadian securities legislation including those necessary to remain a reporting issuer not in default in each of the provinces and other Canadian jurisdictions where it is or becomes a reporting issuer; |
| (h) | if any instrument is required to be filed with or any permission, order or ruling is required to be obtained from applicable securities regulatory authorities or any other step is required under any federal or provincial law before any securities or property which a Warrantholder is entitled to receive pursuant to the automatic exercise of a Warrant may properly and legally be delivered upon the automatic exercise of a Warrant, the Corporation shall use its best efforts to make such filing, obtain such permission, order or ruling and take all such action, at its expense, as is required or appropriate in the circumstance; and |
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| (i) | the Corporation will promptly notify the Warrant Agent and the Warrantholders in writing of any default under the terms of this Warrant Indenture which remains unrectified for more than five days following its occurrence. |
Section 5.3 Warrant Agent’s Remuneration and Expenses.
The Corporation covenants that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and will pay or reimburse the Warrant Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Warrant Agent in the administration or execution of the duties hereby created (including the reasonable compensation and the disbursements of its Counsel and all other advisers and assistants not regularly in its employ) both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder shall be finally and fully performed. Any amount owing hereunder and remaining unpaid after 30 days from the invoice date will bear interest at the then current rate charged by the Warrant Agent against unpaid invoices and shall be payable upon demand. This Section shall survive the resignation or removal of the Warrant Agent and/or the termination of this Indenture.
Section 5.4 Performance of Covenants by Warrant Agent.
If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Warrant Agent may notify the Registered Warrantholders of such failure on the part of the Corporation and may itself perform any of the covenants capable of being performed by it but, subject to Section 9.2, shall be under no obligation to perform said covenants or to notify the Registered Warrantholders of such performance by it. All sums expended or advanced by the Warrant Agent in so doing shall be repayable as provided in Section 5.3. No such performance, expenditure or advance by the Warrant Agent shall relieve the Corporation of any default hereunder or of its continuing obligations under the covenants herein contained.
Section 5.5 Enforceability of Warrants.
The Corporation covenants and agrees that it is duly authorized to create and issue the Warrants to be issued hereunder and that the Warrants, when issued and Authenticated as herein provided, will be valid and enforceable against the Corporation in accordance with the provisions hereof and the terms hereof and that, subject to the provisions of this Indenture, the Corporation will cause the Common Shares from time to time acquired upon exercise of Warrants issued under this Indenture to be duly issued and delivered in accordance with the terms of this Indenture.
ARTICLE 6
ENFORCEMENT
Section 6.1 Suits by Registered Warrantholders.
All or any of the rights conferred upon any Registered Warrantholder by any of the terms of this Indenture may be enforced by the Registered Warrantholder by appropriate proceedings but without prejudice to the right which is hereby conferred upon the Warrant Agent to proceed in its own name to enforce each and all of the provisions herein contained for the benefit of the Registered Warrantholders.
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Section 6.2 Suits by the Corporation.
The Corporation shall have the right to enforce full payment of the Exercise Price of all Common Shares issued by the Warrant Agent to a Registered Warrantholder hereunder and shall be entitled to demand such payment from the Registered Warrantholder or alternatively to instruct the Warrant Agent to cause the cancellation of the share certificates and amend the securities register of the Corporation accordingly.
Section 6.3 Immunity of Shareholders, etc.
The Warrant Agent and the Warrantholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any incorporator or any past, present or future shareholder, director, trustee, employee or agent of the Corporation or any Successor Entity on any covenant, agreement, representation or warranty by the Corporation herein.
Section 6.4 Waiver of Default.
Upon the happening of any default hereunder:
| (a) | the Registered Warrantholders of not less than 51% of the Warrants then outstanding shall have power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in writing to instruct the Warrant Agent to waive any default hereunder and the Warrant Agent shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or |
| (b) | the Warrant Agent shall have power to waive any default hereunder upon such terms and conditions as the Warrant Agent may deem advisable, on the advice of Counsel, if, in the Warrant Agent’s opinion, based on the advice of Counsel, the same shall have been cured or adequate provision made therefor; |
provided that no delay or omission of the Warrant Agent or of the Registered Warrantholders to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act or omission either of the Warrant Agent or of the Registered Warrantholders in the premises shall extend to or be taken in any manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.
ARTICLE 7
MEETINGS OF REGISTERED WARRANTHOLDERS
Section 7.1 Right to Convene Meetings.
The Warrant Agent may at any time and from time to time, and shall on receipt of a written request of the Corporation or of a Warrantholders’ Request and upon being indemnified and funded to its reasonable satisfaction by the Corporation or by the Registered Warrantholders signing such Warrantholders’ Request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Registered Warrantholders. If the Warrant Agent fails to so call a meeting within seven days after receipt of such written request of the Corporation or such Warrantholders’ Request and the indemnity and funding given as aforesaid, the Corporation or such Registered Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Toronto, Ontario or at such other place as may be approved or determined by the Warrant Agent and the Corporation. Any meeting held pursuant to this Article 7 may be done through a virtual or electronic meeting platform, subject to the Warrant Agent's capabilities at the time.
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Section 7.2 Notice.
At least 21 days’ prior written notice of any meeting of Registered Warrantholders shall be given to the Registered Warrantholders in the manner provided for in Section 10.2 and a copy of such notice shall be sent by mail to the Warrant Agent (unless the meeting has been called by the Warrant Agent) and to the Corporation (unless the meeting has been called by the Corporation). Such notice shall state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Registered Warrantholders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Section 7.2.
Section 7.3 Chairman.
An individual (who need not be a Registered Warrantholder) designated in writing by the Warrant Agent shall be chairman of the meeting and if no individual is so designated, or if the individual so designated is not present within fifteen minutes from the time fixed for the holding of the meeting, the Registered Warrantholders present in person or by proxy shall choose an individual present to be chairman.
Section 7.4 Quorum.
Subject to the provisions of Section 7.11, at any meeting of the Registered Warrantholders a quorum shall consist of Registered Warrantholder(s) present in person or by proxy and entitled to purchase at least 50% of the aggregate number of Common Shares which could be acquired pursuant to all the then outstanding Warrants. If a quorum of the Registered Warrantholders shall not be present within thirty minutes from the time fixed for holding any meeting, the meeting, if summoned by Registered Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day, in which case it shall be adjourned to the next following Business Day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not be entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all then outstanding Warrants.
Section 7.5 Power to Adjourn.
The chairman of any meeting at which a quorum of the Registered Warrantholders is present may, with the consent of the meeting, adjourn any such meeting, and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.
Section 7.6 Show of Hands.
Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an Extraordinary Resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.
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Section 7.7 Poll and Voting.
| (1) | On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the chairman or by one or more of the Registered Warrantholders acting in person or by proxy and entitled to acquire in the aggregate at least 2% of the aggregate number of Common Shares which could be acquired pursuant to all the Warrants then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by Extraordinary Resolution shall be decided by a majority of the votes cast on the poll. |
| (2) | On a show of hands, every person who is present and entitled to vote, whether as a Registered Warrantholder or as proxy for one or more absent Registered Warrantholders, or both, shall have one vote. On a poll, each Registered Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each Warrant then held or represented by it. A proxy need not be a Registered Warrantholder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him. |
Section 7.8 Regulations.
| (1) | The Warrant Agent, or the Corporation with the approval of the Warrant Agent, may from time to time make and from time to time vary such regulations as it shall think fit for the setting of the record date for a meeting for the purpose of determining Registered Warrantholders entitled to receive notice of and to vote at the meeting. |
| (2) | Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as a Registered Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to Section 7.9), shall be Registered Warrantholders or proxies of Registered Warrantholders. |
Section 7.9 Corporation and Warrant Agent May be Represented.
The Corporation and the Warrant Agent, by their respective directors, officers, agents, and employees and the Counsel for the Corporation and for the Warrant Agent may attend any meeting of the Registered Warrantholders.
Section 7.10 Powers Exercisable by Extraordinary Resolution.
In addition to all other powers conferred upon them by any other provisions of this Indenture or by law, the Registered Warrantholders at a meeting shall, subject to the provisions of Section 7.11, have the power exercisable from time to time by Extraordinary Resolution:
| (a) | to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Registered Warrantholders or the Warrant Agent in its capacity as warrant agent hereunder (subject to the Warrant Agent’s prior consent, acting reasonably) or on behalf of the Registered Warrantholders against the Corporation whether such rights arise under this Indenture or otherwise; |
| (b) | to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Registered Warrantholders; |
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| (c) | to direct or to authorize the Warrant Agent, subject to Section 9.2(2) hereof, to enforce any of the covenants on the part of the Corporation contained in this Indenture or to enforce any of the rights of the Registered Warrantholders in any manner specified in such Extraordinary Resolution or to refrain from enforcing any such covenant or right; |
| (d) | to waive, and to direct the Warrant Agent to waive, any default on the part of the Corporation in complying with any provisions of this Indenture either unconditionally or upon any conditions specified in such Extraordinary Resolution; |
| (e) | to restrain any Registered Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or to enforce any of the rights of the Registered Warrantholders; |
| (f) | to direct any Registered Warrantholder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Registered Warrantholder in connection therewith; |
| (g) | to assent to any change in or omission from the provisions contained in this Indenture or any ancillary or supplemental instrument which may be agreed to by the Corporation, and to authorize the Warrant Agent to concur in and execute any ancillary or supplemental indenture embodying the change or omission; |
| (h) | with the consent of the Corporation, such consent not to be unreasonably withheld, to remove the Warrant Agent or its successor in office and to appoint a new warrant agent or warrant agents to take the place of the Warrant Agent so removed; and |
| (i) | to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation. |
Section 7.11 Meaning of Extraordinary Resolution.
| (1) | The expression “Extraordinary Resolution” when used in this Indenture means, subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution proposed at a meeting of Registered Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 7 at which there are present in person or by proxy Registered Warrantholders holding at least 50% of the aggregate number of Common Shares that could be acquired on the exercise of Warrants and passed by the affirmative votes of Registered Warrantholders holding not less than 66 2/3% of the aggregate number of Common Shares that could be acquired on the exercise of Warrants present in person or by proxy at the meeting and voted on the poll upon such resolution; or (ii) in writing signed by holders of at least 66 2/3% of the then outstanding Warrants on any matter that would otherwise be voted upon at a meeting called to approve such resolution as contemplated herein. |
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| (2) | If, at the meeting at which an Extraordinary Resolution is to be considered, Registered Warrantholders holding at least 50% of the aggregate number of Common Shares that could be acquired on exercise of the then outstanding Warrants are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by Registered Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 14 days’ prior notice shall be given of the time and place of such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Section 7.11(1) shall be an Extraordinary Resolution within the meaning of this Indenture notwithstanding that Registered Warrantholders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting. |
| (3) | Subject to Section 7.14, votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary. |
Section 7.12 Powers Cumulative.
Any one or more of the powers or any combination of the powers in this Indenture stated to be exercisable by the Registered Warrantholders by Extraordinary Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Registered Warrantholders to exercise such power or powers or combination of powers then or thereafter from time to time.
Section 7.13 Minutes.
Minutes of all resolutions and proceedings at every meeting of Registered Warrantholders shall be made and duly entered in books and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes shall have been made shall be deemed to have been duly convened and held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.
Section 7.14 Instruments in Writing.
All actions which may be taken and all powers that may be exercised by the Registered Warrantholders at a meeting held as provided in this Article 7 may also be taken and exercised by Registered Warrantholders holding not less than 66 2/3% of the aggregate number of all of the then outstanding Warrants by an instrument in writing signed in one or more counterparts by such Registered Warrantholders in person or by attorney duly appointed in writing, and the expression “Extraordinary Resolution” when used in this Indenture shall include an instrument so signed.
Section 7.15 Binding Effect of Resolutions.
Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 7 at a meeting of Registered Warrantholders shall be binding upon all the Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed by Registered Warrantholders in accordance with Section 7.14 shall be binding upon all the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and the Warrant Agent (subject to the provisions for indemnity herein contained) shall be bound to give effect accordingly to every such resolution and instrument in writing.
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Section 7.16 Holdings by Corporation Disregarded.
In determining whether Registered Warrantholders holding Warrants evidencing the entitlement to acquire the required number of Common Shares are present at a meeting of Registered Warrantholders for the purpose of determining a quorum or have concurred in any consent, waiver, Extraordinary Resolution, Warrantholders’ Request or other action under this Indenture, Warrants owned legally or beneficially by the Corporation shall be disregarded in accordance with the provisions of Section 10.7.
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1 Provision for Supplemental Indentures for Certain Purposes.
From time to time, the Corporation (when authorized by action of the directors of the Corporation) and the Warrant Agent may, subject to the provisions hereof and they shall, when so directed in accordance with the provisions hereof, execute and deliver by their proper officers, indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:
| (a) | setting forth any adjustments resulting from the application of the provisions of Article 4; |
| (b) | adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of Counsel, are necessary or advisable in the circumstances, provided that the same are not in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders; |
| (c) | giving effect to any Extraordinary Resolution passed as provided in Section 7.11; |
| (d) | making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining a listing or quotation of the Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders; |
| (e) | adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrants, and making any modification in the form of the Warrant Certificates which does not affect the substance thereof; |
| (f) | modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such modification or relief in no way prejudices any of the rights of the Registered Warrantholders or of the Warrant Agent, and provided further that the Warrant Agent may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection to the Warrant Agent when the same shall become operative; |
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| (g) | providing for the issuance of additional Warrants hereunder, including Warrants in excess of the number set out in Section 2.1 and any consequential amendments hereto as may be required by the Warrant Agent relying on the advice of Counsel; and |
| (h) | for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Warrant Agent, relying on the advice of Counsel, the rights of the Warrant Agent and of the Registered Warrantholders are in no way prejudiced thereby. |
Section 8.2 Successor Entities.
In the case of the consolidation, amalgamation, arrangement, merger or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to or with a Successor Entity, the Successor Entity resulting from such consolidation, amalgamation, arrangement, merger or transfer (if not the Corporation) shall expressly assume, by supplemental indenture satisfactory in form to the Warrant Agent and executed and delivered to the Warrant Agent, the due and punctual performance and observance of each and every covenant and condition of this Indenture to be performed and observed by the Corporation.
ARTICLE 9
CONCERNING THE WARRANT AGENT
Section 9.1 Indenture Legislation.
| (1) | If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail. |
| (2) | The Corporation and the Warrant Agent agree that each will, at all times in relation to this Indenture and any action to be taken hereunder, observe and comply with and be entitled to the benefits of Applicable Legislation. |
Section 9.2 Rights and Duties of Warrant Agent.
| (1) | In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Warrant Agent shall act honestly and in good faith and exercise that degree of care, diligence and skill that a reasonably prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Warrant Agent from liability for its own gross negligent action, wilful misconduct, bad faith or fraud under this Indenture. |
| (2) | The obligation of the Warrant Agent to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Warrant Agent or the Registered Warrantholders hereunder shall be conditional upon the Registered Warrantholders furnishing, when required by notice by the Warrant Agent, sufficient funds to commence or to continue such act, action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to protect and to hold harmless the Warrant Agent and its officers, directors, employees, successors, assigns and agents, against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the Warrant Agent to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid. |
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| (3) | The Warrant Agent may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Registered Warrantholders, at whose instance it is acting to deposit with the Warrant Agent the Warrants Certificates held by them, for which Warrants the Warrant Agent shall issue receipts. |
| (4) | Every provision of this Indenture that by its terms relieves the Warrant Agent of liability or entitles it to rely upon any evidence submitted to it is subject to the provisions of Applicable Legislation. |
Section 9.3 Evidence, Experts and Advisers.
| (1) | In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Corporation shall furnish to the Warrant Agent such additional evidence of compliance with any provision hereof, and in such form, as may be prescribed by Applicable Legislation or as the Warrant Agent may reasonably require by written notice to the Corporation. |
| (2) | In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good faith, rely as to the truth of the statements and the accuracy of the opinions expressed in statutory declarations, opinions, reports, written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Warrant Agent pursuant to a request of the Warrant Agent, provided that such evidence complies with Applicable Legislation and that the Warrant Agent complies with Applicable Legislation and that the Warrant Agent examines the same and determines that such evidence complies with the applicable requirements of this Indenture. |
| (3) | Whenever it is provided in this Indenture or under Applicable Legislation that the Corporation shall deposit with the Warrant Agent resolutions, certificates, reports, opinions, requests, orders or other documents, it is intended that the truth, accuracy and good faith on the effective date thereof and the facts and opinions stated in all such documents so deposited shall, in each and every such case, be conditions precedent to the right of the Corporation to have the Warrant Agent take the action to be based thereon. |
| (4) | The Warrant Agent may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct or negligence on the part of any such experts or advisers who have been appointed with due care by the Warrant Agent. The Corporation shall pay or reimburse the Warrant Agent for any reasonable and documented fees, expenses and disbursements of such Counsel or advisers. |
| (5) | The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained from any Counsel, accountant, appraiser, engineer or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in the administration of the agency hereof. |
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Section 9.4 Documents, Monies, etc. Held by Warrant Agent.
Until released in accordance with this Indenture, any funds received hereunder shall be kept in segregated records of the Warrant Agent and the Warrant Agent shall place the funds in segregated bank accounts of the Warrant Agent at one or more of the Canadian Chartered Banks listed in Schedule 1 of the Bank Act (Canada) (“Approved Bank”). All amounts held by the Warrant Agent pursuant to this Agreement shall be held by the Warrant Agent for the Corporation and the delivery of the funds to the Warrant Agent shall not give rise to a debtor-creditor or other similar relationship. The amounts held by the Warrant Agent pursuant to this Agreement are at the sole risk of the Corporation and, without limiting the generality of the foregoing, the Warrant Agent shall have no responsibility or liability for any diminution of the funds which may result from any deposit made with an Approved Bank pursuant to this section, including any losses resulting from a default by the Approved Bank or other credit losses (whether or not resulting from such a default). The parties hereto acknowledge and agree that the Warrant Agent will have acted prudently in depositing the funds at any Approved Bank, and that the Warrant Agent is not required to make any further inquiries in respect of any such bank. The Warrant Agent may hold cash balances constituting part or all of such monies and need not, invest the same. The Warrant Agent shall not be liable to account for any profit to any parties to this Indenture or to any other person or entity.
Section 9.5 Actions by Warrant Agent to Protect Interest.
The Warrant Agent shall have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect or enforce its interests and the interests of the Registered Warrantholders.
Section 9.6 Warrant Agent Not Required to Give Security.
The Warrant Agent shall not be required to give any bond or security in respect of the execution of the agency and powers of this Indenture or otherwise in respect of the premises.
Section 9.7 Protection of Warrant Agent.
By way of supplement to the provisions of any law for the time being relating to the Warrant Agent it is expressly declared and agreed as follows:
| (a) | the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates (except the representation contained in Section 9.9 or in the authentication of the Warrant Agent on the Warrant Certificates) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation; |
| (b) | nothing herein contained shall impose any obligation on the Warrant Agent to see to or to require evidence of the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto; |
| (c) | the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof; |
| (d) | the Warrant Agent shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of the Corporation of any of its covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation; |
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| (e) | the Corporation hereby indemnifies and agrees to hold harmless the Warrant Agent, its affiliates, their officers, directors, employees, agents, successors and assigns (the “Indemnified Parties”) from and against any and all liabilities whatsoever, losses, damages, penalties, claims, demands, actions, suits, proceedings, costs, charges, assessments, judgments, expenses and disbursements, including reasonable legal fees and disbursements of whatever kind and nature which may at any time be imposed on or incurred by or asserted against the Indemnified Parties, or any of them, whether at law or in equity, in any way caused by or arising, directly or indirectly, in respect of any act, deed, matter or thing whatsoever made, done, acquiesced in or omitted in or about or in relation to the execution of the Indemnified Parties’ duties, or any other services that Warrant Agent may provide in connection with or in any way relating to this Indenture. The Corporation agrees that its liability hereunder shall be absolute and unconditional regardless of the correctness of any representations of any third parties and regardless of any liability of third parties to the Indemnified Parties, and shall accrue and become enforceable without prior demand or any other precedent action or proceeding; provided that the Corporation shall not be required to indemnify the Indemnified Parties in the event of the gross negligence, wilful misconduct, bad faith, or fraud of the Warrant Agent, and this provision shall survive the resignation or removal of the Warrant Agent or the termination or discharge of this Indenture; |
| (f) | notwithstanding the foregoing or any other provision of this Indenture, any liability of the Warrant Agent shall be limited, in the aggregate, to the amount of annual retainer fees paid by the Corporation to the Warrant Agent under this Indenture in the twelve (12) months immediately prior to the Warrant Agent receiving the first notice of the claim. Notwithstanding any other provision of this Indenture, and whether such losses or damages are foreseeable or unforeseeable, the Warrant Agent shall not be liable under any circumstances whatsoever for any (a) breach by any other party of securities law or other rule of any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages; and |
| (g) | in the event that any of the funds provided to the Warrant Agent hereunder are received by it in the form of an uncertified cheque or bank draft, the Warrant Agent shall be entitled to delay the time for release of such funds until such uncertified cheque has cleared the financial institution upon which the same is drawn. |
Section 9.8 Replacement of Warrant Agent; Successor by Merger.
| (1) | The Warrant Agent may resign its agency and be discharged from all further duties and liabilities hereunder, subject to this Section 9.8, by giving to the Corporation not less than 60 days’ prior notice in writing or such shorter prior notice as the Corporation may accept as sufficient. The Registered Warrantholders by Extraordinary Resolution shall have power at any time to remove the existing Warrant Agent and to appoint a new warrant agent. In the event of the Warrant Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new warrant agent unless a new warrant agent has already been appointed by the Registered Warrantholders; failing such appointment by the Corporation, the retiring Warrant Agent or any Registered Warrantholder may apply to a judge of the Province of Ontario on such notice as such judge may direct, for the appointment of a new warrant agent; but any new warrant agent so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Registered Warrantholders. Any new warrant agent appointed under any provision of this Section 9.8 shall be an entity authorized to carry on the business of a trust company in the Province of Ontario and, if required by the Applicable Legislation for any other provinces, in such other provinces. On any such appointment the new warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Warrant Agent hereunder. |
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| (2) | Upon the appointment of a successor warrant agent, the Corporation shall promptly notify the Registered Warrantholders thereof in the manner provided for in Section 10.2. |
| (3) | Any Warrant Certificates Authenticated but not delivered by a predecessor Warrant Agent may be Authenticated by the successor Warrant Agent in the name of the predecessor or successor Warrant Agent. |
| (4) | Any corporation into which the Warrant Agent may be merged or consolidated or amalgamated, or any corporation resulting therefrom to which the Warrant Agent shall be a party, or any corporation succeeding to substantially the corporate trust business of the Warrant Agent shall be the successor to the Warrant Agent hereunder without any further act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as successor Warrant Agent under Section 9.8(1). |
Section 9.9 Acceptance of Agency.
The Warrant Agent hereby accepts the agency in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth. The Warrant Agent represents to the Corporation that as of the date of the execution and delivery of this Indenture, it is duly authorized and qualified to carry on the business of a trust company in the Province of British Columbia.
Section 9.10 Warrant Agent Not to be Appointed Receiver.
The Warrant Agent and any person related to the Warrant Agent shall not be appointed a receiver, a receiver and manager or liquidator of all or any part of the assets or undertaking of the Corporation.
Section 9.11 Warrant Agent Not Required to Give Notice of Default.
The Warrant Agent shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall have been required so to do under the terms hereof; nor shall the Warrant Agent be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Warrant Agent and in the absence of any such notice the Warrant Agent may for all purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. Any such notice shall in no way limit any discretion herein given to the Warrant Agent to determine whether or not the Warrant Agent shall take action with respect to any default.
Section 9.12 Anti-Money Laundering.
| (1) | Each party to this Agreement other than the Warrant Agent hereby represents to the Warrant Agent that any account to be opened by, or interest to be held by the Warrant Agent in connection with this Agreement, for or to the credit of such party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the Warrant Agent’s prescribed form as to the particulars of such third party. |
39
| (2) | The Warrant Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Warrant Agent, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering, anti-terrorist or economic sanctions legislation, regulation or guideline. Further, should the Warrant Agent, in its sole judgment, determine at any time that its acting under this Agreement has resulted in its being in non-compliance with any applicable anti-money laundering, anti-terrorist or economic sanctions legislation, regulation or guideline, then it shall have the right to resign on ten (10) days written notice to the other parties to this Agreement, provided (i) that the Warrant Agent’s written notice shall describe the circumstances of such non-compliance; and (ii) that if such circumstances are rectified to the Warrant Agent’s satisfaction within such ten (10) day period, then such resignation shall not be effective. |
Section 9.13 Compliance with Privacy Code.
The parties acknowledge that the Warrant Agent may, in the course of providing services hereunder, collect or receive financial and other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:
| (a) | to provide the services required under this Indenture and other services that may be requested from time to time; |
| (b) | to help the Warrant Agent manage its servicing relationships with such individuals; |
| (c) | to meet the Warrant Agent’s legal and regulatory requirements; and |
| (d) | if Social Insurance Numbers are collected by the Warrant Agent, to perform tax reporting and to assist in verification of an individual’s identity for security purposes. |
Each party acknowledges and agrees that the Warrant Agent may receive, collect, use and disclose personal information provided to it or acquired by it in the course of this Indenture for the purposes described above and, generally, in the manner and on the terms described in its Privacy Code, which the Warrant Agent shall make available on its website, www.odysseytrust.com, or upon request, including revisions thereto. The Warrant Agent may transfer personal information to other companies in or outside of Canada that provide data processing and storage or other support in order to facilitate the services it provides.
Further, each party agrees that it shall not provide or cause to be provided to the Warrant Agent any personal information relating to an individual who is not a party to this Indenture unless that party has assured itself that such individual understands and has consented to the aforementioned uses and disclosures.
40
Section 9.14 Securities Exchange Commission Certification.
The Corporation confirms that as at the date of execution of this Indenture it does not have a class of securities registered pursuant to Section 12 of the U.S. Exchange Act or have a reporting obligation pursuant to Section 15(d) of the U.S. Exchange Act.
The Corporation covenants that in the event that (i) any class of its securities shall become registered pursuant to Section 12 of the U.S. Exchange Act or the Corporation shall incur a reporting obligation pursuant to Section 15(d) of the U.S. Exchange Act, or (ii) any such registration or reporting obligation shall be terminated by the Corporation in accordance with the U.S. Exchange Act, the Corporation shall promptly deliver to the Warrant Agent an Officers’ Certificate notifying the Warrant Agent of such registration or termination and such other information as the Warrant Agent may reasonably require at the applicable time. The Corporation acknowledges that the Warrant Agent is relying upon the foregoing representation and covenant in order to meet certain obligations imposed United States Securities and Exchange Commission (“SEC”) upon the Warrant Agent with respect to those clients of the Warrant Agent who are required to file reports under the U.S. Exchange Act.
ARTICLE 10
GENERAL
Section 10.1 Notice to the Corporation and the Warrant Agent.
| (1) | Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or the Warrant Agent shall be deemed to be validly given if delivered, sent by registered letter, postage prepaid or if sent electronically: |
| (a) | If to the Corporation: | |
| Cardiol Therapeutics Inc. | ||
| 2265 Upper Middle Road East Suite 602 | ||
| Oakville, ON L6H 0G5 | ||
| Attention: David Elsley | ||
| Email: [Redacted – Contact Information] | ||
| With a copy (which shall not constitute notice) to: | ||
| Borden Ladner Gervais LLP | ||
| Bay Adelaide Centre, East Tower | ||
| 22 Adelaide St. W. | ||
| Toronto, ON M5H 4E3 | ||
| Attention: Philippe Tardif | ||
| E-mail: [Redacted – Contact Information] |
| (b) | If to the Warrant Agent: | |
| Odyssey Trust Company | ||
| Trader’s Bank Building | ||
| 1100 – 67 Yonge Street | ||
| Toronto ON M5E 1J8Attention: Corporate Trust | ||
| Email: [Redacted – Contact Information] |
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| and any such notice delivered in accordance with the foregoing shall be deemed to have been received and given on the date of delivery or, if mailed, on the fifth Business Day following the date of mailing such notice or, if emailed, on the next Business Day following the date of transmission. | ||
| (2) | The Corporation or the Warrant Agent, as the case may be, may from time to time notify the other in the manner provided in Section 10.1(1) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Warrant Agent, as the case may be, for all purposes of this Indenture. |
| (3) | If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrant Agent or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed, as provided in Section 10.1(1), or given by facsimile, email or other means of prepaid, transmitted and recorded communication. |
Section 10.2 Notice to Registered Warrantholders.
| (1) | Unless otherwise provided herein, notice to the Registered Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or sent by ordinary prepaid post addressed to such holders at their post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively received and given on the date of delivery or, if mailed, on the third Business Day following the date of mailing such notice. In the event that Warrants are held in the name of the Depository, a copy of such notice shall also be sent by electronic communication to the Depository and shall be deemed received and given on the day it is so sent. |
| (2) | If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Registered Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to such Registered Warrantholders to the address for such Registered Warrantholders contained in the register maintained by the Warrant Agent or such notice may be given, at the Corporation’s expense, by means of publication in the Globe and Mail, National Edition, or any other English language daily newspaper or newspapers of general circulation in Canada, in each two successive weeks, the first such notice to be published within five Business Days of such event, and any so notice published shall be deemed to have been received and given on the latest date the publication takes place. |
| (3) | Accidental error or omission in giving notice or accidental failure to mail notice to any Warrantholder will not invalidate any action or proceeding founded thereon. |
Section 10.3 Ownership of Warrants.
The Corporation and the Warrant Agent may deem and treat the Registered Warrantholders as the absolute owner thereof for all purposes, and the Corporation and the Warrant Agent shall not be affected by any notice or knowledge to the contrary except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction. The receipt of any such Registered Warrantholder of the Common Shares which may be acquired pursuant thereto shall be a good discharge to the Corporation and the Warrant Agent for the same and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction.
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Section 10.4 Counterparts.
This Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution they shall be deemed to be dated as of the date hereof. Delivery of an executed copy of the Indenture by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Indenture as of the date hereof.
Section 10.5 Satisfaction and Discharge of Indenture.
Upon the earlier of:
| (a) | the date by which there shall have been delivered to the Warrant Agent for exercise or cancellation all Warrants theretofore Authenticated hereunder, in the case of Certificated Warrants (or such other instructions, in a form satisfactory to the Warrant Agent), in the case of Uncertificated Warrants, or by way of standard processing through the Book Entry system in the case of a CDS Global Warrant; and |
| (b) | the Expiry Time; |
and if all certificates or other entry on the register representing Common Shares required to be issued in compliance with the provisions hereof have been issued and delivered hereunder or to the Warrant Agent in accordance with such provisions, this Indenture shall cease to be of further effect and the Warrant Agent, on demand of and at the cost and expense of the Corporation and upon delivery to the Warrant Agent of a certificate of the Corporation stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. Notwithstanding the foregoing, the indemnities provided to the Warrant Agent by the Corporation hereunder shall remain in full force and effect and survive the termination of this Indenture.
Section 10.6 Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders.
Nothing in this Indenture or in the Warrants, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the Registered Warrantholders, as the case may be, any legal or equitable right, remedy or claim under this Indenture, or under any covenant or provision herein or therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Registered Warrantholders.
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Section 10.7 Common Shares or Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided.
For the purpose of disregarding any Warrants owned legally or beneficially by the Corporation in Section 7.16, the Corporation shall provide to the Warrant Agent, from time to time, a certificate of the Corporation setting forth as at the date of such certificate:
| (a) | the names (other than the name of the Corporation) of the Registered Warrantholders which, to the knowledge of the Corporation, are owned by or held for the account of the Corporation; and |
| (b) | the number of Warrants owned legally or beneficially by the Corporation; |
and the Warrant Agent, in making the computations in Section 7.16, shall be entitled to rely on such certificate without any additional evidence.
Section 10.8 Severability.
If, in any jurisdiction, any provision of this Indenture or its application to any party or circumstance is restricted, prohibited or unenforceable, such provision will, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Indenture and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other parties or circumstances.
Section 10.9 Force Majeure.
No party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.
Section 10.10 Assignment, Successors and Assigns.
Neither of the parties hereto may assign its rights or interest under this Indenture, except as provided in Section 9.8 in the case of the Warrant Agent, or as provided in Section 8.2 in the case of the Corporation. Subject thereto, this Indenture shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
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Section 10.11 Rights of Rescission and Withdrawal for Holders.
Should a holder of Warrants exercise any legal, statutory, contractual or other right of withdrawal or rescission that may be available to it, and the holder’s funds which were paid on exercise have already been released to the Corporation by the Warrant Agent, the Warrant Agent shall not be responsible for ensuring the exercise is cancelled and a refund is paid back to the holder. In such cases, the holder shall seek a refund directly from the Corporation and subsequently, the Corporation, upon surrender to the Corporation or the Warrant Agent of any underlying shares that may have been issued, or such other procedure as agreed to by the parties hereto, shall instruct the Warrant Agent in writing, to cancel the exercise transaction and any such underlying shares on the register, which may have already been issued upon the Warrant exercise. In the event that any payment is received from the Corporation by virtue of the holder being a shareholder for such Warrants that were subsequently rescinded, such payment must be returned to the Corporation by such holder. The Warrant Agent shall not be under any duty or obligation to take any steps to ensure or enforce that the funds are returned pursuant to this Section, nor shall the Warrant Agent be in any other way responsible in the event that any payment is not delivered or received pursuant to this Section. Notwithstanding the foregoing, in the event that the Corporation provides the refund to the Warrant Agent for distribution to the holder, the Warrant Agent shall return such funds to the holder as soon as reasonably practicable, and in so doing, the Warrant Agent shall incur no liability with respect to the delivery or non-delivery of any such funds.
Section 10.12 Indenture to Prevail
To the extent of any discrepancy or inconsistency between the terms and conditions of this Indenture and the Warrant Certificate, the terms of this Indenture will prevail.
[remainder of page intentionally left blank, signature page follows]
S1
IN WITNESS WHEREOF the parties hereto have executed this Indenture under the hands of their proper officers in that behalf as of the date first written above.
| CARDIOL THERAPEUTICS INC. | |||
| By: | "David Elsley" | ||
| Name: | David Elsley | ||
| Title: | Chief Executive Officer | ||
| By: | "Chris Waddick" | ||
| Name: | Chris Waddick | ||
| Title: | Chief Financial Officer | ||
| ODYSSEY TRUST COMPANY | |||
| By: | "Brett Higgs" | ||
| Name: | Brett Higgs | ||
| Title: | Managing Director | ||
| By: | "Amy Douglas" | ||
| Name: | Amy Douglas | ||
| Title: | Managing Director | ||
Signature Page – Warrant Indenture
A-1
SCHEDULE “A”
FORM OF WARRANT
THE WARRANTS EVIDENCED HEREBY ARE EXERCISABLE AT OR BEFORE 4:00 P.M. (EASTERN TIME) ON JANUARY 23 2028, AFTER WHICH TIME THE WARRANTS EVIDENCED HEREBY SHALL BE DEEMED TO BE VOID AND OF NO FURTHER FORCE OR EFFECT
For all Warrants registered in the name of the Depository, also include the following legend:
(INSERT IF BEING ISSUED TO CDS) UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO CARDIOL THERAPEUTICS INC. (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.
For Warrants required to bear the legend set forth in Section 2.8(1), include the following legend:
“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR (E) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
A-2
WARRANT
To acquire Common Shares of
CARDIOL THERAPEUTICS INC.
(incorporated pursuant to the laws of the Province of Ontario)
| Warrant Certificate No. [*] | Certificate for Warrants, each Warrant entitling the holder to acquire one (1) Common Share (subject to adjustment as provided for in the Warrant Indenture (as defined below) |
| CUSIP: 14161Y168 |
| ISIN: CA14161Y1685 |
THIS IS TO CERTIFY THAT, for value received,
(the “Warrantholder”) is the registered holder of the number of common share purchase warrants (the “Warrants”) of Cardiol Therapeutics Inc. (the “Corporation”) specified above, and is entitled, on exercise of these Warrants upon and subject to the terms and conditions set forth herein and in the Warrant Indenture, to purchase at any time before 4:00 p.m. (Eastern time) (the “Expiry Time”) on January 23, 2028 (the “Expiry Date”), one fully paid and non-assessable Class A common share without par value in the capital of the Corporation as constituted on the date hereof (a “Common Share”) for each Warrant subject to adjustment in accordance with the terms of the Warrant Indenture.
Capitalized terms used but not otherwise defined herein have the meaning ascribed to them in the Warrant Indenture.
The right to purchase Common Shares may only be exercised by the Warrantholder within the time set forth above by:
| (a) | duly completing and executing the exercise form (the “Exercise Form”) attached hereto; and |
(b) surrendering this warrant certificate (the “Warrant Certificate”), with the Exercise Form and all additional information required thereby, to the Warrant Agent at the principal office of the Warrant Agent, in the city of Toronto, Ontario, together with a certified cheque, bank draft or money order in the lawful money of Canada payable to or to the order of the Corporation in an amount equal to the purchase price of the Common Shares so subscribed for.
The surrender of this Warrant Certificate, the duly completed Exercise Form, all additional information required thereby, and payment as provided above will be deemed to have been effected only on personal delivery thereof to, or if sent by mail or other means of transmission on actual receipt thereof by, the Warrant Agent at its principal office as set out above.
A-3
Subject to adjustment thereof in the events and in the manner set forth in the Warrant Indenture hereinafter referred to, the exercise price payable for each Common Share upon the exercise of Warrants shall be $1.75 per Common Share (the “Exercise Price”).
Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein or, if so specified in the Exercise Form, delivered to such persons at the office where this Warrant Certificate is surrendered. If fewer Common Shares are purchased than the number that can be purchased pursuant to this Warrant Certificate, the holder hereof will be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not so purchased. No fractional Common Shares will be issued upon exercise of any Warrant.
This Warrant Certificate evidences Warrants of the Corporation issued or issuable under the provisions of a warrant indenture (which indenture together with all other instruments supplemental or ancillary thereto is herein referred to as the “Warrant Indenture”) dated as of January 23, 2026 between the Corporation and Odyssey Trust Company, as Warrant Agent, to which Warrant Indenture reference is hereby made for particulars of the rights of the holders of Warrants, the Corporation and the Warrant Agent in respect thereof and the terms and conditions on which the Warrants are issued and held, all to the same effect as if the provisions of the Warrant Indenture were herein set forth, to all of which the holder, by acceptance hereof, assents. The Corporation will furnish to the holder, on request and without charge, a copy of the Warrant Indenture.
On presentation at the principal office of the Warrant Agent as set out above, subject to the provisions of the Warrant Indenture and in compliance with the reasonable requirements of the Warrant Agent, one or more Warrant Certificates may be exchanged for one or more Warrant Certificates entitling the holder thereof to purchase in the aggregate an equal number of Common Shares as are purchasable under the Warrant Certificate(s) so exchanged.
Neither the Warrants nor the Common Shares issuable upon exercise hereof have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or U.S. state securities laws. The Warrants may not be exercised by or on behalf of a U.S. person or a person in the United States, unless (i) the Warrants and such Common Shares have been registered under the U.S. Securities Act and the applicable laws of any such state, or (ii) an exemption from such registration requirements is available and the requirements set forth in the Exercise Form have been satisfied. “United States” and “U.S. person” are as defined in Regulation S under the U.S. Securities Act.
The Warrant Indenture contains provisions for the adjustment of the Exercise Price payable for each Common Share issuable upon the exercise of Warrants and the number of Common Shares issuable upon the exercise of Warrants in the events and in the manner set forth therein.
The Warrant Indenture also contains provisions binding all holders of Warrants outstanding thereunder, including all resolutions passed at meetings of holders of Warrants held in accordance with the provisions of the Warrant Indenture and instruments in writing signed by Warrantholders of Warrants entitled to purchase a specific majority of the Common Shares that can be purchased pursuant to such Warrants.
Nothing contained in this Warrant Certificate, the Warrant Indenture or elsewhere shall be construed as conferring upon the Warrantholder hereof any right or interest whatsoever as a holder of Common Shares or any other right or interest except as herein and in the Warrant Indenture expressly provided. In the event of any discrepancy between anything contained in this Warrant Certificate and the terms and conditions of the Warrant Indenture, the terms and conditions of the Warrant Indenture shall govern.
A-4
Warrants may only be transferred in compliance with the conditions of the Warrant Indenture on the register to be kept by the Warrant Agent in Toronto, Ontario, or such other registrar as the Corporation, with the approval of the Warrant Agent, may appoint at such other place or places, if any, as may be designated, upon surrender of this Warrant Certificate to the Warrant Agent or other registrar accompanied by a written instrument of transfer in form and execution satisfactory to the Warrant Agent or other registrar and upon compliance with the conditions prescribed in the Warrant Indenture and with such reasonable requirements as the Warrant Agent or other registrar may prescribe and upon the transfer being duly noted thereon by the Warrant Agent or other registrar. Time is of the essence hereof.
This Warrant Certificate will not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent from time to time under the Warrant Indenture.
The parties hereto have declared that they have required that these presents and all other documents related hereto be in the English language. Les parties aux présentes déclarent qu’elles ont exigé que la présente convention, de même que tous les documents s’y rapportant, soient rédigés en anglais.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be duly executed as of , 20 .
| CARDIOL THERAPEUTICS INC. | ||
| By: | ||
| Authorized Signatory | ||
| By: | ||
| Authorized Signatory | ||
Countersigned and Registered by:
| ODYSSEY TRUST COMPANY | ||
| By: | ||
| Authorized Signatory | ||
A-5
FORM OF TRANSFER
To: Odyssey Trust Company
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to
(print name and address) the Warrants represented by this Warrants Certificate and hereby irrevocable constitutes and appoints as its attorney with full power of substitution to transfer the said securities on the appropriate register of the Warrant Agent.
In the case of a warrant certificate that contains a U.S. restrictive legend, the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
| ¨ | (A) | the transfer is being made only to the Corporation; |
| ¨ | (B) | the transfer is being made outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and in compliance with any applicable local securities laws and regulations, and the holder has provided herewith the Declaration for Removal of Legend attached as Schedule “C” to the Warrant Indenture and any other information required by the Warrant Agent; or |
| ¨ | (C) | the transfer is being made in a transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws and the undersigned has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing, or other evidence, in form and substance reasonably satisfactory to the Corporation and the Warrant Agent to such effect, to the extent required pursuant to the terms of the U.S. restrictive legend. |
In the case of a warrant certificate that does not contain a U.S. restrictive legend, if the proposed transfer is to, or for the account or benefit of, a U.S. Person or a person in the United States, the undersigned hereby represents, warrants and certifies that the transfer of the Warrants is being completed pursuant to an exemption from the registration requirements of the U.S. Securities Act and any applicable state securities laws, and in compliance with the Distribution Compliance Period, in which case the undersigned has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing or other evidence in form and substance reasonably satisfactory to the Corporation and the Warrant Agent to such effect.
| ¨ | If a transfer is to a U.S. Person, check this box. |
If required pursuant to the U.S. Securities Act, certificates representing transferred Warrants will be endorsed with the legend set forth in Section 2.8(a) of the Indenture.
A-6
DATED this day of , 20 .
| SPACE FOR GUARANTEES OF | ) | ||
| SIGNATURES (BELOW) | ) | ||
| ) | |||
| ) | |||
| ) | |||
| ) | Signature of Transferor | ||
| ) | |||
| ) | |||
| ) | |||
| Guarantor’s Signature/Stamp | ) | Name of Transferor | |
| ) |
REASON FOR TRANSFER – For US Residents only (where the individual(s) or corporation receiving the securities is US resident). Please select only one (see instructions below).
| ¨ | Gift | ¨ | Estate | ¨ | Private Sale | ¨ | Other (or no change in ownership) |
| Date of Event (Date of gift, death or sale): | Value per Warrant on the date of event: | |
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¨ CAD OR ¨ USD |
CERTAIN REQUIREMENTS RELATING TO TRANSFERS – READ CAREFULLY
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. All securityholders or a legally authorized representative must sign this form. The signature(s) on this form must be guaranteed in accordance with the transfer agent’s then current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):
| · | Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct prefix covering the face value of the certificate. |
| · | Canada: A Signature Guarantee obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust. The Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”, sign and print their full name and alpha numeric signing number. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature & Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guaranteed” Stamp) obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a Medallion Signature Guarantee with the correct prefix covering the face value of the certificate. |
A-7
| · | Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed. |
OR
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. The signature(s) on this form must be guaranteed by an authorized officer of Royal Bank of Canada, Scotia Bank or TD Canada Trust whose sample signature(s) are on file with the transfer agent, or by a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed signatures are not acceptable as guaranteed signatures. The Guarantor must affix a stamp bearing the actual words: “SIGNATURE GUARANTEED”, “MEDALLION GUARANTEED” OR
“SIGNATURE & AUTHORITY TO SIGN GUARANTEE”, all in accordance with the transfer agent’s then current guidelines and requirements at the time of transfer. For corporate holders, corporate signing resolutions, including certificate of incumbency, will also be required to accompany the transfer unless there is a “SIGNATURE & AUTHORITY TO SIGN GUARANTEE” Stamp affixed to the Form of Transfer obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a “MEDALLION GUARANTEED” Stamp affixed to the Form of Transfer, with the correct prefix covering the face value of the certificate.
REASON FOR TRANSFER – FOR US RESIDENTS ONLY
Consistent with US IRS regulations, Odyssey is required to request cost basis information from US securityholders. Please indicate the reason for requesting the transfer as well as the date of event relating to the reason. The event date is not the day in which the transfer is finalized, but rather the date of the event which led to the transfer request (i.e., date of gift, date of death of the securityholder, or the date the private sale took place).
B-1
SCHEDULE “B”
EXERCISE FORM
| TO: | CARDIOL THERAPEUTICS INC. |
| AND TO: | Odyssey Trust Company |
The undersigned holder of the Warrants evidenced by this Warrant Certificate hereby exercises the right to acquire (A) Common Shares of Cardiol Therapeutics Inc.
| Exercise Price Payable: | |
| ((A) multiplied by $1.75, subject to adjustment) | |
The undersigned hereby exercises the right of such holder to be issued, and hereby subscribes for, Common Shares that are issuable pursuant to the exercise of such Warrants on the terms specified in such Warrant Certificate and in the Warrant Indenture.
The undersigned hereby acknowledges that the undersigned is aware that the Common Shares received on exercise may be subject to restrictions on resale under applicable securities legislation.
Any capitalized term in this Exercise Form that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture.
The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):
| ¨ | (A) | the undersigned holder (i) did not acquire the Warrants within the United States and was not a U.S. Person at the time the Warrants were acquired, (ii) is not in the United States, (iii) is not a U.S. Person, (iv) is not exercising the Warrants on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States, (v) did not execute or deliver this exercise form in the United States and (vi) delivery of the underlying Common Shares will not be to an address in the United States; OR |
| ¨ | (B) | the undersigned holder is the original purchaser from the Corporation, pursuant to an exemption from registration under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), of the units of which the Warrants comprised a part, and at the time of such acquisition was a U.S. Person or was in the United States (or was acting on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States), and confirms, as of the date of hereof, each of the representations, warranties, certifications and agreements made by it in connection with its acquisition of such Warrants, and confirms its status as an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the U.S. Securities Act, as though such representations, warranties, certifications and agreements were made on the date hereof and in respect of the acquisition of the Common Shares issuable upon exercise of the Warrants being exercised; OR |
B-2
| ☐ | (C) | an exemption from the registration requirements of the U.S. Securities Act and all applicable state securities laws is available for the exercise of the Warrants, and attached hereto is a written opinion of U.S. counsel or other evidence in form and substance reasonably satisfactory to the Corporation and the Warrant Agent to such effect. |
It is understood that the Corporation and Odyssey Trust Company may require evidence to verify the foregoing representations.
Notes:
| (1) | Certificates will not be registered or delivered to an address in the United States unless Box B or C above is checked and the applicable requirements are complied with. |
| (2) | If the Warrants have the legend set forth in Section 2.8(1) affixed to them, the resulting Common Shares will have the same U.S. legend affixed to them as well, for so long as required by applicable requirements of the U.S. Securities Act. |
| (3) | If Box C above is checked, holders are encouraged to consult with the Corporation and the Warrant Agent in advance to determine that the legal opinion or other evidence tendered in connection with the exercise or legending matters will be satisfactory in form and substance to the Corporation and the Warrant Agent. |
“United States” and “U.S. Person” are as defined in Rule 902 of Regulation S under the U.S. Securities Act.
The undersigned hereby irrevocably directs that the said Common Shares be issued, registered and delivered as follows:
| Name(s) in
Full and Social Insurance Number(s) (if applicable) |
Address(es) | Number of
Common Shares | ||
Please print full name in which certificates representing the Common Shares are to be issued. If any Common Shares are to be issued to a person or persons other than the registered holder, the registered holder must pay to the Warrant Agent all eligible transfer taxes or other government charges, if any, and the Form of Transfer must be duly executed.
Once completed and executed, this Exercise Form must be mailed or delivered to Odyssey Trust Company, at: Trader’s Bank Building 1100 – 67 Yonge Street Toronto ON M5E 1J8, Attn: Corporate Trust.
B-3
DATED this day of , 20 .
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| Witness | ) | (Signature of Warrantholder, to be the same as appears on the | |
| ) | face of this Warrant Certificate) | ||
| ) | |||
| ) | |||
| ) | |||
| ) | |||
| ) | Name of Registered Warrantholder |
¨ Please check if the certificates or DRS representing the Common Shares are to be delivered at the office where this Warrant Certificate is surrendered, failing which such certificates or DRS will be mailed to the address set out above. Certificates or DRS will be delivered or mailed as soon as practicable after the surrender of this Warrant Certificate to the Warrant Agent.
C-1
SCHEDULE “C”
FORM OF DECLARATION FOR REMOVAL OF LEGEND
| TO: | Odyssey Trust Company, as warrant agent and transfer agent for Cardiol Therapeutics Inc. |
| AND TO: | Cardiol Therapeutics Inc. |
The undersigned (a) acknowledges that the sale of [common shares/warrants] of Cardiol Therapeutics Inc. (the “Corporation”) to which this declaration relates, represented by certificate number , is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and (b) certifies that (1) the undersigned is not an “affiliate” (as that term is defined in Rule 405 under the U.S. Securities Act) of the Corporation, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of the Toronto Stock Exchange or other designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the seller does not intend to replace such securities with fungible unrestricted securities and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S under the U.S. Securities Act, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Unless otherwise defined herein, terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.
The undersigned understands that the Corporation, its transfer agent and others are relying upon the representations contained in this Declaration. The undersigned agrees to and does hereby indemnify and hold the Corporation, its transfer agent, directors, officers, employees, agents and counsel (collectively, the “Indemnified Parties”) harmless from and against any claim against any Indemnified Party as a result of or which involves the inaccuracy of any representation or the breach of any warranty or covenant made by the undersigned in this Declaration, including, without limitation, all expenses, reasonable attorneys’ fees and court costs incurred as a result of any such inaccuracy of any representation or breach of any warranty or covenant.
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| Name of Seller | ||||
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