LEEEF 8-K
Leef Brands Inc. (LEEEF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
Commission
File Number:
| British Columbia | ||
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 3.02 Unregistered Sales of Equity Securities.
On May 18, 2026, Leef Brands, Inc., a British Columbia corporation (the “Company”), completed its previously announced financing, pursuant to which the Company raised aggregate gross proceeds of approximately US$9.3 million. In connection with the closings pursuant to the financing, the Company issued an aggregate of 33,146,842 Common Share Units (each, a “Unit”) at a price of CN$0.25 per Unit. Each Unit consisted of one Common Share of the Company, no par value, and one common share purchase warrant. Each warrant entitles the holder to acquire one additional Common Share of the Company at an exercise price of CN$0.30 per share for a period of 24 months from the date of issuance. In addition, the Company issued 11,084,132 Preferred Shares. The Preferred Shares carry a 15% annual dividend, consisting of 10% payable in cash and 5% payable in kind, and are convertible into Common Shares of the Company at a conversion price of CN$0.38 per share.
The financing was led by Mindset Capital and included participation from existing shareholders and new strategic investors. Micah Anderson, the Company’s Chief Executive Officer, and Kevin Wilson, the Company’s Chief Financial Officer, also participated in the financing.
The Units, the Common Shares, the Preferred Shares, the Warrants and the Common Shares issuable upon exercise of the Warrants and conversion of the Preferred Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act.
The foregoing descriptions of the financing is qualified in its entirety by reference to the full text of the Common Share Subscription Agreement, Preferred Share Subscription Agreement and Warrant, a copies of which are filed as Exhibit 1.1, 1.2 and 1.3, respectively, hereto and are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description | |
| 1.1 | Common Share Subscription Agreement | |
| 1.2 | Preferred Share Subscription Agreement | |
| 1.3 | Warrant | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Leef Brands, Inc. | ||
| Date: June 2, 2026 | By: | /s/ Kevin Wilson |
| Kevin Wilson | ||
| Chief Financial Officer | ||
Exhibit 1.1
SUBSCRIPTION AGREEMENT
A completed and originally executed copy of this Subscription Agreement, including all applicable schedules hereto, must be delivered in hard copy or electronically, by no later than 4:00 p.m. (Toronto time) on [_], 2026 to: LEEF Holdings, Inc., 175 North Lenore Avenue, Willits, California, Attention: Kevin Wilson.
| TO: | LEEF Brands Inc. (the “Company”) |
The undersigned (the “Purchaser”), on its own behalf, and, if applicable, on behalf of those for whom the undersigned is contracting hereunder, hereby irrevocably subscribes for and agrees to purchase the number of units (“Units”) of the Company set out below, at a price of CAD $0.25 per Unit, subject to the following terms and conditions. Each Unit is comprised of one common share of the Company (a “Common Share”) and one Common Share purchase warrant of the Company (a “Warrant”). Each Warrant entitles the holder thereof to purchase one Common Share of the Company (a “Warrant Share”) at an exercise price of CAD $0.30 until twenty-four (24) months following the Closing Date. This subscription agreement, which for certainty includes and incorporates the attached Terms and Conditions of Subscription (the “Terms and Conditions of Subscription”) and the schedules attached hereto, are collectively referred to as the “Subscription Agreement”. A Term Sheet with respect to the offering is attached hereto Schedule A. The Accredited Investor Status Certificate attached hereto as Schedule B, the Foreign Purchaser’s Certificate attached hereto as Schedule C and the U.S. Purchaser’s Certificate attached hereto as Schedule D, are each referred to in the Subscription Agreement as a “Subscriber Certificate” and collectively referred to in the Subscription Agreement as the “Subscriber Certificates”. The Purchaser, on its own behalf, and, if applicable, on behalf of each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, agrees to be bound by the Terms and Conditions of Subscription, including without limitation the representations, warranties and covenants set forth in the schedules attached thereto, and the representations, warranties and covenants set forth in the applicable Subscriber Certificate, and acknowledges and agrees, without limitation, that the Company and its counsel may rely on the Purchaser’s representations, warranties and covenants contained in the Subscription Agreement.
| Issuer: LEEF Brands Inc. | Issue: Units | |
| Issue Price Per Unit: | CAD $0.25 | |
| Total Purchase Price (USD): 1 | $ | |
| Number and kind of securities of the Company currently owned (directly or indirectly) | ||
| Registrant (Y/N) (for Purchasers resident in British Columbia only) |
DATED
| 1 | The number of Units to be delivered to the Purchaser will be determined using the USD:CAD exchange rate published by the Bank of Canada on a date that is no more than two business days prior to the Closing Time. The total number of Units issued will be rounded down to the nearest whole number. No fractional Units shall be issued. |
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Name and Address of Purchaser |
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| (Name of Purchaser - please print) | (Purchaser’s Address) | ||
by |
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| Authorized Signature | (Address) | ||
| (Official Capacity or Title – please print) | (Telephone Number) | ||
| (Please print name of individual whose signature appears above if different than the name of the Purchaser printed above.) | (Email Address) | ||
Details of Beneficial Purchaser (i.e. party for whom the undersigned is contracting, if not the same as the Purchaser identified above). If the Purchaser is signing as agent for a principal and is not a trust company or a portfolio manager, in either case, purchasing as trustee or agent for accounts fully managed by it, please ensure that Schedule B, Schedule C or Schedule D hereto, as applicable, is completed on behalf of such principal.
| (Beneficial Purchaser’s Name – please print) | (Beneficial Purchaser’s Address) | |
| (if space is inadequate please attach a schedule containing the necessary information) | (Beneficial Purchaser’s Telephone Number) | |
| Registration Instructions: | Delivery Instructions: | |
| (Name) | ||
| (Account Reference, if applicable) | (Account Reference, if applicable) | |
| (Address) | (Contact Name) | |
| (Address) | (Address) | |
| (Address) | (Address) | |
| (Address) | ||
| (Telephone Number) | ||
| (Email Address) | ||
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ACCEPTANCE
The foregoing is acknowledged, accepted, and agreed to this _____ day of __________________, 2026.
| LEEF BRANDS INC. | ||
| Per: | ||
| Name: | Micah Anderson | |
| Title: | Director and Chief Executive Officer | |
TERMS AND CONDITIONS OF SUBSCRIPTION
1. Subscription. The Purchaser hereby tenders to the Company this Subscription Agreement which, upon acceptance by the Company, will constitute an irrevocable agreement of the Purchaser to purchase from the Company, and of the Company to sell to the Purchaser, the number of Units set out on the face page hereof (the “Purchaser’s Securities”) at a price of CAD $0.25 per Unit (the “Issue Price”), all on the terms and subject to the conditions set out in this Subscription Agreement. The Purchaser’s Securities form part of a larger offering of Units (the “Offering”) for total gross proceeds of up to approximately USD $1,500,000. The Offering is being made on a private placement basis.
The Company may increase the Offering (“Increased Offering”) at the Company’s sole discretion. There is no fixed minimum amount of gross proceeds. Unless the context otherwise requires, all references herein to Offering, Units, Warrants, Warrant Shares and Securities include any such securities of the Company issuable in connection with the Increased Offering.
2. Definitions. In this Subscription Agreement, unless the context otherwise requires:
| (a) | “associate”, “affiliate” and “distribution” and “insider” have the respective meanings ascribed to them in the Securities Act (Ontario); |
| (b) | “CAD” means Canadian Dollars, the lawful currency of Canada; |
| (c) | “Closing” means the completion of the issue and sale by the Company and the purchase by the Purchasers of Units pursuant to the provisions of this Subscription Agreement; |
| (d) | “Closing Date” has the meaning ascribed to it in Section 4 of this Subscription Agreement; |
| (e) | “Closing Time” means 4:00 p.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the Company may decide in its sole discretion; |
| (f) | “Common Share” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (g) | “Company” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (h) | “Designated Jurisdictions” means all of the provinces of Canada, to the extent that any Purchasers are resident therein; |
| (i) | “Governmental Entity” has the meaning ascribed to it in Section 5(f) of this Subscription Agreement; |
| (j) | “Increased Offering” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (k) | “Initial Closing Date” means March 12, 2026 or such other date as the Company may decide in its sole discretion; |
| (l) | “Issue Price” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (m) | “Money Laundering Laws” has the meaning ascribed to it in Section 5(h) of this Subscription Agreement; |
| (n) | “NI 45-106” means National Instrument 45-106 Prospectus and Registration Exemptions as such instrument is in effect at Closing in the Designated Jurisdiction in which the Purchaser resides; |
| (o) | “Offering” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (p) | “person” shall be broadly interpreted and shall include an individual, firm, corporation, syndicate, partnership, trust, association, unincorporated organization, joint venture, investment club, government or agency or political subdivision thereof and every other form of legal or business entity of whatsoever nature or kind; |
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| (q) | “Personal Information” means any information about a person (whether an individual or otherwise) required to be disclosed to a Securities Commission or stock exchange, whether pursuant to a form or request made by a Securities Commission or stock exchange, and includes, but is not limited to, the amount of Units purchased by such person and whether the Purchaser is an “insider” of the Company or a “registrant” (each as defined under applicable Securities Laws of the Province of Ontario) or any other information contained in this Subscription Agreement (including, for greater certainty, the Subscriber Certificates incorporated by reference herein); |
| (r) | “Purchase Price” means the product of the Issue Price and the total number of Purchaser’s Securities subscribed for under this Subscription Agreement; |
| (s) | “Purchaser” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (t) | “Purchaser’s Securities” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (u) | “Purchasers” means, collectively, all purchasers of the Units, including the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent; |
| (v) | “Regulation S” means Regulation S promulgated under the U.S. Securities Act; |
| (w) | “Sanctions” has the meaning ascribed to it in Section 5(i) of this Subscription Agreement; |
| (x) | “Securities” means collectively, the Common Shares, the Warrants and the Warrant Shares; |
| (y) | “Securities Commissions” means, collectively, the applicable securities commission or other securities regulatory authority in each of the Designated Jurisdictions; |
| (z) | “Securities Laws” means, collectively, the applicable securities laws of each of the Designated Jurisdictions and the respective regulations and rules made and forms prescribed thereunder together with all applicable and legally enforceable published policy statements, multilateral or national instruments, blanket orders, rulings and notices of the Securities Commissions; |
| (aa) | “Subscriber Certificate” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (bb) | “Subscription Agreement” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (cc) | “Terms and Conditions of Subscription” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (dd) | “U.S. Person” means a U.S. person as defined in Rule 902(k) of Regulation S under the U.S. Securities Act; |
| (ee) | “U.S. Purchaser” means any person who is (i) in the United States, (ii) a U.S. Person, (iii) purchasing the Purchaser’s Securities for the account or benefit of a person that is in the United States or a U.S. Person, (iv) a person that received an offer to purchase the Purchaser’s Securities while in the United States or (v) a person that executed this Subscription Agreement while in the United States; |
| (ff) | “U.S. Securities Act” means the United States Securities Act of 1933, as amended; |
| (gg) | “United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia; |
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| (hh) | “Units” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (ii) | “Warrant” has the meaning ascribed to it on the face page of this Subscription Agreement; and |
| (jj) | “Warrant Share” has the meaning ascribed to it on the face page of this Subscription Agreement. |
3. Delivery and Payment. The Purchaser agrees that the following shall be delivered to LEEF Holdings, Inc. at the address and by the date and time set out on the face page hereof, or such other time, date or place as the Company may advise:
| (a) | a completed and duly signed copy of this Subscription Agreement; |
| (b) | one of the following: |
| (i) | if the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is resident in Canada and purchasing the Purchaser’s Securities in reliance on the “accredited investor” exemption provided by Section 2.3 of NI 45-106: |
| (A) | a duly completed and executed copy of the Accredited Investor Status Certificate in the form attached hereto as Schedule B; and |
| (B) | if the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent is an individual and does not meet the criteria set out in subparagraph (j.1) of the Accredited Investor Status Certificate attached hereto as Schedule B, a duly completed and executed copy of the Risk Acknowledgement Certificate in the form attached hereto as Appendix I to Schedule B; or |
| (ii) | if the Purchaser or beneficial purchaser, if any, is resident in a jurisdiction outside of Canada and is not a U.S. Purchaser, a duly completed and executed copy of the Foreign Purchaser’s Certificate in the form attached hereto as Schedule C; |
| (iii) | if the Purchaser is a U.S. Purchaser, a duly completed and executed copy of the U.S. Purchaser’s Certificate in the form attached hereto as Schedule D; |
| (c) | a certified cheque, bank draft or wire transfer made payable on or before the Closing Date in same day freely transferable U.S. funds to “LEEF Holdings, Inc.” representing the Purchase Price payable by the Purchaser for the Purchaser’s Securities, or such other method of payment of the same amount against delivery of the Purchaser’s Securities as the Company may accept; and |
| (d) | any other documents required by the Securities Laws which the Company requests. |
The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that such documents, when executed and delivered by the Purchaser, will form part of and will be incorporated into this Subscription Agreement with the same effect as if each constituted a representation and warranty or covenant of the Purchaser hereunder in favour of the Company. The Purchaser and each such beneficial purchaser consents to the filing of such documents as may be required to be filed with the Securities Commissions in connection with the transactions contemplated hereby. The Purchaser, and any beneficial purchaser for whom the Purchaser is acting as trustee or agent, agrees that the Company is irrevocably authorized to correct minor errors or omissions in the information provided by the Purchaser in this Subscription Agreement, any applicable Subscriber Certificate, and any other documents or forms delivered by the Purchaser in connection with the transactions contemplated hereby, if any.
4. Closing. The transactions contemplated hereby will be completed electronically or at the offices of Bennett Jones LLP (“Bennett Jones”). The initial closing shall occur on the Initial Closing Date and each subsequent closing date, if any, shall occur on such other date or time as the Company may determine (each a “Closing Date”). If the terms and conditions contained in this Subscription Agreement have been complied with prior to the Closing Date, as determined by the Company, Bennett Jones shall deliver all completed Subscription Agreements to the Company along with payment of the aggregate proceeds to the Company and such other documentation as may be required pursuant to the Subscription Agreement.
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If the terms and conditions contained in this Subscription Agreement (other than delivery by the Company of certificates representing the Common Shares and Warrants) have not been complied with prior to the Closing Date, as determined by the Company, the Company and the Purchaser will have no further obligations under this Subscription Agreement. The Purchaser will take up, purchase and pay for the Purchaser’s Securities at Closing upon acceptance of this offer by the Company.
5. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the Purchaser as follows as of the date hereof and as of the Closing Time and acknowledges that the Purchaser is relying on such representations and warranties in connection with the transactions contemplated herein:
| (a) | the Company is a validly subsisting corporation incorporated under the laws of British Columbia, is in good standing and has full corporate power and authority to perform each of its obligations as herein contemplated and has requisite corporate power and capacity to carry on its business as now conducted and to own its assets; |
| (b) | this Subscription Agreement, when accepted by the Company, and all other certificates and instruments delivered in connection with the Offering will, on the Closing Date, constitute legal, valid and binding obligations of the Company enforceable in accordance with their respective terms subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction; |
| (c) | the execution and delivery of, and the performance of the terms of the Subscription Agreement by the Company, including the issue of the Common Shares and Warrants, does not and will not constitute a breach of or default under the constating documents of the Company or any law, regulation, order or ruling applicable to the Company or any agreement, contract or indenture to which the Company is a party or by which it is bound including but not limited to its articles of incorporation, bylaws, or other formation documents; |
| (d) | the authorized capital of the Company consists of an unlimited number of Common Shares, of which, as of the date hereof, 257,947,996 Common Shares were issued and outstanding as fully paid and non-assessable. Except for the Company’s 109,252,299 outstanding warrants, 25,735,458 outstanding restricted stock units and 12,222,059 outstanding stock options, there are no outstanding rights, commitments or other entitlements to purchase securities of the Company; |
| (e) | the Company and each of its Subsidiaries (as defined in NI 45-106) have complied with and are not in violation, in any material respect, of any applicable laws, with the exception of the U.S. Controlled Substances Act, 21 USC 801 et seq., as it applies to marijuana; |
| (f) | neither the Company nor any of its Subsidiaries has received any written notices or other written correspondence from any (i) international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, commissioner, board, bureau, ministry, agency or instrumentality, domestic or foreign, (ii) subdivision or authority of any of the above, (iii) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, or (iv) stock exchange (each, a “Governmental Entity”) (1) regarding any violation (or any investigation, inspection, audit, or other proceeding by any Governmental Entity involving allegations of any violation) of any law or (2) of any circumstances that may have existed or currently exist which could lead to a loss, suspension, or modification of, or a refusal to issue, any material Authorization. To the knowledge of the Company, no investigation, inspection, audit or other proceeding by any Governmental Entity involving allegations of any material violation of any law by the Company or any of its Subsidiaries is threatened or contemplated; |
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| (g) | neither the Company, its Subsidiaries nor any of their directors, executives, representatives, agents or employees has (i) used or is using any corporate funds for any illegal contributions, gifts, entertainment or other expenses relating to political activity that would be illegal, (ii) used or is using any corporate funds for any direct or indirect illegal payments to any foreign or domestic governmental officials or employees, (iii) violated or is violating any provision of the United States Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public Officials Act (Canada) or any similar laws of other jurisdictions, (iv) established or maintained, or is maintaining, any illegal fund of corporate monies or other properties or (v) made any bribe, illegal rebate, illegal payoff, influence payment, kickback or other illegal payment of any nature; |
| (h) | the operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court of governmental authority or any arbitrator non-Governmental Entity involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened; |
| (i) | none of the Company or any of its Subsidiaries or any director, officer, agent, employee or affiliate of the Company or any of its Subsidiaries, has had any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department, the Government of Canada or any other relevant sanctions authority (collectively, the “Sanctions”) imposed upon any such person, and the Company and its Subsidiaries are not in violation of any of the Sanctions or law or executive order relating thereto, or are conducting business with any person subject to any Sanctions; |
| (j) | there are no material claims, proceedings, actions or lawsuits in existence, or, to the Company’s knowledge, pending or threatened, against the Company; |
| (k) | for a period of twenty-four (24) months after the Closing Date, the Company shall not acquire, by purchase or otherwise, any cryptocurrency, including but not limited to Bitcoin, except for nominal amounts accepted by the Company in business-to-business transactions; and |
| (l) | following any hold periods imposed by the Securities Laws, the Company shall use its best efforts to register the Warrant Shares with any Governmental Entity necessary for the sale of the Warrant Shares on the Toronto Stock Exchange, the TSX Venture Exchange, or other similar exchange. |
6. Reliance upon and Survival of Representations, Warranties and Covenants of the Company. The Company acknowledges that the Purchaser is relying on the foregoing representations, warranties and covenants in connection with the transactions contemplated herein, all of which shall survive the Closing and, notwithstanding such Closing and notwithstanding any subsequent disposition by the Purchaser of any of the Purchaser’s Securities shall continue in full force and effect for the benefit of the Purchaser following the Closing Date.
7. Conditions of Closing. The Purchaser acknowledges that the Company’s obligation to sell the Purchaser’s Securities to the Purchaser is subject to, among other things, the following conditions:
| (a) | the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, executing and returning to the Company all documents required by applicable Securities Laws (including but not limited to the applicable Subscriber Certificate) for delivery on behalf of the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, including, without limitation, the applicable Schedules attached hereto by no later than the date and time set out on the face page hereof; |
| (b) | the Company having obtained all required regulatory approvals (including those that may be required under Securities Laws) to permit the completion of the transactions contemplated hereby; |
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| (c) | there having been no material adverse change in the affairs of the Company, and the representations and warranties of the Company being true in all material respects as of the Closing Date, unless such representation or warranty speaks to an earlier date, in which case, such representation or warranty shall be true in all material respects as of such date; |
| (d) | the offer, issue, sale and delivery of the Purchaser’s Securities being exempt from the requirements to file a prospectus, registration statement, or deliver an offering memorandum (as defined in applicable Securities Laws) or any similar document under applicable Securities Laws and other applicable securities laws relating to the sale of the Purchaser’s Securities, or the Company having received such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or registration statement or delivering an offering memorandum or any similar document; and |
| (e) | the representations and warranties of the Purchaser set out herein, including in any applicable Subscriber Certificate attached hereto, being true and correct as at the Closing Time. |
The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that the sale of the Common Shares and Warrants will not be qualified by a prospectus and the Common Shares and Warrants have not been and will not be registered under the U.S. Securities Act, or applicable state securities laws, and further that, such sale is subject to the condition that the Purchaser (or, if applicable, any others for whom the Purchaser is contracting hereunder) signs and returns to the Company or Bennett Jones all relevant documentation required by the Securities Laws and other applicable securities laws relating to the sale of the Purchaser’s Securities.
The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that the Company will be required to provide to the Securities Commissions a list setting out the identities of the beneficial purchasers of the Common Shares and Warrants. Notwithstanding that the Purchaser may be purchasing the Purchaser’s Securities as an agent on behalf of an undisclosed principal (if permissible under the relevant Securities Laws or other applicable securities laws), the Purchaser agrees to provide, on reasonable request, particulars as to the identity of such undisclosed principal as may be required the Company in order to comply with the Securities Laws and any other applicable laws.
8. Acceptance or Rejection. The Company will have the right, in its sole discretion, to accept or reject this Subscription Agreement in whole at any time at or prior to the Closing Time. The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that the acceptance of this offer will be conditional upon the issue and sale of the Purchaser’s Securities to the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, being exempt from any prospectus or offering memorandum requirements of the Securities Laws and the equivalent provisions of securities laws of any other applicable jurisdiction. The Company will be deemed to have accepted this Subscription Agreement upon the Company’s execution of the acceptance at page 4 of this Subscription Agreement and the delivery at the Closing of the Purchaser’s Securities to the Purchaser.
If this Subscription Agreement is rejected in whole, the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, understands that any funds, certified cheques and bank drafts delivered by the Purchaser to Bennett Jones representing the Purchase Price for the Purchaser’s Securities will be returned promptly by Bennett Jones to the Purchaser without interest or deduction.
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9. Purchaser’s Representations and Warranties. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, represents and warrants to the Company as follows as of the date hereof and as of the Closing Time and acknowledges that the Company is relying on such representations and warranties in connection with the transactions contemplated in this Subscription Agreement which representations and warranties shall survive the Closing and, notwithstanding such Closing and notwithstanding any subsequent disposition by the Purchaser of any of the Purchaser’s Securities shall continue in full force and effect for the benefit of the Company following the Closing Date:
| (a) | Authorization and Effectiveness. If the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is an individual, he or she is of the full age of majority and has all requisite legal capacity and competence to execute and deliver this Subscription Agreement and to observe and perform its covenants and obligations hereunder, or if the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is a corporation, the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is duly incorporated and is a valid and existing corporation, has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement, to subscribe for the Purchaser’s Securities and to observe and perform its covenants and obligations hereunder and has taken all necessary corporate action in respect thereof, or, if the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is a partnership, syndicate or other form of unincorporated organization, the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has the necessary legal capacity and authority to execute and deliver this Subscription Agreement, to subscribe for the Purchaser’s Securities and to observe and perform its covenants and obligations hereunder and has obtained all necessary approvals in respect thereof, and, in any case, upon acceptance by the Company, this Subscription Agreement will constitute a legal, valid and binding agreement of the Purchaser and the beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, enforceable against the Purchaser and the beneficial purchaser in accordance with its terms and will not result in a violation of or create a state of facts which, after notice, lapse of time or both, would constitute a default or breach of any of the Purchaser’s and beneficial purchaser’s constating documents, by-laws or authorizing resolutions (if applicable), any agreement to which the Purchaser or the beneficial purchaser is a party or by which the Purchaser or beneficial purchaser is bound or any law applicable to the Purchaser or beneficial purchaser or any judgment, decree, order, statute, rule or regulation applicable to the Purchaser or beneficial purchaser; |
| (b) | Residence. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, was offered the Units in, and is a resident of, or if not an individual has its head office in, the jurisdiction referred to under the heading “Name and Address of Purchaser” and “Details of Beneficial Purchaser”, respectively, set out on the face page and page 3 hereof, intends that the securities laws of that jurisdiction do and shall govern this subscription by the Purchaser of the Units, is not aware of any reason why the laws of such jurisdiction would not govern such subscription and that such addresses were not created and are not used solely for the purpose of acquiring the Purchaser’s Securities; |
| (c) | Private Placement Exemptions. If applicable, the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has properly completed, executed and delivered to the Company the applicable Subscriber Certificate attached hereto (dated as of the date hereof) and the information contained therein is, to the Purchaser’s knowledge, true and correct and the representations, warranties and covenants contained in the applicable Subscriber Certificate attached hereto will be true and correct both as of the date of execution of this Subscription Agreement and as at the Closing Time; |
| (d) | Subscriber Certificate. The Purchaser has properly completed, executed and delivered as principal, or, if the Purchaser is contracting hereunder as trustee, agent, representative or nominee for one or more beneficial purchasers, on behalf of each such beneficial purchaser, the applicable Subscriber Certificate, and related appendix, if applicable; |
| (e) | Purchasing as Principal. In the case of a Purchaser in Canada, unless paragraph (h) below applies, the Purchaser is purchasing the Purchaser’s Securities as principal (as defined in all applicable Securities Laws) for its own account, and not for the benefit of any other person; |
| (f) | No Syndication. In the case of a Purchaser in Canada, the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, was not created or used solely to purchase or hold securities as an accredited investor as described in paragraph (m) of the definition of “accredited investor” provided in Schedule B; |
| (g) | Investment Purposes. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is purchasing the Units for investment purposes only and not with a view to resale or distribution that would or may contravene the prospectus requirements of Securities Laws; |
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| (h) | Purchasing as Agent or Trustee. |
| (i) | In the case of the purchase by a Purchaser in Canada of the Purchaser’s Securities as agent or trustee for any principal whose identity is disclosed or identified, each beneficial purchaser of the Purchaser’s Securities for whom the Purchaser is acting, is purchasing the Purchaser’s Securities as principal for its own account and not for the benefit of any other person; was not created or used solely to purchase or hold securities in reliance on the “Minimum Amount Investment” exemption provided under Section 2.10 of NI 45-106 and it pre-existed the Offering and has a bona fide purpose other than investment in the Units; and either where such beneficial purchaser is not an individual, is purchasing the Purchaser’s Securities at an aggregate acquisition cost to such beneficial purchaser of not less than $150,000, or the beneficial purchaser is an “accredited investor” as defined in NI 45-106; |
| (ii) | In the case of the purchase by a Purchaser in Canada of the Purchaser’s Securities as agent or trustee for any principal whose identity is disclosed or identified, the Purchaser is the duly authorized trustee or agent of such disclosed beneficial purchaser with due and proper power and authority to execute and deliver, on behalf of each such beneficial purchaser, this Subscription Agreement and all other documentation in connection with the purchase of the Purchaser’s Securities hereunder, to agree to the terms and conditions herein and therein set out and to make the representations, warranties, acknowledgements and covenants herein and therein contained, all as if each such beneficial purchaser were the Purchaser and the Purchaser’s actions as trustee or agent are in compliance with applicable law and the Purchaser and each beneficial purchaser acknowledges that the Company is required by law to disclose to certain regulatory authorities the identity of each beneficial purchaser of Purchaser’s Securities for whom it may be acting; and |
| (iii) | In the case of the purchase by a Purchaser in Canada of the Purchaser’s Securities on behalf of an undisclosed beneficial purchaser, the Purchaser is deemed under applicable Securities Laws to be purchasing as principal; |
| (i) | Broker. There is no person acting or purporting to act in connection with the transactions contemplated herein who is entitled to any brokerage or finder’s fee. If any person establishes a claim that any fee or other compensation is payable in connection with this subscription for the Purchaser’s Securities, the Purchaser covenants to indemnify and hold harmless the Company with respect thereto and with respect to all costs reasonably incurred in the defence thereof; |
| (j) | Illegal Use of Funds. None of the funds being used to purchase the Purchaser’s Securities are to the Purchaser’s or beneficial purchaser’s knowledge proceeds obtained or derived directly or indirectly as a result of illegal activities. The funds being used to purchase the Purchaser’s Securities which will be advanced by the Purchaser to the Company hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”) and the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, acknowledges that the Company may in the future be required by law to disclose the Purchaser’s or beneficial purchaser’s name and other information relating to this Subscription Agreement and the Purchaser’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA or the PATRIOT Act. To the best of its knowledge none of the funds to be provided by the Purchaser or the beneficial purchaser are being tendered on behalf of a person or entity who has not been identified to the Purchaser, and it shall promptly notify the Company if the Purchaser or beneficial purchaser discovers that any of such representations cease to be true, and to provide the Company with appropriate information in connection therewith; |
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| (k) | Trade Sanctions. The Purchaser, and each beneficial purchaser, if any, for whom it is acting as trustee or agent, is not a person or entity identified in the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism, the Regulations Implementing the United Nations Resolutions on Taliban, ISIL (Da’esh) and Al-Qaida, the Regulations Implementing the United Nations Resolution on the Democratic People’s Republic of Korea, the Regulations Implementing the United Nations Resolution on Iran, the Regulations Implementing the United Nations Resolutions on Somalia, the Regulations Implementing the United Nations Resolutions on Lebanon, the Regulations Implementing the United Nations Resolutions on Sudan, the Special Economic Measures (Sudan) Regulations, the Special Economic Measures (Myanmar) Regulations, the Special Economic Measures (Belarus) Regulations, the Special Economic Measures (People’s Republic of China) Regulations, the Special Economic Measures (Haiti) Regulations, the Regulations Implementing the United Nations Resolutions on Haiti, the Special Economic Measures (Moldova) Regulations, the Special Economic Measures (Nicaragua) Regulations, the Special Economic Measures (Sri Lanka) Regulations, the Special Economic Measures (Guatemala) Regulations, the Special Economic Measures (Zimbabwe) Regulations, the Regulations Implementing the United Nations Resolutions and Imposing Special Economic Measures on Libya, the Special Economic Measures (Democratic People’s Republic of Korea) Regulations, the Special Economic Measures (Syria) Regulations, the Special Economic Measures (Venezuela) Regulations, the Special Economic Measures (Iran) Regulations, the Freezing of Assets of Corrupt Foreign Officials (Tunisia) Regulations, the Regulations Implementing the United Nations Resolutions on Iraq, the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, the Special Economic Measures (Russia) Regulations, the Special Economic Measures (Ukraine) Regulations, the Regulations Implementing the United Nations Resolutions on the Central African Republic, the Regulations Implementing the United Nations Resolutions on Yemen, the Special Economic Measures (South Sudan) Regulations, the Regulations Implementing the United Nations Resolutions on South Sudan, the Special Economic Measures (Extremist Settler Violence) Regulations and the Special Economic Measures (Hamas Terrorist Attacks) Regulations (collectively, the “Trade Sanctions”). The Purchaser (and each beneficial purchaser, if any) acknowledges that the Company may in the future be required by law to disclose the name and other information of the Purchaser and the beneficial purchaser, if any, related to the acquisition of the Purchaser’s Securities hereunder, on a confidential basis, pursuant to the Trade Sanctions; |
| (l) | Resale Restrictions. The Purchaser, and each beneficial purchaser, if any, for whom it is acting as trustee or agent, have been advised to consult their own legal advisors with respect to trading in the Securities with respect to the resale restrictions imposed by the Securities Laws of the province in which the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, resides and other applicable securities laws, and acknowledges that no representation has been made respecting the applicable hold periods imposed by the Securities Laws or other resale restrictions applicable to such securities which restrict the ability of the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, to resell such securities, that the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, is solely responsible to find out what these restrictions are and the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions and the Purchaser is aware that it (or any beneficial purchaser for whom it is contracting hereunder) may not be able to resell such securities except in accordance with limited exemptions under the Securities Laws and other applicable securities laws. The physical certificate evidencing the Securities may bear legends denoting such restrictions; |
| (m) | Compliance with Resale Restrictions. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, fully understands the restrictions on resale on the Purchaser’s Securities and will not resell the Purchaser’s Securities except in accordance with the provisions of applicable Securities Laws; |
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| (n) | Company or Unincorporated Organization. If the Purchaser, and each beneficial purchaser, if any, for whom it is acting as trustee or agent, is a corporation or a partnership, syndicate, trust, association, or any other form of unincorporated organization or organized group of persons, the Purchaser or such beneficial purchaser was not created or being used solely to permit purchases of or to hold securities without a prospectus in reliance on a prospectus exemption or exemption from the registration requirements of the U.S. Securities Act; |
| (o) | Absence of Offering Memorandum or Similar Document. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has not received, nor has it requested, nor does it have any need to receive, any offering memorandum or any other document describing the business and affairs of the Company (other than this Subscription Agreement), nor has any document been prepared for delivery to, or review by, prospective purchasers in order to assist them in making an investment decision in respect of the Securities being offered under the Offering; |
| (p) | Absence of Advertising. The offering and sale of the Units to the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, was not made or solicited through, and the Purchaser and each such beneficial purchaser is not aware of, any general solicitation or general advertising with respect to this Offering, or any directed selling efforts within the meaning of Regulation S, including advertisements, articles, notices or other communications published in any printed public media, radio, television or telecommunications, including electronic display (such as the Internet, including but not limited to the Company’s website), or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (q) | No Undisclosed Information. The decision of the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, to tender this Subscription Agreement and acquire the Purchaser’s Securities has not been made as a result of any oral or written representation (other than this Subscription Agreement) as to fact or otherwise made by or on behalf of the Company or any other person and is based entirely upon this Subscription Agreement and publicly available information relating to the Company. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has relied only on the information contained in this Subscription Agreement and publicly available information relating to the Company in making the decision to subscribe for the Purchaser’s Securities hereunder. Except as set forth in this Subscription Agreement, no representation, (written or oral) has been made to the Purchaser or any beneficial Purchaser, if any, for whom the Purchaser is acting as trustee or agent, by or on behalf of the Company or any Agent with respect to the Offering or the purchase of the Units; |
| (r) | Investment Suitability. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the investment hereunder in the Purchaser’s Securities and is able to bear the economic risk of and can afford the total loss of such investment; |
| (s) | Not an Insider. The purchase of the Purchaser’s Securities hereunder is not a transaction in which any shareholder of the Company, or any beneficial owner of securities carrying more than 10% of the voting rights attaching to all outstanding voting securities of the Company, has a direct or indirect beneficial interest, unless the Purchaser has otherwise notified the Company; |
| (t) | Not a “Control Person”. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is not a “control person” of the Company, as that term is defined in applicable Securities Laws, and will not become a “control person” of the Company by virtue of the purchase of the Purchaser’s Securities under this Subscription Agreement and does not act or intend to act in concert with any other person to form a control group in respect of the Company, unless the Purchaser has otherwise notified the Company; |
| (u) | Other Documents. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, will execute and deliver any other documents required by applicable Securities Laws to permit the purchase of the Purchaser’s Securities on the terms herein set forth which the Company reasonably requests; |
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| (v) | Personal Information. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges that this Subscription Agreement requires the Purchaser to provide certain Personal Information to the Company and its agents and advisers as reasonably necessary in connection with the proposed Offering. Such information is being collected and will be used by the Company for the purposes of completing the proposed Offering of Units, which includes, without limitation, determining the Purchaser’s eligibility to purchase the Purchaser’s Securities under applicable Securities Laws, the U.S. Securities Act and applicable state securities laws and completing filings required by the Securities Commissions and under the U.S. Securities Act and applicable state securities laws. The Purchaser agrees that the Purchaser’s Personal Information may be disclosed by the Company to: stock exchanges and applicable securities regulatory authorities; the Company’s registrar and transfer agent; the Canada Revenue Agency or other taxing authorities; and any of the other parties involved in the proposed Offering, including legal counsel, and may be included in record books in connection with the Offering. By executing this Subscription Agreement, the Purchaser consents to the foregoing collection, use, and disclosure of the Purchaser’s Personal Information. The Purchaser also consents to the filing of copies or originals of any of the Purchaser’s documents described in Section 3 hereof as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby. The Purchaser represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of the beneficial purchaser, if any; and |
| (w) | Compliance with United States Securities Laws. If the Purchaser is a U.S. Purchaser, then in addition to the other representations and warranties contained herein, the Purchaser represents and warrants that: |
| (i) | the Purchaser is aware that the Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States and that the Securities may not be offered or sold, directly or indirectly, in the United States without registration under the U.S. Securities Act or compliance with requirements of an exemption from registration and it acknowledges that the Company has no present intention of filing a registration statement under the U.S. Securities Act in respect of the Securities; |
| (ii) | unless the Purchaser has executed and delivered Schedule D hereto (in which case it makes the representations and warranties set forth therein), the Purchaser or any person for whom it is acting is not in the United States or a U.S. Person and is not acquiring the Securities for the account or benefit of a U.S. Person or a person in the United States or for resale in the United States and confirms that the Securities have not been offered to the Purchaser in the United States and that this Subscription Agreement has not been signed in the United States; |
| (iii) | neither the Purchaser nor any person for whom it is acting will offer, sell or otherwise dispose of the Securities in the United States unless the Company has consented to such offer, sale or distribution and such offer, sale or disposition is made in accordance with an exemption from the registration requirements of the U.S. Securities Act and the securities laws of all applicable states of the United States or the Company has filed, and the U.S. Securities and Exchange Commission has declared effective, a registration statement in respect of such securities; and |
| (iv) | the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, has duly completed and delivered to the Company the Subscriber Certificate appended hereto as Schedule D and represents and warrants set forth therein. |
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| (x) | International Purchasers. If the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, is a resident of a country other than Canada and is not a U.S. Purchaser (an “International Jurisdiction”) then in addition to the other representations and warranties contained herein, the Purchaser represents and warrants that: |
| (i) | the Purchaser is knowledgeable of, or has been independently advised as to, the applicable securities laws of the International Jurisdiction which would apply to this Subscription Agreement, if any; |
| (ii) | the Purchaser is purchasing the Purchaser’s Securities pursuant to exemptions from the prospectus, financial promotion and registration requirements under the applicable securities laws of that International Jurisdiction or, if such is not applicable, the Purchaser is permitted to purchase the Purchaser’s Securities under the applicable securities laws of the International Jurisdiction without the need to rely on an exemption; |
| (iii) | the applicable securities laws of the International Jurisdiction do not require the Company to file a prospectus, offering memorandum or similar document or to register or qualify the distribution of the Securities or for the Company to be registered with or to make any filings or seek any approvals of any kind whatsoever from any governmental or regulatory authority of any kind whatsoever in the International Jurisdiction; |
| (iv) | the delivery of this Subscription Agreement, the acceptance of it by the Company and the issuance of the Purchaser’s Securities to the Purchaser complies with all applicable laws of the Purchaser’s jurisdiction of residence or domicile and all other applicable laws and will not cause the Company to become subject to or comply with any continuous disclosure, prospectus or other periodic filing or reporting requirements under any such applicable laws; and |
| (v) | the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, has duly completed and delivered to the Company the Subscriber Certificate appended hereto as Schedule C and represents and warrants set forth therein. |
The Purchaser and each beneficial purchaser, if any, for whom it is acting as trustee or agent, acknowledges and agrees that the foregoing representations and warranties, and the acknowledgments made in Section 10 hereof, are made by it with the intention that they may be relied upon by the Company and its counsel in determining the Purchaser’s eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Purchaser’s Securities under the Securities Laws and other applicable securities laws. The Purchaser and each beneficial purchaser further agrees that by accepting delivery of the Purchaser’s Securities on the Closing Date, it shall be representing and warranting that the foregoing representations and warranties are true and correct as at the Closing Time with the same force and effect as if they had been made by the Purchaser at the Closing Time and that they shall survive the purchase by the Purchaser of the Purchaser’s Securities and shall continue in full force and effect notwithstanding any subsequent disposition by the Purchaser or the beneficial purchaser of the Purchaser’s Securities. The Purchaser and the beneficial purchaser undertakes to notify the Company immediately of any change in any representation, warranty or other information relating to the Purchaser or beneficial purchaser set out in this Subscription Agreement which takes place prior to the Closing Time. If the Purchaser is acquiring the Units for the account or benefit of one or more investor accounts, the Purchaser represents and warrants that it has the sole investment discretion with respect to each such investor account and that it has full power and authority to make the foregoing representations and warranties and the acknowledgments in Section 10 hereof.
10. Purchaser’s Acknowledgements. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting, acknowledges and agrees that:
| (a) | this Subscription Agreement is subject to rejection or acceptance by the Company, in whole, and is effective only upon acceptance by the Company; |
| (b) | no agency, securities commission, governmental authority, regulatory body, stock exchange or other entity has reviewed or passed on, made any finding or determination as to the merit for investment of, nor have any such agencies, securities commissions or governmental authorities made any recommendation or endorsement with respect to the Securities or the Offering; there is no government or other insurance covering the Securities; and there are risks associated with the purchase of the Securities; |
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| (c) | the purchase of the Purchaser’s Securities has not been or will not be (as applicable) made through, or as a result of, and the distribution of the Purchaser’s Securities is not being accompanied by, a general solicitation or advertisement including articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (d) | in the case of any Purchaser or beneficial purchaser in Canada, no prospectus or other offering document has been filed by the Company with a securities commission or other securities regulatory authority in any province of Canada, or any other jurisdiction in or outside of Canada in connection with the issuance of the Securities and such issuance is exempt from the prospectus requirements otherwise applicable under the provisions of Securities Laws and, as a result, in connection with its purchase of the Purchaser’s Securities hereunder, as applicable: |
| (i) | the Company has advised the Purchaser that the Company is relying on an exemption from the requirements to provide the Purchaser with a prospectus and that the Purchaser and each beneficial purchaser, if any, is restricted from using most of the protections, rights and remedies available under Securities Laws including, without limitation, statutory rights of rescission or damages; |
| (ii) | the common law may not provide investors with an adequate remedy in the event that they suffer investment losses in connection with securities acquired in a private placement; |
| (iii) | the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, will not receive information that may otherwise be required to be provided to the Purchaser and each beneficial purchaser, if any, under applicable Securities Laws or contained in a prospectus prepared in accordance with applicable Securities Laws; and |
| (iv) | the Company is relieved from certain obligations that would otherwise apply under such applicable Securities Laws. |
| (e) | the Securities are being offered for sale only on a “private placement” basis; |
| (f) | the Purchaser has received a copy of the Term Sheet attached hereto as Schedule A, setting out the principal terms of the offering; |
| (g) | all costs and expenses incurred by the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting, (including any fees and disbursements of legal counsel retained by the Purchaser or any beneficial purchaser) relating to the purchase of the Purchaser’s Securities shall be borne solely by the Purchaser or the beneficial purchaser; |
| (h) | in purchasing the Purchaser’s Securities, the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has relied solely upon this Subscription Agreement and publicly available information relating to the Company and not upon any other document or verbal or written representation as to any fact or otherwise made by or on behalf of the Company or any employee, agent or affiliate thereof or any other person associated therewith. The Company’s counsel, Bennett Jones, does not assume any responsibility or liability of any nature whatsoever for the accuracy or adequacy of the information upon which the Purchaser’s or the beneficial purchaser’s, if any, investment decision has been made. The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting, is not relying upon anyone to conduct any due diligence investigation on behalf of the Purchaser concerning the Offering, the Securities, the Company’s business, management, financial position, condition or prospects. The Company’s counsel, Bennett Jones, is entitled to the benefit of this subsection; |
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| (i) | the Securities will be subject to certain resale restrictions under the Securities Laws and the Purchaser agrees to comply with such restrictions. The Purchaser also acknowledges that it has been advised to consult its own legal advisors with respect to applicable resale restrictions and that it is solely responsible (and the Company is not in any manner responsible) for complying with such restrictions. For purposes of complying with the Securities Laws, including National Instrument 45-102 – Resale of Securities, the Purchaser and each beneficial purchaser, if any, for whom it is acting as trustee or agent, understands and acknowledges that upon the issuance of the Securities, all the certificates representing the Securities shall bear, as applicable and in addition to any legends set forth on Schedule D (if applicable), a legend substantially in the following form: |
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE DISTRIBUTION DATE].”
| (j) | no person has made any written or oral representations: that any person will resell or repurchase the Purchaser’s Securities; that any person will refund the Purchase Price or as to the future price or value of the Securities; |
| (k) | the original Purchaser may not engage in any hedging transactions involving the Purchaser’s Securities or resell or otherwise transfer the Securities to U.S. Persons or to persons in the United States or to or for the account or benefit of U.S. Persons or persons in the United States, except in compliance with the U.S. Securities Act and applicable state securities legislation; |
| (l) | unless the Purchaser has executed and delivered Schedule D hereto: (i) is not, and is not purchasing the Purchaser’s Securities on behalf of (as agent or otherwise), or for the account or benefit of, a person in the United States or a U.S. Person; (ii) was not offered or sold the Purchaser’s Securities in the United States; (iii) did not, nor did its authorized signatory, receive, execute or deliver this Subscription Agreement inside the United States; and (iv) acknowledges, or if applicable, each person for whom it is contracting hereunder, acknowledges, that it has not purchased the Securities as a result of any directed selling efforts, as such term is used in Regulation S, or any general solicitation or general advertising, as such terms are defined in Regulation D promulgated under the U.S. Securities Act, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (m) | the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act; |
| (n) | the Purchaser is solely responsible for obtaining such tax, investment, legal and other professional advice as it considers appropriate in connection with the offer, sale and issuance of the Securities, the execution, delivery and performance by it of this Subscription Agreement, applicable tax considerations and the applicable hold periods and resale restrictions imposed in respect of the Securities by applicable securities legislation and regulatory policies, and confirms that it (and any disclosed principal, if applicable) is not relying on the Issuer or counsel to any of them in this regard. The Purchaser is solely responsible for compliance with applicable resale restrictions and applicable tax legislation; |
| (o) | the Company may complete additional financings in the future in order to develop the business of the Company and fund its ongoing development, and such future financings may have a dilutive effect on current shareholders of the Company, including the Purchaser, and there is no assurance that such financing will be available, on reasonable terms or at all, and if not available, the Company may be unable to fund its ongoing development; |
| (p) | Bennett Jones is acting solely as counsel to the Company and not as counsel to the Purchaser; |
| (q) | in purchasing the Purchaser’s Securities, the Purchaser (and, if applicable, the beneficial purchaser, if any) is not relying upon anyone to conduct any due diligence investigation on behalf of the Purchaser concerning the Offering, the Purchaser’s Securities, or the Company’s business, management, financial position, condition or prospects; |
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| (r) | the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has had the opportunity to review this Subscription Agreement and the Schedules attached hereto and the transactions contemplated by this Subscription Agreement and fully understands the same; and |
| (s) | the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has had the opportunity to ask questions and receive answers concerning the terms and conditions of the Offering and it has had access to such information concerning the Company as it has considered necessary or appropriate in connection with its investment decision to acquire the Purchaser’s Securities. |
11. Further Acknowledgements of the Purchaser. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, hereby acknowledges, agrees, and consents to:
| (a) | the disclosure of Personal Information to each of the Company, the Securities Commissions and any other securities commission pursuant to applicable securities legislation; and |
| (b) | the collection, use, and disclosure of Personal Information by the Company for corporate finance and shareholder communication purposes or such other purposes as are necessary to the Company’s business. |
If the Purchaser is resident in or otherwise subject to the Securities Laws of the Province of Ontario, the Purchaser acknowledges and agrees that the Purchaser has been notified by the Company: of the delivery to the Ontario Securities Commission (the “OSC”) of Personal Information pertaining to the Purchaser, including, without limitation, the full name, residential address and telephone number of the Purchaser, the number and type of securities purchased and the total Purchase Price paid in respect of the Purchaser’s Securities; that this information is being collected indirectly by the OSC under the authority granted to it in securities legislation; that this information is being collected for the purposes of the administration and enforcement of the securities legislation of Ontario; and that the title, business address and business telephone number of the public official in Ontario who can answer questions about the OSC’s indirect collection of the information is the Administrative Assistant to the Director of Corporate Finance, the Ontario Securities Commission, Suite 1903, Box 55, 20 Queen Street West, Toronto, ON M5H 3S8, Telephone: (416) 593-8086, Facsimile: (416) 593-8252.
If the Purchaser is resident in or otherwise subject to the Securities Laws of the Province of British Columbia, the Purchaser acknowledges: (i) that the British Columbia Securities Commission (“BCSC”) will publish part of Form 45-106F6, which is required to be filed under NI 45-106, on its website (including the Personal Information about non-individual Purchasers) and allow for the inspection of the full form (including the Personal Information about individual Purchasers) at the BCSC’s office; (ii) that the disclosure of such Personal Information; and (iii) that questions about such indirect collection of information by the BCSC should be directed to the following telephone number (604) 899-6854 or 1-800-373-6393 (toll free access across Canada) or by facsimile at (604) 899-6506 or in person or writing at P.O. Box 10142, Pacific Centre, 701 West Georgia Street, Vancouver, BC, V7Y 1L2.
12. Purchaser’s Covenants. If the Company has reason to believe the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent does not qualify as an “accredited investor” under applicable Securities Laws, the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent covenants and agrees to provide information as reasonably requested by the Company to verify that the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent qualifies as an accredited investor, which information may include, without limitation, financial records of the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent.
13. No Revocation. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, agrees that this Subscription Agreement is made for valuable consideration and, following the Closing, may not be withdrawn, cancelled, terminated, or revoked by the Purchaser without the consent of the Company.
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14. Indemnity. The Purchaser, on its own behalf, and, if applicable, on behalf of each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, agrees that the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, shall indemnify and hold harmless the Company and its respective directors, officers, employees, agents, advisors, counsel and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation, warranty or acknowledgement of the Purchaser made on its own behalf, and, if applicable, on behalf of each beneficial purchaser for whom it is acting as trustee or agent, contained herein or in any document furnished by the Purchaser to the Company in connection herewith being untrue in any material respect or any breach or failure by the Purchaser or any beneficial purchaser for whom it is acting as trustee or agent, to comply with any covenant or agreement made by the Purchaser herein or in any document furnished by the Purchaser to the Company in connection herewith. With respect to any indemnified person who is not a party to this Subscription Agreement, it is the intention of the Purchaser and each beneficial purchaser for whom it is acting as trustee or agent, if any, to constitute the Company as trustee for such indemnified persons of the rights and benefits of this Section 14 and the Company agrees to accept such trust and to hold the rights and benefits of this Section 14 in trust for and on behalf of each such indemnified person. The Company agrees that it shall indemnify and hold harmless the Purchaser, and, if applicable, each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, and their respective directors, officers, employees, agents, advisors, counsel and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation, warranty or acknowledgement of the Company contained herein or in any document furnished by the Company to the Purchaser in connection herewith being untrue in any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company herein or in any document furnished by the Company to the Purchaser in connection herewith.
15. Modification. Subject to the terms hereof, neither this Subscription Agreement nor any provision hereof shall be modified, changed, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.
16. Assignment. The terms and provisions of this Subscription Agreement shall be binding upon and enure to the benefit of the Purchaser, the Company and their respective successors and assigns; provided that this Subscription Agreement shall not be assignable by the Company without the prior written consent of the Purchaser. For greater certainty this Subscription Agreement may be transferred or assigned by the Purchaser to any of its affiliates without the prior written consent of the Company, subject to compliance with applicable laws (including, without limitation, applicable Securities Laws), and effective upon notice the Company.
17. Change in Information. The Purchaser, on its own behalf and (if applicable) on behalf of others for whom it is contracting hereunder, agrees that the representations, warranties and covenants of the Purchaser herein will be true and correct both as of the Purchaser’s execution of this Subscription Agreement and as of the Closing Time and will survive the completion of the issuance of the Securities. The representations, warranties and covenants of the Purchaser herein are made with the intent that they be relied upon by the Company and its counsel in determining the eligibility of a purchaser of Units and the Purchaser agrees to indemnify and save harmless the Company and its affiliates, shareholders, directors, officers, employees, counsel and agents against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur which are caused or arise from a breach thereof. The Purchaser undertakes to immediately notify the Company at LEEF Brands Inc., Suite 2500 – 666 Burrard Street, Vancouver, British Columbia, V6C 2X8, Canada, Attention: Kevin Wilson, email: [email protected] of any change in any statement or other information relating to the Purchaser set forth herein which takes place prior to the Closing Time.
18. Miscellaneous and Counterparts. All representations, warranties, agreements, and covenants made or deemed to be made by the Purchaser (and, if applicable, others for whom it is contracting hereunder) herein will survive the execution and delivery, and acceptance, of this Subscription Agreement and the Closing. This Subscription Agreement may be executed in any number of counterparts, each of which when delivered, either in original or electronic form, shall be deemed to be an original and all of which together shall constitute one and the same document.
19. Governing Law. This Subscription 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 Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, hereby irrevocably attorns to the jurisdiction of the courts of the Province of Ontario with respect to any matters arising out of this Subscription Agreement.
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20. Electronic Subscriptions. The Company shall be entitled to rely on delivery by electronic means of an executed copy of this Subscription Agreement (including, the applicable Subscriber Certificate), and acceptance by the Company of such electronic copy shall be legally effective to create a valid and binding agreement between the Purchaser and the Company in accordance with the terms hereof.
21. Entire Agreement. This Subscription Agreement (including the Schedules hereto) contains the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein. This Subscription Agreement may be amended or modified in any respect by written instrument only.
22. Language. In connection with the proposed offering of Units, the undersigned hereby requests that all documentation available, including the Subscription Agreement, be prepared and forwarded in the English language only. Dans le cadre du placement propose de reçu de souscription de LEEF Brands Inc.., le soussigné consent par les présentes à ce que la documentation relative à ce placement proposé, y compris la convention de souscription, soit rédigée et soumise en la langue anglaise seulement.
23. Time of Essence. Time shall be of the essence of this Subscription Agreement.
24. Currency. All dollar amounts referred to in this Subscription Agreement are in U.S. dollars, unless otherwise indicated.
25. 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 Subscription Agreement.
26. 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.
27. Headings. The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof.
28. Notices. Any and all notices, designations, consents, offers, acceptances or any other communication provided for herein; shall be given in writing by (i) recognized local same day or next day delivery courier, (ii) when sent by electronic mail (without receipt of any transmission error message), or (iii) Federal Express or other similar internationally recognized overnight delivery service, in each instance, with receipt requested; shall be deemed to have been given on the earlier to occur of the date of actual delivery, or one day after delivered to Federal Express or other similar internationally recognized overnight delivery service for next day delivery; and shall be addressed, in the case of the Purchaser, to the address of the Purchaser indicated on the signature page hereto, and in the case of the Company, to the address indicated on the instruction page, or in each case, to such other address as may be designated in writing by either party pursuant to this Section.
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SCHEDULE A
TERM SHEET
| Issuer | LEEF Brands Inc. (the “Company”) | |
| Offering | Up to USD $3.0 million of Units (the “Offering”) | |
| Issue Price | CAD $0.25 per Unit. | |
| Units | Each “Unit” shall consist of: (a) one common share of the Company (each, a “Common Share”); and (b) one warrant entitling the holder thereof to purchase one Common Share on the terms set out therein (each, a “Warrant”). | |
| Warrants | Each Warrant shall: |
| 1. | entitle the holder thereof to purchase one Common Share at an exercise price of CAD $0.30 per Common Share; and | |||
| 2. | expire 24 months from the date of issuance. |
| Voting | Holders of Common Shares are entitled to one vote per common share at all meetings of the Company’s shareholders. | |
| Dividends | Holders of Common Shares are entitled to receive dividends as and when declared by the directors of the Company. | |
| Use of Proceeds | Proceeds of the Offering shall be used primarily for commencement and support of operations at the farm known as Salisbury Canyon Ranch. |
| Closing | On or about March 12, 2026 (the “Closing”). | |
| Agent | The Company may pay participating securities dealers a fee, commensurate with prevailing industry norms, in cash and/or warrants. | |
| Hold Period | The Units issued in the Offering will be subject to a four month hold period under provincial securities laws in Canada and the Canadian Securities Exchange (“CSE”) policies, and may be subject to additional resale restrictions based upon the jurisdiction in which the Purchaser is resident.
The Units have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state of the United States, and may not be offered or sold to any person who is a U.S. Purchaser absent registration or an exemption from applicable registration requirements.
The Purchaser is advised to consult its own legal counsel or advisors to determine the resale restrictions that may be applicable to them. |
| Conditions | Closing of the Offering is subject to the following: | |||
| 1. | Receipt of applicable corporate, regulatory and other third party approvals, including the CSE. | |||
| 2. | Completion by the Company, the Purchaser and their respective advisors of “due diligence” investigations satisfactory to the parties in their respective sole discretion. | |||
| 3. | No material adverse change in the affairs of the Company having occurred. | |||
| Definitive Agreement | To effect the Offering, the Company and the Purchaser shall enter into a definitive subscription agreement and related agreements, which shall contain the terms, conditions, representations, warranties and covenants set out in this Term Sheet and such other the terms, conditions, representations, warranties and covenants as are customary for transactions of the nature and magnitude contemplated herein (collectively, the “Definitive Agreement”). The Company and the Purchaser shall use commercially reasonable efforts to enter into the Definitive Agreement by Closing. | |
| Confidentiality | This Term Sheet is subject to the Confidentiality Agreement entered into between the Purchaser and the Company, and accordingly the existence, status and terms of the parties’ negotiations and agreements regarding the Offering will be kept confidential. |
SCHEDULE B
Accredited Investor Status Certificate
Capitalized terms not specifically defined in this Schedule B have the meanings ascribed to them in the Subscription Agreement to which this Schedule B is attached.
The categories listed herein contain certain specifically defined terms. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your broker and/or legal advisor before completing this certificate.
In connection with the purchase by the undersigned Purchaser of the Purchaser’s Securities, the Purchaser, on its own behalf and on behalf of each of the beneficial purchasers for whom the Purchaser is acting (collectively, the “Purchaser”), hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its counsel are relying thereon) that:
| (a) | the Purchaser is resident in or otherwise subject to the securities laws of one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Newfoundland and Labrador, Nova Scotia, New Brunswick or Prince Edward Island; |
| (b) | the Purchaser is purchasing the Purchaser’s Securities as principal for its own account and not for the benefit of any other person or is deemed to be purchasing as principal pursuant to NI 45-106; |
| (c) | the Purchaser is an “accredited investor” within the meaning of NI 45-106 on the basis that the undersigned fits within one of the categories of an “accredited investor” reproduced below beside which the undersigned has indicated the undersigned belongs to such category; |
| (d) | the Purchaser was not created or is not used solely to purchase or hold securities as an accredited investor as described in paragraph (m) below; |
| (e) | if the Purchaser is an individual and does not meet the criteria set out in subparagraph (j.1) of this Schedule B, it has duly completed and executed a copy of the Risk Acknowledgement Certificate in the form attached hereto as Appendix I to this Schedule B; |
| (f) | upon execution of this Schedule B by the Purchaser, this Schedule B shall be incorporated into and form a part of the Subscription Agreement. |
(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)
| ☐ | (a) | except in Ontario, a Canadian financial institution, or a Schedule III bank; |
| (a.1) | in Ontario, a financial institution that is (i) a bank listed in Schedule I, II or III of the Bank Act (Canada); (ii) an association to which the Cooperative Credit Associations Act (Canada) applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act; or (iii) a loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative or credit union league or federation that is authorized by a statute of Canada or Ontario to carry on business in Canada or Ontario, as the case may be; | |
| ☐ | (b) | the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); |
| - B2 - |
| ☐ | (c) | a subsidiary of any person referred to in paragraphs (a), (a.1) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary; |
| ☐ | (d) | a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, except in Ontario as otherwise prescribed by the regulations under the Securities Act (Ontario); |
| ☐ | (e) | an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d); |
| ☐ | (e.1) | an individual formerly registered under the securities legislation of a jurisdictio of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador), |
| ☐ | (f) | the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada; |
| ☐ | (g) | a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec; |
| ☐ | (h) | any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government; |
| ☐ | (i) | a pension fund that is regulated by the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction of Canada; |
| ☐ | (j) | an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000 (note: check only if you do not qualify under option (j.1) immediately below); [PLEASE ALSO COMPLETE SECTIONS 2-4 OF APPENDIX I] |
| ☐ | (j.1) | an individual who beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $5,000,000 (note: if individual accredited investors wish to purchase through wholly-owned holding companies or similar entities, such purchasing entities must qualify under section (t) below, which must be initialled); |
| ☐ | (k) | an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year; [PLEASE ALSO COMPLETE SECTIONS 2-4 OF APPENDIX I] |
| ☐ | (l) | an individual who, either alone or with a spouse, has net assets of at least $5,000,000; [PLEASE ALSO COMPLETE SECTIONS 2-4 OF APPENDIX I] |
| ☐ | (m) | a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements; |
| (n) | an investment fund that distributes or has distributed its securities only to |
| (i) | a person that is or was an accredited investor at the time of the distribution | |||
| (ii) | a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] or 2.19 [Additional investment in investment funds] of NI 45-106, or | |||
| (iii) | a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106; |
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| ☐ | (o) | an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt; |
| ☐ | (p) | a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be; |
| ☐ | (q) | a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; |
| ☐ | (r) | a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded; |
| ☐ | (s) | an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function; |
| ☐ | (t) | a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors; |
| ☐ | (u) | an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; |
| ☐ | (v) | a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor; or |
| ☐ | (w) | a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse. |
For the purposes hereof, the following definitions are included for convenience:
| (a) | “Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada; |
| (b) | “company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization; |
| (c) | “control person” means |
| (i) | a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, or |
| (ii) | each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, |
and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer;
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| (d) | “director” means |
| (i) | a member of the board of directors of a company or an individual who performs similar functions for a company, and |
| (ii) | with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company; |
| (e) | “eligibility adviser” means |
| (i) | a person that is registered as an investment dealer and authorized to give advice with respect to the type of security being distributed; and |
| (ii) | in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not: |
| (A) | have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders or control persons, and |
| (B) | have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months; |
| (f) | “entity” means a company, syndicate, partnership, trust or unincorporated organization; |
| (g) | “executive officer” means, for an issuer, an individual who is |
| (i) | a chair, vice-chair or president, |
| (ii) | a vice-president in charge of a principal business unit, division or function including sales, finance or production, or |
| (iii) | performing a policy-making function in respect of the issuer; |
| (h) | “financial assets” means cash, securities, or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation; |
| (i) | “foreign jurisdiction” means a country other than Canada or a political subdivision of a country other than Canada; |
| (j) | “founder” means, in respect of an issuer, a person who, (i) acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and (ii) at the time of the distribution or trade is actively involved in the business of the issuer; |
| (k) | “fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction; |
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| (l) | “investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes an employee venture capital corporation that does not have a restricted constitution, and is registered under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments and a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is making multiple investments; |
| (m) | “jurisdiction” or “jurisdiction of Canada” means a province or territory of Canada except when used in the term foreign jurisdiction; |
| (n) | “non-redeemable investment fund” means an issuer: |
| (i) | whose primary purpose is to invest money provided by its securityholders; |
| (ii) | that does not invest |
| (A) | for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund, or |
| (B) | for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund, and |
| (iii) | that is not a mutual fund; |
| (o) | “person” includes |
(i) an individual;
(ii) a corporation;
(iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and
(iv) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;
| (p) | “related liabilities” means liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets and liabilities that are secured by financial assets; |
| (q) | “Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada); |
| (r) | “spouse” means an individual who (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and |
| (s) | “subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary. |
Under NI 45-106 a person or company is an affiliate of another person or company if one is a subsidiary of the other, or if each of them is controlled by the same person or company.
Under NI 45-106 and except under Part 2 Division 4 of NI 45-106, a person (first person) is considered to control another person (second person) if (a) the first person beneficially owns or, directly or indirectly, exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation, (b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or (c) the second person is a limited partnership and the general partner of the limited partnership is the first person.
| - B6 - |
Under NI 45-106 a trust company or trust corporation described in paragraph (p) above of the definition of “accredited investor” (other than in respect of a trust company or trust corporation registered under the laws of Prince Edward Island that is not registered or authorized under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada) is deemed to be purchasing as principal.
Under NI 45-106 a person described in paragraph (q) above of the definition of “accredited investor” is deemed to be purchasing as principal.
The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time.
| DATED: | SIGNED: | |||
|
||||
| Witness (if Purchaser is an individual) | ||||
| Print the name of witness | Print the name of Purchaser | |||
If Purchaser is not an individual, print name and title of authorized signing officer | ||||
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APPENDIX I TO SCHEDULE B
RISK ACKNOWLEDGEMENT CERTIFICATE
WARNING! This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment. |
| SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | ||
| 1. About your investment | ||
| Type of securities: Units | Issuer: LEEF Brands Inc. | |
| Purchased from: Issuer | ||
| SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER | ||
| 2. Risk acknowledgement | ||
| This investment is risky. Initial that you understand that: | Your Initials | |
| Risk of loss – You could lose your entire investment of $__________________. [Instruction: Insert the total dollar amount of the investment.] | ||
| Liquidity risk – You may not be able to sell your investment quickly – or at all. | ||
| Lack of information – You may receive little or no information about your investment. | ||
| Lack of advice – You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca. | ||
| 3. Accredited investor status | ||
| You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria. | Your initials | |
| ● | Your net income before taxes was more than $200,000 in each of the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.) | |
| ● | Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year. | |
| ● | Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities. | |
| ● | Either alone or with your spouse, you have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.) | |
| - B8 - |
| 4. Your name and signature | |
| By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. | |
| First and last name (please print): | |
| Signature: | Date: |
| SECTION 5 TO BE COMPLETED BY THE SALESPERSON | |
| 5. Salesperson information | |
| [Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.] | |
| First and last name of salesperson (please print): | |
| Telephone: | Email: |
| Name of firm (if registered): | |
| SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | |
| 6. For more information about this investment | |
|
LEEF Brands Inc. Suite 2500 Park Place, 666 Burrard Street Vancouver, BC V6C 2X8 Contact person: Kevin Wilson Email: [email protected]
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca. | |
SCHEDULE C
FOREIGN PURCHASER’S CERTIFICATE
(Residents of Jurisdictions other than Canada and Non-U.S. Purchasers)
TO: LEEF BRANDS INC. (the “Company”)
Capitalized terms not specifically defined in this Schedule C have the meanings ascribed to them in the Subscription Agreement to which this Schedule C is attached.
In connection with the purchase by the undersigned Purchaser of the Purchaser’s Securities, the Purchaser, on its own behalf and on behalf of each of the beneficial purchasers for whom the Purchaser is acting, hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its counsel are relying thereon) that:
| 1. | it is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulatory authorities (“Authorities”) having application in its jurisdiction of residence or by which it is otherwise governed (the “International Jurisdiction”) that would apply to this subscription, if there are any; |
| 2. | it is purchasing the Securities pursuant to exemptions from any substantive or procedural requirements (including without limitation exemptions from prospectus or registration requirements or equivalent requirements) under the applicable securities laws of the Authorities in the International Jurisdiction or, if such is not applicable, the Purchaser is permitted to purchase the Securities under the applicable securities laws of the Authorities in the International Jurisdiction without the need to rely on any exemption; |
| 3. | by committing to acquire the Securities, it has obtained all necessary consents and authorizations to enable it to agree to subscribe for the Securities and to perform its obligations under this Subscription Agreement and it has otherwise observed the laws and regulatory requirements of the International Jurisdiction, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due in such International Jurisdiction in connection with its acceptance and it has not taken any action which will or may result in the Company acting in breach of any regulatory or legal requirements of any territory or jurisdiction in connection with the Offering; |
| 4. | the applicable laws of the Authorities in the International Jurisdiction do not require the Company to make any filings or seek any approvals or exemptions of any nature whatsoever from any Authority of any kind whatsoever in the International Jurisdiction in connection with the sale of the Securities; |
| 5. | the purchase of the Securities by the Purchaser does not trigger: (a) any obligation to prepare and file a prospectus or similar document, (b) any other report with respect to such purchase in the International Jurisdiction or (c) any continuous disclosure reporting obligation of the Company in the International Jurisdiction; |
| 6. | it will provide such evidence of compliance with all such matters as the Company or its counsel may request and it will, if requested by the Company, deliver to the Company, as applicable, a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in paragraphs 2, 3 and 4 above to the satisfaction of the Company, as the case may be; |
| 7. | upon execution of this Schedule C by or on behalf of the Purchaser, this Schedule C shall be incorporated into and form a part of the Subscription Agreement. Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Subscription Agreement to which this Schedule C is attached; |
| 8. | if any representations and warranties contained in this Schedule C shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time; |
| 9. | The Subscriber has no intention to sell or distribute either directly or indirectly any of the Purchased Securities in Canada; and |
| 10. | The Subscriber’s purchase of the Purchased Securities is not part of a plan or scheme to avoid the prospectus requirements in connection with a distribution to a person or company in Canada. |
| - C2 - |
| DATED: | SIGNED: | ||
| Witness (if Purchaser is an individual) | |||
| Print the name of witness | Print the name of Purchaser | ||
If Purchaser is not an individual, print name and title of authorized signing officer | |||
| Address of Purchaser | |||
| Address of Purchaser (cont’d) | |||
SCHEDULE D
U.S. PURCHASER’S certificate
TO: LEEF BRANDS INC. (the “Company”)
Reference is made to the subscription agreement between the Company and the undersigned (referred to herein as the “Purchaser”) dated as of the date hereof to which this Schedule D is attached (the “Subscription Agreement”). Upon execution of this Subscriber Certificate by the Purchaser, this Subscriber Certificate will be incorporated into and form a part of the Subscription Agreement. Capitalized terms not specifically defined in this Schedule D have the meanings ascribed to them in the Subscription Agreement to which this Schedule D is attached.
In connection with the purchase of the Purchaser’s Securities by the Purchaser, the Purchaser represents, warrants and covenants and certifies to the Company and acknowledges that the Company is relying thereon that:
| (a) | the Purchaser is purchasing the Units comprised of Common Shares and Warrants (and the underlying Warrant Shares) (collectively, the “Securities”) for its own account (or for the account or one or more beneficial purchasers over which the Purchaser has sole investment discretion) and the Securities are being purchased for investment purposes only and not with a view to resale or distribution or for the account or benefit of anyone other than the Purchaser (or such beneficial purchaser). The Purchaser has no intention to distribute either directly or indirectly any of the Securities in the United States; provided, however, that this paragraph shall not restrict the Purchaser from selling or otherwise disposing of any of the Securities pursuant to registration thereof pursuant to the U.S. Securities Act and any applicable state securities laws or under an exemption from such registration requirements; |
| (b) | the Purchaser understands and acknowledges that the Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and that the offer and sale of Securities to it are being made in reliance upon the exemption from registration provided by Rule 506(b) of Regulation D under the U.S. Securities Act and similar exemptions under applicable state securities laws; |
| (c) | the Purchaser (and any beneficial purchaser) is an “accredited investor”, within the meaning of Rule 501(a) of Regulation D (a “U.S. Accredited Investor”), and satisfies the category of U.S. Accredited Investor set forth below: |
(PLEASE CHECK THE BOX FOR THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR AND EXECUTE THIS CERTIFICATE ON THE LAST PAGE HEREOF. PLEASE INITIAL “P” BESIDE THE CATEGORY FOR THE PURCHASER AND “BP” BESIDE THE CATEGORY FOR THE BENEFICIAL PURCHASER.)
| _____Category 1. | A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or | ||
| _____Category 2. | A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or | ||
| _____Category 3. | A broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934, as amended; or | ||
| _____Category 4. | An insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; or |
| - D2 - |
| _____Category 5. | An investment company registered under the United States Investment Company Act of 1940, as amended; or | ||
| _____Category 6. | A business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940, as amended; or | ||
| _____Category 7. | A small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the United States Small Business Investment Act of 1958, as amended; or | ||
| _____Category 8. | A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S. $5,000,000; or | ||
| _____Category 9. | An employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, as amended, in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are U.S. Accredited Investors; or | ||
| _____Category 10. | A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940, as amended; or | ||
| _____Category 11. | An organization described in Section 501(c)(3) of the United States Internal Revenue Code of 1976, as amended, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of U.S. $5,000,000; or | ||
| _____Category 12. | A trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; | ||
| _____Category 13. | Any director or executive officer of the Company; or | ||
| _____Category 14. | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds U.S. $1,000,000 (for purposes of calculating net worth: (i) a person’s primary residence shall not be included as an asset, (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the Securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of the Securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability) and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of sale of the Securities shall be included as a liability); or | ||
| _____Category 15. | A natural person who had an individual income in excess of U.S. $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or | ||
| _____Category 16. | An entity in which all of the equity owners are U.S. Accredited Investors; |
| - D3 - |
| (d) | the Purchaser acknowledges that it has not purchased the Securities as a result of any form of “general solicitation” or “general advertising” within the meaning of Regulation D under the U.S. Securities Act, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or on the internet, or broadcast over radio, television, or the internet, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (e) | the Purchaser understands and agrees that the Securities will be “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act, and that if it decides to offer, sell, pledge or otherwise transfer the Securities, it may not offer, sell, pledge or otherwise transfer any of such Securities, directly or indirectly, unless the transfer is made: |
| (i) | to the Company; |
| (ii) | outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S and in compliance with applicable local laws and regulations; |
| (iii) | in compliance with (A) Rule 144A under the U.S. Securities Act, if available, or (B) Rule 144 under the U.S. Securities Act, if available, and, in each case, in compliance with applicable state securities laws; or |
| (iv) | in another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws; and |
the Purchaser has prior to any transfer pursuant to clauses (iii)(B) or (iv) (and, if required by the Company or any transfer agent for the Securities, clause (ii)) above furnished to the Company (and the transfer agent, if applicable) an opinion of counsel of recognized standing, or other evidence, reasonably satisfactory to the Company to the effect that such transfer does not require registration under the U.S. Securities Act or applicable state securities laws;
| (f) | the Purchaser and each beneficial purchaser for whom it is acting acknowledge and agree that upon the original issuance thereof, and until such time as the same is not required under applicable requirements of the U.S. Securities Act and applicable state securities laws, the certificates representing the Securities, and all certificates issued in exchange therefor or in substitution thereof, will bear a legend substantially in the following form: |
“THE SECURITIES REPRESENTED HEREBY [OR ISSUABLE IN EXCHANGE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF LEEF BRANDS INC. THAT THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO LEEF BRANDS INC., (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S (“REGULATION S”) UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE CANADIAN LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH (1) RULE 144A UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, OR (2) RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C)(2) OR (D) ABOVE, A LEGAL OPINION OR OTHER EVIDENCE REASONABLY SATISFACTORY TO LEEF BRANDS INC. MUST FIRST BE PROVIDED.”
provided, that if Securities are being sold under clause (B) above, the legend set forth above may be removed by providing a declaration to the Company and any transfer agent for the Securities, in the form attached as Appendix I to this Schedule D (or in such form as the Company may from time to time prescribe), together with any other evidence reasonably satisfactory to the Company that may be required by the Company or any transfer agent for the Securities, which evidence may include, without limitation, an opinion of counsel of recognized standing, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act;
| - D4 - |
notwithstanding the foregoing, the Company’s transfer agent, if any, may impose additional requirements for the removal of legends from Securities sold in accordance with Rule 904 of Regulation S under the U.S. Securities Act in the future; and
provided, further, that if any such Securities are being sold pursuant to Rule 144 under the U.S. Securities Act, or in a transaction that does not require registration under the U.S. Securities Act or applicable state securities laws, the above legend may be removed by delivery to the Company or any duly appointed transfer agent for the Securities of an opinion of counsel, of recognized standing, reasonably satisfactory to the Company, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;
| (g) | the Purchaser (and any beneficial purchaser) consents to the Company making a notation on its records or giving instruction to the registrar and transfer agent of the Company in order to implement the restrictions on transfer with respect to the Securities set forth and described herein; |
| (h) | the Purchaser (and any beneficial purchaser) acknowledges and agrees that the Warrants may not be exercised by or on behalf of a U.S. Person or a person in the United States unless an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available to the holder and the holder has furnished an opinion of counsel of recognized standing in form and substance reasonable satisfactory to the Company to such effect; provided, however, that a U.S. Accredited Investor that purchased the Warrants in the Offering and completed this U.S. Purchaser’s Certificate will not be required to deliver an opinion of counsel in connection with its exercise of the Warrants, at a time when it is a U.S. Accredited Investor; |
| (i) | the Purchaser (and any beneficial purchaser) understands and acknowledges that the Company has no obligation or present intention of filing with the United States Securities and Exchange Commission or with any state securities administrator any registration statement in respect of resales of the Securities in the United States; |
| (j) | the Purchaser (and any beneficial purchaser) has had the opportunity to ask questions of and receive answers from the Company regarding the investment, and has received all the information regarding the Company that it has requested; |
| (k) | the Purchaser (and any beneficial purchaser) has had access to such information concerning the Company as it has considered necessary or appropriate in connection with its investment decision to acquire the Securities; |
| (l) | the office or other address of the Purchaser at which the Purchaser received and accepted the offer to purchase the Securities is the address listed as the “Purchaser’s Address” on the signature page of the Subscription Agreement; |
| (m) | the Purchaser understands and acknowledges that if the Company were to ever be deemed to be, or to have at any time previously been, an issuer with (i) no or nominal operations and (ii) no or nominal assets other than cash and cash equivalents, Rule 144 under the U.S. Securities Act may be unavailable with respect to resales of the Securities, and the Company is under no obligation to take, and has no present intention of taking, any required action in order to make Rule 144 under the U.S. Securities Act available with respect to resales of the Securities; |
| (n) | the Purchaser (and any beneficial purchaser) is aware that (i) purchasing, holding and disposing of the Securities may have tax consequences under the laws of both Canada and the United States, (ii) the tax consequences for prospective investors who are resident in, or citizens of, the United States are not described in this Subscription Agreement, and (iii) it is solely responsible for determining the tax consequences applicable to its particular circumstances and should consult its own tax advisors concerning investment in such securities; in particular, no determination has been made whether the Company will be a “passive foreign investment company” within the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (the “Code”); |
| (o) | the Purchaser is aware that its ability to enforce civil liabilities under the United States federal securities laws may be affected adversely by, among other things: (i) the fact that the Company is organized under the laws of Canada; (ii) some or all of the directors and officers may be residents of countries other than the United States; and (iii) all or a substantial portion of the assets of the Company and such persons may be located outside the United States; |
| (p) | the Purchaser (and any Disclosed Principal) understands and agrees that the financial statements of the Company have been prepared in accordance with International Financial Reporting Standards and are subject to Canadian auditing standards and auditor independence standards, which differ in some respects from United States generally accepted accounting principles, auditing standards and auditor independence standards, respectively, and thus may not be comparable to financial statements of United States companies; and |
| (q) | it acknowledges that the representations, warranties and covenants contained in this Schedule D are made by it with the intent that they may be relied upon by the Company in determining its eligibility to purchase the Securities. |
[signature page follows]
| - D5 - |
The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time.
Dated: _________________________ |
Signed: _________________________ | |
| Witness (If Purchaser is an Individual) | Print Name of Purchaser | |
| Print Name of Witness | If Purchaser is not an Individual, Print Name and Title of Authorized Signing Officer |
APPENDIX I TO SCHEDULE D
DECLARATION FOR REMOVAL OF LEGEND
| TO: | The transfer agent for LEEF Brands Inc. |
AND TO: LEEF Brands Inc.
The undersigned (a) acknowledges that the current sale of ____________ of LEEF Brands Inc. (the “Company”) 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 Company, (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 the TSX Venture Exchange (or another 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.
| Dated: | ||||
| Name of Seller | ||||
By: |
||||
| Name: | ||||
| Title: | ||||
Exhibit 1.2
SUBSCRIPTION AGREEMENT
A completed and originally executed copy of this Subscription Agreement, including all applicable schedules hereto, must be delivered in hard copy or electronically, by no later than 4:00 p.m. (Toronto time) on [_], 2026 to: LEEF Holdings, Inc., 175 North Lenore Avenue, Willits, California, Attention: Kevin Wilson.
| TO: | LEEF Brands Inc. (the “Company”) |
The undersigned (the “Purchaser”), on its own behalf, and, if applicable, on behalf of those for whom the undersigned is contracting hereunder, hereby irrevocably subscribes for and agrees to purchase the number of preferred shares (the “Preferred Shares”) of the Company set out below, at a price of CAD $0.38 per Preferred Share, subject to the following terms and conditions. Each Preferred Share is convertible into one Common Share of the Company (each, a “Conversion Share”) at a conversion price of CAD $0.38 per Common Share. This subscription agreement, which for certainty includes and incorporates the attached Terms and Conditions of Subscription (the “Terms and Conditions of Subscription”) and the schedules attached hereto, are collectively referred to as the “Subscription Agreement”. A Term Sheet with respect to the offering is attached hereto Schedule A. The Accredited Investor Status Certificate attached hereto as Schedule B, the Foreign Purchaser’s Certificate attached hereto as Schedule C and the U.S. Purchaser’s Certificate attached hereto as Schedule D, are each referred to in the Subscription Agreement as a “Subscriber Certificate” and collectively referred to in the Subscription Agreement as the “Subscriber Certificates”. The Purchaser, on its own behalf, and, if applicable, on behalf of each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, agrees to be bound by the Terms and Conditions of Subscription, including without limitation the representations, warranties and covenants set forth in the schedules attached thereto, and the representations, warranties and covenants set forth in the applicable Subscriber Certificate, and acknowledges and agrees, without limitation, that the Company and its counsel may rely on the Purchaser’s representations, warranties and covenants contained in the Subscription Agreement.
| Issuer: LEEF Brands Inc. | Issue: Preferred Shares | |
| Issue Price Per Preferred Share: | CAD $0.38 | |
| Total Purchase Price (USD):1 | $ | |
| Number and kind of securities of the Company currently owned (directly or indirectly) | ||
| Registrant (Y/N) (for Purchasers resident in British Columbia only) |
DATED this 12th day of March, 2026.
| 1 | The number of Preferred Shares to be delivered to the Purchaser will be determined using the USD:CAD exchange rate published by the Bank of Canada on a date that is no more than two business days prior to the Closing Time. The total number of Preferred Shares issued will be rounded down to the nearest whole number. No fractional Preferred Shares shall be issued. |
| - 2 - |
Name and Address of Purchaser |
|||
| (Name of Purchaser - please print) | (Purchaser’s Address) | ||
|
by |
|||
| Authorized Signature | (Address) | ||
| (Official Capacity or Title – please print) | (Telephone Number) | ||
| (Please print name of individual whose signature appears above if different than the name of the Purchaser printed above.) | (Email Address) | ||
Details of Beneficial Purchaser (i.e. party for whom the undersigned is contracting, if not the same as the Purchaser identified above). If the Purchaser is signing as agent for a principal and is not a trust company or a portfolio manager, in either case, purchasing as trustee or agent for accounts fully managed by it, please ensure that Schedule B, Schedule C or Schedule D hereto, as applicable, is completed on behalf of such principal.
| (Beneficial Purchaser’s Name – please print) | (Beneficial Purchaser’s Address) | |
| (if space is inadequate please attach a schedule containing the necessary information) | (Beneficial Purchaser’s Telephone Number) | |
| Registration Instructions: | Delivery Instructions: | |
| (Name) | ||
| (Account Reference, if applicable) | (Account Reference, if applicable) | |
| (Address) | (Contact Name) | |
| (Address) | (Address) | |
| (Address) | (Address) | |
| (Address) | ||
| (Telephone Number) | ||
| (Email Address) |
| - 3 - |
ACCEPTANCE
The foregoing is acknowledged, accepted, and agreed to this _____ day of __________________, 2026.
| LEEF BRANDS INC. | ||
| Per: | ||
| Name: | Micah Anderson | |
| Title: | Director and Chief Executive Officer | |
TERMS AND CONDITIONS OF SUBSCRIPTION
1. Subscription.
The Purchaser hereby tenders to the Company this Subscription Agreement which, upon acceptance by the Company, will constitute an irrevocable agreement of the Purchaser to purchase from the Company, and of the Company to sell to the Purchaser, the number of Preferred Shares set out on the face page hereof (the “Purchaser’s Securities”) at a price of CAD $0.38 per Preferred Share (the “Issue Price”), all on the terms and subject to the conditions set out in this Subscription Agreement. The Purchaser’s Securities form part of a larger offering of Preferred Shares (the “Offering”) for total gross proceeds of up to approximately USD $3,000,000. The Offering is being made on a private placement basis.
The Company may increase the Offering (“Increased Offering”) at the Company’s sole discretion. There is no fixed minimum amount of gross proceeds. Unless the context otherwise requires, all references herein to Offering, Preferred Shares, Conversion Shares and Securities include any such securities of the Company issuable in connection with the Increased Offering.
2. Definitions.
In this Subscription Agreement, unless the context otherwise requires:
| (a) | “associate”, “affiliate” and “distribution” and “insider” have the respective meanings ascribed to them in the Securities Act (Ontario); |
| (b) | “CAD” means Canadian Dollars, the lawful currency of Canada; |
| (c) | “Closing” means the completion of the issue and sale by the Company and the purchase by the Purchasers of Preferred Shares pursuant to the provisions of this Subscription Agreement; |
| (d) | “Closing Date” has the meaning ascribed to it in Section 4 of this Subscription Agreement; |
| (e) | “Closing Time” means 4:00 p.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the Company may decide in its sole discretion; |
| (f) | “Common Shares” means common shares in the capital of the Company as constituted from time to time; |
| (g) | “Company” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (h) | “Conversion Shares” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (i) | “Designated Jurisdictions” means all of the provinces of Canada, to the extent that any Purchasers are resident therein; |
| (j) | “Governmental Entity” has the meaning ascribed to it in Section 5(f) of this Subscription Agreement; |
| (k) | “Increased Offering” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (l) | “Initial Closing Date” means March 12, 2026 or such other date as the Company may decide in its sole discretion; |
| (m) | “Issue Price” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (n) | “Money Laundering Laws” has the meaning ascribed to it in Section 5(h) of this Subscription Agreement; |
| (o) | “NI 45-106” means National Instrument 45-106 Prospectus and Registration Exemptions as such instrument is in effect at Closing in the Designated Jurisdiction in which the Purchaser resides; |
| (p) | “Offering” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
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| (q) | “person” shall be broadly interpreted and shall include an individual, firm, corporation, syndicate, partnership, trust, association, unincorporated organization, joint venture, investment club, government or agency or political subdivision thereof and every other form of legal or business entity of whatsoever nature or kind; |
| (r) | “Personal Information” means any information about a person (whether an individual or otherwise) required to be disclosed to a Securities Commission or stock exchange, whether pursuant to a form or request made by a Securities Commission or stock exchange, and includes, but is not limited to, the amount of Preferred Shares purchased by such person and whether the Purchaser is an “insider” of the Company or a “registrant” (each as defined under applicable Securities Laws of the Province of Ontario) or any other information contained in this Subscription Agreement (including, for greater certainty, the Subscriber Certificates incorporated by reference herein); |
| (s) | “Preferred Shares” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (t) | “Purchase Price” means the product of the Issue Price and the total number of Purchaser’s Securities subscribed for under this Subscription Agreement; |
| (u) | “Purchaser” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (v) | “Purchaser’s Securities” has the meaning ascribed to it in Section 1 of this Subscription Agreement; |
| (w) | “Purchasers” means, collectively, all purchasers of the Preferred Shares, including the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent; |
| (x) | “Regulation S” means Regulation S promulgated under the U.S. Securities Act; |
| (y) | “Sanctions” has the meaning ascribed to it in Section 5(i) of this Subscription Agreement; |
| (z) | “Securities” means collectively, the Preferred Shares and the Conversion Shares; |
| (aa) | “Securities Commissions” means, collectively, the applicable securities commission or other securities regulatory authority in each of the Designated Jurisdictions; |
| (bb) | “Securities Laws” means, collectively, the applicable securities laws of each of the Designated Jurisdictions and the respective regulations and rules made and forms prescribed thereunder together with all applicable and legally enforceable published policy statements, multilateral or national instruments, blanket orders, rulings and notices of the Securities Commissions; |
| (cc) | “Subscriber Certificate” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (dd) | “Subscription Agreement” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (ee) | “Terms and Conditions of Subscription” has the meaning ascribed to it on the face page of this Subscription Agreement; |
| (ff) | “U.S. Person” means a U.S. person as defined in Rule 902(k) of Regulation S under the U.S. Securities Act; |
| (gg) | “U.S. Purchaser” means any person who is (i) in the United States, (ii) a U.S. Person, (iii) purchasing the Purchaser’s Securities for the account or benefit of a person that is in the United States or a U.S. Person, (iv) a person that received an offer to purchase the Purchaser’s Securities while in the United States or (v) a person that executed this Subscription Agreement while in the United States; |
| (hh) | “U.S. Securities Act” means the United States Securities Act of 1933, as amended; and |
| (ii) | “United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia. |
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3. Delivery and Payment.
The Purchaser agrees that the following shall be delivered to LEEF Holdings, Inc. at the address and by the date and time set out on the face page hereof, or such other time, date or place as the Company may advise:
| (a) | a completed and duly signed copy of this Subscription Agreement; |
| (b) | one of the following: |
| (i) | if the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is resident in Canada and purchasing the Purchaser’s Securities in reliance on the “accredited investor” exemption provided by Section 2.3 of NI 45-106: |
| (A) | a duly completed and executed copy of the Accredited Investor Status Certificate in the form attached hereto as Schedule B; and |
| (B) | if the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent is an individual and does not meet the criteria set out in subparagraph (j.1) of the Accredited Investor Status Certificate attached hereto as Schedule B, a duly completed and executed copy of the Risk Acknowledgement Certificate in the form attached hereto as Appendix I to Schedule B; or |
| (ii) | if the Purchaser or beneficial purchaser, if any, is resident in a jurisdiction outside of Canada and is not a U.S. Purchaser, a duly completed and executed copy of the Foreign Purchaser’s Certificate in the form attached hereto as Schedule C; |
| (iii) | if the Purchaser is a U.S. Purchaser, a duly completed and executed copy of the U.S. Purchaser’s Certificate in the form attached hereto as Schedule D; |
| (c) | a certified cheque, bank draft or wire transfer made payable on or before the Closing Date in same day freely transferable U.S. funds to “LEEF Holdings, Inc.” representing the Purchase Price payable by the Purchaser for the Purchaser’s Securities, or such other method of payment of the same amount against delivery of the Purchaser’s Securities as the Company may accept; and |
| (d) | any other documents required by the Securities Laws which the Company requests. |
The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that such documents, when executed and delivered by the Purchaser, will form part of and will be incorporated into this Subscription Agreement with the same effect as if each constituted a representation and warranty or covenant of the Purchaser hereunder in favour of the Company. The Purchaser and each such beneficial purchaser consents to the filing of such documents as may be required to be filed with the Securities Commissions in connection with the transactions contemplated hereby. The Purchaser, and any beneficial purchaser for whom the Purchaser is acting as trustee or agent, agrees that the Company is irrevocably authorized to correct minor errors or omissions in the information provided by the Purchaser in this Subscription Agreement, any applicable Subscriber Certificate, and any other documents or forms delivered by the Purchaser in connection with the transactions contemplated hereby, if any.
4. Closing.
The transactions contemplated hereby will be completed electronically or at the offices of Bennett Jones LLP (“Bennett Jones”). The initial closing shall occur on the Initial Closing Date and each subsequent closing date, if any, shall occur on such other date or time as the Company may determine (each a “Closing Date”). If the terms and conditions contained in this Subscription Agreement have been complied with prior to the Closing Date, as determined by the Company, Bennett Jones shall deliver all completed Subscription Agreements to the Company along with payment of the aggregate proceeds to the Company and such other documentation as may be required pursuant to the Subscription Agreement.
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If the terms and conditions contained in this Subscription Agreement (other than delivery by the Company of certificates representing the Preferred Shares) have not been complied with prior to the Closing Date, as determined by the Company, the Company and the Purchaser will have no further obligations under this Subscription Agreement. The Purchaser will take up, purchase and pay for the Purchaser’s Securities at Closing upon acceptance of this offer by the Company.
5. Representations, Warranties and Covenants of the Company.
The Company hereby represents and warrants to, and covenants with, the Purchaser as follows as of the date hereof and as of the Closing Time and acknowledges that the Purchaser is relying on such representations and warranties in connection with the transactions contemplated herein:
| (a) | the Company is a validly subsisting corporation incorporated under the laws of British Columbia, is in good standing and has full corporate power and authority to perform each of its obligations as herein contemplated and has requisite corporate power and capacity to carry on its business as now conducted and to own its assets; |
| (b) | this Subscription Agreement, when accepted by the Company, and all other certificates and instruments delivered in connection with the Offering will, on the Closing Date, constitute legal, valid and binding obligations of the Company enforceable in accordance with their respective terms subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction; |
| (c) | the execution and delivery of, and the performance of the terms of the Subscription Agreement by the Company, including the issue of the Preferred Shares, does not and will not constitute a breach of or default under the constating documents of the Company or any law, regulation, order or ruling applicable to the Company or any agreement, contract or indenture to which the Company is a party or by which it is bound including but not limited to its articles of incorporation, bylaws, or other formation documents; |
| (d) | the authorized capital of the Company consists of an unlimited number of Common Shares, of which, as of the date hereof, 257,947,996 Common Shares were issued and outstanding as fully paid and non-assessable. Except for the Company’s 109,252,299 outstanding warrants, 25,735,458 outstanding restricted stock units and 12,222,059 outstanding stock options, there are no outstanding rights, commitments or other entitlements to purchase securities of the Company; |
| (e) | the Company and each of its Subsidiaries (as defined in NI 45-106) have complied with and are not in violation, in any material respect, of any applicable laws, with the exception of the U.S. Controlled Substances Act, 21 USC 801 et seq., as it applies to marijuana; |
| (f) | neither the Company nor any of its Subsidiaries has received any written notices or other written correspondence from any (i) international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, commissioner, board, bureau, ministry, agency or instrumentality, domestic or foreign, (ii) subdivision or authority of any of the above, (iii) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, or (iv) stock exchange (each, a “Governmental Entity”) (1) regarding any violation (or any investigation, inspection, audit, or other proceeding by any Governmental Entity involving allegations of any violation) of any law or (2) of any circumstances that may have existed or currently exist which could lead to a loss, suspension, or modification of, or a refusal to issue, any material Authorization. To the knowledge of the Company, no investigation, inspection, audit or other proceeding by any Governmental Entity involving allegations of any material violation of any law by the Company or any of its Subsidiaries is threatened or contemplated; |
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| (g) | neither the Company, its Subsidiaries nor any of their directors, executives, representatives, agents or employees has (i) used or is using any corporate funds for any illegal contributions, gifts, entertainment or other expenses relating to political activity that would be illegal, (ii) used or is using any corporate funds for any direct or indirect illegal payments to any foreign or domestic governmental officials or employees, (iii) violated or is violating any provision of the United States Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public Officials Act (Canada) or any similar laws of other jurisdictions, (iv) established or maintained, or is maintaining, any illegal fund of corporate monies or other properties or (v) made any bribe, illegal rebate, illegal payoff, influence payment, kickback or other illegal payment of any nature; |
| (h) | the operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court of governmental authority or any arbitrator non-Governmental Entity involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened; |
| (i) | none of the Company or any of its Subsidiaries or any director, officer, agent, employee or affiliate of the Company or any of its Subsidiaries, has had any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department, the Government of Canada or any other relevant sanctions authority (collectively, the “Sanctions”) imposed upon any such person, and the Company and its Subsidiaries are not in violation of any of the Sanctions or law or executive order relating thereto, or are conducting business with any person subject to any Sanctions; |
| (j) | there are no material claims, proceedings, actions or lawsuits in existence, or, to the Company’s knowledge, pending or threatened, against the Company; |
| (k) | for a period of twenty-four (24) months after the Closing Date, the Company shall not acquire, by purchase or otherwise, any cryptocurrency, including but not limited to Bitcoin, except for nominal amounts accepted by the Company in business-to-business transactions; and |
| (l) | following any hold periods imposed by the Securities Laws, the Company shall use its best efforts to register the Conversion Shares with any Governmental Entity necessary for the sale of the Conversion Shares on the Toronto Stock Exchange, the TSX Venture Exchange, or other similar exchange. |
6. Reliance upon and Survival of Representations, Warranties and Covenants of the Company. The Company acknowledges that the Purchaser is relying on the foregoing representations, warranties and covenants in connection with the transactions contemplated herein, all of which shall survive the Closing and, notwithstanding such Closing and notwithstanding any subsequent disposition by the Purchaser of any of the Purchaser’s Securities shall continue in full force and effect for the benefit of the Purchaser following the Closing Date.
7. Conditions of Closing.
The Purchaser acknowledges that the Company’s obligation to sell the Purchaser’s Securities to the Purchaser is subject to, among other things, the following conditions:
| (a) | the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, executing and returning to the Company all documents required by applicable Securities Laws (including but not limited to the applicable Subscriber Certificate) for delivery on behalf of the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, including, without limitation, the applicable Schedules attached hereto by no later than the date and time set out on the face page hereof; |
| (b) | the Company having obtained all required regulatory approvals (including those that may be required under Securities Laws) to permit the completion of the transactions contemplated hereby; |
| (c) | there having been no material adverse change in the affairs of the Company, and the representations and warranties of the Company being true in all material respects as of the Closing Date, unless such representation or warranty speaks to an earlier date, in which case, such representation or warranty shall be true in all material respects as of such date; |
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| (d) | the offer, issue, sale and delivery of the Purchaser’s Securities being exempt from the requirements to file a prospectus, registration statement, or deliver an offering memorandum (as defined in applicable Securities Laws) or any similar document under applicable Securities Laws and other applicable securities laws relating to the sale of the Purchaser’s Securities, or the Company having received such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or registration statement or delivering an offering memorandum or any similar document; and |
| (e) | the representations and warranties of the Purchaser set out herein, including in any applicable Subscriber Certificate attached hereto, being true and correct as at the Closing Time. |
The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that the sale of the Preferred Shares will not be qualified by a prospectus and the Preferred Shares have not been and will not be registered under the U.S. Securities Act, or applicable state securities laws, and further that, such sale is subject to the condition that the Purchaser (or, if applicable, any others for whom the Purchaser is contracting hereunder) signs and returns to the Company or Bennett Jones all relevant documentation required by the Securities Laws and other applicable securities laws relating to the sale of the Purchaser’s Securities.
The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that the Company will be required to provide to the Securities Commissions a list setting out the identities of the beneficial purchasers of the Preferred Shares. Notwithstanding that the Purchaser may be purchasing the Purchaser’s Securities as an agent on behalf of an undisclosed principal (if permissible under the relevant Securities Laws or other applicable securities laws), the Purchaser agrees to provide, on reasonable request, particulars as to the identity of such undisclosed principal as may be required the Company in order to comply with the Securities Laws and any other applicable laws.
8. Acceptance or Rejection.
The Company will have the right, in its sole discretion, to accept or reject this Subscription Agreement in whole at any time at or prior to the Closing Time. The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges and agrees that the acceptance of this offer will be conditional upon the issue and sale of the Purchaser’s Securities to the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, being exempt from any prospectus or offering memorandum requirements of the Securities Laws and the equivalent provisions of securities laws of any other applicable jurisdiction. The Company will be deemed to have accepted this Subscription Agreement upon the Company’s execution of the acceptance at page 4 of this Subscription Agreement and the delivery at the Closing of the Purchaser’s Securities to the Purchaser.
If this Subscription Agreement is rejected in whole, the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, understands that any funds, certified cheques and bank drafts delivered by the Purchaser to Bennett Jones representing the Purchase Price for the Purchaser’s Securities will be returned promptly by Bennett Jones to the Purchaser without interest or deduction.
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9. Purchaser’s Representations and Warranties.
The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, represents and warrants to the Company as follows as of the date hereof and as of the Closing Time and acknowledges that the Company is relying on such representations and warranties in connection with the transactions contemplated in this Subscription Agreement which representations and warranties shall survive the Closing and, notwithstanding such Closing and notwithstanding any subsequent disposition by the Purchaser of any of the Purchaser’s Securities shall continue in full force and effect for the benefit of the Company following the Closing Date:
| (a) | Authorization and Effectiveness. If the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is an individual, he or she is of the full age of majority and has all requisite legal capacity and competence to execute and deliver this Subscription Agreement and to observe and perform its covenants and obligations hereunder, or if the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is a corporation, the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is duly incorporated and is a valid and existing corporation, has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement, to subscribe for the Purchaser’s Securities and to observe and perform its covenants and obligations hereunder and has taken all necessary corporate action in respect thereof, or, if the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is a partnership, syndicate or other form of unincorporated organization, the Purchaser, or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has the necessary legal capacity and authority to execute and deliver this Subscription Agreement, to subscribe for the Purchaser’s Securities and to observe and perform its covenants and obligations hereunder and has obtained all necessary approvals in respect thereof, and, in any case, upon acceptance by the Company, this Subscription Agreement will constitute a legal, valid and binding agreement of the Purchaser and the beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, enforceable against the Purchaser and the beneficial purchaser in accordance with its terms and will not result in a violation of or create a state of facts which, after notice, lapse of time or both, would constitute a default or breach of any of the Purchaser’s and beneficial purchaser’s constating documents, by-laws or authorizing resolutions (if applicable), any agreement to which the Purchaser or the beneficial purchaser is a party or by which the Purchaser or beneficial purchaser is bound or any law applicable to the Purchaser or beneficial purchaser or any judgment, decree, order, statute, rule or regulation applicable to the Purchaser or beneficial purchaser; |
| (b) | Residence. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, was offered the Preferred Shares in, and is a resident of, or if not an individual has its head office in, the jurisdiction referred to under the heading “Name and Address of Purchaser” and “Details of Beneficial Purchaser”, respectively, set out on the face page and page 3 hereof, intends that the securities laws of that jurisdiction do and shall govern this subscription by the Purchaser of the Preferred Shares, is not aware of any reason why the laws of such jurisdiction would not govern such subscription and that such addresses were not created and are not used solely for the purpose of acquiring the Purchaser’s Securities; |
| (c) | Private Placement Exemptions. If applicable, the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has properly completed, executed and delivered to the Company the applicable Subscriber Certificate attached hereto (dated as of the date hereof) and the information contained therein is, to the Purchaser’s knowledge, true and correct and the representations, warranties and covenants contained in the applicable Subscriber Certificate attached hereto will be true and correct both as of the date of execution of this Subscription Agreement and as at the Closing Time; |
| (d) | Subscriber Certificate. The Purchaser has properly completed, executed and delivered as principal, or, if the Purchaser is contracting hereunder as trustee, agent, representative or nominee for one or more beneficial purchasers, on behalf of each such beneficial purchaser, the applicable Subscriber Certificate, and related appendix, if applicable; |
| (e) | Purchasing as Principal. In the case of a Purchaser in Canada, unless paragraph (h) below applies, the Purchaser is purchasing the Purchaser’s Securities as principal (as defined in all applicable Securities Laws) for its own account, and not for the benefit of any other person; |
| (f) | No Syndication. In the case of a Purchaser in Canada, the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, was not created or used solely to purchase or hold securities as an accredited investor as described in paragraph (m) of the definition of “accredited investor” provided in Schedule B; |
| (g) | Investment Purposes. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is purchasing the Preferred Shares for investment purposes only and not with a view to resale or distribution that would or may contravene the prospectus requirements of Securities Laws; |
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| (h) | Purchasing as Agent or Trustee. |
| (i) | In the case of the purchase by a Purchaser in Canada of the Purchaser’s Securities as agent or trustee for any principal whose identity is disclosed or identified, each beneficial purchaser of the Purchaser’s Securities for whom the Purchaser is acting, is purchasing the Purchaser’s Securities as principal for its own account and not for the benefit of any other person; was not created or used solely to purchase or hold securities in reliance on the “Minimum Amount Investment” exemption provided under Section 2.10 of NI 45-106 and it pre-existed the Offering and has a bona fide purpose other than investment in the Preferred Shares; and either where such beneficial purchaser is not an individual, is purchasing the Purchaser’s Securities at an aggregate acquisition cost to such beneficial purchaser of not less than $150,000, or the beneficial purchaser is an “accredited investor” as defined in NI 45-106; |
| (ii) | In the case of the purchase by a Purchaser in Canada of the Purchaser’s Securities as agent or trustee for any principal whose identity is disclosed or identified, the Purchaser is the duly authorized trustee or agent of such disclosed beneficial purchaser with due and proper power and authority to execute and deliver, on behalf of each such beneficial purchaser, this Subscription Agreement and all other documentation in connection with the purchase of the Purchaser’s Securities hereunder, to agree to the terms and conditions herein and therein set out and to make the representations, warranties, acknowledgements and covenants herein and therein contained, all as if each such beneficial purchaser were the Purchaser and the Purchaser’s actions as trustee or agent are in compliance with applicable law and the Purchaser and each beneficial purchaser acknowledges that the Company is required by law to disclose to certain regulatory authorities the identity of each beneficial purchaser of Purchaser’s Securities for whom it may be acting; and |
| (iii) | In the case of the purchase by a Purchaser in Canada of the Purchaser’s Securities on behalf of an undisclosed beneficial purchaser, the Purchaser is deemed under applicable Securities Laws to be purchasing as principal; |
| (i) | Broker. There is no person acting or purporting to act in connection with the transactions contemplated herein who is entitled to any brokerage or finder’s fee. If any person establishes a claim that any fee or other compensation is payable in connection with this subscription for the Purchaser’s Securities, the Purchaser covenants to indemnify and hold harmless the Company with respect thereto and with respect to all costs reasonably incurred in the defence thereof; |
| (j) | Illegal Use of Funds. None of the funds being used to purchase the Purchaser’s Securities are to the Purchaser’s or beneficial purchaser’s knowledge proceeds obtained or derived directly or indirectly as a result of illegal activities. The funds being used to purchase the Purchaser’s Securities which will be advanced by the Purchaser to the Company hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”) and the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, acknowledges that the Company may in the future be required by law to disclose the Purchaser’s or beneficial purchaser’s name and other information relating to this Subscription Agreement and the Purchaser’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA or the PATRIOT Act. To the best of its knowledge none of the funds to be provided by the Purchaser or the beneficial purchaser are being tendered on behalf of a person or entity who has not been identified to the Purchaser, and it shall promptly notify the Company if the Purchaser or beneficial purchaser discovers that any of such representations cease to be true, and to provide the Company with appropriate information in connection therewith; |
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| (k) | Trade Sanctions. The Purchaser, and each beneficial purchaser, if any, for whom it is acting as trustee or agent, is not a person or entity identified in the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism, the Regulations Implementing the United Nations Resolutions on Taliban, ISIL (Da’esh) and Al-Qaida, the Regulations Implementing the United Nations Resolution on the Democratic People’s Republic of Korea, the Regulations Implementing the United Nations Resolution on Iran, the Regulations Implementing the United Nations Resolutions on Somalia, the Regulations Implementing the United Nations Resolutions on Lebanon, the Regulations Implementing the United Nations Resolutions on Sudan, the Special Economic Measures (Sudan) Regulations, the Special Economic Measures (Myanmar) Regulations, the Special Economic Measures (Belarus) Regulations, the Special Economic Measures (People’s Republic of China) Regulations, the Special Economic Measures (Haiti) Regulations, the Regulations Implementing the United Nations Resolutions on Haiti, the Special Economic Measures (Moldova) Regulations, the Special Economic Measures (Nicaragua) Regulations, the Special Economic Measures (Sri Lanka) Regulations, the Special Economic Measures (Guatemala) Regulations, the Special Economic Measures (Zimbabwe) Regulations, the Regulations Implementing the United Nations Resolutions and Imposing Special Economic Measures on Libya, the Special Economic Measures (Democratic People’s Republic of Korea) Regulations, the Special Economic Measures (Syria) Regulations, the Special Economic Measures (Venezuela) Regulations, the Special Economic Measures (Iran) Regulations, the Freezing of Assets of Corrupt Foreign Officials (Tunisia) Regulations, the Regulations Implementing the United Nations Resolutions on Iraq, the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, the Special Economic Measures (Russia) Regulations, the Special Economic Measures (Ukraine) Regulations, the Regulations Implementing the United Nations Resolutions on the Central African Republic, the Regulations Implementing the United Nations Resolutions on Yemen, the Special Economic Measures (South Sudan) Regulations, the Regulations Implementing the United Nations Resolutions on South Sudan, the Special Economic Measures (Extremist Settler Violence) Regulations and the Special Economic Measures (Hamas Terrorist Attacks) Regulations (collectively, the “Trade Sanctions”). The Purchaser (and each beneficial purchaser, if any) acknowledges that the Company may in the future be required by law to disclose the name and other information of the Purchaser and the beneficial purchaser, if any, related to the acquisition of the Purchaser’s Securities hereunder, on a confidential basis, pursuant to the Trade Sanctions; |
| (l) | Resale Restrictions. The Purchaser, and each beneficial purchaser, if any, for whom it is acting as trustee or agent, have been advised to consult their own legal advisors with respect to trading in the Securities with respect to the resale restrictions imposed by the Securities Laws of the province in which the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, resides and other applicable securities laws, and acknowledges that no representation has been made respecting the applicable hold periods imposed by the Securities Laws or other resale restrictions applicable to such securities which restrict the ability of the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, to resell such securities, that the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, is solely responsible to find out what these restrictions are and the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions and the Purchaser is aware that it (or any beneficial purchaser for whom it is contracting hereunder) may not be able to resell such securities except in accordance with limited exemptions under the Securities Laws and other applicable securities laws. The physical certificate evidencing the Securities may bear legends denoting such restrictions; |
| (m) | Compliance with Resale Restrictions. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, fully understands the restrictions on resale on the Purchaser’s Securities and will not resell the Purchaser’s Securities except in accordance with the provisions of applicable Securities Laws; |
| (n) | Company or Unincorporated Organization. If the Purchaser, and each beneficial purchaser, if any, for whom it is acting as trustee or agent, is a corporation or a partnership, syndicate, trust, association, or any other form of unincorporated organization or organized group of persons, the Purchaser or such beneficial purchaser was not created or being used solely to permit purchases of or to hold securities without a prospectus in reliance on a prospectus exemption or exemption from the registration requirements of the U.S. Securities Act; |
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| (o) | Absence of Offering Memorandum or Similar Document. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has not received, nor has it requested, nor does it have any need to receive, any offering memorandum or any other document describing the business and affairs of the Company (other than this Subscription Agreement), nor has any document been prepared for delivery to, or review by, prospective purchasers in order to assist them in making an investment decision in respect of the Securities being offered under the Offering; |
| (p) | Absence of Advertising. The offering and sale of the Preferred Shares to the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, was not made or solicited through, and the Purchaser and each such beneficial purchaser is not aware of, any general solicitation or general advertising with respect to this Offering, or any directed selling efforts within the meaning of Regulation S, including advertisements, articles, notices or other communications published in any printed public media, radio, television or telecommunications, including electronic display (such as the Internet, including but not limited to the Company’s website), or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (q) | No Undisclosed Information. The decision of the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, to tender this Subscription Agreement and acquire the Purchaser’s Securities has not been made as a result of any oral or written representation (other than this Subscription Agreement) as to fact or otherwise made by or on behalf of the Company or any other person and is based entirely upon this Subscription Agreement and publicly available information relating to the Company. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has relied only on the information contained in this Subscription Agreement and publicly available information relating to the Company in making the decision to subscribe for the Purchaser’s Securities hereunder. Except as set forth in this Subscription Agreement, no representation, (written or oral) has been made to the Purchaser or any beneficial Purchaser, if any, for whom the Purchaser is acting as trustee or agent, by or on behalf of the Company or any Agent with respect to the Offering or the purchase of the Preferred Shares; |
| (r) | Investment Suitability. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the investment hereunder in the Purchaser’s Securities and is able to bear the economic risk of and can afford the total loss of such investment; |
| (s) | Not an Insider. The purchase of the Purchaser’s Securities hereunder is not a transaction in which any shareholder of the Company, or any beneficial owner of securities carrying more than 10% of the voting rights attaching to all outstanding voting securities of the Company, has a direct or indirect beneficial interest, unless the Purchaser has otherwise notified the Company; |
| (t) | Not a “Control Person”. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, is not a “control person” of the Company, as that term is defined in applicable Securities Laws, and will not become a “control person” of the Company by virtue of the purchase of the Purchaser’s Securities under this Subscription Agreement and does not act or intend to act in concert with any other person to form a control group in respect of the Company, unless the Purchaser has otherwise notified the Company; |
| (u) | Other Documents. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, will execute and deliver any other documents required by applicable Securities Laws to permit the purchase of the Purchaser’s Securities on the terms herein set forth which the Company reasonably requests; |
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| (v) | Personal Information. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, acknowledges that this Subscription Agreement requires the Purchaser to provide certain Personal Information to the Company and its agents and advisers as reasonably necessary in connection with the proposed Offering. Such information is being collected and will be used by the Company for the purposes of completing the proposed Offering of Preferred Shares, which includes, without limitation, determining the Purchaser’s eligibility to purchase the Purchaser’s Securities under applicable Securities Laws, the U.S. Securities Act and applicable state securities laws and completing filings required by the Securities Commissions and under the U.S. Securities Act and applicable state securities laws. The Purchaser agrees that the Purchaser’s Personal Information may be disclosed by the Company to: stock exchanges and applicable securities regulatory authorities; the Company’s registrar and transfer agent; the Canada Revenue Agency or other taxing authorities; and any of the other parties involved in the proposed Offering, including legal counsel, and may be included in record books in connection with the Offering. By executing this Subscription Agreement, the Purchaser consents to the foregoing collection, use, and disclosure of the Purchaser’s Personal Information. The Purchaser also consents to the filing of copies or originals of any of the Purchaser’s documents described in Section 3 hereof as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby. The Purchaser represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of the beneficial purchaser, if any; and |
| (w) | Compliance with United States Securities Laws. If the Purchaser is a U.S. Purchaser, then in addition to the other representations and warranties contained herein, the Purchaser represents and warrants that: |
| (i) | the Purchaser is aware that the Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States and that the Securities may not be offered or sold, directly or indirectly, in the United States without registration under the U.S. Securities Act or compliance with requirements of an exemption from registration and it acknowledges that the Company has no present intention of filing a registration statement under the U.S. Securities Act in respect of the Securities; |
| (ii) | unless the Purchaser has executed and delivered Schedule D hereto (in which case it makes the representations and warranties set forth therein), the Purchaser or any person for whom it is acting is not in the United States or a U.S. Person and is not acquiring the Securities for the account or benefit of a U.S. Person or a person in the United States or for resale in the United States and confirms that the Securities have not been offered to the Purchaser in the United States and that this Subscription Agreement has not been signed in the United States; |
| (iii) | neither the Purchaser nor any person for whom it is acting will offer, sell or otherwise dispose of the Securities in the United States unless the Company has consented to such offer, sale or distribution and such offer, sale or disposition is made in accordance with an exemption from the registration requirements of the U.S. Securities Act and the securities laws of all applicable states of the United States or the Company has filed, and the U.S. Securities and Exchange Commission has declared effective, a registration statement in respect of such securities; and |
| (iv) | the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, has duly completed and delivered to the Company the Subscriber Certificate appended hereto as Schedule D and represents and warrants set forth therein. |
| (x) | International Purchasers. If the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, is a resident of a country other than Canada and is not a U.S. Purchaser (an “International Jurisdiction”) then in addition to the other representations and warranties contained herein, the Purchaser represents and warrants that: |
| (i) | the Purchaser is knowledgeable of, or has been independently advised as to, the applicable securities laws of the International Jurisdiction which would apply to this Subscription Agreement, if any; |
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| (ii) | the Purchaser is purchasing the Purchaser’s Securities pursuant to exemptions from the prospectus, financial promotion and registration requirements under the applicable securities laws of that International Jurisdiction or, if such is not applicable, the Purchaser is permitted to purchase the Purchaser’s Securities under the applicable securities laws of the International Jurisdiction without the need to rely on an exemption; |
| (iii) | the applicable securities laws of the International Jurisdiction do not require the Company to file a prospectus, offering memorandum or similar document or to register or qualify the distribution of the Securities or for the Company to be registered with or to make any filings or seek any approvals of any kind whatsoever from any governmental or regulatory authority of any kind whatsoever in the International Jurisdiction; |
| (iv) | the delivery of this Subscription Agreement, the acceptance of it by the Company and the issuance of the Purchaser’s Securities to the Purchaser complies with all applicable laws of the Purchaser’s jurisdiction of residence or domicile and all other applicable laws and will not cause the Company to become subject to or comply with any continuous disclosure, prospectus or other periodic filing or reporting requirements under any such applicable laws; and |
| (v) | the Purchaser, or beneficial purchaser, if any, for whom it is acting as trustee or agent, has duly completed and delivered to the Company the Subscriber Certificate appended hereto as Schedule C and represents and warrants set forth therein. |
The Purchaser and each beneficial purchaser, if any, for whom it is acting as trustee or agent, acknowledges and agrees that the foregoing representations and warranties, and the acknowledgments made in Section 10 hereof, are made by it with the intention that they may be relied upon by the Company and its counsel in determining the Purchaser’s eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Purchaser’s Securities under the Securities Laws and other applicable securities laws. The Purchaser and each beneficial purchaser further agrees that by accepting delivery of the Purchaser’s Securities on the Closing Date, it shall be representing and warranting that the foregoing representations and warranties are true and correct as at the Closing Time with the same force and effect as if they had been made by the Purchaser at the Closing Time and that they shall survive the purchase by the Purchaser of the Purchaser’s Securities and shall continue in full force and effect notwithstanding any subsequent disposition by the Purchaser or the beneficial purchaser of the Purchaser’s Securities. The Purchaser and the beneficial purchaser undertakes to notify the Company immediately of any change in any representation, warranty or other information relating to the Purchaser or beneficial purchaser set out in this Subscription Agreement which takes place prior to the Closing Time. If the Purchaser is acquiring the Preferred Shares for the account or benefit of one or more investor accounts, the Purchaser represents and warrants that it has the sole investment discretion with respect to each such investor account and that it has full power and authority to make the foregoing representations and warranties and the acknowledgments in Section 10 hereof.
10. Purchaser’s Acknowledgements.
The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting, acknowledges and agrees that:
| (a) | this Subscription Agreement is subject to rejection or acceptance by the Company, in whole, and is effective only upon acceptance by the Company; |
| (b) | no agency, securities commission, governmental authority, regulatory body, stock exchange or other entity has reviewed or passed on, made any finding or determination as to the merit for investment of, nor have any such agencies, securities commissions or governmental authorities made any recommendation or endorsement with respect to the Securities or the Offering; there is no government or other insurance covering the Securities; and there are risks associated with the purchase of the Securities; |
| (c) | the purchase of the Purchaser’s Securities has not been or will not be (as applicable) made through, or as a result of, and the distribution of the Purchaser’s Securities is not being accompanied by, a general solicitation or advertisement including articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
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| (d) | in the case of any Purchaser or beneficial purchaser in Canada, no prospectus or other offering document has been filed by the Company with a securities commission or other securities regulatory authority in any province of Canada, or any other jurisdiction in or outside of Canada in connection with the issuance of the Securities and such issuance is exempt from the prospectus requirements otherwise applicable under the provisions of Securities Laws and, as a result, in connection with its purchase of the Purchaser’s Securities hereunder, as applicable: |
| (i) | the Company has advised the Purchaser that the Company is relying on an exemption from the requirements to provide the Purchaser with a prospectus and that the Purchaser and each beneficial purchaser, if any, is restricted from using most of the protections, rights and remedies available under Securities Laws including, without limitation, statutory rights of rescission or damages; |
| (ii) | the common law may not provide investors with an adequate remedy in the event that they suffer investment losses in connection with securities acquired in a private placement; |
| (iii) | the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, will not receive information that may otherwise be required to be provided to the Purchaser and each beneficial purchaser, if any, under applicable Securities Laws or contained in a prospectus prepared in accordance with applicable Securities Laws; and |
| (iv) | the Company is relieved from certain obligations that would otherwise apply under such applicable Securities Laws. |
| (e) | the Securities are being offered for sale only on a “private placement” basis; |
| (f) | the Purchaser has received a copy of the Term Sheet attached hereto as Schedule A, setting out the principal terms of the offering; |
| (g) | all costs and expenses incurred by the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting, (including any fees and disbursements of legal counsel retained by the Purchaser or any beneficial purchaser) relating to the purchase of the Purchaser’s Securities shall be borne solely by the Purchaser or the beneficial purchaser; |
| (h) | in purchasing the Purchaser’s Securities, the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has relied solely upon this Subscription Agreement and publicly available information relating to the Company and not upon any other document or verbal or written representation as to any fact or otherwise made by or on behalf of the Company or any employee, agent or affiliate thereof or any other person associated therewith. The Company’s counsel, Bennett Jones, does not assume any responsibility or liability of any nature whatsoever for the accuracy or adequacy of the information upon which the Purchaser’s or the beneficial purchaser’s, if any, investment decision has been made. The Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting, is not relying upon anyone to conduct any due diligence investigation on behalf of the Purchaser concerning the Offering, the Securities, the Company’s business, management, financial position, condition or prospects. The Company’s counsel, Bennett Jones, is entitled to the benefit of this subsection; |
| (i) | the Securities will be subject to certain resale restrictions under the Securities Laws and the Purchaser agrees to comply with such restrictions. The Purchaser also acknowledges that it has been advised to consult its own legal advisors with respect to applicable resale restrictions and that it is solely responsible (and the Company is not in any manner responsible) for complying with such restrictions. For purposes of complying with the Securities Laws, including National Instrument 45-102 – Resale of Securities, the Purchaser and each beneficial purchaser, if any, for whom it is acting as trustee or agent, understands and acknowledges that upon the issuance of the Securities, all the certificates representing the Securities shall bear, as applicable and in addition to any legends set forth on Schedule D (if applicable), a legend substantially in the following form: |
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE DISTRIBUTION DATE].”
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| (j) | no person has made any written or oral representations: that any person will resell or repurchase the Purchaser’s Securities; that any person will refund the Purchase Price or as to the future price or value of the Securities; |
| (k) | the original Purchaser may not engage in any hedging transactions involving the Purchaser’s Securities or resell or otherwise transfer the Securities to U.S. Persons or to persons in the United States or to or for the account or benefit of U.S. Persons or persons in the United States, except in compliance with the U.S. Securities Act and applicable state securities legislation; |
| (l) | unless the Purchaser has executed and delivered Schedule D hereto: (i) is not, and is not purchasing the Purchaser’s Securities on behalf of (as agent or otherwise), or for the account or benefit of, a person in the United States or a U.S. Person; (ii) was not offered or sold the Purchaser’s Securities in the United States; (iii) did not, nor did its authorized signatory, receive, execute or deliver this Subscription Agreement inside the United States; and (iv) acknowledges, or if applicable, each person for whom it is contracting hereunder, acknowledges, that it has not purchased the Securities as a result of any directed selling efforts, as such term is used in Regulation S, or any general solicitation or general advertising, as such terms are defined in Regulation D promulgated under the U.S. Securities Act, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (m) | the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act; |
| (n) | the Purchaser is solely responsible for obtaining such tax, investment, legal and other professional advice as it considers appropriate in connection with the offer, sale and issuance of the Securities, the execution, delivery and performance by it of this Subscription Agreement, applicable tax considerations and the applicable hold periods and resale restrictions imposed in respect of the Securities by applicable securities legislation and regulatory policies, and confirms that it (and any disclosed principal, if applicable) is not relying on the Issuer or counsel to any of them in this regard. The Purchaser is solely responsible for compliance with applicable resale restrictions and applicable tax legislation; |
| (o) | the Company may complete additional financings in the future in order to develop the business of the Company and fund its ongoing development, and such future financings may have a dilutive effect on current shareholders of the Company, including the Purchaser, and there is no assurance that such financing will be available, on reasonable terms or at all, and if not available, the Company may be unable to fund its ongoing development; |
| (p) | Bennett Jones is acting solely as counsel to the Company and not as counsel to the Purchaser; |
| (q) | in purchasing the Purchaser’s Securities, the Purchaser (and, if applicable, the beneficial purchaser, if any) is not relying upon anyone to conduct any due diligence investigation on behalf of the Purchaser concerning the Offering, the Purchaser’s Securities, or the Company’s business, management, financial position, condition or prospects; |
| (r) | the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has had the opportunity to review this Subscription Agreement and the Schedules attached hereto and the transactions contemplated by this Subscription Agreement and fully understands the same; and |
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| (s) | the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, has had the opportunity to ask questions and receive answers concerning the terms and conditions of the Offering and it has had access to such information concerning the Company as it has considered necessary or appropriate in connection with its investment decision to acquire the Purchaser’s Securities. |
11. Further Acknowledgements of the Purchaser.
The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, hereby acknowledges, agrees, and consents to:
| (a) | the disclosure of Personal Information to each of the Company, the Securities Commissions and any other securities commission pursuant to applicable securities legislation; and |
| (b) | the collection, use, and disclosure of Personal Information by the Company for corporate finance and shareholder communication purposes or such other purposes as are necessary to the Company’s business. |
If the Purchaser is resident in or otherwise subject to the Securities Laws of the Province of Ontario, the Purchaser acknowledges and agrees that the Purchaser has been notified by the Company: of the delivery to the Ontario Securities Commission (the “OSC”) of Personal Information pertaining to the Purchaser, including, without limitation, the full name, residential address and telephone number of the Purchaser, the number and type of securities purchased and the total Purchase Price paid in respect of the Purchaser’s Securities; that this information is being collected indirectly by the OSC under the authority granted to it in securities legislation; that this information is being collected for the purposes of the administration and enforcement of the securities legislation of Ontario; and that the title, business address and business telephone number of the public official in Ontario who can answer questions about the OSC’s indirect collection of the information is the Administrative Assistant to the Director of Corporate Finance, the Ontario Securities Commission, Suite 1903, Box 55, 20 Queen Street West, Toronto, ON M5H 3S8, Telephone: (416) 593-8086, Facsimile: (416) 593-8252.
If the Purchaser is resident in or otherwise subject to the Securities Laws of the Province of British Columbia, the Purchaser acknowledges: (i) that the British Columbia Securities Commission (“BCSC”) will publish part of Form 45-106F6, which is required to be filed under NI 45-106, on its website (including the Personal Information about non-individual Purchasers) and allow for the inspection of the full form (including the Personal Information about individual Purchasers) at the BCSC’s office; (ii) that the disclosure of such Personal Information; and (iii) that questions about such indirect collection of information by the BCSC should be directed to the following telephone number (604) 899-6854 or 1-800-373-6393 (toll free access across Canada) or by facsimile at (604) 899-6506 or in person or writing at P.O. Box 10142, Pacific Centre, 701 West Georgia Street, Vancouver, BC, V7Y 1L2.
12. Purchaser’s Covenants. If the Company has reason to believe the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent does not qualify as an “accredited investor” under applicable Securities Laws, the Purchaser and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent covenants and agrees to provide information as reasonably requested by the Company to verify that the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent qualifies as an accredited investor, which information may include, without limitation, financial records of the Purchaser or beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent.
13. No Revocation. The Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, agrees that this Subscription Agreement is made for valuable consideration and, following the Closing, may not be withdrawn, cancelled, terminated, or revoked by the Purchaser without the consent of the Company.
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14. Indemnity. The Purchaser, on its own behalf, and, if applicable, on behalf of each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, agrees that the Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, shall indemnify and hold harmless the Company and its respective directors, officers, employees, agents, advisors, counsel and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation, warranty or acknowledgement of the Purchaser made on its own behalf, and, if applicable, on behalf of each beneficial purchaser for whom it is acting as trustee or agent, contained herein or in any document furnished by the Purchaser to the Company in connection herewith being untrue in any material respect or any breach or failure by the Purchaser or any beneficial purchaser for whom it is acting as trustee or agent, to comply with any covenant or agreement made by the Purchaser herein or in any document furnished by the Purchaser to the Company in connection herewith. With respect to any indemnified person who is not a party to this Subscription Agreement, it is the intention of the Purchaser and each beneficial purchaser for whom it is acting as trustee or agent, if any, to constitute the Company as trustee for such indemnified persons of the rights and benefits of this Section 14 and the Company agrees to accept such trust and to hold the rights and benefits of this Section 14 in trust for and on behalf of each such indemnified person. The Company agrees that it shall indemnify and hold harmless the Purchaser, and, if applicable, each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, and their respective directors, officers, employees, agents, advisors, counsel and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation, warranty or acknowledgement of the Company contained herein or in any document furnished by the Company to the Purchaser in connection herewith being untrue in any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company herein or in any document furnished by the Company to the Purchaser in connection herewith.
15. Modification. Subject to the terms hereof, neither this Subscription Agreement nor any provision hereof shall be modified, changed, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.
16. Assignment. The terms and provisions of this Subscription Agreement shall be binding upon and enure to the benefit of the Purchaser, the Company and their respective successors and assigns; provided that this Subscription Agreement shall not be assignable by the Company without the prior written consent of the Purchaser. For greater certainty this Subscription Agreement may be transferred or assigned by the Purchaser to any of its affiliates without the prior written consent of the Company, subject to compliance with applicable laws (including, without limitation, applicable Securities Laws), and effective upon notice the Company.
17. Change in Information. The Purchaser, on its own behalf and (if applicable) on behalf of others for whom it is contracting hereunder, agrees that the representations, warranties and covenants of the Purchaser herein will be true and correct both as of the Purchaser’s execution of this Subscription Agreement and as of the Closing Time and will survive the completion of the issuance of the Securities. The representations, warranties and covenants of the Purchaser herein are made with the intent that they be relied upon by the Company and its counsel in determining the eligibility of a purchaser of Preferred Shares and the Purchaser agrees to indemnify and save harmless the Company and its affiliates, shareholders, directors, officers, employees, counsel and agents against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur which are caused or arise from a breach thereof. The Purchaser undertakes to immediately notify the Company at LEEF Brands Inc., Suite 2500 – 666 Burrard Street, Vancouver, British Columbia, V6C 2X8, Canada, Attention: Kevin Wilson, email: [email protected] of any change in any statement or other information relating to the Purchaser set forth herein which takes place prior to the Closing Time.
18. Miscellaneous and Counterparts. All representations, warranties, agreements, and covenants made or deemed to be made by the Purchaser (and, if applicable, others for whom it is contracting hereunder) herein will survive the execution and delivery, and acceptance, of this Subscription Agreement and the Closing. This Subscription Agreement may be executed in any number of counterparts, each of which when delivered, either in original or electronic form, shall be deemed to be an original and all of which together shall constitute one and the same document.
19. Governing Law. This Subscription 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 Purchaser, and each beneficial purchaser, if any, for whom the Purchaser is acting as trustee or agent, hereby irrevocably attorns to the jurisdiction of the courts of the Province of Ontario with respect to any matters arising out of this Subscription Agreement.
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20. Electronic Subscriptions. The Company shall be entitled to rely on delivery by electronic means of an executed copy of this Subscription Agreement (including, the applicable Subscriber Certificate), and acceptance by the Company of such electronic copy shall be legally effective to create a valid and binding agreement between the Purchaser and the Company in accordance with the terms hereof.
21. Entire Agreement. This Subscription Agreement (including the Schedules hereto) contains the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein. This Subscription Agreement may be amended or modified in any respect by written instrument only.
22. Language. In connection with the proposed offering of Preferred Shares, the undersigned hereby requests that all documentation available, including the Subscription Agreement, be prepared and forwarded in the English language only. Dans le cadre du placement propose de reçu de souscription de LEEF Brands Inc.., le soussigné consent par les présentes à ce que la documentation relative à ce placement proposé, y compris la convention de souscription, soit rédigée et soumise en la langue anglaise seulement.
23. Time of Essence. Time shall be of the essence of this Subscription Agreement.
24. Currency. All dollar amounts referred to in this Subscription Agreement are in U.S. dollars, unless otherwise indicated.
25. 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 Subscription Agreement.
26. 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.
27. Headings. The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof.
28. Notices. Any and all notices, designations, consents, offers, acceptances or any other communication provided for herein; shall be given in writing by (i) recognized local same day or next day delivery courier, (ii) when sent by electronic mail (without receipt of any transmission error message), or (iii) Federal Express or other similar internationally recognized overnight delivery service, in each instance, with receipt requested; shall be deemed to have been given on the earlier to occur of the date of actual delivery, or one day after delivered to Federal Express or other similar internationally recognized overnight delivery service for next day delivery; and shall be addressed, in the case of the Purchaser, to the address of the Purchaser indicated on the signature page hereto, and in the case of the Company, to the address indicated on the instruction page, or in each case, to such other address as may be designated in writing by either party pursuant to this Section.
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SCHEDULE A
TERM SHEET
| Issuer | LEEF Brands Inc. (the “Company”) | |
| Offering | Up to USD $3.0 million of Preferred Shares (the “Offering”) | |
| Issue Price | CAD $0.38 per Preferred Share | |
| Liquidation Preference | CAD $0.38 per Preferred Share | |
| Conversion | Each “Preferred Share” is convertible into one Common Share of the Company (each, a “Conversion Share”) at a conversion price of CAD $0.38 per Common Share. | |
| Dividends | Each Preferred Share will pay dividends at a rate of 15% per annum, payable quarterly in arrears, with each dividend being two-thirds cash and one-third additional Preferred Shares paid in kind (PIK). i.e., Cash dividends will be paid at a rate of 10% per annum and PIK dividends will be paid at a rate of 5% per annum.
The Company may on one or more occasions defer the cash portion of the dividend due on any dividend payment date until the next succeeding dividend payment date; provided that if a cash interest payment is deferred by more than 45 days then it will be paid as though the original cash interest rate with respect to that payment had been 15% per annum instead of 10% per annum. |
| Mandatory Conversion | After the eighteen (18) month anniversary of the issuance of the Preferred Shares, the Company may cause all then outstanding Preferred Shares to be converted into Common Shares at the conversion price then in effect upon the occurrence of either of the following: | |
| ● | a change of control of the Company; or | |
| ● | the 20-day volume weighted average trading price of the Common Shares being at least CAD $0.70 during any 20-trading day period following the eighteen (18) month anniversary of the issuance of the Preferred Shares. | |
| Voting | Preferred Shares will not carry voting rights, except to the extent required by law. Subject to the foregoing, holders of Preferred Shares will not be entitled to vote at any shareholder meeting of the Company.
Upon conversion of the Preferred Shares, the Conversion Shares will carry the voting rights associated with Common Shares. | |
| Use of Proceeds | Proceeds of the Offering shall be used primarily for commencement and support of operations at the farm known as Salisbury Canyon Ranch. |
| Closing | On or about March 12, 2026 (the “Closing”). | |
| Agent | The Company may pay participating securities dealers a fee, commensurate with prevailing industry norms, in cash and/or warrants. | |
| Hold Period | The Preferred Shares and Conversion Shares issued in the Offering will be subject to a four month hold period under provincial securities laws in Canada and the Canadian Securities Exchange (“CSE”) policies, and may be subject to additional resale restrictions based upon the jurisdiction in which the Purchaser is resident.
The Preferred Shares and the Conversion Shares have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state of the United States, and may not be offered or sold to any person who is a U.S. Purchaser absent registration or an exemption from applicable registration requirements.
The Purchaser is advised to consult its own legal counsel or advisors to determine the resale restrictions that may be applicable to them. |
| Conditions | Closing of the Offering is subject to the following: | ||
| 1. | Receipt of applicable corporate, regulatory and other third party approvals, including the CSE. | ||
| 2. | Completion by the Company, the Purchaser and their respective advisors of “due diligence” investigations satisfactory to the parties in their respective sole discretion. | ||
| 3. | No material adverse change in the affairs of the Company having occurred. | ||
| Definitive Agreement | To effect the Offering, the Company and the Purchaser shall enter into a definitive subscription agreement and related agreements, which shall contain the terms, conditions, representations, warranties and covenants set out in this Term Sheet and such other the terms, conditions, representations, warranties and covenants as are customary for transactions of the nature and magnitude contemplated herein (collectively, the “Definitive Agreement”). The Company and the Purchaser shall use commercially reasonable efforts to enter into the Definitive Agreement by Closing. | |
| Confidentiality | This Term Sheet is subject to the Confidentiality Agreement entered into between the Purchaser and the Company, and accordingly the existence, status and terms of the parties’ negotiations and agreements regarding the Offering will be kept confidential. |
SCHEDULE B
Accredited Investor Status Certificate
Capitalized terms not specifically defined in this Schedule B have the meanings ascribed to them in the Subscription Agreement to which this Schedule B is attached.
The categories listed herein contain certain specifically defined terms. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your broker and/or legal advisor before completing this certificate.
In connection with the purchase by the undersigned Purchaser of the Purchaser’s Securities, the Purchaser, on its own behalf and on behalf of each of the beneficial purchasers for whom the Purchaser is acting (collectively, the “Purchaser”), hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its counsel are relying thereon) that:
| (a) | the Purchaser is resident in or otherwise subject to the securities laws of one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Newfoundland and Labrador, Nova Scotia, New Brunswick or Prince Edward Island; |
| (b) | the Purchaser is purchasing the Purchaser’s Securities as principal for its own account and not for the benefit of any other person or is deemed to be purchasing as principal pursuant to NI 45-106; |
| (c) | the Purchaser is an “accredited investor” within the meaning of NI 45-106 on the basis that the undersigned fits within one of the categories of an “accredited investor” reproduced below beside which the undersigned has indicated the undersigned belongs to such category; |
| (d) | the Purchaser was not created or is not used solely to purchase or hold securities as an accredited investor as described in paragraph (m) below; |
| (e) | if the Purchaser is an individual and does not meet the criteria set out in subparagraph (j.1) of this Schedule B, it has duly completed and executed a copy of the Risk Acknowledgement Certificate in the form attached hereto as Appendix I to this Schedule B; |
| (f) | upon execution of this Schedule B by the Purchaser, this Schedule B shall be incorporated into and form a part of the Subscription Agreement. |
(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)
| ☐ | (a) | except in Ontario, a Canadian financial institution, or a Schedule III bank; |
| (a.1) | in Ontario, a financial institution that is (i) a bank listed in Schedule I, II or III of the Bank Act (Canada); (ii) an association to which the Cooperative Credit Associations Act (Canada) applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act; or (iii) a loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative or credit union league or federation that is authorized by a statute of Canada or Ontario to carry on business in Canada or Ontario, as the case may be; | |
| ☐ | (b) | the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); |
| ☐ | (c) | a subsidiary of any person referred to in paragraphs (a), (a.1) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary; |
| - B2 - |
| ☐ | (d) | a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, except in Ontario as otherwise prescribed by the regulations under the Securities Act (Ontario); |
| ☐ | (e) | an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d); |
| ☐ | (e.1) | an individual formerly registered under the securities legislation of a jurisdictio of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador), |
| ☐ | (f) | the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada; |
| ☐ | (g) | a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec; |
| ☐ | (h) | any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government; |
| ☐ | (i) | a pension fund that is regulated by the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction of Canada; |
| ☐ | (j) | an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000 (note: check only if you do not qualify under option (j.1) immediately below);
[PLEASE ALSO COMPLETE SECTIONS 2-4 OF APPENDIX I] |
| ☐ | (j.1) | an individual who beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $5,000,000 (note: if individual accredited investors wish to purchase through wholly-owned holding companies or similar entities, such purchasing entities must qualify under section (t) below, which must be initialled); |
| ☐ | (k) | an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
[PLEASE ALSO COMPLETE SECTIONS 2-4 OF APPENDIX I] |
| ☐ | (l) | an individual who, either alone or with a spouse, has net assets of at least $5,000,000;
[PLEASE ALSO COMPLETE SECTIONS 2-4 OF APPENDIX I] |
| ☐ | (m) | a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements; |
| ☐ | (n) an investment fund that distributes or has distributed its securities only to | |
| (i) | a person that is or was an accredited investor at the time of the distribution | |
| (ii) | a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] or 2.19 [Additional investment in investment funds] of NI 45-106, or | |
| (iii) | a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106; | |
| - B3 - |
| ☐ | (o) | an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt; |
| ☐ | (p) | a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be; |
| ☐ | (q) | a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; |
| ☐ | (r) | a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded; |
| ☐ | (s) | an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function; |
| ☐ | (t) | a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors; |
| ☐ | (u) | an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; |
| ☐ | (v) | a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor; or |
| ☐ | (w) | a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse. |
For the purposes hereof, the following definitions are included for convenience:
| (a) | “Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada; |
| (b) | “company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization; |
| (c) | “control person” means |
| (i) | a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, or |
| (ii) | each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer; |
| - B4 - |
| (d) | “director” means |
| (i) | a member of the board of directors of a company or an individual who performs similar functions for a company, and |
| (ii) | with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company; |
| (e) | “eligibility adviser” means |
| (i) | a person that is registered as an investment dealer and authorized to give advice with respect to the type of security being distributed; and |
| (ii) | in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not: |
| (A) | have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders or control persons, and |
| (B) | have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months; |
| (f) | “entity” means a company, syndicate, partnership, trust or unincorporated organization; |
| (g) | “executive officer” means, for an issuer, an individual who is |
| (i) | a chair, vice-chair or president, |
| (ii) | a vice-president in charge of a principal business unit, division or function including sales, finance or production, or |
| (iii) | performing a policy-making function in respect of the issuer; |
| (h) | “financial assets” means cash, securities, or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation; |
| (i) | “foreign jurisdiction” means a country other than Canada or a political subdivision of a country other than Canada; |
| (j) | “founder” means, in respect of an issuer, a person who, (i) acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and (ii) at the time of the distribution or trade is actively involved in the business of the issuer; |
| (k) | “fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction; |
| - B5 - |
| (l) | “investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes an employee venture capital corporation that does not have a restricted constitution, and is registered under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments and a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is making multiple investments; |
| (m) | “jurisdiction” or “jurisdiction of Canada” means a province or territory of Canada except when used in the term foreign jurisdiction; |
| (n) | “non-redeemable investment fund” means an issuer: |
| (i) | whose primary purpose is to invest money provided by its securityholders; |
| (ii) | that does not invest |
| (A) | for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund, or |
| (B) | for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund, and |
| (iii) | that is not a mutual fund; |
| (o) | “person” includes |
(i) an individual;
(ii) a corporation;
(iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and
(iv) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;
| (p) | “related liabilities” means liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets and liabilities that are secured by financial assets; |
| (q) | “Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada); |
| (r) | “spouse” means an individual who (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and |
| (s) | “subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary. |
Under NI 45-106 a person or company is an affiliate of another person or company if one is a subsidiary of the other, or if each of them is controlled by the same person or company.
| - B6 - |
Under NI 45-106, except under Part 2 Division 4 of NI 45-106, a person (first person) is considered to control another person (second person) if (a) the first person beneficially owns or, directly or indirectly, exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation, (b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or (c) the second person is a limited partnership and the general partner of the limited partnership is the first person.
Under NI 45-106 a trust company or trust corporation described in paragraph (p) above of the definition of “accredited investor” (other than in respect of a trust company or trust corporation registered under the laws of Prince Edward Island that is not registered or authorized under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada) is deemed to be purchasing as principal.
Under NI 45-106 a person described in paragraph (q) above of the definition of “accredited investor” is deemed to be purchasing as principal.
The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time.
| DATED: | SIGNED: | |||
| Witness (if Purchaser is an individual) | ||||
| Print the name of witness | Print the name of Purchaser | |||
If Purchaser is not an individual, print name and title of authorized signing officer | ||||
| - B7 - |
APPENDIX I TO SCHEDULE B
RISK ACKNOWLEDGEMENT CERTIFICATE
WARNING! This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment. |
| SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | ||
| 1. About your investment | ||
| Type of securities: Preferred Shares | Issuer: LEEF Brands Inc. | |
| Purchased from: Issuer | ||
| SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER | ||
| 2. Risk acknowledgement | ||
| This investment is risky. Initial that you understand that: | Your Initials | |
| Risk of loss – You could lose your entire investment of $__________________. [Instruction: Insert the total dollar amount of the investment.] | ||
| Liquidity risk – You may not be able to sell your investment quickly – or at all. | ||
| Lack of information – You may receive little or no information about your investment. | ||
| Lack of advice – You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca. | ||
| 3. Accredited investor status | ||
| You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria. | Your initials | |
| ● | Your net income before taxes was more than $200,000 in each of the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.) | |
| ● | Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year. | |
| ● | Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities. | |
| ● | Either alone or with your spouse, you have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.) | |
| - B8 - |
| 4. Your name and signature | |
| By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. | |
| First and last name (please print): | |
| Signature: | Date: |
| SECTION 5 TO BE COMPLETED BY THE SALESPERSON | |
| 5. Salesperson information | |
| [Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.] | |
| First and last name of salesperson (please print): | |
| Telephone: | Email: |
| Name of firm (if registered): | |
| SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | |
| 6. For more information about this investment | |
|
LEEF Brands Inc. Suite 2500 Park Place, 666 Burrard Street Vancouver, BC V6C 2X8 Contact person: Kevin Wilson Email: [email protected]
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca. | |
| - B9 - |
SCHEDULE C
FOREIGN PURCHASER’S CERTIFICATE
(Residents of Jurisdictions other than Canada and Non-U.S. Purchasers)
TO: LEEF BRANDS INC. (the “Company”)
Capitalized terms not specifically defined in this Schedule C have the meanings ascribed to them in the Subscription Agreement to which this Schedule C is attached.
In connection with the purchase by the undersigned Purchaser of the Purchaser’s Securities, the Purchaser, on its own behalf and on behalf of each of the beneficial purchasers for whom the Purchaser is acting, hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its counsel are relying thereon) that:
| 1. | it is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulatory authorities (“Authorities”) having application in its jurisdiction of residence or by which it is otherwise governed (the “International Jurisdiction”) that would apply to this subscription, if there are any; |
| 2. | it is purchasing the Securities pursuant to exemptions from any substantive or procedural requirements (including without limitation exemptions from prospectus or registration requirements or equivalent requirements) under the applicable securities laws of the Authorities in the International Jurisdiction or, if such is not applicable, the Purchaser is permitted to purchase the Securities under the applicable securities laws of the Authorities in the International Jurisdiction without the need to rely on any exemption; |
| 3. | by committing to acquire the Securities, it has obtained all necessary consents and authorizations to enable it to agree to subscribe for the Securities and to perform its obligations under this Subscription Agreement and it has otherwise observed the laws and regulatory requirements of the International Jurisdiction, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due in such International Jurisdiction in connection with its acceptance and it has not taken any action which will or may result in the Company acting in breach of any regulatory or legal requirements of any territory or jurisdiction in connection with the Offering; |
| 4. | the applicable laws of the Authorities in the International Jurisdiction do not require the Company to make any filings or seek any approvals or exemptions of any nature whatsoever from any Authority of any kind whatsoever in the International Jurisdiction in connection with the sale of the Securities; |
| 5. | the purchase of the Securities by the Purchaser does not trigger: (a) any obligation to prepare and file a prospectus or similar document, (b) any other report with respect to such purchase in the International Jurisdiction or (c) any continuous disclosure reporting obligation of the Company in the International Jurisdiction; |
| 6. | it will provide such evidence of compliance with all such matters as the Company or its counsel may request and it will, if requested by the Company, deliver to the Company, as applicable, a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in paragraphs 2, 3 and 4 above to the satisfaction of the Company, as the case may be; |
| 7. | upon execution of this Schedule C by or on behalf of the Purchaser, this Schedule C shall be incorporated into and form a part of the Subscription Agreement. Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Subscription Agreement to which this Schedule C is attached; |
| 8. | if any representations and warranties contained in this Schedule C shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time; |
| 9. | The Subscriber has no intention to sell or distribute either directly or indirectly any of the Purchased Securities in Canada; and |
| 10. | The Subscriber’s purchase of the Purchased Securities is not part of a plan or scheme to avoid the prospectus requirements in connection with a distribution to a person or company in Canada. |
| - C2 - |
| DATED: | SIGNED: | ||
|
|||
| Witness (if Purchaser is an individual) | |||
| Print the name of witness | Print the name of Purchaser | ||
If Purchaser is not an individual, print name and title of authorized signing officer | |||
| Address of Purchaser | |||
| Address of Purchaser (cont’d) | |||
SCHEDULE D
U.S. PURCHASER’S certificate
TO: LEEF BRANDS INC. (the “Company”)
Reference is made to the subscription agreement between the Company and the undersigned (referred to herein as the “Purchaser”) dated as of the date hereof to which this Schedule D is attached (the “Subscription Agreement”). Upon execution of this Subscriber Certificate by the Purchaser, this Subscriber Certificate will be incorporated into and form a part of the Subscription Agreement. Capitalized terms not specifically defined in this Schedule D have the meanings ascribed to them in the Subscription Agreement to which this Schedule D is attached.
In connection with the purchase of the Purchaser’s Securities by the Purchaser, the Purchaser represents, warrants and covenants and certifies to the Company and acknowledges that the Company is relying thereon that:
| (a) | the Purchaser is purchasing the Preferred Shares (and the underlying Conversion Shares) (collectively, the “Securities”) for its own account (or for the account or one or more beneficial purchasers over which the Purchaser has sole investment discretion) and the Securities are being purchased for investment purposes only and not with a view to resale or distribution or for the account or benefit of anyone other than the Purchaser (or such beneficial purchaser). The Purchaser has no intention to distribute either directly or indirectly any of the Securities in the United States; provided, however, that this paragraph shall not restrict the Purchaser from selling or otherwise disposing of any of the Securities pursuant to registration thereof pursuant to the U.S. Securities Act and any applicable state securities laws or under an exemption from such registration requirements; |
| (b) | the Purchaser understands and acknowledges that the Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and that the offer and sale of Securities to it are being made in reliance upon the exemption from registration provided by Rule 506(b) of Regulation D under the U.S. Securities Act and similar exemptions under applicable state securities laws; |
| (c) | the Purchaser (and any beneficial purchaser) is an “accredited investor”, within the meaning of Rule 501(a) of Regulation D (a “U.S. Accredited Investor”), and satisfies the category of U.S. Accredited Investor set forth below: |
(PLEASE CHECK THE BOX FOR THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR AND EXECUTE THIS CERTIFICATE ON THE LAST PAGE HEREOF. PLEASE INITIAL “P” BESIDE THE CATEGORY FOR THE PURCHASER AND “BP” BESIDE THE CATEGORY FOR THE BENEFICIAL PURCHASER.)
| _____Category 1. | A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or |
| _____Category 2. | A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or |
| _____Category 3. | A broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934, as amended; or |
| _____Category 4. | An insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; or |
| _____Category 5. | An investment company registered under the United States Investment Company Act of 1940, as amended; or |
| - D2 - |
| _____Category 6. | A business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940, as amended; or |
| _____Category 7. | A small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the United States Small Business Investment Act of 1958, as amended; or |
| _____Category 8. | A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S. $5,000,000; or |
| _____Category 9. | An employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, as amended, in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are U.S. Accredited Investors; or |
| _____Category 10. | A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940, as amended; or |
| _____Category 11. | An organization described in Section 501(c)(3) of the United States Internal Revenue Code of 1976, as amended, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of U.S. $5,000,000; or |
| _____Category 12. | A trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; |
| _____Category 13. | Any director or executive officer of the Company; or |
| _____Category 14. | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds U.S. $1,000,000 (for purposes of calculating net worth: (i) a person’s primary residence shall not be included as an asset, (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the Securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of the Securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability) and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of sale of the Securities shall be included as a liability); or |
| _____Category 15. | A natural person who had an individual income in excess of U.S. $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or |
| _____Category 16. | An entity in which all of the equity owners are U.S. Accredited Investors; |
| - D3 - |
| (d) | the Purchaser acknowledges that it has not purchased the Securities as a result of any form of “general solicitation” or “general advertising” within the meaning of Regulation D under the U.S. Securities Act, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or on the internet, or broadcast over radio, television, or the internet, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (e) | the Purchaser understands and agrees that the Securities will be “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act, and that if it decides to offer, sell, pledge or otherwise transfer the Securities, it may not offer, sell, pledge or otherwise transfer any of such Securities, directly or indirectly, unless the transfer is made: |
| (i) | to the Company; |
| (ii) | outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S and in compliance with applicable local laws and regulations; |
| (iii) | in compliance with (A) Rule 144A under the U.S. Securities Act, if available, or (B) Rule 144 under the U.S. Securities Act, if available, and, in each case, in compliance with applicable state securities laws; or |
| (iv) | in another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws; and |
the Purchaser has prior to any transfer pursuant to clauses (iii)(B) or (iv) (and, if required by the Company or any transfer agent for the Securities, clause (ii)) above furnished to the Company (and the transfer agent, if applicable) an opinion of counsel of recognized standing, or other evidence, reasonably satisfactory to the Company to the effect that such transfer does not require registration under the U.S. Securities Act or applicable state securities laws;
| (f) | the Purchaser and each beneficial purchaser for whom it is acting acknowledge and agree that upon the original issuance thereof, and until such time as the same is not required under applicable requirements of the U.S. Securities Act and applicable state securities laws, the certificates representing the Securities, and all certificates issued in exchange therefor or in substitution thereof, will bear a legend substantially in the following form: |
“THE SECURITIES REPRESENTED HEREBY [OR ISSUABLE IN EXCHANGE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF LEEF BRANDS INC. THAT THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO LEEF BRANDS INC., (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S (“REGULATION S”) UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE CANADIAN LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH (1) RULE 144A UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, OR (2) RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C)(2) OR (D) ABOVE, A LEGAL OPINION OR OTHER EVIDENCE REASONABLY SATISFACTORY TO LEEF BRANDS INC. MUST FIRST BE PROVIDED.”
provided, that if Securities are being sold under clause (B) above, the legend set forth above may be removed by providing a declaration to the Company and any transfer agent for the Securities, in the form attached as Appendix I to this Schedule D (or in such form as the Company may from time to time prescribe), together with any other evidence reasonably satisfactory to the Company that may be required by the Company or any transfer agent for the Securities, which evidence may include, without limitation, an opinion of counsel of recognized standing, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act;
| - D4 - |
notwithstanding the foregoing, the Company’s transfer agent, if any, may impose additional requirements for the removal of legends from Securities sold in accordance with Rule 904 of Regulation S under the U.S. Securities Act in the future; and
provided, further, that if any such Securities are being sold pursuant to Rule 144 under the U.S. Securities Act, or in a transaction that does not require registration under the U.S. Securities Act or applicable state securities laws, the above legend may be removed by delivery to the Company or any duly appointed transfer agent for the Securities of an opinion of counsel, of recognized standing, reasonably satisfactory to the Company, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;
| (g) | the Purchaser (and any beneficial purchaser) consents to the Company making a notation on its records or giving instruction to the registrar and transfer agent of the Company in order to implement the restrictions on transfer with respect to the Securities set forth and described herein; |
| (h) | the Purchaser (and any beneficial purchaser) understands and acknowledges that the Company has no obligation or present intention of filing with the United States Securities and Exchange Commission or with any state securities administrator any registration statement in respect of resales of the Securities in the United States; |
| (i) | the Purchaser (and any beneficial purchaser) has had the opportunity to ask questions of and receive answers from the Company regarding the investment, and has received all the information regarding the Company that it has requested; |
| (j) | the Purchaser (and any beneficial purchaser) has had access to such information concerning the Company as it has considered necessary or appropriate in connection with its investment decision to acquire the Securities; |
| (k) | the office or other address of the Purchaser at which the Purchaser received and accepted the offer to purchase the Securities is the address listed as the “Purchaser’s Address” on the signature page of the Subscription Agreement; |
| (l) | the Purchaser understands and acknowledges that if the Company were to ever be deemed to be, or to have at any time previously been, an issuer with (i) no or nominal operations and (ii) no or nominal assets other than cash and cash equivalents, Rule 144 under the U.S. Securities Act may be unavailable with respect to resales of the Securities, and the Company is under no obligation to take, and has no present intention of taking, any required action in order to make Rule 144 under the U.S. Securities Act available with respect to resales of the Securities; |
| (m) | the Purchaser (and any beneficial purchaser) is aware that (i) purchasing, holding and disposing of the Securities may have tax consequences under the laws of both Canada and the United States, (ii) the tax consequences for prospective investors who are resident in, or citizens of, the United States are not described in this Subscription Agreement, and (iii) it is solely responsible for determining the tax consequences applicable to its particular circumstances and should consult its own tax advisors concerning investment in such securities; in particular, no determination has been made whether the Company will be a “passive foreign investment company” within the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (the “Code”); |
| (n) | the Purchaser is aware that its ability to enforce civil liabilities under the United States federal securities laws may be affected adversely by, among other things: (i) the fact that the Company is organized under the laws of Canada; (ii) some or all of the directors and officers may be residents of countries other than the United States; and (iii) all or a substantial portion of the assets of the Company and such persons may be located outside the United States; |
| (o) | the Purchaser (and any Disclosed Principal) understands and agrees that the financial statements of the Company have been prepared in accordance with International Financial Reporting Standards and are subject to Canadian auditing standards and auditor independence standards, which differ in some respects from United States generally accepted accounting principles, auditing standards and auditor independence standards, respectively, and thus may not be comparable to financial statements of United States companies; and |
| (p) | it acknowledges that the representations, warranties and covenants contained in this Schedule D are made by it with the intent that they may be relied upon by the Company in determining its eligibility to purchase the Securities. |
[signature page follows]
| - D5 - |
The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time.
| Dated: | Signed: | |||
| Witness (If Purchaser is an Individual) | Print Name of Purchaser | |||
| Print Name of Witness | If Purchaser is not an Individual, Print Name and Title of Authorized Signing Officer | |||
APPENDIX I TO SCHEDULE D
DECLARATION FOR REMOVAL OF LEGEND
| TO: | The transfer agent for LEEF Brands Inc. |
| AND TO: | LEEF Brands Inc. |
The undersigned (a) acknowledges that the current sale of ____________ of LEEF Brands Inc. (the “Company”) 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 Company, (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 the TSX Venture Exchange (or another 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.
| Dated: | ||||
| Name of Seller | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Exhibit 1.3
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE SEPTEMBER 8, 2026.
WARRANTS TO PURCHASE
COMMON SHARES OF LEEF BRANDS, INC.
Date: C
Warrant Certificate Number:
X |
Number of Warrants:
XXX,XXX |
THIS IS TO CERTIFY THAT, for value received, “X” (the “Warrantholder”), has the right to purchase in respect of each whole warrant (individually, a “Warrant” and, collectively, the “Warrants”) represented by this certificate or by a replacement certificate (in either case, this “Warrant Certificate”), at any time up to 5:00 p.m. (Toronto time) on May 7, 2028 (the “Expiry Time”), one fully paid and non-assessable common share (individually, a “Common Share” and, collectively, the “Common Shares” and which terms shall include any shares or other securities to be issued in addition thereto or in substitution or replacement therefor as provided herein) of LEEF Brands, Inc. (the “Corporation”), a corporation existing under the Business Corporations Act (British Columbia), as constituted on the date hereof at a purchase price (the purchase price in effect from time to time being called the “Exercise Price”) of $0.30 per Common Share, subject to adjustment as provided herein.
The Warrants are being issued to the Warrantholder in connection with the issuance and sale by the Corporation of units (each a “Unit”) consisting of one Common Share in the capital of the Corporation and one Warrant.
The Corporation agrees that the Common Shares purchased pursuant to the exercise of the Warrants shall be and be deemed to be issued to the Warrantholder as of the close of business on the date on which this Warrant Certificate shall have been surrendered and payment made for such Common Shares as aforesaid.
Nothing contained herein shall confer any right upon the Warrantholder to subscribe for or purchase any Common Shares at any time after the Expiry Time and from and after the Expiry Time the Warrants and all rights under this Warrant Certificate shall be void and of no value.
The above provisions are subject to the following:
| 1. | Exercise: In the event that the Warrantholder desires to exercise the right to purchase Common Shares conferred hereby, the Warrantholder shall complete, to the extent possible in the manner indicated, and execute a subscription form in the form attached as Schedule “A” to this Warrant Certificate, surrender this Warrant Certificate to the Corporation in accordance with this Section 1, and pay the amount payable upon the exercise of such Warrants in respect of the Common Shares subscribed for by certified cheque, bank draft or money order in lawful money of Canada payable to the Corporation or by transmitting same day funds in lawful money of Canada by wire to such account as the Corporation shall direct the Warrantholder. Upon such surrender and payment as aforesaid, the Warrantholder shall be deemed for all purposes to be the holder of record of the number of Common Shares to be so issued and the Warrantholder shall be entitled to delivery of a certificate or certificates representing such Common Shares and the Corporation shall cause such certificate or certificates to be delivered to the Warrantholder at the address specified in the subscription form within three business days after such surrender and payment as aforesaid. No fractional Common Shares will be issuable upon any exercise of the Warrants and the Warrantholder will not be entitled to any cash payment or compensation in lieu of a fractional Common Share. |
| -2- |
| 2. | U.S. Restrictions: |
| (1) | U.S. Registration Restrictions: Neither the Warrants represented by this Warrant Certificate 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”) nor under the securities laws of any state of the United States. The Warrants represented by this Certificate may only be exercised by or on behalf of a holder who, at the time of exercise, either: |
| (a) | is not, and is not exercising the Warrant for the account or benefit of, a U.S. Person or a person in the United States; |
| (i) | did not execute or deliver the exercise form while in the United States; |
| (ii) | delivery of the Common Shares will not be to an address in the United States; and |
| (iii) | has in all other respects complied with the terms of Regulation S of the U.S. Securities Act; or |
| (b) | is the original subscriber for the Warrants, on its own behalf or on behalf of the original beneficial purchaser (if any), it and such beneficial purchaser (if any) are “accredited investors” that satisfy one or more of the criteria set forth in Rule 501(a) of Regulation D under the U.S. Securities Act, it delivered a United States Accredited Investor Certificate to the Corporation in connection with the subscription for the Units pursuant to which the Warrants were acquired, and the representations, warranties and covenants made by the undersigned therein are true and correct on the date of exercise of the Warrants in respect to the exercise of the Warrants and it represents to the Corporation as such; or |
| (c) | is the original subscriber of the Warrants and is exercising the Warrants solely for its own account or for the account of the original beneficial owner, if any, and for whose account such original purchaser exercises sole investment discretion; each of it and any beneficial owner was on the date the Warrants were purchased from the Corporation, and is on the date of exercise of the Warrants, an “accredited investor” that satisfies one or more of the criteria set forth in Rule 501(a) of Regulation D under the U.S. Securities Act, and all the representations, warranties and covenants agreed upon or made by the Warrantholder, or any beneficial purchaser, as the case may be, during the purchase of the Warrants from the Corporation continue to be true and correct as of the date of exercise; or |
| (d) | is tendering with the exercise form a written opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to the effect that the Common Shares to be delivered upon exercise of the Warrants have been registered under the U.S. Securities Act and all applicable state securities laws of the United States or are exempt from such registration requirements. |
| -3- |
As used herein, the terms “United States” and “U.S. Person” have the meaning assigned to them in Regulation S under the U.S. Securities Act.
| (2) | Restrictive Legends: All certificates representing Common Shares issued to persons who exercise the Warrants pursuant to subsections 1(b) or 1(c) above on the exercise of the rights represented by this Warrant Certificate will, unless such Common Shares are registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, bear the following legend: |
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 OR (ii) RULE 144A UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND, IN EACH CASE IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, (D) IN COMPLIANCE WITH ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (E) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C)(i) OR (D) ABOVE, A LEGAL OPINION REASONABLY SATISFACTORY TO THE CORPORATION MUST FIRST BE PROVIDED TO THE CORPORATION AND THE CORPORATION’S TRANSFER AGENT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
provided, that if the Common Shares are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S, the legend set forth above may be removed by providing an executed declaration to the registrar and transfer agent of the Corporation and to the Corporation, in such form as the Corporation may prescribe from time to time and, if requested by the Corporation or the registrar and transfer agent, an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation and the registrar and transfer agent to the effect that such sale is being made in compliance with Rule 904 of Regulation S;
provided further, that if any of the Common Shares are being sold pursuant to Rule 144 under the U.S. Securities Act and in compliance with any applicable state securities laws, the legend may be removed by delivery to the Corporation’s registrar and transfer agent of an opinion satisfactory to the Corporation and its registrar and transfer agent to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws.
| -4- |
| 3. | Partial Exercise: The Warrantholder may from time to time subscribe for and purchase any lesser number of Common Shares than the number of Common Shares expressed in this Warrant Certificate. In the event that the Warrantholder subscribes for and purchases any such lesser number of Common Shares prior to the Expiry Time, the Warrantholder shall be entitled to receive a replacement certificate representing the unexercised balance of the Warrants. |
| 4. | Not a Shareholder: The holding of the Warrants shall not constitute the Warrantholder a shareholder of the Corporation nor entitle the Warrantholder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate. |
| 5. | Covenants, Representations and Warranties: |
| (1) | The Corporation hereby represents and warrants that: |
| (a) | The Corporation is duly authorized and has the corporate and lawful authority to create and issue the Warrants and the Common Shares issuable upon the exercise hereof and perform its obligations hereunder. |
| (b) | All Common Shares which are issued upon the exercise of the right of purchase provided in this Warrant Certificate, upon payment therefor of the Exercise Price at which such Common Shares may be purchased pursuant to the provisions of this Warrant Certificate, shall be deemed to be fully paid and non-assessable shares and free from all taxes, liens and charges with respect to the issue thereof. |
| (c) | This Warrant Certificate is a valid and enforceable obligation of the Corporation, enforceable in accordance with the provisions of this Warrant Certificate. |
| (2) | The Corporation hereby covenants and agrees that: |
| (a) | So long as any Common Shares evidenced hereby remain outstanding, the Corporation will cause the Common Shares from time to time subscribed for and purchased in the manner provided in this Warrant Certificate and the certificate or certificates representing such Common Shares to be issued and that, at all times prior to the Expiry Time, it has authorized and will reserve and there will remain unissued a sufficient number of Common Shares to satisfy the right of purchase provided for in this Warrant Certificate. |
| (b) | The Corporation shall use commercially reasonable efforts to preserve and maintain its corporate existence. |
| (c) | If, in the opinion of counsel for the Corporation, any prospectus or other filing is required to be filed with or any permission is required to be obtained from any securities regulatory body or any other step is required under any federal or provincial law before any Common Shares which the Warrantholder is entitled to purchase pursuant to the Warrant may properly and legally be issued upon exercise thereof, the Corporation covenants that it will use commercially reasonable efforts to take such action. |
| -5- |
| 6. | Anti-Dilution Protection: |
| (1) | Definitions: For the purposes of this Section 6, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor in this subsection 6(1): |
| (a) | “Adjustment Period” means the period commencing on the date of issue of the Warrants and ending at the Expiry Time; |
| (b) | “Current Market Price” of the Common Shares at any date means the price per share equal to the weighted average price at which the Common Shares have traded on the Canadian Securities Exchange (the “CSE”) or, if the Common Shares are not then listed on the CSE, on such other Canadian stock exchange as may be selected by the directors of the Corporation for such purpose or, if the Common Shares are not then listed on any Canadian stock exchange, in the over-the-counter market, during the period of 20 consecutive trading days ending on the third business day before such date; provided that the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold on the said exchange or market, as the case may be, during such 20 consecutive trading days by the total number of Common Shares so sold; and provided further that if the Common Shares are not then listed on any Canadian stock exchange or quoted for trading in the over the counter market, then the Current Market Price shall be determined by a firm of independent chartered accountants selected by the directors of the Corporation; |
| (c) | “director” or “director of the Corporation” means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to action “by the directors” means action by the directors of the Corporation as a board or, whenever empowered, action by any committee of the directors of the Corporation; and |
| (d) | “trading day” with respect to a stock exchange or over-the-counter market means a day on which such stock exchange or market is open for business. |
| (2) | Adjustments: The Exercise Price and the number of Common Shares issuable to the Warrantholder pursuant to this Warrant Certificate shall be subject to adjustment from time to time in the events and in the manner provided as follows: |
| (a) | If, at any time during the Adjustment Period, the Corporation shall: |
| (i) | make a distribution to, the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable or exercisable for or convertible into Common Shares; |
| (ii) | subdivide, re-divide or otherwise change the outstanding Common Shares into a greater number of Common Shares; or |
| (iii) | reduce, combine or consolidate the outstanding Common Shares into a lesser number of Common Shares, |
| -6- |
(any of such events in subclauses 6(2)(a)(i), 6(2)(a)(ii) and 6(2)(a)(iii) above being herein called a “Common Share Reorganization”), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Common Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:
| A. | the numerator of which shall be the number of Common Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Common Share Reorganization; and |
| B. | the denominator of which shall be the number of Common Shares which will be outstanding immediately after giving effect to such Common Share Reorganization. |
To the extent that any adjustment in the Exercise Price occurs pursuant to this clause 6(2)(a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable or exercisable for or convertible into Common Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.
| (b) | If, at any time during the Adjustment Period, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Common Shares of rights, options or warrants pursuant to which such holders are entitled, during a period expiring not more than 90 days after the record date for such issue (such period being the “Rights Period”), to subscribe for or purchase Common Shares or securities exchangeable or exercisable for or convertible into Common Shares at a price per share to the holder (or, in the case of securities exchangeable or exercisable for or convertible into Common Shares, at an exchange, exercise or conversion price per share) at the date of issue of such securities of less than 95% of the Current Market Price of the Common Shares on such record date (any of such events being called a “Rights Offering”), the Exercise Price shall be adjusted effective immediately after the record date for such Rights Offering to the amount determined by multiplying the Exercise Price in effect on such record date by a fraction: |
| -7- |
| (i) | the numerator of which shall be the aggregate of |
| A. | the number of Common Shares outstanding as of the record date for the Rights Offering, and |
| B. | the quotient determined by dividing |
| (1) | either (a) where the event giving rise to the application of this Section 6(2)(b) was the issue or distribution of rights, options or warrants to the holders of Common Shares under which such holders are entitled to subscribe for or purchase additional Common Shares, the product of the maximum number of Common Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Common Shares are offered, or (b) where the event giving rise to the application of this Section 6(2)(b) was the issue or distribution of rights, options or warrants to the holders of Common Shares under which such holders are entitled to subscribe for or purchase securities exchangeable or exercisable for or convertible into Common Shares, the product of the exchange, exercise or conversion price of the securities so offered and the maximum number of Common Shares for or into which the securities offered pursuant to the Rights Offering may be exchanged, exercised or converted, as the case may be, by |
| (2) | the Current Market Price of the Common Shares as of the record date for the Rights Offering; and |
| (ii) | the denominator of which shall be the aggregate of the number of Common Shares outstanding on such record date and the number of Common Shares offered pursuant to the Rights Offering (including, in the case of the issue or distribution of securities exchangeable or exercisable for or convertible into Common Shares, the number of Common Shares for or into which such securities may be exchanged, exercised or converted). |
If, by the terms of the rights, options or warrants referred to in this clause 6(2)(b), there is more than one purchase, exchange, exercise or conversion price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate exchange, exercise or conversion price of the exchangeable, exercisable or convertible securities so offered, shall be calculated for purposes of the adjustment on the basis of the lowest purchase, exchange, exercise or conversion price per Common Share, as the case may be. 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 calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this clause 6(2)(b) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants referred to in this clause 6(2)(b), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.
| -8- |
| (c) | If, at any time during the Adjustment Period, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Common Shares of: |
| (i) | shares of the Corporation of any class other than Common Shares; |
| (ii) | rights, options or warrants to acquire Common Shares or securities exchangeable or exercisable for or convertible into Common Shares (other than rights, options or warrants pursuant to which holders of Common Shares are entitled, during a period expiring not more than 90 days after the record date for such issue, to subscribe for or purchase Common Shares or securities exchangeable or exercisable for or convertible into Common Shares at a price per share (or, in the case of securities exchangeable or exercisable for or convertible into Common Shares, at an exchange, exercise or conversion price per share) on the record date for the issue of such securities to the holder of at least 95% of the Current Market Price of the Common Shares on such record date); |
| (iii) | evidences of indebtedness of the Corporation; or |
| (iv) | any property or assets of the Corporation; |
and if such issue or distribution does not constitute a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Exercise Price shall be adjusted effective immediately after the record date for the Special Distribution to the amount determined by multiplying the Exercise Price in effect on such record date for the Special Distribution by a fraction:
| A. | the numerator of which shall be the difference between |
| (1) | the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date, and |
| (2) | the aggregate fair market value, as determined by action by nationally or internationally recognized and independent firm of chartered accountants as may be selected by action by the directors of the Corporation, and subject to the approval of any stock exchange on which the Shares may then be listed, where required, to the holders of Common Shares of the shares, rights, options, warrants, evidences of indebtedness or property or assets to be issued or distributed in the Special Distribution, and |
| -9- |
| B. | the denominator of which shall be the product obtained by multiplying the number of Common Shares outstanding on such record date by the Current Market Price of the Common Shares on such record date. |
Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this clause 6(2)(c) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable or exercisable for or convertible into Common Shares referred to in this clause 6(2)(c), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the amount which would then be in effect based upon the number of Common Shares issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right. To the extent that such Special Distribution is not ultimately so made, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed.
| (d) | If, at any time during the Adjustment Period, there shall occur: |
| (i) | a reclassification or redesignation of the Common Shares, a change of the Common Shares into other shares or securities or any other capital reorganization involving the Common Shares other than a Common Share Reorganization; |
| (ii) | a consolidation, amalgamation, arrangement or merger of the Corporation with or into another body corporate which results in a reclassification or redesignation of the Common Shares or a change of the Common Shares into other shares or securities; or |
| (iii) | the transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity; |
(any of such events being called a “Capital Reorganization”), after the effective date of the Capital Reorganization, the Warrants shall remain outstanding and the Warrantholder shall be entitled to receive, upon exercising any of the Warrants after the effective date of such Capital Reorganization, in lieu of the number of Common Shares to which the Warrantholder was theretofore entitled upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Warrantholder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Warrantholder had been the registered holder of the number of Common Shares which the Warrantholder was theretofore entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any such Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Certificate with respect to the rights and interests thereafter of the Warrantholder to the end that the provisions of this Section 6 shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of the Warrants and the Corporation or any successor corporation or entity shall be entitled to deliver a replacement certificate representing the rights and interests of the Warrantholder as a result of such Capital Reorganization.
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| (e) | If, at any time during the Adjustment Period, any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of clause 6(2)(a), 6(2)(b) or 6(2)(c) of this Warrant Certificate, then the number of Common Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Common Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price. |
| (3) | Rules: The following rules and procedures shall be applicable to adjustments made pursuant to subsection 6(2) of this Warrant Certificate: |
| (a) | If any event of the type contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the board of directors of the Corporation shall promptly make an appropriate adjustment in the Exercise Price and the number of Common Shares issuable upon exercise of this Warrant so as to protect the rights of the Warrantholder in a manner consistent with the provisions of this Section 6. |
| (b) | If more than one subsection of Section 6 is applicable to a single event, the board of directors of the Corporation shall make the most appropriate adjustment and no single event shall cause an adjustment under more than one subsection of Section 6 so as to result in duplication. |
| (c) | Subject to the following clauses of this subsection 6(3), any adjustment made pursuant to subsection 6(2) hereof shall be made successively whenever an event referred to therein shall occur, and will, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent and will be made successively whenever an event referred to therein occurs, subject to the following subsections of this Section 6. |
| (d) | No adjustment in the Exercise Price or in the number or kind of securities purchasable upon the exercise of the Warrants shall be made in respect of any event described in Section 6 hereof if the Warrantholder is entitled to participate in such event on the same terms mutatis mutandis as if the Warrantholder had exercised the Warrants prior to or on the record date or effective date, as the case may be, of such event. |
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| (e) | No adjustment in the Exercise Price or in the number of Common Shares purchasable upon the exercise of the Warrants shall be made pursuant to subsection 6(2) hereof in respect of the issue from time to time of Common Shares pursuant to this Warrant Certificate or pursuant to any stock option, stock purchase or stock bonus plan in effect from time to time for directors, officers or employees of the Corporation and any such issue, and any grant of options in connection therewith, shall be deemed not to be a Common Share Reorganization, a Rights Offering nor any other event described in subsection 6(2) hereof. |
| (f) | If, at any time during the Adjustment Period, the Corporation shall take any action affecting the Common Shares, other than an action or event described in subsection 6(2) hereof, which, in the opinion of the directors of the Corporation, would have a material adverse effect upon the rights of Warrantholders, either or both the Exercise Price and the number of Common Shares purchasable upon exercise of the Warrants shall be adjusted in such manner and at such time by action by the directors of the Corporation, in their sole discretion, as may be equitable in the circumstances. Failure of the taking of action by the directors of the Corporation so as to provide for an adjustment prior to the effective date of any action by the Corporation affecting the Common Shares shall be deemed to be conclusive evidence that the directors of the Corporation have determined that it is equitable to make no adjustment in the circumstances. |
| (g) | If the Corporation shall set a record date to determine holders of Common Shares for the purpose of entitling such holders to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such holders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Common Shares purchasable upon the exercise of the Warrants shall be required by reason of the setting of such record date. |
| (h) | In any case in which this Warrant Certificate shall require that an adjustment shall become effective immediately after a record date for an event referred to in subsection 6(2) hereof, the Corporation may defer, until the occurrence of such event: |
| (i) | issuing to the Warrantholder, to the extent that the Warrants are exercised after such record date and before the occurrence of such event, the additional Common Shares or other securities issuable upon such exercise by reason of the adjustment required by such event; and |
| (ii) | delivering to the Warrantholder any distribution declared with respect to such additional Common Shares or other securities after such record date and before such event; |
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provided, however, that the Corporation shall deliver to the Warrantholder an appropriate instrument evidencing the right of the Warrantholder upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable upon the exercise of the Warrants and to such distribution declared with respect to any such additional Common Shares issuable upon the exercise of the Warrants.
| (i) | In the absence of a resolution of the directors of the Corporation fixing a record date for a Rights Offering, the Corporation shall be deemed to have fixed as the record date therefor the date of the issue of the rights, options or warrants issued pursuant to the Rights Offering. |
| (j) | If a dispute shall at any time arise with respect to adjustments of the Exercise Price or the number of Common Shares purchasable upon the exercise of the Warrants, such disputes shall be conclusively determined by the auditors of the Corporation or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by the directors of the Corporation and any such determination shall be conclusive evidence of the correctness of any adjustment made pursuant to subsection 6(2) hereof and shall be binding upon the Corporation and the Warrantholder. |
| (k) | As a condition precedent to the taking of any action which would require an adjustment pursuant to subsection 6(2) hereof, including the Exercise Price and the number or class of Common Shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of counsel to the Corporation, be necessary in order that the Corporation may validly and legally issue as fully paid and non-assessable shares all of the Common Shares or other securities which the Warrantholder is entitled to receive in accordance with the provisions of this Warrant Certificate |
| (l) | As promptly as reasonably practicable following any adjustment of the Exercise Price, the Corporation shall furnish to the Warrantholder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof. |
| (4) | Notice: At least 21 days prior to the earlier of the record date or effective date of any event which requires or might require an adjustment in any of the rights of the Warrantholder under this Warrant Certificate, including the Exercise Price or the number of Common Shares which may be purchased under this Warrant Certificate, the Corporation shall deliver to the Warrantholder a certificate of the Corporation specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment for which a notice in this subsection 6(4) has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable deliver to the Warrantholder a certificate providing the calculation of such adjustment. The Corporation hereby covenants and agrees that the register of transfers and share transfer books for the Common Shares will be open, and that the Corporation will not take any action which might deprive the Warrantholder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate, during such 21 day period. |
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| 7. | Consolidation and Amalgamation: |
| (1) | In the case of the Corporation entering into a transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation and/or its securities exchanged for the securities of another corporation (herein called a “successor corporation”) whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, the successor corporation shall be bound by all of the provisions hereof including the due and punctual performance of all covenants of the Corporation and forthwith following the occurrence of such event, the successor corporation resulting from such reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise (if not the Corporation or a subsidiary of the Corporation), shall expressly assume, by supplemental certificate satisfactory in form to the Warrantholder, acting reasonably, and executed and delivered to the Warrantholder, the due and punctual performance and observance of this Warrant Certificate to be performed and observed by the Corporation and these securities and the terms set forth in this Warrant certificate will be a valid and binding obligation of the successor corporation entitling the Warrantholder, as against the successor corporation, to all the rights of the Warrantholder under this Warrant Certificate. |
| (2) | Whenever the conditions of Section 7(1) shall have been duly observed and performed the successor corporation shall possess, and from time to time may exercise, each and every right and power of the Corporation under this Warrant Certificate in the name of the Corporation or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Corporation may be done and performed with like force and effect by the like directors or officers of the successor corporation. |
| 8. | No Obligation to Purchase: Nothing herein contained or done pursuant hereto shall obligate the Warrantholder to purchase or pay for or the Corporation to issue any Common Shares except those Common Shares in respect of which the Warrantholder shall have exercised its right to purchase in the manner provided hereunder. |
| 9. | Change; Waiver: Subject to the approval of the CSE (or such other stock exchange on which the Common Shares are listed or posted for trading), the provisions of these Warrants may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to in writing by the Corporation and the Warrantholder. |
| 10. | Further Assurances: The Corporation hereby covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other act, deed and assurance as the Warrantholder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant Certificate. |
| 11. | Time of Essence: Time shall be of the essence of this Warrant Certificate. |
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| 12. | Governing Laws: This Warrant Certificate shall be construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein. |
| 13. | Notices: All notices or other communications to be given under this Warrant Certificate shall be delivered by hand, courier, ordinary prepaid mail, facsimile or by electronic transmission and, if delivered by hand, shall be deemed to have been given on the delivery date, if delivered by ordinary prepaid mail shall be deemed to have been given on the fifth day following the delivery date and, if sent by facsimile or electronic transmission, on the date of transmission if sent before 5:00 p.m. (Toronto time), on a business day or, if sent after 5:00 p.m. (Toronto time), or such day is not a business day, on the first business day following the date of transmission. |
Notices to the Corporation shall be addressed to:
LEEF Brands, Inc.
666 Burrard Street, Suite 2500
Vancouver, BC V6C 2X8
| Attention: | Kevin Wilson, Chief Financial Officer | |
| Email: | [email protected] |
with a copy (which shall not constitute notice) to:
Bennett Jones LLP
3400 One First Canadian Place
P.O. Box 130
Toronto, ON M5X 1A4
| Attention: | Aaron Sonshine, Partner | |
| Email: | [email protected] |
Notices to the Warrantholder shall be addressed to the address of the Warrantholder set out on the face page of this Warrant Certificate.
The Corporation and the Warrantholder may change its address for service by notice in writing to the other of them specifying its new address for service under this Warrant Certificate.
| 14. | Lost Certificate: If this Warrant Certificate or any replacement hereof becomes stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it may in its discretion impose, acting reasonably, issue and deliver a new certificate, in form identical hereto but with appropriate changes, representing any unexercised portion of the subscription rights represented hereby to replace the certificate so stolen, lost, mutilated or destroyed. |
| 15. | Language: The parties hereto acknowledge and confirm that they have requested that this Warrant Certificate as well as all notices and other documents contemplated hereby be drawn up in the English language. Les parties aux présentes reconnaissent et confirment qu’elles ont exigé que la présente convention ainsi que tous les avis et documents qui s’y rattachent soient rédigés en langue anglaise. |
| 16. | Transfer: The Warrants are transferable and the term “Warrantholder” shall mean and include any successor, transferee or assignee of the current or any future Warrantholder. The Warrants may be transferred by the Warrantholder completing and delivering to the Corporation the transfer form attached hereto as Schedule “B” and subject to compliance with all applicable laws including the applicable securities legislation. |
| 17. | Successors and Assigns: This Warrant Certificate shall enure to the benefit of the Warrantholder and the successors and assignees thereof and shall be binding upon the Corporation and the successors thereof. |
| 18. | Canadian Dollars: All references herein to monetary amounts are references to lawful money of Canada. |
| 19. | Electronic Execution: This Warrant Certificate may be executed electronically (i.e., in portable document format (“.pdf”), DocuSign or similar) and may be delivered in original or electronic form, and when so executed and delivered will be deemed to be an original. |
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IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer as of the _____ day of _______________, 2026.
| LEEF BRANDS, INC. | ||
| By: | ||
| Authorized Officer | ||
[Signature Page to Warrant Certificate]
Schedule “A”
SUBSCRIPTION FORM
| TO: | LEEF BRANDS, INC. |
The undersigned hereby subscribes for _______________ common shares (“Common Shares”) of LEEF Brands, Inc. (the “Corporation”) (or such other number of Common Shares or other securities to which such subscription entitles the undersigned in lieu thereof or in addition thereto pursuant to the provisions of the warrant certificate (the “Warrant Certificate”) dated May 7, 2026 issued by the Corporation) at the purchase price of $0.30 per Common Share (or at such other purchase price as may be in effect under the provisions of the Warrant Certificate) and on and subject to the other terms and conditions specified in the Warrant Certificate and hereunder and encloses herewith a certified cheque, bank draft or money order in lawful money of Canada payable to the Corporation or has transmitted same day funds by wire to such account as the Corporation directed the undersigned in payment of the subscription price.
The undersigned hereby represents and warrants to the Corporation that the undersigned (check one):
| ☐ | 1. at the time of exercise of these warrants (i) is not in the United States; (ii) is not a U.S. Person as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”); (iii) is not exercising these warrants on behalf of, or for the account of, a U.S. Person or a person in the United States; (iv) did not acquire these warrants in the United States or 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; (vi) is not requesting delivery in the United States of the Common Shares issuable upon such exercise; and (vii) represents and warrants that the exercise of these warrants and acquisition of the Common Shares occurred in an “offshore transaction” (as defined in Regulation S under the U.S. Securities Act); OR |
| ☐ | 2. is |
(A) (i) present in the United States, (ii) a U.S. Person, (iii) a person exercising these warrants for the account or benefit of a U.S. Person or a person in the United States, or (iv) requesting delivery in the United States of the Common Shares issuable upon such exercise; and
(B) the undersigned has an exemption from the registration requirements of the U.S. Securities Act and all applicable state securities laws available for the exercise of these warrants, and has delivered to the Corporation a written opinion of U.S. counsel, in form and substance reasonably satisfactory to the Corporation, or such other evidence reasonably satisfactory to the Corporation to that effect; OR
| ☐ | 3. is the original purchaser of these warrants and (a) purchased these warrants directly from the Corporation pursuant to the terms and conditions of a subscription agreement for the purchase of units from the Corporation; (b) is exercising these warrants solely for its own account or for the account of the original beneficial owner, if any; (c) each of it and any beneficial owner was on the date these warrants were purchased from the Corporation, and is on the date of exercise of these warrants, an “accredited investor” within the meaning of Rule 501(a) under the U.S. Securities Act; and (d) all the representations, warranties and covenants agreed upon or made by the undersigned during the purchase of these warrants from the Corporation continue to be true and correct as if duly executed as of the date thereof; OR |
| ☐ | 4. is the original purchaser of these warrants and (a) purchased these warrants directly from the Corporation pursuant to the terms and conditions of a subscription agreement for the purchase of units from the Corporation; (b) is exercising these warrants solely for its own account or for the account of the original beneficial owner, if any, and for whose account such original purchaser exercises sole investment direction; (c) each of it and any beneficial owner was on the date these warrants were purchased from the Corporation, and is on the date of exercise of these warrants, a “qualified institutional buyer” (as that term is used in Rule 144A of the U.S. Securities Act) and is also an “accredited investor” that satisfies one or more of the criteria set forth in Rule 501(a) of Regulation D under the U.S. Securities Act; and (d) all the representations, warranties and covenants agreed upon or made by the undersigned, or any beneficial purchaser, as the case may be during the purchase of these warrants from the Corporation continue to be true and correct as if duly executed as of the date thereof. |
“United States” and “U.S. Person” are as defined in Regulation S under the U.S. Securities Act.
The undersigned holder understands that unless Box 1 or 4 above is checked, the certificate representing the Common Shares issued upon exercise of the warrants represented by this Warrant Certificate will bear a legend restricting transfer without registration under the U.S. Securities Act and applicable state securities laws unless an exemption from registration is available (as described in the Warrant Certificate and the subscription documents). If Box 2 above is checked, holders are encouraged to consult with the Corporation in advance to determine that the legal opinion tendered in connection with the exercise will be satisfactory in form and substance to the Corporation.
If Box 2 or Box 3 is checked, any certificate representing the Common Shares issuable upon exercise of these warrants will bear an applicable United States restrictive legend
The undersigned hereby directs that the Common Shares subscribed for be registered and delivered as follows:
| Name in Full | Address | Number of Common Shares | ||
DATED this _____ day of _______________, 20_____.
By: |
Schedule “B”
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto __________________________________________________________________________________(include name and address of the transferee) Warrants exercisable for common shares of LEEF Brands, Inc. (the “Corporation”) registered in the name of the undersigned on the register of the Corporation maintained therefor, and hereby irrevocably appoints _________________________________________ the attorney of the undersigned to transfer the said securities on the books maintained by the Corporation with full power of substitution.
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 to the Corporation; OR | |
| ☐ | (B) | the transfer is being made outside the United States in accordance with Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and in compliance with any applicable local securities laws and regulations and the Warrantholder has provided herewith a declaration for removal of U.S. Legend in such form as the Corporation or its transfer agent may prescribe from time to time; OR | |
| ☐ | (C) | the transfer is being made pursuant to the exemption from the registration requirements of the U.S. Securities Act provided by (i) Rule 144 or (ii) Rule 144A thereunder, and in either case in accordance with applicable state securities laws; OR | |
| ☐ | (D) | the transfer is being made within the United States or to, or for the account or benefit of, U.S. Persons, in accordance with a transaction that does not require registration under the U.S. Securities Act or any applicable state securities law. |
In the case of a transfer in accordance with (C)(i) or (D) above, the Corporation and its transfer agent shall first have received an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation, to such effect. “United States” and “U.S. Person” are used herein as such terms are defined by Regulation S under the U.S. Securities Act.
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DATED this _____ day of _______________, 20_____.
Signature of Transferor guaranteed by:
| Name of Bank or Trust Company: | Signature of Transferor | |
| Address of Transferor |
Instructions:
| 1. | The name of the transferor must correspond with the name written upon the face of this Warrant Certificate in every particular without any changes whatsoever. |
| 2. | The signature of the Transferor on the Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange, and the Warrantholder must pay any applicable transfer taxes or fees. |
| 3. | If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation. |