VRSSF 8-K
Verses AI Inc. (VRSSF)
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)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
|
||||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Not Applicable
(Former name or former address, if changed since last report.)
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: None
Indicate by check mark whether the registrant is an emerging growth company 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 1.01 Entry into a Material Definitive Agreement.
Subscription Agreement
Effective as of October 31, 2025, Verses AI Inc. (the “Company”) entered into a Subscription Agreement (the “Subscription Agreement”) with Sorbie Bornholm LP (“SBLP”) and Sorbie Investments LLP (“SILP”) pursuant to which the Company could receive an aggregate notional amount of CAD$14,000,000, pursuant to the terms of a Sharing Arrangement Transaction, in exchange for the issuance of a total of 2,333,334 units of the Company’s securities at a price of CAD$6.00 per unit (the “Units”). Each Unit consists of one Class A Subordinate Voting Share (a “Common Share”) of the Company and one half of one (1/2) warrant to purchase one Common Share (the “Warrants”).
In addition to the notional amount of CAD$14,000,000 described above, at closing, the Company received CAD$700,000 in exchange for the issuance of an additional 140,000 Units.
The Subscription Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, other obligations of the parties, and termination provisions. The Company intends to use the net proceeds of the sale of Units for working capital and general corporate purposes.
Sharing Agreement
On October 31, 2025, the Company and SBLP also entered into a Sharing Arrangement Transaction (the “Sharing Agreement”) which provided additional terms for the transactions contemplated by the Subscription Agreement and other offering documents. The Sharing Agreement provides that 11 periodic settlement tranches will be made to the Company whereby the notional amount of $1,209,091 will be measured against the initial benchmark price of $7.75 (the “Benchmark Price”). If, at the time of settlement, the 20-day volume-weighted average price (the “Settlement Price”) exceeds the Benchmark Price, the Company will receive more than one-hundred percent of the monthly settlement due, on a proportionate basis, and if, at the time of settlement, the Settlement Price is below the Benchmark Price, the Company will receive less than one-hundred percent of the monthly settlement due, on a proportionate basis. Prior to making any settlement tranche payment, the Subordinate Voting Shares must not be subject to resale restrictions.
Pursuant to the Sharing Agreement, the Benchmark Price was set at CAD$7.75 per Common Share, provided that:
(i) if during the 90 day period following the occurrence of the Knock-in Event (as defined in the Sharing Agreement), the Company makes any placement of its Common Shares at a price per Common Share below CAD$6.00, then at the Company’s discretion (x) the Benchmark Price shall be increased by an amount equal to CAD$6.00 minus the per Common Share price of such placing or (y) the Company shall issue to SBLP a number of additional Common Shares or securities convertible into a number of additional Common Shares that in the determination of SBLP, acting reasonably and in good faith, would have an economic effect in favor of SBLP equivalent to that contemplated by clause (x) above;
(ii) if at any time, the Company executes or completes a backdoor listing or reverse takeover or merger at a price per Common Share below CAD$6.00, then the Benchmark Price shall be increased by an amount equal to CAD$6.00 minus the per Common Share price of such backdoor listing or reverse takeover or merger; and
(iii) the Benchmark Price in effect at any time shall be increased by an amount equal to 50% thereof (which increased price shall then constitute the effective Benchmark Price) following each issuance by the Company of any Common Shares to or through any other party: in an at-the-market or equity line program or other comparable program or by conversion, exercise or exchange of any securities convertible into or exercisable or exchangeable for any shares (but not, for the avoidance of doubt, following the issuance by the Company of any Common Shares through a standard placement or a rights offering or through a share purchase plan or an employee scheme) that in effect provides for the issuance or sale of Common Shares at non-fixed, market related prices (including without limitation any such effect that results from any adjustment provisions or other conditions provided for under the terms of the relevant securities, whether or not a conversion, exercise or exchange has occurred based on such adjustment) (it being acknowledged that the foregoing adjustment shall occur each time such an issuance or sale of Common Shares occurs and that, as a result, multiple adjustments may occur under a program or pursuant to a security).
| -2- |
The Sharing Agreement also contains customary representations, warranties and agreements by the Company, customary conditions to closing, other obligations of the parties, and termination provisions.
Master Agreement
In connection with the Subscription Agreement and the Sharing Agreement, on October 31, 2025, the Company and SBLP entered into a Master Agreement and related schedules (the “Master Agreement”) which provides additional terms for the transactions contemplated by the Subscription Agreement and Sharing Agreement, including obligations of the parties, representations, covenants, events of default, and termination events.
Warrant Certificate
In connection with the foregoing transactions, on November 6, 2025, the Company issued a Warrant Certificate (the “Warrant”) to SILP, which Warrant represents the right to subscribe for 616,667 Common Shares (“Warrant Shares”) until November 6, 2028. The Warrant is exercisable at a price of CAD$7.00 per Warrant Share, subject to adjustment in the event of any Adjustment Event (as defined in the Warrant).
The issuance of the Common Shares, Warrants and Warrant Shares being issued pursuant to the aforementioned agreements is exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 903 of Regulation S promulgated thereunder. None of the Common Shares, Warrants, or Common Shares issuable upon exercise of the Warrants may be offered or sold in the United States absent registration under the U.S. Securities Act and all applicable state securities laws or an applicable exemption from such registration requirements.
The foregoing summaries of the Subscription Agreement, Sharing Agreement, Master Agreement and Warrant, and the other agreements entered into by the parties, are qualified in their entirety by reference to the text of the such agreements, copies of which are attached as exhibits hereto and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Form 8-K is incorporated by reference herein in its entirety.
Item 7.01 Regulation FD Disclosure.
On November 13, 2025, the Company issued a press release regarding the closing of the transactions described above. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information set forth in this Item 7.01 and contained in the press releases furnished as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in any such filing.
| -3- |
Forward-Looking Statements
This Current Report on Form 8-K and the press releases furnished herewith contain “forward-looking information” and “forward-looking statements” (collectively, the “Statements”) within the meaning of applicable securities laws, including, without limitation, statements regarding the anticipated benefits of the transactions and the expected use of proceeds. Although the Company believes that the expectations expressed in the Statements are based on reasonable assumptions, actual results may differ materially.
By their nature, the Statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such Statements. Factors that may cause such differences include, but are not limited to, changes in market conditions, fluctuations in share price, timing of payments, regulatory approvals, and other risks detailed in the Company’s public filings. The Statements speak only as of the date of this report, and the Company undertakes no obligation to update them except as required by applicable law.
Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Company. Although such statements are based on reasonable assumptions of the Company’s management, there can be no assurance that any conclusions or forecasts will prove to be accurate.
Item 9.01 Financial Statements and Exhibits.
Exhibit Number |
Description | |
| 4.1 | Warrant Certificate | |
| 4.2 | Warrant Instrument | |
| 10.1 | Sharing Agreement | |
| 10.2 | Master Agreement | |
| 10.3 | Subscription Agreement | |
| 99.1 | Press Release, dated November 13, 2025 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| -4- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VERSES AI INC. | ||
| Dated: December 4, 2025 | By: | /s/ James Christodoulou |
| Name: | James Christodoulou | |
| Title: | Chief Financial Officer | |
| -5- |
Exhibit 4.1
WARRANT CERTIFICATE
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 7, 2026.
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULES 903 OR 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS; OR (E) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT IN THE CASE OF PARAGRAPH (C) OR (D), SUCH OFFER, SALE OR OTHER TRANSFER MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO AND AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED IS FURNISHED BY COUNSEL TO THE COMPANY. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.
THESE WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE SHARES ISSUABLE UPON EXERCISE OF THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.
THE
WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE AFTER
4:00 PM (EASTERN TIME) ON NOVEMBER 6, 2028
VERSES AI INC
(the “Company”)
Warrant No. 2026-11-02
Issue Date: November 6, 2025
Issued under the authority of a resolution of the board of directors of the Company passed on the November 3, 2025 (the “Instrument”).
THIS IS TO CERTIFY that SORBIE INVESTMENTS LLP of 9th Floor, 107 Cheapside, London EC2V 6DN United Kingdom (the “Holder”) is the registered holder of a Warrant to subscribe for 616,667 Warrant Shares at any time on or before 4:00 p.m.( Eastern time) on November 6, 2028 (the “Expiry Date”) at a price of C$7.00 per Warrant Share, subject to the conditions endorsed on this certificate (the “Conditions”). The Warrant is issued pursuant to, and in accordance with, the Instrument and is subject to the Conditions.
After the Expiry Date, all rights under the Warrants will wholly cease and terminate, and the Warrants will thereupon be void and of no effect.
[the remainder of the page is left intentionally blank]
IN WITNESS this Certificate has been executed and delivered as a deed on the date first below written.
Dated 6th day of November 2025
| EXECUTED as a DEED by | ) | |
| VERSES AI INC | ) | |
| acting by | ) | |
| Gabriel Rene | ) | /s/ Gabriel Rene |
| in the presence of: | ||
| Witness signature: | ||
| Name (print): | ||
| Address: | ||
| Occupation: |
NOTES:
| 1. | Subject to applicable Canadian securities law, the Warrants are transferable. |
| 2. | No transfer of any part of the Warrant represented by this Certificate will be registered unless it is accompanied by this Certificate and delivered to the Company’s head office. |
| 3. | Where the context so admits, terms defined in the Conditions shall have the same meanings when used herein. |
SCHEDULE 1
CONDITIONS
| 1. | Interpretation |
| 1.1 | In these Conditions, unless the context otherwise requires, the following expressions have the following meanings: |
“Adjustment Event” means any issue of Shares at a price less than the Subscription Price, any reduction of the Company’s share capital, share premium account or capital redemption reserve involving the repayment of money to shareholders of the Company, or the entering into any scheme of arrangement requiring the consent of the court or the purchase or the redemption of any share capital or the reduction of any uncalled liability in respect thereof or the cancellation of any unissued shares and every issue by way of capitalisation of profits or reserves and every rights issue, and the consolidation, subdivision or reduction of capital or other reconstruction or adjustment relating to the equity share capital and any amalgamation or reconstruction affecting the equity share capital (or any shares, stocks or securities derived from them) of the Company or any other equity-like instrument such as exploding loans or other synthetic instruments designed to disenfranchise or otherwise give participating investors a preferential return ahead of non-participating equity investors and which adversely impacts the value of the equity shares in the Company;
“Affiliates” means in respect of a company, any business entity from time to time directly or indirectly controlling, controlled by, or under common control with, a shareholder of such a company;
“Board” means the board of Directors or any duly appointed committee of it for the time being;
“Business Day” means a day, except a Saturday or Sunday, on which banks are generally open for business in the City of London and Vancouver, British Columbia;
“Certificates” means the certificates constituting the Warrants substantially in the form set out in Schedule 1 and “Certificate” shall mean any one of them;
“Conditions” means the conditions subject to, and with the benefit of, which the Warrants shall be held, as set out in this Schedule;
“Constitution” means the Company’s constating documents, including the Company’s Notice of Articles and Articles, (as the same may be amended from time to time);
“Directors” means the directors of the Company from time to time;
“Encumbrances” means any mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third party right or interest, any other encumbrance of any kind, and any other type of preferential arrangement (including, without limitation, title transfer and retention arrangements) having a similar effect;
“Exercise Notice” means the completed notice of exercise of the Warrant substantially in the form set out in Schedule 3;
“Exercise Period” means the period commencing on the Issue Date and ending on the third anniversary of the Issue Date;
“Group” means the Company, its subsidiaries, any holding company of the Company and any subsidiary of any such holding company from time to time and “Group Company” shall be construed accordingly;
“Holders” means the persons from time to time entered in the Register as the holders of the Warrants and including their personal representatives;
“Holder Majority” means one or more Holders who hold Warrants conferring not less than 75% of the Subscription Rights then outstanding (measured in terms of the number of Warrant Shares which would fall to be issued if such Subscription Rights were all simultaneously exercised in full);
“Instrument” means the instrument constituting the Warrants (including any Schedule or annexure to it and any document in agreed form);
“Issue Date” means the date of issue by the Company to the Holder of the relevant Warrants;
“Recognised Investment Exchange” means a recognised investment exchange (within the meaning thereof given for the purposes of section 285 of the UK Financial Services and Markets Act 2000, which shall include the Canadian Securities Exchange);
“Register” means the register of persons for the time being entitled to the benefit of the Warrants to be maintained pursuant to the Conditions;
“Shares” means all shares in the capital of the Company from time to time, of whatever class, each having the rights and being subject to the restrictions as set out in the Constitution;
“Subscription Price” means C$7.00 per Warrant Share;
“Subscription Rights” means the rights conferred by a Warrant and in accordance with the provisions of clause 3 of the Instrument;
“Warrant” means the right granted to a Holder to subscribe for such number of Warrant Shares as constituted by the Instrument and these Conditions and “Warrants” shall be the aggregate rights granted to all Holders for the time being;
“Warrant Shares” means the common shares in the capital of the Company to be issued on the exercise of any Subscription Rights; and
“Winding-Up” means any of the following events to have commenced: (i) if an order is made or an effective resolution passed for the winding up or dissolution of any Group Company (other than a winding up for the purposes of amalgamation or reconstruction) whether voluntarily or involuntarily; or (ii) if an encumbrancer takes possession or an administrator, receiver or administrative receiver is appointed over the whole or a material part of the assets or undertaking of any Group Company (and for this purpose a part of the assets or undertaking shall be material if the value thereof exceeds 10% of the value of the gross assets of the Group all as determined by reference to the latest published consolidated audited accounts of the Company subject to any adjustments as the Company’s auditors for the time being (acting as experts and not as arbitrators) may consider necessary); or (iii) if the Company stops payment of its debts or ceases or threatens to cease to carry on its business or the greater part of its business; or (iv) if the Company is unable to pay its debts as and when they fall due; or (v) the passing of a resolution for a solvent winding-up of the Company.
In these Conditions (unless the context requires otherwise):
| (a) | this Schedule shall also be deemed to include the Instrument and all other Schedules and words and expressions used in the Instrument and each of the other Schedules shall have the same meaning as set out in this Schedule; |
| (b) | references to clauses, Schedules, Conditions are references to clauses, schedules and Conditions of the Instrument and all Schedules; |
| (c) | words denoting persons shall include corporations and firms; |
| (d) | references to any statute or statutory provision include a reference to that statute or statutory provision as from time to time amended, extended or re-enacted; and |
| (e) | clauses, Condition headings and the contents page are for convenience only and shall not affect the interpretation or construction of this Schedule. |
| 2. | Warrants |
| 2.1 | The Warrants shall be issued subject to the terms of the Instrument, the Constitution and these Conditions, which are binding upon the Company and each Holder. |
| 2.2 | The Warrants shall be issued free from all Encumbrances in registered form, the Company shall treat each such Holder as the absolute owner of the Warrants issued to him and accordingly the Company shall not be bound to recognise any equitable or other claim to or interest in such Warrants on the part of any other person. |
| 2.3 | Each Holder shall be entitled to a Certificate that shall be substantially in the form set out in Schedule 1. |
| 2.4 | The Instrument and Conditions shall, subject to its terms, enure for the benefit of all Holders, each of whom may sue for the performance or observance of the provisions of these Conditions and so far as his holding of the Warrants is concerned. |
| 3. | Exercise of Warrants |
| 3.1 | Subject to Condition 3.2, the Subscription Rights conferred by a Warrant may be exercised in whole or in part only by the relevant Holder at any time during the Exercise Period by the Holder giving to the Company not less than 10 Business Days’ notice in writing by the Holder completing the Exercise Notice (and which shall state the date of completion or shall be such other date as agreed between the Holder and the Company). |
| 3.2 | No exercise of Subscription Rights shall be exercised in the event that a Holder, upon any exercise of Subscription Rights, shall become a holder of a total number of Shares which then aggregated with any Shares beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Shares would be aggregated with the Holder’s exceeds 9.99% of the total number of issued and outstanding Shares. For such purposes, beneficial ownership shall be determined in accordance with the Securities Act (British Columbia) and the national instruments, policy statements, rules and regulations promulgated by the British Columbia Securities Commission. Each delivery of a Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this Condition. This Condition shall not restrict the number of Shares which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a merger or other business combination or reclassification involving the Company. This restriction may not be waived. |
| 3.3 | Each Holder shall have the right at any time within the Exercise Period to subscribe for the number of Warrant Shares for which he holds subscription rights at the Subscription Price for each Warrant Share to be issued pursuant to the exercise of the Subscription Rights. |
| 3.4 | On or before completion of the exercise of the Subscription Rights, the Holder shall lodge with the Company at its head office for the time being the Holder’s Certificate together with a remittance for the aggregate Subscription Price payable for the Warrant Shares in respect of which Subscription Rights are to be exercised. |
| 3.5 | The Company undertakes that, subject to receipt of the Subscription Price for the Warrant Shares in respect of which Subscription Rights are to be exercised upon completion of the exercise of the Warrant(s) by the Holder(s) in accordance with this Condition 3 it shall allot and issue to the Holder(s) the Warrant Shares constituted by such Warrant(s) free from all Encumbrances, shall enter the name of the Holder(s) in the register of shareholders of the Company in respect of the number of Warrant Shares issued to it, and deliver to the Holder(s) a Certificate in respect of such Warrant Shares on the date of issue. |
| 3.6 | The Warrant Shares issued on exercise of the Subscription Rights shall rank pari passu with the other Shares of the same class as the Warrant Shares so issued (and shall benefit from all of the same rights attached to those Shares including, but without limitation, as to any liquidation preference) except that the Warrant Shares so allotted will not rank for any dividend or other distribution which has previously been announced or declared if the record date for such dividend or other distribution is prior to the issue date of the relevant Warrant Shares. |
| 3.7 | For the avoidance of doubt, the Subscription Rights may be exercised by any Holder at any time and on any one or more occasions during the Exercise Period, and any Exercise Notice or other notice given by a Holder to the Company in relation to the exercise of Subscription Rights may be withdrawn by a Holder provided that no such notice may be withdrawn after the issue of Warrant Shares resulting from the exercise of the Subscription Rights. |
| 3.8 | If during the Exercise Period a Winding-Up occurs each Holder shall, in respect of its unexercised Subscription Rights, be treated as if it had fully exercised its outstanding Subscription Rights on the day immediately preceding the happening of the Winding-Up and shall receive out of the surplus assets of the Company available in the liquidation such sum as it would have received if it had been registered as the holder of the number of fully paid Warrant Shares for which it is entitled to subscribe after the deduction from such sum of a sum equal to the Subscription Price in respect of those Warrant Shares. |
| 3.9 | To the extent that a Holder is entitled to receive on the exercise or partial exercise thereof a fraction of a share, such right may be exercised in respect of such fraction only in combination with another Warrant which in the aggregate will entitle the Holder to receive a whole number of shares. |
| 3.10 | Any certificates representing Warrant Shares issued upon exercise of the Warrants and any Warrant Shares issued in exchange for such Warrant Shares, will bear the following legend: |
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF VERSES AI INC. (THE “ISSUER”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULES 903 OR 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF PARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.”
| 3.11 | In addition to the legend required in Section 3.10 above, any certificates representing Warrant Shares issued upon exercise of the Warrants prior to the date that is four months and one day after the date of issue of the Warrants, and any Warrant Shares issued in exchange for such Warrant Shares, will bear the following legend: |
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE DATE OF ISSUE OF THE WARRANTS.”
provided that at any time subsequent to the date which is four months and one day after the date of issue of the Warrants, any certificate representing any such Warrant Shares may be exchanged for a certificate bearing no such legend.
| 4. | Adjustment Events |
| 4.1 | If any Adjustment Event shall take place after the date of this Instrument but prior to completion of the exercise of the Warrant, then all the Warrant Shares which shall derive (whether directly or indirectly) from the Warrant shall be deemed to be subject to such Adjustment Event (assuming for the purposes of calculating the adjustment to be made that the warrant had been exercised in full immediately prior to such Adjustment Event) so that references in this Instrument to the Warrant Shares and the Subscription Price shall be appropriately adjusted to take account of such Adjustment Event. For the avoidance of doubt, the issue of shares pursuant to this Warrant Instrument shall not trigger an Adjustment Event. |
| 4.2 | Any dispute as to the Adjustment Event and the adjustment to the Warrant Shares and the Subscription Price (if any) shall be referred to the auditors of the Company without delay by the Company (and at the Company’s cost), who shall act as experts and not as arbitrators and their certificate as to the Adjustment Event, Warrant Shares and the Subscription Price (if any) shall be final and binding on the parties. |
| 5. | Company undertakings |
| 5.1 | Save with the consent of a Holder Majority, the Company agrees and undertakes to each Holder to procure (so far as it is legally able) that until the earlier of completion of the exercise of the Warrants in full and the expiry of the Exercise Period, it will: |
| (a) | procure that at all times its directors have all necessary authority to allot and issue sufficient share capital as may be required to satisfy in full all Subscription Rights remaining exercisable; |
| (b) | procure that at all times its directors have all necessary authority to allot and issue sufficient share capital as may be required to satisfy in full all Subscription Rights remaining exercisable without first having to offer the same to any existing members, whether pursuant to the Constitution or otherwise; |
| (c) | give immediate notice in writing, with copies of all relevant documentation, of all communications generally with, and resolutions of, the members or creditors of the Company as a whole (or any class of creditors), including without limitation notices convening and minutes of meetings and circulars; and |
| (d) | upon or as soon as possible after the issue of Warrant Shares apply to the Canadian Securities Exchange upon which the Warrant Shares are listed, on behalf of the Holder for permission to deal in or for listing or quotation for such Warrant Shares or any of the shares into which the Warrant Shares are convertible (as the case may be) and shall use its reasonable endeavours to secure such permission, listing or quotation not later than 30 Business Days after the relevant subscription date. |
| 5.2 | Except where otherwise provided under Condition 3, if any offer or invitation is made to any holders of any class of Shares to acquire any of their Shares by way of purchase or pursuant to a scheme of arrangement or if any proposal or arrangement is put to any holders of any class of Shares while the Warrants remain to be exercised in full, the Company shall use its reasonable endeavours to procure that such offer, invitation, proposal or arrangement is made or put (as the case may be) to the Holders and shall notify the Holders in writing in sufficient time (being not less than 10 Business Days’ notice of the happening of such event) to enable each Holder to fully exercise its Subscription Rights and to enable each Holder, at its discretion, to accept such offer or invitation or participate in such proposal or arrangement. |
| 5.3 | The Holders shall be entitled to exercise the Subscription Rights conditionally following receipt by them of any offer, invitation, proposal or arrangement made pursuant to Condition 5.2 or following receipt by such Holders of the notice of sale or transfer referred to in Condition 5.2 by delivering a notice (the “Conditional Warrant Notice”) to the Company specifying the number of Warrant Shares in respect of which the Subscription Rights may be exercised to be allotted and indicating that such election to exercise is conditional. |
| 5.4 | Except where otherwise provided under Condition 3, if, on a date (or by reference to a record date) on or before the expiry of the Exercise Period, the Company makes any offer or invitation by way of a rights issue or other pre-emptive offer to the holders of the Shares, or if any offer or invitation is made to such holders otherwise than by the Company, then the Company shall notify the Holders in writing in sufficient time (being not less than 10 Business Days’ notice of the happening of such event) to enable the Holders to fully exercise their Subscription Rights and to enable the Holders, at their discretion, to participate in such offer or invitation. |
| 5.5 | Each Holder shall be entitled to exercise the Subscription Rights conditionally following receipt by it of any offer, invitation, proposal or arrangement made pursuant to Condition 5.4 or following receipt by such Holder of the aforesaid notice of sale or transfer referred to in Condition 5.4 by delivering a notice (the “Conditional Rights Issue Notice”) to the Company specifying the number of Warrant Shares in respect of which the Subscription Rights may be exercised to be allotted and indicating that such election to exercise is conditional. |
| 5.6 | Completion (if it occurs) shall then take place on or prior to the actual date of sale or transfer provided that if the sale or transfer pursuant to Condition 5.2 or the offer or invitation pursuant to Condition 5.4 (as the case may be) does not occur within 60 days of the date of the Conditional Warrant Notice or Conditional Rights Issue Notice (as the case may be), it shall be deemed to be withdrawn and the Warrants and the Subscription Rights shall remain in force and shall be available for subsequent exercise by the Holder at any time during the Exercise Period. |
| 5.7 | Nothing herein contained will prevent the Company from issuing any other securities or rights with respect thereto during the period within which a Warrant is exercisable, upon such terms as the Company may deem appropriate. |
| 6. | Company warranties |
| 6.1 | The Company is duly authorised to enter into the Instrument and the obligations of the Company under the Instrument constitute and impose valid legal and binding obligations on the Company fully enforceable in accordance with its terms. |
| 6.2 | The Company is duly incorporated and validly existing in all respects under the laws of Province of British Columbia and has the power and authority to own its assets and to carry on its business as it is now being conducted. |
| 7. | Financial Information |
The Company shall send to each Holder:
| (a) | a copy of its annual audited financial statements and related management’s discussion and analysis upon the public filing of such documents on the System for Electronic Document Analysis and Retrieval (SEDAR) in accordance with applicable Canadian securities laws; and |
| (b) | copies of every notice of meeting and management information circular at the same time they are issued to a holder of Shares and publicly filed on SEDAR, in accordance with applicable Canadian securities laws. |
| 8. | Certificates |
Every Holder will be entitled to a Certificate stating the number of Warrants held by him and every such Certificate shall refer to the Instrument and shall bear a serial number. Joint holders of a Warrant will be entitled only to one Certificate in respect of the Warrant held by them jointly, which will be delivered to the first-named of joint holders.
| 9. | Lost Certificates |
| 9.1 | If a Certificate is defaced, lost, stolen or destroyed it will be replaced at the registered office of the Company for the time being upon payment by the claimant of such reasonable costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Company may reasonably require. |
| 9.2 | Where a Certificate is required for delivery on any exercise of the Subscription Rights or on any transfer of the Warrants, and the Holder is unable to produce such Certificate, the Directors may waive production of any such Certificate upon production to them of satisfactory evidence of the loss or destruction of such Certificate together with such indemnity as they may require. |
| 10. | Register |
| 10.1 | The Company shall at all times cause a register to be maintained at its registered office showing the name and address of each Holder, the Warrants held by the Holder, the Certificate numbers and the date of issue of the Warrants. |
| 10.2 | Any change in the name or address of any Holder shall be notified to the Company, which shall cause the Register to be altered accordingly. Each Holder (or any person authorised by such Holder) shall be at liberty at all reasonable times during office hours to inspect the Register and to take copies of or extracts from the same of any part thereof. |
| 11. | Title to Warrants |
| 11.1 | The Company will recognise the registered Holder as the sole absolute owner of the Warrants and (save as may be required by law) the Company shall not be bound to take notice of or to see to the execution of any trust, whether express, implied or constructive, to which the Warrants may be subject, and the receipt by such Holder of the shares on exercise of the relevant Warrants shall be a good discharge to the Company notwithstanding any notice it may have whether express or otherwise of the right, title, interest or claim of any other person to or in such Warrants. No notice of any trust, express, implied or constructive, shall (except as provided by statute or as required by an order of a court of competent jurisdiction) be entered on the register in respect of any Warrants. |
| 11.2 | The Company will not be bound to take notice of or to see the execution of any trust whether express, implied or constructive to which the Warrants may be subject. |
| 12. | Transfers |
| 12.1 | The benefit of the Warrants shall enure for the benefit of the successors in title and personal representatives of the Holders. |
| 12.2 | Subject to Section 12.3, Warrants and Subscription Rights shall be freely transferable by the Holder on the terms and conditions contained herein and by the Holder completing and submitting to the Company a completed and duly executed Warrant Transfer Form attached here to as Schedule 4. |
| 12.3 | The Warrants, Subscription Rights and Warrant Shares received by the Holder upon the exercise of the Warrants may be subject to a hold period as determined by the Securities Act (British Columbia) and/or other applicable securities laws. |
| 13. | Meetings |
| 13.1 | The Company may (and shall at the written request of a Holder Majority) at any time convene a meeting of the Holders by not less than 10 Business Days’ notice in writing of it specifying the place, day and hour of the meeting and the terms of any resolution to be proposed at it to the Holders and such meeting shall have power by a resolution passed by a Holder Majority to sanction (subject to the consent of the Company) any modification, abrogation, consent or compromise or any arrangement in respect of the rights of the Holders against the Company, and to assent to any modification, abrogation, consent or compromise or any arrangement of these Conditions. No votes may be taken on a poll. |
| 13.2 | The non-receipt by any Holder of or the accidental omission to give to any Holder notice of any such meeting shall not invalidate the proceedings at it. |
| 13.3 | A resolution passed at a meeting of the Holders duly convened and held in accordance with the Conditions shall be binding upon each of the Holders whether present or not present at such meeting. |
| 13.4 | A resolution signed by Holders constituting a Holder Majority shall (subject to the consent of the Company) be as valid and effectual as if it had been passed at a meeting of the Holders duly convened and held and such resolution in writing may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Holders. |
| 13.5 | The quorum at any meeting shall be a Holder Majority and such quorate number shall have the power to pass any resolution. If within fifteen minutes from the time being appointed for any meeting a quorum is not present the meeting shall stand adjourned to such day (not being less than 5 or more than 20 Business Days after the date of the meeting from which such adjournment takes place) and time and place as the Chairman of the Meeting may determine and at the adjourned meeting the Holders present shall form a quorum. Notice of an adjourned meeting shall be given in like manner as for the original meeting and such notice shall state that the Holders present at such meeting whatever the number of the Warrants held or presented by them will constitute a quorum for all purposes. |
| 13.6 | For purposes of this Condition, reference to “Holders” shall be deemed to include reference to a single Holder and (subject to the other provisions of this Condition) one person present in person or by proxy shall constitute a quorum. |
| 13.7 | After the Issue Date, the Holders and the Company (as applicable) shall execute such documents and take such steps as may reasonably be required to fulfil the provisions of and to give to each Holder the full benefit intended by the Instrument and Conditions. |
| 14. | Notices |
| 14.1 | Every Holder shall notify the Company in writing of an address in the United Kingdom to which notices can be sent. |
| 14.2 | Every Holder shall be bound by every notice in respect of such Warrants which prior to his name and address being entered on the register of Warrants shall have been duly given to the person from whom he derives his title to such Warrants. |
| 14.3 | Any notice to a Party under this Deed shall be in writing signed by or on behalf of the party giving it and shall be served on a party if given personally, left at or sent by prepaid first class post or prepaid recorded delivery or special delivery or email transmission to the address of the other Party set out in the register of Warrants (or email address for the time being shown in the Register) or in the case of the Company at its registered office (or email address for the time being shown in the Register or otherwise notified for such purpose). A notice shall be deemed to have been served at the time of delivery if delivered personally, 48 hours after posting, or 2 hours after transmission if served by email provided that where the deemed time of service is after 6 p.m. on a Business Day or on a day which is not a Business Day, the notice shall be served at 9 a.m. on the next Business Day. The deemed service provisions of this Condition shall not apply to notices served by post if there is a national or local disruption of postal services that affects the giving of the notice. |
| 14.4 | In proving service it will be sufficient to prove: |
| (a) | in the case of personal service, that it was handed to the recipient or delivered to or left in an appropriate place for receipt of letters at its address; |
| (b) | in the case of a letter sent by post, that the letter was properly addressed, stamped and posted; |
| (c) | in the case of email, that it was properly addressed and despatched to the email address of the recipient. |
| 14.5 | Where a Warrant is held by joint Holders, it shall be sufficient for the Company to have sent notice to the first name appearing in the register of Warrants for such Holders on behalf of all such Holders, and any notice required to be given by the Company to the Holders shall be given to such persons who are entered in the register of Warrants as such Holders and such service shall for all purposes of these presents be deemed duly served and sufficient service of such notice or document on his or her executors or administrators and all persons (if any) jointly interested with him in any such Warrant. |
| 15. | General |
| 15.1 | If, at any time, any term or provision in these Conditions shall be held to be illegal, invalid or unenforceable, in whole or in part, under any rule of law or enactment, such term or provision or part shall, to that extent, be deemed not to form part of these Conditions, but the enforceability of the remainder of these Conditions shall not be affected. |
| 15.2 | These Conditions and the rights and obligations of the Company and the Holders shall be subject to the exclusive jurisdiction of the courts of England and shall be governed by and construed in accordance with English law (including as to any non-contractual disputes or claims). |
SCHEDULE 2
EXERCISE NOTICE
| To: | VERSES AI INC |
| 1111 West Hastings Street, | |
| 15th Floor, | |
| Vancouver, British Columbia | |
| Canada | |
| V6E 2J3 | |
| Attn: Chief Financial Officer |
[DATE]
●, being the registered holder of [a] Warrant[s], give[s] notice to the Company of [its][his] desire to exercise [its] Subscription Rights to subscribe for the number of Warrant Shares at the aggregate Subscription Price both as set out below, in accordance with the provisions of the Instrument and the Conditions. [I][We] enclose [my] [our] payment with this Exercise Notice together with our Warrant Certificate.
Number of Warrant Shares: ●
Aggregate Subscription Price: C$●
Name of proposed allottee: ●
Address of proposed allottee: ●
Completion date: ● 20●● (if not on or immediately prior to an Exit)
The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):
[ ] (A) the undersigned holder at the time of exercise of the Warrants (a) is not in the United States, (b) is not a “U.S. Person” (as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), (c) is not exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, (d) did not execute or deliver this exercise form in the United States, and (e) delivery of the Warrant Shares will not be to an address in the United States; OR
[ ] (B) the undersigned holder has delivered to the Company and the Company’s transfer agent an opinion of counsel of recognized standing (which will not be sufficient unless it is in form and substance reasonably satisfactory to the Company) or such other evidence reasonably satisfactory to the Company to the effect that with respect to the Warrant Shares to be delivered upon exercise of the Warrants, the issuance of such securities has been registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration requirements is available.
Note: The undersigned understands that the certificate or DRS representing the Warrant Shares 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.
Note: Certificates or DRS representing Warrant Shares will not be registered or delivered to an address in the United States unless Box B above is checked.
Note. For greater certainty, Box A may be checked by an undersigned that is a discretionary or similar account (other than an estate or trust) that is excluded from the definition of “U.S. Person” pursuant to Rule 902(k)(2)(i) of Regulation S under the U.S. Securities Act, and the Warrants are held on behalf of a person that is not a U.S. Person by a dealer or other professional fiduciary organized, incorporated, or (if an individual) resident in the United States.
Note: If Box B is checked, any opinion tendered must be in form and substance reasonably satisfactory to the Company. Holders planning to deliver an opinion of counsel in connection with the exercise of Warrants should contact the Company in advance to determine whether any opinions to be tendered will be acceptable to the Company.
Please issue the Warrant Shares set out in this Exercise Notice. [I][We] agree to accept the Warrant Shares in accordance with the rights attaching to them as set out in the Company’s Constitution.
Please enter the name of the proposed allottee (as stated above) in the register of members of the Company and arrange for a Certificate for the Warrant Shares and a certificate for the balance of the Subscription Rights to be sent to the address stated above.
| Signature(s) | |
| Print name: | |
| Address: |
Notes:
Payments to the Company should be in C$ by wire transfer to the Company’s bank account, details of which will be supplied to the Holder upon request by him/it.
SCHEDULE 3
WARRANT TRANSFER FORM
| TO: | VERSES AI INC. |
| 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia Canada V6E 2J3 | |
| Attn: Chief Financial Officer |
FOR VALUE RECEIVED, the undersigned holder (the “Transferor”) of the Warrants represented by Warrant Certificate No. ___________ hereby sells, assigns and transfers to _______________________________ (the “Transferee”), ________________ Warrants of VERSES AI Inc (the “Company”) representing the right to purchase _______ common shares of the Company on the terms set for in such Warrant certificate registered in the name of the undersigned on the records of the Company and irrevocably appoints ________________ the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.
The undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
☐ (A) the transfer is being made only to the Company;
☐ (B) the transfer is being made outside the United States in accordance with Rule 904 of 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, or
☐ (C) the transfer is being made to, or for the account or benefit of, a U.S. Person or a person in the United States, in accordance with a transaction that does not require registration under the U.S. Securities Act or any applicable U.S. state securities laws, and the undersigned has furnished to the Company an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company to such effect.
The undersigned hereby directs that the Warrants hereby transferred be issued and delivered as follows:
| NAME IN FULL | ADDRESS | NUMBER OF WARRANTS | ||
DATED this _________ day of _______________, 202_____.
__________________________________
Signature of Warrant Holder
INSTRUCTIONS FOR TRANSFER
Signature of the Warrant Holder must be the signature of the person appearing on the face of this Warrant Certificate.
If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Company.
The Warrants will only be transferable in accordance with applicable laws.
Exhibit 4.2
DATED
WARRANT INSTRUMENT CONSTITUTING UP TO 1,236,667
WARRANTS
THIS INSTRUMENT is entered into by way of a deed poll on
BY
VERSES AI INC., a company incorporated under the laws of the Province of British Columbia and having its head office at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3 (the “Company”).
BY a resolution of its board of directors passed on 31 October 2025 the Company has determined to create and issue warrants to subscribe for up to Warrant Shares (as defined below) and as adjusted (if appropriate) by Condition 4 and on such other terms and conditions set out in this Instrument.
THE COMPANY DECLARES as follows:
| 1. | DEFINITIONS AND INTERPRETATION |
In this Instrument, unless the context otherwise requires, the definitions and interpretations set out in the Conditions (at Schedule 2) of this Instrument shall apply as if the same were set out herein in full.
| 2. | CONDITIONS |
The applicable Conditions to be attached to, or endorsed on, the Certificates contained in Schedule 2 shall have effect in the same manner as if such conditions and provisions were set forth in this Instrument.
| 3. | WARRANTS |
| 3.1 | This Instrument constitutes Warrants which shall, in aggregate, confer the right, exercisable on the terms and subject to the Conditions, to subscribe in cash at the Subscription Price for such number of Warrant Shares in respect of which all rights of all Holders are capable of being exercised and as adjusted (if appropriate) by Condition 4. The maximum number of Warrants which may be issued under this Instrument is limited to 1,236,667. The Warrants may be issued in multiple tranches. |
| 3.2 | The Warrants shall be held subject to, and with the benefit of, the Conditions, which shall be binding on the Company and the Holders and all persons claiming through them respectively. |
| 3.3 | The Company hereby covenants with each of the Holders duly to perform and observe the obligations on its part contained in this Instrument and the Conditions. |
| 3.4 | This Instrument and the Schedules shall, subject to its terms, enure for the benefit of all Holders, each of whom may sue for the performance or observance of the provisions of this Instrument so far as his holding of the Warrants is concerned. |
| 4. | MONEYS |
All sums due in respect of the Warrants shall be payable to the Company in the manner set out in the Conditions.
| 5. | COPIES OF INSTRUMENT |
A copy of this Instrument shall be supplied free of charge to each Holder upon receipt by the Company of a written request from such Holder.
| 6. | TRANSFER |
The Warrants shall be transferable in accordance with, and pursuant to, Condition 12.
| 7. | REGISTER |
The Company shall maintain a register of Warrants and the persons entitled to them.
| 8. | GENERAL |
| 8.1 | This Instrument sets out the entire terms and conditions in connection with the Warrants. |
| 8.2 | If, at any time, any term or provision in this Instrument (including the Schedules) shall be held to be illegal, invalid or unenforceable, in whole or in part, under any rule of law or enactment, such term or provision or part shall, to that extent, be deemed not to form part of this Instrument, but the enforceability of the remainder of this Instrument shall not be affected. |
| 8.3 | The provisions of this Instrument and the Conditions and the rights of the Holders will be subject to modifications, abrogation or compromise in any respect with the sanction of a Holder Majority and with the written consent of the Company in accordance with Condition 13. The Company may, without such sanction, make any amendment to the provisions of the Warrants, which in the opinion of the Company’s auditors, is not prejudicial to the interests of Holders that is of a formal, minor or technical nature or to correct a manifest error. |
| 8.4 | This Instrument and the rights and obligations of the Company and the Holders shall be subject to the exclusive jurisdiction of the courts of England and shall be governed by and construed in accordance with English law (including as to any non-contractual disputes or claims). |
THIS INSTRUMENT has been executed and delivered as a deed poll by the Company on the date inserted at the head of page 1.
| EXECUTED AS A DEED by | ) | |
| VERSES AI INC | ) | |
| acting by | ) | |
| Gabriel René, a Director, | ) | /s/ Gabriel René |
| and | ||
| James Hendrickson, a Director | ) | /s/ James Hendrickson |
SCHEDULE 1
FORM OF CERTIFICATE
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE ●, 2025.
THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE AFTER 4:00 PM (EASTERN TIME) ON ●, 2028
VERSES AI INC
(the “Company”)
Warrant No. [ ]
Issue Date: [ ] 2025
Issued under the authority of a resolution of the board of directors of the Company passed on the [ ] 2025 (the “Instrument”).
THIS IS TO CERTIFY that of (the “Holder”) is the registered holder of a Warrant to subscribe for [ ] Warrant Shares at any time on or before 4:00 p.m.( Eastern time) on ●, 2028 (the “Expiry Date”) at a price of C$7.00 per Warrant Share, subject to the conditions endorsed on this certificate (the “Conditions”). The Warrant is issued pursuant to, and in accordance with, the Instrument and is subject to the Conditions.
After the Expiry Date, all rights under the Warrants will wholly cease and terminate, and the Warrants will thereupon be void and of no effect.
IN WITNESS this Certificate has been executed and delivered as a deed on the date first below written.
| Dated day of 2025 | ||
| EXECUTED as a DEED by | ) | |
| VERSES AI INC | ) | |
| acting by | ) | |
| [ ] | ) | |
| in the presence of: | ||
| Witness signature: | ||
| Name (print): |
| Address: | |
| Occupation: |
NOTES:
| 1. | Subject to applicable Canadian securities law, the Warrants are transferable. |
| 2. | No transfer of any part of the Warrant represented by this Certificate will be registered unless it is accompanied by this Certificate and delivered to the Company’s head office. |
| 3. | Where the context so admits, terms defined in the Conditions shall have the same meanings when used herein. |
SCHEDULE 2
CONDITIONS
| 1. | Interpretation |
| 1.1 | In these Conditions, unless the context otherwise requires, the following expressions have the following meanings: |
“Adjustment Event” means any issue of Shares at a price less than the Subscription Price, any reduction of the Company’s share capital, share premium account or capital redemption reserve involving the repayment of money to shareholders of the Company, or the entering into any scheme of arrangement requiring the consent of the court or the purchase or the redemption of any share capital or the reduction of any uncalled liability in respect thereof or the cancellation of any unissued shares and every issue by way of capitalisation of profits or reserves and every rights issue, and the consolidation, subdivision or reduction of capital or other reconstruction or adjustment relating to the equity share capital and any amalgamation or reconstruction affecting the equity share capital (or any shares, stocks or securities derived from them) of the Company or any other equity-like instrument such as exploding loans or other synthetic instruments designed to disenfranchise or otherwise give participating investors a preferential return ahead of non-participating equity investors and which adversely impacts the value of the equity shares in the Company;
“Affiliates” means in respect of a company, any business entity from time to time directly or indirectly controlling, controlled by, or under common control with, a shareholder of such a company;
“Board” means the board of Directors or any duly appointed committee of it for the time being;
“Business Day” means a day, except a Saturday or Sunday, on which banks are generally open for business in the City of London and Vancouver, British Columbia;
“Certificates” means the certificates constituting the Warrants substantially in the form set out in Schedule 1 and “Certificate” shall mean any one of them;
“Conditions” means the conditions subject to, and with the benefit of, which the Warrants shall be held, as set out in this Schedule;
“Constitution” means the Company’s constating documents, including the Company’s Notice of Articles and Articles, (as the same may be amended from time to time);
“Directors” means the directors of the Company from time to time;
“Encumbrances” means any mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third party right or interest, any other encumbrance of any kind, and any other type of preferential arrangement (including, without limitation, title transfer and retention arrangements) having a similar effect;
“Exercise Notice” means the completed notice of exercise of the Warrant substantially in the form set out in Schedule 3;
“Exercise Period” means the period commencing on the Issue Date and ending on the third anniversary of the Issue Date;
“Group” means the Company, its subsidiaries, any holding company of the Company and any subsidiary of any such holding company from time to time and “Group Company” shall be construed accordingly;
“Holders” means the persons from time to time entered in the Register as the holders of the Warrants and including their personal representatives;
“Holder Majority” means one or more Holders who hold Warrants conferring not less than 75% of the Subscription Rights then outstanding (measured in terms of the number of Warrant Shares which would fall to be issued if such Subscription Rights were all simultaneously exercised in full);
“Instrument” means the instrument constituting the Warrants (including any Schedule or annexure to it and any document in agreed form);
“Issue Date” means the date of issue by the Company to the Holder of the relevant Warrants;
“Recognised Investment Exchange” means a recognised investment exchange (within the meaning thereof given for the purposes of section 285 of the UK Financial Services and Markets Act 2000, which shall include the Canadian Securities Exchange);
“Register” means the register of persons for the time being entitled to the benefit of the Warrants to be maintained pursuant to the Conditions;
“Shares” means all shares in the capital of the Company from time to time, of whatever class, each having the rights and being subject to the restrictions as set out in the Constitution;
“Subscription Price” means C$7.00 per Warrant Share;
“Subscription Rights” means the rights conferred by a Warrant and in accordance with the provisions of clause 3 of the Instrument;
“Warrant” means the right granted to a Holder to subscribe for such number of Warrant Shares as constituted by the Instrument and these Conditions and “Warrants” shall be the aggregate rights granted to all Holders for the time being;
“Warrant Shares” means the common shares in the capital of the Company to be issued on the exercise of any Subscription Rights; and
“Winding-Up” means any of the following events to have commenced: (i) if an order is made or an effective resolution passed for the winding up or dissolution of any Group Company (other than a winding up for the purposes of amalgamation or reconstruction) whether voluntarily or involuntarily; or (ii) if an encumbrancer takes possession or an administrator, receiver or administrative receiver is appointed over the whole or a material part of the assets or undertaking of any Group Company (and for this purpose a part of the assets or undertaking shall be material if the value thereof exceeds 10% of the value of the gross assets of the Group all as determined by reference to the latest published consolidated audited accounts of the Company subject to any adjustments as the Company’s auditors for the time being (acting as experts and not as arbitrators) may consider necessary); or (iii) if the Company stops payment of its debts or ceases or threatens to cease to carry on its business or the greater part of its business; or (iv) if the Company is unable to pay its debts as and when they fall due; or (v) the passing of a resolution for a solvent winding-up of the Company.
In these Conditions (unless the context requires otherwise):
| (a) | this Schedule shall also be deemed to include the Instrument and all other Schedules and words and expressions used in the Instrument and each of the other Schedules shall have the same meaning as set out in this Schedule; |
| (b) | references to clauses, Schedules, Conditions are references to clauses, schedules and Conditions of the Instrument and all Schedules; |
| (c) | words denoting persons shall include corporations and firms; |
| (d) | references to any statute or statutory provision include a reference to that statute or statutory provision as from time to time amended, extended or re-enacted; and |
| (e) | clauses, Condition headings and the contents page are for convenience only and shall not affect the interpretation or construction of this Schedule. |
| 2. | Warrants |
| 2.1 | The Warrants shall be issued subject to the terms of the Instrument, the Constitution and these Conditions, which are binding upon the Company and each Holder. |
| 2.2 | The Warrants shall be issued free from all Encumbrances in registered form, the Company shall treat each such Holder as the absolute owner of the Warrants issued to him and accordingly the Company shall not be bound to recognise any equitable or other claim to or interest in such Warrants on the part of any other person. |
| 2.3 | Each Holder shall be entitled to a Certificate that shall be substantially in the form set out in Schedule 1. |
| 2.4 | The Instrument and Conditions shall, subject to its terms, enure for the benefit of all Holders, each of whom may sue for the performance or observance of the provisions of these Conditions and so far as his holding of the Warrants is concerned. |
| 3. | Exercise of Warrants |
| 3.1 | Subject to Condition 3.2, the Subscription Rights conferred by a Warrant may be exercised in whole or in part only by the relevant Holder at any time during the Exercise Period by the Holder giving to the Company not less than 10 Business Days’ notice in writing by the Holder completing the Exercise Notice (and which shall state the date of completion or shall be such other date as agreed between the Holder and the Company). |
| 3.2 | No exercise of Subscription Rights shall be exercised in the event that a Holder, upon any exercise of Subscription Rights, shall become a holder of a total number of Shares which then aggregated with any Shares beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Shares would be aggregated with the Holder’s exceeds 9.99% of the total number of issued and outstanding Shares. For such purposes, beneficial ownership shall be determined in accordance with the Securities Act (British Columbia) and the national instruments, policy statements, rules and regulations promulgated by the British Columbia Securities Commission. Each delivery of a Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this Condition. This Condition shall not restrict the number of Shares which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a merger or other business combination or reclassification involving the Company. This restriction may not be waived. |
| 3.3 | Each Holder shall have the right at any time within the Exercise Period to subscribe for the number of Warrant Shares for which he holds subscription rights at the Subscription Price for each Warrant Share to be issued pursuant to the exercise of the Subscription Rights. |
| 3.4 | On or before completion of the exercise of the Subscription Rights, the Holder shall lodge with the Company at its head office for the time being the Holder’s Certificate together with a remittance for the aggregate Subscription Price payable for the Warrant Shares in respect of which Subscription Rights are to be exercised. |
| 3.5 | The Company undertakes that, subject to receipt of the Subscription Price for the Warrant Shares in respect of which Subscription Rights are to be exercised upon completion of the exercise of the Warrant(s) by the Holder(s) in accordance with this Condition 3 it shall allot and issue to the Holder(s) the Warrant Shares constituted by such Warrant(s) free from all Encumbrances, shall enter the name of the Holder(s) in the register of shareholders of the Company in respect of the number of Warrant Shares issued to it, and deliver to the Holder(s) a Certificate in respect of such Warrant Shares on the date of issue. |
| 3.6 | The Warrant Shares issued on exercise of the Subscription Rights shall rank pari passu with the other Shares of the same class as the Warrant Shares so issued (and shall benefit from all of the same rights attached to those Shares including, but without limitation, as to any liquidation preference) except that the Warrant Shares so allotted will not rank for any dividend or other distribution which has previously been announced or declared if the record date for such dividend or other distribution is prior to the issue date of the relevant Warrant Shares. |
| 3.7 | For the avoidance of doubt, the Subscription Rights may be exercised by any Holder at any time and on any one or more occasions during the Exercise Period, and any Exercise Notice or other notice given by a Holder to the Company in relation to the exercise of Subscription Rights may be withdrawn by a Holder provided that no such notice may be withdrawn after the issue of Warrant Shares resulting from the exercise of the Subscription Rights. |
| 3.8 | If during the Exercise Period a Winding-Up occurs each Holder shall, in respect of its unexercised Subscription Rights, be treated as if it had fully exercised its outstanding Subscription Rights on the day immediately preceding the happening of the Winding-Up and shall receive out of the surplus assets of the Company available in the liquidation such sum as it would have received if it had been registered as the holder of the number of fully paid Warrant Shares for which it is entitled to subscribe after the deduction from such sum of a sum equal to the Subscription Price in respect of those Warrant Shares. |
| 3.9 | To the extent that a Holder is entitled to receive on the exercise or partial exercise thereof a fraction of a share, such right may be exercised in respect of such fraction only in combination with another Warrant which in the aggregate will entitle the Holder to receive a whole number of shares. |
| 3.10 | Any certificates representing Warrant Shares issued upon exercise of the Warrants prior to the date that is four months and one day after the date of issue of the Warrants, and any Warrant Shares issued in exchange for such Warrant Shares, will bear the following legend: |
“Unless permitted under securities legislation, the holder of this security must not trade the security before [the date that is four months and one day after the date of issue of the Warrants].
provided that at any time subsequent to the date which is four months and one day after the date of issue of the Warrants, any certificate representing any such Warrant Shares may be exchanged for a certificate bearing no such legend.
| 4. | Adjustment Events |
| 4.1 | If any Adjustment Event shall take place after the date of this Instrument but prior to completion of the exercise of the Warrant, then all the Warrant Shares which shall derive (whether directly or indirectly) from the Warrant shall be deemed to be subject to such Adjustment Event (assuming for the purposes of calculating the adjustment to be made that the warrant had been exercised in full immediately prior to such Adjustment Event) so that references in this Instrument to the Warrant Shares and the Subscription Price shall be appropriately adjusted to take account of such Adjustment Event. For the avoidance of doubt, the issue of shares pursuant to this Warrant Instrument shall not trigger an Adjustment Event. |
| 4.2 | Any dispute as to the Adjustment Event and the adjustment to the Warrant Shares and the Subscription Price (if any) shall be referred to the auditors of the Company without delay by the Company (and at the Company’s cost), who shall act as experts and not as arbitrators and their certificate as to the Adjustment Event, Warrant Shares and the Subscription Price (if any) shall be final and binding on the parties. |
| 5. | Company undertakings |
| 5.1 | Save with the consent of a Holder Majority, the Company agrees and undertakes to each Holder to procure (so far as it is legally able) that until the earlier of completion of the exercise of the Warrants in full and the expiry of the Exercise Period, it will: |
| (a) | procure that at all times its directors have all necessary authority to allot and issue sufficient share capital as may be required to satisfy in full all Subscription Rights remaining exercisable; |
| (b) | procure that at all times its directors have all necessary authority to allot and issue sufficient share capital as may be required to satisfy in full all Subscription Rights remaining exercisable without first having to offer the same to any existing members, whether pursuant to the Constitution or otherwise; |
| (c) | give immediate notice in writing, with copies of all relevant documentation, of all communications generally with, and resolutions of, the members or creditors of the Company as a whole (or any class of creditors), including without limitation notices convening and minutes of meetings and circulars; and |
| (d) | upon or as soon as possible after the issue of Warrant Shares apply to the Canadian Securities Exchange upon which the Warrant Shares are listed, on behalf of the Holder for permission to deal in or for listing or quotation for such Warrant Shares or any of the shares into which the Warrant Shares are convertible (as the case may be) and shall use its reasonable endeavours to secure such permission, listing or quotation not later than 30 Business Days after the relevant subscription date. |
| 5.2 | Except where otherwise provided under Condition 3, if any offer or invitation is made to any holders of any class of Shares to acquire any of their Shares by way of purchase or pursuant to a scheme of arrangement or if any proposal or arrangement is put to any holders of any class of Shares while the Warrants remain to be exercised in full, the Company shall use its reasonable endeavours to procure that such offer, invitation, proposal or arrangement is made or put (as the case may be) to the Holders and shall notify the Holders in writing in sufficient time (being not less than 10 Business Days’ notice of the happening of such event) to enable each Holder to fully exercise its Subscription Rights and to enable each Holder, at its discretion, to accept such offer or invitation or participate in such proposal or arrangement. |
| 5.3 | The Holders shall be entitled to exercise the Subscription Rights conditionally following receipt by them of any offer, invitation, proposal or arrangement made pursuant to Condition 5.2 or following receipt by such Holders of the notice of sale or transfer referred to in Condition 5.2 by delivering a notice (the “Conditional Warrant Notice”) to the Company specifying the number of Warrant Shares in respect of which the Subscription Rights may be exercised to be allotted and indicating that such election to exercise is conditional. |
| 5.4 | Except where otherwise provided under Condition 3, if, on a date (or by reference to a record date) on or before the expiry of the Exercise Period, the Company makes any offer or invitation by way of a rights issue or other pre-emptive offer to the holders of the Shares, or if any offer or invitation is made to such holders otherwise than by the Company, then the Company shall notify the Holders in writing in sufficient time (being not less than 10 Business Days’ notice of the happening of such event) to enable the Holders to fully exercise their Subscription Rights and to enable the Holders, at their discretion, to participate in such offer or invitation. |
| 5.5 | Each Holder shall be entitled to exercise the Subscription Rights conditionally following receipt by it of any offer, invitation, proposal or arrangement made pursuant to Condition 5.4 or following receipt by such Holder of the aforesaid notice of sale or transfer referred to in Condition 5.4 by delivering a notice (the “Conditional Rights Issue Notice”) to the Company specifying the number of Warrant Shares in respect of which the Subscription Rights may be exercised to be allotted and indicating that such election to exercise is conditional. |
| 5.6 | Completion (if it occurs) shall then take place on or prior to the actual date of sale or transfer provided that if the sale or transfer pursuant to Condition 5.2 or the offer or invitation pursuant to Condition 5.4 (as the case may be) does not occur within 60 days of the date of the Conditional Warrant Notice or Conditional Rights Issue Notice (as the case may be), it shall be deemed to be withdrawn and the Warrants and the Subscription Rights shall remain in force and shall be available for subsequent exercise by the Holder at any time during the Exercise Period. |
| 5.7 | Nothing herein contained will prevent the Company from issuing any other securities or rights with respect thereto during the period within which a Warrant is exercisable, upon such terms as the Company may deem appropriate. |
| 6. | Company warranties |
| 6.1 | The Company is duly authorised to enter into the Instrument and the obligations of the Company under the Instrument constitute and impose valid legal and binding obligations on the Company fully enforceable in accordance with its terms. |
| 6.2 | The Company is duly incorporated and validly existing in all respects under the laws of Province of British Columbia and has the power and authority to own its assets and to carry on its business as it is now being conducted. |
| 7. | Financial Information |
The Company shall send to each Holder:
| (a) | a copy of its annual audited financial statements and related management’s discussion and analysis upon the public filing of such documents on the System for Electronic Document Analysis and Retrieval (SEDAR) in accordance with applicable Canadian securities laws; and |
| (b) | copies of every notice of meeting and management information circular at the same time they are issued to a holder of Shares and publicly filed on SEDAR, in accordance with applicable Canadian securities laws. |
| 8. | Certificates |
Every Holder will be entitled to a Certificate stating the number of Warrants held by him and every such Certificate shall refer to the Instrument and shall bear a serial number. Joint holders of a Warrant will be entitled only to one Certificate in respect of the Warrant held by them jointly, which will be delivered to the first-named of joint holders.
| 9. | Lost Certificates |
| 9.1 | If a Certificate is defaced, lost, stolen or destroyed it will be replaced at the registered office of the Company for the time being upon payment by the claimant of such reasonable costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Company may reasonably require. |
| 9.2 | Where a Certificate is required for delivery on any exercise of the Subscription Rights or on any transfer of the Warrants, and the Holder is unable to produce such Certificate, the Directors may waive production of any such Certificate upon production to them of satisfactory evidence of the loss or destruction of such Certificate together with such indemnity as they may require. |
| 10. | Register |
| 10.1 | The Company shall at all times cause a register to be maintained at its registered office showing the name and address of each Holder, the Warrants held by the Holder, the Certificate numbers and the date of issue of the Warrants. |
| 10.2 | Any change in the name or address of any Holder shall be notified to the Company, which shall cause the Register to be altered accordingly. Each Holder (or any person authorised by such Holder) shall be at liberty at all reasonable times during office hours to inspect the Register and to take copies of or extracts from the same of any part thereof. |
| 11. | Title to Warrants |
| 11.1 | The Company will recognise the registered Holder as the sole absolute owner of the Warrants and (save as may be required by law) the Company shall not be bound to take notice of or to see to the execution of any trust, whether express, implied or constructive, to which the Warrants may be subject, and the receipt by such Holder of the shares on exercise of the relevant Warrants shall be a good discharge to the Company notwithstanding any notice it may have whether express or otherwise of the right, title, interest or claim of any other person to or in such Warrants. No notice of any trust, express, implied or constructive, shall (except as provided by statute or as required by an order of a court of competent jurisdiction) be entered on the register in respect of any Warrants. |
| 11.2 | The Company will not be bound to take notice of or to see the execution of any trust whether express, implied or constructive to which the Warrants may be subject. |
| 12. | Transfers |
| 12.1 | The benefit of the Warrants shall enure for the benefit of the successors in title and personal representatives of the Holders. |
| 12.2 | Subject to Section 12.3, Warrants and Subscription Rights shall be freely transferable by the Holder on the terms and conditions contained herein and by the Holder completing and submitting to the Company a completed and duly executed Warrant Transfer Form attached here to as Schedule 4. |
| 12.3 | The Warrants, Subscription Rights and Warrant Shares received by the Holder upon the exercise of the Warrants may be subject to a hold period as determined by the Securities Act (British Columbia) and/or other applicable securities laws. |
| 13. | Meetings |
| 13.1 | The Company may (and shall at the written request of a Holder Majority) at any time convene a meeting of the Holders by not less than 10 Business Days’ notice in writing of it specifying the place, day and hour of the meeting and the terms of any resolution to be proposed at it to the Holders and such meeting shall have power by a resolution passed by a Holder Majority to sanction (subject to the consent of the Company) any modification, abrogation, consent or compromise or any arrangement in respect of the rights of the Holders against the Company, and to assent to any modification, abrogation, consent or compromise or any arrangement of these Conditions. No votes may be taken on a poll. |
| 13.2 | The non-receipt by any Holder of or the accidental omission to give to any Holder notice of any such meeting shall not invalidate the proceedings at it. |
| 13.3 | A resolution passed at a meeting of the Holders duly convened and held in accordance with the Conditions shall be binding upon each of the Holders whether present or not present at such meeting. |
| 13.4 | A resolution signed by Holders constituting a Holder Majority shall (subject to the consent of the Company) be as valid and effectual as if it had been passed at a meeting of the Holders duly convened and held and such resolution in writing may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Holders. |
| 13.5 | The quorum at any meeting shall be a Holder Majority and such quorate number shall have the power to pass any resolution. If within fifteen minutes from the time being appointed for any meeting a quorum is not present the meeting shall stand adjourned to such day (not being less than 5 or more than 20 Business Days after the date of the meeting from which such adjournment takes place) and time and place as the Chairman of the Meeting may determine and at the adjourned meeting the Holders present shall form a quorum. Notice of an adjourned meeting shall be given in like manner as for the original meeting and such notice shall state that the Holders present at such meeting whatever the number of the Warrants held or presented by them will constitute a quorum for all purposes. |
| 13.6 | For purposes of this Condition, reference to “Holders” shall be deemed to include reference to a single Holder and (subject to the other provisions of this Condition) one person present in person or by proxy shall constitute a quorum. |
| 13.7 | After the Issue Date, the Holders and the Company (as applicable) shall execute such documents and take such steps as may reasonably be required to fulfil the provisions of and to give to each Holder the full benefit intended by the Instrument and Conditions. |
| 14. | Notices |
| 14.1 | Every Holder shall notify the Company in writing of an address in the United Kingdom to which notices can be sent. |
| 14.2 | Every Holder shall be bound by every notice in respect of such Warrants which prior to his name and address being entered on the register of Warrants shall have been duly given to the person from whom he derives his title to such Warrants. |
| 14.3 | Any notice to a Party under this Deed shall be in writing signed by or on behalf of the party giving it and shall be served on a party if given personally, left at or sent by prepaid first class post or prepaid recorded delivery or special delivery or email transmission to the address of the other Party set out in the register of Warrants (or email address for the time being shown in the Register) or in the case of the Company at its registered office (or email address for the time being shown in the Register or otherwise notified for such purpose). A notice shall be deemed to have been served at the time of delivery if delivered personally, 48 hours after posting, or 2 hours after transmission if served by email provided that where the deemed time of service is after 6 p.m. on a Business Day or on a day which is not a Business Day, the notice shall be served at 9 a.m. on the next Business Day. The deemed service provisions of this Condition shall not apply to notices served by post if there is a national or local disruption of postal services that affects the giving of the notice. |
| 14.4 | In proving service it will be sufficient to prove: |
| (a) | in the case of personal service, that it was handed to the recipient or delivered to or left in an appropriate place for receipt of letters at its address; |
| (b) | in the case of a letter sent by post, that the letter was properly addressed, stamped and posted; |
| (c) | in the case of email, that it was properly addressed and despatched to the email address of the recipient. |
| 14.5 | Where a Warrant is held by joint Holders, it shall be sufficient for the Company to have sent notice to the first name appearing in the register of Warrants for such Holders on behalf of all such Holders, and any notice required to be given by the Company to the Holders shall be given to such persons who are entered in the register of Warrants as such Holders and such service shall for all purposes of these presents be deemed duly served and sufficient service of such notice or document on his or her executors or administrators and all persons (if any) jointly interested with him in any such Warrant. |
| 15. | General |
| 15.1 | If, at any time, any term or provision in these Conditions shall be held to be illegal, invalid or unenforceable, in whole or in part, under any rule of law or enactment, such term or provision or part shall, to that extent, be deemed not to form part of these Conditions, but the enforceability of the remainder of these Conditions shall not be affected. |
| 15.2 | These Conditions and the rights and obligations of the Company and the Holders shall be subject to the exclusive jurisdiction of the courts of England and shall be governed by and construed in accordance with English law (including as to any non-contractual disputes or claims). |
SCHEDULE 3
EXERCISE NOTICE
| To: | VERSES AI INC 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia Canada V6E 2J3 Attn: Chief Financial Officer |
[DATE]
●, being the registered holder of [a] Warrant[s], give[s] notice to the Company of [its][his] desire to exercise [its] Subscription Rights to subscribe for the number of Warrant Shares at the aggregate Subscription Price both as set out below, in accordance with the provisions of the Instrument and the Conditions. [I][We] enclose [my] [our] payment with this Exercise Notice together with our Warrant Certificate.
Number of Warrant Shares: ●
Aggregate Subscription Price: C$●
Name of proposed allottee: ●
Address of proposed allottee: ●
Completion date: ● 20●● (if not on or immediately prior to an Exit)
Please issue the Warrant Shares set out in this Exercise Notice. [I][We] agree to accept the Warrant Shares in accordance with the rights attaching to them as set out in the Company’s Constitution.
Please enter the name of the proposed allottee (as stated above) in the register of members of the Company and arrange for a Certificate for the Warrant Shares and a certificate for the balance of the Subscription Rights to be sent to the address stated above.
| Signature(s) | ||
| Print name: | ||
| Address: |
Notes:
Payments to the Company should be in C$ by wire transfer to the Company’s bank account, details of which will be supplied to the Holder upon request by him/it.
SCHEDULE 4
WARRANT TRANSFER FORM
| TO: | VERSES AI INC. 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia Canada V6E 2J3 Attn: Chief Financial Officer |
FOR VALUE RECEIVED, the undersigned holder (the “Transferor”) of the Warrants represented by Warrant Certificate No.______________hereby sells, assigns and transfers to__________________________(the “Transferee”), _______________________Warrants of VERSES AI Inc (the “Company”) representing the right to purchase ____________common shares of the Company on the terms set for in such Warrant certificate registered in the name of the undersigned on the records of the Company and irrevocably appoints ________________the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.
The undersigned hereby directs that the Warrants hereby transferred be issued and delivered as follows:
| NAME IN FULL | ADDRESS | NUMBER OF WARRANTS | ||
DATED this___________ day of________________ , 202_____ .
| Signature of Warrant Holder |
INSTRUCTIONS FOR TRANSFER
Signature of the Warrant Holder must be the signature of the person appearing on the face of this Warrant Certificate.
If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Company.
The Warrants will only be transferable in accordance with applicable laws.
Exhibit 10.1
| Date: | October 31, 2025 |
| To: | VERSES AI Inc. |
| From: | Sorbie Bornholm LP |
SUBJECT: SHARING ARRANGEMENT TRANSACTION
This communication is to set forth the terms and conditions of the sharing arrangement transactions entered into on the Trade Date referred to below (the “Sharing Arrangement Transactions”), between Sorbie Bornholm LP, a limited partnership (“Sorbie” or “we”) and VERSES AI Inc., a corporation incorporated under the laws of the Province of British Columbia (“Counterparty” or “you”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
This Confirmation incorporates the definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions as published by the International Swaps and Derivatives Association, Inc. (the “Equity Definitions”). In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation will supplement, form a part of, and be subject to the ISDA Master Agreement dated as of October 31, 2025 between Counterparty and Sorbie, including the schedule and the Credit Support Annex thereto, as from time to time amended (the “Master Agreement”). All provisions contained in, or incorporated by reference to, the Master Agreement shall govern this Confirmation except as expressly modified below. In the event of any inconsistency between the provisions of the Master Agreement and this Confirmation, this Confirmation shall prevail for the purpose of each Sharing Arrangement Transaction. In addition, this Confirmation shall itself evidence a complete and binding agreement between you and Sorbie as to the terms and conditions of the Sharing Arrangement Transactions to which this Confirmation relates.
Sorbie and Counterparty each represents that entering into the Sharing Arrangement Transactions is authorized and does not violate any laws of its jurisdiction of organization or residence or the terms of any agreement to which it is a party. Sorbie and Counterparty each represents that (i) it is not relying on the other party in connection with its decision to enter into the Sharing Arrangement Transactions, and neither party is acting as an advisor or fiduciary of the other party in connection with the Sharing Arrangement Transactions regardless of whether the other party provides it with market information or its views; (ii) it understands the risks of the Sharing Arrangement Transactions and any legal, regulatory, tax, accounting and economic consequences resulting therefrom; and (iii) it has determined based upon its own judgment and upon any advice received from its own professional advisors as it has deemed necessary to consult that entering into the Sharing Arrangement Transactions is appropriate for such party in light of its financial capabilities and objectives.
| -1- |
2. The Sharing Arrangement Transactions to which this Confirmation relates consist of 11 separate “bullet” transactions (which are referred to sequentially as “Transaction 1”, “Transaction 2”, “Transaction 3” and so on through “Transaction 11”), with the terms of each Sharing Arrangement Transaction as follows (with respect to each Sharing Arrangement Transaction, this Confirmation shall be interpreted as if it were a separate confirmation for such Sharing Arrangement Transaction consisting of the specific terms thereof and any general terms to the extent applicable thereto):
General Terms:
| Trade Date: | The date of this Confirmation | |
| Effective Date: | Knock-in Determination Day | |
| Termination Date: | For each Sharing Arrangement Transaction, the Cash Settlement Payment Date under such Transaction. | |
| Settlement Date: | The “Settlement Date” for any Sharing Arrangement Transaction shall be the earlier of: (i) the 10th Exchange Business Day immediately following the 11th month after the Trigger Date or (ii) the Applicable Settlement Date (or such later date as may be established under “Deferral” provided below). The “Applicable Settlement Date” for a Sharing Arrangement Transaction shall be (i) an Exchange Business Day determined in accordance with Schedule 1 hereto or (ii) such earlier date as Sorbie and Counterparty may agree, provided that in each case the Applicable Settlement Date for a Sharing Arrangement Transaction shall not be deemed to have occurred unless the Calculation Agent has determined that the Resale Condition and the Trading Condition (each as defined below) has been satisfied on, and for at least 25 days of the 30 consecutive day period preceding, the relevant date specified on Schedule 1 hereto (provided that, if any such condition is not so satisfied, such Applicable Settlement Date shall be subject to deferral as provided under “Other Terms” below). If any Applicable Settlement Date determined pursuant to the foregoing is not an Exchange Business Day, then such date shall be postponed to the first Exchange Business Day thereafter. For each Sharing Arrangement Transaction, the “Applicable Share Amount” means the aggregate number of shares for such Sharing Arrangement Transaction as specified on Schedule 1 hereto. |
| -2- |
| Settlement Currency: | CAD (CAD$) | |
| Shares: | VERSES AI Inc. Class A Subordinate Voting Shares, ISIN number CA92539Q6040 | |
| Exchange: | CBOE Canada Inc. (“CBOE”). | |
| Related Exchange(s): | Not Applicable | |
| Knock-in Event: | Applicable. The “Knock-in Event” shall occur at the time that the disbursements contemplated by Section 2.2(A) and (B) of the Escrow Agreement (as defined in and executed in connection with the Subscription Agreement referred to below) have been completed and the Admission Conditions (as defined in the Escrow Agreement) have been satisfied. | |
| Knock-in Determination Day: | The third Business Day after occurrence of the Knock-in Event, but only if the Knock-in Event occurs on or before the Delivery Date (as defined in the Escrow Agreement); provided that the preceding definition supersedes section 1.48 of the Equity Definitions which shall not apply for purposes hereof. |
Equity Amounts
| Equity Amount Payer:: | Sorbie | |
| Equity Amount Receiver: | Counterparty | |
| Equity Amounts: | For each Sharing Arrangement Transaction, an amount determined by the Calculation Agent as of the Valuation Time on the Valuation Date equal to the product of the Equity Notional Amount and the Rate of Return (for which, for the avoidance of doubt, the “Multiplier” is one (1)), provided that, (i) if that Equity Amount is a negative number, then the Equity Amount Receiver will owe to the Equity Amount Payer the absolute value of the Equity Amount (the “Absolute Value”) on the relevant Cash Settlement Payment Date and further provided that the Absolute Value shall be netted in accordance with Section 4(c) below; provided further that, if such Absolute Value exceeds the applicable Transfer Amount for the relevant Sharing Arrangement Transaction (as indicated on Schedule 1), which is the amount to be netted under Section 4(c) of this Confirmation, then Counterparty shall remain liable for such excess only to the extent provided below under “Equity Amount Deferral” and (ii) if the Equity Amount is a positive number, such amount will be applied hereunder or remitted to the Equity Amount Receiver on the terms and conditions of this Confirmation. |
| -3- |
| Rate of Return: | in respect of each Settlement Date, a rate determined by the Calculation Agent as of the relevant Valuation Date to which the Settlement Date relates on a formula basis as follows:
(Final
Price – Initial Price/Initial Price) | |
| Cash Settlement Payment Date: | For each Sharing Arrangement Transaction, the 5th Currency Business Day following the relevant Settlement Date. | |
| Number of Shares: | For each Sharing Arrangement Transaction, a number of Shares equal to the Applicable Share Amount specified for that Sharing Arrangement Transaction in Schedule 1 hereto. | |
| Equity Notional Amount: | For each Sharing Arrangement Transaction, the Number of Shares multiplied by the Initial Price | |
| Equity Notional Reset: | Inapplicable | |
| Type of Return: | Price Return |
| -4- |
| Initial Price: | CAD$7.75 per Share; provided that (i) if during the 90 day period following the occurrence of the Knock-in Event, Counterparty makes any placing of its Shares at a price per Share below CAD$6.00, then at Counterparty’s (x) the Initial Price shall be increased by an amount equal to CAD$6.00 minus the per Share price of such placing or (y) Counterparty shall issue to Sorbie a number of additional Shares or securities convertible into a number of additional Shares that in the determination of the Calculation Agent, acting reasonably and in good faith, would have an economic effect in favor of Sorbie equivalent to that contemplated by clause (x) above, (ii) if at any time, Counterparty executes or completes a backdoor listing or reverse takeover or merger at a price per Share below CAD$6.00, then the Initial Price shall be increased by an amount equal to CAD$6.00 minus the per Share price of such backdoor listing or reverse takeover or merger and (iii) the Initial Price in effect at any time shall be increased by an amount equal to 50% thereof (which increased price shall then constitute the effective Initial Price) following each issuance by Counterparty of any Shares to or through any other party: in an at-the-market or equity line program or other comparable programme or by conversion, exercise or exchange of any securities convertible into or exercisable or exchangeable for any shares (but not, for the avoidance of doubt, following the issuance by Counterparty of any shares through a standard placing or a rights offering or through a share purchase plan or an employee scheme) that in effect provides for the issuance or sale of Shares at non-fixed, market related prices (including without limitation any such effect that results from any adjustment provisions or other conditions provided for under the terms of the relevant securities, whether or not a conversion, exercise or exchange has occurred based on such adjustment) (it being acknowledged that the foregoing adjustment shall occur each time such an issuance or sale of shares occurs and that, as a result, multiple adjustments may occur under a program or pursuant to a security); and further subject in each case to adjustment under the “Adjustments” provisions set forth below. As each Transaction subject hereto has a single Valuation Date, the parties acknowledge that the Initial Price shall be determined solely as set forth above and not pursuant to Section 5.8 of the Equity Definitions. |
| -5- |
| Final Price: | For any Valuation Date, the average of the Relevant Prices for the Averaging Dates relating to that Valuation Date (which average shall be weighted to take account of the relative trading volume for each such Averaging Date). | |
| Valuation Time: | The Scheduled Closing Time on the Exchange | |
| Valuation Date: | The Exchange Business Day immediately preceding the Settlement Date | |
| Averaging Dates: | For any Valuation Date, the twenty (20) Scheduled Trading Days up to and including that Valuation Date | |
| Averaging Date Disruption: | Modified Postponement; provided that, notwithstanding anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Averaging Date, the Calculation Agent may postpone the Valuation Date and the Valuation Date for each successive Sharing Arrangement Transaction for so long as such Market Disruption Event continues, provided further that no such Valuation Date shall be postponed beyond the eighth Scheduled Trading Day following the scheduled Valuation Date of the last Sharing Arrangement Transaction and any Valuation Date postponed to such eighth Scheduled Trading Day shall be deemed to occur on that day. The parties further acknowledge that, as a result of any such postponement, the Settlement Date shall be adjusted as contemplated by 6.7(d) of the Equity Definitions. |
| -6- |
| Relevant Price: | For each Averaging Date, the volume-weighted average price of the Shares for that date on the Exchange, as determined by the Calculation Agent in a commercially reasonable manner based on (to the extent available) publicly disseminated quotation services. | |
| Equity Amount Deferral: | If, for any Sharing Arrangement Transaction, the Equity Amount due from Counterparty to Sorbie exceeds the Transfer Amount for such Sharing Arrangement Transaction (a “Settlement Shortfall”) and, in any subsequent Sharing Arrangement Transaction, the Equity Amount is due from Sorbie to Counterparty, then Counterparty agrees that Sorbie should first apply and setoff such Equity Amount against the aggregate amount of all such Settlement Shortfalls (to the extent not previously setoff under this paragraph) and only remit to Counterparty the portion (if any) of such Equity Amount as remains after all such Settlement Shortfalls have been eliminated by setoff under this paragraph. The foregoing setoff shall be repeated for each Sharing Arrangement Transaction that results in Sorbie owing an Equity Amount to Counterparty at a time when any Settlement Shortfalls (or portions thereof) have yet to be fully eliminated by setoff under this paragraph. However, if after application and setoff of the Equity Amount from the final Sharing Arrangement Transaction hereunder, any Settlement Shortfalls (or portions thereof) have yet to be fully eliminated, then so long as Counterparty has not executed or completed a backdoor listing or reverse takeover or merger and an Event of Default with respect to Counterparty under Section 5(a)(vii) has not occurred, Counterparty shall not have any further obligation to make payment to Sorbie with respect to such remaining amounts; provided that, if Counterparty has executed or completed a backdoor listing or reverse takeover or merger or an Event of Default with respect to Counterparty under Section 5(a)(vii) has occurred, then thereafter Counterparty shall be obligated to pay to Sorbie any and all such remaining amounts immediately following the application and setoff contemplated above. The parties agree that Counterparty shall not be responsible for any delay in making or failure to make any such setoff and, accordingly, any such delay or failure shall not constitute a default, Potential Event of Default or Event of Default with respect to Counterparty. In no event shall any interest accrue on or be due in respect of any Settlement Shortfalls. |
| -7- |
Delivery of Value Payment by Counterparty:
| Value Payment: | CAD$840,000 in the form of (i) cash paid by wire transfer of immediately available funds to Sorbie on the Value Payment Delivery Date or (ii) 140,000 Units (as defined in the Subscription Agreement) having an aggregate face value of CAD$840,000 (the “Value Payment”), subject to the following terms. | |
| Value Payment Delivery Date: | The Value Payment constitutes a fee due to Sorbie and shall be paid or delivered by Counterparty pursuant to the Subscription Agreement and concurrently with the occurrence of the Knock-in Event (as defined above). | |
| In each case, Counterparty shall pay or deliver the Value Payment to Sorbie as and where instructed by Sorbie. | ||
| Additional Conditions: | It is a condition to the effectiveness of this Transaction that if the Value Payment consists of Units or Convertible Loan Notes, all Shares issuable upon exercise of warrants or conversion Convertible Loan Notes shall have been duly authorized and validly issued by Counterparty and that, at the time such Shares are delivered to Sorbie, be admitted to trading on the Exchange and otherwise satisfy the definition of Unrestricted Shares and the Trading Condition as set forth below. |
| -8- |
Other Terms:
| Resale Condition: | The “Resale Condition” shall be deemed satisfied as of any day with respect to the number of Equity Shares that, as of such day, are then Unrestricted Shares. “Unrestricted Shares” mean, as of any day, Shares that are in electronic, freely transferable form, not evidenced by any share certificates bearing restrictive legends, not subject to any stop transfer order, not adversely affected by a Market Disruption Event relating to the Shares and not subject to any other condition to or restriction on the ability of the holder thereof to sell, assign or otherwise transfer such Shares on the CBOE, including, without limitation, any requirement that such sale, assignment or other transfer be registered or qualified with, or approved or consented to by, any governmental or regulatory body having jurisdiction over such transfer (including any self-regulatory organization or multinational body), any requirement that any sale, assignment or other transfer or enforcement of such Shares be consented to or approved by the issuer thereof or any other obligor thereon, any limitations on the type or status, financial or otherwise, of any purchaser, pledgee, assignee or transferee of such Shares or any requirement to deliver any certificate, consent, agreement, opinion of counsel, notice or any other document of any person to the issuer of, any other obligor on or any registrar or transfer agent for, such Shares, prior to the sale, pledge, assignment or other transfer or enforcement of such Shares. |
| -9- |
| “Trading Condition” shall be deemed to be satisfied upon the Counterparty and its Shares obtaining and having in effect a full listing on the CBOE excluding, in each case, any restriction, consent, requirement or interest agreed to or granted by or on behalf of Sorbie. | ||
| “Equity Shares” mean, as of any day, a number of Shares held by Sorbie and its affiliates equal to (i) the sum of 2,333,334 Shares, the number of Shares included in the Units issued upon exercise of the Warrants (as acquired under the Subscription Agreement) and, if applicable, the number of Shares issued as the Value Payment hereunder (including Shares issuable upon exercise of the Warrants included in such Value Payment) minus (ii) the Aggregate Settled Share Amount; provided that such number of Shares shall be adjusted from time to time by the Calculation Agent as provided in Section 11.2 of the Equity Definitions; provided that this Share amount shall be in addition to and separate from any similar Share amount referred to in any other confirmation between the parties. | ||
| The “Aggregate Settled Share Amount” means, as of any day, the sum of the Applicable Share Amounts for all Sharing Arrangement Transactions that have settled prior to such day. | ||
| The “Trigger Date” shall mean the day occurring immediately after the first day as of which the following conditions are satisfied (such first day, the “Conditions Completion Date”): the Admission Condition (as defined in the Escrow Agreement); the Resale Condition with respect to the Applicable Share Amount of the Equity Shares; and the Trading Condition. Counterparty further covenants and agrees that, from and after the Trigger Date until all of Counterparty’s obligations under this Confirmation have been satisfied in full, Counterparty shall cause the foregoing conditions to continue to be satisfied. |
| -10- |
| “Offer Period Event” means any period commencing upon the date upon which there is a public announcement via a regulatory or market news service that a “formal take-over bid”, as defined in the Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids (as published by the Canadian Securities Administrators), as such rule may be amended or replaced from time to time, for securities of the Counterparty has commenced. | ||
| Deferral: | If (a) for more than 5 days during the 30 consecutive day period preceding an Applicable Settlement Date for any Sharing Arrangement Transaction, the Resale Condition or the Trading Condition is not satisfied or (b) an Offer Period Event has occurred and is continuing, then, commencing, in the case of clause (a) above, immediately following such 5th day, and in the case of clause (b) above, upon the occurrence of such Offer Period Event, Sorbie may, at its option, defer the Applicable Settlement Date until such later date as of which both the Resale Condition and Trading Condition have been satisfied or such Offer Period Event has no longer been continuing (as the case may be) for a period of 30 consecutive days; provided that no such deferral shall be continued if it would result in a Settlement Date under any Sharing Arrangement Transaction occurring later than 12 months after the Trigger Date (except as otherwise contemplated in the last sentence of this paragraph). If Sorbie defers any Applicable Settlement Date under this provision, then it may defer each scheduled Applicable Settlement Date for each successive Sharing Arrangement Transaction by an equal number of days and also may defer the Settlement Date determined under clause (i) in the definition thereof set forth above, provided that in no event may the Settlement Date determined under such clause (i) be deferred to a day occurring more than 12 months after the Trigger Date, except that in the case of an Offer Period Event, such Settlement Date under clause (i) may, at Sorbie’s option, be deferred for a period equal to the number of days during which such Offer Period Event continued plus two months. |
| -11- |
| Additional Covenant: | Counterparty agrees that, so long as any Sharing Arrangement Transaction subject hereto remains outstanding, it will not (and will not permit any of its affiliates to) provide to Sorbie any material non-public information (“MNPI”) with respect to Counterparty, its subsidiaries or their securities which constitutes price sensitive or inside information for the purposes of any applicable laws of England or Canada. If, notwithstanding the foregoing, any such MNPI is provided to Sorbie, then (i) Counterparty will as promptly as practicable publicly disclose such MNPI and (ii) Sorbie may, until such MNPI has been publicly disclosed, suspend settlements of the Sharing Arrangement Transactions subject hereto, in which case the scheduled Applicable Settlement Dates will be deferred for the period of such suspension. This Additional Covenant shall be in addition to, and not supersede or limit, any other provisions contained in the Escrow Agreement and/or the Subscription Agreement (each as defined in Section 9 below). If Counterparty fails to remedy any breach of this covenant promptly, such failure shall (without limiting Sorbie’s suspension right under the preceding sentence) constitute an Event of Default. |
| -12- |
Settlement Terms:
| Cash Settlement: | Applicable | |
| Settlement Currency: | CAD (CAD$) | |
| Settlement Method Election: | Not Applicable | |
| Default Settlement Method: | Cash Settlement |
Adjustments:
| Method of Adjustment: | Calculation Agent Adjustment |
Extraordinary Events:
Consequences of Merger Events:
| Share-for-Share: | Calculation Agent Adjustment | |
| Share-for-Other: | Calculation Agent Adjustment | |
| Share-for-Combined: | Calculation Agent Adjustment | |
| Determining Party: | Sorbie, provided that any calculation shall be made in good faith and in a commercially reasonable manner | |
| Tender Offer: | Applicable |
Consequences of Tender Offers:
| Share-for-Share: | Calculation Agent Adjustment | |
| Share-for-Other: | Calculation Agent Adjustment | |
| Share-for-Combined: | Component Adjustment | |
| Determining Party: | Sorbie, provided that any calculation shall be made in good faith and in a commercially reasonable manner | |
| Composition of Combined Consideration: | Applicable | |
| Nationalization or Insolvency: | Cancellation and Payment | |
| Delisting: | The parties acknowledge that the consequences of a Delisting are addressed pursuant to the “Deferral” provision above and the Additional Termination Event provided for below. | |
| Determining Party: | Sorbie, provided that any calculation shall be made in good faith and in a commercially reasonable manner |
| -13- |
Additional Disruption Events:
| Change in Law: | Applicable | |
| Failure to Deliver: | Applicable | |
| Insolvency Filing: | Applicable | |
| Determining Party: | Sorbie, provided that any calculation shall be made in good faith and in a commercially reasonable manner |
| Non-Reliance: | Applicable |
| Agreements
and Acknowledgments Regarding Hedging Activities: |
Applicable |
| Additional Acknowledgments: | Applicable |
4. Credit Support Annex:
(a) For purposes of Paragraph 11 of the Credit Support Annex to the Master Agreement, the “Independent Amount” for all Sharing Arrangement Transactions covered by and subject to this Confirmation shall equal the Remaining Notional Amount. The “Remaining Notional Amount” shall equal (i) as of any day prior to the Conditions Completion Date, CAD$14,000,000 and (ii) as of any day from and after the Conditions Completion Date, CAD$13,300,000 minus the sum of the Transfer Amounts of all Sharing Arrangement Transactions that have settled prior to such day.
(b) On the Conditions Completion Date, CAD$700,000 shall be released and paid to the Counterparty as contemplated by Clause 3.1(d) of the Escrow Agreement.
(c) Following the Conditions Completion Date, upon a reduction in the Remaining Notional Amount pursuant to the terms hereof, and provided all amounts then due and owing to Sorbie hereunder have been paid (or deducted from amounts due and owing to Counterparty in accordance with the provisions in this paragraph) and there is no Event of Default or Potential Event of Default then outstanding with respect to Counterparty, then Sorbie shall transfer to Counterparty the portion, if any, of the Eligible Credit Support then outstanding under the Credit Support Annex that exceeds such Remaining Notional Amount. If any amounts are then due and owing to Sorbie under this Confirmation or under any other Transaction subject to the Master Agreement, such amounts shall first be deducted from the amount to be transferred to Counterparty and, in such case, Sorbie shall first retain for its own account the amounts owing to it and then transfer to Counterparty the amount equal to that reduction in the Remaining Notional Amount less the amount so retained by Sorbie. Sorbie may defer any transfers to Counterparty of Eligible Credit Support for so long as any Event of Default or Potential Event of Default is outstanding with respect to Counterparty.
| -14- |
(d) Provided the Remaining Notional Amount is reduced on the Applicable Settlement Date of each Sharing Arrangement Transaction as if all applicable conditions thereunder are satisfied at all times, there is no Event of Default or Potential Event of Default with respect to Counterparty and no other amounts become due to Sorbie that are retained by it from the Eligible Credit Support, then the amount of Eligible Credit Support to be transferred to Counterparty each month shall correspond to the Transfer Amount as set forth on Schedule 1 annexed hereto.
(e) As provided under the Credit Support Annex, Sorbie holds title to, and has the unrestricted right to use and dispose of, any Eligible Credit Support transferred to it thereunder; provided that the foregoing shall not limit Sorbie’s obligation to transfer amounts to Counterparty in connection with reductions in the Remaining Notional Amount pursuant to paragraph 4(b) above.
(f) Regardless of the form in which Sorbie holds any Eligible Credit Support from time to time transferred to it under the Credit Support Annex, to the extent Sorbie is required to transfer to Counterparty any amount under the Credit Support Annex it shall transfer such amount in the form of cash in an Eligible Currency. If any Eligible Credit Support is held in any other form than cash, any fluctuations in the value thereof shall be solely at the risk and for the account of Sorbie and shall not increase or decrease Sorbie’s obligation to transfer amounts to Counterparty in connection with reductions in the Remaining Notional Amount pursuant to paragraph 4(b) above.
(g) It is agreed that, with respect to the Transaction evidenced hereby, the Valuation Date for purposes of the Credit Support Annex shall mean the Valuation Date as defined herein and the Escrow Agreement referred to in Paragraph 11(h)(ii) of Credit Support Annex shall be the Escrow Agreement referred to in the Subscription Agreement identified in Section 9 below.
5. Additional Termination Event:
The parties agree that, for purposes of the Master Agreement the following shall constitute an “Additional Termination Event” (for purposes of this Additional Termination Event, Counterparty shall be the sole Affected Party):
(A) the Resale Condition or Trading Condition shall not have been satisfied with respect to the Equity Shares for any period of 15 or more consecutive Scheduled Trading Days or for an aggregate of 30 or more Scheduled Trading Days (whether or not consecutive).
6. Determination of Close-out Amount: The parties agree that, if Sorbie, as the Determining Party, determines a Close-out Amount with respect to the Transactions evidenced by this Confirmation, any calculation shall be made in good faith and in a commercially reasonable manner and Sorbie may, in a commercially reasonable manner, take account of the value of, or any amounts realized upon the disposition of, any Equity Shares, and any loss or cost incurred in connection with the disposition of such Equity Shares may be included (without duplication) in determining such Close-out Amount as permitted with respect to the termination and liquidation of a hedge related to such Transactions.
| -15- |
| 7. Calculation Agent: | Sorbie; provided that any calculation shall be made in good faith and in a commercially reasonable manner. |
8. Account Details:
| Account for payments to Sorbie: | To be provided. | |
| Account for payments to Counterparty: | To be provided. |
9. Relationship between the parties:
Except as expressly provided herein, in the Subscription Agreement dated the date of this Confirmation among Sorbie, Sorbie Investments LP and Counterparty (the “Subscription Agreement”) or the Escrow Agreement referred therein, each party acknowledges that in connection with entering into this Transaction, it has not entered into any agreements, arrangements or understandings with the other party or any related entity of such party in relation to timing or manner of any acquisition or disposal of any Shares, the voting rights attaching to any Shares or the management of the Counterparty.
10. Assignability: Notwithstanding anything herein, or in the Master Agreement, to the contrary, Sorbie may assign all of its rights and obligations with respect to any Sharing Arrangement Transaction, together with the related rights and obligations under the Escrow Agreement, to any third party with the prior written consent of the Counterparty, which will not be unreasonably withheld.
11. Governing Law: the laws of England.
[remainder of page intentionally left blank]
| -16- |
Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning such executed copy to us.
| Yours sincerely, | ||
| Sorbie Bornholm LP | ||
| acting by its General Partner | ||
| By: | /s/ Greg Kofford | |
| Greg Kofford | ||
| Director | ||
| Confirmed as of the date first above written: | ||
| VERSES AI Inc. | ||
| By: | /s/ Gabriel René | |
| Name: | Gabriel René | |
| Title: | CEO | |
| By: | /s/ James Hendrickson | |
| Name: | James Hendrickson | |
| Title: | President & COO | |
| -17- |
Schedule 1
| Sharing Arrangement Transaction | Applicable Settlement Date (Expressed as a Number of Months after the Trigger Date) | Applicable
Share Amount | Transfer Amount (Assuming all Applicable Settlement Dates occur at earliest possible date) | |||||||
| Transaction 1 | 1 month after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 2 | 2 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 3 | 3 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 4 | 4 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 5 | 5 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 6 | 6 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 7 | 7 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 8 | 8 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 9 | 9 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 10 | 10 months after Trigger Date | 164,223 | CAD$ | 1,209,091.00 | ||||||
| Transaction 11 | 11 months after Trigger Date | 164,222 | CAD$ | 1,209,090.00 | ||||||
| -18- |
Exhibit 10.2
ISDA®
International Swaps and Derivatives Association, Inc.
2002 MASTER AGREEMENT
dated as of October 31, 2025
| Sorbie Bornholm LP | and | VERSES AI Inc. |
have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this 2002 Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties or otherwise effective for the purpose of confirming or evidencing those Transactions. This 2002 Master Agreement and the Schedule are together referred to as this “Master Agreement”.
Accordingly, the parties agree as follows:
| 1. | Interpretation |
(a) Definitions. The terms defined in Section 14 and elsewhere in this Master Agreement will have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.
| 2. | Obligations |
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.
| -1- |
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other condition specified in this Agreement to be a condition precedent for the purpose of this Section 2(a)(iii).
(b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the Scheduled Settlement Date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.
(c) Netting of Payments. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by which the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount and payment obligation will be determined in respect of all amounts payable on the same date in the same currency in respect of those Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or any Confirmation by specifying that “Multiple Transaction Payment Netting” applies to the Transactions identified as being subject to the election (in which case clause (ii) above will not apply to such Transactions). If Multiple Transaction Payment Netting is applicable to Transactions, it will apply to those Transactions with effect from the starting date specified in the Schedule or such Confirmation, or, if a starting date is not specified in the Schedule or such Confirmation, the starting date otherwise agreed by the parties in writing. This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.
| -2- |
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (“X”) will:
(1) promptly notify the other party (“Y”) of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:
(A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, after a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.
(ii) Liability. If:—
(1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X, then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
| -3- |
| 3. | Representations |
Each party makes the representations contained in Sections 3(a), 3(b), 3(c), 3(d), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement). If any “Additional Representation” is specified in the Schedule or any Confirmation as applying, the party or parties specified for such Additional Representation will make and, if applicable, be deemed to repeat such Additional Representation at the time or times specified for such Additional Representation.
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
| -4- |
(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it, any of its Credit Support Providers or any of its applicable Specified Entities any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.
(g) No Agency. It is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity.
| 4. | Agreements |
Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:
(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under clause (iii) below, to such government or taxing authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification, in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable.
| -5- |
(b) Maintain Authorizations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.
(c) Comply With Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organized, managed and controlled or considered to have its seat, or where an Office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”), and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.
| 5. | Events of Default and Termination Events |
(a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes (subject to Sections 5(c) and 6(e)(iv)) an event of default (an “Event of Default”) with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) required to be made by it if such failure is not remedied on or before the first Local Business Day in the case of any such payment or the first Local Delivery Day in the case of any such delivery after, in each case, notice of such failure is given to the party;
(ii) Breach of Agreement; Repudiation of Agreement.
(1) Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied within 30 days after notice of such failure is given to the party; or
| -6- |
(2) the party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, this Master Agreement, any Confirmation executed and delivered by that party or any Transaction evidenced by such a Confirmation (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document, or any security interest granted by such party or such Credit Support Provider to the other party pursuant to any such Credit Support Document, to be in full force and effect for the purpose of this Agreement (in each case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or 3(f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;
(v) Default Under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:
(1) defaults (other than by failing to make a delivery) under a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction;
(2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment due on the last payment or exchange date of, or any payment on early termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one Local Business Day);
| -7- |
(3) defaults in making any delivery due under (including any delivery due on the last delivery or exchange date of) a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, all transactions outstanding under the documentation applicable to that Specified Transaction; or
(4) disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, a Specified Transaction or any credit support arrangement relating to a Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that party, Credit Support Provider or Specified Entity (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(vi) Cross-Default. If “Cross-Default” is specified in the Schedule as applying to the party, the occurrence or existence of:
(1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) where the aggregate principal amount of such agreements or instruments, either alone or together with the amount, if any, referred to in clause (2) below, is not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments before it would otherwise have been due and payable; or
(2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments under such agreements or instruments on the due date for payment (after giving effect to any applicable notice requirement or grace period) in an aggregate amount, either alone or together with the amount, if any, referred to in clause (1) above, of not less than the applicable Threshold Amount;
| -8- |
(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4)(A) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organization or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 15 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (l) to (7) above (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, or reorganizes, reincorporates or reconstitutes into or as, another entity and, at the time of such consolidation, amalgamation, merger, transfer, reorganization, reincorporation or reconstitution:
(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party; or
| -9- |
(2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes (subject to Section 5(c)) an Illegality if the event is specified in clause (i) below, a Force Majeure Event if the event is specified in clause (ii) below, a Tax Event if the event is specified in clause (iii) below, a Tax Event Upon Merger if the event is specified in clause (iv) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to clause (v) below or an Additional Termination Event if the event is specified pursuant to clause (vi) below:
(i) Illegality. After giving effect to any applicable provision, disruption fallback or remedy specified in, or pursuant to, the relevant Confirmation or elsewhere in this Agreement, due to an event or circumstance (other than any action taken by a party or, if applicable, any Credit Support Provider of such party) occurring after a Transaction is entered into, it becomes unlawful under any applicable law (including without limitation the laws of any country in which payment, delivery or compliance is required by either party or any Credit Support Provider, as the case may be), on any day, or it would be unlawful if the relevant payment, delivery or compliance were required on that day (in each case, other than as a result of a breach by the party of Section 4(b)):
(1) for the Office through which such party (which will be the Affected Party) makes and receives payments or deliveries with respect to such Transaction to perform any absolute or contingent obligation to make a payment or delivery in respect of such Transaction, to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or
(2) for such party or any Credit Support Provider of such party (which will be the Affected Party) to perform any absolute or contingent obligation to make a payment or delivery which such party or Credit Support Provider has under any Credit Support Document relating to such Transaction, to receive a payment or delivery under such Credit Support Document or to comply with any other material provision of such Credit Support Document;
(ii) Force Majeure Event. After giving effect to any applicable provision, disruption fallback or remedy specified in, or pursuant to, the relevant Confirmation or elsewhere in this Agreement, by reason of force majeure or act of state occurring after a Transaction is entered into, on any day:
(1) the Office through which such party (which will be the Affected Party) makes and receives payments or deliveries with respect to such Transaction is prevented from performing any absolute or contingent obligation to make a payment or delivery in respect of such Transaction, from receiving a payment or delivery in respect of such Transaction or from complying with any other material provision of this Agreement relating to such Transaction (or would be so prevented if such payment, delivery or compliance were required on that day), or it becomes impossible or impracticable for such Office so to perform, receive or comply (or it would be impossible or impracticable for such Office so to perform, receive or comply if such payment, delivery or compliance were required on that day); or
| -10- |
(2) such party or any Credit Support Provider of such party (which will be the Affected Party) is prevented from performing any absolute or contingent obligation to make a payment or delivery which such party or Credit Support Provider has under any Credit Support Document relating to such Transaction, from receiving a payment or delivery under such Credit Support Document or from complying with any other material provision of such Credit Support Document (or would be so prevented if such payment, delivery or compliance were required on that day), or it becomes impossible or impracticable for such party or Credit Support Provider so to perform, receive or comply (or it would be impossible or impracticable for such party or Credit Support Provider so to perform, receive or comply if such payment, delivery or compliance were required on that day),
so long as the force majeure or act of state is beyond the control of such Office, such party or such Credit Support Provider, as appropriate, and such Office, party or Credit Support Provider could not, after using all reasonable efforts (which will not require such party or Credit Support Provider to incur a loss, other than immaterial, incidental expenses), overcome such prevention, impossibility or impracticability;
(iii) Tax Event. Due to (1) any action taken by a taxing authority, or brought in a court of competent jurisdiction, after a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (2) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Settlement Date (A) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 9(h)) or (B) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 9(h)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));
(iv) Tax Event Upon Merger. The party (the “Burdened Party”) on the next succeeding Scheduled Settlement Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 9(h)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets (or any substantial part of the assets comprising the business conducted by it as of the date of this Master Agreement) to, or reorganizing, reincorporating or reconstituting into or as, another entity (which will be the Affected Party) where such action does not constitute a Merger Without Assumption;
| -11- |
(v) Credit Event Upon Merger. If “Credit Event Upon Merger” is specified in the Schedule as applying to the party, a Designated Event (as defined below) occurs with respect to such party, any Credit Support Provider of such party or any applicable Specified Entity of such party (in each case, “X”) and such Designated Event does not constitute a Merger Without Assumption, and the creditworthiness of X or, if applicable, the successor, surviving or transferee entity of X, after taking into account any applicable Credit Support Document, is materially weaker immediately after the occurrence of such Designated Event than that of X immediately prior to the occurrence of such Designated Event (and, in any such event, such party or its successor, surviving or transferee entity, as appropriate, will be the Affected Party). A “Designated Event” with respect to X means that:
(1) X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets (or any substantial part of the assets comprising the business conducted by X as of the date of this Master Agreement) to, or reorganizes, reincorporates or reconstitutes into or as, another entity;
(2) any person, related group of persons or entity acquires directly or indirectly the beneficial ownership of (A) equity securities having the power to elect a majority of the board of directors (or its equivalent) of X or (B) any other ownership interest enabling it to exercise control of X; or
(3) X effects any substantial change in its capital structure by means of the issuance, incurrence or guarantee of debt or the issuance of (A) preferred stock or other securities convertible into or exchangeable for debt or preferred stock or (B) in the case of entities other than corporations, any other form of ownership interest; or
(vi) Additional Termination Event. If any “Additional Termination Event” is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties will be as specified for such Additional Termination Event in the Schedule or such Confirmation).
| -12- |
(c) Hierarchy of Events.
(i) An event or circumstance that constitutes or gives rise to an Illegality or a Force Majeure Event will not, for so long as that is the case, also constitute or give rise to an Event of Default under Section 5(a)(i), 5(a)(ii)(1) or 5(a)(iii)(1) insofar as such event or circumstance relates to the failure to make any payment or delivery or a failure to comply with any other material provision of this Agreement or a Credit Support Document, as the case may be.
(ii) Except in circumstances contemplated by clause (i) above, if an event or circumstance which would otherwise constitute or give rise to an Illegality or a Force Majeure Event also constitutes an Event of Default or any other Termination Event, it will be treated as an Event of Default or such other Termination Event, as the case may be, and will not constitute or give rise to an Illegality or a Force Majeure Event.
(iii) If an event or circumstance which would otherwise constitute or give rise to a Force Majeure Event also constitutes an Illegality, it will be treated as an Illegality, except as described in clause (ii) above, and not a Force Majeure Event.
(d) Deferral of Payments and Deliveries During Waiting Period. If an Illegality or a Force Majeure Event has occurred and is continuing with respect to a Transaction, each payment or delivery which would otherwise be required to be made under that Transaction will be deferred to, and will not be due until:
(i) the first Local Business Day or, in the case of a delivery, the first Local Delivery Day (or the first day that would have been a Local Business Day or Local Delivery Day, as appropriate, but for the occurrence of the event or circumstance constituting or giving rise to that Illegality or Force Majeure Event) following the end of any applicable Waiting Period in respect of that Illegality or Force Majeure Event, as the case may be; or
(ii) if earlier, the date on which the event or circumstance constituting or giving rise to that Illegality or Force Majeure Event ceases to exist or, if such date is not a Local Business Day or, in the case of a delivery, a Local Delivery Day, the first following day that is a Local Business Day or Local Delivery Day, as appropriate.
(e) Inability of Head or Home Office to Perform Obligations of Branch. If (i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or 5(b)(ii)(1) and the relevant Office is not the Affected Party’s head or home office, (ii) Section 10(a) applies, (iii) the other party seeks performance of the relevant obligation or compliance with the relevant provision by the Affected Party’s head or home office and (iv) the Affected Party’s head or home office fails so to perform or comply due to the occurrence of an event or circumstance which would, if that head or home office were the Office through which the Affected Party makes and receives payments and deliveries with respect to the relevant Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and such failure would otherwise constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1) with respect to such party, then, for so long as the relevant event or circumstance continues to exist with respect to both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case may be, and the Affected Party’s head or home office, such failure will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).
| -13- |
| 6. | Early Termination; Close-Out Netting |
(a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event other than a Force Majeure Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction, and will also give the other party such other information about that Termination Event as the other party may reasonably require. If a Force Majeure Event occurs, each party will, promptly upon becoming aware of it, use all reasonable efforts to notify the other party, specifying the nature of that Force Majeure Event, and will also give the other party such other information about that Force Majeure Event as the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, other than immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.
| -14- |
(iii) Two Affected Parties. If a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice of such occurrence is given under Section 6(b)(i) to avoid that Termination Event.
(iv) Right to Terminate.
(1) If
(A) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or
(B) a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party,
the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there are two Affected Parties, or the Non-affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, if the relevant Termination Event is then continuing, by not more than 20 days notice to the other party, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.
(2) If at any time an Illegality or a Force Majeure Event has occurred and is then continuing and any applicable Waiting Period has expired:
(A) Subject to clause (B) below, either party may, by not more than 20 days notice to the other party, designate (I) a day not earlier than the day on which such notice becomes effective as an Early Termination Date in respect of all Affected Transactions or (II) by specifying in that notice the Affected Transactions in respect of which it is designating the relevant day as an Early Termination Date, a day not earlier than two Local Business Days following the day on which such notice becomes effective as an Early Termination Date in respect of less than all Affected Transactions. Upon receipt of a notice designating an Early Termination Date in respect of less than all Affected Transactions, the other party may, by notice to the designating party, if such notice is effective on or before the day so designated, designate that same day as an Early Termination Date in respect of any or all other Affected Transactions.
(B) An Affected Party (if the Illegality or Force Majeure Event relates to performance by such party or any Credit Support Provider of such party of an obligation to make any payment or delivery under, or to compliance with any other material provision of, the relevant Credit Support Document) will only have the right to designate an Early Termination Date under Section 6(b)(iv)(2)(A) as a result of an Illegality under Section 5(b)(i)(2) or a Force Majeure Event under Section 5(b)(ii)(2) following the prior designation by the other party of an Early Termination Date, pursuant to Section 6(b)(iv)(2)(A), in respect of less than all Affected Transactions.
| -15- |
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section 6(a) or 6(b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 9(h)(i) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date will be determined pursuant to Sections 6(e) and 9(h)(ii).
(d) Calculations; Payment Date.
(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (l) showing, in reasonable detail, such calculations (including any quotations, market data or information from internal sources used in making such calculations), (2) specifying (except where there are two Affected Parties) any Early Termination Amount payable and (3) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation or market data obtained in determining a Close-out Amount, the records of the party obtaining such quotation or market data will be conclusive evidence of the existence and accuracy of such quotation or market data.
(ii) Payment Date. An Early Termination Amount due in respect of any Early Termination Date will, together with any amount of interest payable pursuant to Section 9(h)(ii)(2), be payable (1) on the day on which notice of the amount payable is effective in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default and (2) on the day which is two Local Business Days after the day on which notice of the amount payable is effective (or, if there are two Affected Parties, after the day on which the statement provided pursuant to clause (i) above by the second party to provide such a statement is effective) in the case of an Early Termination Date which is designated as a result of a Termination Event.
(e) Payments on Early Termination. If an Early Termination Date occurs, the amount, if any, payable in respect of that Early Termination Date (the “Early Termination Amount”) will be determined pursuant to this Section 6(e) and will be subject to Section 6(f).
| -16- |
(i) Events of Default. If the Early Termination Date results from an Event of Default, the Early Termination Amount will be an amount equal to (1) the sum of (A) the Termination Currency Equivalent of the Close-out Amount or Close-out Amounts (whether positive or negative) determined by the Non-defaulting Party for each Terminated Transaction or group of Terminated Transactions, as the case may be, and (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (2) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If the Early Termination Amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of the Early Termination Amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a Termination Event:
(1) One Affected Party. Subject to clause (3) below, if there is one Affected Party, the Early Termination Amount will be determined in accordance with Section 6(e)(i), except that references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and to the Non-affected Party, respectively.
(2) Two Affected Parties. Subject to clause (3) below, if there are two Affected Parties, each party will determine an amount equal to the Termination Currency Equivalent of the sum of the Close-out Amount or Close-out Amounts (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions, as the case may be, and the Early Termination Amount will be an amount equal to (A) the sum of (I) one-half of the difference between the higher amount so determined (by party “X”) and the lower amount so determined (by party “Y”) and (II) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to Y. If the Early Termination Amount is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of the Early Termination Amount to Y.
(3) Mid-Market Events. If that Termination Event is an Illegality or a Force Majeure Event, then the Early Termination Amount will be determined in accordance with clause (1) or (2) above, as appropriate, except that, for the purpose of determining a Close-out Amount or Close-out Amounts, the Determining Party will:
(A) if obtaining quotations from one or more third parties (or from any of the Determining Party’s Affiliates), ask each third party or Affiliate (I) not to take account of the current creditworthiness of the Determining Party or any existing Credit Support Document and (II) to provide mid-market quotations; and
| -17- |
(B) in any other case, use mid-market values without regard to the creditworthiness of the Determining Party.
(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because Automatic Early Termination applies in respect of a party, the Early Termination Amount will be subject to such adjustments as are appropriate and permitted by applicable law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).
(iv) Adjustment for Illegality or Force Majeure Event. The failure by a party or any Credit Support Provider of such party to pay, when due, any Early Termination Amount will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1) if such failure is due to the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event. Such amount will (1) accrue interest and otherwise be treated as an Unpaid Amount owing to the other party if subsequently an Early Termination Date results from an Event of Default, a Credit Event Upon Merger or an Additional Termination Event in respect of which all outstanding Transactions are Affected Transactions and (2) otherwise accrue interest in accordance with Section 9(h)(ii)(2).
(v) Pre-Estimate. The parties agree that an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks, and, except as otherwise provided in this Agreement, neither party will be entitled to recover any additional damages as a consequence of the termination of the Terminated Transactions.
(f) Set-Off. Any Early Termination Amount payable to one party (the “Payee”) by the other party (the “Payer”), in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be (“X”) (and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts (“Other Amounts”) payable by the Payee to the Payer (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation). To the extent that any Other Amounts are so set off, those Other Amounts will be discharged promptly and in all respects. X will give notice to the other party of any set-off effected under this Section 6(f).
For this purpose, either the Early Termination Amount or the Other Amounts (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, in good faith and using commercially reasonable procedures, to purchase the relevant amount of such currency.
| -18- |
If an obligation is unascertained, X may in good faith estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.
Nothing in this Section 6(f) will be effective to create a charge or other security interest. This Section 6(f) will be without prejudice and in addition to any right of set-off, offset, combination of accounts, lien, right of retention or withholding or similar right or requirement to which any party is at any time otherwise entitled or subject (whether by operation of law, contract or otherwise).
| 7. | Transfer |
Subject to Section 6(b)(ii) and to the extent permitted by applicable law, neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any Early Termination Amount payable to it by a Defaulting Party, together with any amounts payable on or with respect to that interest and any other rights associated with that interest pursuant to Sections 8, 9(h) and 11.
Any purported transfer that is not in compliance with this Section 7 will be void.
| 8. | Contractual Currency |
(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in good faith and using commercially reasonable procedures in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.
| -19- |
(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in clause (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purpose of such judgment or order and the rate of exchange at which such party is able, acting in good faith and using commercially reasonable procedures in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party.
(c) Separate Indemnities. To the extent permitted by applicable law, the indemnities in this Section 8 constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.
| 9. | Miscellaneous |
(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud.
(b) Amendments. An amendment, modification or waiver in respect of this Agreement will only be effective if in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law.
| -20- |
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission and by electronic messaging system), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation will be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes, by an exchange of electronic messages on an electronic messaging system or by an exchange of e-mails, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex, electronic message or e-mail constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.
(h) Interest and Compensation.
(i) Prior to Early Termination. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction:
(1) Interest on Defaulted Payments. If a party defaults in the performance of any payment obligation, it will, to the extent permitted by applicable law and subject to Section 6(c), pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as the overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment (and excluding any period in respect of which interest or compensation in respect of the overdue amount is due pursuant to clause (3)(B) or (C) below), at the Default Rate.
(2) Compensation for Defaulted Deliveries. If a party defaults in the performance of any obligation required to be settled by delivery, it will on demand (A) compensate the other party to the extent provided for in the relevant Confirmation or elsewhere in this Agreement and (B) unless otherwise provided in the relevant Confirmation or elsewhere in this Agreement, to the extent permitted by applicable law and subject to Section 6(c), pay to the other party interest (before as well as after judgment) on an amount equal to the fair market value of that which was required to be delivered in the same currency as that amount, for the period from (and including) the originally scheduled date for delivery to (but excluding) the date of actual delivery (and excluding any period in respect of which interest or compensation in respect of that amount is due pursuant to clause (4) below), at the Default Rate. The fair market value of any obligation referred to above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party that was entitled to take delivery.
| -21- |
(3) Interest on Deferred Payments. If
(A) a party does not pay any amount that, but for Section 2(a)(iii), would have been payable, it will, to the extent permitted by applicable law and subject to Section 6(c) and clauses (B) and (C) below, pay interest (before as well as after judgment) on that amount to the other party on demand (after such amount becomes payable) in the same currency as that amount, for the period from (and including) the date the amount would, but for Section 2(a)(iii), have been payable to (but excluding) the date the amount actually becomes payable, at the Applicable Deferral Rate;
(B) a payment is deferred pursuant to Section 5(d), the party which would otherwise have been required to make that payment will, to the extent permitted by applicable law, subject to Section 6(c) and for so long as no Event of Default or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the amount of the deferred payment to the other party on demand (after such amount becomes payable) in the same currency as the deferred payment, for the period from (and including) the date the amount would, but for Section 5(d), have been payable to (but excluding) the earlier of the date the payment is no longer deferred pursuant to Section 5(d) and the date during the deferral period upon which an Event of Default or Potential Event of Default with respect to that party occurs, at the Applicable Deferral Rate; or
(C) a party fails to make any payment due to the occurrence of an Illegality or a Force Majeure Event (after giving effect to any deferral period contemplated by clause (B) above), it will, to the extent permitted by applicable law, subject to Section 6(c) and for so long as the event or circumstance giving rise to that Illegality or Force Majeure Event continues and no Event of Default or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as the overdue amount, for the period from (and including) the date the party fails to make the payment due to the occurrence of the relevant Illegality or Force Majeure Event (or, if later, the date the payment is no longer deferred pursuant to Section 5(d)) to (but excluding) the earlier of the date the event or circumstance giving rise to that Illegality or Force Majeure Event ceases to exist and the date during the period upon which an Event of Default or Potential Event of Default with respect to that party occurs (and excluding any period in respect of which interest or compensation in respect of the overdue amount is due pursuant to clause (B) above), at the Applicable Deferral Rate.
| -22- |
(4) Compensation for Deferred Deliveries. If:
(A) a party does not perform any obligation that, but for Section 2(a)(iii), would have been required to be settled by delivery;
(B) a delivery is deferred pursuant to Section 5(d); or
(C) a party fails to make a delivery due to the occurrence of an Illegality or a Force Majeure Event at a time when any applicable Waiting Period has expired, the party required (or that would otherwise have been required) to make the delivery will, to the extent permitted by applicable law and subject to Section 6(c), compensate and pay interest to the other party on demand (after, in the case of clauses (A) and (B) above, such delivery is required) if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.
(ii) Early Termination. Upon the occurrence or effective designation of an Early Termination Date in respect of a Transaction:
(1) Unpaid Amounts. For the purpose of determining an Unpaid Amount in respect of the relevant Transaction, and to the extent permitted by applicable law, interest will accrue on the amount of any payment obligation or the amount equal to the fair market value of any obligation required to be settled by delivery included in such determination in the same currency as that amount, for the period from (and including) the date the relevant obligation was (or would have been but for Section 2(a)(iii) or 5(d)) required to have been performed to (but excluding) the relevant Early Termination Date, at the Applicable Close-out Rate.
(2) Interest on Early Termination Amounts. If an Early Termination Amount is due in respect of such Early Termination Date, that amount will, to the extent permitted by applicable law, be paid together with interest (before as well as after judgment) on that amount in the Termination Currency, for the period from (and including) such Early Termination Date to (but excluding) the date the amount is paid, at the Applicable Close-out Rate.
| -23- |
(iii) Interest Calculation. Any interest pursuant to this Section 9(h) will be calculated on the basis of daily compounding and the actual number of days elapsed.
| 10. | Offices; Multibranch Parties |
(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to and agrees with the other party that, notwithstanding the place of booking or its jurisdiction of incorporation or organization, its obligations are the same in terms of recourse against it as if it had entered into the Transaction through its head or home office, except that a party will not have recourse to the head or home office of the other party in respect of any payment or delivery deferred pursuant to Section 5(d) for so long as the payment or delivery is so deferred. This representation and agreement will be deemed to be repeated by each party on each date on which the parties enter into a Transaction.
(b) If a party is specified as a Multibranch Party in the Schedule, such party may, subject to clause (c) below, enter into a Transaction through, book a Transaction in and make and receive payments and deliveries with respect to a Transaction through any Office listed in respect of that party in the Schedule (but not any other Office unless otherwise agreed by the parties in writing).
(c) The Office through which a party enters into a Transaction will be the Office specified for that party in the relevant Confirmation or as otherwise agreed by the parties in writing, and, if an Office for that party is not specified in the Confirmation or otherwise agreed by the parties in writing, its head or home office. Unless the parties otherwise agree in writing, the Office through which a party enters into a Transaction will also be the Office in which it books the Transaction and the Office through which it makes and receives payments and deliveries with respect to the Transaction. Subject to Section 6(b)(ii), neither party may change the Office in which it books the Transaction or the Office through which it makes and receives payments or deliveries with respect to a Transaction without the prior written consent of the other party.
| 11. | Expenses |
A Defaulting Party will on demand indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, execution fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.
| 12. | Notices |
(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner described below (except that a notice or other communication under Section 5 or 6 may not be given by electronic messaging system or e-mail) to the address or number or in accordance with the electronic messaging system or e-mail details provided (see the Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date it is delivered;
| -24- |
(ii) if sent by telex, on the date the recipient’s answerback is received;
(iii) if sent by facsimile transmission, on the date it is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date it is delivered or its delivery is attempted;
(v) if sent by electronic messaging system, on the date it is received; or
(vi) if sent by e-mail, on the date it is delivered,
unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication will be deemed given and effective on the first following day that is a Local Business Day.
(b) Change of Details. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system or e-mail details at which notices or other communications are to be given to it.
| 13. | Governing Law and Jurisdiction |
(a) Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to any dispute arising out of or in connection with this Agreement (“Proceedings”), each party irrevocably:
(i) submits:
(1) if this Agreement is expressed to be governed by English law, to (A) the non-exclusive jurisdiction of the English courts if the Proceedings do not involve a Convention Court and (B) the exclusive jurisdiction of the English courts if the Proceedings do involve a Convention Court; or
(2) if this Agreement is expressed to be governed by the laws of the State of New York, to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City;
(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party; and
| -25- |
(iii) agrees, to the extent permitted by applicable law, that the bringing of Proceedings in any one or more jurisdictions will not preclude the bringing of Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent, if any, specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12(a)(i), 12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by applicable law.
(d) Waiver of Immunities. Each party irrevocably waives, to the extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction or order for specific performance or recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.
| 14. | Definitions |
As used in this Agreement:
“Additional Representation” has the meaning specified in Section 3.
“Additional Termination Event” has the meaning specified in Section 5(b).
“Affected Party” has the meaning specified in Section 5(b).
“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Force Majeure Event, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event (which, in the case of an Illegality under Section 5(b)(i)(2) or a Force Majeure Event under Section 5(b)(ii)(2), means all Transactions unless the relevant Credit Support Document references only certain Transactions, in which case those Transactions and, if the relevant Credit Support Document constitutes a Confirmation for a Transaction, that Transaction) and (b) with respect to any other Termination Event, all Transactions.
“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person.
| -26- |
“Agreement” has the meaning specified in Section 1(c).
“Applicable Close-out Rate” means:
(a) in respect of the determination of an Unpaid Amount:
(i) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(ii) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate;
(iii) in respect of obligations deferred pursuant to Section 5(d), if there is no Defaulting Party and for so long as the deferral period continues, the Applicable Deferral Rate; and
(iv) in all other cases following the occurrence of a Termination Event (except where interest accrues pursuant to clause (iii) above), the Applicable Deferral Rate; and
(b) in respect of an Early Termination Amount:
(i) for the period from (and including) the relevant Early Termination Date to (but excluding) the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable:
(1) if the Early Termination Amount is payable by a Defaulting Party, the Default Rate;
(2) if the Early Termination Amount is payable by a Non-defaulting Party, the Non-default Rate; and
(3) in all other cases, the Applicable Deferral Rate; and
(ii) for the period from (and including) the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable to (but excluding) the date of actual payment:
(1) if a party fails to pay the Early Termination Amount due to the occurrence of an event or circumstance which would, if it occurred with respect to a payment or delivery under a Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and for so long as the Early Termination Amount remains unpaid due to the continuing existence of such event or circumstance, the Applicable Deferral Rate;
(2) if the Early Termination Amount is payable by a Defaulting Party (but excluding any period in respect of which clause (1) above applies), the Default Rate;
| -27- |
(3) if the Early Termination Amount is payable by a Non-defaulting Party (but excluding any period in respect of which clause (1) above applies), the Non-default Rate; and
(4) in all other cases, the Termination Rate.
“Applicable Deferral Rate” means:
(a) for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer to be a rate offered to the payer by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market;
(b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the definition of Applicable Close-out Rate, the rate certified by the relevant payer to be a rate offered to prime banks by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer after consultation with the other party, if practicable, for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; and
(c) for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv), (b)(i)(3) and (b)(ii)(1) of the definition of Applicable Close-out Rate, a rate equal to the arithmetic mean of the rate determined pursuant to clause (a) above and a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount.
“Automatic Early Termination” has the meaning specified in Section 6(a).
“Burdened Party” has the meaning specified in Section 5(b)(iv).
“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs after the parties enter into the relevant Transaction.
“Close-out Amount” means, with respect to each Terminated Transaction or each group of Terminated Transactions and a Determining Party, the amount of the losses or costs of the Determining Party that are or would be incurred under then prevailing circumstances (expressed as a positive number) or gains of the Determining Party that are or would be realized under then prevailing circumstances (expressed as a negative number) in replacing, or in providing for the Determining Party the economic equivalent of, (a) the material terms of that Terminated Transaction or group of Terminated Transactions, including the payments and deliveries by the parties under Section 2(a)(i) in respect of that Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date (assuming satisfaction of the conditions precedent in Section 2(a)(iii)) and (b) the option rights of the parties in respect of that Terminated Transaction or group of Terminated Transactions.
| -28- |
Any Close-out Amount will be determined by the Determining Party (or its agent), which will act in good faith and use commercially reasonable procedures in order to produce a commercially reasonable result. The Determining Party may determine a Close-out Amount for any group of Terminated Transactions or any individual Terminated Transaction but, in the aggregate, for not less than all Terminated Transactions. Each Close-out Amount will be determined as of the Early Termination Date or, if that would not be commercially reasonable, as of the date or dates following the Early Termination Date as would be commercially reasonable.
Unpaid Amounts in respect of a Terminated Transaction or group of Terminated Transactions and legal fees and out-of-pocket expenses referred to in Section 11 are to be excluded in all determinations of Close-out Amounts.
In determining a Close-out Amount, the Determining Party may consider any relevant information, including, without limitation, one or more of the following types of information:
(i) quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that may take into account the creditworthiness of the Determining Party at the time the quotation is provided and the terms of any relevant documentation, including credit support documentation, between the Determining Party and the third party providing the quotation;
(ii) information consisting of relevant market data in the relevant market supplied by one or more third parties including, without limitation, relevant rates, prices, yields, yield curves, volatilities, spreads, correlations or other relevant market data in the relevant market; or
(iii) information of the types described in clause (i) or (ii) above from internal sources (including any of the Determining Party’s Affiliates) if that information is of the same type used by the Determining Party in the regular course of its business for the valuation of similar transactions.
The Determining Party will consider, taking into account the standards and procedures described in this definition, quotations pursuant to clause (i) above or relevant market data pursuant to clause (ii) above unless the Determining Party reasonably believes in good faith that such quotations or relevant market data are not readily available or would produce a result that would not satisfy those standards. When considering information described in clause (i), (ii) or (iii) above, the Determining Party may include costs of funding, to the extent costs of funding are not and would not be a component of the other information being utilized. Third parties supplying quotations pursuant to clause (i) above or market data pursuant to clause (ii) above may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors, brokers and other sources of market information.
Without duplication of amounts calculated based on information described in clause (i), (ii) or (iii) above, or other relevant information, and when it is commercially reasonable to do so, the Determining Party may in addition consider in calculating a Close-out Amount any loss or cost incurred in connection with its terminating, liquidating or re-establishing any hedge related to a Terminated Transaction or group of Terminated Transactions (or any gain resulting from any of them).
| -29- |
Commercially reasonable procedures used in determining a Close-out Amount may include the following:
(1) application to relevant market data from third parties pursuant to clause (ii) above or information from internal sources pursuant to clause (iii) above of pricing or other valuation models that are, at the time of the determination of the Close-out Amount, used by the Determining Party in the regular course of its business in pricing or valuing transactions between the Determining Party and unrelated third parties that are similar to the Terminated Transaction or group of Terminated Transactions; and
(2) application of different valuation methods to Terminated Transactions or groups of Terminated Transactions depending on the type, complexity, size or number of the Terminated Transactions or group of Terminated Transactions.
“Confirmation” has the meaning specified in the preamble.
“Consent” includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent.
“Contractual Currency” has the meaning specified in Section 8(a).
“Convention Court” means any court which is bound to apply to the Proceedings either Article 17 of the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters or Article 17 of the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.
“Credit Event Upon Merger” has the meaning specified in Section 5(b).
“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement.
“Credit Support Provider” has the meaning specified in the Schedule.
“Cross-Default” means the event specified in Section 5(a)(vi).
“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.
“Defaulting Party” has the meaning specified in Section 6(a).
“Designated Event” has the meaning specified in Section 5(b)(v).
“Determining Party” means the party determining a Close-out Amount.
“Early Termination Amount” has the meaning specified in Section 6(e).
“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).
| -30- |
“Electronic messages” does not include e-mails but does include documents expressed in markup languages, and “electronic messaging system” will be construed accordingly.
“English law” means the law of England and Wales, and “English” will be construed accordingly. “Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule. “Force Majeure Event” has the meaning specified in Section 5(b).
“General Business Day” means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits).
“Illegality” has the meaning specified in Section 5(b).
“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).
“Law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority), and “unlawful” will be construed accordingly.
“Local Business Day” means (a) in relation to any obligation under Section 2(a)(i), a General Business Day in the place or places specified in the relevant Confirmation and a day on which a relevant settlement system is open or operating as specified in the relevant Confirmation or, if a place or a settlement system is not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) for the purpose of determining when a Waiting Period expires, a General Business Day in the place where the event or circumstance that constitutes or gives rise to the Illegality or Force Majeure Event, as the case may be, occurs, (c) in relation to any other payment, a General Business Day in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment and, if that currency does not have a single recognized principal financial centre, a day on which the settlement system necessary to accomplish such payment is open, (d) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), a General Business Day (or a day that would have been a General Business Day but for the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event) in the place specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant locations for performance with respect to such Specified Transaction.
| -31- |
“Local Delivery Day” means, for purposes of Sections 5(a)(i) and 5(d), a day on which settlement systems necessary to accomplish the relevant delivery are generally open for business so that the delivery is capable of being accomplished in accordance with customary market practice, in the place specified in the relevant Confirmation or, if not so specified, in a location as determined in accordance with customary market practice for the relevant delivery.
“Master Agreement” has the meaning specified in the preamble.
“Merger Without Assumption” means the event specified in Section 5(a)(viii).
“Multiple Transaction Payment Netting” has the meaning specified in Section 2(c). “Non-affected Party” means, so long as there is only one Affected Party, the other party.
“Non-default Rate” means the rate certified by the Non-defaulting Party to be a rate offered to the Non-defaulting Party by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the Non-defaulting Party for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market.
“Non-defaulting Party” has the meaning specified in Section 6(a).
“Office” means a branch or office of a party, which may be such party’s head or home office.
“Other Amounts” has the meaning specified in Section 6(f).
“Payee” has the meaning specified in Section 6(f).
“Payer” has the meaning specified in Section 6(f).
“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
“Proceedings” has the meaning specified in Section 13(b).
“Process Agent” has the meaning specified in the Schedule.
“Rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.
“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organized, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.
“Schedule” has the meaning specified in the preamble.
“Scheduled Settlement Date” means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction.
| -32- |
“Specified Entity” has the meaning specified in the Schedule.
“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.
“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is not a Transaction under this Agreement but (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.
“Stamp Tax” means any stamp, registration, documentation or similar tax.
“Stamp Tax Jurisdiction” has the meaning specified in Section 4(e).
“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.
“Tax Event” has the meaning specified in Section 5(b).
“Tax Event Upon Merger” has the meaning specified in Section 5(b).
“Terminated Transactions” means, with respect to any Early Termination Date, (a) if resulting from an Illegality or a Force Majeure Event, all Affected Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if resulting from any other Termination Event, all Affected Transactions and (c) if resulting from an Event of Default, all Transactions in effect either immediately before the effectiveness of the notice designating that Early Termination Date or, if Automatic Early Termination applies, immediately before that Early Termination Date.
| -33- |
“Termination Currency” means (a) if a Termination Currency is specified in the Schedule and that currency is freely available, that currency, and (b) otherwise, euro if this Agreement is expressed to be governed by English law or United States Dollars if this Agreement is expressed to be governed by the laws of the State of New York.
“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Close-out Amount is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.
“Termination Event” means an Illegality, a Force Majeure Event, a Tax Event, a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event.
“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.
“Threshold Amount” means the amount, if any, specified as such in the Schedule.
“Transaction” has the meaning specified in the preamble.
“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii) or due but for Section 5(d)) to such party under Section 2(a)(i) or 2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date, (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii) or 5(d)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered and (c) if the Early Termination Date results from an Event of Default, a Credit Event Upon Merger or an Additional Termination Event in respect of which all outstanding Transactions are Affected Transactions, any Early Termination Amount due prior to such Early Termination Date and which remains unpaid as of such Early Termination Date, in each case together with any amount of interest accrued or other compensation in respect of that obligation or deferred obligation, as the case may be, pursuant to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any obligation referred to in clause (b) above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it will be the average of the Termination Currency Equivalents of the fair market values so determined by both parties.
“Waiting Period” means:
(a) in respect of an event or circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and
(b) in respect of an event or circumstance under Section 5(b)(ii), other than in the case of Section 5(b)(ii)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of eight Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance.
| -34- |
IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.
| Sorbie Bornholm LP acting by its General Partner | VERSES AI Inc. | |
| (Name of Party) | (Name of Party) |
| By: | /s/ Greg Kofford | By: | /s/ Gabriel René | |
| Name: | Greg Kofford | Name: | Gabriel René | |
| Title: | Director | Title: | CEO | |
| Date: | 11/1/2025 | Date: | 11/2/2025 |
Exhibit 10.3
(1) VERSES AI INC.
(2) SORBIE BORNHOLM LP
(3) SORBIE INVESTMENTS LLP
SUBSCRIPTION AGREEMENT
| 1. | INTERPRETATION | 2 |
| 2. | CONDITIONS PRECEDENT | 7 |
| 3. | ISSUE OF THE SBLP SHARES, THE SILP SHARES AND ANCILLARY ACTIONS | 9 |
| 4. | REGISTRATION | 10 |
| 5. | DEPOSIT AND THIRD PARTY FEES | 10 |
| 6. | WARRANTIES | 11 |
| 7. | TERMINATION | 13 |
| 8. | GENERAL | 14 |
| 9. | LAW AND JURISDICTION | 17 |
| SCHEDULE 1 WARRANTIES | 18 | |
| Part 1 Warranties of the Company | 18 | |
| Part 2 Warranties of SBLP and SILP | 23 | |
| 1 |
DATED
PARTIES
| (1) | VERSES AI INC., a company incorporated under the laws of the Province of British Columbia and having its head office at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3 (the “Company”); |
| (2) | SORBIE BORNHOLM LP, a limited partnership formed under the laws of England and Wales whose principal office is at 9th Floor, 107 Cheapside, London EC2V 6DN (“SBLP”); and |
| (3) | SORBIE INVESTMENTS LLP, a limited partnership formed under the laws of England and Wales whose principal office is at 9th Floor, 107 Cheapside, London EC2V 6DN (“SILP”). |
BACKGROUND
| (A) | The Company is a public company whose Common Shares are listed on Cboe Canada. |
| (B) | The Company proposes to issue units, each unit consisting of one (1) Common Share and one half of a Warrant to SBLP and SILP on and in accordance with the terms of this agreement. |
| (C) | An application has been made by the Company for the Admission of the SBLP and SILP Shares and Common Shares underlying the Warrants. |
| (D) | The Company and SBLP propose to enter into the ISDA Master Agreement & Schedule dated on or about the date of this agreement. |
| (E) | The Company proposes to enter into a Sharing Transaction with SBLP. |
OPERATIVE PROVISIONS
| 1. | INTERPRETATION |
| 1.1 | Definitions |
In this agreement, meanings in the Sharing Transaction Confirmation shall have the same meaning in this agreement, in addition to the following meanings, where the context admits:
“Accounts” means the audited annual consolidated financial statements of the Company prepared in accordance with International Financial Reporting Standards (IFRS);
“Admission” means the listing of the Common Shares for trading on the CBOE;
“Adverse Interest” means any option, lien, mortgage, charge, equity, trust, any other right or interest of any third party and any other encumbrance of any kind;
| 2 |
“Authorization” means any licence, consent, permit, approval or authorization (public or private) granted by any Authority or other person;
“Authority” means any competent governmental, administrative, supervisory, regulatory, judicial, determinative, disciplinary, enforcement or tax raising body, authority, agency, board, department, court or tribunal of any jurisdiction, and whether supranational, national, provincial, regional or local;
“Board” means the board of directors of the Company or a duly authorized committee thereof;
“Bonds” means UK Government Bonds with a market value on the date immediately preceding the date of delivery to the Escrow Agent by SBLP and SILP pursuant to the Escrow Agreement of at least CAD$14,000,000, based on current market values at the time of delivery, in connection with which SBLP and/or SILP shall supply a schedule listing for each Bond, listing the exact amount, maturity and CUSIP/ISIN number;
“Business Day” means any day other than a Saturday or Sunday or a day which is a public holiday in the place specified where that term is used in this agreement;
“CAD” means the Canadian dollar;
“CBOE” means the CBOE Canada Inc. Exchange;
“CBOE Policies” means the rules and policies published by the CBOE as in force at the date of this agreement as amended from time to time or waived in relation to the Company together with the listing agreement made between the Company and CBOE;
“CDS” means the Canadian Depositary for Securities Ltd. acting as clearing and settlement agent of the CBOE;
“Common Shares” means the Class A Subordinate Voting Shares in the capital of the Company;
“Company Warranties” means the warranties given by the Company pursuant to clause 6 and Part 1 of Schedule 1;
“Conditions” means the conditions precedent set out in clause 2;
“Corporations Act” means the Business Corporations Act (British Columbia) including any regulations made pursuant thereto;
“Credit Support Annex” means the annex to the ISDA Master Agreement providing for the transfer by the Company of “Eligible Credit Support” (as defined therein) in support of its obligations pursuant to the Sharing Transaction;
| 3 |
“Deposit” means the deposit of CAD$150,000 paid by the Company to SBLP on or about the date of the Term Sheet, which shall be refundable to the Company upon the successful closing of the Placing after deduction of the legal costs of SBLP and the fee due under the Escrow Agreement. The Deposit not being repayable in the event that the Placing fails to close as a result of any act or omission of the Company;
“Director” means a director of the Company from time to time;
“Escrow Agent” means Orrick, Herrington & Sutcliffe (UK) LLP, a limited liability partnership of 107 Cheapside, London EC2V 6DN;
“Escrow Agreement” means the agreement of even date between the Company, SBLP, SILP and the Escrow Agent governing escrow procedures for completion;
“General Partner” means Sorbie Bornholm Limited, a company duly incorporated in England and Wales, the general partner of SBLP;
“Group” means the Company and its Subsidiaries or Affiliates (each such term as defined in section 1 of the Corporations Act) for the time being;
“Group Company” means any one or more as the context requires, of the Company and its Subsidiaries or Affiliates;
“ISDA Master Agreement & Schedule” means the master agreement and schedule between SBLP and the Company dated on or about the date of this agreement containing the generic Sharing Transaction terms and conditions;
“Issue Date” means the date on which the SBLP Shares and the SILP Shares are issued; “Last Accounts Date” means 31 March 2025;
“Law” or “Laws” includes all applicable legislation, statutes, directives, regulations, judgments, decisions, decrees, orders, instruments, by-laws and other legislative measures or decisions having the force of law, treaties, conventions and other agreements among Canada and the European Union or other supranational bodies, rules of common law, customary law and equity and all civil and other codes and all other laws of or having effect in any jurisdiction from time to time and whether before or after the date of this agreement;
“Listing Date” means the day on which the Common Shares are listed and trading on the CBOE;
“Long Stop Date” means 31 October 2025 or such later date as extended pursuant to clause 2.4;
“Local Time” means the time in Vancouver, British Columbia on the relevant day;
“Placing” means the placing of the units, comprised of the SBLP Shares, the SILP Shares and Warrants pursuant to this agreement;
“Placing Price” means CAD$6.00 for each Common Share with one half of a Warrant attached;
| 4 |
“Regulatory Information Service” means (i) a news service used by the Company to disseminate information in accordance with the CBOE Policies; and (ii) the System for Electronic Document Analysis and Retrieval (SEDAR+), whereupon all applicable continuous disclosure documents required to be filed by the Company pursuant to applicable Canadian securities laws are filed;
“SBLP’s Solicitors” means Orrick, Herrington & Sutcliffe (UK) LLP, 107 Cheapside, London EC2V 6DN;
“SILP Shares” means the 1,233,334 Common Shares in the capital of the Company to be issued to SBLP pursuant to the Placing “SBLP Shares” means the 1,240,000 Common Shares in the capital of the Company to be issued to SBLP pursuant to the Placing and including the Value Payment Shares;
“SILP Warranties” means the warranties given by SILP pursuant to clause 6 and Schedule 1Part 2 of Schedule 1;
“SBLP Warranties” means the warranties given by SBLP pursuant to clause 6 and Schedule 1Part 2 of Schedule 1;
“Shareholders” means the shareholders of the Company;
“Sharing Transaction” means the sharing transaction in respect of the Sharing Transaction Shares, with a reference price of CAD$7.75 providing for a series of individual sharing transactions which are scheduled to settle over an 11 month period in accordance with the schedule of settlements forming part of that agreement;
“Sharing Transaction Confirmation” means the confirmation subject to the ISDA Master Agreement & Schedule documenting the specific terms of the Sharing Transaction;
“Sharing Transaction Shares” means 1,806,452 Common Shares which are the subject of the Sharing Transaction;
“Specified Event” means: (a) an event occurring or matter arising on or after the date of this agreement and before the Issue Date which, if the Company Warranties had been repeated on each day of that period with reference to the circumstances existing as at each such deemed repetition, would have rendered any of the Company Warranties materially untrue or incorrect and would have a material adverse change on the financial position or prospects of the Group taken as a whole; and (b) the Common Shares trading the CBOE at less than CAD$6.00 per Common Share.;
“Tax” or “Taxation” means any form of taxation wherever imposed without prejudice to the generality of the foregoing, includes income tax, corporation tax, capital gains tax, VAT or any similar goods and services tax, stamp duty, stamp duty reserve tax, stamp duty land tax, customs and. excise duties, national insurance contributions and any other taxes, levies, duties or imposts similar to, replaced by or replacing any of them and all penalties, fines and interest included in or relating to any assessment or liability therefor, regardless of whether such taxes, penalties, charges and interest and directly or primarily chargeable against or attributable to any Group Company or any other person;
| 5 |
“Term Sheet” means the term sheet between the Company and SBLP dated on or about 18 October 2025;
“Trading Day” has the meaning given to it in the CBOE Policies.
“VAT” means United Kingdom value added tax;
“Value Payment” means the fee to be paid by the Company in the sum of CAD$840,000 in connection with SBLP entering into the Sharing Transaction which may be settled in cash or in Common Shares (with Warrants attached) at the Placing Price, provided that the Company’s obligation to pay the Value Payment is subject to satisfaction or waiver of all Conditions;
“Value Payment Shares” means, in the event that the Value Payment is settled in Common Shares and Warrants, 140,000 Common Shares each with one half of a Warrant attached (rounded up to the nearest whole Warrant), which shall be delivered to SBLP together with the SBLP Shares on the Issue Date, subject to satisfaction or waiver of all Conditions; and
“Warrants” means the Common Share purchase warrants of the Company, each entitling the holder to subscribe for one Common Share for a period of three years from the Issue Date, at an exercise price CAD$7.00; provided that the Warrants shall not be exercisable by the holder if such exercise would cause the holder to hold, individually, more than 9.99% of the issued and outstanding Common Shares at such time.
| 1.2 | Construction of certain references |
In this agreement where the context admits:
| (a) | words and phrases, the definitions of which are contained or referred to in the Corporations Act and which are in force at the date of this agreement, shall be construed as having the meanings so attributed to them; | |
| (b) | references to statutory provisions shall be construed as references to those provisions as amended or re-enacted or as their application is modified by other provisions from time to time and shall include references to any provisions of which they are re-enactments (whether with or without modification); | |
| (c) | references to times, unless otherwise expressly stated, are references to “Local Time” are to local time in Vancouver, British Columbia on the relevant Business Day; | |
| (d) | references to clauses and schedules are references to clauses of and schedules to this agreement and references to paragraphs are, unless otherwise stated, references to paragraphs of the schedule in which the reference appears; |
| 6 |
| (e) | references to the singular shall include the plural and vice versa, and references to the masculine, the feminine and the neuter shall include each other such gender; | |
| (f) | headings are included for convenience only and shall be disregarded in its interpretation; | |
| (g) | general words shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things, and the word “including” shall be construed without limitation; and | |
| (h) | “person” includes any individual, partnership, body corporate, corporation sole or aggregate, a state or agency of a state and any unincorporated association or organization in each case whether or not having a separate legal personality. |
| 1.3 | Schedules |
Each of the Schedules shall have effect as if set out in this agreement.
| 2. | CONDITIONS PRECEDENT |
| 2.1 | The Company’s obligations under this agreement conditional |
The obligations of the Company under this agreement are conditional upon satisfaction or waiver of each of the obligations set out below by 3.00pm Local Time on the Long Stop Date:
| (a) | the Company shall have received notice of CBOE’s acceptance of the transactions contemplated herein; | |
| (b) | confirmation of delivery to the Company, being sent to the Escrow Agent by SBLP and SILP (on behalf of the Company) of the delivery of Bonds, together with delivery to the Company of a schedule listing for each Bond the exact amount, maturity and CUSIP/ISIN number; and | |
| (c) | delivery by SBLP of the following agreements to the Company, all duly executed on behalf of SBLP: |
| (i) | the Escrow Agreement; | |
| (ii) | the instrument constituting the Warrants; | |
| (iii) | the Sharing Transaction Confirmation; and | |
| (iv) | the Credit Support Annex and the ISDA Master Agreement & Schedule, (each dated on or about the date of this agreement); |
| (d) | delivery by SILP of the Escrow Agreement to the Company, duly executed on behalf of SILP; and | |
| (e) | delivery to SBLP a written confirmation from Corporate Secretary or Transfer Agent of the Company that there are in excess of 9,920,000 Comon Shares outstanding |
| 7 |
Provided that each of the parties shall perform its obligations under this agreement until such time (if any) as any of the Conditions shall have become incapable of being satisfied within the time specified or agreed and provided further that if any other party is participating in the Placing or a simultaneous Common Share issue by the Company, SBLP and SILP shall be entitled to a pro rata quantity of any options, warrants or other convertible securities which might be offered to any such parties on identical commercial terms.
| 2.2 | SBLP’s and SILP’s obligations under this agreement conditional |
The obligations of SBLP and SILP under this agreement are conditional upon satisfaction or waiver of each of the obligations set out below by 3.00pm Local Time on the Long Stop Date:
| (a) | CBOE not indicating that Admission of the SBLP Shares, the SILP Shares, any Value Payment Shares and the common shares underlying the Warrants will not be approved for Admission; | |
| (b) | no Specified Event having occurred; | |
| (c) | the SBLP Shares, any Value Payment Shares and Common Shares underlying the Warrants not representing more than 9.99% of the issued and outstanding share capital of the Company on a non-diluted and/or partially diluted basis; | |
| (d) | the SILP Shares and Common Shares underlying the Warrants not representing more than 9.99% of the issued and outstanding share capital of the Company on a non-diluted and/or partially diluted basis; | |
| (e) | delivery by the Company of the following agreements to SBLP’s Solicitors, duly executed by the Company: |
| (i) | the Escrow Agreement; | |
| (ii) | the instrument constituting the Warrants; | |
| (iii) | the Sharing Transaction Confirmation; and | |
| (iv) | the Credit Support Annex dated and the ISDA Master Agreement & Schedule; |
each dated on or about the date of this agreement.
Provided that each of the parties shall perform its obligations under this agreement until such time (if any) as any of the Conditions shall have become incapable of being satisfied within the time specified or agreed
| 8 |
| 2.3 | Failure of Conditions |
Subject to clause 2.4, if any of the Conditions are not fulfilled (or waived in accordance with clause 2.5) by 3.00pm Local Time on the Long Stop Date, this agreement shall automatically terminate and clauses 5.2 and 7.3 shall apply.
| 2.4 | Extension of Long Stop Date |
The Long Stop Date may be extended by the Company to 7 November 2025 by giving written notice to SBLP before 3.00pm Local Time on 31 October 2025 and the Company paying an additional fee to SBLP in the sum of CAD$40,000 on such date.
| 2.5 | Waiver of Conditions |
| (a) | The Conditions set out in clauses 2.1(a), 2.1(b), and 2.1(c) are for the benefit of the Company and may only be waived by the Company. | |
| (b) | The Conditions set out in clauses 2.2(a), 2.2(b), 2.2(e) and 2.2(e) are for the benefit of SBLP and SILP and may only be waived by SBLP and SILP. |
| 3. | ISSUE OF THE SBLP SHARES, THE SILP SHARES AND ANCILLARY ACTIONS |
| 3.1 | Issue of the SBLP Shares, the SILP Shares, and Value Payment Shares, Warrants and ancillary actions: |
| (a) | subject to satisfaction or waiver of the Conditions, SBLP hereby irrevocably subscribes for the SBLP Shares and the Warrants, subject to the provisions of the Company’s constating documents; and following receipt of a notice from the Escrow Agent confirming that SBLP has complied with clause 2.1(a) of the Escrow Agreement, the Company shall issue the SBLP Shares and the Warrants to SBLP’s nominee (as the case may be) in accordance with clause 2.1(b) of the Escrow Agreement. | |
| (b) | subject to satisfaction or waiver of the Conditions, SILP hereby irrevocably subscribes for the SILP Shares and the Warrants, subject to the provisions of the Company’s constating documents; and following receipt of a notice from the Escrow Agent confirming that SILP has complied with clause 2.1(a) of the Escrow Agreement, the Company shall issue the SILP Shares and the Warrants to SILP’s nominee (as the case may be) in accordance with clause 2.1(b) of the Escrow Agreement. | |
| (c) | the subscription price per unit shall be CAD$6.00 per Common Share unit, for aggregate gross proceeds of CAD$14,000,000 in respect of the 2,333,334 Common Share units subscribed for by SBLP and SILP hereunder. | |
| (d) | SBLP and/or SILP shall, on the Issue Date, pay to the Company a total of CAD$14,000,000 for the 2,333,334 Common Share units, comprised of 2,333,334 Common Shares and 1,166,667 Warrants, to be satisfied in accordance with clause 2.1(a) of the Escrow Agreement. |
| 9 |
| (e) | as soon as practicable following or prior to the issue of the SBLP Shares, the SILP Shares, and Value Payment Shares, the Company must: |
| (i) | apply for Admission of the SBLP Shares, the SILP Shares, any Value Payment Shares and Common Shares underlying the Warrants by making the necessary application to the CBOE in respect of those shares; | |
| (ii) | procure evidence of delivery for the SBLP Shares, SILP Shares, any Value Payment Shares and Warrants showing SBLP and SILP respectively or their respective nominees as the holder of the Common Shares and Warrants in accordance with clause 2.1(a) of the Escrow Agreement. |
| 3.2 | Rights attaching to the SBLP Shares and SILP Shares |
The SBLP Shares, the SILP Shares, any Value Payment Shares and Common Shares underlying the Warrants allotted pursuant to clause 3.1 shall be issued subject to the Company’s constitutional documents and subject to satisfaction by SBLP and SILP of their respective obligations under this agreement, and, subject to the due exercise of the Warrants and the payment of the exercise price in respect thereof, shall be issued as fully paid and non-assessable shares, free from all Adverse Interests.
| 4. | REGISTRATION |
Contemporaneously with their issue on the Issue Date, the Company shall promptly update the Company’s shareholder registry in relation to the SBLP Shares and SILP Shares in accordance with the directions of the Escrow Agent, record SBLP and SILP as a holder of the Warrants on any register of warrant holders.
| 5. | DEPOSIT AND THIRD PARTY FEES |
| 5.1 | On the date that corresponds to the first monthly settlement under the Sharing Transaction, SBLP will pay to the Company an amount in cash equal to the Deposit less the legal fees of SBLP and SILP and the fee due under the Escrow Agreement. |
| 5.2 | For the avoidance of doubt if any of the Conditions applicable to the Company are not fulfilled (or waived in accordance with clause 2.5 or the relevant deadline extended in writing by the parties) by 3.00pm Local Time on the Long Stop Date, the Deposit shall cease to be refundable and shall become the absolute property of SBLP. |
| 5.3 | The Company will be responsible for any broker or finders fees in respect of the transactions contemplated under this Agreement. |
| 10 |
| 6. | WARRANTIES |
| 6.1 | Warranties by the Company |
The Company hereby warrants to SBLP and SILP in the terms set out in Part 1 of Schedule 1. The Warranties are given subject to any matter fairly disclosed in the Accounts and any previous announcements (or document referred to therein) issued by the Company through a Regulatory Information Service prior to the date of this agreement or otherwise fully and fairly disclosed by the Company to SBLP, SILP or their professional advisors in such a manner and in such detail as is sufficient to identify in reasonable detail the nature and scope of the matter disclosed.
| 6.2 | Warranties by SBLP and SILP |
SBLP and SILP hereby warrant to the Company in the terms set out in Part 2 of Schedule 1.
| 6.3 | Avoidance of Specified Events |
The Company undertakes not knowingly, recklessly or negligently to cause, and to use all reasonable endeavours not to permit, any Specified Event in relation to the Company Warranties to occur before the Issue Date.
| 6.4 | Notice of breach etc. |
If any breach of any of the Company Warranties or a Specified Event shall occur and come to the knowledge of the Company prior to the Issue Date, the Company shall forthwith give notice of the same to SBLP and SILP and provide SBLP and SILP with such information with regard to the same as SBLP or SILP shall reasonably require.
SBLP shall immediately notify the Company of any change in any statement or other information relating to SBLP or SILP, including the SBLP Warranties and the SILP Warranties, which takes place before the Issue Date, including without limitation any change that may result in the Company not having the benefit of a prospectus exemption in respect of the issuance of the securities contemplated herein.
| 6.5 | Maximum liability of the Company under the Warranties |
The maximum liability of the Company under the Company Warranties shall be the sum of CAD$14,000,000.
| 6.6 | No consequential loss |
Any claim for breach of Company Warranty or SBLP Warranty or SILP Warranty is excluded to the extent that it is for indirect or consequential loss, loss of profit or economic loss (however it arises), or for punitive or exemplary damages.
| 11 |
| 6.7 | Enquiry |
Where any of the Company Warranties is given to the best of the information, knowledge and belief of the Company or is expressed to be “so far as the Company is aware” or is qualified by any similar expression, the Company is deemed also to warrant that such warranty is given after it has made reasonable enquiries of the Directors.
| 6.8 | Reliance on Warranties |
Each party acknowledges to the other that in entering into this agreement the other party has relied upon the Company Warranties or the SBLP Warranties, as applicable.
| 6.9 | Continuance |
The Company Warranties and the SBLP Warranties and the SILP Warranties shall continue in full force and effect notwithstanding the completion of all matters and arrangements referred to in or contemplated by this agreement. The Company shall cease to have liability under or in respect of the Company Warranties upon the date falling nine months after the publication of the Accounts for the Company for the financial year ending 31 July 2025 (the “Expiry Date”) except in respect of a claim of which SBLP or SILP has given notice to the Company before the Expiry Date specifying (in reasonable detail) the nature of the claim, but liability of the Company shall in any event absolutely terminate if proceedings in respect of that claim have not been commenced within three months after services of such notice. SBLP and SILP shall cease to have liability under or in respect of the SBLP Warranties and the SILP Warranties following the first anniversary of the Issue Date, except in respect of a claim of which the Company has given notice to SBLP and/or SILP before the first anniversary of the Issue Date specifying (in reasonable detail) the nature of the claim, but liability of SBLP and SILP shall in any event absolutely terminate if proceedings in respect of that claim have not been commenced within three months after services of such notice.
| 6.10 | Fraud etc. |
None of the limitations contained in this clause 6 shall apply where the events giving rise to the relevant breach of the Company Warranties or the SBLP Warranties or the SILP Warranties are caused or contributed by the fraud, dishonesty or wilful misconduct of the Company or SBLP or SILP respectively.
| 6.11 | Construction of Warranties |
Each of the Company Warranties and each of the SBLP Warranties and the SILP Warranties shall be construed separately and shall not be limited or restricted by reference to or inference from the terms of any other provision of this agreement (other than in respect of the limitations noted in this clause 6).
| 12 |
| 7. | TERMINATION |
| 7.1 | Termination of the Escrow Agreement |
In the event that the obligations of the parties hereto under clauses 2.1 and 2.3 of the Escrow Agreement shall not be satisfied in accordance with their terms, each of SBLP, SILP and the Company hereby agree that the terms and provisions of this agreement shall (save as otherwise expressly provided) immediately terminate without any further action on the part of either party.
| 7.2 | Force majeure |
If before the Issue Date:
| (a) | there is: |
| (i) | a general moratorium on commercial banking activities declared; | |
| (ii) | a material adverse effect on the financial markets; or | |
| (iii) | a material disruption in commercial banking or security settlement or clearance services, | |
| (iv) | in Canada, the United States of America, the European Union or the United Kingdom; |
| (b) | trading in all securities quoted or listed on the CBOE or the London Stock Exchange is suspended or limited in a material respect; or | |
| (c) | hostilities not then existing commence (whether war has been declared or not) or an escalation in existing hostilities occurs (whether war has been declared or not) involving either Canada or the United Kingdom, |
and which, in the reasonable opinion of SBLP and/or SILP, is likely to cause a substantial deterioration in the value of the Common Shares, SBLP and/or SILP will consult with the Company (to the extent practicable) and may in its absolute discretion give notice to the Company to terminate this agreement, in which case clause 7.3 shall apply.
| 7.3 | Consequences of termination |
If this agreement is terminated pursuant to the provisions of this clause 7 or in accordance with clause 2:
| (a) | no party to this agreement will have any claim against any other party, except that: |
| (i) | such termination shall be without prejudice to any accrued rights or obligations under this agreement; |
| 13 |
| (ii) | the provisions of clauses 1, 7 and 8 shall remain in full force and effect insofar as applicable; |
| (b) | the Company shall withdraw the application for Admission in respect of the SBLP Shares and the SILP Shares; and | |
| (c) | the parties shall return to the other party the documents delivered to it pursuant to clause 2.1(c) and 2.2(e). |
| 8. | GENERAL |
| 8.1 | Notices |
| (a) | Any notice (which term in this clause 8.1 shall include any other communication) required to be given under, or in connection with any matter contemplated by, this agreement shall be in writing in the English language unless specifically provided to the contrary. | |
| (b) | Subject to clause 8.1(d) any notice shall be addressed as provided in clause 8.1(c) and may be: |
| (i) | personally delivered, in which case it shall be deemed to have been given upon delivery at the relevant address if it is delivered not later than 5.00pm in the place of receipt (local time in the place of receipt) on a Trading Day or, if it is delivered later than 5.00pm (local time in the place of receipt) on a Trading Day or at any time on a day which is not a Trading Day, at 8.00am (local time) on the next Trading Day; or | |
| (ii) | if within the United Kingdom or Canada, sent by first class pre-paid post in which case it shall be deemed to have been given two Trading Days after the date of posting; or | |
| (iii) | if from or to any place outside the United Kingdom or Canada, sent by pre-paid airmail, in which case it shall be deemed to have been given seven Trading Days after posting; or | |
| (iv) | sent by electronic mail (with copy sent by mail in accordance with (ii) or (iii)), in which case it shall be given at the time it left the email gateway of the server of the notice. |
| (c) | The addresses and other details of the parties to this agreement are: |
Name: VERSES AI Inc.
Address: 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3
For the attention of: Gabriel René
Email: [email protected]
| 14 |
Name: Sorbie Bornholm LP
Address: 9th Floor, 107 Cheapside, London EC2V 6DN
For the attention of: Greg Kofford and Ed Lukins
Email: [email protected] and [email protected]
Name: Sorbie Investments LLP
Address: 9th Floor, 107 Cheapside, London EC2V 6DN
For the attention of: Whitney Kofford and Ed Lukins
Email: [email protected] and [email protected]
| (d) | Any party to this agreement may notify the other parties of any change to the address or any of the other details specified in clause 8.1(c) provided that such notification shall only be effective on the date specified in such notice or five Trading Days after the notice is given whichever is the later, and provided also that any new address shall be in the same country as the previous address. |
| 8.2 | Rights cumulative and other matters |
| (a) | The rights, powers and remedies provided in this agreement are cumulative and are not exclusive of any rights, powers or remedies provided by Law or otherwise. | |
| (b) | No failure to exercise nor any delay in the exercising, by any party to this agreement, of any right, privilege or remedy under this agreement shall impair or operate as a waiver thereof. | |
| (c) | No single or partial exercise of any right power or remedy under this agreement shall prevent any further or other exercise thereof or the exercise of any other right or remedy. | |
| (d) | No time or other indulgence granted, to, or release or compromise of the liability of, any party to this agreement shall affect the liability of any other party to this agreement. |
| 8.3 | Survival of provisions |
The provisions of this agreement (including the Warranties and the provisions of clauses 6 and 7 inclusive) which are capable of having effect following the issue of the SBLP Shares and the SILP Shares shall remain in full force and effect, notwithstanding the completion of all matters, arrangements and transactions referred to in or contemplated by this agreement.
| 8.4 | Entire Agreement |
This agreement, together with the documents referred to in it, constitutes the whole agreement between the parties relating to its subject matter as at its date and supersedes and extinguishes any prior drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter save that this agreement does not supersede clauses 4 and 5 of the Term Sheet.
| 15 |
| 8.5 | Other rights |
The provisions of this agreement are without prejudice to any liabilities which any of the parties may have under any Law.
| 8.6 | Invalidity |
If any provision of this agreement shall be held to be illegal or unenforceable, the enforceability of the remainder of this agreement shall be unaffected.
| 8.7 | Time of the Essence |
Time is of the essence hereof.
| 8.8 | Counterparts |
This agreement may be entered into in any number of counterparts and by the parties to it on separate counterparts, each of which when executed and delivered shall be an original, but all the counterparts shall together constitute one and the same document. Any party may enter into this agreement by executing a counterpart and this agreement shall not take effect until it has been executed by all parties named therein.
| 8.9 | Announcements |
The Company shall use all reasonable endeavours to give SBLP and SILP not less than 48 hours’ notice of any intended regulatory or official announcement which mentions SBLP or SILP or references the terms of this agreement and shall, where reasonably practicable, take into account any comments or drafting amendments which may be provided by SBLP or SILP.
| 8.10 | Obligations subject to Acceptance of CBOE |
The obligations of the parties are subject to the acceptance of the terms of the Placing by the CBOE and all other required regulatory approvals.
| 8.11 | Personal Information |
SBLP and SILP acknowledge that:
| (a) | this agreement requires SBLP and SILP to provide certain personal information to the Company. Such information is being collected by the Company for the purposes of completing the Placing, which includes, without limitation, determining the SBLP’s and SILP’s eligibility to purchase the SBLP Shares, the SILP Shares, and Warrants under the applicable securities Laws, preparing and registering certificates representing the SBLP Shares, the SILP Shares and Warrants, if applicable, and completing filings required by any stock exchange or securities regulatory authority; and |
| 16 |
| (b) | SBLP’s and SILP’s personal information may be disclosed by the Company to: (i) stock exchanges or securities regulatory authorities; (ii) the Company’s registrar and transfer agent; (iii) Canada Revenue Agency; (iv) a governmental or other authority to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure; and (v) any of the other parties involved in the Placing, including legal counsel, and may be included in record books in connection with the Placing, and by executing this agreement, SBLP and SILP are deemed to be consenting to the foregoing collection, use and disclosure of its personal information and to the filing of copies or originals of any of the documents as may be required to be filed with any stock exchange or securities commissions in connection with the transactions contemplated hereby and the collection, use and disclosure of any personal information by the CBOE for the purposes set out in CBOE policies. |
| (c) | SBLP and SILP hereby: (i) acknowledge that they have been notified by the Company of the delivery to the securities commissions of the full name, residential address, telephone number and email address of SBLP and SILP; the date of distribution, number of securities purchased and total purchase price; the exemption relied on and whether SBLP and SILP are insiders of the Company or registrants; (ii) acknowledge that this information is being collected by the commissions under the authority granted in securities legislation, that this information is being collected for the purposes of the administration and enforcement of the securities legislation of the local jurisdiction, and of the title, business address and business telephone number of the public official in the local jurisdiction, as set out in this form; and (iii) authorize the indirect collection of the information by the securities commissions. Should SBLP or SILP have any questions or concerns with respect to the foregoing, the contact information of the public official in the local jurisdiction who can answer such questions or address such concerns about the commissions’ indirect collection of personal information is provided in Exhibit 2. |
| 9. | LAW AND JURISDICTION |
The contract arising out of this agreement and all related documents are governed by the laws of England and Wales. The parties submit to the non-exclusive jurisdiction of the courts of England and Wales.
This document has been executed as a deed on the date written at the beginning of it.
| 17 |
SCHEDULE 1
WARRANTIES
Part 1
Warranties of the Company
| 1.1 | Previous announcements |
With respect to all documents issued and all announcements made by or on behalf of the Company or any member of the Group through a Regulatory Information Service or otherwise to the public since the Last Accounts Date (“Previous Announcements”), all statements of fact contained therein were, when made, materially true and accurate and not misleading and all forecasts, estimates, valuations and statements and expressions of opinion or intention or expectation contained therein were made on reasonable grounds and were honestly held and all Previous Announcements materially complied with the applicable provisions of the Corporations Act, all applicable Canadian securities laws, and the rules of the CBOE (to the extent applicable).
| 1.2 | Confidential information |
The Company has not imparted to SBLP or SILP (or their advisers or any other persons acting on its behalf) during the course of the negotiations leading up to the execution of this agreement any fact or information concerning the Company or any member of the Group, its management, or its future intentions that might be capable of being, or being deemed to be, of a price sensitive nature or material non-public information and which has not otherwise been disclosed, or will be disclosed, to the market, through a Regulatory Information Service (including the existence of this agreement) prior to close of business on the Business Day following the date of this agreement.
| 2. | Information (specific) |
| 2.1 | Business since the Last Accounts Date |
Save to the extent disclosed to SBLP and/or SILP or in any announcement via a Regulatory Information Service, since the Last Accounts Date:
| (a) | each Group Company has carried on its business in the ordinary and normal course; |
| (b) | there has been no material adverse change in the financial or trading position or prospects of any Group Company and no material depletion in the net assets of the Group taken as a whole; |
| (c) | no Group Company has entered into any contracts or commitments of a long term or unusual nature or which involve an obligation of a material nature or magnitude or for the acquisition or disposal of any business or has assumed any liabilities (including contingent liabilities) which are material for disclosure in the context of the Placing; and |
| 18 |
| (d) | the business of the Group has not been adversely affected by the loss of any important customer or source of supply and to the best of the information, knowledge and belief of the Company and the Directors, there are no facts or circumstances likely to give rise to any such effect. |
| 3. | The Group Companies and the Law |
| 3.1 | Compliance with Laws |
So far as the Company is aware, each Group Company has conducted its business in all material respects in accordance with all applicable Canadian Laws and all applicable Laws of relevant foreign jurisdictions and so far as the Company is aware there is no order, decree or judgment of any court or any Authority outstanding against any Group Company or, so far as the Company is aware, any person for whose acts any Group Company is vicariously liable, which is material in the context of the Group or adversely affects or is likely to have an adverse effect on the financial position of any Group Company.
| 3.2 | Licences etc |
.
All Authorizations necessary for utilizing any of the assets of each Group Company or carrying on any aspect of the business of each Group Company in the places and in the manner in which each such business is now carried on, and which are material to the Group, have been obtained by each Group Company and so far as the Company is aware all such Authorizations are in full force and effect and, so far as the Company is aware, there are no circumstances which indicate that any such Authorization is likely to be suspended, cancelled or revoked in whole or in part.
| 3.3 | Regulatory |
So far as the Company is aware, the Company has complied in all material respects with the rules, regulations and policies of the CBOE and Canadian securities laws governing the issue and transfer of any securities of the Company whilst the Common Shares have been traded on the CBOE. The Company is currently a “reporting issuer” (within the meaning of Canadian securities laws) in each of the provinces and territories of Canada and the Company will, as of the date hereof, be a reporting issuer in each of the provinces and territories of Canada and not included in a list of defaulting reporting issuers maintained by the applicable securities commissions in such jurisdictions, and in particular, without limiting the foregoing, the Company has at all relevant times complied with its obligations to make timely disclosure of all material changes relating to it, no such disclosure has been made on a confidential basis that is still maintained on a confidential basis, and there is no material change relating to the Company which has occurred and with respect to which the requisite material change report has not been filed with the securities commissions.
| 19 |
| 3.4 | Litigation |
| (a) | No Group Company nor, so far as the Company is aware, any of its present officers, agents or employees is engaged in or is the subject of any litigation or arbitration, administrative, criminal or other proceedings whether as plaintiff, defendant or otherwise, which is material in the context of the Group. |
| (b) | So far as the Company is aware, no litigation or arbitration, administrative, criminal or other proceedings are pending or threatened or expected by or against any Group Company or any of its officers, agents or employees which is material in the context of the Group and to the best of the knowledge, information and belief of the Company and the Directors, there are no facts or circumstances likely to give rise to any such litigation or arbitration, administrative, criminal or other proceedings. |
| (c) | No Group Company nor, so far as the Company is aware, any of its officers or agents or employees has been a party to any undertaking or assurance given to any court or governmental agency or the subject of any injunction which is still in force, and which is material to its business. |
| (d) | For the purposes of this paragraph 3.4, “proceedings” includes any action by any Authority (including any investment or stock exchange or any authority or body which regulates investment business or takeovers or which is concerned with regulatory, licensing, competition or Taxation matters). |
| 4. | Arrangements regarding shares |
| 4.1 | Agreements regarding shares |
Save to the extent disclosed to SBLP and SILP or in any announcement via a Regulatory Information Service, there is no agreement, undertaking, instrument or arrangement requiring the creation, allotment, issue, redemption or repayment, or the grant to any person of the right (whether conditional or not) to require the allotment, issue, redemption or repayment, of any shares in the capital of a Group Company (including, without limitation, an option or right of pre-emption or conversion), other than pursuant to:
| (a) | equity incentive plans of any Group Company; | |
| (b) | existing common share purchase warrants; and | |
| (c) | the Placing. |
| 5. | Solvency |
| 5.1 | No insolvency |
No Group Company is unable to pay its debts or liabilities as they have or will become due.
| 20 |
| 5.2 | No winding-up |
No order has been made, petition presented or resolution passed for the winding up of any Group Company and no meeting has been convened for the purpose of winding up any Group Company. To the best of the knowledge, information and belief of the Company, no Group Company has been a party to any transaction which could be avoided in a winding up.
| 5.3 | No administration or receivership |
Save to the extent disclosed to SBLP and SILP or in any announcement via a Regulatory Information Service, to the best of the knowledge, information and belief of the Company, no steps have been taken for the appointment of an administrator, monitor or receiver (including an administrative receiver) of all or any part of the assets of any Group Company.
| 5.4 | No compositions |
No Group Company has made or proposed any arrangement or composition with its creditors or any class of its creditors.
| 5.5 | No distress etc. |
To the best of the knowledge, information and belief of the Company, no distress or execution or other similar process has been commenced or undertaken against any Group Company and there are no unfulfilled or unsatisfied judgments or court orders outstanding against any Group Company.
| 6. | Placing Arrangements |
| 6.1 | Proper Authority |
The Company has the right, power and authority under the constating documents of the Company, or pursuant to resolutions passed, to allot and issue the SBLP Shares, the SILP Shares, the Warrants and the Common Shares underlying the Warrants and the Company has such right, power and authority to pay the fees, costs and expenses provided for in this agreement and to enter into, and to exercise its rights and perform its obligations under, this agreement in accordance with its terms without any further sanction or consent.
| 6.2 | No contraventions |
The allotment or issue of the SBLP Shares, the SILP Shares, the Warrants and the Common Shares underlying the Warrants will not cause the termination or breach of any agreement or arrangement to which a Group Company is a party or by which a Group Company or any of its assets is bound.
| 21 |
| 6.3 | Issue of SBLP Shares and SILP Shares |
Upon their allotment and issue in accordance with the terms of this agreement, the SBLP Shares, the SILP Shares and the Common Shares underlying the Warrants will be authorized, validly issued and fully paid or fully-paid when exercised in accordance with the terms of the Warrants.
| 6.4 | Issue of Warrants |
Upon their allotment and issue in accordance with the terms of this agreement, the Warrants will be authorized and validly issued.
| 7. | SBLP and SILP Shares |
| 7.1 | As at the Issue Date, the Common Shares will have been listed securities at all times in the three months before that date. |
| 7.2 | Immediately prior to the Issue Date the Company will have move than 9,920,000 Common Shares outstanding. |
| 7.3 | Upon issue, the SBLP Shares and the SILP Shares shall be of the same class and have the same characteristics as the currently issued and outstanding Common Shares. |
| 22 |
Part 2
Warranties of SBLP and SILP
| 1. | Proper Authority |
| 1.1 | Authorizations |
All necessary authorizations, approvals, consents and licences required by SBLP and SILP for entering into and performing this agreement, including, without limitation, subscribing for the SBLP Shares, the SILP Shares and Warrants, have been obtained and all such authorizations, approvals, consents and licences are in full force and effect.
| 1.2 | Authority |
SBLP and SILP are each empowered under their constitutional documents to subscribe for the SBLP Shares, the SILP Shares and Warrants and enter into and perform this agreement and all other agreements referred to herein in accordance with their terms, without any sanction or consent of its partners. The execution, delivery and performance of this agreement and any other agreements executed in connection herewith have been duly authorized by all necessary corporate actions.
| 1.3 | General |
This agreement and any other agreements and instruments executed in connection herewith are valid and binding obligations on SBLP and SILP and enforceable in accordance with their respective terms.
| 1.4 | Counsel |
The Company’s counsel is acting as counsel to the Company and not as counsel to SBLP or SILP.
| 2. | Prospectus Exemptions |
| 2.1 | SBLP and SILP are purchasing the SBLP Shares, the SILP Shares and Warrants as principal for their own account, not for the benefit of any other person, satisfies the definition of “accredited investor” found in National Instrument 45-106 Prospectus Exemptions and as evidenced by the attached certificate attached as Exhibit 1 hereto and 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”. |
| 2.2 | SBLP and SILP are resident in the United Kingdom and: |
| (a) | SBLP and SILP are knowledgeable of, or has been independently advised as to, the applicable securities laws of the regulatory authorities (the “Authorities”) in the United Kingdom (the “International Jurisdiction”) that would apply to the acquisition and issuance of the SBLP Shares, the SILP Shares and the Warrants; |
| 23 |
| (b) | SBLP and SILP are purchasing the SBLP Shares, the SILP Shares and Warrants in accordance with exemptions from the prospectus and registration requirements under the applicable securities laws of the Authorities in the International Jurisdiction or, if such is not applicable, the Subscriber or Disclosed Beneficial Purchaser is permitted to purchase the Common Shares under the applicable securities laws of the Authorities in the International Jurisdiction without the need to rely on any exemption and such purchase does not contravene any applicable laws in the International Jurisdiction; |
| (c) | the applicable securities laws in the International Jurisdiction do not require the Company to make any filings or seek any approvals of any nature whatsoever from any Authority in the International Jurisdiction in connection with the issue and sale or resale of the SBLP Shares, the SILP Shares or the Warrants; |
| (d) | the purchase of the SBLP Shares, the SILP Shares and Warrants by SBLP and SILP does not trigger: (A) any obligation to prepare and file a prospectus, offering memorandum or similar document, or any other report with respect to such purchase in the United Kingdom; or (B) any continuous disclosure reporting obligation of the Corporation in the International Jurisdiction; |
| (e) | SBLP and SILP decided to subscribe for the SBLP Shares, the SILP Shares and Warrants in the International Jurisdiction; and |
| (f) | neither SBLP nor SILP shall sell, transfer or dispose of the SBLP Shares or the SILP Shares or Warrants except in accordance with all applicable laws, including applicable securities laws of Canada, the United States and the International Jurisdictions, and represents and warrants that the Company has no obligation to register any such purported sale, transfer or disposition. |
| 2.3 | SBLP and SILP will, if requested by the Company, deliver to the Company a certificate or opinion of local counsel from the International Jurisdiction that will confirm the matters referred to in subsections 2.2(b) through (f) above to the satisfaction of the Company acting reasonably. |
| 2.4 | SBLP and SILP are resident in the United Kingdom, and the purchase by and sale to SBLP and SILP of the SBLP Shares, the SILP Shares and Warrants, and any act, offer, solicitation, conduct or negotiation directly or indirectly in furtherance of such purchase and sale, has occurred only in such jurisdiction. Such address was not created and is not used solely for the purpose of acquiring the SBLP Shares, the SILP Shares and Warrants under an exemption from the prospectus requirements of the Canadian securities laws. |
| 2.5 | Neither SBLP nor SILP has, in connection with its subscription, received or been provided with, nor have they requested, nor do they have any need to receive, a prospectus or offering memorandum, within the meaning of the Canadian securities laws, or any sales or advertising literature, or any other document describing or purporting to describe the business and affairs of the Company which has been prepared for delivery to, and review by, prospective purchasers in order to assist them in making an investment decision in respect of the SBLP Shares, the SILP Shares and Warrants. |
| 24 |
| 2.6 | The offering and sale of the Common Shares to SBLP and SILP, was not made or solicited through, and neither SBLP nor SILP, is aware of, an advertisement of the Common Shares in printed media of general and regular paid circulation (or other printed public media), radio, television or telecommunications, including electronic display (such as the Internet), or any other form of advertisement or general solicitation. |
| 2.7 | The SBLP Shares, the SILP Shares and Warrants are being offered for sale pursuant to an exemption under National Instrument 45-106 and the sale and delivery of the SBLP Shares, the SILP Shares and Warrants is conditional upon such sale being exempt from the requirements that would otherwise be applicable under the Canadian securities laws as to the filing of a prospectus or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the filing of a prospectus and, as a consequence: (i) it may be restricted from using most of the civil remedies available under Canadian securities laws; (ii) it may not receive information that would otherwise be required to be provided to it under the Canadian securities laws; and (iii) the Company may be relieved from certain obligations that would otherwise apply under Canadian securities laws. |
| 3. | Securities Law and Regulatory Matters |
| 3.1 | If required by applicable securities laws, regulations, rules, policies or orders or by any securities commission, stock exchange or other regulatory authority, SBLP will sign, deliver, file and otherwise assist the Company in filing, such reports, undertakings and other documents with respect to the issue or continued ownership of the SBLP Shares, the SILP Shares and Warrants as may be reasonably required. |
| 3.2 | SBLP and SILP have relied solely upon publicly available information relating to the Company and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Company. |
| 3.3 | Neither SBLP nor SILP is a person in the United States or a U.S. person, as defined in Regulation S under the United States Securities Act of 1933 (“U.S. Person”) and is not acquiring the SBLP Shares, the SILP Shares and Warrants on behalf of, or for the account or benefit of, a person in the United States or a U.S. Person and the offer to purchase the SBLP Shares, the SILP Shares and Warrants was not made in the United States, and at the time that SBLP and SILP placed its order to purchase SBLP Shares, the SILP Shares and Warrants and at the time this agreement was signed and delivered, SBLP and SILP were outside the United States. |
| 3.4 | Solvency |
| 3.5 | No winding up |
No order has been made, petition presented or resolution passed for the winding up of SBLP or SILP and no meeting has been convened for the purpose of winding up SBLP or SILP.
| 25 |
| 3.6 | No administration or receivership |
No steps have been taken for the appointment of an administrator or receiver (including an administrative receiver) of all or any part of the assets of SBLP or SILP.
| 3.7 | No insolvency |
Neither SBLP nor SILP is unable to pay its debts within the meaning of s.123 of the UK Insolvency Act 1986.
| 3.8 | No composition |
Neither SBLP nor SILP has made or proposed any arrangement or composition with its creditors or any class of its creditors.
| 3.9 | Ability to satisfy financial obligations |
SBLP will continue to have the financial capacity to meet their obligations under the Sharing Transaction Confirmation.
| 26 |
| SIGNED by | ) | |
| VERSES AI INC. | ) | /s/ Gabriel René |
| acting by | ) | |
| Gabriel René and | ) | /s/ James Hendrickson |
| James Hendrickson | ) |
| SIGNED by | ) | |
| SORBIE BORNHOLM LP | ) | |
| acting by | ) | |
| GREGORY KOFFORD | ) | /s/ Greg Kofford |
| as director of the General Partner | ) |
| SIGNED by | ) | |
| SORBIE INVESTMENTS LLP | ) | |
| acting by | ) | |
| WHITNEY KOFFORD | ) | /s/ Whitney Kofford |
| as Designated Member | ) |
| 27 |
Exhibit 1
ACCREDITED INVESTOR CERTIFICATE
| TO: | VERSES AI INC. (THE “Issuer”) |
| RE: | Purchase of Common Shares and Warrants (the “Securities”) of the Issuer |
Representations and Warranties
In connection with the purchase by the undersigned (the “Purchaser”) of the Securities, the Purchaser hereby represents, warrants and certifies to the Issuer that the Purchaser:
| (i) | is purchasing the Securities as principal; |
| (ii) | is not resident in or subject to the laws of any Province or Territory of Canada; |
| (iii) | is an “accredited investor” (as defined in National Instrument 45-106 – Prospectus Exemptions) by virtue of satisfying the indicated criterion on Schedule “A” to this certificate; and |
| (iv) | has not been provided with any offering memorandum in connection with the purchase of the Securities. |
Certified on
SORBIE BORNHOLM LP, ACTING BY GREGORY KOFFORD AS DIRECTOR OF SORBIE BORNHOLM LIMITED
| /s/ Greg Kofford | |
| Name: Greg Kofford | |
| Office or Title: Director |
SORBIE INVESTMENTS LLP, ACTING BY WHITNEY KOFFORD AS DESIGNATED MEMBER
| /s/ Whitney Kofford | |
| Name: Whitney Kofford | |
| Office or Title: |
| 28 |
SCHEDULE “A” TO EXHIBIT 1
ACCREDITED INVESTOR CERTIFICATE FOR CORPORATIONS, PARTNERSHIPS AND OTHER ENTITIES
(NON-INDIVIDUALS)
The undersigned (the “Subscriber”) hereby confirms and certifies to the Company that the Subscriber is purchasing the securities as principal and that the Subscriber is an “Accredited Investor” as defined in NI 45-106 and is: [check appropriate boxes]
| ______________ | (a) | a person, other than an individual or investment fund, that has net assets of at least CAD$5,000,000 as shown on its most recently prepared financial statements,
Type of entity: __________________________________________________________
Jurisdiction and date of formation: __________________________________________ |
| ______________ | (b) | a person acting on behalf of a fully managed account managed by that person, if that person 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,
Jurisdiction(s) registered: _______________________________________________
Categories of registration: _______________________________________________ |
| ______________ | (c) | 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,
IF THIS IS APPLICABLE, EACH OWNER OF INTEREST MUST COMPLETE AND SUBMIT ITS OWN COPY OF (I) THIS ACCREDITED INVESTOR CERTIFICATE FOR CORPORATIONS, PARTNERSHIPS AND OTHER ENTITIES (NON-INDIVIDUALS) (I.E. THIS SCHEDULE C) OR (II) THE ACCREDITED INVESTOR CERTIFICATE FOR INDIVIDUALS (NATURAL PERSONS) (SCHEDULE A TO THE SUBSCRIPTION AGREEMENT), AS APPLICABLE |
| ______________ | (d) | a person that is recognized or designated by the securities regulatory authority or, except in Quebec, the regulator as an accredited investor, or
Jurisdiction(s) recognized or designated: ______________________________________ |
| 29 |
| ______________ | (e) | 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.
Name(s) of settlor: ___________________________________________________
Name(s) of trustees: __________________________________________________ |
and for purposes hereof, words and phrases which are used in this Accredited Investor Certificate and which are defined in NI 45-106 will have the meaning ascribed thereto in NI 45-106.
EXECUTED by the Subscriber at ______________________, this _______ day of __________, 2025.
SORBIE BORNHOLM LP, ACTING BY GREGORY KOFFORD AS DIRECTOR OF SORBIE BORNHOLM LIMITED
| /s/ Greg Kofford | |
| Name: | |
| Office or Title: |
SORBIE INVESTMENTS LLP, ACTING BY WHITNEY KOFFORD AS DESIGNATED MEMBER
| /s/ Whitney Kofford | |
| Name: Whitney Kofford | |
| Office or Title: |
| 30 |
Exhibit 2
CONTACT INFORMATION OF PUBLIC OFFICIALS
REGARDING INDIRECT COLLECTION OF PERSONAL INFORMATION
| Alberta
Securities Commission Suite 600, 250 – 5th Street SW Calgary, Alberta T2P 0R4 Telephone: 403-297-6454 Toll free in Canada: 1-877-355-0585 Facsimile: 403-297-2082 Public official contact regarding indirect collection of information: FOIP Coordinator |
British
Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, British Columbia V7Y 1L2 Inquiries: 604-899-6854 Toll free in Canada: 1-800-373-6393 Facsimile: 604-899-6581 Email: [email protected] Public official contact regarding indirect collection of information: FOI Inquiries |
| The
Manitoba Securities Commission 500 – 400 St. Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: 204-945-2561 Toll free in Manitoba 1-800-655-5244 Facsimile: 204-945-0330 Public official contact regarding indirect collection of information: Director |
Financial
and Consumer Services Commission (New Brunswick) 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Telephone: 506-658-3060 Toll free in Canada: 1-866-933-2222 Facsimile: 506-658-3059 Email: [email protected] Public official contact regarding indirect collection of information: Chief Executive Officer and Privacy Officer |
| Government
of Newfoundland and Labrador Financial Services Regulation Division P.O. Box 8700 Confederation Building 2nd Floor, West Block Prince Philip Drive St. John’s, Newfoundland and Labrador A1B 4J6 Attention: Director of Securities Telephone: 709-729-4189 Facsimile: 709-729-6187 Public official contact regarding indirect collection of information: Superintendent of Securities |
Government
of the Northwest Territories Office of the Superintendent of Securities P.O. Box 1320 Yellowknife, Northwest Territories X1A 2L9 Telephone: 867-767-9305 Facsimile: 867-873-0243 Public official contact regarding indirect collection of information: Superintendent of Securities |
| Nova
Scotia Securities Commission Suite 400, 5251 Duke Street Duke Tower P.O. Box 458 Halifax, Nova Scotia B3J 2P8 Telephone: 902-424-7768 Facsimile: 902-424-4625 Public official contact regarding indirect collection of information: Executive Director |
Government
of Nunavut Department of Justice Legal Registries Division P.O. Box 1000, Station 570 1st Floor, Brown Building Iqaluit, Nunavut X0A 0H0 Telephone: 867-975-6590 Facsimile: 867-975-6594 Public official contact regarding indirect collection of information: Superintendent of Securities |
| 31 |
| Ontario
Securities Commission 20 Queen Street West, 22nd Floor Toronto, Ontario M5H 3S8 Telephone: 416-593- 8314 Toll free in Canada: 1-877-785-1555 Facsimile: 416-593-8122 Email: [email protected] Public official contact regarding indirect collection of information: Inquiries Officer |
Prince
Edward Island Securities Office 95 Rochford Street, 4th Floor Shaw Building P.O. Box 2000 Charlottetown, Prince Edward Island C1A 7N8 Telephone: 902-368-4569 Facsimile: 902-368-5283 Public official contact regarding indirect collection of information: Superintendent of Securities |
| Autorité
des marchés financiers 800, Square Victoria, 22e étage C.P. 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Telephone: 514-395-0337 or 1-877-525-0337 Facsimile: 514-864-6381 Email: [email protected] Public official contact regarding indirect collection of information: Secrétaire générale |
Financial
and Consumer Affairs Authority of Saskatchewan Suite 601 – 1919 Saskatchewan Drive Regina, Saskatchewan S4P 4H2 Telephone: 306-787-5842 Facsimile: 306-787-5899 Public official contact regarding indirect collection of information: Director |
| Government
of Yukon Department of Community Services Office of the Superintendent of Securities 307 Black Street Whitehorse, Yukon Y1A 2N1 Telephone: 867-667-5466 Facsimile: 867-393-6251 Email: [email protected] Public official contact regarding indirect collection of information: Superintendent of Securities |
| 32 |
Exhibit 99.1
VERSES® Closes Financing Arrangement with a Notional Value of CAD$14 Million and Receives First Tranche of CAD$700,000
VANCOUVER, British Columbia – November 13, 2025 – VERSES AI Inc. (CBOE: VERS) (OTCQB: VRSSF) (“VERSES” or the “Company”), a cognitive computing company pioneering next-generation agentic software systems, is pleased to announce that it has closed its previously announced non-brokered private placement (the “Offering”) with Sorbie Bornholm LP (“Sorbie”).
As part of the Offering, VERSES is expected to receive a notional amount of CAD$14,000,000 in exchange for the issuance of an aggregate of 2,660,000 Units, including finder’s fees. Each Unit consists of one Class A subordinated voting share (a “Common Share”) of the Company and one half warrant (each whole warrant, a “Warrant”), where each Warrant will entitle the holder to acquire one additional Common Share at an exercise price of CAD$7.00 for a period of 36 months from the closing of the Offering.
The Company intends to use the net proceeds of the Offering for working capital and general corporate purposes.
Verses has received CAD$700,000 representing the first tranche of the Offering, and expects to receive eleven additional tranches expected to be paid monthly subject to the terms of the Sharing Agreement. The Sharing Agreement calculates each additional tranche, as CAD$1,209,091 times the percent difference between the benchmark price of CAD$7.75 and the trailing 20-day Value Weighted Average Price. In the case where the 20-day Value Weighted Average Price is greater than the benchmark price, then the difference will be added to CAD$1,209,092 and there is no limit to the amount that Verses can receive. VERSES anticipates that the additional tranches will begin 30 days after closing and is responsible to pay 8% brokerage fee with each tranche.
The securities issued under the Offering are subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation in Canada.
The Common Shares and Warrants being offered and sold in the Offering will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and none of the Common Shares, Warrants, or Common Shares issuable upon exercise of the Warrants may be offered or sold in the United States absent registration under the U.S. Securities Act and all applicable state securities laws or an applicable exemption from such registration requirements.
This news release shall not constitute an offer to sell, or a solicitation of an offer to buy, the Units in the United States, and shall not constitute an offer, solicitation or sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. This news release is being issued pursuant to and in accordance with Rule 135c under the U.S. Securities Act.
About VERSES
VERSES is a cognitive computing company building next-generation agentic software systems modeled after the wisdom and genius of Nature. Designed around first principles found in science, physics and biology, our flagship product, Genius,™ is an agentic enterprise intelligence platform designed to generate reliable domain-specific predictions and decisions under uncertainty. Imagine a Smarter World that elevates human potential through technology inspired by Nature.
For more information, visit VERSES.ai, and follow VERSES on LinkedIn and X.
On behalf of the Company
Gabriel René, Founder & CEO, VERSES AI Inc.
Press Inquiries: [email protected]
Investor Relations Inquiries
James Christodoulou, Chief Financial Officer
[email protected], +1(212)970-8889
Forward-Looking Statements
This news release contains “forward-looking information” and “forward-looking statements” (collectively, the “Statements”) within the meaning of applicable securities laws, including, without limitation, statements regarding the anticipated proceeds from the Offering; the price of the Company’s Common Shares in the future and the impact of same on the proceeds received by the Company under the sharing agreement; and the timing of the settlement tranches under the sharing agreement.. Although VERSES believes that the expectations expressed in these Statements are based on reasonable assumptions, actual results may differ materially.
By their nature, the Statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such Statements. Factors that may cause such differences include, but are not limited to, the ability of the Company to receive the anticipated proceeds from the Offering and other risks detailed in the Company’s public filings. The Statements speak only as of the date of this release, and VERSES undertakes no obligation to update them except as required by applicable law.
Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information, including the assumption that the Company will receive the anticipated proceeds from the Offering. Those assumptions and factors are based on information currently available to the Company. Although such statements are based on reasonable assumptions of the Company’s management, there can be no assurance that any conclusions or forecasts will prove to be accurate.
Neither the CBOE nor any other securities regulator accepts responsibility for the adequacy or accuracy of this release.