Registration No. 333-

As filed with the Securities and Exchange Commission on November 7, 2019

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

  

 

 

FORM S-8

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

  

 

 

Profound Medical Corp.
(Exact name of registrant as specified in its charter)

Ontario, Canada   Not Applicable
(State or other jurisdiction of
incorporation or organization)
2400 Skymark Avenue,
Unit 6, Mississauga,
Ontario L4W 5K5
(647) 476-1350
(I.R.S. Employer Identification No.)
(Address of Principal Executive Offices) (Zip Code)
     
 

Profound Medical Corp.

Amended and Restated Share Option Plan

 
  (Full title of the plan)  
     
 

Corporation Services Company
1180 Avenue of the Americas,

Suite 210, New York, NY 10036

 
  (Name and address of agent for service)  
     
  +1 (212) 299-5600  
(Telephone number, including area code, of agent for service)
 

Copies to:
Cheryl V. Reicin, Esq.

Andrew J. Beck, Esq.

Christopher R. Bornhorst, Esq.

Torys LLP

1114 Avenue of the Americas, 23rd Floor
New York, New York 10036, USA

     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o   Accelerated Filer o
Non-Accelerated Filer x   Smaller reporting company x
    Emerging growth company x

 

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 7(a)(2)(B) of the Securities Act. ¨

 

 

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of securities
to be registered
  Amount to be
registered
    Proposed maximum
offering price
per share(3)
    Proposed maximum
aggregate
offering price(3)
    Amount of
registration fee(3)
 
Common Shares, no par value(1)(2)     1,540,857     $ 9.60     $ 14,792,227.20     $ 1,920.03  

 

(1)   This Registration Statement on Form S-8 (this “Registration Statement”) covers common shares, no par value per share (“Common Shares”), of Profound Medical Corp. (the “Registrant”) reserved for future issuance upon exercise of options issued or issuable pursuant to the Profound Medical Corp. Amended and Restated Share Option Plan (the “Plan”).

 

(2)   Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”), includes any additional Common Shares that become issuable under the Plan by reason of any share dividend, share split, recapitalization or other similar transaction.

 

(3)   Estimated pursuant to Rule 457(h) and Rule 457(c) under the Securities Act, solely for the purpose of computing the registration fee for Common Shares to be issued pursuant to the Plan, based on the average of the high and low prices reported for a Common Share on The Nasdaq Stock Market LLC on November 4, 2019.

 

 

 

 

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

 

The documents containing the information specified in Item 1 and Item 2 of Part I of Form S-8 will be delivered to participants as specified by Rule 428(b)(1) under the Securities Act. In accordance with the rules and regulations of the Commission and the instructions to Form S-8, such documents are not being filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.

 

-3-

 

 

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

 

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE

 

The following documents filed with or furnished to the Securities and Exchange Commission (the “Commission”) by Profound Medical Corp., a corporation organized under the laws of Ontario, Canada (the “Corporation” or the “Registrant”), are incorporated herein by reference and made a part hereof:

 

(a) Exhibits 4.1 to 4.10 of the Registrant’s Registration Statement on Form F-10 (File No. 333-233997) (the “F-10 Registration Statement”) filed with the Commission on September 27, 2019 (as amended on October 18, 2019), including the Registrant’s audited financial statements for the fiscal year ended December 31, 2018;

 

(b) all reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since October 22, 2019 (the effective date of the F-10 Registration Statement); and

 

(c) the description of the Corporation’s common shares (“Common Shares”), under the section captioned “Description of Securities” in the prospectus included in the F-10 Registration Statement, and incorporated by reference in the Registrant’s registration statement on Form 8-A filed on October 18, 2019 (File No. 001-39032) under the Exchange Act, including any amendment or report filed for the purpose of updating such description.

 

All documents or reports subsequently filed by the Corporation pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities offered hereby then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing of such documents or reports; provided that reports on Form 6-K shall only be deemed so incorporated by reference to the extent expressly stated therein. Any statement in a document or report incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document or report which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

 

ITEM 4.  DESCRIPTION OF SECURITIES

 

Not applicable.

 

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL

 

Not applicable.

 

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Section 136 of the Business Corporations Act (Ontario) as amended, provides, in part, as follows:

 

Indemnification

 

(1)          A corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation or another individual who acts or acted at the corporation's request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity.

 

-4-

 

 

Advance of costs

 

(2)          A corporation may advance money to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1), but the individual shall repay the money if the individual does not fulfil the conditions set out in subsection (3).

 

Limitation

 

(3)          A corporation shall not indemnify an individual under subsection (1) unless the individual acted honestly and in good faith with a view to the best interests of the corporation or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the corporation's request.

 

Same

 

(4)          In addition to the conditions set out in subsection (3), if the matter is a criminal or administrative action or proceeding that is enforced by a monetary penalty, the corporation shall not indemnify an individual under subsection (1) unless the individual had reasonable grounds for believing that the individual's conduct was lawful.

 

Derivative Actions

 

(4.1)       A corporation may, with the approval of a court, indemnify an individual referred to in subsection (1), or advance moneys under subsection (2), in respect of an action by or on behalf of the corporation or other entity to obtain a judgment in its favor, to which the individual is made a party because of the individual's association with the corporation or other entity as described in subsection (1), against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfils the conditions set out in subsection (3).

 

Right to indemnity

 

(4.2)       Despite subsection (1), an individual referred to in that subsection is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual's association with the corporation or other entity as described in subsection (1), if the individual seeking an indemnity,

 

(a) was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and

 

(b) fulfils the conditions set out in subsections (3) and (4).

 

Nothing in the articles of association, by-laws or resolutions of the Registrant limits the right of any person entitled to claim indemnity apart from the indemnity provided pursuant to Section 136 of the Business Corporations Act (Ontario).

 

The Registrant maintains a policy of directors’ and officers’ liability insurance which insures, subject to certain exclusions, directors and officers for losses as a result of claims against the directors and officers of the Registrant in their capacity as directors and officers.

 

Insofar as indemnification for liabilities arising under the U.S. Securities Act of 1933 may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

 

-5-

 

 

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED

 

Not applicable.

 

ITEM 8.  EXHIBITS.

 

See Exhibit Index following the signature page.

 

ITEM 9.  UNDERTAKINGS

 

(a)          The undersigned Registrant hereby undertakes:

 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;

 

(ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and

 

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;

 

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the registration statement;

 

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(b)          The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(c)          Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

-6-

 

 

EXHIBIT INDEX

 

Exhibit    
Number   Description
4.1   Articles of Incorporation.
     
4.2   Articles of Amendment.
     
4.3   Articles of Amalgamation.
     
4.4   Bylaws.
     
5.1   Opinion of Torys LLP.
     
23.1   Consent of Torys LLP (included in Exhibit 5.1).
     
23.2   Consent of PricewaterhouseCoopers LLP
     
24.1   Power of Attorney (included on signature page).
     
99.1   Profound Medical Corp. Amended and Restated Share Option Plan.

 

 

-7-

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mississauga, Province of Ontario, Canada, on the 7th day of November, 2019.

 

  PROFOUND MEDICAL CORP.  
       
       
  By:   /s/ Aaron Davidson  
  Name:  Aaron Davidson  
  Title:  Chief Financial Officer  

 

 

POWER OF ATTORNEY

 

We, the undersigned directors and/or officers of the Registrant, hereby severally constitute and appoint Arun Menawat, Aaron Davidson and Rashed Dewan, and each of them singly, our true and lawful attorneys, with full power to any of them, and to each of them singly, to sign for us and in our names in the capacities indicated below the registration statement on Form S-8 filed herewith, and any and all amendments to said registration statement, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratifying and confirming all that said attorneys and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.

 

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities indicated as of the 7th day of November, 2019:

 

Signatures Title
   
/s/ Arun Menawat Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)
Arun Menawat  
   
/s/ Aaron Davidson Chief Financial Officer (Principal Financial Officer)
Aaron Davidson  
   
/s/ Rashed Dewan Vice President of Finance, Manufacturing and Service (Principal Accounting Officer)
Rashed Dewan  
 
/s/ Brian Ellacott Lead Director
Brian Ellacott  
   
/s/ Jean-François Pariseau Director
Jean-François Pariseau  
   
/s/ Kenneth Galbraith Director
Kenneth Galbraith  
   
/s/ Arthur Rosenthal Director
Arthur Rosenthal  
   
/s/ Linda Maxwell Director
Linda Maxwell  
   
/s/ Steve Forte Director
Steve Forte  

 

-8-

 

 

SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned, the Registrant’s duly authorized representative has signed this Registration Statement on this 7th day of November, 2019:

 

  PROFOUND MEDICAL (U.S.) INC.  
       
       
  By:   /s/ Arun Menawat  
  Name:  Arun Menawat  
  Title:  CEO  

 

-9-

 

Exhibit 4.1

 

Request ID: 016652025 Province of Ontario Date Report Produced: 2014/07/16
Demande n°:   Province de l'Ontario Document produit le:
Transaction ID: 054818438 Ministry of Government Services Time Report Produced: 10:25:28
Transaction n°:   Ministers des Services gouvernementaux Imprimé à:
Category ID: CT    
Catégorie:      

 

Certificate of Incorporation

Certificat de constitution

 

This is to certify that Ceci certifie que

 

MIRA IV ACQUISITION CORP.

 

Ontario Corporation No. Numéro matricule de la personne morale en Ontario

 

002426652

 

is a corporation incorporated, est une société constituée aux termes
under the laws of the Province of Ontario. des lois de la province de l'Ontario.
   
These articles of incorporation Les présents statuts constitutifs
are effective on entrent en vigueur le

 

JULY 16 JUILLET, 2014

 

 

Director/Directeur

Business Corporations Act/Loi sur les societes par actions

 

 

 

 

Page: 1

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

FORM 1   FORMULE NUMERO 1
     
BUSINESS CORPORATIONS ACT / LOI SUR LES SOCIETES PAR ACTIONS

 

ARTICLES OF INCORPORATION

STATUTS CONSTITUTIFS

 

1. The name of the corporation is: Denomination socials de la compagnie:
  MIRA IV ACQUISITION CORP.  
     
2. The address of the registered office is: Adresse du siège social:

 

  5 HAZELTON AVENUE Suite 300

 

  (Street & Number, or R.R. Number & if Multi-Office Building give Room No.)
  (Rue et numéro, ou numéro de la R.R. et, s'il s'agit edifice a bureau, numero du bureau)

 

  TORONTO ONTARIO
  CANADA M5R 2E1
 

(Name of Municipality or Post Office)

(Nom da la municipalité ou du bureau de poste)

(Postal Code/Code postal)
     
3. Number (or minimum and maximum number) of directors is:

Nombre (ou nombres minimal et maximal)

d'administrateurs :

     
  Minimum 3 Maximum 11
     
4. The first director(s) is/are: Premier (a) administrateur (s) :
     
 

First name, initials and surname

Prénom, initiales et nom de famille

Resident Canadian State Yes or No

Resident Canadien Oui/Non

     
 

Address for service, giving Street & No.

or R.R. No., Municipality and Postal Code

Domicile é1u, y compris la rue et le numéro, le numéro de la R.R., ou le nom de la municipalité et le code postal

 

 

 

  

Page: 2

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

4. The first director(s) is/are: Premier (a) administrateur(s):
     
 

First name, initials and surname

Prénom, initiales at nom do famille

Resident Canadian State Yes or No

Resident Canadien Oui/Non

     
  Address for service, giving Street & No. or R.R. No., Municipality and Postal Code Domicile é1u, y compris la rue et le numéro, le numéro de la R.R., ou le nom de la municipalité et le code postal
     
* RONALD YES
  SCHMEICHEL  
  5 HAZELTON AVENUE Suite 300  
     
  TORONTO ONTARIO  
  CANADA M5R 2E1  
     
* KEVIN NO
  TAYLOR  
     
  2456 NE 27TH AVENUE  
     
  FORT LAUDERDALE FLORIDA  
  UNITED STATES OF AMERICA 33305  
     
* JORDAN YES
  KUPINSKY  
     
  5 HAZELTON AVENUE Suite 300  
     
  TORONTO ONTARIO  
  CANADA M5R 2E1  

 

 

 

  

Page: 3

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

5.

Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise.

Limites, s'il y a lieu, imposées aux activités commerciales ou aux pouvoirs de la conpagnie.

   
  There are no restrictions on the business the Corporation may carry on or on the powers the Corporation may exercise.
   
6. The classes and any maximum number of shares that the corporation is authorized to issue:
  Catégories et nombre maximal, s'il y a lieu, d'actions que la compagnie est autorisée à émettre;
   
  The Corporation is authorized to issue an unlimited number of shares of one class designated as common shares.

 

 

 

 

Page: 4

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

7. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors authority with respect to any class of shares which may be issued in series: Droits, privilèges, restrictions et conditions, s'il y a lieu, rattachés á chaque catégorie d'actions et pouvoirs des administrateurs relatifs à chague catégorie d'actions que peut être émise en série:
   
  Not applicable.

 

 

 

 

Page: 5

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

8. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows:
  L'émission, le transfert ou la propriété d'actions eat/n'est pas restraints. Les restrictions, s'il y a lieu, sont lea suivantes:
   
  None.

 

 

 

 

Page: 6

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

9. Other provisions, (if any, are):
  Autres dispositions, s'il y a lieu:
   
  None.

 

 

 

 

Page: 7

 

  Ontario Corporation Number
Request ID / Demande n° Numéro de la compagnie en Ontario
16652025 2426652

 

10. The names and addresses of the incorporators are
Nam et adresse des fondateurs
 

 

  First name, initials and last name Pré nom, initiale et nom da
  or corporate name famille ou dé nomination sociale

 

  Full address for service or address of registered office or of principal place of business giving street & No. or R.R. No., municipality and postal code
  Domicile élu, adresse du siège social au adresse de l'établissement principal, y compris la rue et le numéro, le numéro de la R.R., le nom de la municipalité et le code postal

 

* RUBIN RAPUCH
  333 BAY STREET Suite 2400
   
  TORONTO ONTARIO
  CANADA M5H 2T6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 4.2 

 

 

 

Exhibit 4.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE “A”

 

STATEMENT OF A DIRECTOR OR OFFICER OF

MIRA IV SUBCO INC.

PURSUANT TO SUBSECTION 178(2)

OF THE BUSINESS CORPORATIONS ACT

 

I, Elena Masters, of the City of Toronto, in the Province of Ontario, state that:

 

1. this Statement is made pursuant to subsection 178(2) of the Business Corporations Act (the “Act”);

 

2. I am the director, President and Secretary of Mira IV Subco Inc. and as such have knowledge of its affairs;

 

3. I have conducted such examinations of the books and records of Mira IV Subco Inc. (the “Corporation”), and have made such enquiries and investigations as are necessary to enable me to make this Statement;

 

4. There are reasonable grounds for believing that:

 

(a) the Corporation is, and the corporation to be formed by its amalgamation with Profound Medical Inc. will, be able to pay its liabilities as they become due;

 

(b) the realizable value of such amalgamated corporation’s assets will not be less than the aggregate of its liabilities and stated capital of all classes;

 

(c) no creditor of the Corporation will be prejudiced by the amalgamation; and

 

(d) adequate notice has been given to all known creditors of the Corporation.

 

This Statement is made this 4th day of June, 2015.

 

  /s/ Elena Masters
  Elena Masters

 

[Statement of Director of Mira IV Subco]

 

     

 

  

SCHEDULE “A”

 

STATEMENT OF DIRECTOR

 

I, Steven Plymale, of the City of Toronto, in the Province of Ontario, solemnly state that:

 

1. I am a director of Profound Medical Inc. (the “Corporation”) and as such have personal knowledge of the matters herein deposed to.

 

2. There are reasonable grounds for believing that:

 

(a) the Corporation is and the amalgamated corporation will be able to pay its liabilities as they become due;

 

(b) the realizable value of the assets of the amalgamated corporation will not be less than the aggregate of its liabilities and stated capital of all classes; and

 

(c) no creditor of the Corporation will be prejudiced by the amalgamation.

 

DATED June 4, 2015.

 

  /s/ Steven Plymale
  Steven Plymale

 

     

 

  

SCHEDULE “B”

 

EXECUTION VERSION

 

AMALGAMATION AGREEMENT

 

BETWEEN

 

MIRA IV ACQUISITION CORP.,

 

PROFOUND MEDICAL INC.

 

AND

 

MIRA IV SUBCO INC.

 

April 29, 2015

 

     

 

 

TABLE OF CONTENTS

 

    Page
     
ARTICLE 1 INTERPRETATION 2
1.1 Definitions 2
1.2 Interpretation Not Affected by Headings, etc 13
1.3 Number, etc 13
1.4 Date for Any Action 13
1.5 Rounding 13
1.6 Currency 13
1.7 Knowledge 13
1.8 Meanings 13
ARTICLE 2 AMALGAMATION 14
2.1 Amalgamation 14
2.2 Amalco 14
2.3 Resulting Issuer 15
2.4 Effect of Certificate of Amalgamation 16
2.5 Manner of Conversion of Issued Securities 17
2.6 Certificates 18
2.7 Fractional Securities 20
2.8 Stock Option Plan 20
2.9 Cancellation of Certain Options 20
2.10 U.S. Securities Law Compliance 20
ARTICLE 3 COVENANTS 21
3.1 Covenants of Mira 21
3.2 Further Covenants of Mira 22
3.3 Covenants of Profound 23
3.4 Further Covenants of Profound 25
3.5 Profound Shareholder Approval 26
ARTICLE 4 REPRESENTATIONS AND WARRANTIES 27
4.1 Representations and Warranties of Mira 27
4.2 Representations and Warranties of Profound 32
ARTICLE 5 CONDITIONS PRECEDENT AND OTHER MATTERS 45
5.1 Conditions to Obligations of Profound 45

 

     

 

 

5.2 Conditions to Obligations of Mira 47
5.3 Merger of Conditions 48
5.4 Alternative Transactions - Mira 48
5.5 Alternative Transactions - Profound 49
ARTICLE 6 NOTICES 50
6.1 Notices 50
ARTICLE 7 AMENDMENT AND TERMINATION OF AGREEMENT 51
7.1 Amendment 51
7.2 Rights of Termination 51
7.3 Notice of Unfulfilled Conditions 52
ARTICLE 8 GENERAL 52
8.1 Entire Agreement 52
8.2 Binding Effect 52
8.3 Waiver and Modification 53
8.4 No Personal Liability 53
8.5 Assignment 53
8.6 Confidentiality 53
8.7 Costs 54
8.8 Time of Essence 54
8.9 Survival 54
8.10 Governing Law 54
8.11 Severability 54
8.12 Further Assurances 55
8.13 Counterparts and Electronic Copies 55

 

  - ii -  

 

  

AMALGAMATION AGREEMENT

 

THIS AMALGAMATION AGREEMENT made as of the 29th day of April, 2015.

 

BETWEEN:

 

MIRA IV ACQUISITION CORP., a body corporate incorporated under the laws of the Province of Ontario (hereinafter called “Mira”)

 

OF THE FIRST PART

 

- and -

 

PROFOUND MEDICAL INC., a body corporate incorporated under the laws of the Province of Ontario (hereinafter called “Profound”)

 

OF THE SECOND PART

 

- and -

 

MIRA IV SUBCO INC., a body corporate incorporated under the laws of the Province of Ontario (hereinafter called “Mira Subco”)

 

OF THE THIRD PART

 

WHEREAS Profound and Mira, among others, are parties to a letter agreement dated November 5, 2014, as amended (the “Letter Agreement”) whereby the parties have agreed to complete a business combination;

 

AND WHEREAS Profound and Mira have agreed to structure the business combination contemplated in the Letter Agreement by way of a three-cornered amalgamation in accordance with the provisions of the Business Corporations Act (Ontario);

 

AND WHEREAS the parties have entered into this Agreement to provide for the matters referred to in the foregoing recitals and for other matters relating to the proposed amalgamation;

 

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the above premises and of the covenants, agreements, representations and warranties hereinafter contained, the parties hereto agree as follows:

 

     

 

  

ARTICLE 1

INTERPRETATION

 

1.1 Definitions

 

In this Agreement, unless there is something in the context or subject matter inconsistent therewith, the following defined terms shall have the meanings hereinafter set forth:

 

“Agency Agreement” means the agency agreement to be entered into among the Agents, Profound and Mira in respect of the Profound Private Placement.

 

“Agents” means GMP, Cormark Securities Inc., Bloom Burton & Co. and Mackie Research Capital Corporation.

 

“Agents’ Option Certificates” means, collectively, the definitive certificates issued to the Agents representing the Profound Agents’ Options or the Resulting Issuer Agents’ Options, as applicable.

 

“Agreement”, “this Agreement”, “herein”, “hereby”, “hereof’, “hereunder” and similar expressions mean or refer to this agreement and any amendments hereto.

 

“Amalco” means the amalgamated corporation to be constituted upon completion of the Amalgamation, to be named Profound Medical Inc.

 

“Amalco Shares” means the common shares in the capital of Amalco.

 

“Amalgamation” means the amalgamation of Profound and Mira Subco pursuant to Section 174 of the OBCA provided for herein to form Amalco to be effective at the Effective Time.

 

“Applicable Anti-Corruption Laws and Regulations” has the meaning ascribed thereto in Section 4.2(pp).

 

“Applicable Anti-Money Laundering Laws” has the meaning ascribed thereto in Section 4.2(qq).

 

“Articles of Amalgamation” means the Articles of Amalgamation with respect to the Amalgamation.

 

“Assessment” has the meaning ascribed thereto in Subsection 3.2(f).

 

“Assets and Properties” with respect to any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, tangible or intangible, choate or inchoate, absolute, accrued, contingent, fixed or otherwise, and, in each case, wherever situated), including the goodwill related thereto, operated, owned or leased by or in the possession of such Person.

 

  - 2 -  

 

 

“associate” and “affiliate” have the respective meanings ascribed thereto in the Securities Act (Ontario).

 

“Auditors” means such firm of chartered accountants as a company may have appointed or may from time to time appoint as auditors of such company.

 

“BDC Secured Convertible Note” means the secured convertible note dated January 27, 2015, between Profound and BDC Capital Inc. pursuant to which BDC Capital Inc. has advanced $1,000,000 to Profound.

 

“Business Day” means any day other than a Saturday or Sunday or a day when banks in the City of Toronto are not generally open for business.

 

“CDS” means CDS Clearing & Depository Services Inc.

 

“Certificate of Amalgamation” means the certificate of amalgamation for the Amalgamation issued pursuant to Section 178 of the OBCA.

 

“Clinical Trials” has the meaning ascribed thereto in Section 4.2(yy).

 

“Closing” means the completion of the Amalgamation.

 

“Closing Date” means the date of the Closing, which shall be within three (3) Business Days following the later of the satisfaction or waiver of all conditions precedent to the Amalgamation or such other date as Profound and Mira may collectively agree, acting reasonably, and in any event not later than June 12, 2015.

 

“CMS” means the Centers for Medicare and Medicaid Services.

 

“Confidential Information” means any information concerning a party to this Agreement (the “Disclosing Party”) or its business, properties and assets made available to another party or its representatives (the “Receiving Party”); provided that it does not include information which (i) is generally available to or known by the public other than as a result of improper disclosure by the Receiving Party, or (ii) is obtained by the Receiving Party from a source other than the Disclosing Party, provided that such source was not bound by a duty of confidentiality to the Disclosing Party or another party with respect to such information.

 

“Consolidation” means a consolidation of the Mira Common Shares on the basis of one (1) post-consolidation Mira Common Share for every 13.6363 pre-consolidation Mira Common Shares, which Consolidation shall occur prior to completion of the Amalgamation.

 

“Contract” means all agreements, contracts or commitments of any nature, written or oral, including, for greater certainty and without limitation, leases, purchase agreements, manufacturing, supply and distribution agreements, loan documents and security documents.

 

  - 3 -  

 

 

“Convertible Notes” means, collectively, the BDC Secured Convertible Note and the Genesys Secured Convertible Note.

 

“CPC Policy” means Policy 2.4 of the TSX Venture.

 

“Disclosing Party” has the meaning ascribed thereto in the definition of “Confidential Information”.

 

“Disclosure Documents” has the meaning ascribed thereto in Subsection 4.1(e).

 

“Effective Date” means the effective date of the Amalgamation, which shall be the date of the Certificate of Amalgamation.

 

“Effective Time” means the effective time at which the articles of amalgamation in respect of the Amalgamation are filed on the Effective Date.

 

“Employee Plans” has the meaning ascribed thereto in Section 4.2(ff).

 

“Encumbrance” means any charge, mortgage, lien, pledge, claim, restriction, security interest or other encumbrance whether created or arising by agreement, statute or otherwise pursuant to any applicable law, attaching to property, interests or rights and shall be construed in the widest possible terms and principles known under the laws applicable to such property, interests or rights and whether or not they constitute specific or floating charges as those terms are understood under the laws of the Province of Ontario.

 

“Environmental Laws” means all applicable laws currently in existence in the United States and Canada (whether federal, state, provincial or municipal) relating to the protection and preservation of the environment, occupational health and safety, product safety, product liability or hazardous substances.

 

“Environmental Permits” includes all orders, permits, certificates, approvals, consents, registrations and licences issued by any authority of competent jurisdiction under any Environmental Law.

 

“Escrow Release Conditions” has the meaning ascribed thereto in the Agency Agreement.

 

“Escrow Release Date” has the meaning ascribed thereto in the Agency Agreement.

 

“FDA” means the U.S. Food and Drug Administration of the U.S. Department of Health & Human Services.

 

“Final Exchange Bulletin” means the exchange bulletin which is issued following the Closing and the submission of all documentation and that evidences final TSX Venture acceptance of the Qualifying Transaction.

 

  - 4 -  

 

 

“Final Filing Statement” means the final filing statement of Mira in the form prescribed by the TSX Venture pertaining to the Qualifying Transaction which shall be filed on SEDAR at least seven (7) Business Days prior to the Closing, unless abridged by the TSX Venture.

 

“Final Offering Memorandum” means the final confidential offering memorandum of Profound, dated April 24, 2015, in respect of the Private Placement.

 

“Genesys Secured Convertible Note” means the secured convertible note dated January 27 2015, between Profound and Genesys Ventures II L.P., pursuant to which Genesys Ventures II L.P. has advanced $500,000 to Profound.

 

“GMP” means GMP Securities L.P.

 

“Governmental Authority” means any governmental authority and includes, without limitation, any national or federal government, province, state, municipality or other political subdivision of any of the foregoing, any entity or agency exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing.

 

“Government Health Care Program” means any federal, provincial, state or other publicly funded healthcare insurance or reimbursement program, including but not limited to a federal healthcare program as defined in Section 1128B(f) of the United States federal Social Security Act and includes the United States Medicare, Medicaid and TRICARE programs.

 

“Health Care Laws” means any international, federal, state, provincial or local statutes, regulations, directives guidelines, ordinances, orders, standards, requirements, approvals, or consents, including but not limited to: the United States Federal Food, Drug and Cosmetic Act and similar foreign health product legislation; any implementing regulations pursuant to any of the foregoing, and all similar or related international, federal, state provincial or local healthcare statutes, regulations and directives applicable to the Profound Business, including but not limited to state and provincial laws concerning fee-splitting, kickbacks, corporate practice of medicine, disclosure of ownership, related party requirements, survey, certification, licensing, civil monetary penalties, self-referrals, or laws concerning the privacy and/or security of personal health information and breach notification requirements concerning personal health information.

 

“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board, as applicable in Canada.

 

“Indebtedness” of any Person means all obligations of such Person:

 

(a) for borrowed money;

 

(b) evidenced by notes, bonds, debentures or similar instruments;

 

  - 5 -  

 

 

(c) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business);

 

(d) under capital and operating leases;

 

(e) under “vendor take-back” financing or deferred payments in connection with any acquisition; or

 

(f) which are guarantees of the obligations described in clauses (a) through (e) above of any other Person if secured by any or all of the Assets and Properties of the guarantor.

 

“Intellectual Property” means all of the following which is currently owned by, issued to or licensed to Profound, or other rights of Profound to use the following: (i) patent rights, issued patents, patent applications, patent disclosures, and registrations, inventions, discoveries, developments, concepts, ideas, improvements, processes and methods, whether or not such inventions, discoveries, developments, concepts, ideas, improvements, processes, or methods are patentable or registrable under patent or similar laws anywhere in the world; (ii) copyrights (including performance rights) to any original works of art or authorship, including source code and graphics, which are fixed in any medium of expression, including copyright registrations and applications therefor, anywhere in the world, whether or not registered or registrable; (iii) any and all common law or registered trade-mark rights, trade names, business names, trade-marks, proposed trade-marks, certification marks, service marks, distinguishing marks and guises, logos, slogans, goodwill, domain names and any registrations and applications therefor, anywhere in the world, whether or not registered or registrable; (iv) know-how, show-how, confidential information, trade secrets; (v) any and all industrial design rights, industrial designs, design patents, industrial design or design patent registrations and applications therefor, anywhere in the world, whether or not registered or registrable; (vi) any and all integrated circuit topography rights, integrated circuit topographies and integrated circuit topography applications, anywhere in the world, whether or not registered or registrable, (vii) any reissues, divisions, continuations, continuations-in-part, renewals, improvements, translations, derivatives, modifications and extensions of any of the foregoing; (viii) any other industrial, proprietary or intellectual property rights, anywhere in the world; and (ix) proprietary computer software (including but not limited to data, data bases and documentation).

 

“Knight” means Knight Therapeutics Inc.

 

“Knight Loan” means the loan agreement to be entered into between Profound and Knight on the closing of the Profound Private Placement, pursuant to which Knight will agree to provide Amalco a four-year secured loan bearing interest at an effective annual rate of 15.0% per annum and in connection with which Profound will grant to Knight a 0.5% royalty on net sales of Profound for the duration of the loan.

 

“Knight Share Issuance” means the issuance, for nominal consideration immediately prior to the Closing, by Profound of that number of Profound Common Shares to Knight as will equal four percent (4%) of the issued and outstanding Resulting Issuer Shares, on a fully-diluted basis, after giving effect to the Qualifying Transaction.

 

  - 6 -  

 

 

“Leased Premises” has the meaning ascribed thereto in Section 4.2(cc).

 

“Letter Agreement” has the meaning ascribed thereto in the first recital of this Agreement.

 

“Material Adverse Change” or “Material Adverse Effect” with respect to Mira or Profound, as the case may be, means any change (including a decision to implement such a change made by the board of directors or by senior management), event, violation, inaccuracy, circumstance or effect that is materially adverse to the business, assets (including intangible assets), liabilities, capitalization, ownership, financial condition or results of operations of Mira or Profound, as the case may be, on a consolidated basis.

 

“Material Permits” has the meaning ascribed thereto in Section 4.2(tt).

 

“Mira” means Mira IV Acquisition Corp., a body corporate incorporated under the OBCA with its head office located in Toronto, Ontario.

 

“Mira Alternative Transaction” has the meaning ascribed thereto in Section 5.4.

 

“Mira Alternative Transaction Agreement” has the meaning ascribed thereto in Section 5.4.

 

“Mira Business” means the identification and evaluation of businesses and assets with a view to completing a Qualifying Transaction and, having identified and evaluated such opportunities, to negotiate an acquisition subject to acceptance by the TSX Venture.

 

“Mira Circular” means the management information circular dated November 19, 2014 in respect of the Mira Meeting.

 

“Mira Common Shares” means the issued and outstanding common shares in the capital of Mira.

 

“Mira Escrow Agreement” means an escrow agreement dated as of August 12, 2014 among Mira, Equity Financial Trust Company (now operating as TMX Equity Transfer Services), and certain securityholders of Mira.

 

“Mira Event” has the meaning ascribed thereto in Section 5.4.

 

“Mira IPO Agent Options” means the stock options of Mira currently outstanding to acquire 1,000,000 Mira Common Shares issued to GMP Securities L.P. in connection with Mira’s initial public offering.

 

“Mira Loan” means the loan agreement entered into between Profound and Mira, pursuant to which Mira will provide Profound a three-month secured loan in the principal amount of $225,000, bearing interest at an effective annual rate of 15% per annum.

 

  - 7 -  

 

 

“Mira Management Options” means the management stock options of Mira currently outstanding to acquire collectively 3,000,000 Mira Common Shares.

 

“Mira Material Contract” has the meaning ascribed thereto in Subsection 4.1(t).

 

“Mira Meeting” means the special meeting of holders of Mira Common Shares held on December 22, 2014 approving the Mira Meeting Matters.

 

“Mira Meeting Matters” means the following matters: (i) the election of the directors set out in Subsection 2.3(e); (ii) the appointment of PricewaterhouseCoopers LLP as the auditor and the authorization of the board of directors of Mira to fix the remuneration thereof; (iii) the approval of the stock option plan of the Resulting Issuer; (iv) the amendment of the articles of Mira to effect the Consolidation; and (v) the amendment of the articles of Mira to change its name to “Profound Medical Inc.” or such other name as the board of directors of Mira, in its sole discretion, deems appropriate.

 

“Mira Offer” has the meaning ascribed thereto in Section 5.4.

 

“Mira Shareholders’ Approval” means the approval of the Mira Meeting Matters by the holders of Mira Common Shares.

 

“Mira Subco” means Mira IV Subco Inc., a wholly-owned subsidiary of Mira, incorporated under the OBCA for the sole purpose of effecting the Amalgamation.

 

“Mira Termination” has the meaning ascribed thereto in Section 5.4.

 

“OBCA” means the Business Corporations Act (Ontario), as from time to time amended or re-enacted and includes any regulations heretofore or hereafter made pursuant thereto.

 

“OIG” means the United States Department of Health and Human Services Office of Inspector General.

 

“Person” shall be broadly interpreted and shall include any individual, corporation, partnership, joint venture, association, trust or other legal entity.

 

“Private Placement Shareholders” means holders of Profound Common Shares that obtained such shares upon the automatic conversion of Profound Subscription Receipts acquired under the Profound Private Placement.

 

“Product” means the medical device currently being developed by Profound in the United States, Canada and the European Union, known as the Transurethral ULtraSound Ablation (TULSA-PRO) device.

 

“Product Distribution Agreement” means the product distribution agreement to be entered into by Knight and Profound prior to the Closing pursuant to which Profound will grant to Knight certain product distribution rights in Canada.

 

  - 8 -  

 

 

“Profound” means Profound Medical Inc., a body corporate incorporated under the OBCA with its registered office located at 3080 Yonge Street, Suite 4040, Toronto, ON M4N 3N1.

 

“Profound Agents’ Options” means the options entitling the Agents to subscribe for that number of Profound Common Shares as is equal to the following percentages of the total number of Profound Common Shares issued pursuant to the exercise of Profound Subscription Receipts under the Profound Private Placement, including those Profound Subscription Receipts issued in respect of the Profound Over-allotment Option: (i) for Profound Common Shares issued to persons or entities on the president’s list of Profound, 2%; and (ii) for all other persons or entities, 4%, each such option exercisable for one Profound Common Share for a period of 24 months from the release of the proceeds of the Profound Private Placement at the offering price of the Profound Subscription Receipts under the Profound Private Placement.

 

“Profound Alternative Transaction” has the meaning ascribed thereto in Section 5.5.

 

“Profound Alternative Transaction Agreement” has the meaning ascribed thereto in Section 5.5.

 

“Profound’s Auditors” means PricewaterhouseCoopers LLP or such other firm of chartered accountants as Profound may have appointed or may from time to time appoint as auditors of Profound.

 

“Profound Business” means the development and commercialization of a unique, minimally invasive treatment for prostate cancer.

 

“Profound Common Shares” means the common shares in the capital of Profound.

 

“Profound Event” has the meaning ascribed thereto in Section 5.5.

 

“Profound Financial Statements” means audited financial statements for Profound for the years ended December 31, 2014 and 2013.

 

“Profound Management Options” means (i) options granted to Mr. Shameze Rampertab, in connection with his employment as Chief Financial Officer of Profound, to purchase that number of Profound Common Shares upon completion of the Profound Private Placement as is equal to 1.00% of the total fully-diluted share capital of Profound after giving effect to the Profound Private Placement and the Knight Share Issuance and (ii) options granted to Mr. Steven Plymale, in connection with an amended and restated employment agreement, to purchase that number of Profound Common Shares upon completion of the Profound Private Placement that, when combined with the Profound Options he holds as at the date of this Agreement, would result in Mr. Plymale holding options to purchase that number of Profound Common Shares as is equal to 4.45% of the total fully-diluted share capital of Profound after giving effect to the Profound Private Placement and the Knight Share Issuance.

 

  - 9 -  

 

 

“Profound Material Agreements” means, collectively, this Agreement, the Agency Agreement, the Subscription Receipt Indenture, the Subscription Agreements, the Profound Agents’ Options, the Resulting Issuer Agents’ Options, the Agents’ Option Certificates, the certificates (if any) representing the Profound Subscription Receipts and the Sunnybrook License Agreement.

 

“Profound Offer” has the meaning ascribed thereto in Section 5.5.

 

“Profound Options” means the 501,250 issued and outstanding options of Profound exercisable into Profound Common Shares, in addition to the Profound Management Options.

 

“Profound Over-allotment Option” means an option exercisable by the Agents up to 48 hours prior to the closing of the Profound Private Placement, to arrange for the purchase of up to an additional 15% of the number of Profound Subscription Receipts sold under the Profound Private Placement on the same terms as under the Profound Private Placement.

 

“Profound Principals” means BDC Capital Inc. and Genesys Ventures II LP.

 

“Profound Private Placement” means the brokered private placement by Profound of Profound Subscription Receipts for gross proceeds of up to $25,012,500, assuming the exercise of the Profound Over-allotment Option in full.

 

“Profound Shareholder Approval” means the unanimous shareholders resolution of the shareholders of Profound approving, among other things, the Amalgamation and this Agreement.

 

“Profound Shareholders Agreement” means the amended and restated shareholders agreement of Profound dated May 25, 2011.

 

“Profound Subscription Receipts” means the up to 16,675,000 subscription receipts of Profound to be issued in connection with the Profound Private Placement, each exchangeable into one Profound Common Share, subject to adjustment, without additional consideration.

 

“Profound Termination” has the meaning ascribed thereto in Section 5.5.

 

“Purchasers” means the Persons (which may include the Agents) who, as purchasers, acquire the Profound Subscription Receipts by duly completing, executing and delivering the Subscription Agreements.

 

“Qualifying Transaction” has the meaning ascribed thereto under the policies of the TSX Venture Corporate Finance Manual.

 

“Receiving Party” has the meaning ascribed thereto in the definition of “Confidential Information”.

 

  - 10 -  

 

 

“Registrar and Transfer Agent” means Equity Financial Trust Company, and any other Person which may be appointed as registrar and transfer agent of Mira, as applicable, from time to time.

 

“Regulatory Authority” means the Governmental Authority authorized under applicable laws to protect and promote public health through regulation and supervision of medical products, including, without limitation, the FDA, Health Canada and similar foreign regulatory agencies.

 

“Resulting Issuer” means Mira as it exists upon completion of the Amalgamation to be known as Profound Medical Corp., or such other name determined by the board of directors of Mira.

 

“Resulting Issuer Agents’ Options” means the compensation options of the Resulting Issuer that will be outstanding upon completion of the Amalgamation.

 

“Resulting Issuer Common Shares” means common shares of the Resulting Issuer including those issued upon the Amalgamation.

 

“Resulting Issuer Options” means the stock options of the Resulting Issuer that will be outstanding upon completion of the Amalgamation.

 

“Resulting Issuer Registrar and Transfer Agent” means Equity Financial Trust Company and any other Person which may be appointed as registrar and transfer agent of the Resulting Issuer from time to time.

 

“Resulting Issuer Stock Option Plan” means the stock option plan of the Resulting Issuer.

 

“Securities Laws” means all applicable securities laws, the respective regulations made thereunder, together with applicable published fee schedules, prescribed forms, policy statements, multilateral and national instruments, orders, blanket rulings, notices and other regulatory instruments of the securities regulatory authorities in applicable jurisdictions, including the rules and published policies of the TSX Venture.

 

“SEDAR” means the System for Electronic Document Analysis and Retrieval.

 

“Series A1 Preferred Shares” means the first series of preferred shares in the capital of Profound.

 

“Series A2 Preferred Shares” means the second series of preferred shares in the capital of Profound.

 

“Subscription Agreements” means the subscription agreements in the forms agreed upon by the Agents and Profound pursuant to which Purchasers agree to subscribe for and purchase the Profound Subscription Receipts and shall include, for greater certainty, all schedules and exhibits thereto.

 

  - 11 -  

 

 

Subscription Receipt Indenture” means the subscription receipt indenture to be entered into on the closing date of the Profound Private Placement among Profound, GMP, on behalf of the Agents, and Equity Financial Trust Company, in its capacity as subscription receipt agent thereunder.

 

“Sunnybrook License Agreement” has the meaning ascribed thereto in Section 4.2(q)(i).

 

“Support Agreements” means the support agreements of the Profound Principals.

 

“Taxes” means all taxes (including income tax, sales tax, value add tax, capital tax, payroll taxes, employer health tax, workers’ compensation payments, property taxes and land transfer taxes), duties, royalties, levies, imposts, assessments, deductions, charges or withholdings and all liabilities with respect thereto including any penalty and interest payable with respect thereto.

 

“Termination Date” means June 12, 2015 or such other date as the parties may agree upon in writing.

 

“TSX Venture” means the TSX Venture Exchange Inc.

 

“United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia.

 

“U.S. Investment Company Act” means the United States Investment Company Act of 1940, as amended.

 

“U.S. Person” means a U.S. person as defined in Rule 902(k) of Regulation S under the U.S. Securities Act.

 

“U.S. Private Placement Accredited Investor” means a holder of Profound Common Shares in the United States or that is a U.S. Person that: (i) obtained such shares upon the automatic conversion of Profound Subscription Receipts that were acquired by such holder as a subscriber in the Profound Private Placement; and (ii) did not execute and deliver a copy of Appendix II to Schedule C (United States Qualified Institutional Buyer Acknowledgement, Agreement and Undertaking) to the Profound Private Placement subscription agreement.

 

“U.S. Private Placement QIB” means a holder of Profound Common Shares in the United States or that is a U.S. Person that: (i) obtained such shares upon the automatic conversion of Profound Subscription Receipts that were acquired by such holder as a subscriber in the Profound Private Placement; and (ii) executed and delivered a copy of Appendix II to Schedule C (United States Qualified Institutional Buyer Acknowledgement, Agreement and Undertaking) to the Profound Private Placement subscription agreement.

 

“U.S. Securities Act” means the United States Securities Act of 1933, as amended.

 

  - 12 -  

 

 

1.2 Interpretation Not Affected by Headings, etc.

 

The division of this Agreement into articles, sections and subsections is for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms “this Agreement”, “hereof’, “herein”, and “hereunder” and similar expressions refer to this Agreement and not to any particular article, section or other portion hereof and include any Agreement or instrument supplementary or ancillary hereto.

 

1.3 Number, etc.

 

Words importing the singular number shall include the plural and vice versa, words importing the use of any gender shall include all genders and words importing persons shall include firms and corporations and vice versa.

 

1.4 Date for Any Action

 

In the event that any date on which any action is required to be taken hereunder by any of the parties is not a Business Day such action shall be required to be taken on the next succeeding day which is a Business Day.

 

1.5 Rounding

 

In performing the various mathematical calculations required to be performed hereunder, all numbers shall be rounded to the nearest four (4) decimal places.

 

1.6 Currency

 

All sums of money which are referred to in this Agreement are expressed in lawful money of Canada, unless otherwise indicated.

 

1.7 Knowledge

 

Where any representation or warranty contained in this Agreement is expressly qualified by reference to the knowledge of Mira or Profound, as applicable, it shall be deemed to refer to the actual knowledge after having made due inquiry of the officers of the particular company.

 

1.8 Meanings

 

Words and phrases defined in the OBCA shall have the same meaning herein as in the OBCA, unless otherwise defined herein or the context otherwise requires. Unless otherwise specifically indicated or the context otherwise requires “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation”.

 

  - 13 -  

 

 

ARTICLE 2

AMALGAMATION

 

2.1 Amalgamation

 

On or before the Closing Date, subject to the terms and conditions of this Agreement and receipt of necessary approvals, Profound, Mira and Mira Subco shall take all steps required to complete the Amalgamation and, without limitation, to apply for and obtain all consents, orders or approvals as are necessary or desirable for the implementation of the Amalgamation and the filing of the Articles of Amalgamation with the registrar pursuant to the OBCA, and Profound shall use all reasonable efforts to obtain the Profound Shareholder Approval.

 

2.2 Amalco

 

(a) Name. The name of Amalco shall be Profound Medical Inc.

 

(b) Registered Office. The registered office of Amalco shall be situated at 3080 Yonge Street, Suite 4040, Toronto, ON M4N 3N1.

 

(c) Authorized Capital. Amalco shall be authorized to issue an unlimited number of Amalco Shares.

 

(d) Restrictions on Share Transfer. The transfer of shares of Amalco shall not be subject to any restrictions.

 

(e) Number of Directors. The minimum number of directors of Amalco shall be one and the maximum number of directors of Amalco shall be 10.

 

(f) First Directors. The number of first directors of Amalco shall be one. The first director of Amalco shall be:

 

Name   Address
     
Steven Plymale   1 Ripley Avenue, Unit 509
    Toronto, Ontario M6S 4Z6

 

(g) Officers. The officers of Amalco, until changed or added to by the board of directors of Amalco, shall be as follows:

 

Office   Name
     
Chief Executive Officer and President   Steven Plymale

 

  - 14 -  

 

  

Office   Name
Chief Financial Officer, Secretary and Treasurer   Shameze Rampertab
     
Vice-President of Quality and Regulatory Affairs   Guruprit Singh
     
Vice-President of Engineering   Ronald Kurtz

 

(h) First Auditors. The Auditors of Amalco shall be PricewaterhouseCoopers LLP. The Auditors of Amalco shall hold office until the first annual meeting of shareholders of Amalco following the Amalgamation, or until their successor is appointed.

 

(i) Fiscal Year. The fiscal year end of Amalco shall be December 31.

 

(j) Restrictions on Business. There shall be no restrictions on the business that Amalco may carry on.

 

(k) By-laws. The by-laws of Amalco shall be the current by-laws of Profound. A copy of such by-laws may be examined at the current address of Profound set out in Section 6.1 hereof.

 

2.3 Resulting Issuer

 

(a) Name. The name of the Resulting Issuer shall be Profound Medical Corp.

 

(b) Registered Office. The registered office of the Resulting Issuer shall be situated at 3080 Yonge Street, Suite 4040, Toronto, ON M4N 3N1.

 

(c) Authorized Capital. The Resulting Issuer shall be authorized to issue an unlimited number of Resulting Issuer Common Shares.

 

(d) Number of Directors. The minimum number of directors of the Resulting Issuer shall be three and the maximum number of directors of the Resulting Issuer shall be 11.

 

(e) First Directors. The number of first directors of the Resulting Issuer shall be 5. Subject to the receipt of all necessary approvals, the first directors of the Resulting Issuer shall be:

 

Name   Address
     
Steven Plymale   1 Ripley Avenue, Unit 509
    Toronto, Ontario M6S 4Z6
     
Damian Peter Lamb   3 Orchard Crest Road
    Toronto, Ontario M6S 4N2
     
Jean-François Pariseau   1772 Cecile-L.-Dagenais
    Laval, Quebec H3L 2X7

 

  - 15 -  

 

  

Name   Address
     
William Edward Curran   28 Jean Street
    Rye, New York 10580
     
Arun Swarup Menawat  

2412 Eighth Line

Oakville, Ontario L6H 6S9

 

The first directors shall hold office until the first annual meeting of the shareholders of the Resulting Issuer, or until their successors are duly appointed or elected.

 

(f) Officers. The officers of the Resulting Issuer, until changed or added to by the board of directors of the Resulting Issuer, shall be as follows:

 

Office   Name
     
Chief Executive Officer and President   Steven Plymale
     
Chief Financial Officer, Secretary and Treasurer   Shameze Rampertab
     
Vice-President of Quality and Regulatory Affairs   Guruprit Singh
     
Vice-President of Engineering   Ronald Kurtz

 

(g) First Auditors. The Auditors of the Resulting Issuer shall be PricewaterhouseCoopers LLP. The Auditors of the Resulting Issuer shall hold office until the first annual meeting of shareholders of the Resulting Issuer following the Amalgamation or until their successor is appointed.

 

(h) Fiscal Year. The fiscal year end of the Resulting Issuer shall be December 31.

 

(i) Restrictions on Business. There shall be no restrictions on the business that the Resulting Issuer may carry on.

 

(j) By-laws. The by-laws of the Resulting Issuer shall be the current by-laws of Mira.

 

2.4 Effect of Certificate of Amalgamation

 

Upon the issuance of the Certificate of Amalgamation:

 

(a) the Amalgamation of Profound and Mira Subco and their continuation as one corporation becomes irrevocable;

 

(b) Amalco shall possess all the property, rights, privileges and franchises and interests of each of Profound and Mira Subco;

 

  - 16 -  

 

 

(c) Amalco shall be subject to all liabilities, including civil, criminal and quasicriminal and all contracts, disabilities and debts of each of Profound and Mira Subco;

 

(d) a conviction against, or ruling, order or judgment in favour of or against, either Profound or Mira Subco may be enforced by or against Amalco;

 

(e) Amalco shall be a wholly-owned subsidiary of Mira;

 

(f) the aggregate stated capital of the common shares of Amalco shall become an amount equal to the paid-up capital for purposes of the Income Tax Act (Canada) of the common shares of Mira Subco immediately prior to the Amalgamation; and

 

(g) the aggregate stated capital of the Resulting Issuer Common Shares shall be an amount equal to the aggregate paid-up capital for purposes of the Income Tax Act (Canada) immediately prior to the Amalgamation of (i) the Mira Common Shares and (ii) the Profound Common Shares that are exchanged, or deemed to be exchanged, for Mira Common Shares on the Amalgamation.

 

2.5 Manner of Conversion of Issued Securities

 

Upon the terms and subject to the conditions set forth herein, at the time of the Amalgamation,

 

(a) each outstanding Profound Common Share (except for Profound Common Shares held by holders that have validly exercised their dissent rights in connection with the Profound Shareholder Approval) shall be exchanged for one fully paid and non-assessable Resulting Issuer Common Share;

 

(b) each outstanding share of Mira Subco shall be exchanged for one fully paid and non-assessable share of Amalco;

 

(c) subject to receipt of all required regulatory approvals, each outstanding Profound Option shall be exchanged for a Resulting Issuer Option to purchase the corresponding number of Resulting Issuer Common Shares on the same terms as those contained in the Profound Option immediately prior to the Amalgamation and each such Profound Option shall be cancelled. The exercise price for each Resulting Issuer Common Share underlying a Resulting Issuer Option will be equal to the exercise price per Profound Common Share under the Profound Option in effect immediately prior to the Amalgamation; and

 

(d) subject to receipt of all required regulatory approvals, each outstanding Profound Agents’ Option shall be exchanged for a Resulting Issuer Agents’ Option to purchase the corresponding number of Resulting Issuer Common Shares on the same terms as those contained in the Profound Agents’ Option immediately prior to the Amalgamation and each such Profound Agents’ Option shall be cancelled. The exercise price for each Resulting Issuer Common Share underlying a Resulting Issuer Agents’ Option will be equal to the exercise price per Profound Common Share under the Profound Agents’ Option in effect immediately prior to the Amalgamation.

 

  - 17 -  

 

  

Profound Common Shares held by holders who have validly exercised their dissent rights in connection with the applicable shareholder resolution to approve the Amalgamation in accordance with the OBCA will not be exchanged pursuant to this Section 2.5. However, if any such dissenting holder fails to perfect or effectively withdraws its claim pursuant to the OBCA or forfeits its right to make a claim under the OBCA or if its rights as a shareholder of Profound are otherwise reinstated, the Profound Common Shares held by such holders shall thereupon be deemed to have been exchanged as of the time of the Amalgamation in accordance with this Section.

 

2.6 Certificates

 

At the time of the Amalgamation:

 

(a) the registered holders of Profound Common Shares shall cease to be holders of Profound Common Shares, and shall be deemed to be registered holders of the Resulting Issuer Common Shares to which they are entitled in accordance with Section 2.5 hereof, all certificates evidencing Profound Common Shares shall be null and void and, on or after the Effective Time, subject to the provisions of any escrow requirement, if applicable, and subject to Section 2.10 hereof, the Resulting Issuer shall provide instructions to the Resulting Issuer Registrar and Transfer Agent to deliver such certificates or other evidence of ownership representing the number of Resulting Issuer Common Shares to which they are so entitled and/or register the holders thereof in book-entry only format in CDS’ name in accordance with the following:

 

(i) holders of Profound Common Shares immediately prior to the Amalgamation (other than Private Placement Shareholders and holders of Profound Common Shares that are either in the United States or are U.S. Persons) will be issued physical certificates representing the Resulting Issuer Common Shares exchanged therefor;

 

(ii) holders of Profound Common Shares immediately prior to the Amalgamation that are either in the United States or U.S. Persons (other than U.S. Private Placement Accredited Investors and U.S. Private Placement QIBs) will not be entitled to receive delivery of any Resulting Issuer Common Shares unless and until such holder provides any and all such representations, warranties, covenants or agreements as may be required by the Resulting Issuer, in its sole discretion, in order to establish the availability of an exemption from the registration requirements of the U.S. Securities Act and any applicable state securities laws in connection with the distribution of the Resulting Issuer Common Shares to be exchanged for their Profound Common Shares, and in order to ensure compliance by the Resulting Issuer with the requirements of the U.S. Investment Company Act, failing which the Company shall appoint an agent to sell the Resulting Issuer Shares of such a holder on behalf of that holder and that holder shall be entitled to receive an amount of cash representing the proceeds of the sale of the Resulting Issuer Common Shares, net of expenses of sale; if and to the extent that the Resulting Issuer determines in its sole discretion that Resulting Issuer Common Shares may otherwise be delivered to any such holder, such holder will be issued physical certificates representing the Resulting Issuer Common Shares, each bearing such legend or legends with respect to United States securities laws matters as the Resulting Issuer determines to be necessary or appropriate, in its sole discretion;

 

  - 18 -  

 

  

(iii) each Private Placement Shareholder that is neither in the United States nor a U.S. Person and holds Profound Common Shares immediately prior to the Amalgamation will have the Resulting Issuer Common Shares they are entitled to receive pursuant to this Agreement registered in book-entry only with CDS;

 

(iv) each Private Placement Shareholder that is a U.S. Private Placement Accredited Investor and holds Profound Common Shares immediately prior to the Amalgamation will be issued a physical certificate representing the Resulting Issuer Common Shares they are entitled to receive pursuant to this Agreement bearing the following legend:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION OR (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS;

 

(v) each Private Placement Shareholder that is a U.S. Private Placement QIB and holds Profound Common Shares immediately prior to the Amalgamation will have the Resulting Issuer Common Shares they are entitled to receive pursuant to this Agreement registered in book-entry only with CDS;

 

(b) the registered holders of the Profound Options and Profound Agents’ Options shall be deemed to be the registered holders of the Resulting Issuer Options and Resulting Issuer Agents’ Options, respectively, to which they are entitled in accordance with Section 2.5 hereof, all certificates and/or agreements evidencing such securities shall, in accordance with their terms, evidence such securities of the Resulting Issuer and the Resulting Issuer shall deliver notice to the holders of such options of the foregoing or deliver amended certificates or agreements evidencing such securities of the Resulting Issuer as required; and

 

  - 19 -  

 

  

(c) notwithstanding the foregoing, all certificates representing Profound Common Shares held by persons who have validly exercised their dissent rights in connection with the Profound Shareholder Approval shall represent only the right to receive fair value of the Profound Common Shares formerly represented by such certificates in accordance with the OBCA.

 

2.7 Fractional Securities

 

No fractional securities of the Resulting Issuer will be issued. If a securityholder of Profound would otherwise be entitled to a fractional security upon the Amalgamation, the number of securities of the Resulting Issuer issued to such securityholder shall be rounded down to the next lesser whole number of such security. In calculating such fractional interests, all securities of the Resulting Issuer, as the case may be, registered in the name of or beneficially held by a Resulting Issuer securityholder or their nominee shall be aggregated.

 

2.8 Stock Option Plan

 

The stock option plan of the Resulting Issuer shall be substantially in the form approved at the Mira Meeting.

 

2.9 Cancellation of Certain Options

 

Immediately prior to the time of the Amalgamation, Mira shall cancel one-third (1/3) of the Mira Management Options, being 1,000,000 of such Mira Management Options on a pre-Consolidation basis.

 

2.10 U.S. Securities Law Compliance

 

Notwithstanding anything to the contrary in this Agreement, no Resulting Issuer Common Shares, Resulting Issuer Options or Resulting Issuer Agents’ Options shall be delivered to any person in the United States or to any U.S. Person if the Resulting Issuer determines, in its sole discretion, that doing so may result in any contravention of the U.S. Securities Act or any applicable state securities laws, or the U.S. Investment Company Act, and the Resulting Issuer may instead, in the case of Resulting Issuer Shares, appoint an agent to sell the Resulting Issuer Shares of such person on behalf of that person and deliver an amount of cash representing the proceeds of the sale of such Resulting Issuer Shares, net of expenses of sale, or, in the case of Resulting Issuer Options or Resulting Issuer Agents’ Options, deliver an amount of cash representing the fair market value of the Resulting Issuer Options or Resulting Issuer Agents’ Options, as the case may be.

 

  - 20 -  

 

  

ARTICLE 3

COVENANTS

 

3.1 Covenants of Mira

 

Mira covenants and agrees with Profound from the date of execution hereof to and including the Effective Date:

 

(a) not to, directly or indirectly, solicit, initiate, knowingly encourage, co-operate with or facilitate (including by way of furnishing any non-public information or entering into any form of agreement, arrangement or understanding) the submission, initiation or continuation of any oral or written inquiries or proposals or expressions of interest regarding, constituting or that may reasonably be expected to lead to any activity, arrangement or transaction or propose any activities or solicitations in opposition to or in competition with the Amalgamation, and without limiting the generality of the foregoing, not to induce or attempt to induce any other Person to initiate any shareholder proposal or “take-over bid,” exempt or otherwise, within the meaning of the Securities Act (Ontario), for securities of Mira, nor to undertake any transaction or negotiate any transaction which would be or potentially could be in conflict with the Amalgamation, including allowing access to any third party (other than its representatives) to conduct due diligence, nor to permit any of its officers or directors to do so, except as required by statutory obligations. In the event Mira or any of its affiliates, including any of their officers or directors, receives any form of offer or inquiry in respect of any of the foregoing, Mira shall forthwith (in any event within one Business Day following receipt) notify Profound of such offer or inquiry and provide Profound with such details as it may request;

 

(b) to co-operate fully with Profound and to use all reasonable commercial efforts to assist Profound in its efforts to complete the Amalgamation, unless such co-operation and/or efforts would subject Mira to liability or would be in breach of applicable statutory or regulatory requirements;

 

(c) to operate its business in a prudent and business-like manner in the ordinary course and in a manner consistent with past practice;

 

(d) not to, without Profound’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed):

 

(i) issue any debt, equity or other securities, except the issuance of Mira Common Shares (or options to acquire Mira Common Shares) pursuant to the Amalgamation or pursuant to any securities exercisable to acquire Mira Common Shares outstanding as of the date hereof;

 

(ii) borrow money or incur any indebtedness for money borrowed;

 

(iii) make any capital expenditures;

 

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(iv) make loans, advances, or any other payments out of the ordinary course, other than the Mira Loan and payment of professional fees in connection with or ancillary to the Amalgamation, not to exceed $250,000, which amount excludes professional fees in connection with annual shareholder meeting requirements.

 

(v) declare or pay any dividends or distribute any of Mira’s properties or assets to shareholders or otherwise;

 

(vi) alter or amend Mira’s articles or by-laws in any manner which may adversely affect the success of the Amalgamation, except as required to give effect to the matters contemplated herein; and

 

(vii) except as otherwise permitted or contemplated herein, enter into any transaction or material Contract which is not in the ordinary course of business or engage in any business enterprise or activity materially different from that carried on by Mira as of the date hereof.

 

3.2 Further Covenants of Mira

 

Mira covenants and agrees with Profound that Mira will from the date of execution hereof to and including the Effective Date:

 

(a) use all commercially reasonable efforts to obtain all necessary consents, assignments or waivers from third parties and amendments or terminations to any instrument or agreement and take such other measures as may be necessary to fulfil its obligations under and to carry out the transactions contemplated by this Agreement;

 

(b) make necessary filings and applications under applicable federal and provincial laws and regulations required on the part of it in connection with the transactions contemplated herein, and take all reasonable action necessary to be in compliance with such laws and regulations;

 

(c) use all commercially reasonable efforts to conduct its affairs so that all of its representations and warranties contained herein shall be true and correct on and as of the Effective Date as if made on the Effective Date, except to the extent that such representations and warranties require modification to give effect to the transactions contemplated herein;

 

(d) immediately notify Profound of any legal or governmental actions, suits, judgments, investigations, injunction, complaint, motion, regulatory investigation, regulatory proceeding or similar proceeding by any Person, Governmental Authority or other regulatory body, whether actual or threatened, with respect to the Amalgamation or which could otherwise delay or impede the transactions contemplated hereby or would result in a Material Adverse Effect;

 

  - 22 -  

 

  

  (e) notify Profound immediately upon becoming aware that any of the representations and warranties of Mira contained herein are no longer true and correct in any material respect;
     
(f) immediately upon receipt of any written audit inquiry, assessment, reassessment, confirmation or variation of an assessment, indication that an assessment is being considered, request for filing of a waiver or extension of time or any other notice in writing relating to Taxes (an “Assessment”) of Mira, deliver to Profound a copy thereof together with a statement setting out, to the extent then determinable, an estimate of the obligations, if any, of Mira on the assumption that such Assessment is valid and binding;

 

(g) use all commercially reasonable efforts to cause each of the conditions precedent set forth in Section 5.1 hereof to be complied with;

 

(h) effect the Consolidation; and

 

(i) subject to the satisfaction of the conditions in Section 5.2 hereof thereafter cause Mira Subco to file together with Profound with the registrar the Articles of Amalgamation and such other documents as may be required to give effect to the Amalgamation on or before the Termination Date.

 

3.3 Covenants of Profound

 

Profound covenants and agrees with Mira from the date of execution hereof to and including the Effective Date:

 

(a) not to, directly or indirectly, solicit, initiate, knowingly encourage, co-operate with or facilitate (including by way of furnishing any non-public information or entering into any form of agreement, arrangement or understanding) the submission, initiation or continuation of any oral or written inquiries or proposals or expressions of interest regarding, constituting or that may reasonably be expected to lead to any activity, arrangement or transaction or propose any activities or solicitations in opposition to or in competition with the Amalgamation, and without limiting the generality of the foregoing, not to induce or attempt to induce any other Person to initiate any shareholder proposal or “take-over bid,” exempt or otherwise, within the meaning of the Securities Act (Ontario) for securities or assets of Profound, nor to undertake any transaction or negotiate any transaction which would be or potentially could be in conflict with the Amalgamation, including allowing access to any third party (other than its representatives) to conduct due diligence, nor to permit any of its officers or directors to do so, except as required by statutory obligations or in respect of which the board of directors of Profound determines, in its good faith judgement, after receiving advice from its legal advisors, that failure to recommend such alternative transaction to its shareholders would be a breach of its fiduciary duties under applicable law. In the event Profound or any of its affiliates, including any of their officers or directors, receives any form of offer or inquiry in respect of any of the foregoing, Profound shall forthwith (in any event within one Business Day following receipt) notify Mira of such offer or inquiry and provide Mira with such details as it may request;

 

  - 23 -  

 

  

(b) to co-operate fully with Mira and to use all reasonable commercial efforts to assist Mira in its efforts to complete the Amalgamation unless such co-operation and efforts would subject Profound to liability or would be in breach of applicable statutory or regulatory requirements;

 

(c) to operate its business in a prudent and business-like manner in the ordinary course and in a manner consistent with past practice;

 

(d) that Profound shall not, without Mira’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed):

 

(i) issue any equity or convertible debt securities, except in connection with the Knight Share Issuance, the Profound Private Placement or the issuance of Profound Common Shares pursuant to any securities exercisable to acquire common shares of Profound (including the Profound Subscription Receipts, Profound Agents’ Options, and Profound Options (including without limitation, the Profound Management Options)) outstanding as of the date hereof or in connection with any short-term convertible note bridge financing (not to exceed $5 million), from shareholders of Profound prior to the Profound Private Placement (including, for greater certainty, the Convertible Notes), which notes are convertible into securities issuable in the Profound Private Placement or into Profound Common Shares;

 

(ii) make loans, advances, or any other payments, excluding salaries and bonuses at current rates or routine advances to employees of Profound for expenses incurred in the ordinary course or as contemplated pursuant to or in conjunction with the Amalgamation; and excluding the Knight Loan and the Mira Loan;

 

(iii) declare or pay any dividends or distribute any properties or assets of Profound to shareholders or otherwise dispose of any of such properties or assets;

 

(iv) alter or amend the articles or by-laws of Profound in any manner which may adversely affect the success of the Amalgamation, except as required to give effect to the matters contemplated herein;

 

(v) except as otherwise permitted or contemplated herein, enter into any transaction or material Contract which is not in the ordinary course of business or engage in any business enterprise or activity materially different from that carried on by Profound as at the date hereof; or

 

(vi) make capital expenditures, other than in the ordinary course of business.

 

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3.4 Further Covenants of Profound

 

Profound covenants and agrees with Mira that it will from the date of execution hereof to and including the Effective Date:

 

(a) use all commercially reasonable efforts to obtain all necessary consents, assignments or waivers from third parties and amendments or terminations to any instrument or agreement, to provide all notices required in connection with the Amalgamation and take such other measures as may be necessary to fulfil its obligations under and to carry out the transactions contemplated by this Agreement;

 

(b) use all commercially reasonable efforts to complete the Profound Private Placement prior to the Effective Date;

 

(c) circulate to its shareholders materials required in connection with the Profound Shareholder Approval in accordance with its constating documents and applicable laws as soon as reasonably practicable;

 

(d) use its commercially reasonable efforts to have the Profound Shareholder Approval approved by the required percentage of shareholders of Profound;

 

(e) advise Mira once it receives the Profound Shareholder Approval;

 

(f) promptly advise Mira of any written notice of dissent or purported exercise by any Profound shareholder of dissent rights under the OBCA received by Profound in relation to the Amalgamation and any withdrawal of dissent rights received by Profound and, subject to applicable law, any written communications sent by or on behalf of Profound to any Profound shareholder exercising or purporting to exercise dissent rights in relation to the Amalgamation;

 

(g) make necessary filings and applications under applicable federal, state and provincial laws and regulations required on the part of Profound in connection with the transactions contemplated herein, and take all reasonable action necessary to be in compliance with such laws and regulations;

 

(h) use all commercially reasonable efforts to conduct its affairs so that Profound’s representations and warranties contained herein shall be true and correct on and as of the Effective Date as if made on the Effective Date, except to the extent that such representations and warranties require modification to give effect to the transactions contemplated herein;

 

(i) immediately notify Mira of any legal or governmental actions, suits, judgments, investigations, injunction, complaint, motion, regulatory investigation, regulatory proceeding or similar proceeding by any Person, Governmental Authority or other regulatory body, whether actual or threatened, with respect to the Amalgamation or which could otherwise delay or impede the transactions contemplated hereby or result in a Material Adverse Effect;

 

  - 25 -  

 

  

(j) notify Mira immediately upon becoming aware that any of the representations and warranties of Profound contained herein are no longer true and correct in any material respect;

 

(k) immediately upon receipt of any Assessment relating to Profound, deliver to Mira a copy thereof together with a statement setting out, to the extent then determinable, an estimate of the obligations, if any, of Profound on the assumption that such Assessment is valid and binding;

 

(l) use all commercially reasonable efforts to cause each of the conditions precedent set forth in Section 5.2 hereof to be complied with; and

 

(m) subject to the satisfaction of the conditions precedent in Section 5.1 hereof thereafter together with Mira Subco file with the registrar the Articles of Amalgamation and such other documents as may be required to give effect to the Amalgamation on or before the Termination Date.

 

3.5 Profound Shareholder Approval

 

(a) Promptly after the execution of this Agreement, Profound shall prepare and complete the Profound Shareholder Approval, together with any other documents required by the OBCA and other applicable laws in connection with the Amalgamation, and Profound shall cause the Profound Shareholder Approval to be sent to each shareholder of Profound and other Persons as required by its constating documents and applicable laws, as soon as is practicable.

 

(b) Profound shall furnish to Mira all such information concerning Profound, as may be reasonably required by Mira in the preparation of the Final Filing Statement and other documents related thereto, and Profound shall ensure that no such information provided by Profound for inclusion in the Final Filing Statement shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein in order to make any information so furnished by Profound not misleading in light of the circumstances in which it is disclosed.

 

(c) Profound shall indemnify and save harmless Mira and Mira Subco and their respective directors, officers, employees, agents, advisors and representatives from and against any and all respective liabilities, claims, demands, losses, costs, damages and expenses to which Mira or Mira Subco or their respective directors, officers, employees, agents, advisors or representatives may be subject or may suffer, in any way caused by, or arising, directly or indirectly, from or in consequence of:

 

(i) any misrepresentation or alleged misrepresentation in any information included in the Final Filing Statement that is provided by Profound for inclusion therein; and

 

(ii) any order made, or any inquiry, investigation or proceeding by any securities regulatory authority or other Governmental Authority, to the extent based on any misrepresentation or any alleged misrepresentation in any information related to Profound and provided for inclusion in the Final Filing Statement.

 

  - 26 -  

 

  

(d) Profound shall promptly notify Mira if, at any time before the Closing, the Final Filing Statement contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to the Final Filing Statement and the parties shall co-operate in the preparation of any amendment or supplement as required or as appropriate. Mira shall, subject to compliance by Profound with this Subsection 3.5(d), and, if required by the TSX Venture or applicable laws, file any amendment or supplement to the Final Filing Statement with the applicable securities regulatory authority and as otherwise required.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

 

4.1 Representations and Warranties of Mira

 

Mira represents and warrants to and in favour of Profound as follows, and acknowledges that Profound is relying upon such representations and warranties in connection with the completion of the transactions contemplated herein:

 

(a) Each of Mira and Mira Subco is a corporation incorporated and validly existing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and corporate authority and is duly qualified and holds all material permits, licences, registrations, qualifications, consents and authorizations necessary or required to carry on the Mira Business as now conducted and to own, lease or operate its Assets and Properties and neither Mira nor, to the knowledge of Mira, any other Person, has taken any steps or proceedings, voluntary or otherwise, requiring or authorizing Mira’s dissolution or winding up of Mira or Mira Subco, and each of Mira and Mira Subco has all requisite corporate power and corporate authority to enter into this Agreement.

 

(b) The authorized capital of Mira consists of an unlimited number of Mira Common Shares, of which 30,000,000 Mira Common Shares are issued and outstanding as at the date hereof as fully paid and non-assessable shares in the capital of Mira. Mira also has the Mira Management Options and the Mira IPO Agent Options outstanding. Immediately prior to the Effective Time, Mira shall cancel 1,000,000 of the Mira Management Options (on a pre-Consolidation basis).

 

(c) Other than Mira Subco, Mira has no direct or indirect subsidiaries nor any investment in any Person or any agreement, option or commitment to acquire any such investment. All of the issued and outstanding securities of Mira Subco (being one common share of Mira Subco) are held by Mira. Mira Subco is not a party to any contract and has nominal assets and no liabilities.

 

  - 27 -  

 

  

(d) Mira became a “reporting issuer” (as that term is defined under applicable Securities Laws in each of the provinces of Ontario, Alberta and British Columbia) on August 13, 2014, is a reporting issuer as at the date hereof, and is not in default of the requirements of the applicable Securities Laws in such jurisdictions in any material respect as at the date hereof.

 

(e) As at November 17, 2014, Mira had at least 200 shareholders each holding a Board Lot (as such term is defined in TSX Venture Policy 1.1 - Interpretation).

 

(f) Mira has filed all material documents and information required to be filed by it, whether pursuant to applicable Securities Laws or otherwise, with the applicable securities commissions (the “Disclosure Documents”), except where non-compliance has not had, and would not reasonably be expected to have, a Material Adverse Effect, and Mira does not have any confidential filings with any securities authorities. As of the time the Disclosure Documents were filed with the applicable securities regulators and on SEDAR (System for Electronic Document Analysis and Retrieval) (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (i) each of the Disclosure Documents complied in all material respects with the requirements of the applicable Securities Laws in the jurisdictions they were filed; and (ii) none of the Disclosure Documents contained any untrue statement of a material fact regarding Mira or omitted to state a material fact regarding Mira required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(g) Mira has been conducting the Mira Business in compliance in all material respects with all applicable laws and regulations of each jurisdiction in which it carries on the Mira Business and has not received a notice of material non-compliance, and, to the knowledge of Mira, there are no facts that would give rise to a notice of material non-compliance with any such laws and regulations.

 

(h) No consent, approval, order or authorization of, or registration, declaration or filing with, any third party or Governmental Authority is required by or with respect to Mira or Mira Subco in connection with the execution and delivery of this Agreement by Mira or Mira Subco, the performance of their obligations hereunder or the consummation by Mira or Mira Subco of the transactions contemplated hereby other than: (i) the approval of the Amalgamation as Mira’s Qualifying Transaction by the TSX Venture and the listing of the Resulting Issuer Common Shares on the TSX Venture; (ii) the filing of Articles of Amendment to effect the applicable Mira Meeting Matters; (iii) the filing of the Articles of Amalgamation under the OBCA and the issuance of a certificate in respect thereof; (iv) such registrations and other actions required under applicable Securities Laws as are contemplated by this Agreement and registrations and applications required as a result of the formation of a new corporation on the Amalgamation; and (v) any filings with the registrar under the OBCA.

 

  - 28 -  

 

  

(i) Each of the execution and delivery of this Agreement, the performance by each of Mira and Mira Subco of its obligations hereunder, the issue of the Resulting Issuer Common Shares and the consummation of the transactions contemplated in this Agreement, including the Amalgamation, do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (whether after notice or lapse of time or both), (i) any law, statute, rule or regulation applicable to Mira or Mira Subco including applicable Securities Laws; (ii) the constating documents, by-laws or resolutions of Mira or Mira Subco, which are in effect as at the date hereof; (iii) any mortgage, note, indenture, contract, agreement, joint venture, partnership, instrument, lease or other document to which Mira or Mira Subco is a party or by which it is bound; or (iv) any judgment, decree or order binding upon Mira or Mira Subco or either’s Assets and Properties.

 

(j) This Agreement has been duly authorized and executed by Mira and Mira Subco and constitutes a valid and binding obligation of Mira and Mira Subco and shall be enforceable against each of Mira and Mira Subco in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by the application of equitable principals when equitable remedies are sought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law.

 

(k) Other than this Agreement, neither Mira nor Mira Subco is currently party to any agreement in respect of: (i) the purchase of any material property or assets or any interest therein or the sale, transfer or other disposition of any material property or assets or any interest therein currently owned, directly or indirectly, by Mira or Mira Subco whether by asset sale, transfer of shares or otherwise; or (ii) the change of control of Mira or Mira Subco (whether by sale or transfer of shares or otherwise).

 

(l) The audited financial statements of Mira from the period from the date of incorporation (July 16, 2014) to December 31, 2014 have been prepared in accordance with IFRS and present fairly, in all material respects, the financial position (including the assets and liabilities, whether absolute, contingent or otherwise as required by IFRS) of Mira as at such date and the results of its operations and its cash flows for the period then ended and contain and reflect adequate provisions for all reasonably anticipated liabilities, expenses and losses of Mira in accordance with IFRS and there has been no change in accounting policies or practices of Mira since December 31, 2014.

 

(m) Mira is a taxable Canadian corporation and all Taxes due and payable or required to be collected or withheld and remitted by Mira have been paid, collected or withheld and remitted as applicable, except for where the failure to pay such Taxes would not have a Material Adverse Effect. Except to the extent that failure to do so would not have a Material Adverse Effect, all tax returns, declarations, remittances and filings required to be filed by Mira have been filed with all appropriate Governmental Authorities and all such returns, declarations, remittances and filings are complete and accurate and no material fact or facts have been omitted therefrom which would make any of them misleading. To the knowledge of Mira, no examination of any tax return of Mira is currently in progress by any Governmental Authority and there are no issues or disputes outstanding with any Governmental Authority respecting any Taxes that have been paid, or may be payable, by Mira. There are no agreements, waivers or other arrangements with any taxation authority providing for an extension of time for any assessment or reassessment of Taxes with respect to Mira.

 

  - 29 -  

 

  

(n) Mira has established on its books and records reserves that are adequate for the payment of all material Taxes not yet due and payable and there are no liens for Taxes on the assets of Mira that are material, and there are no audits pending of the tax returns of Mira (whether federal, state, provincial, local or foreign) and there are no claims which have been asserted relating to any such tax returns, which audits and claims, if determined adversely, would result in the assertion by any governmental agency of any deficiency that would result in a Material Adverse Effect.

 

(o) Mira’s Auditors are independent public accountants.

 

(p) No holder of outstanding shares in the capital of Mira is entitled to any pre-emptive or any similar rights to subscribe for any Mira Common Shares or other securities of Mira and, other than pursuant to the Mira Management Options, Mira IPO Agent Options and this Agreement, there are no rights to acquire, or instruments convertible into or exchangeable for, any shares in the capital of Mira or Mira Subco.

 

(q) No third party has any ownership right, title, interest in, claim in, lien against or any other right to the Assets and Properties purported to be owned by Mira or Mira Subco.

 

(r) No legal or governmental actions, suits, judgments, investigations or proceedings are pending to which Mira or Mira Subco, or to the knowledge of Mira, the directors, officers or employees of Mira are a party or to which the Assets and Properties of Mira or Mira Subco are subject that would result in’ a Material Adverse Effect and, to the knowledge of Mira, no such proceedings have been threatened against or are pending with respect to Mira or Mira Subco, or with respect to its Assets and Properties and neither Mira nor Mira Subco is subject to any judgment, order, writ, injunction, decree or award of any Governmental Authority, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(s) Neither Mira nor Mira Subco is in violation of its constating documents or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any Contract to which it is a party or by which it or its property may be bound.

 

(t) Mira is not party to any material Contract, written or oral, other than:

 

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(i) this Agreement;

 

(ii) a registrar and transfer agency and disbursing agent agreement dated as of August 12, 2014 between Mira and Equity Financial Trust Company;

 

(iii) an agency agreement dated as of August 12, 2014 between Mira and Richardson GMP Limited in connection with the initial public offering of Mira; and

 

(iv) the Mira Escrow Agreement,

 

(collectively, the “Mira Material Contracts”).

 

(u) All Mira Material Contracts are in good standing in all material respects and in full force and effect.

 

(v) Neither Mira nor, to the knowledge of Mira, any other party thereto is in material default or breach of any Mira Material Contract and there exists no condition, event or act which, with the giving of notice or lapse of time or both, would constitute a material default or breach under any Mira Material Contract which would give rise to a right of termination on the part of any other party to a Mira Material Contract.

 

(w) Except for the trading halt imposed by the TSX Venture on November 5, 2014 following disclosure by Mira of the Letter Agreement, no order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of Mira (including the Mira Common Shares) has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of Mira, are pending, contemplated or threatened by any regulatory authority.

 

(x) Mira is not party to any agreement, nor, to the knowledge of Mira, is there any shareholders agreement or other Contract which in any manner affects the voting control of any of the securities of Mira.

 

(y) There is no agreement, plan or practice of Mira relating to the payment of any management, consulting, service or other fee or any bonus, pensions, share of profits or retirement allowance, insurance, health or other employee benefit other than in the ordinary course of business or in respect of professional service fees.

 

(z) Mira has no, and since incorporation has not had any, employees.

 

(aa) Except for the Mira Management Options, Mira IPO Agent Options and the stock option plan of the Resulting Issuer approved by the shareholders of Mira at the Mira Meeting, Mira does not have any plan for retirement, bonus, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, incentive or otherwise contributed to, or required to be contributed to, by Mira for the benefit of any current or former director, officer, employee or consultant of Mira, each of which has been maintained in all material respects with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations.

 

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(bb) None of the directors or officers of Mira has any material interest, direct or indirect, in any material transaction or any proposed material transaction with Mira that materially affects, is material to or will materially affect Mira. Mira is not indebted to: (i) any director, officer or shareholder of Mira; (ii) any individual related to any of the foregoing by blood, marriage or adoption; or (iii) any corporation controlled, directly or indirectly, by any one or more of those Persons referred to in this Subsection 4.1(bb). None of those Persons referred to in this Subsection 4.1(bb) is indebted to Mira. Mira is not currently a party to any material Contract, agreement or understanding with any officer, director, employee, shareholder or any other Person not dealing at arm’s length with Mira.

 

(cc) Mira has no insurance policies in place.

 

(dd) The minute books and records of Mira made available to counsel for Profound in connection with the due diligence investigation of Mira for the period from the date of incorporation to the date hereof are all of the minute books of Mira and contain copies of all material proceedings (or certified copies thereof) of the shareholders, the directors and all committees of directors of Mira to the date hereof and there have been no other meetings, resolutions or proceedings of the shareholders, directors or any committees of the directors of Mira to the date hereof not reflected in such minute books.

 

(ee) There is no Person acting at the request or on behalf of Mira that is entitled to any brokerage or finder’s fee or other compensation in connection with the transactions contemplated by this Agreement.

 

4.2 Representations and Warranties of Profound

 

Profound represents and warrants to and in favour of Mira and Mira Subco as follows, and acknowledges that Mira and Mira Subco are relying upon such representations and warranties in connection with the completion of the transactions contemplated herein:

 

(a) Profound is a corporation incorporated and validly existing under the laws of the Province of Ontario and has all requisite corporate power and corporate authority and is duly qualified and holds all permits, licences, registrations, qualifications, consents and authorizations necessary or required to carry on the Profound Business as now conducted in each of the jurisdictions it carries on business and to own, lease or operate its Assets and Properties and neither Profound nor, to the knowledge of Profound, any other Person, has taken any steps or proceedings, voluntary or otherwise, requiring or authorizing Profound’s dissolution or winding up, and Profound has all requisite corporate power and corporate authority to enter into each of the Profound Material Agreements and to carry out its obligations hereunder and thereunder.

 

  - 32 -  

 

  

(b) Profound has no direct or indirect subsidiaries nor any investment in any Person or any agreement, option or commitment to acquire any such investment.

 

(c) Profound has been conducting the Profound Business in compliance in all respects with all applicable laws, rules, regulations, orders and directions of Governmental Authorities of each jurisdiction in which it carries on the Profound Business and has not received a notice of material noncompliance, and, to the knowledge of Profound, there are no facts that would give rise to a notice of material non-compliance with any such laws, rules, regulations, orders and directions.

 

(d) No consent, approval, order or authorization of, or registration, declaration or filing with, any third party or Governmental Authority is required by or with respect to Profound in connection with the execution and delivery of this Agreement by Profound, the performance of its obligations hereunder or the consummation by Profound of the transactions contemplated hereby other than the approvals set out in Schedule 4.2(d).

 

(e) The execution and delivery of this Agreement, the performance by Profound of its obligations hereunder, and the consummation of the transactions contemplated in this Agreement do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (whether after notice or lapse of time or both), (i) any statute, rule or regulation applicable to Profound including Securities Laws; (ii) the constating documents, by-laws or resolutions of Profound which are in effect at the date hereof; (iii) any mortgage, note, indenture, contract, agreement, joint venture, partnership, instrument, lease or other document to which Profound is a party or by which it is bound; or (iv) any judgment, decree or order binding Profound of its Assets and Properties.

 

(f) This Agreement has been duly authorized and executed by Profound and constitutes a valid and binding obligation of Profound and is enforceable against Profound in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by the application of equitable principals when equitable remedies are sought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law.

 

(g) Other than this Agreement and as stated in this Section 4.2(g), Profound is not currently party to any agreement in respect of: (A) the purchase of any material Assets and Properties or any interest therein or the sale, transfer or other disposition of any material Assets and Properties or any interest therein currently owned, directly or indirectly, by Profound whether by asset sale, transfer of shares or otherwise; or (B) the change of control of Profound (whether by sale or transfer of shares or sale of all or substantially all of the Assets and Properties of Profound or otherwise). Profound expects to enter into the Profound Distribution Agreement at or prior to Closing.

 

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(h) The Profound Financial Statements have been prepared in accordance with IFRS consistently applied throughout the periods referred to therein and present fairly, in all material respects, the financial position (including the assets and liabilities, whether absolute, contingent or otherwise as required by IFRS) of Profound as at such dates and the results of its operations and its cash flows for the periods then ended and contain and reflect adequate provisions or allowance for all reasonably anticipated liabilities, expenses and losses of Profound in accordance with IFRS and there has been no change in accounting policies or practices of Profound since incorporation. Except as set out in the Profound Financial Statements, and other than the Convertible Notes, Profound does not have any outstanding indebtedness or any liabilities or obligations including any unfunded obligation under any employee plan, whether accrued, absolute, contingent or otherwise as of the date of the applicable financial statements. Profound expects to enter into the Mira Loan at or prior to the closing of the Profound Private Placement and the Knight Loan at or prior to the Closing.

 

(i) All Taxes due and payable or required to be collected or withheld and remitted, by Profound have been paid, collected or withheld and remitted as applicable. All tax returns, declarations, remittances and filings required to be filed by Profound have been filed with all appropriate Governmental Authorities and all such returns, declarations, remittances and filings are complete and accurate and no material feet or facts have been omitted therefrom which would make any of them misleading. To the knowledge of Profound, no examination of any tax return of Profound is currently in progress and there are no issues or disputes outstanding with any Governmental Authority respecting any taxes that have been paid, or may be payable, by Profound. There are no agreements, waivers or other arrangements with any taxation authority providing for an extension of time for any assessment or reassessment of taxes with respect to Profound.

 

(j) Profound has established on its books and records reserves that are adequate for the payment of all Taxes not yet due and payable and there are no liens for Taxes on the Assets and Properties of Profound (other than liens for Taxes that are not yet due and payable), and there are no audits pending of the tax returns of Profound (whether federal, state, provincial, local or foreign) and there are no claims which have been asserted relating to any such tax returns, which audits and claims, if determined adversely, would result in the assertion by any governmental agency of any material deficiency.

 

(k) Profound maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; and (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain accountability for assets.

 

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(l) Profound’s Auditors who audited the audited consolidated financial statements of Profound for the financial year ended December 31, 2014 are independent public accountants.

 

(m) No Person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issue of any of the unissued Profound Common Shares or other securities of Profound and, other than the (i) the Profound Subscription Receipts; (ii) options to purchase 1,268,312 Profound Common Shares; (iii) 2,500,000 Series A1 Preferred Shares; (iv) 10,812,500 Series A2 Preferred Shares; (v) the Convertible Notes; (vi) the Profound Management Options; and (vii) the Knight Share Issuance; and except for pre-emptive rights and rights of first refusal as provided for in the Profound Shareholders Agreement with respect to Profound, no other rights to acquire, or instruments convertible into or exchangeable for, any shares in the capital of Profound are outstanding.

 

(n) No legal or governmental actions, suits, judgments, investigations or proceedings are pending to which Profound, or to the knowledge of Profound, the directors, officers or employees of Profound are a party or to which the Assets and Properties of Profound is subject and, to the knowledge of Profound, no such proceedings have been threatened against or are pending with respect to Profound, or with respect to its Assets and Properties and Profound is not subject to any judgment, order, writ, injunction, decree or award of any Governmental Authority, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(o) Profound is not in violation of its constating documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any Contract to which it is a party or by which it or its Assets and Properties may be bound.

 

(p) Profound owns or has the right to full use of all Assets and Properties owned or used in the Business (other than Intellectual Property, with respect to which the representations and warranties in Sections 4.2(s)-(y) apply) free and clear of any actual, pending or, to the knowledge of Profound, threatened claims, liens, charges, options, set-offs, free-carried interests, royalties, encumbrances, security interests or other interests whatsoever, including: (a) all Contracts that are material to the Profound Business; and (b) all Assets and Properties necessary to enable Profound to carry on the Profound Business as now conducted and as presently proposed to be conducted.

 

(q) All Contracts to which Profound is a party are in good standing in all respects and in full force and effect, including, without limitation:

 

(i) the amended and restated technology license agreement (the “Sunnybrook License Agreement”) entered into on May 16, 2011 between Profound and Sunnybrook Health Sciences Centre, pursuant to which Sunnybrook Health Sciences Centre licenses to Profound certain intellectual property on the terms and conditions set forth therein;

 

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(ii) the Convertible Notes;

 

(iii) the lease extending and amending agreement entered into on August 30, 2012, between Profound and Yonge & Lawrence Inc., pursuant to which Profound leases the premises at 3080 Yonge Street for a term ending December 31, 2016;

 

(iv) the agreement entered into on February 27, 2012, between Profound and TDC Medical, Inc. for the manufacture and supply of the disposal portion of the Product;

 

(v) the loan agreement entered into on May 25, 2011, between Profound and The Health Technology Exchange, as amended by the amending agreement dated April 1, 2012, for a non-revolving term performance based loan of up to $750,000 for a project relating to the commercialization of the Product, with annual repayments commencing upon commercialization;

 

(vi) the loan agreement entered into on March 31, 2014, between Profound and The Health Technology Exchange for a non-revolving performance based loan of up to $750,000 for a project relating to the commercialization of the Product, with annual repayments commencing upon commercialization; and

 

(vii) the loan agreement entered into on December 16, 2011, between Profound and the Federal Economic Development Agency for a non-interest bearing loan of up to $867,000, to be repaid in 60 monthly instalments commencing April 1, 2015 and finishing on April 1, 2020.

 

(r) Neither Profound nor, to the knowledge of Profound, any other party thereto is in default or breach of any Contract and, to the knowledge of Profound, there exists no condition, event or act which, with the giving of notice or lapse of time or both would constitute a default or breach under any Contract which would give rise to a right of termination on the part of any other party to a Contract.

 

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(s) (i) Profound owns, or has obtained valid and enforceable licenses for, or other rights to use, the Intellectual Property including the Intellectual Property described in the Final Offering Memorandum; (ii) Profound has no knowledge that Profound lacks any rights or licenses to use all Intellectual Property necessary and material for the conduct of the Profound Business; (iii) no third parties have rights to any Intellectual Property that is owned by or licensed to Profound, except as disclosed in the Final Offering Memorandum, other than rights acquired pursuant to non-exclusive licenses granted by Profound in the ordinary course of business or Intellectual Property licensed to Profound; (iv) all of the applied for or registered Intellectual Property that is owned by or licensed to Profound and necessary and material in the operation of the Profound Business is in full force and effect and, to the knowledge of Profound, Profound has not failed to take any actions with respect to such applied for or registered Intellectual Property in a manner which would result in the abandonment, opposition, re-examination, rejection, impeachment, cancellation, termination, lapsing, limitation, expungement or unenforceability of any of such applied for or registered Intellectual Property; (v) all applications, registrations, filings, renewals and payments necessary to preserve the rights in and to the applied for or registered Intellectual Property that is owned by or licensed to Profound and necessary and material to the operation of the Profound Business have been duly filed, made, prosecuted and maintained, are in good standing or substantially reinstatable and are, if owned by Profound, recorded in the name of Profound, and Profound has not received any written notice indicating that any application for registration of the Intellectual Property that is owned by Profound has been finally rejected or denied by the applicable reviewing authority, except as would not, individually or in the aggregate, have or would reasonably be expected to have a Material Adverse Effect; and (vi) there is no pending or threatened action, suit, proceeding or claim by any other Person challenging the validity or enforceability of any Intellectual Property, and Profound has no knowledge of any finding of unenforceability or invalidity of any issued or registered Intellectual Property that is owned by Profound or licensed to Profound pursuant to the Sunnybrook License Agreement.

 

(t) (i) Profound is the sole and exclusive legal and/or beneficial owner, as applicable, of, has good and marketable title to, and owns all right, title and interest in all material Intellectual Property that is owned by Profound, free and clear of all encumbrances, liens, mortgages, hypothecations, security interests, charges or adverse interests whatsoever, options to purchase and restrictions or other adverse claims of any kind or nature, and Profound has no knowledge of any claim of adverse ownership in respect thereof; (ii) no consent of any person is necessary to make, use, reproduce, license, sell, modify, update, enhance or otherwise exploit any Intellectual Property that is owned by Profound; and (iii) other than the Intellectual Property licensed to Profound pursuant to the Sunnybrook License Agreement, none of the Intellectual Property that is owned by or licensed to Profound comprises an improvement to any Intellectual Property that would give any third Person any rights to any such Intellectual Property, including, without limitation, rights to license any such Intellectual Property; except as would not, individually or in the aggregate, have or would reasonably be expected to have a Material Adverse Effect.

 

(u) The Company has no knowledge of any pending or threatened, action, suit, proceeding or claim by others challenging Profound’s rights in or to any Intellectual Property, and Profound has no knowledge of any facts which form a reasonable basis for any such claim; Profound has not received any written notice or claim challenging its ownership or right to use any of the Intellectual Property.

 

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(v) (i) To Profound’s knowledge, the conduct of the Profound Business (including, without limitation, the use or other exploitation of the Intellectual Property by Profound) has not infringed, violated, misappropriated or otherwise conflicted with any intellectual property right of any third Person; and (ii) to the knowledge of Profound, there is no pending or threatened action, suit, proceeding or claim by any other person that Profound infringes or otherwise violates (or would infringe or otherwise violate upon commercialization of Profound’s products or services under development) any intellectual property right owned by any other Person, and Profound has no knowledge of any facts which form a reasonable basis for any such claim.

 

(w) To Profound’s knowledge, no person has infringed or misappropriated, or is infringing or misappropriating, any rights of Profound in or to any of the Intellectual Property.

 

(x) To the extent that any of the Intellectual Property that is owned by Profound is licensed or disclosed to any other Person by Profound, Profound has entered into a valid and subsisting written agreement with any such Person which contains terms and conditions prohibiting the unauthorized use or transfer of such Intellectual Property by such Person. Other than such agreements that have expired in accordance with their respective terms, all such agreements are in full force and effect and, to the knowledge of Profound, none of Profound or, any other Person, is in material default or material breach of its obligations thereunder.

 

(y) To Profound’s knowledge, all moral rights as defined under the Copyright Act (Canada) or any other applicable legislation or by operation of law in any applicable jurisdiction have been waived in writing in favour of Profound and its successors or assignees with respect to the copyrightable works that are owned by Profound, except as would not, individually or in the aggregate, have or would reasonably be expected to have a Material Adverse Effect.

 

(z) No order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of Profound has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of Profound, are pending, contemplated or threatened by any Governmental Authority.

 

(aa) The authorized capital of Profound consists of: (i) an unlimited number of Profound Common Shares of which 2,166,766 Profound Common Shares are issued and outstanding as fully paid and non-assessable shares in the capital of Profound as of the date hereof; and (ii) an unlimited number of preferred shares, issuable in series, the first series of which is designated as Series A1 Preferred Shares, of which 2,500,000 Series A1 Preferred Shares are issued and outstanding as fully paid and non-assessable shares in the capital of Profound as of the date hereof, and the second series of which is designated as Series A2 Preferred Shares, of which 10,812,500 Series A2 Preferred Shares are issued and outstanding as fully paid and non-assessable shares in the capital of Profound as of the date hereof.

 

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(bb) at the Effective Time, there will be no securityholders’ agreements to which Profound is a party and, to the knowledge of Profound, there will not be, at the time of the Qualifying Transaction Closing, any pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of the securities of Profound.

 

(cc) Profound owns no real property; and with respect to each premises of Profound which is material to the Profound Business and which Profound occupies as tenant (the “Leased Premises”), Profound occupies the Leased Premises and has the exclusive right to occupy and use the Leased Premises and each of the leases pursuant to which Profound occupies the Leased Premises is in good standing and in full force and effect in all respects.

 

(dd) Profound is not a party to or bound by any collective agreement and is not currently conducting negotiations with any labour union or employee association.

 

(ee) Profound is in compliance with all laws respecting employment and employment practices, terms and conditions of employment, pay equity and wages and has not and is not engaged in any unfair labour practice.

 

(ff) Other than (i) Profound’s Amended and Restated Stock Option Plan dated September 26, 2008, as amended and restated on March 16, 2012 and on September 12, 2012; and (ii) the Encon Group Benefits Plan as renewed on March 1, 2014, Profound does not have any agreements, plans or practices relating to the payment of any management, consulting, service or other fees or any bonuses, pensions, share of profits or retirement allowance, insurance, health or other employee benefits or any plan for retirement, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, incentive or otherwise contributed to, or required to be contributed to, by Profound for the benefit of any current or former director, officer, employee or consultant of Profound (the “Employee Plans”). The Company has made available to Mira IV the opportunity to review true and complete copies of documents, contracts and arrangements relating to the Employee Plans. The Employee Plans have been established, operated in the ordinary course and administered in all material respects in accordance with their terms and applicable laws.

 

(gg) There has not been in the last two years and there is not currently any labour disruption that would reasonably be expected to have a Material Adverse Effect.

 

(hh) To Profound’s knowledge, none of the directors, officers or employees of Profound or any associate or affiliate of any of the foregoing has any interest, direct or indirect, in any transaction with Profound that materially affects, is material to or would reasonably be expected to materially affect Profound.

 

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(ii) Other than the Convertible Notes, Profound is not indebted to: (i) any director, officer or shareholder of Profound; (ii) any individual related to any of the foregoing by blood, marriage or adoption; or (iii) any corporation controlled, directly or indirectly, by any one or more of those Persons referred to in this Section 4.2(ii). None of those Persons referred to in this Section 4.2(ii) is indebted to Profound. Profound is not currently a party to any material Contract, agreement or understanding with any officer, director, employee, shareholder or any other Person not dealing at arm’s length with Profound other than employment agreements and the Convertible Notes.

 

(jj) Profound’s insurance policies are valid and enforceable and in full force and effect, are underwritten by unaffiliated and reputable insurers, are sufficient for all applicable requirements of law and provide insurance, including liability and product liability insurance, in such amounts and against such risks as is customary for corporations engaged in businesses similar to that carried on by Profound. Profound is not in default in any respect with respect to the payment of any premium or compliance with any of the provisions contained in any such insurance policy and has not failed to give any notice or present any claim within the appropriate time therefor. There are no circumstances under which Profound would be required to or, in order to maintain its coverage, should give any notice to the insurers under any such insurance policy which has not been given. Profound has not received notice from any of the insurers regarding cancellation of such insurance policy.

 

(kk) Copies of the minute books and records of Profound made available to counsel for Mira IV in connection with the due diligence investigation of Profound for the period from the date of incorporation to the date hereof are all of the minute books of Profound and contain copies of all proceedings (or certified copies thereof) of the shareholders, the directors and all committees of directors of Profound to the date hereof to the extent that minutes exist and there have been no other meetings, resolutions or proceedings of the shareholders, directors or any committees of the directors of Profound to the date hereof not reflected in such minute books.

 

(ll) (A) Profound and each of its Assets and Properties and the operation of the Profound Business have been and are, to the knowledge of Profound, in compliance in all respects with all Environmental Laws; (B) Profound has complied in all respects with all reporting and monitoring requirements under all Environmental Laws; (C) Profound has not ever received any notice of any non-compliance in respect of any Environmental Laws; and (D) there are no Environmental Permits necessary to conduct the Profound Business.

 

(mm) Other than the Agents, there is no Person acting or purporting to act at the request or on behalf of Profound that is entitled to any brokerage or finder’s fee or other compensation in connection with the transactions contemplated hereby or by the Agency Agreement.

 

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(nn) Since December 31, 2014, there has not occurred any Material Adverse Change (actual, anticipated, contemplated or threatened, whether financial or otherwise) in the assets, liabilities (contingent or otherwise), properties, capital, affairs, prospects, business, operations or condition (financial or otherwise) of Profound which has not been disclosed in the Final Offering Memorandum.

 

(oo) Other than the Profound Private Placement and other than as disclosed in the Final Offering Memorandum, Profound has not:

 

(i) paid or declared any dividend or incurred any material capital expenditure or made any commitment therefor;

 

(ii) incurred any obligation or liability, direct or indirect, contingent or otherwise, except in the ordinary course of business and which is not, and which in the aggregate are not, material; or

 

(iii) entered into any material transaction other than as contemplated herein.

 

(pp) Profound has conducted all transactions, negotiations, discussions and dealings in full compliance with anti-bribery and anti-corruption laws and regulations applicable in any jurisdiction in which they are located or conducting business (collectively “Applicable Anti-Corruption Laws and Regulations”). The Company has not made any offer, payment, promise to pay or authorization of payment of money or anything of value to any government official, or any other person while having reasonable grounds to believe that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a government official, for the purpose of (i) assisting the parties in obtaining, retaining or directing business; (ii) influencing any act or decision of a government official in his or its official capacity; (iii) inducing a government official to do or omit to do any act in violation of his or its lawful duty, or to use his or its influence with a government or instrumentality thereof to affect or influence any act or decision of such government or department, agency, instrumentality or entity thereof; or (iv) securing any improper advantage.

 

(qq) The operations of Profound are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the anti-money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Applicable Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any Governmental Authority involving Profound with respect to Applicable Anti-Money Laundering Laws is, to the knowledge of Profound, pending or threatened.

 

(rr) All forward-looking information and statements of Profound contained in the Final Offering Memorandum and that will be contained in the Final Filing Statement and the assumptions underlying such information and statements, subject to any qualifications contained therein, are reasonable in the circumstances, or will be reasonable in the circumstances, as applicable, as at the date on which such assumptions were made.

 

  - 41 -  

 

  

(ss) The statistical, industry and market related data included in the Final Offering Memorandum and that will be contained in the Final Filing Statement are derived from sources which Profound reasonably believes to be accurate, reasonable and reliable, and such data is consistent, or will be consistent, as applicable, with the sources from which it was derived.

 

(tt) Profound holds all of the permits, licenses, approvals, consents, orders, markings, certificates and like authorizations necessary for it to own, lease and license its Assets and Properties and carry on the Profound Business, as now carried on as of the date of this Agreement, in each jurisdiction where such business is carried on that are material to the conduct of the Profound Business, as now carried on as of the date of this Agreement, including, but not limited to, permits, licenses, approvals, consents, orders, certificates and like authorizations from Regulatory Authorities (collectively, the “Material Permits”); all such Material Permits are valid and subsisting and in good standing and none of the same contains any term, provision, condition or limitation which has or would reasonably be expected to affect or restrict in an adverse manner the operation of the Profound Business, as now carried on as of the date of this Agreement or proposed to be carried on, as set out in the Final Offering Memorandum, and Profound is not in breach thereof or in default with respect to filings to be effected or conditions to be fulfilled in order to maintain such Material Permits in good standing.

 

(uu) No Material Permits issued by a Regulatory Authority have been limited, suspended, or revoked, and nor is a Regulatory Authority considering such action.

 

(vv) Profound is in compliance in all material respects with each Material Permit held by it and is not in violation of, or in default under applicable Health Care Laws.

 

(ww) There is no false or misleading information or significant omission in any submission to a Regulatory Authority.

 

(xx) The Product has been and is being developed, tested, investigated, manufactured, stored, distributed and marketed in compliance with applicable Health Care Laws or any other applicable legal requirement, including those regarding non-clinical testing, clinical research, establishment registration, device listing, pre-market notification, good manufacturing practices, labeling, advertising, record-keeping, adverse event reporting and reporting of corrections and removals.

 

(yy) The clinical, pre-clinical and other studies and tests conducted by or on behalf of or sponsored by Profound that are described or referred to in the Final Offering Memorandum (collectively, the “Clinical Trials”) were and, if still pending, are being conducted, in all material respects, in accordance with all experimental protocols; procedures and controls; accepted professional scientific standards; accepted standards of ethical research involving humans; and applicable laws, including applicable laws administered by Regulatory Authorities. The descriptions of the result of the Clinical Trials described or referred to in the Final Offering Memorandum are accurate and complete in all respects and fairly present the published data derived from the Clinical Trials and Profound has no knowledge of other studies or tests the results of which are inconsistent with or would otherwise call into question the results described or referred to in the Final Offering Memorandum. The Company has not received any notices or written correspondence from any Regulatory Authority with respect to any Clinical Trial requesting information about or requiring the termination or suspension of such Clinical Trial.

 

  - 42 -  

 

  

(zz) Profound has filed with applicable Regulatory Authorities all filings, declarations, listings, registrations, reports, updates and submissions that are required to be so filed under applicable Health Care Laws. All such filings were in compliance with applicable Health Care Laws when filed and no deficiencies have been asserted by any Regulatory Authority with respect to any such filings, declarations, listings, registrations, reports, updates or submissions.

 

(aaa) Profound has not received any Form FDA-483, notice of adverse finding, FDA warning letters, notice of violation or “untitled letters,” or notice of FDA action for import detentions or refusals or any other written correspondence from the FDA or similar communications from another Regulatory Authority alleging or asserting noncompliance with any applicable Health Care Laws. Profound is not subject to any obligation arising under an administrative or regulatory action, inspection, warning letter, notice of violation letter, or other written notice, response or commitment made to or with the FDA or any other Regulatory Authority, and, to Profound’s knowledge, no such proceedings have been threatened.

 

(bbb) Profound and its officers, directors, and employees and, to Profound’s knowledge, their respective representatives, contractors and agents, have been and are currently in compliance with all applicable Health Care Laws and neither Profound nor its officers, directors or employees have engaged in any act or omission that violates or would violate any Health Care Laws.

 

(ccc) Profound and, to Profound’s knowledge, none of its officers, directors, and employees (i) are not and have not been a party to, or bound by, any order, individual integrity agreement, corporate integrity agreement or other formal agreement or settlement with any Governmental Authority concerning compliance with Health Care Laws; (ii) has not made any filings in the United States pursuant to the OIG or CMS self-disclosure protocol; (iii) has not been a defendant in any action, or received a threat of any action, brought under a United States federal or state whistleblower statute, including without limitation the False Claims Act of 1863 (31 U.S.C. § 3729 et seq.); and (iv) has not been served with or received any written search warrant, subpoena (other than those related to actions against third parties), civil investigative demand or contact letter from a Governmental Authority.

 

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(ddd) Profound has not received notice of any action pending or recommended by any Governmental Authority (including a Regulatory Authority) either to revoke, withdraw, suspend or limit any Material Permit, or to terminate, suspend, limit, withdraw, or forfeit the participation of Profound in any government program.

 

(eee) To Profound’s knowledge, Profound is not the target or subject of any current or potential investigation relating to any Government Health Care Program-related offense.

 

(fff) Profound has not (i) offered, authorized, promised, made or agreed to make gifts of money, other property, other value or similar benefits or contributions to, or entered into any fee-splitting arrangement with, any actual or potential patient, health care provider, actual or potential business partner, governmental employee, or other Person in a position to assist or hinder Profound in connection with any actual or proposed transaction, or to any political party, political party official or candidate for federal, state, provincial or local public office in violation of any applicable law or (ii) maintained any unrecorded fund or asset of Profound for any improper purpose or made any false entries on its books and records for any reason.

 

(ggg) To Profound’s knowledge, no Persons who have engaged in any activity that is in violation of or have been convicted of, charged with, or investigated for, a felony or a criminal offense under any Health Care Law; or who are excluded, suspended, debarred, prohibited from providing services under, or otherwise ineligible to participate in any Government Health Care Program; or who have been threatened with exclusion, debarment or being otherwise ineligible to participate in any Government Health Care Program; or who have committed any act or have engaged in any activity that is permissive or mandatory grounds for exclusion, debarment, suspension, or other ineligibility to so participate, are either employed by, under Contract with, or agents of Profound or provide items or services on behalf of Profound.

 

(hhh) Profound has not unlawfully disclosed the protected health information of any person, nor committed any other breach of applicable Health Care Laws concerning the privacy and/or security of personal health information; nor is Profound aware of any investigation by any Governmental Authority for a violation of applicable Health Care Laws concerning the privacy and/or security of personal health information.

 

(iii) Profound has not notified, either voluntarily or as required by Health Care Law or other applicable law, any affected individual, any Governmental Authority or the media of any breach of protected health information. To the knowledge of Profound, Profound has not suffered any unauthorized acquisition, access, use or disclosure of any personal information that, individually or in the aggregate, materially compromises the security or privacy of such personal information.

 

(jjj) Profound does not participate in, directly or through any broker, distributor or similar party, any arrangement pursuant to which customers of the Profound Business receive, directly or indirectly, a reduction in the purchase or other benefits, monetary or otherwise, other than normal and legal customary trade practices and incidental business-related entertainment.

 

  - 44 -  

 

 

(kkk) Subject only to the terms of the Sunnybrook License Agreement, Profound is the sole legal and beneficial owner of, has good and marketable title to, and owns all right, title and interest in the Product. Profound intends to grant Knight the exclusive right to market, sell, distribute and commercialize the Product in Canada, and any future product of Profound to be approved in Canada;

 

(lll) There is no actual or, to Profound’s knowledge, threatened enforcement actions by any Regulatory Authority against Profound.

 

(mmm) Except for ordinary course inquiries by Regulatory Authorities, no Regulatory Authority is presently alleging or asserting, or, to Profound’s knowledge, threatening to allege or assert, noncompliance with any applicable legal requirement or registration in respect of the Product.

 

ARTICLE 5

CONDITIONS PRECEDENT AND OTHER MATTERS

 

5.1 Conditions to Obligations of Profound

 

The obligation of Profound to consummate the transactions contemplated herein is subject to the satisfaction, on or before the Closing Date, of the following conditions:

 

(a) except as affected by the transactions contemplated herein, including the Mira Loan, the representations and warranties of Mira contained in Section 4.1 hereof shall be true in all material respects on the Closing Date with the same effect as though such representations and warranties had been made at and as of such time, other than in respect of representations and warranties qualified by materiality which representations and warranties shall be true and correct, and Profound shall have received a certificate to that effect, dated the Closing Date, from an officer or director of Mira acceptable to Profound, to the best of his or her knowledge, having made reasonable inquiry;

 

(b) Mira and Mira Subco shall have performed, fulfilled or complied with, in all material respects, all of their obligations, covenants and agreements contained in this Agreement to be fulfilled or complied with by them at or prior to the Closing and Profound shall have received a certificate of an officer or director of Mira to such effect;

 

(c) Mira shall have furnished Profound with:

 

(i) a certified copy of the resolutions passed by the board of directors of Mira approving this Agreement and the consummation of the transactions contemplated herein;

 

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(ii) a certified copy of the special resolution of the sole shareholder of Mira Subco authorizing and approving the Amalgamation;

 

(iii) a certified copy of the resolutions of shareholders of Mira approving the Mira Meeting Matters; and

 

(iv) written approval of the TSX Venture of the Amalgamation as a Qualifying Transaction under the TSX Venture rules and policies and such other matters as may require TSX Venture approval in order to give effect to the transactions contemplated hereby.

 

(d) receipt of all regulatory and third party approvals, authorizations and consents as are required to be obtained by Mira or Profound in connection with the Amalgamation, including the approval of the TSX Venture and any other applicable regulatory authorities and specifically including approval of the TSX Venture with respect to the Knight Share Issuance;

 

(e) completion of the Consolidation;

 

(f) the shareholders of Profound approving the Amalgamation and this Agreement;

 

(g) the Resulting Issuer Common Shares that are issued as consideration for the Profound Common Shares shall be issued as fully paid and non-assessable Resulting Issuer Common Shares in the capital of the Resulting Issuer, free and clear of any and all encumbrances, liens, charges and demands of whatsoever nature, except those imposed pursuant to escrow restrictions of the TSX Venture and/or applicable securities laws;

 

(h) no Material Adverse Change shall have occurred with respect to Mira since the date of this Agreement, other than a reduction of its cash position in order to pay its ongoing operating expenses and professional fees, such fees not to exceed $250,000 except in accordance with Section 3.1(d)(iv) or with Profound’s written consent;

 

(i) there being no legal proceeding or regulatory actions or proceedings against any Person to enjoin, restrict or prohibit the Amalgamation or which could reasonably be expected to result in a Material Adverse Effect on Mira;

 

(j) there being no prohibition at law against completion of Amalgamation;

 

(k) Mira shall be in compliance, in all material respects, with applicable Securities Laws and the rules and policies of the TSX Venture and there shall be no cease-trade order made or threatened by a Governmental Authority in respect of the Mira Common Shares except pursuant to the CPC Policy; and

 

(l) completion of the Profound Private Placement for gross proceeds of not less than $21,750,000.

 

  - 46 -  

 

  

The conditions described above are for the exclusive benefit of Profound and may be asserted by Profound regardless of the circumstances, or may be waived by Profound in its sole discretion, in whole or in part, at any time and from time to time prior to the Amalgamation without prejudice to any other rights which Profound may have hereunder or at law and notwithstanding the approval of this Agreement by the shareholders of Mira Subco and/or Profound.

 

5.2 Conditions to Obligations of Mira

 

The obligations of Mira and Mira Subco to consummate the transactions contemplated herein are subject to the satisfaction, on or before the Closing Date, of the following conditions:

 

(a) except as affected by the transactions contemplated herein, the representations and warranties of Profound contained in Section 4.2 hereof shall be true in all material respects on the Closing Date with the same effect as though such representations and warranties had been made at and as of such time, other than in respect of representations and warranties qualified by materiality which representations and warranties shall be true and correct, and Mira shall have received a certificate to such effect, dated the Closing Date, of a senior officer of Profound to the best of his knowledge having made reasonable inquiry;

 

(b) Profound shall have performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement to be fulfilled or complied with by it at or prior to the time of the Closing and Mira shall have received a certificate of an officer of Profound to such effect;

 

(c) Profound shall have furnished Mira with:

 

(i) certified copies of the directors’ resolutions passed by the board of directors of Profound approving this Agreement, as well as the consummation of the transactions contemplated therein;

 

(ii) certified copies of the special resolution of the shareholders of Profound authorizing and approving the Amalgamation and this Agreement; and

 

(iii) a certificate of Profound, or Profound’s registrar and transfer agent, setting forth the number of issued and outstanding Profound securities immediately prior to the Amalgamation and confirming that there are no issued and outstanding preferred shares in the capital of Profound;

 

(d) receipt of all regulatory or third party approvals, authorizations and consents as are required to be obtained by Mira or Profound in connection with the Amalgamation, including the approval of the TSX Venture and any other applicable regulatory authorities;

 

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(e) no Material Adverse Change shall have occurred in the business, results of operations, assets, liabilities, financial condition or affairs of Profound since the date of this Agreement;

 

(f) each of the Profound Principals shall have entered into a Support Agreement on or prior to the date hereof with Mira and Profound and shall not be in default of any term thereof;

 

(g) the shareholders of Profound approving the Amalgamation and this Agreement;

 

(h) there being no legal proceeding or regulatory actions or proceedings against any Person to enjoin, restrict or prohibit the Amalgamation or which could reasonably be expected to result in a Material Adverse Effect on Profound;

 

(i) there being no prohibition at law against the completion of the transactions contemplated hereby; and

 

(j) the completion of the Profound Private Placement for gross proceeds of not less than $21,750,000 million.

 

The conditions described above are for the exclusive benefit of Mira and Mira Subco and may be asserted by Mira and Mira Subco, acting together, regardless of the circumstances, or may be waived by Mira and Mira Subco, acting together, in their sole discretion, in whole or in part, at any time and from time to time prior to the Amalgamation without prejudice to any other rights which Mira and Mira Subco may have hereunder or at law and notwithstanding the approval of this Agreement by the shareholders of Mira Subco and/or Profound.

 

5.3 Merger of Conditions

 

The conditions set out in Sections 5.1 and 5.2 hereof shall be conclusively deemed to have been satisfied, waived or released on the filing by Profound and Mira Subco of the Articles of Amalgamation with the registrar.

 

5.4 Alternative Transactions – Mira

 

In the event that Mira receives a bona fide offer, whether written or oral (a “Mira Offer”), from a third party to acquire the assets or shares of Mira or to enter into an arrangement or agreement which would materially interfere with the Amalgamation which Mira wishes to pursue at the instruction of its board of directors or a committee thereof, including without in any way limiting the generality of the foregoing, any such arrangement or agreement resulting from an unsolicited offer or proposal from a third party (a “Mira Alternative Transaction”), then Mira shall provide forthwith a copy of the Mira Offer to Profound or, if made orally, a written summary of the Mira Offer (and in any event within one Business Day following receipt thereof) and Mira may terminate this Agreement upon written notice to Profound. Upon termination of this Agreement by Mira by written notice to Profound (the “Mira Termination”) or upon Mira entering into an agreement, including a letter of intent, whether or not binding (the “Mira Alternative Transaction Agreement”), prior to the termination of this Agreement, with respect to the Mira Alternative Transaction, Mira shall forthwith provide Profound with a copy of the Mira Alternative Transaction Agreement and shall, within ten (10) Business Days following the earlier of the Mira Termination and the entering into of the Mira Alternative Transaction Agreement (collectively and individually referred to as a “Mira Event”), as applicable, make a cash payment to Profound in the amount of: (a) $100,000 if the Mira Event occurs after the entering into of this Agreement but prior to the filing of the Final Filing Statement on SEDAR; and (b) $200,000 if the Mira Event occurs on or after the filing of the Final Filing Statement on SEDAR, which payment shall constitute full and final compensation and remedy to Profound for any breach or the non-performance of this Agreement and any and all fees and expenses associated therewith.

 

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5.5 Alternative Transactions – Profound

 

In the event that Profound or any of the Profound Principals receives a bona fide offer, whether written or oral, (a “Profound Offer”), from a third party to acquire the assets or shares of Profound or to enter into an arrangement or agreement which would materially interfere with the Amalgamation which Profound wishes to pursue at the instruction of its board of directors or a committee thereof, including without in any way limiting the generality of the foregoing, any such arrangement or agreement resulting from an unsolicited offer or proposal from a third party (a “Profound Alternative Transaction”), then Profound shall provide forthwith a copy of the Profound Offer to Mira or if made orally, a written summary of the Profound Offer (and in any event within one Business Day following receipt thereof) and Profound may terminate this Agreement upon written notice to Mira. Upon termination of this Agreement by Profound by written notice to Mira (the “Profound Termination”) or upon Profound entering into an agreement, including a letter of intent, whether or not binding (the “Profound Alternative Transaction Agreement”) prior to the termination of this Agreement, with respect to the Profound Alternative Transaction, Profound shall forthwith provide Mira with a copy of the Profound Alternative Transaction Agreement and shall, within ten (10) Business Days following the earlier of the Profound Termination and the entering into of the Profound Alternative Transaction Agreement (collectively and individually referred to as a “Profound Event”), as applicable, make a cash payment to Mira in the amount of: (a) $100,000 if the Profound Event occurs after the entering into of this Agreement but prior to the filing of the Final Filing Statement on SEDAR; and (b) $200,000 if the Profound Event occurs on or after the filing of the Final Filing Statement on SEDAR, which payment shall constitute full and final compensation and remedy to Mira for any breach or the non-performance of this Agreement and any and all fees and expenses associated therewith.

 

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ARTICLE 6

NOTICES

 

6.1 Notices

 

All notices, requests and demands hereunder, which may or are required to be given pursuant to any provision of this Agreement, shall be given or made in writing and shall be delivered by courier, facsimile or e-mail as follows:

 

(a) to Mira, addressed to:

 

Mira IV Acquisition Corp.

Suite 300, 5 Hazelton Avenue

Toronto, ON M5R 2E1

 

Attn: Jordan Kupinsky
Fax: (416) 972-6208
Email: jkupinsky@jjrcapital.com

 

with a copy to (such copy shall not constitute notice):

 

Fasken Martineau DuMoulin LLP

333 Bay Street

Suite 2400, Bay Adelaide Centre

Toronto, ON M5H 2T6

 

Attn: Tracy Hooey
Fax: (416)364 7813
Email: thooey@fasken.com

 

(b) to Profound, addressed to:

 

Profound Medical Inc.

3080 Yonge Street, Suite 4040

Toronto, ON M4N 3N1

 

Attn: Steven Plymale
Fax: (647) 847-3739
Email: splymale@profoundmedical.com

 

with a copy to (such copy shall not constitute notice):

 

Osier Hoskin & Harcourt LLP

100 King Street West, Suite 6200

First Canadian Place

Toronto, ON M5X 1B8

 

Attn: GeoffTaber
Fax: (416) 862-6666
Email: gtaber@osler.com

 

or to such other addresses and facsimile numbers or e-mail addresses as the parties may, from time to time, advise to the other parties hereto by notice in writing. All notices, requests and demands hereunder shall be deemed to have been received, if delivered personally or by prepaid courier on the date of delivery and if sent by facsimile or e-mail, on the next Business Day after the facsimile or e-mail was sent.

 

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ARTICLE 7

AMENDMENT AND TERMINATION OF AGREEMENT

 

7.1 Amendment

 

This Agreement may, at any time and from time to time before or after the holding of the Mira Meeting or obtaining the Profound Shareholder Approval, be amended by written agreement of the parties hereto without, subject to applicable law, further notice to or authorization on the part of their respective shareholders and any such amendment may, without limitation:

 

(a) change the time for performance of any of the obligations or acts of the parties hereto;

 

(b) waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;

 

(c) waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the parties hereto; or

 

(d) waive compliance with or modify any other conditions precedent contained herein,

 

provided that no such amendment shall change the provisions hereof regarding the consideration to be received by securityholders of Profound without approval by such securityholders of Profound given in the same manner as required for the approval of the Amalgamation.

 

7.2 Rights of Termination

 

This Agreement may be terminated as follows:

 

(a) by mutual agreement of the parties hereto in writing;

 

(b) upon provision of notice in accordance with Section 5.4 or 5.5;

 

(c) by Profound (i) by notice to Mira if any of the conditions contained in Section 5.1 hereof shall not be fulfilled or performed by the Termination Date or (ii) upon a breach by Mira of Subsection 3.1(a) hereof that could reasonably result in a condition set forth in Section 5.1 which condition has not been waived to be incapable of being satisfied on or before the Termination Date;

 

(d) by Mira (i) by notice to Profound if any of the conditions contained in Section 5.2 hereof shall not be fulfilled or performed by the Termination Date or (ii) upon a breach by Profound of Subsection 3.3(a) hereof that could reasonably result in a condition set forth in Section 5.2 which condition has not been waived to be incapable of being satisfied on or before the Termination Date;

 

(e) by any party if the Amalgamation is not completed by the Termination Date; or

 

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(f) by any party if any applicable regulatory or Governmental Authority has notified any of Mira, Mira Subco or Profound that it will not permit the Amalgamation to proceed, in whole or in part.

 

If this Agreement is terminated as aforesaid, the party terminating this Agreement shall be released from all obligations under this Agreement other than the obligations that by their terms survive the termination of this Agreement (including the obligation to make payments under Section 5.4 and 5.5, the obligations with respect to confidentiality under Section 8.6 and the obligations with respect to expenses under Section 8.7), all rights of specific performance against such party shall terminate and, unless such party can show that the condition or conditions the non-performance of which has caused such party to terminate this Agreement were reasonably capable of being performed by the other party, then the other party shall also be released from all obligations hereunder, except any liability expressly contemplated hereby; and further provided that any of such conditions may be waived in full or in part by either of the parties without prejudice to its rights of termination in the event of the non-fulfilment or non-performance of any other condition.

 

7.3 Notice of Unfulfilled Conditions

 

If either of Profound or Mira shall determine at any time prior to the Effective Date that it intends to refuse to consummate the Amalgamation or any of the other transactions contemplated hereby because of any unfulfilled or unperformed condition contained in this Agreement on the part of the other of them to be fulfilled or performed, Profound or Mira, as the case may be, shall so notify the other of them forthwith upon making such determination in order that such other of them shall have the right and opportunity to take such steps, at its own expense, as may be necessary for the purpose of fulfilling or performing such condition within a reasonable period of time, but in no event later than the Termination Date.

 

ARTICLE 8

GENERAL

 

8.1 Entire Agreement

 

The terms and provisions herein contained constitute the entire agreement between the parties with respect to the subject matter herein and shall supersede all previous oral or written communications, representations, undertakings and agreements with respect to such subject matter, including the Letter Agreement.

 

8.2 Binding Effect

 

This Agreement shall be binding upon and enure to the benefit of the parties hereto.

 

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8.3 Waiver and Modification

 

Mira and Profound may waive or consent to the modification of, in whole or in part, any inaccuracy of any representation or warranty made to them hereunder or in any document to be delivered pursuant hereto and may waive or consent to the modification of any of the covenants or agreements herein contained for their respective benefit or waive or consent to the modification of any of the obligations of the other parties hereto. No waiver, or consent to the modification of any inaccuracy of any provision of this Agreement constitutes a waiver of or consent to any proceeding, continuing or succeeding inaccuracy of such provision or of any other provision of this Agreement. Any waiver or consent to the modification of any of the provisions of this Agreement, to be effective, must be in writing executed by the party granting such waiver or consent.

 

8.4 No Personal Liability

 

(a) No director, officer, employee or agent of either Profound shall have any personal liability whatsoever to Mira under this Agreement, or under any other document delivered in connection with the Amalgamation on behalf of Profound.

 

(b) No director, officer, employee or agent of either Mira or Mira Subco shall have any personal liability whatsoever to Profound under this Agreement, or under any other document delivered in connection with the Amalgamation on behalf of Mira.

 

8.5 Assignment

 

No party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto.

 

8.6 Confidentiality

 

(a) No disclosure or announcement, public or otherwise, in respect of this Agreement or the transactions contemplated hereby will be made by Mira, Mira Subco, Profound or their representatives without the prior agreement of the other parties hereto as to timing, content and method, provided that the obligations herein will not prevent a party from making, after consultation with the other parties, such disclosure as its counsel advises is required by applicable law or the rules and policies of the TSX Venture.

 

(b) Except as and only to the extent required, by applicable law, a Receiving Party will not disclose or use, and it will cause its representatives not to disclose or use, any Confidential Information furnished, or to be furnished, by a Disclosing Party or its representatives to the Receiving Party or its representatives at any time or in any manner other than for purposes of evaluating the transactions proposed in this Agreement.

 

(c) If this Agreement is terminated pursuant to Article 7, each Receiving Party will promptly return to the Disclosing Party or destroy any Confidential Information and any work product produced from such Confidential Information in its possession or in the possession of any of its representatives.

 

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8.7 Costs

 

Each of the parties hereto shall be responsible for their own costs and charges incurred with respect to the transactions contemplated herein, including all costs and charges incurred prior to the date of this Agreement and all legal and accounting fees and disbursements relating to preparing the documents relating to the transactions contemplated herein or otherwise relating to the transactions contemplated herein. For the purposes of clarity, Profound shall be responsible for paying the costs and fees payable to the TSX Venture regarding their review of the personal information forms to be submitted by the proposed executive officers, directors and promoters and insiders of the Resulting Issuer following completion of the Amalgamation and all listing fees payable in connection with any securities issued pursuant to the Amalgamation and/or any application fees payable to the TSX Venture in connection with the transactions contemplated herein. The legal fees of Mira shall also be the responsibility of the Resulting Issuer following completion of the Amalgamation.

 

8.8 Time of Essence

 

Time shall be of the essence of this Agreement.

 

8.9 Survival

 

The representations and warranties of each of Profound, Mira and Mira Subco contained herein shall survive the execution and delivery of this Agreement and shall terminate on the earlier of the termination of this Agreement in accordance with its terms and the Effective Date.

 

8.10 Governing Law

 

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, without giving effect to the principles of conflicts of laws thereof, and the parties hereto irrevocably attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario in respect of any matter arising hereunder or in connection herewith.

 

8.11 Severability

 

In the event that any provisions contained in this Agreement shall be declared invalid, illegal or unenforceable by a court or other lawful authority of competent jurisdiction, this Agreement shall continue in force with respect to the enforceable provisions and all rights and remedies accrued under the enforceable provisions shall survive any such declaration, and any non-enforceable provision shall, to the extent permitted by law, be replaced by a provision which, being valid, comes closest to the intention underlying the invalid, illegal and unenforceable provision.

 

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8.12 Further Assurances

 

Each party hereto shall, from time to time, and at all times hereafter, at the request of the other parties hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof.

 

8.13 Counterparts and Electronic Copies

 

This Agreement may be executed in separate counterparts, and all such counterparts when taken together shall constitute one (1) agreement. The parties shall be entitled to rely on delivery of a facsimile, email in pdf or other electronic copy of the executed Agreement and such copy shall be legally effective to create a valid and binding Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

  - 55 -  

 

  

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

 

MIRA IV ACQUISITION CORP. PROFOUND MEDICAL INC.

 

Per: /s/ Jordan Kupinsky   Per: /s/ Steven Plymale
  Name: Jordan Kupinsky     Name: Steven Plymale
  Title: Director     Title: Chief Executive Officer

 

MIRA IV SUBCO INC.  
     
Per: /s/ Elena Masters  
  Name: Elena Masters  
  Title: Director  

 

[Signature Page - Amalgamation Agreement]

 

     

 

 

SCHEDULE 4.2(d)

 

1. Written consent of the landlord prior to effecting a transfer that results in a change in the effective voting control of the tenant (Sections. 13.1 and 13.21), under a lease agreement between 3080 Yonge Street Inc. and Profound Medical Inc. dated September 27, 2011, as may be amended from time to time.

 

2. Written consent of the Minister before effecting change of control (Section 8.2(b)), under Investing in Business Innovation Contribution Agreement between Her Majesty the Queen in Right of Canada and Profound Medical Inc. dated December 16, 2011 as amended February 29, 2012.

 

3. Written consent of the lender before change of control (Section 8.1(d)), under the Performance-Based Loan Agreement between The Health Technology Exchange and Profound Medical Inc. dated March 31, 2014.

 

4. Written consent of the lender before change of control (Section 8.1(d)), under the Performance-Based Loan Agreement between The Health Technology Exchange and Profound Medical Inc. dated May 25, 2011.

 

     

 

Exhibit 4.4

 

BY-LAW NUMBER 1

A BY-LAW RELATING TO THE BUSINESS AND AFFAIRS OF
MIRA IV ACQUISITION CORP.

 

ARTICLE 1
INTERPRETATION

 

1.1 Definitions

 

In this by-law:

 

“Act” means the Business Corporations Act (Ontario) and the regulations enacted pursuant to it and any statute and regulations that may be substituted for them, as amended from time to time;

 

“articles” means the articles, as that term is defined in the Act, of the Corporation;

 

“auditor” means the auditor of the Corporation;

 

“board” means the board of directors of the Corporation;

 

“by-law” means a by-law of the Corporation;

 

“Corporation” means the corporation incorporated on July 16, 2014 under the name “Mira IV Acquisition Corp.”;

 

“director” means a director of the Corporation;

 

“officer” means an officer of the Corporation, and reference to any specific officer is to the individual holding that office of the Corporation;

 

“person” means an individual, body corporate, partnership, joint venture, trust, unincorporated organization, association, the Crown or any agency or instrumentality thereof, or any entity recognized by law;

 

“proxyholder” means an individual holding a valid proxy for a shareholder;

 

“resident Canadian” has the meaning ascribed to that phrase in the Act;

 

“shareholder” means a shareholder of the Corporation;

 

“telephonic or electronic means” means telephone calls or messages, facsimile messages, electronic mail, transmission of data or information through automated touch-tone telephone systems, transmission of data or information through computer networks, any other similar means or any other means prescribed by the Act; and

 

 

 

 

“voting person” means, in respect of a meeting of shareholders, an individual who is either a shareholder entitled to vote at that meeting, a duly authorized representative of a shareholder entitled to vote at the meeting or a proxyholder entitled to vote at that meeting.

 

1.2 Number, Gender and Headings

 

In this by-law, words in the singular include the plural and vice-versa and words in one gender include all genders. The insertion of headings in this by-law and its division into articles, sections and other subdivisions are for convenience of reference only, and shall not affect the interpretation of this by-law.

 

1.3 By-Law Subordinate to Other Documents

 

This by-law is subordinate to, and should be read in conjunction with, the Act, the articles and any unanimous shareholder agreement of the Corporation.

 

1.4 Computation of Time

 

The computation of time and any period of days shall be determined in accordance with the Act.

 

ARTICLE 2
DIRECTORS

 

2.1 Notice of Meeting

 

Any director or the president may call a meeting of the board by giving notice stating the date, time and place of the meeting to each of the directors other than the director giving that notice. Notices sent by delivery or by telephonic or electronic means shall be sent no less than 48 hours before the time of the meeting. Notices sent by mail shall be sent no less than 5 days before the day of the meeting.

 

The board may appoint, by resolution, dates, time and places for meetings of the board. A copy of any such resolution shall be sent to each director forthwith after being passed, but no other notice is required for any such meeting.

 

2.2 Meetings Without Notice

 

A meeting of the board may be held without notice immediately following the first or any annual meeting of shareholders.

 

2.3 Place of Meeting

 

A meeting of the board may be held at any place within or outside Ontario, and no such meeting need be held at a place within Canada.

 

  - 2 -  

 

 

2.4 No Notice to Newly Appointed Director

 

An individual need not be given notice of the meeting at which that individual is appointed by the other directors to fill a vacancy on the board, if that individual is present at that meeting.

 

2.5 Quorum for Board Meetings

 

If there are 1 or 2 directors, all of the directors constitute a quorum at a meeting of the board. If there are 3, 4 or 5 directors, a majority of the directors constitute a quorum at a meeting of the board. Otherwise, such a quorum consists of the next whole number not less than 2/5ths of the number of directors. In this section, the “number of directors” is either:

 

(a) the number of directors specified in the articles; or

 

(b) if a minimum and maximum number of directors is provided for in the articles, the number determined from time to time by special resolution or, if the special resolution empowers the directors to determine the number, by resolution of the directors, or if no such resolution has been passed, the number of directors named in the articles.

 

2.6 Chairman of Board Meetings

 

The chairman of a meeting of the board must be a director present at the meeting who consents to preside as chairman. The first-mentioned of the chairman of the board, the managing director or the president who so qualifies shall preside as chairman of the meeting. If none of them is so qualified, the directors present at the meeting shall choose a director to preside as chairman of the meeting.

 

2.7 Votes at Board Meetings

 

Each director present at a meeting of the board shall have 1 vote on each motion arising. Motions arising at meetings of the board shall be decided by a majority vote. The chairman of the meeting shall not have a second or casting vote.

 

2.8 Officers

 

Each officer shall hold office during the pleasure of the board. Any officer may, however, resign at any time by giving notice to the Corporation.

 

ARTICLE 3
MEETINGS OF SHAREHOLDERS

 

3.1 Notice of Shareholders’ Meetings

 

The board may call a meeting of shareholders by causing notice of the date, time and place of the meeting to be sent to each shareholder entitled to vote at the meeting, each director and the auditor. Such notice shall be sent no less than 21 days and no more than 50 days before the meeting, if the Corporation is an offering corporation (as defined in the Act), or no less than 10 days and no more than 50 days before the meeting if the Corporation is not an offering corporation.

 

  - 3 -  

 

 

3.2 Quorum at Meetings of Shareholders

 

If the Corporation has only 1 shareholder entitled to vote at a meeting of shareholders, that shareholder constitutes a quorum. Otherwise, any 2 voting persons present shall constitute a quorum, but only to appoint a chairman and adjourn the meeting. For all other purposes, a quorum consists of at least 2 voting persons present and authorized to cast in the aggregate not less than 10% of the total number of votes attaching to all shares carrying the right to vote at that meeting.

 

3.3 Chairman’s Vote

 

The chairman of any meeting of shareholders shall not have a second or casting vote.

 

3.4 Voting

 

Unless the chairman of a meeting of shareholders directs a ballot, or a voting person demands one, each motion shall be voted upon by a show of hands. Each voting person has 1 vote in a vote by show of hands. A ballot may be directed or demanded either before or after a vote by show of hands. If a ballot is taken, a prior vote by show of hands has no effect.

 

3.5 Scrutineers

 

The chairman of a meeting of shareholders may appoint for that meeting 1 or more scrutineers, who need not be voting persons.

 

3.6 Who May Attend Shareholders’ Meeting

 

The only persons entitled to attend a meeting of shareholders are voting persons, the directors, the auditor and, if any, the chairman, the managing director and the President, as well as others permitted by the chairman of the meeting.

 

3.7 Meeting by Telephonic or Electronic Means

 

A meeting of the shareholders may be held by telephonic or electronic means and a shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting shall be deemed for the purposes of the Act to be present at the meeting.

 

  - 4 -  

 

 

ARTICLE 4

SECURITY CERTIFICATES, PAYMENTS

 

4.1 Certificates

 

(a) Subject to Section 4.1(b), security certificates shall be in such form as the board may approve or the Corporation adopt. The president or the board may order the cancellation of any security certificate that has become defaced and the issuance of a replacement certificate for it when the defaced certificate is delivered to the Corporation or to a transfer agent or branch transfer agent of the Corporation.

 

(b) Unless otherwise provided in the articles, the board may provide by resolution that any or all classes and series of shares or other securities shall be uncertificated securities, provided that such resolution shall not apply to securities represented by a certificate until such certificate is surrendered to the Corporation.

 

4.2 Cheques

 

Any amount payable in cash to shareholders (including dividends payable in cash) may be paid by cheque drawn on any of the Corporation’s bankers to the order of each registered holder of shares of the class or series in respect of which such amount is to be paid. Cheques may be sent by delivery or first class mail to such registered holder at that holder’s address appearing on the register of shareholders, unless that holder otherwise directs in writing. By sending a cheque, as provided in this by-law, in the amount of the dividend less any tax that the Corporation is required to withhold, the Corporation discharges its liability to pay the amount of that dividend, unless the cheque is not paid on due presentation.

 

4.3 Cheques to Joint Shareholders

 

Cheques payable to joint shareholders shall be made payable to the order of all such joint shareholders unless such joint shareholders direct otherwise. Such cheques may be sent to the joint shareholders at the address appearing on the register of shareholders in respect of that joint holding, to the first address so appearing if there is more than one, or to such other address as those joint shareholders direct in writing.

 

4.4 Non-Receipt of Cheques

 

The Corporation shall issue a replacement cheque in the same amount to any person who does not receive a cheque sent as provided in this by-law, if that person has satisfied the conditions regarding indemnity, evidence of non-receipt and title set by the board from time to time, either generally or for that particular case.

 

4.5 Currency of Dividends

 

Dividends or other distributions payable in cash may be paid to some shareholders in Canadian currency and to other shareholders in equivalent amounts of a currency or currencies other than Canadian currency. The board may declare dividends or other distributions in any currency or in alternative currencies and make such provisions as it deems advisable for the payment of such dividends or other distributions.

 

  - 5 -  

 

 

ARTICLE 5
SIGNATORIES, INFORMATION

 

5.1 Signatories

 

Except for documents executed in the usual and ordinary course of the Corporation’s business, which may be signed by any officer or employee of the Corporation acting within the scope of his or her authority, the following are the only persons authorized to sign any document on behalf of the Corporation:

 

(a) any individual appointed by resolution of the board to sign the specific document, that type of document or documents generally on behalf of the Corporation; or

 

(b) any director or any officer appointed to office by the board.

 

Any document so signed may, but need not, have the corporate seal of the Corporation applied, if there is one.

 

5.2 Facsimile or Electronic Signatures

 

The signature of any individual authorized to sign on behalf of the Corporation may, if specifically authorized by resolution of the board, be written, printed, stamped, engraved, lithographed or otherwise mechanically reproduced or may be an electronic signature. Anything so signed shall be as valid as if it had been signed manually, even if that individual has ceased to hold office when anything so signed is issued or delivered, until revoked by resolution of the board.

 

5.3 Restriction on Information Disclosed

 

Except as required by the Act or authorized by the board, no shareholder is entitled by virtue of being a shareholder to disclosure of any information, document or records respecting the Corporation or its business.

 

ARTICLE 6

PROTECTION AND INDEMNITY

 

6.1 Transactions with the Corporation

 

No director or officer shall be disqualified, by virtue of being a director, or by holding any other office of, or place of profit under, the Corporation or any body corporate in which the Corporation is a shareholder or is otherwise interested, from entering into, or from being concerned or interested in any manner in, any contract, transaction or arrangement made, or proposed to be made, with the Corporation or any body corporate in which the Corporation is interested and no such contract, transaction or arrangement shall be void or voidable for any such reason. No director or officer shall be liable to account to the Corporation for any profit arising from any such office or place of profit or realized in respect of any such contract, transaction or arrangement. Except as required by the Act, no director or officer must make any declaration or disclosure of interest or, in the case of a director, refrain from voting in respect of any such contract, transaction or arrangement.

 

  - 6 -  

 

 

6.2 Limitation of Liability

 

Subject to the Act, no director or officer shall be liable for:

 

(a) the acts, receipts, neglects or defaults of any other person;

 

(b) joining in any receipt or act for conformity;

 

(c) any loss, damage or expense to the Corporation arising from the insufficiency or deficiency of title to any property acquired by or on behalf of the Corporation;

 

(d) the insufficiency or deficiency of any security in or upon which any moneys of the Corporation are invested;

 

(e) any loss, damage or expense arising from the bankruptcy, insolvency, act or omission of any person with whom any monies, securities or other property of the Corporation are lodged or deposited;

 

(f) any loss, damage or expense occasioned by any error of judgment or oversight; or

 

(g) any other loss, damage or expense related to the performance or non-performance of the duties of that individual’s office.

 

6.3 Contracts on Behalf of the Corporation

 

Subject to the Act, any contract entered into, or action taken or omitted, by or on behalf of the Corporation shall, if duly approved by a resolution of the shareholders, be deemed for all purposes to have had the prior authorization of the shareholders.

 

6.4 Indemnity of Directors and Officers

 

As required or permitted by the Act, the Corporation shall indemnify each Indemnified Person (as defined in this section) against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, which that Indemnified Person reasonably incurs in respect of any civil, criminal, administrative, investigative or other proceeding to which that Indemnified Person is made a party by reason of being or having been a director or officer of the Corporation or of a body corporate or by reason of having acted in a similar capacity for an entity if:

  - 7 -  

 

 

(a) the Indemnified Person acted honestly and in good faith with a view to the best interests of the Corporation or as the case may be, to the best interests of the other entity;

 

(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Indemnified Person had reasonable grounds for believing that the conduct was lawful; and

 

(c) “Indemnified Person” means:

 

(i) each director and former director of the Corporation;

 

(ii) each officer and former officer of the Corporation;

 

(iii) each individual who acts or acted at the Corporation’s request as a director or officer of a body corporate or an individual acting in a similar capacity of another entity; and

 

(iv) the respective heirs and legal representatives of each of the persons designated in the preceding paragraphs (i) through (iii) of this section 6.4(c).

 

6.5 Advances by the Corporation

 

The Corporation shall advance monies to an Indemnified Person for the costs, charges and expenses of a proceeding referred to in Section 6.4 provided the Indemnified Person shall repay such monies if the Indemnified Person does not fulfil the duties of Subsections 6.4 (a) and (b).

 

6.6 Indemnities Not Limiting

 

The provisions of this Article 6 shall be in addition to and not in substitution for any rights, immunities and protections to which an Indemnified Person is otherwise entitled under the Act or as the law may permit or require.

 

6.7 Insurance

 

Subject to the Act, the Corporation may purchase and maintain such insurance for the benefit of any individual referred to in Subsection 6.4 as the board may determine.

 

ARTICLE 7
NOTICES

 

7.1 Procedure for Sending Notices

 

Notice shall be deemed to have been sufficiently sent if sent in writing to the address of the addressee on the books of the Corporation and delivered in person, sent by prepaid first class mail or sent by any telephonic or electronic means of sending messages, including telex or facsimile transmission, which produces a paper record. Notice shall not be sent by mail if there is any general interruption of postal services in the municipality in which or to which it is mailed. Each notice so sent shall be deemed to have been received on the day it was delivered or sent by telephonic or electronic means or on the fifth day after it was mailed.

 

  - 8 -  

 

 

7.2 Notices to Successors in Title

 

Notice to a shareholder is sufficient notice to each successor in title to that shareholder until the name and address of that successor have been entered on the Corporation’s share register.

 

7.3 Notice to Joint Shareholders

 

Notice to one joint shareholder is sufficient notice to all of them. Such notice shall be addressed to all such joint shareholders and sent to the address for them on the Corporation’s register of shareholders, or to the first such address if there is more than one.

 

7.4 Signatures on Notices

 

The signature on any notice or other communication or document to be sent by the Corporation may be written, printed, stamped, engraved, lithographed or otherwise mechanically reproduced or may be an electronic signature.

 

7.5 Omission of Notice Does Not Invalidate Actions

 

All actions taken at a meeting in respect of which a notice has been sent shall be valid even if:

 

(a) by accident, notice was not sent to any person;

 

(b) notice was not received by any person; or

 

(c) there was an error in a notice that did not affect the substance of that notice.

 

7.6 Waiver of Notice

 

Any person entitled to notice under the Act, the articles or the by-laws may waive that notice. Waiver, either before or after the event referred to in the notice, shall cure any default in sending that notice.

 

ARTICLE 8

REPEAL OF FORMER BY-LAWS

 

8.1 Former By-Laws May be Repealed

 

The board may repeal one or more by-laws by passing a by-law that contains provisions to that effect.

 

  - 9 -  

 

 

8.2 Effect of Repeal of By-Laws

 

The repeal of any by-law in whole or part shall not in any way affect the validity of any act done or right, privilege, obligation or liability acquired or incurred thereunder prior to such repeal. All directors, officers and other persons acting under any by-law repealed in whole or part shall continue to act as if elected or appointed under the provisions of this by-law.

 

MADE by the board on the 16th day of July, 2014.

 

  “Ronald D. Schmeichel”
  President and Secretary

 

  - 10 -  

 

 

BY-LAWS RESOLUTION (ADVANCE NOTICE REQUIREMENT)

 

BE IT HEREBY RESOLVED that:

 

(1) the following amendment to By-Law No. 1 of the Corporation, which shall be added to Section 1.1 of By-Law No. 1 of the Corporation in the appropriate alphabetical sequence is hereby ratified, confirmed and approved:

 

Nominating Shareholder” has the meaning ascribed to that phrase in section 2.1A(c);

 

Nomination Notice” has the meaning ascribed to that phrase in section 2.2A;

 

Nominee” has the meaning ascribed to that phrase in section 2.3A(a);

 

(2) the following amendment to By-Law No. 1 of the Corporation, which shall be inserted following Article 2 and preceding Article 3 of By-Law No. 1 of the Corporation, is hereby ratified, confirmed and approved:

 

ARTICLE 2A
NOMINATION OF DIRECTORS

 

2.1A Nomination of Directors

 

Subject to the Act and the articles, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the board may be made:

 

(a) by or at the direction of the board, including pursuant to a notice of meeting;

 

(b) by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act or a requisition of the shareholders made in accordance with the provisions of the Act; or

 

(c) by any person (a “Nominating Shareholder”) who: (i) at the close of business on the date of the giving of the notice provided described in section 0A and on the record date for notice of such meeting of shareholders is a registered holder of one or more shares carrying the right to vote at such meeting of shareholders; and (ii) complies with the provisions set forth in this section.

 

2.2A Timely Notice

 

A Nominating Shareholder must give notice of a nomination (a “Nomination Notice”) in proper form to the chairman of the board:

 

(a) in the case of an annual meeting of shareholders, not less than 30 days before the date of the annual meeting of shareholders, unless such meeting of shareholders is called for a date that is less than 50 days after the date on which the first public filing or announcement of the date of such meeting was made, in which case a Nomination Notice must be given not later than the close of business on the 10th day following the date of such public filing or announcement; and

 

(b) in the case of a special meeting of shareholders (which is not also an annual meeting of shareholders) called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business on the 15th day following the day on which the first public filing or announcement of the date of such meeting of shareholders was made.

 

  B-1  

 

 

In the event of any adjournment or postponement of a meeting of shareholders, or an announcement thereof, the required time periods for the giving of a Nomination Notice as described above shall apply using the date of the adjourned or postponed meeting, or the date of announcement thereof, as the case may be. This means that a Nominating Shareholder who failed to deliver a timely Nomination Notice in proper written form to the chairman of the board for purposes of the originally scheduled meeting of shareholders shall nonetheless be entitled to provide a Nomination Notice for purposes of any adjourned or postponed meeting of shareholders as the determination as to whether a Nomination Notice is timely is to be determined based off of the adjourned or postponed meeting of shareholders date and not the original meeting of shareholders date.

 

2.3A Proper Written Form

 

To be in proper written form, a Nomination Notice must set forth:

 

(a) disclose or include, as applicable, as to each person whom the Nominating Shareholder proposes to nominate for election as a director (a “Nominee”):

 

(i) their name, age, business and residential address, principal occupation or employment for the past five years, status as a “resident Canadian” (as such term is defined in the Act);

 

(ii) their direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of the Corporation, including the number or principal amount;

 

(iii) any relationships, agreements or arrangements, including financial, compensation and indemnity related relationships, agreements or arrangements, between the Nominee or any affiliates or associates of, or any person or entity acting jointly or in concert with, the Nominee and the Nominating Shareholder; and

 

(iv) any other information that would be required to be disclosed in a dissident proxy circular or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to the Act or applicable securities law.

 

(b) disclose or include, as applicable, as to each Nominating Shareholder giving the notice and each beneficial owner, if any, on whose behalf the nomination is made:

 

(i) their name, business and residential address, direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of the Corporation, including the number or principal amount;

 

(ii) their interests in, or rights or obligations associated with, an agreement, arrangement or understanding, the purpose or effect of which is to alter, directly or indirectly, the person’s economic interest in a security of the Corporation or the person’s economic exposure to the Corporation, including any derivative or hedging arrangements;

 

(iii) any proxy, contract, arrangement, agreement or understanding pursuant to which such person, or any of its affiliates or associates, or any person acting jointly or in concert with such person, has any interests, rights or obligations relating to the voting of any securities of the Corporation or the nomination of directors to the Board; and

 

(iv) any other information relating to such person that would be required to be included in a dissident proxy circular or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Act or as required by applicable securities laws;

 

(c) Such notice shall include a written consent duly signed by each Nominee to being named as a nominee and to serve as a director of the Corporation, if elected, and that the Nominee is eligible to serve as a director under the Act.

 

  B-2  

 

 

(d) All information to be provided in a Nomination Notice shall be provided as of the date of such notice. The Nominating Shareholder shall update such information forthwith so that it is true and correct in all material respects as of the date that is 10 business days prior to the date of the meeting of shareholders, or any adjournment or postponement thereof.

 

2.4 Further Information

 

The Corporation may require that any Nominee furnish such other information as may be required to be contained in a dissident proxy circular or by applicable law or regulation to determine the independence of the Nominee or his or her eligibility to serve as a director of the Corporation or a member of any committee of the board.

 

2.5 Discussion Permitted

 

Nothing in this section shall be deemed to preclude discussion by a shareholder (as distinct from nominating directors) at a meeting of shareholders of any matter in respect of which such shareholder would have been entitled to submit a proposal pursuant to the provisions of the Act.

 

2.6 Notice

 

A Nomination Notice may only be given by personal delivery, facsimile transmission or by e-mail at such e-mail address as may be stipulated from time to time by the Corporation for purposes of this notice, and shall be deemed to have been given and made only at the time it is served by personal delivery to the chairman of the board at the registered address of the Corporation, sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received) or sent by e-mail (at the address as aforesaid); provided that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Toronto time) on a day which is a business day, then such delivery or electronic communication shall be deemed to have been made on the next following day that is a business day.

 

2.7 Additional Matters

 

(a) The chairman of any meeting of shareholders shall have the power to determine whether any proposed nomination is made in accordance with this section, and if any proposed nomination is not in compliance with such provisions, must declare that such defective nomination shall not be considered at any meeting of shareholders.

 

(b) Notwithstanding the foregoing, the board may, in its sole discretion, waive any requirement in this section.”

 

(3) any one director or officer of the Corporation is hereby authorized and directed for and in the name of and on behalf of the Corporation to execute or cause to be executed and to deliver or cause to be delivered all such documents, and to do or cause to be done all such acts and things, as in the opinion of such director or officer may be necessary or desirable in order to carry out the terms of this resolution, such determination to be conclusively evidenced by the execution and delivery of such documents or the doing of any such act or thing.

 

  B-3  

Exhibit 5.1

 

 

   

 

November 7, 2019

 

Profound Medical Corp.
2400 Skymark Avenue, Unit #6
Mississauga, Ontario L4W 5K5

 

Dear Sirs/Mesdames:

 

RE: Profound Medical Corp. (the “Corporation”)

 

We have acted as counsel to the Corporation in connection with the filing on the date hereof of a Registration Statement on Form S-8 (the “Form S-8”) with respect to common shares of the Corporation (the “Common Shares”) issuable upon exercise of options to purchase Common Shares granted under the Corporation’s amended and restated share option plan dated July 13, 2018 (the “Option Plan”). We have made such investigations and examined originals or copies certified or otherwise identified to our satisfaction of documents, records and certificates of the Corporation as we have considered necessary or relevant for the purposes of this opinion including:

 

(a) the articles of amalgamation, as amended to date, and by-laws of the Corporation;

 

(b) the Option Plan; and

 

(c) resolutions of the directors and the shareholders of the Corporation authorizing the Option Plan.

 

In giving this opinion, with regard to all documents examined by us, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as duplicates, certified, conformed, telecopied or photostatic copies and the authenticity of the originals of such latter documents.

 

Based upon and subject to the foregoing we are of the opinion that subject to the due and valid exercise of options in accordance with the terms of the Option Plan and receipt by the Corporation of the applicable exercise price pursuant to the terms of the Option Plan, the Common Shares so issued will be validly issued and outstanding as fully paid and non-assessable shares of the Corporation.

 

The foregoing opinion is limited to the laws of Ontario and the federal laws of Canada applicable therein.

 

We consent to the filing of this opinion as an exhibit to the Form S-8. In giving such consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the United States Securities Act of 1933 or the rules and regulations of the Securities and Exchange Commission thereunder.

 

 
  - 2 -  

 

 

 

Yours truly,

 

 

/s/ Torys LLP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 23.2

 

 

 

 

November 7, 2019

  

 

Consent of Independent Registered Public Accounting Firm

 

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of Profound Medical Corp. of our report dated August 14, 2019, relating to the financial statements, which appear in Exhibit 4.2 of Profound Medical Corp.’s Registration Statement on Form F-10.

 

 

 

/s/ PricewaterhouseCoopers LLP

 Chartered Professional Accountants, Licensed Public Accountants

 Oakville, Ontario, Canada

 

 

 

 

 

 

 

 

 

 

 

PricewaterhouseCoopers LLP

PwC Centre, 354 Davis Road, Suite 600, Oakville, Ontario, Canada L6J 0C5

T: +1 905 815 6300, F: +1 905 815 6499, www.pwc.com/ca

 

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

 

 

 

 

Exhibit 99.1

 

 

 

PROFOUND MEDICAL CORP.

 

AMENDED AND RESTATED SHARE

 

OPTION PLAN

 

July 13, 2018 

 

 

 

     

 

 

PROFOUND MEDICAL CORP.

 

Share Option Plan

 

PREAMBLE

 

A. The Company adopted a Share Option Plan on June 4, 2015 (the “Original Plan”), which was amended and restated on December 8, 2016.

 

B. The Company wishes to further amend and restate the Plan in the manner contemplated herein.

 

ARTICLE 1

INTRODUCTION

 

1.1 Purpose

 

The purpose of this Plan is to assist the Company in attracting, retaining and motivating key employees, officers, directors and consultants of the Company or of a Designated Affiliate by granting to them options to purchase Common Shares in the capital of the Company.

 

1.2 No Changes to Outstanding Options

 

This Plan shall have no effect on any outstanding Options granted under the Plan prior to the date hereof, which shall continue in effect in accordance with their terms and conditions and the terms and conditions of the Plan in effect prior to the date hereof.

 

1.3 Definitions

 

When used herein, unless the context otherwise requires, the following terms have the following meanings, respectively:

 

Affiliate” has the meaning ascribed thereto in National Instrument 45-106 – Prospectus Exemptions, as amended from time to time, and any successor to such instrument.

 

Associate” has the meaning ascribed thereto in the Securities Act (Ontario).

 

Board” means the board of directors of the Company.

 

Business Day” means a day, other than a Saturday or Sunday, on which the principal commercial banks located in Toronto, Ontario, Canada are open for business during normal banking hours.

 

     

 

 

Change of Control” means the happening of any of the following events:

 

(a) any transaction at any time and by whatever means pursuant to which any Person or any group of two or more Persons acting jointly or in concert (other than the Company or a wholly-owned subsidiary of the Company) hereafter acquires the direct or indirect “beneficial ownership” (as defined in the Business Corporations Act (Ontario) of, or acquires the right to exercise control or direction over, securities of the Company representing 50% or more of the then issued and outstanding voting securities of the Company, including, without limitation, as a result of a take-over bid, an exchange of securities, an amalgamation of the Company with any other entity, an arrangement, a capital reorganization or any other business combination or reorganization;

 

(b) the sale, assignment or other transfer of all or substantially all of the assets of the Company to a Person other than a wholly-owned subsidiary of the Company;

 

(c) the dissolution or liquidation of the Company, other than in connection with the distribution of assets of the Company to one or more Persons which were wholly-owned subsidiaries of the Company prior to such event;

 

(d) the occurrence of a transaction requiring approval of the Company’s shareholders whereby the Company is acquired through consolidation, merger, exchange of securities, purchase of assets, amalgamation, statutory arrangement or otherwise by any other Person (other than a short form amalgamation or exchange of securities with a wholly-owned subsidiary of the Company);

 

(e) the Board determines that a Change of Control shall be deemed to have occurred in such circumstances as the Board shall determine; or

 

(f) individuals who comprise the Board as of the last annual meeting of shareholders of the Company for any reason cease to constitute at least a majority of the members of the Board;

 

provided that, notwithstanding clauses (a), (b), (c) and (d) above, a Change of Control shall be deemed not to have occurred if immediately following the transaction set forth in clause (a), (b), (c) or (d) above: (i) the holders of securities of the Company that immediately prior to the consummation of such transaction represented more than 50% of the combined voting power of the then outstanding securities eligible to vote for the election of directors of the Company hold (A) securities of the entity resulting from such transaction (the “Surviving Entity”) that represent more than 50% of the combined voting power of the then outstanding securities eligible to vote for the election of directors (“voting power”) of the Surviving Entity, or (B) if applicable, securities of the entity that directly or indirectly has beneficial ownership of 100% of the securities eligible to elect directors of the Surviving Entity (the “Parent Entity”) that represent more than 50% of the combined voting power of the then outstanding securities eligible to vote for the election of directors of the Parent Entity, and (ii) no Person, or group of two or more Persons acting jointly or in concert, is the beneficial owner, directly or indirectly, of 50% or more of the voting power of the Parent Entity (or, if there is no Parent Entity, the Surviving Entity) (any such transaction which satisfies all of the criteria specified in clauses (i) and (ii) above being referred to as a “Non-Qualifying Transaction” and, following the Non-Qualifying Transaction, references in this definition of “Change in Control” to the “Company” shall mean and refer to the Parent Entity (or, if there is no Parent Entity, the Surviving Entity).

 

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Committee” has the meaning set forth in Section 2.2.

 

Common Share” means a common share in the capital of the Company. “Company” means Profound Medical Corp. and its successors and assigns.

 

Consultant Participant” means an individual consultant or a consultant entity, other than an Employee Participant or Director Participant that:

 

(a) is engaged to provide services on a bona fide basis to the Company or a Designated Affiliate, other than services provided in relation to a distribution of securities of the Company or a Designated Affiliate;

 

(b) provides the services under a written contract with the Company or a Designated Affiliate; and

 

(c) spends or will spend a significant amount of time and attention on the affairs and business of the Company or a Designated Affiliate;

 

and includes, (i) for an individual consultant, (A) a company of which the individual consultant is an employee or shareholder; or (B) a partnership of which the individual consultant is an employee or partner, and (ii) for a consultant that is not an individual, an employee or director of the consultant, provided that the individual employee or director spends or will spend a significant amount of time and attention on the affairs and business of the Company or a Designated Affiliate.

 

Date of Grant” means, for any Option, the date specified by the Plan Administrator at the time it grants the Option (provided, however, that such date shall not be prior to the date the Plan Administrator acts to grant the Option) or, if no such date is specified, the date upon which the Option was granted.

 

Designated Affiliate” means each Subsidiary of the Company and any other Affiliate of the Company as designated by the Plan Administrator for purposes of the Plan from time to time.

 

Director” means a member of the Board.

 

Director Participant” means a Director (i) who is not an officer or employee of the Company or of a Designated Affiliate and (ii) who is not an Associate of a Significant Shareholder.

 

Disabled” or “Disability” means eligible for long-term disability under the terms of a long-term disability plan sponsored by the Participant’s employer.

 

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Employee Participant” means a bona fide current employee (other than a Consultant Participant) of the Company or of a Designated Affiliate.

 

Exercise Notice” means a notice in writing, in the form set out in Schedule B, signed by an Optionee and stating the Optionee’s intention to exercise a particular Option.

 

Exercise Price” means the price at which an Option Share may be purchased pursuant to the exercise of an Option.

 

Expiry Date” means the expiry date specified in the Option Agreement, provided that such date shall not be later than the tenth (10th) anniversary of the Date of Grant, or, if not so specified, means the tenth (10th) anniversary of the Date of Grant.

 

Fiscal Year” means the twelve month period ending December 31 in each calendar year or as otherwise determined by the Board.

 

Individual Optionee” means an Optionee who is an individual.

 

Market Price” means the volume-weighted average price of the Common Shares on the stock exchange where the majority of trading volume and value of the Common Shares occurs, for the five trading days immediately preceding the relevant date on which the Market Price is to be determined. If the Common Shares are not listed for trading on a stock exchange, the Market Price shall be the fair market value of the Common Shares as determined by the board of directors of the Company.

 

Option” means a right to purchase Common Shares under this Plan that is non-assignable and non-transferable unless otherwise approved by the Plan Administrator.

 

Optionee” means a Participant who has been granted one or more Options.

 

Option Agreement” means a signed, written agreement between an Optionee and the Company, in the form attached as Schedule A, subject to any amendments or additions thereto as may, in the discretion of the Plan Administrator, be necessary or advisable, evidencing the terms and conditions on which an Option has been granted under this Plan.

 

Option Shares” means Common Shares issuable by the Company upon the exercise of outstanding Options.

 

Participant” means an Employee Participant, a Director Participant or a Consultant Participant.

 

Person” includes an individual, sole proprietorship, corporation, company, partnership, limited partnership, joint venture, association, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof, and a natural person in his or her capacity as trustee, executor, administrator or other legal representative.

 

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Plan” means this Share Option Plan as set out herein and as amended from time to time in accordance with the provisions hereof.

 

Plan Administrator” means the Board or, if the administration of this Plan has been delegated by the Board to the Committee pursuant to Section 2.2, the Committee.

 

Retirement” means retirement from active employment under the retirement policies of the Company, its Designated Affiliates or a Consultant, as applicable, at or after the age of 65, or, with the consent for the purposes of the Plan of such officer of the Company as may be designated by the Plan Administrator, at or after such earlier age and upon the completion of such years of service as the Plan Administrator may specify.

 

Security” has the meaning assigned to the term “security” in the Securities Act (Ontario), and “Securities” has a corresponding meaning.

 

Significant Shareholder” has the meaning ascribed thereto in National Instrument 55-104 – Insider Reporting Requirements and Exemptions, as amended from time to time, and any successor to such instrument.

 

Subsidiary” has the meaning assigned to the term “subsidiary” in the Securities Act (Ontario).

 

Termination Date” means:

 

(a) in the case of an Employee Participant whose employment with the Company or a Designated Affiliate terminates in the circumstances set out in Subsection 3.9(a) or Subsection 3.9(b), the date designated by the Company or a Designated Affiliate, as the case may be, on which an Employee Participant ceases to be an employee of the Company or the Designated Affiliate, as the case may be, provided that in the case of termination of employment by voluntary resignation by the Optionee, such date shall not be earlier than the date notice of resignation was given, and “Termination Date” specifically does not mean the date of termination of any period of reasonable notice that the Company or the Designated Affiliate (as the case may be) may be required by law to provide to the Optionee;

 

(b) in the case of a Consultant Participant whose consulting agreement or arrangement with the Company or a Designated Affiliate, as the case may be, terminates in the circumstances set out in Subsection 3.9(c) or Subsection 3.9(d), the date that is designated by the Company or the Designated Affiliate, as the case may be, as the date on which the Optionee’s consulting agreement or arrangement is terminated, provided that in the case of voluntary termination by the Optionee of the Optionee’s consulting agreement or arrangement, such date shall not be earlier than the date notice of voluntary termination was given, and “Termination Date” specifically does not mean the date on which any period of notice of termination that the Company or the Designated Affiliate (as the case may be) may be required to provide to the Optionee under the terms of the consulting agreement or arrangement expires; or

 

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(c) in the case of a Director Participant who ceases to hold office in the circumstances set out in Section 3.9(e), the date upon which the Optionee ceases to hold office.

 

1.4 Interpretation

 

(a) Whenever the Plan Administrator is to exercise discretion in the administration of the terms and conditions of this Plan, the term “discretion” means the sole and absolute discretion of the Plan Administrator.

 

(b) As used in this Plan, the terms “Article”, “Section”, “Subsection”, “clause”, and “Schedule” mean and refer to the specified Article, Section, Subsection, clause and Schedule of this Plan, respectively.

 

(c) Where the word “including” or “includes” is used in this Plan, it means “including (or includes) without limitation”.

 

(d) Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period begins, including the day on which the period ends, and abridging the period to the immediately preceding Business Day in the event that the last day of the period is not a Business Day. In the event an action is required to be taken or a payment is required to be made on a day which is not a Business Day such action shall be taken or such payment shall be made on the immediately preceding Business Day.

 

(e) Words importing the singular meaning include the plural and vice versa and words importing any gender include any other gender.

 

(f) Unless otherwise specified, all references to money amounts are to Canadian currency.

 

ARTICLE 2

PLAN ADMINISTRATION

 

2.1 Plan Administration

 

This Plan will be administered by the Plan Administrator and the Plan Administrator has sole and complete authority, in its discretion, to:

 

(a) determine the individuals and entities (from among the Participants) to whom Options may be granted;

  

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(b) grant Options in such amounts and, subject to the provisions of this Plan, on such terms and conditions as it determines including:

 

(i) the time or times at which Options may be granted;

 

(ii) the Exercise Price at which Option Shares subject to each Option may be purchased;

 

(iii) the time or times when each Option becomes exercisable and the Expiry Date; and

 

(iv) whether restrictions or limitations are to be imposed on the Option Shares and the nature of such restrictions or limitations, if any;

 

(c) authorize any acceleration of exercisability or waiver of termination regarding any Option, based on such factors as the Plan Administrator may determine;

 

(d) cancel, amend, adjust or otherwise change any Option under such circumstances as the Plan Administrator may consider appropriate in accordance with the provisions of this Plan;

 

(e) construe and interpret this Plan and all Option Agreements;

 

(f) adopt, amend, prescribe and rescind administrative guidelines and other rules and regulations relating to this Plan; and

 

(g) make all other determinations and take all other actions necessary or advisable for the implementation and administration of this Plan.

 

2.2 Delegation of Plan Administration

 

(a) The initial Plan Administrator shall be the Board.

 

(b) To the extent permitted by applicable law, the Board may, from time to time, delegate to a committee of the Board (the “Committee”) all or any of the powers conferred on the Plan Administrator pursuant to this Plan. In such event, the Committee will exercise the powers delegated to it by the Board in the manner and on the terms authorized by the Board. Any decision made or action taken by the Committee arising out of or in connection with the administration or interpretation of this Plan in this context is final and conclusive.

 

(c) The day-to-day administration of this Plan may be delegated to such officers and employees of the Company or a Designated Affiliate as the Plan Administrator determines.

 

2.3 Determinations Binding

 

Any decision made or action taken by the Plan Administrator, the Committee or any officers or employees to whom authority has been delegated pursuant to Subsection 2.2(c) arising out of or in connection with the administration or interpretation of this Plan is final, conclusive and binding on the Company, the affected Participant(s), their legal and personal representatives and all other Persons.

 

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2.4 Eligibility

 

All Employee Participants, Director Participants and Consultant Participants are eligible to participate in this Plan, subject to Subsections 3.8(b) and 3.9(f). Eligibility to participate does not confer upon any Participant any right to be granted Options pursuant to this Plan. The extent to which any Participant is entitled to be granted Options pursuant to this Plan will be determined in the discretion of the Plan Administrator.

 

2.5 Compliance with Regulatory Requirements

 

The Company’s obligation to issue Common Shares in accordance with the terms of this Plan and any Options granted hereunder are subject to compliance with any applicable legislation and the rules, regulations and published policies of any stock exchange, regulatory authority or agency having jurisdiction over the issuance and distribution of such Common Shares in such jurisdictions as the Company may elect to grant Options to Participants. Participants shall, to the extent applicable, cooperate with the Company in complying with such legislation, rules, regulations and policies.

 

2.6 Total Common Shares Subject to Options

 

(a) The maximum number of Common Shares reserved for issuance under this Plan shall be equal to a number that is 13% of the issued and outstanding shares in the capital of the Company at the time of any Option grant. Subject to the provisions and restrictions of this Plan, if any Option is exercised, cancelled, expired, surrendered or otherwise terminated for any reason whatsoever, the number of Common Shares in respect of which the Option is exercised, cancelled, expired, surrendered or otherwise terminated for any reason whatsoever, as the case may be, will ipso facto be immediately available for purchase pursuant to Options granted under the Plan.

 

(b) The maximum number of Common Shares reserved for issuance under this Plan shall be automatically adjusted to take into account any conversion, changing, reclassification, redivision, redesignation, subdivision or consolidation of the Common Shares and shall also apply to securities of the Company or of any successor or continuing entity which may result from a reorganization, amalgamation, consolidation or merger, statutory or otherwise, take-over bid or any transaction similar to any of the foregoing. To the extent any Options terminate, lapse or are cancelled for any reason prior to exercise in full, or are surrendered to the Company by the Participant, the Common Shares subject to such Options shall be added back to the number of Common Shares reserved for issuance under this Plan and will again become available for issuance pursuant to the exercise of Options granted under this Plan.

 

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(c) Notwithstanding anything in this Plan, the aggregate number of Common Shares that may be (i) issued to insiders of the Company within any one-year period, or (ii) issuable to insiders of the Company at any time, in each case, under this Plan alone or when combined with all other security-based compensation arrangements of the Company cannot exceed 10% of the outstanding Common Shares. For purposes of this Subsection 2.6(c) and Subsection 5.1(b), “insider” and “security- based compensation arrangement” have the meanings given to them in the Toronto Stock Exchange Company Manual in respect of the rules governing security-based compensation arrangements, as amended from time to time.

 

2.7 Option Agreements

 

All grants of Options under this Plan will be evidenced by Option Agreements. Such Option Agreements will be subject to the applicable provisions of this Plan and will contain such provisions as are required by this Plan and any other provisions that the Plan Administrator may direct which are not inconsistent with this Plan. The Board shall authorize and empower any director or officer of the Company to execute and deliver, for and on behalf of the Company, an Option Agreement to each Optionee.

 

ARTICLE 3

GRANT OF OPTIONS

 

3.1 Grant of Options

 

The Plan Administrator may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Plan Administrator may prescribe, grant Options to any Participant.

 

3.2 Exercise Price

 

The Board will establish the Exercise Price at the time each Option is granted, which Exercise Price must in all cases be not less than the Market Price of the Common Shares on the date the Option is granted.

 

3.3 Term of Options

 

Subject to any accelerated termination as set forth in this Plan, each Option expires on its Expiry Date.

 

3.4 Blackout Periods

 

If an Option is due to expire on a date that falls within a corporate blackout period applicable to the holder of such Option, or within 5 business days following the expiry of such a blackout period, the Expiry Date of such Option shall be extended to the 10th business day following the expiry of the blackout period.

 

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3.5 Vesting and Exercisability

 

(a) Unless otherwise specified by the Plan Administrator at the time of granting an Option and except as otherwise provided in this Plan, each Option will vest and be exercisable as follows:

 

Total Number of Option Shares
that may be Purchased
  Vesting Date
     
1/4   From the first anniversary of the Date of Grant.
     
1/36   On the first day of each calendar month following the first anniversary of the Date of Grant.

 

(a) Once an instalment becomes vested, it shall remain vested and shall be exercisable until expiration or termination of the Option, unless otherwise specified by the Plan Administrator. Each Option or instalment may be exercised at any time or from time to time, in whole or in part, for up to the total number of Option Shares with respect to which it is then exercisable. The Plan Administrator has the right to accelerate the date upon which any instalment of any Option becomes exercisable.

 

(b) Subject to the provisions of this Plan and any Option Agreement, Options shall be exercised by means of a fully completed Exercise Notice delivered to the Company.

 

(c) The Plan Administrator may provide at the time of granting an Option that the exercise of that Option is subject to additional restrictions, such as performance- based vesting conditions.

 

3.6 Payment of Exercise Price

 

Unless otherwise specified by the Plan Administrator at the time of granting an Option, the Exercise Notice must be accompanied by payment in full of the purchase price for the Option Shares to be purchased. The Exercise Price must be fully paid by certified cheque, bank draft or money order payable to the Company or by such other means as might be specified from time to time by the Plan Administrator, provided that under no circumstances shall satisfaction of the Exercise Price by way of surrender of a portion of the Option or Option Shares, be permitted. No Common Shares will be issued or transferred until full payment therefor has been received by the Company.

 

3.7 Retirement of Optionee

 

Subject to Section 3.10 or unless otherwise specified by the Plan Administrator at the time of granting an Option, if the employment of a Participant terminates due to Retirement:

 

(a) such Participant shall continue to be a Participant notwithstanding the Participant’s Retirement and each Option held by the Individual Optionee that has vested as of the date of the Individual Optionee’s Retirement or that vests within 12 months of the date of the Individual Optionee’s Retirement (the “Post-Retirement Date”) continues to be exercisable by the Individual Optionee until the earlier of: (i) its Expiry Date; and (ii) the Post-Retirement Date. Any Options held by the Individual Optionee that have not been exercised as at the Post-Retirement Date immediately expire and shall be cancelled as of the Post-Retirement Date; and

 

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(b) the Individual Optionee’s eligibility to receive further grants of Options under this Plan ceases as of the date of the Individual Optionee’s Retirement.

 

3.8 Death or Disability of Optionee

 

Subject to Section 3.10 or unless otherwise specified by the Plan Administrator at the time of granting an Option, if an Individual Optionee dies or becomes Disabled while an employee or officer of the Company or a Designated Affiliate:

 

(a) the executor or administrator of the Individual Optionee’s estate or the Individual Optionee, as the case may be, may exercise any Options of the Individual Optionee to the extent that the Options have vested as at the date of such death or Disability and the right to exercise each such Option terminates on the earlier of: (i) its Expiry Date; and (ii) the date that is 180 days after the Individual Optionee’s death or Disability. Any Options held by the Individual Optionee that have not vested as at the date of death or Disability immediately expire and shall be cancelled as of such date; and

 

(b) the Individual Optionee’s eligibility to receive further grants of Options under this Plan ceases as of the date of the Individual Optionee’s death or Disability, as the case may be.

 

3.9 Termination of Employment or Services

 

Subject to Section 3.10 or unless otherwise specified by the Plan Administrator at the time of granting an Option:

 

(a) where, in the case of an Employee Participant, an Individual Optionee’s employment is terminated by the Company or a Designated Affiliate without cause (whether such termination occurs with or without any or adequate reasonable notice, or with or without any or adequate compensation in lieu of such reasonable notice), then each Option held by the Individual Optionee that has vested as at the Termination Date continues to be exercisable by the Individual Optionee until the earlier of: (i) its Expiry Date; and (ii) the date that is 90 days after the Termination Date. Any Options held by the Individual Optionee that have not vested as at the Termination Date immediately expire and shall be cancelled as of the Termination Date;

 

(b) where, in the case of an Employee Participant, an Individual Optionee’s employment terminates by reason of: (i) termination by the Company or a Designated Affiliate for cause; or (ii) voluntary resignation by the Individual Optionee, then any Options held by the Individual Optionee, whether or not they have vested as at the Termination Date, immediately expire and are cancelled on the Termination Date;

 

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(c) where, in the case of a Consultant Participant, an Optionee’s consulting agreement or arrangement terminates by reason of: (i) termination by the Company or a Designated Affiliate for any reason whatsoever other than for breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in the Optionee’s consulting agreement or arrangement); or (ii) the death or Disability of the Individual Optionee, then each Option held by the Optionee that has vested as at the Termination Date, or at the date of the death or Disability of the Individual Optionee, as the case may be, continues to be exercisable by the Optionee until the earlier of: (i) its Expiry Date; and (ii) the date that is 90 days after the Termination Date. Any Options held by the Optionee that have not vested as at the Termination Date, or at the date of the death or Disability of the Individual Optionee, as the case may be, immediately expire and shall be cancelled as of the Termination Date;

 

(d) where, in the case of a Consultant Participant, an Optionee’s consulting agreement or arrangement terminates by reason of: (i) termination by the Company or a Designated Affiliate for breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in Optionee’s consulting agreement or arrangement); or (ii) voluntary termination by the Optionee (whether or not such termination is effected in compliance with any termination provisions contained in the Optionee’s consulting agreement or arrangement), then any Options held by the Optionee, whether or not such Options have vested as at the Termination Date, immediately expire and shall be cancelled as of the Termination Date;

 

(e) where, in the case of a Director Participant, an Individual Optionee ceases to hold office, then any Options held by the Individual Optionee that have vested as at the Termination Date continue to be exercisable by the Optionee until the earlier of: (i) its Expiry Date; and (ii) the date that is 60 days after the Termination Date; except that this Section 3.9(e) will not apply if such Director Participant is also an Employee Participant or a Consultant Participant and such Participant’s employment or consulting agreement is not terminated. Any Options held by the Individual Optionee that have not vested as at the Termination Date immediately expire and shall be cancelled as of the Termination Date; except for such Director Participant who is also an Employee Participant or a Consultant Participant and such Participant’s employment or consulting agreement is not terminated;

 

(f) an Optionee’s eligibility to receive further grants of Options under this Plan ceases as of the date that the Company or a Designated Affiliate, as the case may be, provides the Optionee with written notification that the Optionee’s employment or consulting agreement or arrangement, as the case may be, is terminated in the circumstances contemplated by this Section 3.9, notwithstanding that such date may be prior to the Termination Date; and

 

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(g) notwithstanding Subsections 3.9(a) and 3.9(c), unless the Plan Administrator, in its discretion, otherwise determines, at any time and from time to time, Options are not affected by a change of employment or consulting arrangement within or among the Company or a Designated Affiliate for so long as the Employee Participant continues to be an employee of the Company or a Designated Affiliate or for so long as the Consultant Participant continues to be engaged as a consultant to the Company or a Designated Affiliate, as the case may be.

 

3.10 Discretion to Permit Exercise

 

Notwithstanding the provisions of Sections 3.7, 3.8 and 3.9, the Plan Administrator may, in its discretion, at any time prior to or following the events contemplated in such sections, permit the exercise of any or all Options held by the Optionee in the manner and on the terms authorized by the Plan Administrator, provided that the Plan Administrator will not, in any case, authorize the exercise of an Option pursuant to this Section 3.10 at any time after the earlier of (i) its Expiry Date or (ii) after the Post-Retirement Date or the date that is 12 months from the Termination Date, as the case may be, and any Options held by an Individual Optionee as of such date, whether or not they have vested, shall immediately expire and be cancelled as of such date.

 

3.11 Change of Control

 

Upon the Company entering into an agreement relating to, or otherwise becoming aware of, a transaction which, if completed, would result in a Change of Control, the Company shall give written notice of the proposed Change of Control to the Participants, together with a description of the effect of such Change of Control on Options, not less than ten (10) Business Days prior to the closing of the transaction resulting in the Change of Control.

 

3.12 Conditions of Exercise

 

Each Optionee will, when requested by the Company, sign and deliver all such documents relating to the granting or exercise of Options which the Company deems necessary or desirable.

 

ARTICLE 4

SHARE CAPITAL ADJUSTMENTS

 

4.1 General

 

The existence of any Options does not affect in any way the right or power of the Company or its shareholders to make, authorize or determine any adjustment, recapitalization, reorganization or any other change in the Company’s capital structure or its business, or any amalgamation, combination, merger or consolidation involving the Company, to create or issue any bonds, debentures, Common Shares or other securities of the Company or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or to effect any other corporate act or proceeding, whether of a similar character or otherwise, whether or not any such action referred to in this section would have an adverse effect on this Plan or any Option granted hereunder.

 

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4.2 Reorganization of Company’s Capital

 

Should the Company effect a subdivision or consolidation of Common Shares or any similar capital reorganization or a payment of a stock dividend (other than a stock dividend that is in lieu of a cash dividend), or should any other change be made in the capitalization of the Company that, in the opinion of the Plan Administrator, would warrant the replacement or amendment of any existing Options in order to adjust: (a) the number of Common Shares that may be acquired on the exercise of any outstanding Options; and/or (b) the Exercise Price of any outstanding Options in order to preserve proportionately the rights and obligations of the Optionees, the Plan Administrator, will authorize such steps to be taken as may be equitable and appropriate to that end.

 

4.3 Other Events Affecting the Company

 

In the event of an amalgamation, combination, merger or other reorganization involving the Company by exchange of Common Shares, by sale or lease of assets or otherwise, that, in the opinion of the Plan Administrator, warrants the replacement or amendment of any existing Options in order to adjust: (a) the number of Common Shares or the securities or other property that may be acquired on the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options in order to preserve proportionately the rights and obligations of the Optionees, the Plan Administrator will authorize such steps to be taken as may be equitable and appropriate to that end.

 

4.4 Immediate Exercise of Awards

 

Where the Plan Administrator determines that the steps provided in Sections 4.2 and 4.3 would not preserve proportionately the rights and obligations of the Optionees in the circumstances or otherwise determines that it is appropriate, the Plan Administrator may permit the immediate exercise of any outstanding Options that are not otherwise exercisable.

 

4.5 Issue by Company of Additional Shares

 

Except as expressly provided in this Article 4, neither the issue by the Company of shares of any class or securities convertible into or exchangeable for shares of any class, nor the conversion or exchange of such shares or securities, affects, and no adjustment by reason thereof is to be made with respect to: (a) the number of Common Shares that may be acquired on the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options.

 

4.6 Fractions

 

No fractional Common Shares will be issued on the exercise of an Option. Accordingly, if, as a result of any adjustment under Sections 4.2 to 4.4 inclusive, an Optionee would become entitled to a fractional Common Share, the Optionee has the right to acquire only the adjusted number of full Common Shares and no payment or other adjustment will be made with respect to the fractional Common Shares so disregarded.

 

  - 14 -  

 

  

4.7 Conditions of Exercise

 

The Plan and each Option are subject to the requirement that if at any time the Plan Administrator determines that the listing, registration or qualification of the Common Shares subject to such Option upon any securities exchange or under any provincial, state or federal law, or the consent or approval of any governmental body, securities exchange or of the holders of voting shares in the capital of the Company or of the Common Shares generally, is necessary or desirable, as a condition of, or in connection with, the granting of such Option or the issue or purchase of Common Shares thereunder, no such Option may be granted or exercised in whole or in part unless such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Plan Administrator. The Optionees shall, to the extent applicable, cooperate with the Company in relation to such listing, registration, qualification, consent or other approval and shall have no claim or cause of action against the Company or any of its officers or directors as a result of any failure by the Company to obtain or to take any steps to obtain any such registration, qualification or approval.

 

ARTICLE 5

GENERAL PROVISIONS

 

5.1 Amendment, Suspension, or Termination of the Plan

 

The Plan Administrator may from time to time, without notice and without approval of the holders of voting shares in the capital of the Company, amend, modify, change, suspend or terminate the Plan or any Options granted pursuant to the Plan as it, in its discretion determines appropriate, provided, however, that:

 

(a) no such amendment, modification, change, suspension or termination of the Plan or any Option granted hereunder may materially impair any rights of a Participant or materially increase any obligations of a Participant under the Plan without the consent of the Participant, unless the Plan Administrator determines such adjustment is required or desirable in order to comply with any applicable securities laws or stock exchange requirements;

 

(b) shareholder approval (in accordance with the rules of the exchange upon which the Common Shares may be listed) shall be required for any amendment, modification or change that:

 

(i) increases the number of Common Shares reserved for issuance under the Plan, except pursuant to the provisions in the Plan which permit the Plan Administrator to make equitable adjustments in the event of transactions affecting the Company or its capital;

 

(ii) reduces the exercise price of an Option (for this purpose, a cancellation or termination of an Option of a Participant prior to its Expiry Date for the purpose of reissuing an Option to the same Participant with a lower exercise price shall be treated as an amendment to reduce the exercise price of an Option) except pursuant to the provisions in the Plan which permit the Plan Administrator to make equitable adjustments in the event of transactions affecting the Company or its capital;

 

  - 15 -  

 

  

(iii) extends the term of an Option beyond the original Expiry Date (except where an Expiry Date would have fallen within a blackout period applicable to the Participant or within 5 business days following the expiry of such a blackout period);

 

(iv) permits an Option to be exercisable beyond 10 years from its Date of Grant (except where an Expiry Date would have fallen within a blackout period of the Company);

 

(v) permits Options to be transferred other than for normal estate settlement purposes;

 

(vi) removes or exceeds the insider participation limits set out in Section 2.6(c);

 

(vii) permits awards, other than the Options to be granted under the Plan; or

 

(viii) deletes or reduces the range of amendments which require approval of the holders of voting shares in the capital of the Company under this Section 5.1.

 

(c) if required by the rules of the exchange upon which the Common Shares may be listed, the Company will seek the approval of shareholders excluding the votes of securities held directly or indirectly by insiders entitled to receive a benefit directly or indirectly under the Plan.

 

5.2 Legal Requirement

 

The Company is not obligated to grant any Options, issue any Common Shares or other securities, make any payments or take any other action if, in the opinion of the Plan Administrator, in its sole discretion, such action would constitute a violation by an Optionee or the Company of any provision of any applicable statutory or regulatory enactment of any government or government agency.

 

5.3 Non-Transferability

 

Except as otherwise may be expressly provided for in this Plan, no Options granted under this Plan shall be transferrable or assignable by the Participant (except to an Optionee’s estate) and no Options may be exercised by anyone other than the Participant or his or her legal representative during the lifetime of the Participant.

 

  - 16 -  

 

  

5.4 No Other Benefit

 

No amount will be paid to, or in respect of, a Participant under the Plan to compensate for a downward fluctuation in the price of a Common Share, nor will any other form of benefit be conferred upon, or in respect of, a Participant for such purpose.

 

5.5 Governing Law

 

The Plan shall be governed by, and interpreted in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable in the Province of Ontario.

 

5.6 Submission To Jurisdiction

 

The Company and each Participant irrevocably submits to the exclusive jurisdiction of the courts of competent jurisdiction in the Province of Ontario in respect of any action or proceeding relating in any way to the Plan, including with respect to the grant of Options and any issuance of Common Shares made in accordance with the Plan.

 

5.7 Optionee’s Entitlement

 

Except as otherwise provided in this Plan, Options previously granted under this Plan, whether or not then exercisable, are not affected by any change in the relationship between, or ownership of, the Company and a Designated Affiliate and do not interfere in any way with any right of the Company to discharge any Participant at any time for any reason whatsoever, with or without cause. For greater certainty, all Options remain valid and exercisable in accordance with the terms and conditions of this Plan and are not affected by reason only that, at any time, a Designated Affiliate ceases to be a Designated Affiliate.

 

5.8 Withholding Taxes

 

In addition to the other conditions on exercise set forth in this Plan, the exercise of each Option granted under this Plan is subject to the satisfaction of all applicable withholding taxes or other withholding liabilities as the Company may determine to be necessary or desirable in respect of such exercise. The Company may (a) require that a Participant pay to the Company, in addition to, and in the same manner as, the Exercise Price, such amount as the Company is obliged to remit to the relevant taxing authority in respect of the exercise of the Option; (b) withhold such amount from any remuneration or other amount payable by the Company or any Affiliate of the Company to the Participant; (c) permit the Participant to sell a number of Option Shares issued upon the exercise of the Option and remit to the Company a portion of the net proceeds from such sale sufficient to satisfy such amount; or (d) enter into any other suitable arrangements for the receipt of such amount.

 

5.9 Participation in this Plan

 

The participation of any Participant in this Plan is entirely voluntary and not obligatory and shall not be interpreted as conferring upon such Participant any rights or privileges other than those rights and privileges expressly provided in this Plan. In particular, participation in this Plan does not constitute a condition of employment or service nor a commitment on the part of the Company to ensure the continued employment or service of such Participant. This Plan does not provide any guarantee against any loss which may result from fluctuations in the market value of the Common Shares. The Company does not assume responsibility for the personal income or other tax consequences of the Participants and Participants are advised to consult with their own tax advisors.

 

  - 17 -  

 

  

5.10 Corporate Action

 

Nothing contained in this Plan or in an Option shall be construed so as to prevent the Company from taking corporate action which is deemed by the Company to be appropriate or in its best interest, whether or not such action would have an adverse effect on this Plan or any Option.

 

5.11 Rights of Participant/Optionee

 

No Participant has any claim or right to be granted an Option (including an Option granted in substitution for any Option that has expired pursuant to the terms of this Plan), and the granting of any Option is not to be construed as giving an Optionee a right to remain in the employ of the Company or a Designated Affiliate. No Optionee has any rights as a shareholder of the Company in respect of Common Shares issuable on the exercise of rights to acquire Common Shares under any Option until the allotment and issuance to the Optionee of certificates representing such Common Shares.

 

5.12 Conflict

 

In the event of any conflict between the provisions of this Plan and an Option Agreement, the provisions of this Plan shall govern. In the event of any conflict between or among the provisions of this Plan, an Option Agreement and an employment agreement between the Company or a Designated Affiliate and a Participant, the provisions of such employment agreement shall govern. In the event of any conflict between the provisions of this Plan, an Option Agreement or an employment agreement between the Company or a Designated Affiliate and a Participant and any applicable law, regulation of any governmental agency having jurisdiction or the rule, policy or decision of any stock exchange upon which the Common Shares are or may become listed for trading, the applicable law, regulation, rule, policy or decision, as the case may be, shall govern.

 

5.13 Participant Information

 

Each Participant shall provide the Company with all information (including personal information) required by the Company in order to administer to the Plan. Each Participant acknowledges that information required by the Company in order to administer the Plan may be disclosed to any custodian appointed in respect of the Plan and other third parties, and may be disclosed to such persons (including persons located in jurisdictions other than the Participant’s jurisdiction of residence), in connection with the administration of the Plan. Each Participant consents to such disclosure and authorizes the Company to make such disclosure on the Participant’s behalf.

 

  - 18 -  

 

 

5.14 International Participants

 

With respect to Participants who reside or work outside Canada, the Plan Administrator may, in its sole discretion, amend, or otherwise modify, without shareholder approval, the terms of the Plan or Options with respect to such Participants in order to conform such terms with the provisions of local law, and the Plan Administrator may, where appropriate, establish one or more sub-plans to reflect such amended or otherwise modified provisions.

 

5.15 Successors and Assigns

 

The Plan shall be binding on all successors and assigns of the Company and its Designated Affiliates.

 

5.16 General Restrictions and Assignment

 

Except as required by law, the rights of a Participant under the Plan are not capable of being assigned, transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are not capable of being subject to attachment or legal process for the payment of any debts or obligations of the Participant.

 

5.17 Severability

 

The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision and any invalid or unenforceable provision shall be severed from the Plan.

 

5.18 Notices

 

All written notices to be given by the Optionee to the Company shall be delivered personally or by registered mail, postage prepaid, addressed as follows:

 

Profound Medical Corp.

2400 Skymark Avenue, Unit 6

Mississauga, Ontario L4W 5K5

 

Attention: Vice President, Finance

 

All notices to the Optionee will be addressed to the principal address of the Optionee on file with the Company. Either the Company or the Optionee may designate a different address by written notice to the other. Such notices are deemed to be received, if delivered personally, on the date of delivery, and if sent by prepaid, registered mail, on the fifth business day following the date of mailing. Any notice given by either the Optionee or the Company is not binding on the recipient thereof until received.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

  - 19 -  

 

  

THIS AMENDED AND RESTATED SHARE OPTION PLAN was adopted by the board of directors of Profound Medical Corp. on July 13, 2018.

 

PROFOUND MEDICAL CORP.

 

By: /s/ Aaron Davidson  
  Name: Aaron Davidson  
  Title:   Chief Financial Officer  

 

Profound Medical Corp. – Signature Page to Share Option Plan 

 

     

 

 

SCHEDULE A

Share Option Plan Option Agreement

 

Profound Medical Corp. (the “Company”) hereby grants to the Optionee named below (the “Optionee”), an option (the “Option”) to purchase, in accordance with and subject to the terms, conditions and restrictions of this Share Option Agreement, together with the provisions of the Amended and Restated Share Option Plan of the Company dated n, 2018 (the “Plan”), the number of common shares in the capital of the Company (“Common Shares”) at the price per share set forth below:

 

Name of Optionee:  

 

Type of Participant: [Employee Participant, Director Participant or Consultant Participant]

 

Date of Grant:  

 

Total No. of Common Shares Subject to Option:  

 

Exercise Price:  

 

1. The terms and conditions of the Plan are hereby incorporated by reference as terms and conditions of this Option Agreement and all capitalized terms used herein, unless expressly defined in a different manner, have the meanings ascribed thereto in the Plan.

 

2. Subject to Sections 3.10 and 4.4 of the Plan and unless otherwise determined by the Plan Administrator at the time of granting an Option, each Option is exercisable in the instalments set forth in Section 3.5 of the Plan.

 

3. Subject to Section 3.4 of the Plan, in no event is the Option granted hereunder exercisable after the Expiry Date.

 

4. No fractional Common Shares will be issued on the exercise of the Option granted hereunder. If, as a result of any adjustment to the number of Common Shares issuable on the exercise of the Option granted hereunder pursuant to the Plan, the Optionee would be entitled to receive a fractional Common Share, the Optionee has the right to acquire only the adjusted number of full Common Shares and no payment or other adjustment will be made with respect to the fractional Common Shares so disregarded.

 

5. Nothing in the Plan or in this Option Agreement will affect the Company’s right, or that of a Designated Affiliate, to terminate the employment of, or consulting agreement or arrangement with, the Optionee at any time for any reason whatsoever. Upon such termination, the Optionee’s rights to exercise Options will be subject to restrictions and time limits for the exercise of Options. Complete details of such restrictions are set out in the Plan, and in particular in Sections 3.7, 3.8 and 3.9 of the Plan.

 

     

 

  

6. Each notice relating to the Option, including the exercise thereof, must be in writing. All notices to the Company must be delivered personally or by prepaid registered mail and must be addressed to the Secretary. All notices to the Optionee will be addressed to the principal address of the Optionee on file with the Company. Either the Company or the Optionee may designate a different address by written notice to the other. Such notices are deemed to be received, if delivered personally, on the date of delivery, and if sent by prepaid, registered mail, on the fifth business day following the date of mailing. Any notice given by either the Optionee or the Company is not binding on the recipient thereof until received.

 

7. When the issuance of Common Shares on the exercise of the Option may, in the opinion of the Company, conflict or be inconsistent with any applicable law, regulation of any governmental agency having jurisdiction or the rule, policy or decision of any stock exchange upon which the Common Shares are or may become listed for trading, the Company reserves the right to refuse to issue such Common Shares for so long as such conflict or inconsistency remains outstanding.

 

8. Subject to Section 3.8 of the Plan, the Option granted pursuant to this Option Agreement may only be exercised during the lifetime of the Optionee by the Optionee personally and, subject to Section 5.3 of the Plan, no assignment or transfer of the Option, whether voluntary, involuntary, by operation of law or otherwise, vests any interest or right in such Option whatsoever in any assignee or transferee, and immediately upon any assignment or transfer or any attempt to make such assignment or transfer, the Option granted hereunder terminates and is of no further force or effect. Complete details of this restriction are set out in the Plan.

 

9. The Optionee hereby agrees that:

 

(a) any rule, regulation or determination, including the interpretation by the Plan Administrator of the Plan, the Option granted hereunder and the exercise thereof, is final and conclusive for all purposes and binding on all persons including the Company and the Optionee; and

 

(b) the grant of the Option does not affect in any way the right of the Company or any Designated Affiliate to terminate the employment or service of the Optionee.

 

10. This Option Agreement has been made in and is to be construed under and in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

  PROFOUND MEDICAL CORP.
     
  By:  
    Name:
    Title:

 

  A-2  

 

  

I have read the foregoing Option Agreement and hereby accept the Option to purchase Common Shares in accordance with and subject to the terms and conditions of such agreement and the Plan. I understand that I may review the complete text of the Plan by contacting the Secretary of the Company. I agree to be bound by the terms and conditions of the Plan governing the award.

 

     
Date Accepted   Optionee’s Signature
     
     
    Optionee’s Name
    (Please Print)

 

  A-3  

 

  

SCHEDULE B

Share Option Plan Exercise Notice Form – Options

 

I,                                                                                                                                                                           , hereby exercise the option

(print name)

to purchase              common shares (each, a “Common Share”) in the capital of Profound Medical Corp. (the “Company”) at a purchase price of $             per Common Share. This Exercise Notice is delivered in respect of the option to purchase              Common Shares in the capital of the Company that was granted to me on                       pursuant to the Option Agreement entered into between the Company and me. In connection with the foregoing, I enclose a certified cheque, bank draft or money order payable to the Company in the amount of $             as full payment for the Common Shares to be received upon exercise of the Option.

 

I understand that my exercise of the option to purchase the number of Common Shares indicated above is subject to the satisfaction of all applicable withholding taxes or other withholding liabilities as the Company may determine to be necessary or desirable in respect of such exercise. I further understand that I may be required to make such payment in connection with the exercise of my options.

 

     
Date   Optionee’s Signature