UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 26, 2015
Bionik Laboratories Corp. |
(Exact Name of Registrant as Specified in Its Charter) |
Delaware | 000-54717 | 27-1340346 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (IRS Employer Identification No.) |
483 Bay Street, N105 | ||
Toronto, ON | M5G 2C9 | |
(Address of Principal Executive Offices) | (Zip Code) | |
Registrant’s Telephone Number, Including Area Code: (416) 640-7887 | ||
Drywave Technologies, Inc. 167 Penn Street Washington Boro, Pennsylvania 17582 |
||
(Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
GENERAL NOTE
This Current Report on Form 8-K is being filed by Bionik Laboratories Corp., formerly known as Drywave Technologies, Inc., following the completion of our acquisition of Bionik Laboratories Inc., a company existing under the laws of Canada (“ Bionik Canada ”), through our wholly owned subsidiary Bionik Acquisition Inc., a company existing under the laws of Canada (“ Acquireco ”) on February 26, 2015 as described more fully below (collectively referred to as the “ Acquisition Transaction ”).
In connection with the closing of the Acquisition Transaction, we experienced a change of control, as:
· | We expanded our Board of Directors to four members and appointed two new directors who are directors of Bionik Canada; |
· | Subject to our filing and disclosure obligations pursuant to Rule 14f-1, our two existing directors resigned (such resignation date, the “ 14F Date ”) and two new directors who are directors of Bionik Canada were appointed to fill their vacancy; |
· | Our prior Chief Executive Officer and sole officer resigned as such and was appointed as Senior Vice President; |
· | The existing management of Bionik Canada were appointed as our executive officers; and |
· | The existing shareholders of Bionik Canada entered into a transaction whereby their existing common shares of Bionik Canada were exchanged for a new class of shares that are exchangeable for shares of our common stock, which assuming exchange of all such exchangeable shares, would equal a number of common shares that constitute 78.4% of our issued and outstanding shares as of the date of this Current Report on Form 8-K. |
As a result, we have determined to treat the acquisition as a reverse merger and recapitalization for accounting purposes, with Bionik Canada as the acquirer for accounting purposes. As such, the financial information, including the operating and financial results and audited financial statements included in this Current Report on Form 8-K are that of Bionik Canada rather than that of our company prior to the completion of the transactions described herein.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intends”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks listed under the section entitled “Risk Factors” commencing on page 14 of this report, which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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In this Current Report, unless otherwise specified, all dollar amounts are expressed in United States dollars. Except as otherwise indicated by the context, references in this report to “Company”, “we,” “us” and “our” are references to Bionik Laboratories Corp. f/k/a Drywave Technologies, Inc. including the operating and financial results of Bionik Canada.
Item 1.01 | Entry into a Material Definitive Agreement |
Acquisition Transaction
Acquisition of Bionik Canada
On February 26, 2015, we entered into an Investment Agreement with Acquireco, our wholly owned subsidiary, and Bionik Canada (the “ Investment Agreement ”) whereby we acquired 100 Class 1 common shares of Bionik Canada representing 100% of the outstanding Class 1 common shares of Bionik Canada, taking into account the Exchangeable Share Transaction (as defined below). After giving effect to this transaction, we commenced operations through Bionik Canada.
A copy of the Investment Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Spin-Off Agreement and Assignment and Assumption Agreement
Immediately prior to the closing of the Acquisition Transaction and the First Closing (as defined below), we transferred all of the business, properties, assets, operations and goodwill of the Company (other than cash and cash equivalents), and liabilities as of March 6, 2013, to our then-existing wholly owned subsidiary, Strategic Dental Alliance, Inc., a Colorado corporation (“ Strategic Dental Alliance ”), and then transferred all of the capital stock of Strategic Dental Alliance to Brian E. Ray, a former officer and existing director (through the 14F Date) and Jon Lundgreen, a former officer and director, pursuant to a Spin-Off Agreement (the “ Spin-Off Agreement ”). Also as of immediately prior to the closing of the Acquisition Transaction and the First Closing, we entered into an Assignment and Assumption Agreement with Tungsten 74 LLC, pursuant to which Tungsten 74 LLC assumed all of our remaining liabilities through the closing of the Acquisition Transaction (the “ Assignment and Assumption Agreement ”). Accordingly, as of the closing of the Acquisition Transaction and the First Closing, we had no assets or liabilities.
A copy of the Spin-Off Agreement and Assignment and Assumption Agreement are filed as Exhibits 10.6 and 10.7 to this Current Report on Form 8-K and are incorporated by reference herein.
Exchangeable Share Transaction
As a condition of the closing of the Acquisition Transaction, Bionik Canada created a new class of exchangeable shares (the “ Exchangeable Shares ”), which were issued to the existing common shareholders of Bionik Canada in exchange for all of their outstanding common shares, all of which were cancelled (the “ Exchangeable Share Transaction ”).
Pursuant to the rights and privileges of the Exchangeable Shares, the holders of such Exchangeable Shares maintain the right to (i) received dividends equal to, and paid concurrently with, dividends paid by the Company to the holders of Common Stock; (ii) vote, through the Trustee’s voting of the Special Voting Preferred Stock (as defined herein) on all matters that the holders of Common Stock are entitled to vote upon; and (iii) receive shares of Common Stock upon the liquidation or insolvency of the Company upon the redemption of such Exchangeable Shares by Acquireco.
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The rights and preferences of the Exchangeable Shares are filed as Exhibit 4.2 to this Current Report on Form 8-K and is incorporated by reference herein.
As part of the Exchangeable Share Transaction, we entered into the following agreements, each dated February 26, 2015:
· | Voting and Exchange Trust Agreement (the “ Trust Agreement ”) with Bionik Canada and Computershare Trust Company of Canada (the “ Trustee ”); and |
· | Support Agreement (the “ Support Agreement ”) with Acquireco and Bionik Canada. |
Pursuant to the terms of the Trust Agreement, the parties created a trust for the benefit of its beneficiaries, which are the holders of the Exchangeable Shares, enabling the Trustee to exercise the voting rights of such holders until such time as they choose to redeem their Exchangeable Shares for shares of the common stock of the Company, and allowing the Trustee to hold certain exchange rights in respect of the Exchangeable Shares.
As a condition of the Trust Agreement and prior to the execution thereof, we filed a Certificate of Designation with the Delaware Secretary of State, effective February 20, 2015, designating a class of our preferred shares as The Special Voting Preferred Stock (the “ Special Voting Preferred Stock ”) and issued one share of The Special Voting Preferred Stock to the Trustee.
A copy of the Certificate of Designation is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The Special Voting Preferred Stock entitles the Trustee to exercise the number of votes equal to the number of Exchangeable Shares outstanding on a one-for-one basis during the term of the Trust Agreement. The Trust Agreement further sets out the terms and conditions under which holders of the Exchangeable Shares are entitled to instruct the Trustee as to how to vote during any stockholder meetings of our company.
Pursuant to the terms of the Trust Agreement, we granted the Trustee the right to require our Company to purchase the Exchangeable Shares from any beneficiary upon the occurrence of certain events including in the event that we are bankrupt, insolvent or our business is wound up. The Trust Agreement continues to remain in force until the earliest of the following events: (i) no outstanding Exchangeable Shares are held by any beneficiary under the Trust Agreement; and (ii) each of Bionik Canada and us elects to terminate the Trust Agreement in writing and the termination is approved by the beneficiaries.
A copy of the Trust Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference herein.
Pursuant to the terms of the terms of the Support Agreement, we agreed to certain covenants while the Exchangeable Shares were outstanding, including: (i) not to declare or pay any dividends on our common stock unless simultaneously declaring the equivalent dividend for the holders of the Exchangeable Shares, (ii) advising Bionik Canada in advance of any dividend declaration by our company, (iii) ensure that the record date for any dividend or other distribution declared on the shares of the Company is not less than seven days after the declaration date of such dividend or other distribution; (iv) taking all actions reasonably necessary to enable Bionik Canada to pay and otherwise perform its obligations with respect to the issued and outstanding Exchangeable Shares, (iv) to ensure that shares of the Company are delivered to holders of Exchangeable Shares upon exercise of certain redemption rights set out in the agreement and in the rights and restrictions of the Exchangeable Shares, and (v) reserving for issuance and keeping available from our authorized common stock such number of shares as may be equal to: (A) the number of Exchangeable Shares issued and outstanding from time to time; and (B) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares from time to time.
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The Support Agreement also outlines certain restrictions on our ability to issue any dividends, rights, options or warrants to all or substantially all of our stockholders during the term of the agreement unless the economic equivalent is provided to the holders of Exchangeable Shares. The Support Agreement is governed by the laws of the Province of Ontario.
A copy of the Support Agreement is filed as Exhibit 10.3 to this Form 8-K.
Private Placement Offering
Concurrently with the closing of the Acquisition Transaction and in contemplation of the Acquisition Transaction, we sold 7,735,750 units (the “ Units ”) for gross proceeds of $6,188,600 (including $500,000 of outstanding bridge loans converted into Units at the offering price) at a purchase price of $0.80 per Unit (the “ Purchase Price ”) in a private placement offering (the “ Offering ”). Each Unit consists of one share of common stock, par value $0.001 per share (the “ Common Stock ”) and a warrant (the “ Warrant ”) to purchase one share of Common Stock at an initial exercise price of $1.40 per share (the “ Warrant Shares ”). The Common Stock and Warrants were sold to each subscriber of the Offering pursuant to a Subscription Agreement (the “ Subscription Agreement ”).
The Offering was being offered with a minimum offering amount of $6,000,000 (the “ Minimum Offering Amount ”) and up to a maximum offering amount of $12,800,000 (subject to an overallotment option). Once the Minimum Offering amount was reached and held in escrow and other conditions to closing were satisfied (including the simultaneous closing of the Acquisition Transaction), the Company and the placement agent were able to conduct a first closing (the “ First Closing ”). Pursuant to the terms of a Registration Rights Agreement, we have agreed to file a registration statement on Form S-1 (or any other applicable form exclusively for the Offering) (the “ Registration Statement ”) registering for resale under the Securities Act all of the shares of Common Stock sold in the Offering and Warrant Shares underlying the Warrants within ninety days after the First Closing and we have agreed to use our commercially reasonable best efforts to cause such registration statement to become effective within one hundred eighty days of the First Closing. As a result of the Offering, after payment of placement agent fees and expenses but before the payment of other offering expenses such as legal and accounting expenses, we received net proceeds of approximately $5,383,734 at the First Closing, including the $500,000 in bridge loans we previously received that were taken into account as part of the Minimum Offering Amount.
The foregoing description of the Acquisition Transaction, Exchangeable Share Transaction, Offering, and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the form of Subscription Agreement with respect to the Offering which includes the Registration Rights Agreement relating to the Common Stock and Warrant Shares, which is filed as Exhibit 10.8 hereto, the form of Warrant which is filed as Exhibit 4.3 hereto, and all of the other documents and instruments referred to herein or attached as exhibits to this Current Report on Form 8-K, each of which is incorporated herein by reference.
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As of the Acquisition Transaction and the First Closing, an aggregate of 90,575,126 shares of our Common Stock were deemed cancelled, of which 90,207,241 were held by our former Chief Executive Officer and current Senior Vice President.
Following the Acquisition Transaction, the Exchangeable Share Transaction and the First Closing, as of the date of this Current Report on Form 8-K, there were 63,735,750 shares of our common stock issued and outstanding of which 6,000,000 are held by existing stockholders, 7,735,750 are held by the investors in the Offering and Bionik Canada shareholders hold an equivalent of 50,000,000 shares of our common stock through their ownership of 100% of the Exchangeable Shares. Furthermore, up to 1,905,700 shares of our Common Stock are subject to forfeiture in the event we are unable to raise additional gross proceeds of $3,811,400 in the Offering.
As a result, our pre-Acquisition Transaction stockholders hold approximately 6.6% of our issued and outstanding shares of Common Stock (assuming we do not raise any additional funds in the Offering and the consequent forfeiture of 1,905,700 of such shares), the former stockholders of Bionik Canada hold approximately 80.9% of our issued and outstanding shares of Common Stock through their ownership of 100% of the Exchangeable Shares, and the investors in the Offering hold approximately 12.5% of our issued and outstanding shares of Common Stock.
Item 2.01 | Completion of Acquisition or Disposition of Assets |
The disclosure in Item 1.01 of this Current Report on Form 8-K regarding the Acquisition Transaction is incorporated herein by reference in its entirety.
FORM 10 DISCLOSURE
As disclosed elsewhere in this Current Report on Form 8-K, we acquired Bionik Canada at the First Closing. Item 2.01(f) of Form 8-K provides that if the Company was a shell company, other than a business combination related shell company (as those terms are defined in Rule 12b-2 under the Exchange Act) immediately before the Acquisition Transaction, then the Company must disclose the information that would be required if the Company were filing a general form for registration of securities on Form 10 under the Exchange Act reflecting all classes of the Company’s securities subject to the reporting requirements of Section 13 of the Exchange Act upon consummation of the Acquisition Transaction.
To the extent that the Company might have been considered to be a shell company immediately before the Acquisition Transaction, we are providing below the information that we would be required to disclose on Form 10 under the Exchange Act if we were to file such form. Please note that, unless the context otherwise requires, the information provided below relates to the combined Company after the acquisition of Bionik Canada.
DESCRIPTION OF BUSINESS
Corporate Overview
Our Company was incorporated on January 8, 2010 in the State of Colorado. At the time of our incorporation the name of our company was Strategic Dental Management Corp. On July 16, 2013, the Company changed its name from Strategic Dental Management Corp. to Drywave Technologies, Inc. and changed its state of incorporation from Colorado to Delaware. On February 20, 2014, we filed with the Secretary of State of Delaware a Certificate of Amendment to our Articles of Incorporation (the “Certificate of Amendment”) whereby, among other things, we changed our name to Bionik Laboratories Corp. and reduced the authorized number of shares of Common Stock from 200,000,000 to 150,000,000. Additionally, on September 24, 2014, our stockholders approved a 1-for-0.831105 reverse stock split of the issued and outstanding shares of our Common Stock, and adopted an equity incentive plan. The reverse stock split was implemented on February 13, 2015.
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Bionik Canada was incorporated on March 24, 2011 under the Canada Business Corporations Act. Bionik Canada’s principal executive office is located at 483 Bay Street, N105, Toronto, ON Canada M5G 2C9 and its telephone number is (416) 640-7887. Our website address is www.bioniklabs.com . The information on our website is not part of this Current Report on Form 8-K.
Description of Business
Overview
Following the closing of the Acquisition Transaction, we became a medical device company, specializing in the designing, developing and commercializing of cost-effective physical rehabilitation technologies, prosthetics, and assisted robotic products. We strive to innovate and build devices that improve an individual’s health, comfort, accessibility and quality of life through the use of advanced algorithms and sensing technologies that anticipate a user’s every move.
Our co-founders, Mr. Michal Prywata and Mr. Thiago Caires, first conceived of a brain-controlled prosthetic device in 2009. Media and industry response sparked further innovation leading to the formation of Bionik Canada and development of our first commercial product, the ARKE lower body exoskeleton.
Since our founding, we have partnered with industry leaders in manufacturing and design and have also expanded our development team through partnerships with researchers and academia. From inception to immediately prior to the First Closing, we have secured cash funding of approximately $5.5 million, which includes grants as well as Scientific Research and Experimental Development tax refunds provided through the Canadian government that support our creation of technologies that could lower the costs of medical devices and medical care.
We are currently developing the ARKE and researching two earlier stage products, the APOLLO intelligent prosthetic knee and the CHRONOS cloud-based intelligent patient queuing system. We plan to develop other biomechatronic solutions through internal research and development and we may further augment our product portfolio through strategic and accretive acquisition opportunities in the future.
We currently hold an intellectual property portfolio that includes 5 U.S. and international patents pending, 13 U.S. provisional patents, and other patents under development.
Product Pipeline
ARKE
The ARKE is a robotic lower body exoskeleton designed to help wheelchair bound individuals suffering from spinal cord injuries, strokes and other mobility disabilities restore proper gait and walk again during the rehabilitation process.. We expect that the ARKE will complement or replace existing rehabilitation methods by giving the patient control and increasing feedback during the rehabilitation process. Further, being able to walk during rehabilitation potentially reduces bone density loss, muscle atrophy, secondary illness and the frequency of re-hospitalization, while potentially helping to increase blood flow and nutrient delivery throughout the body.
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We believe that the ideal candidate for the ARKE rehabilitation therapy is a level T6 spinal cord injury patient with paralysis below the chest but maintains some or all upper body strength and mobility, although we believe any incomplete paraplegic (meaning a paraplegic with some healthy nerves remaining after the spinal cord damage that allows for no more than partial paralysis of hands, arms and upper torso) can benefit from the rehabilitation that the ARKE is expected to provide.
The ARKE uses sensory technology to determine at all times a user’s movements, such as bending forward and weight shifts from side to side. This sensory system allows the exoskeleton to determine precisely the movement needed by the user, including when the user wants to walk, stop, climb stairs, sit down or stop.
We have developed the ARKE to be electronically adjustable by a clinician or a rehabilitation specialist to attend to a patient’s specific needs and provide for customized rehabilitation plans. Additionally, the ARKE will have the capability to interface with tablet computers to allow the clinician or a rehabilitation specialist to program, change, edit and select different features within the ARKE system platform, such as selecting or saving a patient’s profile, adjusting the rehabilitation movement speed or walking gait. The tablet interface is designed to allow for the staff to be in close proximity to the user, allowing for them to closely monitor the ARKE at all times during use, making the process safer and more reliable.
Stroke rehabilitation and other similar disability rehabilitation programs deal with patients that do not necessarily have spinal cord damage and that may possess the ability to generate some sort of lower-body motion. Accordingly, we intend on developing a version of the ARKE for stroke patients with partial assist, that is expected to allow stroke patients that have restricted or no motion in one or both legs to wear the product and experience normal weight bearing rehabilitation to walk. We anticipate that the ARKE software platform will also be programmed to assist with the rehabilitation of other disabilities in the future such as cerebral palsy, multiple sclerosis and spinal bifida.
We also intend on developing additional accessories for the ARKE that can improve the rehabilitation process along with the clinician’s or rehabilitation specialist’s interaction with the patient. We feel that improving the staff interaction with the patient is an important leap forward for the industry and incorporating a tablet interface to the ARKE was our first innovative step in this regard. We intend on improving real time interactions between the staff and the patient that can simulate resistance experienced during the rehabilitation process, as well as improving product controls.
Mobility impairment affects an estimated 10 million people in developed countries, of which there is an estimated 5 million wheelchair users in those markets. We believe that the ARKE can be used to assist in the rehabilitation of those patients with mobility in their arms for stability. Assuming a 40-hour week, a rehabilitation facility can rehabilitate up to 10 patients using the ARKE product for a 4-hour session. We believe serving this market has the maximum market potential for approximately 500,000 exoskeletons.
Early Stage Research Products
The APOLLO and CHRONOS are early stage research development products.
The APOLLO is a microprocessor-driven, above the knee prosthetic designed to provide a user with a natural fluidity and walking gait. Through the use of its microprocessor and provisional patent pending magnetic fluid linear dampener to power the knee joint, it is being designed to sense motion and steps, thereby allowing the user to potentially walk naturally by increasing and decreasing the dampening in the knee joint.
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We believe that the APOLLO could service any above knee amputation, which, of the approximately 185,000 amputations in the U.S. annually, is estimated to be approximately 60,000 patients.
CHRONOS is a cloud-based, intelligent patient queuing system with predictive technology, designed to reduce patient waiting time to see health care providers, whether in waiting rooms in hospitals, clinics, private physician practice or otherwise. It is designed to allow patients to check in with their health care provider through their smartphone, allowing them to monitor the number of patients ahead of them along with an estimated wait time so the patient will know approximately when to come back to see their health care provider. We are aiming for CHRONOS to address productivity loss due to long waiting times, which is a frequent complaint of patients visiting their healthcare providers.
CHRONOS targets waiting rooms in hospitals, clinics, private physician practice or otherwise. We estimate that there is a $6.5 billion yearly productivity loss in the U.S. and Canada caused by patients waiting to see their doctors. CHRONOS could reduce this loss by improving on average admittance times, average additional waiting times and average total times. We intend on marketing CHRONOS through distribution channels and we have not identified the full market potential or acceptance of such products or other market verticals. We believe that value added products such as CHRONOS can improve the overall healthcare markets in public sectors such as Canada, and in the private sector such as the U.S.; such products could increase the flow of patients and overall satisfaction rates.
Other Prospective Products
We intend to expand our product offerings and enhance the strength of our Company through, not only internal development, but also strategic and accretive partnerships or acquisitions from time to time.
Competition and Competitive Advantage
The medical technology equipment industry is characterized by strong competition and rapid technological change. There are a number of companies developing technologies that are competitive to our existing and proposed products, many of them, when compared to our Company, having significantly longer operational history and greater financial and other resources.
The ARKE faces competition from companies that are focused on technologies for rehabilitation of patients suffering from spinal cord injuries, stroke and related neurological disabilities. Our competitors that we expect to compete with the ARKE in spinal cord rehabilitation therapies include Rewalk Robotics, Ekso Bionics, and Rex Bionics, each of which sell over-ground, non-weight bearing exoskeletons. Additionally, Parker Hannifin has announced plans to sell over-ground exoskeletons beginning in 2015. For the stroke market, we are developing an assisted version of the ARKE, which we expect will compete with Cyberdyne’s over-ground exoskeletons and Hocoma, AlterG, Aretech, Ekso Bionics, Parker Hannifin and Reha Technology, who are each selling treadmill-based walking gait therapies.
We believe that the ARKE’s primary advantage over the aforementioned products is that it has been designed to facilitate a selling price, which we believe is more affordable to the market than competing products. When comparing the ARKE to treadmill-based products available to the rehabilitation market, the ARKE has a smaller footprint, uses standard power sources, does not need any special infrastructure and is expected to be more affordable. Importantly, the ARKE is able to mobilize pre or non-ambulatory patients as it is a full weight-bearing product. The ARKE is also expected to be significantly less expensive compared to competitors in the spinal cord rehabilitation market for over-ground exoskeleton products. Additional advantages include our patented patient profiling system, and 3D trigger point system.
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From inception, our developments and proposed products were focused on the medical market. We have also developed our products to reflect current market acceptance, including proper pricing, ease of use, global reach by innovative design and finally outstanding turnaround in product development, revisions and versions. We believe that we are the company among our competitors with by far the shortest time to market strategy. Rewalk Robotics was founded in 2001 and launched its product into the home market in 2014, 13 years later. We were founded about 4 years ago and have products in pre-clinical testing. Ekso Bionics was founded almost 10 years ago. We expect our innovative approach to result in low cost of goods and allow us to sell products superior to our competition’s products at less than half of the cost. We do not only focus on cost but also on quality, as we believe that our exoskeleton is the strongest exoskeleton in the medical market, giving patients the support they need to take steps that one by one, will change their life.
Our challenge will be achieving rapid market awareness and adoption of our emerging technology in rehabilitation and mobility centers throughout the U.S., Canada and any other market we may enter. Robotic exoskeleton technology and its use in clinical settings is a new but emerging industry and currently regulated by medical device regulatory agencies (such as the US Food and Drug Administration). We believe that we will face challenges of increased regulatory scrutiny and increased competition in the future based on new technologies, additional features and customizability, reduced pricing, clinical outcomes and other factors. Our strength in this market will depend on our ability to achieve market acceptance, develop new technologies, develop new products, implement production plans, develop marketing strategies, secure any necessary regulatory approvals, secure necessary data for reimbursement and protect our intellectual property.
The market for the Company’s other prospective products also has competition and is subject to rapid technological change and regulatory requirements. There can be no assurance that the Company will be in a stronger position to respond quickly to potential acquisitions and other market opportunities, new or emerging technologies and changes in customer requirements. Market disruption will be caused when new products or brands are able to differentiate from the rest of market. Failure to maintain and enhance our competitive position could materially adversely affect the business and our prospects.
Market Strategy
The ARKE is designed to be a rehabilitation tool for hospitals and clinics and potentially a personal rehabilitation tool so paraplegics and other walking disabled individuals could benefit from using ARKE at home. We have split the exoskeleton robotic market into two sub-markets:
· | The rehabilitation market for hospitals and clinics; and |
· | The home market for personal use. |
We are currently completing the safety testing and general proof of concept testing which we began in mid-2013. We have also prepared clinical trial protocols, which will test the product on paraplegic patients and gauge the medical benefits and other parameters. We anticipate receiving clearance within 6 months of completing the clinical testing units. Our initial go-to-market strategy will be the development of hospital and clinic relationships that will allow us to diffuse the technology among experts and patients. Initially, the hospitals and clinics selected for the clinical trials will be selected to promote and support the ARKE product. We are also seeking different government grants in collaboration with various hospitals and clinics to allow us to fund trials, research projects and upgrade the ARKE’s technologies with little to no cash requirement directly from us. We expect that this will also diffuse the technology among the doctors and experts involved in the distribution and buying groups that are established within those selected partner hospitals. We may also conduct clinical trials in other countries for the purpose of diffusing the technology in those markets, though we have no current plans to do so.
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During the first market phase, we may sell or lease at a monthly or other fee structure the ARKE product to hospitals, clinics, distribution companies and/or buying groups that supply those rehabilitation facilities. We are also considering other revenue models.
We intend on developing other market vertical products to introduce to the market. We intend on using a similar commercialization approach for these products as planned for the ARKE but have not fully identified the market potential of each.
Intellectual Property
We rely on intellectual property developed or acquired, including patents, trade secrets, technical innovations, laws of unfair competition and various licensing agreements to provide our future growth and to build our competitive position. We have 5 U.S. and international patents pending and 13 U.S. provisional patents. As we continue to expand our intellectual property portfolio, it is critical for us to continue to invest in filing patent applications to protect our technology, inventions, and improvements. However, we can give no assurance that competitors will not infringe on our patent rights or otherwise create similar or non-infringing competing products that are technically patentable in their own right.
Our patents pending are as follows:
Algorithms & Control Systems | Filed US & International |
Sensory Technology | Filed US & International |
Robotics | Filed US & International |
Robotics | Filed US & International |
Robotics | Filed US & International |
Bionik has also filed 13 provisional patents in the areas of Robotics, Algorithms & Controls Systems, Sensory Technology and Cloud Computing.
We have and generally plan to continue to enter into non-disclosure, confidentially and intellectual property assignment agreements with all new employees as a condition of employment. In addition, we intend to also generally enter into confidentiality and non-disclosure agreements with consultants, manufacturers’ representatives, distributors, suppliers and others to attempt to limit access to, use and disclosure of our proprietary information.
Research and Development
Our research and development programs are generally pursued by engineers and scientists employed by us in Toronto on a full-time basis or hired as per diem consultants or through partnerships with industry leaders in manufacturing and design and researchers and academia. We are also working with subcontractors in developing specific components of our technologies.
The primary objective of our research and development program is to advance the development of our existing and proposed products, to enhance the commercial value of such products.
We have incurred research and development costs of $937,426 for the year ended March 31, 2014 and $637,661 for the year ended March 31, 2013, and $1,178,837 and $747,502 for the nine months ended December 31, 2014 and 2013, respectively.
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Government Regulation
General
Our medical technology products and operations are subject to regulation by the U.S. Food and Drug Administration (“ FDA ”) and various other federal and state agencies, as well as by foreign governmental agencies. These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing and distribution, and market surveillance of the our medical device products.
In addition to the below, the only regulations we encounter are the regulations that are common to all businesses, such as employment legislation, implied warranty laws, and environmental, health and safety standards, to the extent applicable. We will also encounter in the future industry-specific government regulations that would govern our products, if and when developed for commercial use. It may become the case that other regulatory approvals will be required for the design and manufacture of our products and proposed products.
U.S. Regulation
Under the U.S. Federal Food, Drug, and Cosmetic Act, medical devices are classified into one of three classes — Class I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness. Our current medical products are expected to be categorized as Class I or Class II (products similar to the ARKE are currently designated as Class 2 for supervised use). Class I devices are those for which safety and effectiveness can be assured by adherence to a set of guidelines, which include compliance with the applicable portions of the FDA's Quality System Regulation, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials. Class II devices require a 510(k) premarket submission to the US FDA. Equivalent agencies in other countries require similar submissions prior to the device being marketed.
We also need to establish a suitable and effective quality management system, which establishes controlled processes for our product design, manufacturing, and distribution. We plan to do this in compliance with the internationally recognized standard ISO 13485:2013 Quality Management Systems. Following the introduction of a product, the FDA and foreign agencies engage in periodic reviews of our quality systems, as well as product performance and advertising and promotional materials. These regulatory controls, as well as any changes in FDA policies, can affect the time and cost associated with the development, introduction and continued availability of new products. Where possible, we anticipate these factors in our product development processes. These agencies possess the authority to take various administrative and legal actions against us, such as product recalls, product seizures and other civil and criminal sanctions.
Foreign Regulation
In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products in foreign countries. Whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
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The policies of the FDA and foreign regulatory authorities may change and additional government regulations may be enacted which could prevent or delay regulatory approval of our products and could also increase the cost of regulatory compliance. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.
Employees
We currently have 15 full-time and 1 part-time employees and 3 consultants who are based in our principal executive office located in Toronto, Canada. These employees oversee day-to-day operations of the Company supporting management, engineering, manufacturing, and administration functions of the Company. As required, we also engage consultants to provide services to the Company, including legal and corporate services. We have no unionized employees.
We currently plan to hire 3 to 6 additional full-time employees within the next 12 months, whose principal responsibilities will be the support of our sales, marketing, research and development, and clinical development activities.
We consider relations with our employees to be satisfactory.
Legal Matters
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business.
We are not currently a party in any legal proceeding or governmental regulatory proceeding nor are we currently aware of any pending or potential legal proceeding or governmental regulatory proceeding proposed to be initiated against us that would have a material adverse effect on us or our business.
DESCRIPTION OF PROPERTY
Our principal executive office is located in premises of approximately 3,655 square feet at 483 Bay Street, N105, Toronto, Ontario Canada M5G 2C9. The facilities have been leased on our behalf by Ryerson University and we receive a subsidy on lease payments to the University. We believe that this facility is adequate for our short-term needs, including providing the space and infrastructure to accommodate our development work based on our current operating plan. We do not own any real estate.
RISK FACTORS
The risks set forth below are not the only ones facing our Company. Additional risks and uncertainties may exist that could also adversely affect our business, financial condition, prospects and/or operations. If any of the following or other risks actually materialize, our business, financial condition, prospects and/or operations could suffer. In such event, the value of our securities could decline.
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Risks Related to Our Business
We have a limited operating history upon which investors can evaluate our future prospects.
We have a limited operating history upon which an evaluation of its business plan or performance and prospects can be made. The business and prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with a newly established business and creating a new industry. The risks include, but are not limited to, the possibility that we will not be able to develop functional and scalable products and services, or that although functional and scalable, our products and services will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products; that our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our technologies and products to accommodate new features and expanded service offerings; or the failure to receive necessary regulatory clearances for our products. To successfully introduce and market our products at a profit, we must establish brand name recognition and competitive advantages for our products. There are no assurances that we can successfully address these challenges. If it is unsuccessful, we and our business, financial condition and operating results could be materially and adversely affected.
The current and future expense levels are based largely on estimates of planned operations and future revenues rather than experience. It is difficult to accurately forecast future revenues because our business is new and our market has not been developed. If our forecasts prove incorrect, the business, operating results and financial condition of the Company will be materially and adversely affected. Moreover, we may be unable to adjust our spending in a timely manner to compensate for any unanticipated reduction in revenue. As a result, any significant reduction in revenues would immediately and adversely affect our business, financial condition and operating results.
We have had no revenues since inception, and we cannot predict when we will achieve profitability.
Bionik Canada has not been profitable and cannot predict when we will achieve profitability. We have experienced net losses since our inception in 2011. We have had no revenues since inception. We do not anticipate generating significant revenues until we successfully develop, commercialize and sell products derived from our technologies, of which we can give no assurance. We are unable to determine when we will generate significant revenues, if any, from the sale of any of such products.
We cannot predict when we will achieve profitability, if ever. Our inability to become profitable may force us to curtail or temporarily discontinue our research and development programs and our day-to-day operations. Furthermore, there can be no assurance that profitability, if achieved, can be sustained on an ongoing basis. As of December 31, 2014, we had an accumulated deficit of $5,053,982.
We may never complete the development of the ARKE lower body exoskeleton or any of our other proposed products into marketable products.
We do not know when or whether we will successfully complete the development of the ARKE lower body exoskeleton, the APOLLO intelligent prosthetic knee, the CHRONOS cloud-based intelligent patient queuing system, or any other proposed or contemplated product, for any of our target markets. We continue to seek to improve our technologies before we are able to produce a commercially viable product. Failure to improve on any of our technologies could delay or prevent their successful development for any of our target markets.
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Developing any technology into a marketable product is a risky, time consuming and expensive process. You should anticipate that we will encounter setbacks, discrepancies requiring time consuming and costly redesigns and changes and that there is the possibility of outright failure.
We may not meet our product development and commercialization milestones.
We have established milestones, based upon our expectations regarding our technologies at that time, which we use to assess our progress toward developing our products. These milestones relate to technology and design improvements as well as to dates for achieving development goals. If our products exhibit technical defects or are unable to meet cost or performance goals, our commercialization schedule could be delayed and potential purchasers of our initial commercial products may decline to purchase such products or may opt to pursue alternative products.
Generally, we have made technological advances meeting our milestone schedules. We can give no assurance that our commercialization schedule will continue to be met as we further develop the ARKE or any of our other proposed products.
Customers will be unlikely to buy the ARKE or any of our other proposed products unless we can demonstrate that they can be produced for sale to consumers at attractive prices.
To date, we have focused primarily on research and development of the first generation version of the ARKE, as well as starting the prototyping the APOLLO and the CHRONOS. Consequently, we have no experience in manufacturing these products on a commercial basis. We may manufacture our products through third-party manufacturers. We can offer no assurance that either we or our manufacturing partners will develop efficient, automated, low-cost manufacturing capabilities and processes to meet the quality, price, engineering, design and production standards or production volumes required to successfully mass market our products. Even if we or our manufacturing partners are successful in developing such manufacturing capability and processes, we do not know whether we or they will be timely in meeting our product commercialization schedule or the production and delivery requirements of potential customers. A failure to develop such manufacturing processes and capabilities could have a material adverse effect on our business and financial results.
The proposed price of our products is in part dependent on material and other manufacturing costs. We are unable to offer any assurance that either we or a manufacturing partner will be able to reduce costs to a level which will allow production of a competitive product or that any product produced using lower cost materials and manufacturing processes will not suffer from a reduction in performance, reliability and longevity. Furthermore, although we have estimated a pricing structure for the ARKE we can give no assurance that these estimates will be correct in light of any manufacturing process we adopt or distribution channels we use.
Our products may not be accepted in the market.
We cannot be certain that our current products or any other products we may develop or market will achieve or maintain market acceptance. Market acceptance of our products depends on many factors, including our ability to convince key opinion leaders to provide recommendations regarding our products, convince distributors and customers that our technology is an attractive alternative to other technologies, demonstrate that our products are reliable and supported by us in the field, supply and service sufficient quantities of products directly or through marketing alliances, and price products competitively in light of the current macroeconomic environment, which, particularly in the case of the medical device industry, are becoming increasingly price sensitive.
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We are subject to extensive governmental regulations relating to the manufacturing, labeling and marketing of our products.
Our medical technology products and operations are subject to regulation by the U.S. Food and Drug Administration (the “ FDA ”), Health Canada and other governmental authorities both inside and outside of the United States. These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing and distribution, and market surveillance of our medical products.
Under the United States Federal Food, Drug, and Cosmetic Act, medical devices are classified into one of three classes — Class I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness. We believe our current products will be Class I and Class II medical devices. Class I devices are those for which safety and effectiveness can be assured by adherence to a set of guidelines, which include compliance with the applicable portions of the FDA's Quality System Regulation, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to additional controls, including full applicability of the Quality System Regulations, and requirements for 510(k) pre-market notification.
In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products in foreign countries. Whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
The policies of the FDA and foreign regulatory authorities may change and additional government regulations may be enacted which could prevent or delay regulatory approval of our products and could also increase the cost of regulatory compliance. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.
Following the introduction of a product, these agencies will also periodically review our design and manufacturing processes and product performance. The process of complying with the applicable good manufacturing practices, adverse event reporting, clinical trial and other requirements can be costly and time consuming, and could delay or prevent the production, manufacturing or sale of our products. In addition, if we fail to comply with applicable regulatory requirements, it could result in fines, delays or suspensions of regulatory clearances, closure of manufacturing sites, seizures or recalls of products and damage to our reputation. Recent changes in enforcement practice by the FDA and other agencies have resulted in increased enforcement activity, which increases the compliance risk for the Company and other companies in our industry. In addition, governmental agencies may impose new requirements regarding registration, labeling or prohibited materials that may require us to modify or re-register products already on the market or otherwise impact our ability to market our products in those countries. Once clearance or approval has been obtained for a product, there is an obligation to ensure that all applicable FDA, Health Canada and other regulatory requirements continue to be met.
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We may be subject to penalties and may be precluded from marketing our products if we fail to comply with extensive governmental regulations.
We believe that our proposed medical products are categorized as Class I and Class II. Class I devices are those for which safety and effectiveness can be assured by adherence to a set of guidelines, which include compliance with the applicable portions of the FDA's Quality System Regulation, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials. However, the FDA has not made any determination about whether our specific medical products are Class I or Class II medical devices. While such a determination is not necessary in order for us to list a Class I device with the FDA and bring that device to the U.S. market, we plan to get clarification from the FDA prior to introducing a product into the market. From time to time, the FDA may disagree with the classification of a new Class I medical device and require the manufacturer of that device to apply for approval as a Class II or Class III medical device. In the event that the FDA determines that our medical products should be classified as Class II or Class III medical devices, we could be precluded from marketing the devices for clinical use within the United States for months, years or longer, depending on the specific change the classification. Reclassification of our products as Class II or Class III medical devices could significantly increase our regulatory costs, including the timing and expense associated with required clinical trials and other costs.
The FDA and non-U.S. regulatory authorities require that our products be manufactured according to rigorous standards. These regulatory requirements may significantly increase our production costs and may even prevent us from making our products in amounts sufficient to meet market demand. If we change our approved manufacturing process, the FDA may need to review the process before it may be used. Failure to comply with applicable regulatory requirements discussed could subject us to enforcement actions, including warning letters, fines, injunctions and civil penalties, recall or seizure of our products, operating restrictions, partial suspension or total shutdown of our production, and criminal prosecution.
Federal, state and non-U.S. regulations regarding the manufacture and sale of medical devices are subject to future changes. The complexity, timeframes and costs associated with obtaining marketing clearances are unknown. Although we cannot predict the impact, if any, these changes might have on our business, the impact could be material.
Certain of our competitors have reported injuries caused by the malfunction of human exoskeleton devices (in at least one case to the FDA). Injuries caused by the malfunction or misuse of human exoskeleton devices, even where such malfunction or misuse occurs with respect to one of our competitor’s products, could cause regulatory agencies to implement more conservative regulations on the medical human exoskeleton industry, which could significantly increase our operating costs.
If we are not able to both obtain and maintain adequate levels of third-party reimbursement for our products, it would have a material adverse effect on our business.
Healthcare providers and related facilities are generally reimbursed for their services through payment systems managed by various governmental agencies worldwide, private insurance companies, and managed care organizations. The manner and level of reimbursement in any given case may depend on the site of care, the procedure(s) performed, the final patient diagnosis, the device(s) utilized, available budget, or a combination of these factors, and coverage and payment levels are determined at each payer’s discretion. The coverage policies and reimbursement levels of these third-party payers may impact the decisions of healthcare providers and facilities regarding which medical products they purchase and the prices they are willing to pay for those products. Thus, changes in reimbursement levels or methods may either positively or negatively impact sales of our products.
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We have no direct control over payer decision-making with respect to coverage and payment levels for our medical device products. Additionally, we expect many payers to continue to explore cost-containment strategies (e.g., comparative and cost-effectiveness analyses, so-called “pay-for-performance” programs implemented by various public and private payers, and expansion of payment bundling schemes such as Accountable Care Organizations, and other such methods that shift medical cost risk to providers) that may potentially impact coverage and/or payment levels for our current products or products we develop.
As our product offerings are diverse across healthcare settings, they are affected to varying degrees by the many payment systems. Therefore, individual countries, product lines or product classes may be impacted by changes to these systems.
Changes in reimbursement practices of third-party payers could affect the demand for our products and the prices at which they are sold.
The sales of our proposed products could depend, in part, on the extent to which healthcare providers and facilities or individual users are reimbursed by government authorities, private insurers and other third-party payers for the costs of our products or the services performed with our products. The coverage policies and reimbursement levels of third-party payers, which can vary among public and private sources and by country, may affect which products customers’ purchase and the prices they are willing to pay for those products in a particular jurisdiction. Reimbursement rates can also affect the acceptance rate of new technologies. Legislative or administrative reforms to reimbursement systems in the United States or abroad, or changes in reimbursement rates by private payers, could significantly reduce reimbursement for procedures using the Company’s products or result in denial of reimbursement for those products, which would adversely affect customer demand or the price customers may be willing to pay for such products.
Clinical outcome studies regarding our products may not provide sufficient data to either cause third-party payers to approve reimbursement or to make human exoskeletons a standard of care.
Our business plan relies on broad adoption of human exoskeletons to provide neuro-rehabilitation in the form of gait training to individuals who have suffered a neurological injury or disorder. Although use of human exoskeletons in neuro-rehabilitation is new, use of robotic devices to provide gait training has been going on for over a decade and the clinical studies relating to such devices have had both positive and negative outcomes. Much of the rehabilitation community has rejected the use of such devices based on the data from some of these studies. Although we believe that human exoskeletons will outperform such robotic equipment, this has not been proven. Furthermore, it may prove impossible to prove an advantage in a timely manner, or at all, which could prevent broad adoption of our products.
Part of our business plan relies on broad adoption of our products to provide “early mobilization” of individuals who have been immobilized by an injury, disease, or other condition. Although the health benefits of other methods of “early mobilization” have been demonstrated in clinical studies in fields such as stroke, those studies did not test early mobilization with human exoskeletons directly. It may be necessary to provide outcome studies on early mobilization with exoskeletons directly in order to convince the medical community of their effectiveness. Such studies have not been designed at this time, and may be too large and too costly for us to conduct.
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Product defects could adversely affect the results of our operations.
The design, manufacture and marketing of our products involve certain inherent risks. Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of our products can lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to our products (either voluntary or required by the FDA, Health Canada or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market. A recall could result in significant costs, as well as negative publicity and damage to our reputation that could reduce demand for our products. Personal injuries relating to the use of our products could also result in product liability claims being brought against us. In some circumstances, such adverse events could also cause delays in new product approvals.
We could be exposed to significant liability claims if we are unable to obtain insurance at acceptable costs and adequate levels or otherwise protect ourselves against potential product liability claims.
The testing, manufacture, marketing and sale of medical devices entail the inherent risk of liability claims or product recalls. Product liability insurance is expensive and may not be available on acceptable terms, if at all. A successful product liability claim or product recall could inhibit or prevent the successful commercialization of our products, cause a significant financial burden on the Company, or both, which in either case could have a material adverse effect on our business and financial condition.
We may require additional capital to support our present business plan and our anticipated business growth, and such capital may not be available on acceptable terms, or at all, which would adversely affect our ability to operate.
We will likely require additional funds to further develop our business plan. Based on our current operating plans, the resources of the Company after the First Closing are expected to be sufficient to fund our planned operations necessary to introduce the ARKE into the rehabilitation market, but not enough to advance the development of the APOLLO or CHRONOS. While we are continuing to raise funds in the Offering, we can give no assurance that we will be successful in raising any additional funds in the Offering. If we are unable to generate sufficient revenues from our operating activities, we may need to raise additional funds through equity offerings or otherwise in order to meet our expected future liquidity requirements, including to introduce the ARKE into the home market, introducing our other planned products or to pursue new product opportunities. Any such financing that we undertake will likely be dilutive to current stockholders and you.
We intend to continue to make investments to support our business growth, including patent or other intellectual property asset creation. In addition, we may also need additional funds to respond to business opportunities and challenges, including its ongoing operating expenses, protecting its intellectual property, satisfying debt payment obligations, developing new lines of business and enhancing its operating infrastructure. While we may need to seek additional funding for such purposes, it may not be able to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of its common stock. We may also seek additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all of our business plans.
We cannot predict our future capital needs and we may not be able to secure additional financing.
We will likely need to raise additional funds in the future to fund our working capital needs and to fund further expansion of our business. We may require additional equity or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance can be given that necessary funds will be available for us to finance our development on acceptable terms, if at all. Furthermore, such additional financings may involve substantial dilution of our stockholders or may require that we relinquish rights to certain of our technologies or products. In addition, we may experience operational difficulties and delays due to working capital restrictions. If adequate funds are not available from operations or additional sources of financing, we may have to delay or scale back our growth plans.
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The results of our research and development efforts are uncertain and there can be no assurance of the commercial success of our products.
We believe that we will need to incur additional research and development expenditures to continue development of our existing proposed products as well as research and development expenditures to develop new products and services. The products and services we are developing and may develop in the future may not be technologically successful. In addition, the length of our product and service development cycle may be greater than we originally expected and we may experience delays in product development. If our resulting products and services are not technologically successful, they may not achieve market acceptance or compete effectively with our competitors’ products and services.
If we fail to retain certain of our key personnel and attract and retain additional qualified personnel, we might not be able to pursue our growth strategy.
Our future success will depend upon the continued service of Peter Bloch, our Chief Executive Officer, Michal Prywata, our Chief Operating Officer, Thiago Caires, our Chief Technology Officer, and Leslie Markow, our Chief Financial Officer. Although we believe that our relationship with each of these individuals is positive, there can be no assurance that the services of any of these individuals will continue to be available to us in the future. We do not carry any key man life insurance policies on any of our existing or proposed executive officers.
The impact of the Patient Protection and Affordable Care Act remains uncertain.
In 2010, significant reforms to the health care system were adopted as law in the United States. The law includes provisions that, among other things, reduce or limit Medicare reimbursement, require all individuals to have health insurance (with limited exceptions) and impose increased taxes. These factors, in turn, could result in reduced demand for our products and increased downward pricing pressure. Specifically, the law requires the medical device industry to subsidize health care reform in the form of a 2.3% excise tax on United States sales of most medical devices. The excise tax will increase our operating expenses. Because other parts of the 2010 health care law remain subject to implementation, the long-term impact on us is uncertain. The new law or any future legislation could reduce medical procedure volumes, lower reimbursement for our products, and impact the demand for our products or the prices at which we sell our products. Accordingly, while it is too early to understand and predict the ultimate impact of the new law on our business, the legislation and resulting regulations could have a material adverse effect on our business, cash flows, financial condition and results of operations.
Our operations in international markets involve inherent risks that we may not be able to control.
Our business plan includes the marketing and sale of our proposed products in international markets. Accordingly, our results could be materially and adversely affected by a variety of uncontrollable and changing factors relating to international business operations, including:
· | Macroeconomic conditions adversely affecting geographies where we intend to do business; |
· | Foreign currency exchange rates; |
· | Political or social unrest or economic instability in a specific country or region; |
· | Higher costs of doing business in foreign countries; |
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· | Infringement claims on foreign patents, copyrights or trademark rights; |
· | Difficulties in staffing and managing operations across disparate geographic areas; |
· | Difficulties associated with enforcing agreements and intellectual property rights through foreign legal systems; |
· | Trade protection measures and other regulatory requirements, which affect our ability to import or export our products from or to various countries; |
· | Adverse tax consequences; |
· | Unexpected changes in legal and regulatory requirements; |
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Military
conflict, terrorist activities, natural disasters and medical epidemics; and
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· | Our ability to recruit and retain channel partners in foreign jurisdictions. |
Our financial results may be affected by fluctuations in exchange rates and our current currency hedging strategy may not be sufficient to counter such fluctuations.
Our financial statements are presented in U.S. dollars, while a significant portion of our business is conducted, and a substantial portion of our operating expenses are payable, in currencies other than the U.S. dollar, specifically the Canadian dollar. Due to the substantial volatility of currency exchange rates, exchange rate fluctuations may have a positive or adverse impact on our future revenues or expenses presented in our financial statements. We plan to use financial instruments, principally forward foreign currency contracts, in our management of foreign currency exposure. These contracts primarily require us to purchase and sell certain foreign currencies with or for U.S. dollars at contracted rates. We may be exposed to a credit loss in the event of non-performance by the counterparties of these contracts. In addition, these financial instruments may not adequately manage our foreign currency exposure. Our results of operations could be adversely affected if we are unable to successfully manage currency fluctuations in the future.
Risks Related to Our Industry
The industry in which we operate is highly competitive and subject to rapid technological change. If our competitors are better able to develop and market products that are safer, more effective, less costly, easier to use, or are otherwise more attractive, we may be unable to compete effectively with other companies.
The medical technology industry is characterized by intense competition and rapid technological change, and we will face competition on the basis of product features, clinical outcomes, price, services and other factors. Competitors may include large medical device and other companies, some of which have significantly greater financial and marketing resources than we do, and firms that are more specialized than we are with respect to particular markets. Our competition may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing and other resources than ours or may be more successful in attracting potential customers, employees and strategic partners.
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Our competitive position will depend on multiple, complex factors, including our ability to achieve regulatory clearance and market acceptance for our products, develop new products, implement production and marketing plans, secure regulatory approvals for products under development and protect our intellectual property. In some instances, competitors may also offer, or may attempt to develop, alternative therapies that may be delivered without a medical device or a medical device superior to ours. The development of new or improved products, processes or technologies by other companies may render our products or proposed products obsolete or less competitive. The entry into the market of manufacturers located in low-cost manufacturing locations may also create pricing pressure, particularly in developing markets. Our future success depends, among other things, upon our ability to compete effectively against current technology, as well as to respond effectively to technological advances or changing regulatory requirements, and upon our ability to successfully implement our marketing strategies and execute our research and development plan.
We face competition from other medical device companies that focus on robotic exoskeleton devices.
We face competition from other companies that also focus on robotic exoskeleton devices such as Rewalk Robotics, Ekso Bionics, Parker Hannifin and Rex Bionics. Additionally, with respect to our products that we intend to market to patients with stroke-related conditions, Cyberdyne is developing an over-ground exoskeleton and Hocoma, AlterG, Aretech and Reha Technology are each currently selling treadmill-based walking gait therapies that will directly compete with such products. These companies have longer operating histories and may have greater name recognition and substantially greater financial, technical and marketing resources than us. Many of these companies also have FDA or other applicable governmental approval to market and sell their products, and more extensive customer bases, broader customer relationships and broader industry alliances than us, including relationships with many of our potential customers. Increased competition from any of these sources could result in our failure to achieve and maintain an adequate level of customers and market share to support the cost of our operations.
Our industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater governmental regulation in the future.
In recent years, the medical device industry has been subject to increased regulatory scrutiny, including by the FDA, Health Canada and numerous other federal, state, provincial and foreign governmental authorities. This has included increased regulation, enforcement, inspections, and governmental investigations of the medical device industry and disclosure of financial relationships with health care professionals. We anticipate that governments will continue to scrutinize our industry closely, and that additional regulation by governmental authorities, both foreign and domestic, may increase compliance costs, exposure to litigation and other adverse effects to our operations.
Unsuccessful clinical trials or procedures relating to products under development could have a material adverse effect on our prospects.
The regulatory approval process for new products and new indications for existing products requires extensive clinical trials and procedures, including early clinical experiences and regulatory studies. Unfavorable or inconsistent clinical data from current or future clinical trials or procedures conducted by us, our competitors, or third parties, or perceptions regarding this clinical data, could adversely affect our ability to obtain necessary approvals and the market's view of our future prospects. Such clinical trials and procedures are inherently uncertain and there can be no assurance that these trials or procedures will be completed in a timely or cost-effective manner or result in a commercially viable product. Failure to successfully complete these trials or procedures in a timely and cost-effective manner could have a material adverse effect on our prospects. Clinical trials or procedures may experience significant setbacks even after earlier trials have shown promising results. Further, preliminary results from clinical trials or procedures may be contradicted by subsequent clinical analysis. In addition, results from our clinical trials or procedures may not be supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be adversely affected. Clinical trials or procedures may be suspended or terminated by us, the FDA or other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks.
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Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products.
The industry we operate in, in particular, the medical device industry is characterized by extensive intellectual property litigation and, from time to time, we might be the subject of claims by third parties of potential infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert the time and effort of our management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in our payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category and could have a material adverse effect on its business, cash flows, financial condition or results of operations.
If we are unable to protect our patents or other proprietary rights, or if we infringe on the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged.
We own 5 U.S. and international patents pending and 13 U.S. provisional patents. We intend to continue to seek legal protection, primarily through patents, for our proprietary technology. Seeking patent protection is a lengthy and costly process, and there can be no assurance that patents will be issued from any pending applications, or that any claims allowed from existing or pending patents will be sufficiently broad or strong to protect our proprietary technology. There is also no guarantee that any patents we hold will not be challenged, invalidated or circumvented, or that the patent rights granted will provide competitive advantages to us. Our competitors have developed and may continue to develop and obtain patents for technologies that are similar or superior to our technologies. In addition, the laws of foreign jurisdictions in which we develop, manufacture or sell our products may not protect our intellectual property rights to the same extent, as do the laws of the United States.
Adverse outcomes in current or future legal disputes regarding patent and other intellectual property rights could result in the loss of our intellectual property rights, subject us to significant liabilities to third parties, require us to seek licenses from third parties on terms that may not be reasonable or favorable to us, prevent us from manufacturing, importing or selling our products, or compel us to redesign our products to avoid infringing third parties’ intellectual property. As a result, we may be required to incur substantial costs to prosecute, enforce or defend our intellectual property rights if they are challenged. Any of these circumstances could have a material adverse effect on our business, financial condition and resources or results of operations.
Our ability to develop intellectual property depends in large part on hiring retaining and motivating highly qualified design and engineering staff with the knowledge and technical competence to advance our technology and productivity goals. To protect our trade secrets and proprietary information, generally we have entered into confidentiality agreements with our employees, as well as with consultants and other parties. If these agreements prove inadequate or are breached, our remedies may not be sufficient to cover our losses.
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Dependence on patent and other proprietary rights and failing to protect such rights or to be successful in litigation related to such rights may result in our payment of significant monetary damages or impact offerings in our product portfolios.
Our long-term success largely depends on our ability to market technologically competitive products. If we fail to obtain or maintain adequate intellectual property protection, we may not be able to prevent third parties from using our proprietary technologies or may lose access to technologies critical to our products. Also, our currently pending or future patents applications may not result in issued patents, and issued patents are subject to claims concerning priority, scope and other issues.
Furthermore, we have not filed applications for all of our patents internationally and we may not be able to prevent third parties from using our proprietary technologies or may lose access to technologies critical to our products in other countries.
Risks Related to Our Securities and Other Risks
An active and visible public trading market for our Common Stock may not develop.
Upon the completion of the Acquisition Transaction, we will attempt to have our Common Stock listed on a securities exchange. We cannot predict whether an active market for our Common Stock will ever develop in the future. In the absence of an active trading market:
· | Investors may have difficulty buying and selling or obtaining market quotations; |
· | Market visibility for shares of our Common Stock may be limited; and |
· | A lack of visibility for shares of our Common Stock may have a depressive effect on the market price for shares of our Common Stock. |
Assuming we can find market makers to establish quotations for our Common Stock, we expect that our Common Stock will be quoted over-the-counter on a market operated by OTC Markets Group, Inc. These markets are relatively unorganized, inter-dealer, over-the-counter markets that provide significantly less liquidity than NASDAQ or the NYSE AMEX. No assurances can be given that our Common Stock, even if quoted on such markets, will ever actively trade on such markets, much less a senior market like NASDAQ or NYSE AMEX. In this event, there would be a highly illiquid market for our Common Stock and you may be unable to dispose of your Common Stock at desirable prices or at all. Moreover, there is a risk that our Common Stock could be delisted from its current tier of the OTC Market, in which case our stock may be quoted on markets even more illiquid.
The market price of our common stock may be volatile.
The market price for our Common Stock may be volatile and subject to wide fluctuations in response to factors including the following:
· | Actual or anticipated fluctuations in our quarterly or annual operating results; |
· | Changes in financial or operational estimates or projections; |
· | Conditions in markets generally; |
· | Changes in the economic performance or market valuations of companies similar to ours; |
· | Announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments; |
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· | Our intellectual property position; and |
· | General economic or political conditions in the United States or elsewhere. |
In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of shares of our Common Stock.
Because we were engaged in a reverse merger, we may not be able to attract the attention of major brokerage firms.
Additional risks may exist since we were engaged in a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of the Company since there is little incentive to brokerage firms to recommend the purchase of the common stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of the Company in the future.
Our Company may have undisclosed liabilities and any such liabilities could harm our revenues, business, prospects, financial condition and results of operations.
Before the Acquisition Transaction, Bionik Canada conducted due diligence on our Company customary and appropriate for a transaction similar to the Acquisition Transaction. However, the due diligence process may not reveal all material liabilities of our Company currently existing or which may be asserted in the future against our Company relating to its activities before the consummation of the Acquisition Transaction. In addition, the Investment Agreement contains representations with respect to the absence of any liabilities. However, there can be no assurance that our Company will not have any liabilities upon the closing of the Reverse Merger that we are unaware of or that we will be successful in enforcing any indemnification provisions or that such indemnification provisions will be adequate to reimburse us. Any such liabilities of our Company that survive the Acquisition Transaction could harm our revenues, business, prospects, financial condition and results of operations.
When the registration statements required to be filed under our existing registration rights obligations become effective, there will be a significant number of shares of common stock eligible for sale, which could depress the market price of such stock.
We are obligated as a condition to the Offering to register all of the shares of Common Stock issued in the Offering and the Warrant Shares underlying the Warrants. Furthermore, we are obligated to register for resale up to 50,000,000 shares of our Common Stock issuable upon the exchange of the Exchangeable Shares. Accordingly, a large number of shares of our common stock would become available for sale in the public market, which could harm the market price of the stock. Further, shares may be offered from time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect as well. In general, a non-affiliate who has held restricted securities for a period of six months may sell such securities into the market and an “affiliate” who has held restricted shares for a period of six months may, upon filing a notification with the SEC on Form 144, sell common stock into the market in an amount equal to one percent of the outstanding shares.
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Our majority shareholders will control our Company for the foreseeable future, including the outcome of matters requiring shareholder approval and such control may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause the Company’s stock price to decline.
Upon completion of the Acquisition Transaction and the First Closing, our officers and directors will collectively own Exchangeable Shares, which may be exchanged for approximately 34% of our outstanding shares of Common Stock. In addition, the Placement Agent with respect to the Offering (or its subagents) and their respective officers, directors, employees and affiliates may own shares of our Common Stock. As a result, such entities and individuals will have the ability, acting together, to control the election of our directors and the outcome of corporate actions requiring shareholder approval, such as: (i) a merger or a sale of our Company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other shareholders and be disadvantageous to our shareholders with interests different from those entities and individuals. Certain of these individuals also have significant control over our business, policies and affairs as officers or directors of our Company. These stockholders may also exert influence in delaying or preventing a change in control of the Company, even if such change in control would benefit the other stockholders of the Company. In addition, the significant concentration of stock ownership may adversely affect the market value of the Company’s common stock due to investors’ perception that conflicts of interest may exist or arise. Therefore, investors should not expect to have any material control over our Company.
We currently have only one independent director on our Board, which limits our ability to establish effective independent corporate governance procedures.
Our board of directors has significant control over us and we have not established committees comprised of independent directors. We have only four directors and, subsequent to the 14F Date, three of which hold executive officer positions and are not independent. Accordingly, they have significant control over all corporate issues. We do not have an audit, compensation, governance or nominating committee comprised of independent directors. Our Board as a whole currently performs these functions. Thus, there is a potential conflict in that a majority of our directors are also engaged in management and participate in decisions concerning management compensation and audit issues, among other issues, that may affect management performance.
Although we intend to add additional members to our Board of Directors as qualified candidates become available, until we have a board of directors that would include a majority of independent members, if ever, there will be limited or no independent oversight of our directors’ decisions and activities.
Material weaknesses may exist when the Company reports on the effectiveness of its internal control over financial reporting for purposes of its reporting requirements.
Following the completion of the Acquisition Transaction, the Company will be required to provide management’s report on the effectiveness of internal control over financial reporting in our Annual Reports on Form 10-K, as required by Section 404 of Sarbanes-Oxley. Material weaknesses may exist when the Company reports on the effectiveness of its internal control over financial reporting for purposes of its reporting requirements under the Exchange Act or Section 404 of Sarbanes-Oxley following the completion of the Acquisition Transaction. The existence of one or more material weaknesses would preclude a conclusion that the Company maintains effective internal control over financial reporting. Such a conclusion would be required to be disclosed in the Company’s future Annual Reports on Form 10-K and could harm the Company’s reputation and cause the market price of its common stock to drop.
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Anti-takeover provisions in the Company’s charter and bylaws may prevent or frustrate attempts by stockholders to change the board of directors or current management and could make a third-party acquisition of the Company difficult.
The Company’s certificate of incorporation and bylaws may contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could limit the price that investors might be willing to pay in the future for shares of the Company’s common stock.
If our common stock becomes subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.
The SEC has adopted regulations, which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock after the consummation of the Acquisition Transaction will potentially be less than $5.00 per share and therefore would be a “penny stock” according to SEC rules, unless we are listed on a national securities exchange. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:
· | Make a special written suitability determination for the purchaser; |
· | Receive the purchaser’s prior written agreement to the transaction; |
· | Provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and |
· | Obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed. |
If our Common Stock becomes subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell your securities.
The market for penny stocks has experienced numerous frauds and abuses, which could adversely impact investors in our stock.
OTC Market securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because reporting requirements are less stringent than those of the stock exchanges such as NASDAQ. Patterns of fraud and abuse include:
· | Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
· | Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
· | “Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; |
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· | Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and |
· | Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. |
Our management is aware of the abuses that have occurred historically in the penny stock market.
We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.
We have never paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future and any return on investment may be limited to the value of our common stock. We plan to retain any future earning to finance growth.
IN ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS CURRENT REPORT ON FORM 8-K, POTENTIAL INVESTORS SHOULD KEEP IN MIND THAT THERE MAY BE OTHER POSSIBLE RISKS THAT COULD BE IMPORTANT.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“ MD&A ”) covers information pertaining to the Company up to December 31, 2014 and should be read in conjunction with the audited financial statements and related notes of the Company as of and for the year ended March 31, 2014 and 2013, as well as the unaudited financial statements and related notes of the Company for the three and nine month periods ended December 31, 2014 and 2013. Except as otherwise noted, the financial information contained in this MD&A and in the financial statements has been prepared in accordance with accounting principles generally accepted in the United States of America. All amounts are expressed in U.S. dollars unless otherwise noted.
Forward Looking Statements
Certain information contained in this MD&A includes “forward-looking statements.” Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition and results of operations, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our existing and proposed business, including many assumptions regarding future events. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including those risks described in detail in the section of this Current Report on Form 8-K entitled “Risk Factors” as well as elsewhere in this Current Report.
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “will,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology.
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In light of these risks and uncertainties, and especially given the nature of our existing and proposed business, there can be no assurance that the forward-looking statements contained in this section and elsewhere in this Current Report on Form 8-K will in fact occur. Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Company Overview
We are a medical device company engaged in the business of designing, developing and commercializing physical rehabilitation technologies, prosthetics, and assisted robotic products. We strive to create products that improve an individual’s health, comfort, accessibility and quality of life through products that use advanced algorithms and sensing technologies to anticipate a user’s every move.
Critical Accounting Policies
The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and changes in these estimates are recorded when known. Significant estimates made by management include: investment tax credit receivable, accounts payable and accrued liabilities and the valuation allowance for deferred tax assets.
Foreign Currency Translation
The Company’s functional currency is the Canadian dollar and its reporting currency is the US dollar. The financial statements have been translated into U.S. dollars in accordance with Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 830. All assets and liabilities with Canadian dollars as functional currency are translated at the exchange rate on the balance sheet date, shareholders' equity and share issuances are translated at the historical rates and the statements of operations and cash flows are translated at the average exchange rate for the year. The resulting translation adjustments are reported under comprehensive income as a separate component of shareholders’ equity.
Equipment
Equipment is recorded at cost. Depreciation is computed using the declining balance method, over the estimated useful lives of these assets. The costs of improvements that extend the life of equipment are capitalized. All ordinary repair and maintenance costs are expensed as incurred.
Equipment is depreciated as follows:
Computer & Electronics | 50% per annum |
Furniture and Fixtures | 20% per annum |
Tools & Parts | 20% per annum |
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Revenue Recognition
The Company has yet to recognize any revenue. The Company intends to record revenue when it is realized, or realizable and earned. The Company will consider revenue to be realized, or realizable and earned, when the following revenue recognition requirements are met: persuasive evidence of an arrangement exists; the products or services have been accepted by the customer via delivery or acceptance; the sales price is fixed or determinable; and collectability is reasonably assured.
Government Grant and Input Tax Credit Recoveries
The Company receives certain grant and input tax credit recoveries from the Canadian government in compensation for eligible expenditures. These are presented as other income in the statement of operations and comprehensive loss as they generally relate to a number of the Company’s operating expenses, such as salaries and benefits, research and development and professional and consulting fees. The recoveries are recognized in the corresponding period when such expenses are incurred.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with original terms to maturity of 90 days or less at the date of purchase. For all periods presented cash and cash equivalents consisted entirely of cash on deposit with a national Bank in Canada.
Research and Development
The Company is engaged in research and development work. Research and development costs are charged as an operating expense of the Company as incurred.
Segment Reporting
ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for the way that public business enterprises report information about operating segments in the Company’s financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company does not have any reportable segments. All of its operations and assets are domiciled in Canada.
Income Taxes
Income taxes are computed in accordance with the provisions of ASC Topic 740, which requires, among other things, a liability approach to calculating deferred income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company is required to make certain estimates and judgments about the application of tax law, the expected resolution of uncertain tax positions and other matters. In the event that uncertain tax positions are resolved for amounts different than the Company’s estimates, or the related statutes of limitations expire without the assessment of additional income taxes, the Company will be required to adjust the amounts of related assets and liabilities in the period in which such events occur. Such adjustment may have a material impact on our income tax provision and results of operations.
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Fair Value of Financial Instruments
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.
The carrying amounts reported in the balance sheets for cash and cash equivalents, other receivables, subscription receivable, accounts payable and accrued liabilities, convertible secured promissory note and due to related parties approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Per ASC Topic 820 framework these are considered Level 2 inputs where inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
For the loans payable, the Company believes the carrying value of the loans payable approximates fair value, as the interest rates are market rates. All third party loans outstanding at March 31, 2014 have been repaid.
There were no assets or liabilities measured at fair value on a recurring basis as of December 31, 2014 or March 31, 2014 and 2013.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
The Company reviews the terms of convertible loans, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants to employees and non-employees in connection with consulting or other services. These options or warrants may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.
Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received an immediate charge to income is recognized in order to initially record the derivative instrument liabilities at their fair value.
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The discount from the face value of the convertible debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.
Basic and Diluted Loss Per Share
Basic loss per share has been determined by dividing the net loss available to stockholders for the applicable period by the basic and diluted weighted average number of shares outstanding, respectively. The diluted weighted average number of shares outstanding is calculated as if all dilutive options had been exercised or vested at the later of the beginning of the reporting period or date of grant, using the treasury stock method. The dilutive effect of convertible loans is reflected in diluted weighted average number of shares using the if-converted method, when there is a dilutive effect.
Loss per common share is computed by dividing the net loss by the weighted average number of shares of common shares outstanding during the period..
Intellectual Property
Five patent applications have been filed by the Company with the U.S. Patent and Trademark Office. No patents have been issued to date. The applications have been published.
Impairment of Long-Lived Assets
The Company follows the ASC Topic 360, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the assets’ carrying amounts may not be recoverable. In performing the review for recoverability, if future undiscounted cash flows (excluding interest charges) from the use and ultimate disposition of the assets are less than their carrying values, an impairment loss represented by the difference between its fair value and carrying value, is recognized. When properties are classified as held for sale they are recorded at the lower of the carrying amount or the expected sales price less costs to sell.
Recently Adopted Accounting Pronouncements
“Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements (“ASU 2014-10”) issued in June 2014, ASU 2014-10 eliminated the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 are effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 for its condensed interim financial statements and accordingly has removed the inception-to-date information.
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“Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”, issued in February 2013 requires entities to disclose additional information for items reclassified out of accumulated other comprehensive income (“ AOCI ”). For items reclassified out of AOCI and into net income in their entirety, entities are required to disclose the effect of the reclassification on each affected line item of net income. For AOCI reclassification items that are not reclassified in their entirety into net income, a cross-reference to other required U.S. GAAP disclosures is required. This information may be provided either in the notes or parenthetically on the face of the statement that reports net income, provided that all the information is disclosed in a single location. However, an entity is prohibited from providing this information parenthetically on the face of the statement that reports net income, if it has items that are not reclassified in their entirety into net income. The guidance is effective for annual and interim reporting periods beginning after December 15, 2012. The adoption of this standard did not have a material impact on the financial statements of the Company.
Recently Issued Accounting Pronouncements
“Income Taxes (ASC Topic - 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists” (“ASU 2013-11”) was issued during July 2013. The FASB issued guidance on how to present an unrecognized tax benefit. The guidance is effective for annual periods beginning after December 15, 2013. Adoption of the accounting pronouncement does not have a material effect on these accompanying condensed interim financial statements.
On May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is not permitted. The impact on the condensed interim financial statements of adopting ASU 2014-09 will be assessed by management.
On August 27, 2014, the FASB issued a new financial accounting standard on going concern, ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Sub-Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The standard provides guidance about management’s responsibility to evaluate whether there is a substantial doubt about the organization’s ability to continue as a going concern. The amendments in this Update apply to all companies. They become effective in the annual period ending after December 15, 2016, with early application permitted. The impact on the condensed interim financial statements of adopting ASU 2014-15 will be assessed by management.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed interim financial statements.
Results of Operations
From our inception on March 24, 2011 through to December 31, 2014, we have generated a deficit of $5,053,982. We expect to incur additional operating losses during the fiscal year ending December 31, 2015 and beyond, principally as a result of our continuing anticipated research and development costs and due to anticipated initial limited sales of the ARKE, our planned first product. When we approach final stages of the anticipated commercialization of the ARKE, we will have to devote and expect to continue to devote significant resources in the areas of capital expenditures and research and development costs.
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Fiscal Year Ended March 31, 2014 Compared To Fiscal Year Ended March 31, 2013
Operating Expenses
Total operating expenses for the fiscal year ended March 31, 2014 were $1,451,769 ($1,947,040 before offsetting other income) compared to $937,059 ($1,243,509 before offsetting other income) for the fiscal year ended March 31, 2013, as further described below.
For the fiscal year ended March 31, 2014, we incurred research and development expenses of $937,426, compared to research and development expenses of $637,661 for the fiscal year ended March 31, 2013. The $299,765 increase in research and development expenses relate primarily to hiring additional members of our research and development team as well as accelerating our research and development activities as we approach the commercialization of our products.
For the fiscal year ended March 31, 2014, we incurred professional and consulting fees of $574,875, compared to professional and consulting fees of $250,943 for the fiscal year ended March 31, 2013. The $323,932 increase in professional and consulting fees relate primarily to an increase in consulting and legal costs.
For the fiscal year ended March 31, 2014, we incurred general and administrative expenses of $302,353, compared to general and administrative expenses of $345,293 for the fiscal year ended March 31, 2013.
For the fiscal year ended March 31, 2014, we incurred interest expenses of $28,629 and imputed interest expenses of $101,985, compared to interest expenses of $0 and imputed interest expenses of $7,282 for the fiscal year ended March 31, 2013. The $28,629 increase in interest expenses relates primarily to interest on loans from non-related parties and the $94,703 increase in imputed interest expenses relates primarily to accretion of the full amount of discount of $98,046 as imputed interest on a secured, interest bearing loan that was repaid on November 15, 2013.
Other Expenses
For the year ended March 31, 2014, we incurred a foreign exchange gain of $18,284 compared to a gain of $23,013 for the year ended March 31, 2013. The gain resulted from the translation of currency in the financial statements from the Company’s functional currency of Canadian dollars to the reporting currency in U.S. dollars.
Other Income
For the fiscal year ended March 31, 2014, we have accrued for other income of $495,271 relating to our anticipated claim for SR&ED credits from the Government of Canada and Industrial Research Assistance Program grants, compared to other income of $306,450 for the fiscal year ended March 31, 2013 relating primarily to SR&ED credits received.
Comprehensive Loss
Comprehensive loss for the fiscal year ended March 31, 2014 amounted to $1,433,485, resulting in a loss per share of $0.12, compared to $914,046 for the fiscal year ended March 31, 2013, resulting in a loss per share of $0.09. The increase in the comprehensive loss from the fiscal year ended March 31, 2013 to the fiscal year ended March 31, 2014 is primarily due to larger research staff.
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Three and Nine-month period ended December 31, 2014 and 2013
Total operating expenses for the nine-month period ended December 31, 2014 were $2,464,747 compared to $1,428,555 for the nine-month period ended December 31, 2013. Total operating expenses for the quarter ended December 31, 2014 were $677,783 compared to $472,181 for the quarter ended December 31, 2013, as further described below.
For the nine-month period ended December 31, 2014, we incurred research and development expenses of $1,178,837 compared to research and development expenses of $747,502 for the nine-month period ended December 31, 2013. For the quarter ended December 31, 2014 research and development expenses were $372,362 compared to research and development costs of $249,129 for the three-month period ended December 31 2013. The increase in research and development expenses in 2014 over 2013 relate primarily to hiring additional members of our research and development team as we accelerate our research and development activities to commercialize our first product.
For the nine months ended December 31, 2014, we incurred professional and consulting fees of $601,491 compared to the $407,941 for the nine months ended December 31, 2013. For the quarter ended December 31, 2014, we incurred $120,846 of professional and consulting fees compared to $146,506 for the quarter ended December 31, 2013. The increase in professional and consulting fees in the nine months relate primarily to an increase in consulting and legal costs, including to prepare Bionik Canada for a going public transaction.
For the nine months ended December 31, 2014, we incurred general and administrative expenses of $549,947, compared to general and administrative expenses of $205,248 for the nine months ended December 31 2013. For the quarter ended December 31, 2014 we incurred $173,959 of general and administrative expenses compared to $71,402 for the quarter ended December 31, 2013. The increase in general and administrative expenses relate to higher rent due to relocation needed to accommodate larger staff and an increase in travel and administrative costs as the company grows. In 2013, the Company was located in a University incubator where rent was significantly below market value.
Other Expenses
For the nine months ended December 31, 2014, we incurred interest expenses of $6,212 compared to interest expenses of $10,868. Imputed interest expense was $27,677 for the nine month period ended December 31, 2014 compared to the $55,647 for the nine months ended December 31, 2013 related to loans that have now been repaid. For the quarter ended December 31, 2014, we incurred interest expense of $868 and for the quarter ended December 31, 2013 interest expense was $4,699. The imputed interest expenses relates to accretion of the full amount of discount as imputed interest on a secured, interest bearing loan that was repaid on May, 2014 and November, 2013.
For the nine months ended December 31, 2014, we recorded a foreign exchange loss of $24,390 compared to $553 for the nine months ended December 31, 2013. For the quarter ended December 31, 2014, we incurred a foreign exchange loss of $10,635 compared to a foreign exchange loss of $84 recorded in the quarter ended December 31, 2013. The increase in foreign exchange loss resulted from the translation of currency in the financial statements from the Company’s functional currency of Canadian dollars to the reporting currency in U.S. dollars.
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For the nine months ended December 31, 2014, we have other income of $46,026 relating to additional revenue from our claim for SR&ED credits from the Government of Canada and Industrial Research Assistance Program grants, which were received in November 2014 compared to no other income for the nine-month period ended December 31, 2013.
Comprehensive Loss
For the nine months ended December 31, 2014, the comprehensive loss amounted to $2,489,137, resulting in a loss per share of $0.16, compared to a comprehensive loss of $1,429,108 for the nine months ended December 31, 2013, resulting in a loss per share of $0.12. For the quarter ended December 31, 2014, we recorded a comprehensive loss of $688,418 and a loss per share of $0.04 compared to a comprehensive loss of $472,265 and loss per share of $0.04 for the quarter ended December 31, 2013.
The increase in the comprehensive loss from the fiscal period ended March 31, 2013 to the fiscal period ended December 31, 2014 was a result of the increased expenses described above.
Liquidity and Capital Resources
We are a development stage company and have not yet realized any revenues from our planned operations. We have a working capital deficit of $128,361 at December 31, 2014 ($781,378 at March 31, 2014) and have incurred a deficit of $5,053,982 from inception (March 24, 2011) to December 31, 2014 ($2,589,235 to March 31, 2014). We have funded operations through the issuance of capital stock, loans, grants and investment tax credits received from the Government of Canada. During the year ended March 31, 2013, we raised net cash of $1,393,551 by issuance of common shares. During the fiscal year ended March 31, 2014, we raised net cash of $147,837 through the issuance of common shares.
In April 2014, we raised additional funds through a private placement of $2,616,062 and issued 3,752,504 common shares, including debt settlements. In addition, we raised $228,875 from the exercise of an option to purchase shares and issued 416,667 common shares.
In addition, we have received a MITACS grant to fund 3 post doctorial fellows at a net cost to us of CND$72,000 per annum, and grants to fund clinical research and trials. We expect to be able to continue to access government funding in the future.
As we proceed with the ARKE product development we have devoted and expect to continue to devote significant resources in the areas of capital expenditures and research and development costs and operations, marketing and sales expenditures.
We may require additional funds to further develop our business plan, including the anticipated commercialization of the ARKE. Based on our current operating plans, we will require additional resources to introduce the ARKE into the home market. Since it is impossible to predict with certainty the timing and amount of funds required to launch the ARKE in any other markets or any of our other proposed products, we anticipate that we will need to raise additional funds through equity or debt offerings or otherwise in order to meet our expected future liquidity requirements. Any such financing that we undertake will likely be dilutive to existing stockholders.
In addition, we expect to also need additional funds to respond to business opportunities and challenges, including our ongoing operating expenses, protecting our intellectual property, satisfying debt payment obligations, developing new lines of business and enhancing our operating infrastructure. While we may need to seek additional funding for such purposes, we may not be able to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock. We may also seek additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all of its product lines.
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At December 31, 2014, we had total assets of $413,971, consisting of cash and cash equivalents of $209,933, prepaid and other receivables of $81,130 and due from related parties of $44,986 and Equipment of $77,922.
As of the Acquisition Transaction, we expect that we will have sufficient funds to continue operations for at least the next 12 months.
Loans from Non-Related Parties
During fiscal 2014, the Company received loans from non-related parties of $772,146 due to loans payable to various private lenders. All non-related loans were repaid or converted into common shares before December 31, 2014.
Net Cash Used in Operating Activities
For the fiscal year ended March 31, 2014, we used cash in operating activities of $1,346,090 compared to $1,077,901 for the fiscal year ended March 31, 2013. The increase of $268,189 is mainly attributable to increased business operations to commercialize the Company’s products.
For the nine months ended December 31 2014, we used cash in operating activities of $1,639,478 compared to $791,130 for the nine months ended December 31, 2013. The increase is mainly attributable to the increase in the net loss in 2014 over 2013.
Net Cash Provided by Investing Activities
For the fiscal year ended March 31, 2014, net cash of $0 and for the fiscal year ended March 31, 2013, net cash of $8,695, respectively, was used for the acquisition of equipment.
For the nine months ended December 30 2014, net cash provided by investing activities was $109,316 compared to $4,557 for the nine months ended December 31, 2013. The increase of is mainly attributable to the addition of computers, software and machinery and tools to support research and development activities.
Net Cash Used in Financing Activities
Net cash provided by financing activities was $1,142,984 for the fiscal year ended March 31, 2014 compared to $1,275,605 for the fiscal year ended March 31, 2013. The change in proceeds were attributable to the decreased proceeds from issuance of shares by $1,245,714, an increase in proceeds from loans from $0 to $810,553, and an increase in proceeds from amounts due to related parties by $302,540.
For the nine months ended December 31, 2014, net cash provided by financing activities was $2,000,287 compared to $662,477 for the nine months ended December 31, 2013. The increase is mainly attributable to the capital raise in the spring of 2014 less debt repayment being larger than then the capital raise and loan proceeds provided in the nine months ended December 31, 2013.
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Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership of our Common Stock as of February 26, 2015 held by (i) each person known to us to be the beneficial owner of more than five percent (5%) of our Common Stock; (ii) each director and director nominee; (iii) each executive officer; and (iv) all directors, director nominees and executive officers as a group. The following table assumes that our two existing directors as of the Acquisition Transaction resigned as of the 14F Date.
Beneficial ownership is determined in accordance with the rules of the SEC, and generally includes voting power and/or investment power with respect to the securities held. Shares of Common Stock subject to options and warrants currently exercisable or which may become exercisable within 60 days of February 26, 2015 are deemed outstanding and beneficially owned by the person holding such options or warrants for purposes of computing the number of shares and percentage beneficially owned by such person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, the persons or entities named have sole voting and investment power with respect to all shares of our Common Stock shown as beneficially owned by them.
The percentages below assume the exchange by all of the holders of Exchangeable Shares of Bionik Canada for an equal number of shares of our Common Stock in accordance with the terms of the Exchangeable Shares. Unless otherwise indicated, the address of each beneficial holder of our Common Stock is our corporate address.
Name of Beneficial Owner |
Shares of Common Stock
Beneficially Owned |
% of Shares of
Common Stock Beneficially Owned |
||||||
Peter Bloch (1) | 6,219,520 | 9.76 | % | |||||
Michal Prywata (1)(2) | 7,707,112 | 12.09 | % | |||||
Thiago Caires (1)(3) | 7,707,112 | 12.09 | % | |||||
Olivier Archambaud (1) | 6,581,630 | 10.33 | % | |||||
Leslie N. Markow (1)(4) | 47,187 | * | ||||||
Robert Hariri (5) | 145,971 | * | ||||||
Austin Kibler (6) | 50,000 | * | ||||||
All directors, director appointees and executive officers as a group (6 persons) | 21,876,902 | 34.29 | % |
__________
* Less than 1%
(1) | Such shares will initially be held as Exchangeable Shares for tax purposes. The Exchangeable Shares have the following attributes, among others: |
· | Be, as nearly as practicable, the economic equivalent of the Common Stock as of the consummation of the Acquisition Transaction; |
· | Have dividend entitlements and other attributes corresponding to the Common Stock; |
· | Be exchangeable, at each holder’s option, for Common Stock; and |
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· | Upon the direction of our board of directors, be exchanged for Common Stock on the 10 year anniversary of the First Closing, subject to applicable law, unless exchanged earlier upon the occurrence of certain events. |
The holders of the Exchangeable Shares, through The Special Voting Preferred Stock, will have voting rights and other attributes corresponding to the Common Stock.
(2) | Does not include approximately 160,000 Exchangeable Shares issued or expected to be issued to Mr. Prywata effective as of the closing of the Acquisition Transaction. See “Certain Relationships and Related Transactions.” |
(3) | Does not include approximately 160,000 Exchangeable Shares issued or expected to be issued to Mr. Caires effective as of the closing of the Acquisition Transaction. See “Certain Relationships and Related Transactions.” |
(4) | Represents options to acquire 47,187 shares of our common stock. |
(5) | Includes options to acquire 20,971 shares of our common stock |
(6) | These shares are owned by AAK Ventures, LLC of which Mr. Kibler has sole voting and investment power. |
DIRECTORS AND EXECUTIVE OFFICERS
Effective as of the closing of the Acquisition Transaction, Austin Kibler resigned as Chief Executive Officer and was appointed Senior Vice President and Peter Bloch and Michal Prywata were appointed as directors of the Company to fill the vacancies created by an increase of our Board of Directors from two to four members. Effective as of the expiration of the ten day period following the mailing of the information statement required by Rule 14f-1 under the Exchange Act, expected to be on or about March 4, 2015, Thiago Caires and Robert Hariri were appointed to our Board of Directors and Messrs. Kibler and Brian Ray resigned as directors. In addition, our Board of Directors appointed Peter Bloch to serve as our Chief Executive Officer, and Chairman of the Board of Directors, Michael Prywata to serve as our Chief Operating Officer, Thiago Caires to serve as our Chief Technology Officer and Leslie N. Markow to serve as our Chief Financial Officer, effective immediately upon the closing of the Acquisition Transaction. It is expected that Mr. Kibler will remain as a Senior Vice President at the Company only until the filing of the Company’s next Annual Report on Form 10-K with respect to the fiscal year ended December 31, 2014 at which time he will resign from this position with the Company.
Name | Age | Position | ||
Peter Bloch | 55 |
Chief Executive Officer and Chairman of the Board of Directors |
||
Michal Prywata | 23 | Chief Operating Officer and Director | ||
Thiago Caires | 26 | Chief Technology Officer and Director | ||
Leslie N. Markow | 54 | Chief Financial Officer | ||
Robert Hariri | 55 | Director | ||
Austin Kibler | 30 | Senior Vice President |
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Peter Bloch: Chief Executive Officer and Chairman of the Board of Directors. Mr. Bloch has served as the Company’s Chief Executive Officer since April 2013 and as Chairman of the Board of Directors since February 2014. From April 2012 to April 2013, Mr. Bloch served as our Chief Financial Officer. Mr. Bloch is a CPA, CA with a track record of building both public and private technology companies, mainly in the life sciences industry. Mr. Bloch currently serves as a Director of HB Agri Products Inc. since February 2014. From January 2008 to February 2009, Mr. Bloch served as the Chief Financial Officer of Just Energy, a public electricity and gas company. Since December 2011, Mr. Bloch has also served as a Director for Walmer Capital Corp. His past 25 years of executive management experience includes serving as Chief Financial Officer and joint interim CEO of Sanofi Canada Inc., the Canadian affiliate of Sanofi, a global healthcare leader; Chief Financial Officer of Intellivax Inc., a biotechnology company which was sold to GlaxoSmithKline for $1.75 billion; founder of Tribute Pharmaceuticals, a specialty pharmaceutical company; and Chief Financial Officer of Gennum Corporation, a public semiconductor company focused on the TV and medical device market. These companies have ranged in size from start-ups to companies with revenues of over $2 billion. In these roles, Mr. Bloch has secured significant funding for both private and public companies, gained experience with initial public offerings and led a number of acquisitions and partnership transactions.
We believe Mr. Bloch is qualified to serve as Chairman of the Board of Directors due to his public service experience, experience in the biotechnology and pharmaceuticals industries and his business contacts.
Michal Prywata: Chief Operating Officer and Director. Mr. Prywata is the co-founder of Bionik Canada and has served as our Chief Operating Officer since April 2013 and as a Director since March 2011. Mr. Prywata previously served as our Chief Executive Officer from March 2011 to April 2013. Mr. Prywata studied biomedical engineering at Ryerson University with a focus on electronics and software development for medical products. He has a track record of winning technology showcases and inventing technologies that address significant unmet needs and untapped markets. He has spent the past 5 years with Bionik Canada, managing technological advancements, managing day-to-day operations, and developing concepts into products. In addition, Mr. Prywata, together with Mr. Caires, was responsible for raising and securing initial seed capital – subsequent capital raises were done together with Mr. Bloch. Mr. Prywata is the co-inventor of all current intellectual property of the Company.
Mr. Prywata serves as a member of the Board of Directors due to his being a founder of the Company and his current executive position with the Company. We also believe that Mr. Prywata is qualified due to his experience in the medical device industry.
Thiago Caires: Chief Technology Officer and Director Elect . Mr. Caires is the co-founder of Bionik Canada and has served as its chief technical officer since May 2013. He was its President from March 2011 to April 2013, at which time he was appointed Chief Technology Officer. He started his engineering training in Mechatronics at PUC University, Rio de Janeiro, Brazil. Mr. Caires moved to Canada to attend Centennial College where he studied automation and robotics with a focus on robotics and CIM (computer integrated manufacturing). After Centennial College he attended Ryerson University for biomedical engineering where his major focus was on prosthetics. He has a track record of winning technology showcases and inventing technologies that address significant unmet needs and untapped markets. While at Bionik Canada, Mr. Caires was responsible for managing technological advancements and creating the clinical trials strategy for the approvals of its first product. In addition, Mr. Caires, together with Mr. Prywata, was responsible for raising and securing initial seed capital - subsequent capital raises were done together with Mr. Bloch. Mr. Caires is the co-inventor of all of current intellectual property of the Company.
Mr. Caires serves as a member-elect of the Board of Directors due to his being a founder of the Company and his current executive position with the Company. We also believe that Mr. Caires is qualified due to his experience in the medical device industry.
Leslie N. Markow: Chief Financial Officer . Ms. Markow has served as the Company’s part-time Chief Financial Officer since September 2014. She is a CPA CA in Canada, a US CPA (Illinois) and Chartered Director. From 2002 to 2004 and since 2010, Ms. Markow has provided outsourced CFO, controller and financial services on a part-time basis to numerous public and private companies. In addition, in 2012-2013, Ms. Markow was the Chief Financial Officer of Stewardship Ontario, a supply chain operator of Blue Box and Orange Drop Programs for industry in the Province of Ontario. In 2010-2012, Ms. Markow was the Chief Financial Officer of Blue Ocean NutraSciences Inc. (formerly Solutions4CO2 Inc.), a public CO2 solution industrial company. From 2004 to 2010, Ms. Markow was the Director of Client Service for Resources Global Professionals, a Nasdaq-listed global consulting firm. From 1991-2002, she held various positions at SunOpta Inc. a TSX-Nasdaq listed company, which at that time was an industrial technology manufacturer, including as Chief Administrative Officer, Vice-President Regulatory Reporting & Compliance, Chief Financial Officer and Vice-President–Finance and Controller. Ms. Markow started her career in 1983 with predecessors of PricewaterhouseCoopers, ultimately holding a position as Senior Audit Manager in 1991 when she moved to SunOpta Inc. Ms. Markow is a member of the Board of Directors and Chairperson of the Audit Committee of Jemtec Inc., a Canadian public company that sells monitoring hardware and software. She also is a member of Financial Executives Canada, where she is a past National Board Director, Toronto Board Director, Toronto Chapter President and the winner of the Toronto Leadership Award, and is a faculty member of The Directors College, which is a joint venture of McMaster University and The Conference Board of Canada.
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Dr. Robert Hariri: Director Elect. Dr. Robert (Bob) Hariri is a surgeon, biomedical scientist and highly successful serial entrepreneur in two technology sectors: biomedicine and aerospace. The Chairman, Founder, Chief Scientific Officer, and former Chief Executive Officer of Celgene Cellular Therapeutics, one of the world’s largest human cellular therapeutics companies, Dr. Hariri has pioneered the use of stem cells to treat a range of life threatening diseases and has made transformative contributions in the field of tissue engineering.
His activities and experience includes academic neurosurgeon at Cornell, businessman, military surgeon and aviator and aerospace innovator. Dr. Hariri has over 90 issued and pending patents, has authored over 100 published chapters, articles and abstracts and is most recognized for his discovery of pluripotent stem cells from the placenta and as a member of the team which discovered the physiological activities of TNF (tumor necrosis factor).
Dr. Hariri was recipient of the Thomas Alva Edison Award in 2007 and 2011, The Fred J. Epstein Lifetime Achievement Award and has received numerous other honours for his many contributions to biomedicine and aviation.
Dr. Hariri also serves on numerous Boards of Directors including Myos Corporation and Provista Diagnostics. Dr. Hariri is an Adjunct Associate Professor of Pathology at the Mount Sinai School of Medicine and a member of the Board of Visitors of the Columbia University School of Engineering & Applied Sciences and the Science & Technology Council of the College of Physicians and Surgeons, and is a member of the scientific advisory board for the Archon X PRIZE for Genomics, which is awarded by the X PRIZE Foundation. Dr. Hariri is also a Trustee of the Liberty Science Center and has been appointed Commissioner of Cancer Research by New Jersey Governor Chris Christie. Dr. Hariri is also a member of the Board of Trustees of the J. Craig Venter Institute.
A jet-rated commercial pilot with thousands of hours of flight time in over 60 different military and civilian aircraft, Dr. Hariri has also produced several feature films as well as documentaries on global societal issues.
We believe Dr. Hariri is qualified to serve as a Director due to his public service experience, experience in the biotechnology and pharmaceuticals industries and his business contacts.
Austin Kibler: Senior Vice President. Mr. Kibler previously served as our Chief Executive officer and a member of the Board from March 2013. Upon the effectiveness of the Acquisition Transaction, Mr. Kibler resigned as Chief Executive Officer and was appointed to serve as Senior Vice President of the Company. Furthermore, he will resign as a director 10 days after the mailing of the Schedule 14-F. Mr. Kibler currently serves as the founder and sole member of Crown A Excavating LLC, a Pennsylvania limited liability company.
There are no family relationships among any of our current or proposed officers and directors.
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EXECUTIVE COMPENSATION
The following table sets forth information regarding each element of compensation that was paid or awarded to the named executive officers of Bionik Canada for the fiscal years ended March 31, 2014 and March 31, 2013.
Name and
Principal Position |
Year |
Salary
($) |
Bonus
($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity
Incentive Plan Compensation ($) |
All Other
($) |
Total
($) |
||||||||||||||||||||||||
Peter Bloch(1) | ||||||||||||||||||||||||||||||||
Chief Executive Officer | 2014 | - | - | - | - | - | 169,996 | 169.996 | ||||||||||||||||||||||||
2013 | - | - | - | - | - | 73,424 | 73,424 | |||||||||||||||||||||||||
Michal Prywata | ||||||||||||||||||||||||||||||||
Chief Operating Officer | 2014 | 157,650 | - | - | - | - | - | 157,650 | ||||||||||||||||||||||||
2013 | 51,362 | - | - | - | - | - | 51,362 | |||||||||||||||||||||||||
Thiago Caires | ||||||||||||||||||||||||||||||||
Chief Technology Officer | 2014 | 157,650 | - | - | - | - | - | 157,650 | ||||||||||||||||||||||||
2013 | 51,362 | - | - | - | - | - | 51,362 | |||||||||||||||||||||||||
Leslie N. Markow (2) | ||||||||||||||||||||||||||||||||
Chief Financial Officer | 2014 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
2013 | - | - | - | - | - | - | - |
__________
(1) Mr. Bloch was a consultant to Bionik Canada until August 2014. His consulting income is reflected under All Other Compensation in the table.
(2) Ms. Markow was hired by Bionik Canada on September 3, 2014.
Mr. Kibler has not received any compensation for his services prior to the First Closing and the Acquisition Transaction.
Outstanding Equity Awards at Fiscal Year-End
Subsequent to March 31, 2014, Bionik Canada granted options to purchase an aggregate of 990,914 shares of common stock (which are adjusted to account for the Acquisition Transaction and through Exchangeable Shares) to each of Mr. Bloch, Mr. Caires and Mr. Prywata, which options vest on May 27, 2015 and have an exercise price per share of $0.23. On February 17, 2015, Dr. Hariri was granted post acquisition adjusted 62,915 options exercisable at $0.23 and Leslie N. Markow was granted post acquisition adjusted 141,559 options exercisable at $0.23, of which one-third vested immediately and the remaining two-thirds vest over the next two years on the anniversary of the grant.
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Employment Agreements
Peter Bloch
Bionik Canada entered into an employment agreement with Peter Bloch on July 7, 2014, to serve as our Chief Executive Officer, on an indefinite basis subject to the termination provisions described in the agreement. Pursuant to the terms of the agreement, Mr. Bloch receives an annual base salary of CDN$200,000.00, payable semi-monthly in arrears. The salary will increase to US$275,000 per annum upon the closing of the Acquisition Transaction. The salary will be reviewed on an annual basis to determine potential increases based on Mr. Bloch’s performance and that of the Company. Mr. Bloch would also be entitled to receive a target annual cash bonus of 50% of base salary. Mr. Bloch would also be entitled to the vesting of a grant of 990,914 options at $0.23 on May 27, 2015 and he will be eligible for grants of additional options in an amount to be determined at the price of the Acquisition Transaction, upon the closing of the Acquisition Transaction, to vest over three years in equal annual installments.
In the event Mr. Bloch’s employment is terminated as a result of death, Mr. Bloch’s estate would be entitled to receive the annual salary and a portion of the annual bonus earned up to the date of death. In addition, all vested options and warrants as of the date of death would continue in full force and effect, subject to the terms and conditions of the plan.
In the event Mr. Bloch’s employment is terminated as a result of disability, Mr. Bloch would be entitled to receive the annual salary, benefits, a portion of the annual bonus earned up to the date of disability and expenses incurred up to the date of termination.
In the event Mr. Bloch’s employment is terminated by us for cause, Mr. Bloch would be entitled to receive his annual salary, benefits and expenses incurred up to the date of termination.
In the event Mr. Bloch’s employment is terminated by us without cause, he would be entitled to receive 12 months’ pay (salary and bonus) and full benefits, plus one month for each year of service. Furthermore, Mr. Bloch will have six months after termination to exercise all vested options in accordance with the terms of the plan. All unvested options would immediately forfeit upon such notice of termination.
The agreement contains customary non-competition and non-solicitation provisions pursuant to which Mr. Bloch agrees not to compete and solicit with the Company. Mr. Bloch also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Michal Prywata
Bionik Canada entered into an employment agreement with Michal Prywata on July 7, 2014, to serve as our Chief Operating Officer, on an indefinite basis subject to the termination provisions described in the agreement. Pursuant to the terms of the agreement, Mr. Prywata receives an annual base salary of CDN$180,000, payable semi-monthly in arrears. The salary will increase to US$210,000 per annum upon the closing of the Acquisition Transaction. The salary will be reviewed on an annual basis to determine potential increases based on Mr. Prywata’s performance and that of the Company. Mr. Prywata would also be entitled to receive a target annual cash bonus of 30% of base salary, and the vesting of a grant of 990,914 options at $0.23 on May 27, 2015 and he will be eligible for grants of additional options in an amount to be determined at the price of the Acquisition Transaction, upon the closing of the Acquisition Transaction, to vest over three years in equal annual installments. Mr. Prywata is further entitled to a cash and option bonus based on a per patent creation basis, as determined by the Board of Directors.
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In the event Mr. Prywata’s employment is terminated as a result of death, Mr. Prywata’s estate would be entitled to receive the annual salary and a portion of the annual bonus earned up to the date of death.. In addition, all vested options and warrants as of the date of death would continue in full force and effect, subject to the terms and conditions of the plan.
In the event Mr. Prywata’s employment is terminated as a result of disability, Mr. Prywata would be entitled to receive the annual salary, benefits, a portion of the annual bonus earned up to the date of disability and expenses incurred up to the date of termination.
In the event Mr. Prywata’s employment is terminated by us for cause, Mr. Prywata would be entitled to receive his annual salary, benefits and expenses incurred up to the date of termination.
In the event Mr. Prywata’s employment is terminated by us without cause, he would be entitled to receive 12 months’ pay and full benefits, plus one month for each year of service. Furthermore, Mr. Prywata will have six months after termination to exercise all vested options in accordance with the terms of the plan. All unvested options would immediately forfeit upon such notice of termination.
The agreement contains customary non-competition and non-solicitation provisions pursuant to which Mr. Prywata agrees not to compete and solicit with the Company. Mr. Prywata also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Thiago Caires
Bionik Canada entered into an employment agreement with Thiago Caires on July 7, 2014, to serve as our Chief Technology Officer, on an indefinite basis subject to the termination provisions described in the agreement. Pursuant to the terms of the agreement, Mr. Caires receives an annual base salary of CDN$180,000, payable semi-monthly in arrears. The salary will increase to US$210,000 per month upon the closing of the Acquisition Transaction. The salary will be reviewed on an annual basis to determine potential increases based on Mr. Caires’s performance and that of the Company. Mr. Caires would also be entitled to receive a target annual cash bonus of 30% of base salary, and the vesting of a grant of 990,914 options at $0.23 at May 27, 2015 and he will be eligible for grants of additional options in an amount to be determined at the price of the Acquisition Transaction, upon the closing of the Acquisition Transaction, to vest over three years in equal annual installments. Mr. Caires is further entitled to a cash and option bonus based on a per patent creation basis, as determined by the Board of Directors.
In the event Mr. Caires’s employment is terminated as a result of death, Mr. Caires’s estate would be entitled to receive the annual salary and a portion of the annual bonus earned up to the date of death.. In addition, all vested options and warrants as of the date of death would continue in full force and effect, subject to the terms and conditions of the plan.
In the event Mr. Caires’s employment is terminated as a result of disability, Mr. Caires would be entitled to receive the annual salary, benefits, a portion of the annual bonus earned up to the date of disability and expenses incurred up to the date of termination.
In the event Mr. Caires’s employment is terminated by us for cause, Mr. Caires would be entitled to receive his annual salary, benefits and expenses incurred up to the date of termination.
In the event Mr. Caires’s employment is terminated by us without cause, he would be entitled to receive 12 months’ pay and full benefits, plus one month for each year of service. Furthermore, Mr. Caires will have six months after termination to exercise all vested options in accordance with the terms of the plan. All unvested options would immediately forfeit upon such notice of termination.
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The agreement contains customary non-competition and non-solicitation provisions pursuant to which Mr. Caires agrees not to compete and solicit with the Company. Mr. Caires also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Leslie N. Markow
Bionik Canada entered into an employment agreement with Leslie Markow on September 3, 2014 to serve as our Chief Financial Officer, on a part-time basis for on an indefinite basis subject to the termination provisions described in the agreement. The Company plans to renegotiate certain terms of the agreement with Ms. Markow Pursuant to the terms of the agreement, Ms. Markow receives an annual base salary of CDN$96,000 payable semi-monthly in arrears. The salary will be reviewed on an annual basis to determine potential increases based on Ms. Markow’s performance and that of the Company. Ms. Markow would also be entitled to receive a target annual cash bonus of 30% of base salary, and a grant of options in an amount to be determined at the price of the Acquisition Transaction, upon the closing of the Acquisition Transaction, to vest over three years in equal annual installments.
In the event Ms. Markow’s employment is terminated as a result of death, Ms. Markow’s estate would be entitled to receive the annual salary and a portion of the annual bonus earned up to the date of death. In addition, all vested options and warrants as of the date of death would continue in full force and effect, subject to the terms and conditions of the plan.
In the event Ms. Markow’ employment is terminated as a result of disability, Ms. Markow would be entitled to receive the annual salary, benefits, a portion of the annual bonus earned up to the date of disability and expenses incurred up to the date of termination.
In the event Ms. Markow’s employment is terminated by us for cause, Ms. Markow would be entitled to receive her annual salary, benefits and expenses incurred up to the date of termination.
In the event Ms. Markow’s employment is terminated by us without cause, she would be entitled to receive no more than 9 months’ pay and full benefits. Furthermore Ms. Markow will have six months after termination to exercise all vested options in accordance with the terms of the plan. All unvested options would immediately forfeit upon such notice of termination.
The agreement contains customary non-competition and non-solicitation provisions pursuant to which Ms. Markow agrees not to compete and solicit with the Company. Ms. Markow also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Corporate Governance
The business and affairs of the Company are managed under the direction of our Board of Directors, which following the expiration of the ten day period following the mailing of the information statement required by Rule 14f-1 under the Exchange Act, will be comprised of Peter Bloch, Michal Prywata, Thiago Caires and Robert Hariri.
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Term of Office
Directors are appointed to hold office until the next annual general meeting of stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board and hold office until removed by our Board.
All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. Our bylaws provide that officers are appointed annually by our Board and each executive officer serves at the discretion of our Board.
Director Compensation
Our directors are reimbursed for expenses incurred by them in connection with attending board meetings, are eligible for stock option grants but they do not receive any other compensation for serving on the board at this time. We plan to compensate independent directors in the future.
Director Independence
We use the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship, which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
· | The director is, or at any time during the past three years was, an employee of the company; |
· | The director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service); |
· | A family member of the director is, or at any time during the past three years was, an executive officer of the company; |
· | The director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); |
· | The director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or |
· | The director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit. |
Under such definitions, Dr. Hariri is considered an independent director.
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Board Committees
Our board of directors does not currently have any committees, such as an audit committee or a compensation committee. However, the board of directors may establish such committees in the future. However, our board of directors will establish an audit committee and a compensation committee (and any other committees that are required) if the Company seeks to be listed on a national securities exchange.
Code of Business Conduct and Ethics Policy
We expect to adopt a Code of Business Conduct and Ethics that applies to, among other persons, our principal executive officers, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Business Conduct and Ethics when adopted will be available on our website www.bioniklabs.com .
Equity Compensation Plan Information
Shown below is information as of March 31, 2014 with respect to the common shares of Bionik Canada that may be issued under its equity compensation plans.
Plan category |
(a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
(b)
Weighted-average exercise price of outstanding options, warrants and rights |
(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||
Equity compensation plans approved by security holders | - | - | 931,333 | |||||||||
Equity compensation plans not approved by security holders | - | - | - | |||||||||
Total | - | - | 931,333 |
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS
AND CERTAIN CONTROL PERSONS
As of February 26, 2015, as part of the Acquisition Transaction and as contemplated by the SPA, the Company spun off Strategic Dental Alliance, Inc., a Colorado corporation, a wholly-owned subsidiary of the Company and, until the Acquisition Transaction, the holder of certain of the Company’s assets and liabilities, to Messrs. Brian Ray and John Lundgreen, former directors or officers of our Company (subject to the 14F Date).
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As of February 26, 2015, as part of the Acquisition Transaction and the resignation of Mr. Kibler as our Chief Executive Officer, we cancelled an aggregate of 90,207,241 shares of the Company’s common stock beneficially owned by AAK Ventures, LLC, which is controlled by Mr. Kibler.
In 2014, Olivier Archambaud, a former director of Bionik Canada, received payments and fees of CDN$233,000 for services rendered to Bionik with respect to a capital raise transaction, which he subsequently converted into 247,778 common shares of Bionik Canada at $0.81 ($0.90 CAD) per share. Subsequent to March 31, 2014, one advance amounting to $85,947 was settled by the issuance of 105,556 pre-transaction common shares to Mr. Archambaud.
As of December 31, 2014, we had aggregate advances repayable by Messrs. Prywata and Caires of $44,986 which bear interest at a prescribed rate of 1% and are repayable on demand in Canadian dollars.
At December 31, 2014, there was $4,220 (March 31, 2014- $16,235) owing to Peter Bloch and $5,930 (March 31, 2014 – Nil) owing to Thiago Caires and Michal Prywata for sums paid by them on behalf of Bionik Canada for certain of its expenses. Subsequent to December 31, 2014, all of such amounts have been repaid.
In connection with a CDN$250,000 loan obtained by Bionik Canada (which loan has been repaid), Bionik Canada agreed to transfer pre-transaction 83,574 common shares to the lenders. In addition, Messrs. Caires and Prywata also transferred 100,000 pre-transaction common shares to the loan holder and this will be reimbursed by the issuance of 320,000 exchangeable shares to Messrs. Caires and Prywata effective as of the date of the Acquisition Transaction.
In order to secure the initial funding of Bionik Canada and to attract key personnel, Messrs. Prywata and Caires, for the benefit of the company, transferred to treasury and to third party individuals an aggregate of 4,816,667 common shares of Bionik Canada beneficially owned by them as co-founders. As a result of the Exchangeable Share Transaction, such transferred shares would represent 15,152,077 Exchangeable Shares.
MARKET PRICE AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is be listed on OTC Pink marketplace, operated by OTC Markets Group under the symbol “DWTPD.” We have applied for and expect to change the symbol to “BNKL” upon FINRA approval. However, there is no active market for our Common Stock and there has been no material trading of our Common Stock.
Holders
As of the Closing Date, and after giving effect to the Acquisition Transaction, 63,735,750 shares of Common Stock were issued and outstanding, which were held by approximately 130 holders of record. Additionally, depending on any additional amounts that may still be raised in the Offering, up to 1,905,600 shares of our common stock are subject to forfeiture.
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Penny Stock
Our Common Stock is subject to provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock rule.” Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The Company is subject to the SEC’s penny stock rules.
Since the Common Stock will be deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice requirements on broker-dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited investors” are persons with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such security and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt the rules require the delivery, prior to the first transaction of a risk disclosure document, prepared by the SEC, relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks held in an account and information to the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealer to trade and/or maintain a market in our common stock and may affect the ability of the Company’s stockholders to sell their shares of common stock.
Stock Option and Incentive Plans
We adopted a new stock incentive plan (the “ Stock Plan ”) in September 2014 to attract and retain employees, directors and consultants. The Stock Plan is administered by our Board of Directors which may determine, among other things, the (a) terms and conditions of any option or stock purchase right granted, including the exercise price and the vesting schedule, (b) persons who are to receive options and stock purchase rights and (c) the number of shares to be subject to each option and stock purchase right. The Stock Plan may also be administered by a special committee, as determined by the Board of Directors.
The maximum aggregate number of shares of our Common Stock that may be issued under the Stock Plan is 10,800,000 shares of our common stock. The Stock Plan provides for the grant of (i) “incentive” options (qualified under section 422 of the Internal Revenue Code of 1986, as amended) to our employees and (ii) nonstatutory options and restricted stock to our employees, directors or consultants.
Dividends
We do not anticipate paying any cash dividends in the foreseeable future and we intend to retain all of our earnings, if any, to finance our growth and operations and to fund the expansion of our business. Payment of any dividends will be made in the discretion of our Board of Directors, after our taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. No dividends may be declared or paid on our Common Stock, unless a dividend, payable in the same consideration or manner, is simultaneously declared or paid, as the case may be, on our shares of preferred stock, if any.
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RECENT SALES OF UNREGISTERED SECURITIES
Our Company has sold the following securities within the last three fiscal years on an unregistered basis:
On February 26, 2015, the Company sold 7,735,750 Units at a purchase price of $0.80 per Unit in a private placement offering. Each Unit consists of one share of Common Stock and a warrant to purchase one share of Common Stock at an initial exercise price of $1.40 per share (the “ Warrant Shares ”). The Common Stock and Warrants were sold to subscribers of the Offering pursuant to a Subscription Agreement. As a result of the Offering, after payment of placement agent fees and expenses but before the payment of other offering expenses such as legal and accounting expenses, we received net proceeds of approximately $5,383,734 at the First Closing, including the $500,000 in bridge loans we previously received that were taken into account as part of the Minimum Offering Amount.
The investors in participating in the Offering met the accredited investor definition of Rule 501 of the Securities Act of 1933, as amended (the “ Securities Act ”). The offer and sale of the Units in the Offering were made in reliance on the exemption from registration afforded under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D under the Securities Act. The Offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the investor in connection with the offering. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 150,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of February 26, 2014 there were 63,735,750 shares of Common Stock issued and outstanding. Of the shares of Common Stock issued and outstanding, 57,735,750 of such shares are restricted shares under the Securities Act. There is currently one share of The Special Voting Preferred Stock issued and outstanding held by one holder of record, which is the Trustee in accordance with the terms of the Trust Agreement. None of these restricted shares are eligible for resale absent registration or an exemption from registration under the Securities Act. As of the date hereof, the exemption from registration provided by Rule 144 under the Securities Act is not available for these shares pursuant to Rule 144(i). Furthermore, up to 1,905,700 shares of our Common Stock are subject to forfeiture in the event we are unable to raise additional gross proceeds of $3,811,400 in the Offering.
Common Stock
Each holder of Common Stock will be entitled to one vote for each share of Common Stock held of record by such holder with respect to all matters to be voted on or consented to by our stockholders, except as may otherwise be required by applicable Delaware law. The stockholders will not have pre-emptive rights under our Certificate of Incorporation to acquire additional shares of Common Stock or other securities. The Common Stock will not be subject to redemption rights and will carry no subscription or conversion rights. In the event of liquidation of the Company, the stockholders will be entitled to share in corporate assets on a pro rata basis after the Company satisfies all liabilities and after provision is made for each class of capital stock having preference over the Common Stock (if any). Subject to the laws of the State of Delaware, if any, of the holders of any outstanding series of preferred stock, the Board of Directors will determine, in their discretion, to declare dividends advisable and payable to the holders of outstanding shares of Common Stock. Shares of our Common Stock are subject to transfer restrictions.
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Blank-Check Preferred Stock
The Company is currently authorized to issue up to 10,000,000 shares of blank check preferred stock, $0.001 par value per share, of which one share has currently been designated as The Special Voting Preferred Stock (as described below). The Board of Directors has the discretion to issue shares of preferred stock in series and, by filing a Preferred Stock Designation or similar instrument with the Delaware Secretary of State, to establish from time to time the number of shares to be included in each such series, and to fix the designation, power, preferences and rights of the shares of each such Series and the qualifications, limitations and restrictions thereof.
Special Voting Preferred Stock
The Board authorized the designation of a class of The Special Voting Preferred Stock, with the rights and preferences specified below. For purposes of deferring Canadian tax liabilities that would be incurred by certain of our shareholders, Bionik Canada and its shareholders have entered into a transaction pursuant to which the Bionik Canada shareholders, who would have otherwise received shares of common stock of the Company pursuant to the Acquisition Transaction, would receive instead newly issued shares of Bionik Canada that are exchangeable into shares of Common Stock at the same ratio as if the shareholders exchanged their common shares at the consummation of the Acquisition Transaction (the “ Exchangeable Shares ”). The right to vote the Common Stock equivalent of such Exchangeable Shares shall be conducted by the vote of The Special Voting Preferred Stock issued to the Trustee.
In that regard, the Company has designated one share of preferred stock as The Special Voting Preferred Stock with a par value of $0.001 per share. The rights and preferences of The Special Voting Preferred Stock consists of the following:
· | The right to vote in all circumstances in which the Common Stock have the right to vote, with the Common Stock as one class; |
· | The Special Voting Preferred Stock entitles the holder (the Trustee) to an aggregate number of votes equal to the number of shares of Common Stock that are issuable to the holders of the outstanding Exchangeable Shares; |
· | The holder of the Special Voting Preferred Stock (and, indirectly, the holders of the Exchangeable Shares) has the same rights as the holders of Common Stock as to notices, reports, financial statements and attendance at all stockholder meetings; |
· | No entitlement to dividends; |
· | The holder of the Special Voting Preferred Stock is entitled to a total sum of $1.00 upon windup, dissolution or liquidation of the Company; and |
· | The Company may cancel The Special Voting Preferred Stock when there are no Exchangeable Shares outstanding and no option or other commitment of Bionik Canada, which could require Bionik Canada to issue more Exchangeable Shares. |
As set forth above, the holders of the Exchangeable Shares, through The Special Voting Preferred Stock, have voting rights and other attributes corresponding to the Common Stock. The Exchangeable Shares provide an opportunity for Canadian resident holders of Bionik Canada securities to obtain a full deferral of taxable capital gains for Canadian federal income tax purposes in specified circumstances. Reference is made to the full text of the Certificate of Designations, a copy of which is filed as Exhibit 4.1 to this Form 8-K.
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Warrants
General Terms. The Warrants issued in connection with the Offering are exercisable for Common Stock at an initial exercise price equal to $1.40 per share. The exercise price and the number of securities issued upon exercise of the Warrants are subject to adjustment in certain cases described below under “Adjustments.”
Exercisability. The Warrants are exercisable on the date of the First Closing and may be exercised at any time prior to the fourth anniversary of the date of the First Closing. The Warrants may be exercised at any time in whole or in part at the applicable exercise price until expiration of the Warrants. No fractional shares will be issued upon the exercise of the Warrants.
Adjustments. The exercise price and the number of warrant shares purchasable upon the exercise of the Warrants are subject to “weighted average” adjustment for dilutive issuance as well as adjustment upon the occurrence of certain events, including stock dividends, stock splits, combinations and reclassifications of our capital stock. Additionally, an adjustment would be made in the case of a reclassification or exchange, consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving corporation) or sale of all or substantially all of the assets of the Company in order to enable holders of the Warrants to acquire the kind and number of shares of stock or other securities or property receivable in such event by a holder of the number of shares Common Stock that might otherwise have been purchased upon the exercise of the Warrants.
Cashless Exercise. The Warrants will not provide for a “cashless” exercise, provided that the Warrant Shares are registered pursuant to the Investor Registration Statement (as defined below).
Redemption . The Warrants may be redeemed by the Company if the VWAP (as defined in the Warrants) of the Common Stock is 200% of the exercise price or more for 20 consecutive trading days, provided there is an effective registration statement covering the Warrant Shares.
Warrant holder Not a Stockholder. The Warrants do not confer upon the holders thereof any voting, dividend or other rights as stockholders of the Company.
The Placement Agent Warrants
The Placement Agent conducting the Offering has been granted a warrant to purchase 10% of the shares of Common Stock sold in this Offering at an exercise price of $0.80 per share and will receive “piggy-back” and demand registration rights. The Placement Agent’s warrants will be immediately exercisable after the First Closing and will expire four years after the First Closing and will provide for a cashless exercise right. The Placement Agent’s Warrants are not callable and have a customary weighted average anti-dilution provision.
Registration Rights
We have agreed to register the shares of Common Stock and shares of Common Stock underlying the Warrants included in the Units by means of filing a registration statement (the “ Investor Registration Statement ”) with the SEC within 90 days of the First Closing, and applying our reasonable best efforts to have the Investor Registration Statement declared effective within 180 days after the First Closing and the Acquisition Transaction. We are under no obligation to register the Warrants.
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In addition, the Company has agreed to register the shares of Common Stock issuable upon the exchange of the Exchangeable Shares by means of filing a registration statement (the “ Exchangeable Share Registration Statement ”) with the SEC within 60 days following the effective date of the Investor Registration Statement, and applying our reasonable best efforts to have the Exchangeable Share Registration Statement declared effective as promptly as practicable after the filing thereof.
We will pay all costs and expenses incurred by us in complying with our obligations to file the registration statements as described above, except that the selling holders will be responsible for their shares of the attorney’s fees and expenses and any commissions or other compensation to selling agents and similar persons.
Indemnification of Directors and Officers
The Company is incorporated under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law (“DGCL”) states:
(a) A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action arising by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expense which the Court of Chancery or such other court shall deem proper.
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Our Certificate of Incorporation and Bylaws provide that we shall indemnify our directors, officers, employees and agents to the full extent permitted by the DGCL, including in circumstances in which indemnification is otherwise discretionary under such law.
These indemnification provisions may be sufficiently broad to permit indemnification of our officers, directors and other corporate agents for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the company pursuant to the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
We have the power to purchase and maintain insurance on behalf of any person who is or was one of our directors or officers, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other business against any liability asserted against the person or incurred by the person in any of these capacities, or arising out of the person’s fulfilling one of these capacities, and related expenses, whether or not we would have the power to indemnify the person against the claim under the provisions of the DGCL. We currently maintain and intend to maintain for the foreseeable future director and officer liability insurance on behalf of our directors and officers.
Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures
We have not had any changes in, or disagreements with, our accountants since our inception.
Item 3.02 | Unregistered Sales of Equity Securities |
Reference is made to the disclosures set forth under Item 1.01 and Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.
Item 5.01 | Changes in Control of Registrant |
Reference is made to the disclosures set forth under Item 1.01 and Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors, Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
The information contained in Item 2.01 of this Current Report on Form 8-K related to resignations and appointments of the registrant’s officers and directors and the compensation payable thereto is responsive to this Item 5.02 and is incorporated herein by reference.
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
On February 26, 2015, our Board of Directors adopted amended and restated By-Laws. A copy of the Amended and Restated By-Laws is annexed hereto as Exhibit 3(ii) and is incorporated by reference herein.
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Item 5.06 | Change in Shell Company Status |
Following the consummation of the Acquisition Transaction described in Item 1.01 and Item 2.01 of this Current Report on Form 8-K, we believe that we are not a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
Item 9.01 | Financial Statements and Exhibits |
(a) Financial Statements of Businesses Acquired . In accordance with Item 9.01(a), Bionik Canada’s audited financial statements for and as of the fiscal years ended March 31, 2014 and 2013 and Bionik Canada’s reviewed financial statements for and as of the three and nine months ended December 31, 2014 are included following the signature page.
(b) Pro forma financial information . See Exhibit 99.1
(c) Shell Company Transactions . See (a) and (b) of this Item 9.01.
(d) Exhibits . The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K:
Exhibit No. | Description | |
3(i) | Amended and Restated Certificate of Incorporation dated February 20, 2015. | |
3(ii) | Amended and Restated By-Laws | |
4.1 | Certificate of Designation of Preferences, Rights and Limitations of Special Voting Preferred Stock of Bionik Laboratories Corp. | |
4.2 | Schedule A to Articles of Amendment of Bionik Laboratories Inc., relating to the Exchangeable Shares of Bionik Laboratories Inc. | |
4.3 | Form of Warrant | |
10.1 | Investment Agreement, dated February 26, 2015, among Bionik Laboratories Inc., Bionik Acquisition Inc. and Bionik Laboratories Corp. | |
10.2 | Voting and Exchange Trust Agreement, made as of February 26, 2015, among Bionik Laboratories Corp., Bionik Laboratories, Inc. and Computershare Trust Company of Canada dated February 26,2015 | |
10.3 | Support Agreement, made as of February 26, 2015, among Bionik Laboratories Inc., Bionik Acquisition Inc. and Bionik Laboratories Corp. | |
10.4 | Registration Rights Agreement, made as of February 26, 2015, by and between Bionik Laboratories Inc. and each of the several shareholders signatory thereto | |
10.5 | Novation Agreement, dated as of February 26, 2015, between Bionik Laboratories Corp. and Bionik Laboratories Inc. | |
10.6 | Spin-Off Agreement, dated as of February 26, 2015, by and among Bionik Laboratories Corp., and Brian E. Ray and Jon Lundgreen |
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10.7 | Assignment and Assumption Agreement, dated as of February 26, 2015, by and between Bionik Laboratories Corp. and Tungsten 74 LLC | |
10.8 | Form of Subscription Agreement | |
10.9 | Peter Bloch Employment Agreement | |
10.10 | Michal Prywata Employment Agreement | |
10.11 | Thiago Caires Employment Agreement | |
10.12 | Leslie Markow’s Employment Agreement | |
10.13 | Bionik Laboratories Corp. f/k/a Drywave Technologies, Inc. 2014 Equity Incentive Plan* | |
99.1 | Pro forma unaudited consolidated financial statements as of March 31, 2014 and December 31, 2014. |
* | Filed as Annex B to the Company’s Definitive Information Statement on Schedule 14C filed with the Securities and Exchange Commission on October 6, 2014, and incorporated by reference herein. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: March 4, 2015
BIONIK LABORATORIES CORP. | ||
By: | /s/ Peter Bloch | |
Peter Bloch | ||
Chief Executive Officer |
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BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in US Dollars)
Index
F- 1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Bionik Laboratories Inc.
We have audited the accompanying balance sheets of Bionik Laboratories Inc. as of March 31, 2014 and 2013, and the related statements of operations, comprehensive loss, stockholders’ equity (deficiency), and cash flows for the years then ended and accumulated for the period from March 24, 2011 (inception) to March 31, 2014. These financial statements are the responsibility of Bionik Laboratories Inc.’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bionik Laboratories Inc. as of March 31, 2014 and 2013 and the results of its operations and its cash flows for the years then ended and accumulated for the period from March 24, 2011 (inception) to March 31, 2014 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1, the Company’s recurring losses from operations, working capital and shareholders’ deficiencies and negative cash flows from operations in addition to their dependency upon future financing raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Signed: “MNP LLP”
MNP LLP
Toronto, Canada
July 7, 2014
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Accounting › Consulting › Tax 701 EVANS AVENUE, 8 th FLOOR, Toronto ON, M9C 1A3 P: 416.626.6000 F: 416.626.8650 MNP.ca |
F- 2 |
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
(Amounts expressed in US Dollars)
as at | as at | |||||||
March 31, 2014 | March 31, 2013 | |||||||
$ | $ | |||||||
Assets | ||||||||
Current | ||||||||
Cash and cash equivalents | 3,482 | 233,240 | ||||||
Prepaid expenses and other receivables (Note 3) | 505,787 | 360,956 | ||||||
Subscription receivable | - | 58,846 | ||||||
Due from related parties (Note 7) | - | 28,240 | ||||||
Total Current Assets | 509,269 | 681,282 | ||||||
Property and equipment (Note 4) | 6,752 | 9,185 | ||||||
516,021 | 690,467 | |||||||
Liabilities and Shareholders' Deficiency | ||||||||
Current liabilities | ||||||||
Accounts payable (Note 7) | 120,751 | 88,637 | ||||||
Accrued liabilities (Note 7) | 128,739 | 11,323 | ||||||
Convertible secured promissory note (Note 5) | 119,112 | 118,685 | ||||||
Loans payable (Note 6) | 772,146 | - | ||||||
Due to related parties (Note 7) | 149,899 | - | ||||||
Total Liabilities | 1,290,647 | 218,645 | ||||||
Shareholders' (Deficiency) Equity | ||||||||
Common shares, no par value, unlimited authorized, 11,641,667 common shares issued and outstanding (2013 - 11,475,000) (Note 8) | 1,658,585 | 1,569,594 | ||||||
Contributed surplus | 114,284 | 16,238 | ||||||
Deficit accumulated during the development stage | (2,589,235 | ) | (1,137,466 | ) | ||||
Accumulated other comprehensive income | 41,740 | 23,456 | ||||||
Total Shareholders' (Deficiency) Equity | (774,626 | ) | 471,822 | |||||
Total Liabilities and Shareholders' (Deficiency) Equity | 516,021 | 690,467 |
Going Concern (Note 1)
Contingencies (Note 11)
Subsequent Events (Note 13)
Approved by the Board | |||
“Peter Bloch” | Director | ||
“Michal Prywata” | Director |
The accompanying notes are an integral part of these financial statements
F- 3 |
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations and Comprehensive Loss
(Amounts expressed in US Dollars)
Year
ended March 31, 2014 |
Year
ended March 31, 2013 |
Cumulative
since Inception (March 24, 2011) |
||||||||||
$ | $ | $ | ||||||||||
Expenses | ||||||||||||
Research and development | 937,426 | 637,661 | 1,842,295 | |||||||||
Professional and consulting fees | 574,875 | 250,943 | 817,345 | |||||||||
General and administrative | 302,353 | 345,293 | 664,952 | |||||||||
Imputed interest expense (Notes 5 & 6) | 101,985 | 7,282 | 112,453 | |||||||||
Interest expense | 28,629 | - | 29,487 | |||||||||
Depreciation | 1,772 | 2,330 | 4,819 | |||||||||
Other income (Note 3) | (495,271 | ) | (306,450 | ) | (882,118 | ) | ||||||
1,451,769 | 937,059 | 2,589,235 | ||||||||||
Net loss for the year | (1,451,769 | ) | (937,059 | ) | (2,589,235 | ) | ||||||
Foreign exchange translation adjustment for the year | 18,284 | 23,013 | 443 | |||||||||
Net loss and comprehensive loss for the year | (1,433,485 | ) | (914,046 | ) | (2,588,792 | ) | ||||||
Loss per share - basic and diluted (Note 2) | (0.12 | ) | (0.09 | ) | ||||||||
Weighted average number of shares outstanding | 11,612,900 | 10,375,937 |
The accompanying notes are an integral part of these financial statements
F- 4 |
(A DEVELOPMENT STAGE COMPANY)
Statements of Changes in Shareholders' Equity (Deficiency)
(Amounts expressed in US Dollars)
Number of
Common Shares |
Common
Shares $ |
Contributed
Surplus $ |
Deficit
$ |
Accumulated
Other Comprehensive Income $ |
Total
$ |
|||||||||||||||||||
Balance, March 24, 2011 (Incorporation) | - | - | - | - | - | - | ||||||||||||||||||
Issuance of common shares to founders for cash | 7,750,000 | 2 | - | - | - | 2 | ||||||||||||||||||
Net loss for the period | - | - | - | (2 | ) | - | (2 | ) | ||||||||||||||||
Balance, March 31, 2011 | 7,750,000 | 2 | - | (2 | ) | - | - | |||||||||||||||||
Issuance of common shares to founders for cash | 1,250,000 | 3 | - | - | - | 3 | ||||||||||||||||||
Issuance of convertible debt (note 5) | - | - | 16,238 | - | - | 16,238 | ||||||||||||||||||
Net loss for the year | - | - | - | (200,405 | ) | - | (200,405 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | 443 | 443 | ||||||||||||||||||
Balance, March 31, 2012 | 9,000,000 | 5 | 16,238 | (200,407 | ) | 443 | (183,721 | ) | ||||||||||||||||
Issuance of common shares for cash | 2,525,000 | 1,486,980 | - | - | - | 1,486,980 | ||||||||||||||||||
Issuance of common shares for services | 200,000 | 117,192 | - | - | - | 117,192 | ||||||||||||||||||
Share issue costs | - | (34,583 | ) | - | - | - | (34,583 | ) | ||||||||||||||||
Cancellation of common shares issued to Founders | (250,000 | ) | - | - | - | - | - | |||||||||||||||||
Net loss for the year | - | - | - | (937,059 | ) | - | (937,059 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | 23,013 | 23,013 | ||||||||||||||||||
Balance, March 31, 2013 | 11,475,000 | 1,569,594 | 16,238 | (1,137,466 | ) | 23,456 | 471,822 | |||||||||||||||||
Issuance of common shares for cash | 166,667 | 96,320 | - | - | - | 96,320 | ||||||||||||||||||
Share issue costs | - | (7,329 | ) | - | - | - | (7,329 | ) | ||||||||||||||||
Relative fair value of options issued and contributed capital from shareholders | - | - | 98,046 | - | - | 98,046 | ||||||||||||||||||
Net loss for the year | - | - | - | (1,451,769 | ) | - | (1,451,769 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | 18,284 | 18,284 | ||||||||||||||||||
Balance, March 31, 2014 | 11,641,667 | 1,658,585 | 114,284 | (2,589,235 | ) | 41,740 | (774,626 | ) |
The accompanying notes are an integral part of these financial statements
F- 5 |
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
(Amounts expressed in US Dollars)
Year ended
March 31, 2014 |
Year ended
March 31, 2013 |
Cumulative
Since Inception (March 24, 2011) |
||||||||||
$ | $ | $ | ||||||||||
Operating activities | ||||||||||||
Net loss | (1,451,769 | ) | (937,059 | ) | (2,589,235 | ) | ||||||
Adjustment for items not affecting cash | ||||||||||||
Depreciation of property and equipment | 1,772 | 2,330 | 4,819 | |||||||||
Interest | 19,223 | - | 20,081 | |||||||||
Imputed interest | 101,985 | 7,282 | 112,453 | |||||||||
Shares issued for services | - | 117,192 | 117,192 | |||||||||
(1,328,789 | ) | (810,255 | ) | (2,334,690 | ) | |||||||
Changes in non-cash working capital items | ||||||||||||
Prepaid expenses and other receivables | (182,783 | ) | (281,604 | ) | (551,183 | ) | ||||||
Accounts payable | 41,261 | 25,195 | 131,588 | |||||||||
Accrued liabilities | 124,221 | (11,238 | ) | 140,294 | ||||||||
Net cash used in operating activities | (1,346,090 | ) | (1,077,901 | ) | (2,613,991 | ) | ||||||
Investing activities | ||||||||||||
Acquisition of property and equipment | - | (8,695 | ) | (12,199 | ) | |||||||
Net cash used in investing activities | - | (8,695 | ) | (12,199 | ) | |||||||
Financing activities | ||||||||||||
Proceeds from issuance of shares, net of issue costs | 147,837 | 1,393,551 | 1,658,585 | |||||||||
Proceeds from loans payable | 810,553 | - | 810,553 | |||||||||
Proceeds from (repayment of) amounts due to related parties | 184,594 | (117,946 | ) | 163,353 | ||||||||
Net cash provided by financing activities | 1,142,984 | 1,275,605 | 2,632,491 | |||||||||
Effects of foreign currency exchange rate changes | (26,652 | ) | 29,288 | (2,819 | ) | |||||||
Net (decrease) increase in cash and cash equivalents for the year | (229,758 | ) | 218,297 | 3,482 | ||||||||
Cash and cash equivalents, beginning of year | 233,240 | 14,943 | - | |||||||||
Cash and cash equivalents, end of year | 3,482 | 233,240 | 3,482 | |||||||||
Supplemental information: | ||||||||||||
Income tax paid | - | - | - | |||||||||
Interest paid | 9,406 | - | 9,406 |
The accompanying notes are an integral part of these financial statements
F- 6 |
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
1. | NATURE OF OPERATIONS AND GOING CONCERN |
The Company and its Operations
Bionik Laboratories Inc. (the “Company” or “Bionik”) is a Canadian private company incorporated under the Canada Business Corporation Act on March 24, 2011 and domiciled in Ontario, Canada. The Company’s registered head office is located at 483 Bay Street, Toronto, Ontario, M5G 2C9.
The Company is a bioengineering research and development company targeting diseases and injuries that impact human mobility. The Company is working towards its first market ready product, which will be the “ARKE”, a robotic pair of exoskeleton legs to be used for rehabilitation purposes and potentially for day-to-day use as a replacement for a wheelchair.
As at March 31, 2014, the Company is considered, under ASC 915, to be in the development stage as its primary activities, since Inception, have been conducting research and development, business development, business and financial planning, establishing its facilities, initial startup operations for manufacturing the ARKE. The Company will continue to report as a development stage company until it begins to generate significant revenue from the sale of its products.
Going Concern
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"), which contemplates continuation of the Company as a going concern which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business.
The Company has not yet realized any revenues from its planned operations. As at March 31, 2014, the Company has a working capital deficit of $781,378 (2013 – surplus of $462,637) and deficit of $2,589,235 (2013 - $1,137,466) and incurred a net loss of $1,451,769 for the year ended March 31, 2014 (2013 - $937,059). The Company has funded operations through the issuance of capital stock and loans, in addition to grants and investment tax credits received from the Government of Canada. During the year ended March 31, 2013, the Company raised net cash of $1,452,397 by issuance of common shares. Subsequent to the year end, the Company raised additional funds of $2,823,875 ($3,121,339 CAD) (see Note 13). The future of the Company is dependent upon its ability to obtain financing and upon achieving profitable operations. Further, the Company plans to initially categorize the ARKE as a Class I medical device with the U.S. Food and Drug Administration (“FDA”) and accordingly will be subject to FDA regulations, guidelines and the FDA’s Quality System Regulation (“QSR”) in order to market and sell their product in the U.S. The costs of obtaining the necessary FDA approval and maintaining compliance with the FDA could be significant. These factors raise substantial doubt about the Company’s ability to continue as a going concern and to operate in the normal course of business.
Management has raised additional capital through private offerings and has plans to raise funds through public offering of its capital stock. While the Company has been successful in securing such financing in the past, there is no assurance that it will be able to do so in the future. Accordingly, these financial statements do not give effect to adjustments, relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
F- 7 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
2. |
SIGNIFICANT ACCOUNTING POLICIES
|
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and changes in these estimates are recorded when known. Significant estimates made by management include: investment tax credit receivable (see note 3), accounts payable and accrued liabilities and the valuation allowance for deferred tax assets.
Foreign Currency Translation
The Company’s functional currency is the Canadian dollar and its reporting currency is the US dollar. The financial statements have been translated into U.S. dollars in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830. All assets and liabilities with Canadian dollars as functional currency are translated at the exchange rate on the balance sheet date, shareholders' equity and share issuances are translated at the historical rates and the statements of operations and cash flows are translated at the average exchange rate for the year. The resulting translation adjustments are reported under comprehensive income as a separate component of shareholders’ equity.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the declining balance method, over the estimated useful lives of these assets. The costs of improvements that extend the life of equipment are capitalized. All ordinary repair and maintenance costs are expensed as incurred. Property and equipment are depreciated as follows:
Furniture and Fixtures | 20% per annum |
Revenue Recognition
The Company has yet to recognize any revenue. The Company intends to record revenue when it is realized, or realizable and earned. The Company will consider revenue to be realized, or realizable and earned, when the following revenue recognition requirements are met: persuasive evidence of an arrangement exists; the products or services have been accepted by the customer via delivery or acceptance; the sales price is fixed or determinable; and collectability is reasonably assured.
Government Grant and Input Tax Credit Recoveries
The Company receives certain grant and input tax credit recoveries from the Canadian government in compensation for eligible expenditures. These are presented as other income in the statement of operations and comprehensive loss as they generally relate to a number of the Company’s operating expenses, such as salaries and benefits, research and development and professional and consulting fees. The recoveries are recognized in the corresponding period when such expenses are incurred.
F- 8 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES – Continued |
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with original terms to maturity of 90 days or less at the date of purchase. For all periods presented cash and cash equivalents consisted entirely of cash.
Research and Development
The Company is engaged in research and development work. Research and development costs are charged as operating expense of the Company as incurred.
Segment Reporting
ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, establishes standards for the way that public business enterprises report information about operating segments in the Company’s financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s does not have any reportable segments. All of its operations and assets are domiciled in Canada.
Income Taxes
Income taxes are computed in accordance with the provisions of ASC Topic 740, which requires, among other things, a liability approach to calculating deferred income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company is required to make certain estimates and judgments about the application of tax law, the expected resolution of uncertain tax positions and other matters. In the event that uncertain tax positions are resolved for amounts different than the Company’s estimates, or the related statutes of limitations expire without the assessment of additional income taxes, the Company will be required to adjust the amounts of related assets and liabilities in the period in which such events occur. Such adjustment may have a material impact on Bionik’s income tax provision and results of operations.
F- 9 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES – Continued |
Fair Value of Financial Instruments
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.
The carrying amounts reported in the balance sheets for cash and cash equivalents, other receivables, subscription receivable, accounts payable and accrued liabilities, convertible secured promissory note and due to related parties approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Per ASC Topic 820 framework these are considered Level 2 inputs where inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
For the loans payable, the Company believes the carrying value of the loans payable approximates fair value as the interest rates are market rates.
There were no assets or liabilities measured at fair value on a recurring basis as of March 31, 2014 and 2013.
F- 10 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES – Continued |
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
The Company reviews the terms of convertible loans, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants to employees and non-employees in connection with consulting or other services. These options or warrants may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.
Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received an immediate charge to income is recognized in order to initially record the derivative instrument liabilities at their fair value.
The discount from the face value of the convertible debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.
Basic and Diluted Loss Per Share
Basic and diluted loss per share has been determined by dividing the net loss available to shareholders for the applicable period by the basic and diluted weighted average number of shares outstanding, respectively. The diluted weighted average number of shares outstanding is calculated as if all dilutive options had been exercised or vested at the later of the beginning of the reporting period or date of grant, using the treasury stock method. The dilutive effect of convertible loans is reflected in diluted weighted average number of shares using the if-converted method, when there is a dilutive effect.
Loss per common share is computed by dividing the net loss by the weighted average number of shares of common shares outstanding during the period. Common share equivalents are excluded from the computation of diluted loss per share when their effect is anti-dilutive.
F- 11 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES – Continued |
Impairment of Long-Lived Assets
The Company follows the ASC Topic 360, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the assets’ carrying amounts may not be recoverable. In performing the review for recoverability, if future undiscounted cash flows (excluding interest charges) from the use and ultimate disposition of the assets are less than their carrying values, an impairment loss represented by the difference between its fair value and carrying value, is recognized. When properties are classified as held for sale they are recorded at the lower of the carrying amount or the expected sales price less costs to sell.
Recently Adopted Accounting Pronouncements
“Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”, (“ASU 2013-2”) issued in February 2013 requires entities to disclose additional information for items reclassified out of accumulated other comprehensive income (“AOCI”). For items reclassified out of AOCI and into net income in their entirety, entities are required to disclose the effect of the reclassification on each affected line item of net income. For AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference to other required U.S. GAAP disclosures is required. This information may be provided either in the notes or parenthetically on the face of the statement that reports net income, provided that all the information is disclosed in a single location. However, an entity is prohibited from providing this information parenthetically on the face of the statement that reports net income, if it has items that are not reclassified in their entirety into net income. The guidance is effective for annual and interim reporting periods beginning after December 15, 2012. The adoption of this standard did not have a material impact on the financial statements of the Company.
Recently Issued Accounting Pronouncements
“Income Taxes (Topic - 750): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists” (“ASU 2013-11”) issued in July 2013 provides guidance on how to present an unrecognized tax benefit. The guidance is effective for annual periods beginning after December 15, 2013.
On May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. The impact on our Financial Statements of adopting ASU 2014-09 is being assessed by management.
“Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements” (“ASU 2014-10”) issued in June 2014, ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company plans to adopt ASU 2014-10 for its financial statements for the year ended March 31, 2016.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
F- 12 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
3. | PREPAID EXPENSES AND OTHER RECEIVABLES |
2014 | 2013 | |||||||
Prepaid expenses and sundry receivables | $ | 11,700 | $ | 11,144 | ||||
IRAP Grant receivable (i) | 63,300 | - | ||||||
Investment tax credit receivable (ii) | 408,506 | 267,562 | ||||||
Sales taxes receivable (iii) | 22,281 | 82,250 | ||||||
$ | 505,787 | $ | 360,956 |
i) | Industrial Research Assistance Program (“IRAP”) grant receivable is the value of claim receivable from the Government of Canada for recovery of eligible expenditures. The grant proceeds are recognized as ‘Other Income’ in the statement of operations and comprehensive loss. |
ii) | Investment tax credit receivable is the estimated Scientific Research and Experimental Development (“SR&ED”) claim receivable from the Government of Canada for input tax credits that are granted on qualifying SR&ED expenditures. The expected recovery is recognized as ‘Other Income’ in the statement of loss and comprehensive loss. |
ii) | Sales tax receivable represents net harmonized sales taxes (HST) input tax credits receivable from the Government of Canada. |
4. | PROPERTY AND EQUIPMENT |
Property and equipment consists of the following as at March 31, 2014 and 2013:
2014 | 2013 | |||||||||||||||||||||||
Cost |
Accumulated
Depreciation |
Net | Cost |
Accumulated
Depreciation |
Net | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Furniture and fixtures | 11,194 | 4,442 | 6,752 | 12,182 | 2,997 | 9,185 |
Plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense during the year ended March 31, 2014 was $1,772 (2013 -$2,330).
Property and equipment is translated to U.S. Dollars using the rate of exchange prevailing at the balance sheet date. There were no additions or disposals during 2014 and the change in cost from 2013 is due to foreign exchange translation.
F- 13 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
5. | CONVERTIBLE SECURED PROMISSORY NOTE |
On December 8, 2011, the Company received $61,500 CAD from a lender that at the time was non-interest bearing and had no specified terms of repayment. On February 28, 2012 the lender and the Company agreed to the terms of a Convertible Secured Promissory Note, which securitized the previous note plus an additional $60,000 CAD for a total principal amount of $121,500 CAD. The note bears interest at prime plus 1% and was to mature on the earlier of a qualifying financing event or February 28, 2014. The “qualifying financing event” is defined as an equity financing (including convertible securities) that is completed on or prior to the maturity date where the Company issues securities for aggregate gross proceeds equal to or greater than $1.5 million CAD. The loan is secured by a general security agreement under which the Company has pledged, assigned, charged and granted to the lender a security interest in and to the property, assets and undertaking of the Company.
The lender has an option to convert the principal plus accrued interest at a discount of 20% to the share price in the event of a qualifying financing event prior to February 28, 2014. The Company evaluated the conversion option and determined that it was based on a contingent event and accordingly, the option was not valued. Upon the occurrence of a qualifying financing event, the conversion option will be measured and recognized.
The Company determined that a market interest rate for similar debt would be approximately 10% per annum and accordingly, recognized the note at its present value based on a 10% discount rate, or $105,262, and allocated the discount of $16,238 from the face value of $121,500 to additional paid in capital, which due to achieving parity the USD and CAD amounts were not materially different. The discount of $16,238 was amortized to February 28, 2014 when the note was due to mature. The Company expensed imputed interest of $3,939 and $7,282 during the years ended March 31, 2014 and 2013, respectively.
The note matured on February 28, 2014, at this point it became due on demand; however, no repayment was demanded. Subsequent to the year end, the lender converted this debt plus accrued interest to equity at a 20% discount to the $0.81 ($0.90 CAD) per share equity financing (see Note 13).
F- 14 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
6. | LOANS PAYABLE |
As of March 31, 2014, the Company has the following loans:
2014 | 2013 | |||||||
$ | $ | |||||||
a) Lieberman Family Trust | ||||||||
The loan carries interest of 10% per annum and is payable within 90 days of demand or upon successful completion of a capital raise for $2,711,700 (CAD $3 million). Secured by way of partial assignment of the Company’s entitlement to its SR&ED tax credit refund from the Government of Canada for the year ended March 31, 2014. | 27,141 | - | ||||||
b) Gaston-Dreyfus Remi | ||||||||
The loan carries interest of 6% per annum and is payable on demand. The loan is secured by a general security agreement on all the assets of the Company. | 454,729 | - | ||||||
c) Parvez Patel/Huda
The loan is unsecured, carries interest of 2% per annum and repayable on demand or successful completion of capital raise for $5,694,570 (CAD $6.3 million). |
100,766 | - | ||||||
d) Pope & Co
The loan carries interest of 10% per annum and is payable within 90 days of demand or upon successful completion of a capital raise For $2,711,700 (CAD $3 million) by no later than June 30, 2014. Secured by way of partial assignment of the Company’s entitlement to its SR&ED tax credit refund from the Government of Canada for the year ended March 31, 2014. |
189,510 | - | ||||||
772,146 | - |
Subsequent to year end, the loan from Lieberman Family Trust was settled in shares and the other loans payable listed above were repaid in full including interest (Note 13).
On June 10, 2013, the Company agreed to the terms of a secured loan for $241,185 ($250,000 CAD) that bore interest at 10%, was secured by a general security agreement, and matured on the earlier of June 10, 2014, two days after receiving the 2013 SR&ED claim or within five days of an event of default. Events of default consisted of standard non-payment clauses.
Under the terms of the loan agreement the lenders received an aggregate of 100,000 shares from the personal shareholdings of the founders as well as options to purchase 416,666 common shares. The shares contributed personally by the founders were valued based on the price of the most recent private placement in March 2013 at $0.60 CAD, see Note 8, which at the time of the loan was $0.58 for a fair value of $58,000 ($60,000 CAD). As detailed in Note 9, the fair value of the stock options was $106,185. The fair value of these instruments was then utilized to allocate the proceeds based on the relative fair values of the loan, the contributed shares and the options, resulting in a carrying value of $143,139 for the loan, $63,481 for the options and $34,565 for the shares. The values for the shares as contributed capital and the options aggregating to $98,046 were recognized in contributed surplus.
The loan was repaid on November 15, 2013, and the Company recognized accretion of the full amount of the discount of $98,046 as imputed interest in the statements of operations and comprehensive loss for the year ended March 31, 2014.
F- 15 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
7. | RELATED PARTY TRANSACTIONS AND BALANCES |
As of March 31, 2014, the Company has advances payable to two directors and one former director for $149,899 (2013 – receivable from two directors of $28,240). These advances are unsecured, non-interest bearing and payable on demand in Canadian dollars. Subsequent to year end, one advance amounting to $85,947 ($95,000 CAD) was settled by issuance of shares to the former director valued at $0.90 CAD.
As at March 31, 2014 there is $63,361 (2013 - $16,384) included in accounts payable and accrued liabilities owing to the Chief Executive Officer (“CEO”) and a former director.
8. CAPITAL STOCK
Number of
Common Shares |
Stated Value
$ |
|||||||
Balance, April 1, 2012 (i) | 9,000,000 | 5 | ||||||
Issued under private placement (Note ii) | 291,667 | 170,815 | ||||||
Issued on settlement of debt relating to prior period services (Note iii) | 200,000 | 117,192 | ||||||
Issued under private placement (Note iv) | 895,834 | 519,420 | ||||||
Cancellation of common stock (Note v) | (250,000 | ) | - | |||||
Issued under private placement (Note vi) | 437,500 | 256,016 | ||||||
Issued under private placement (Note vii) | 383,333 | 232,546 | ||||||
Issued under private placement (Note viii) | 516,666 | 308,183 | ||||||
Share issue costs | - | (34,583 | ) | |||||
Balance, March 31, 2013 | 11,475,000 | 1,569,594 | ||||||
Issued under private placement (Note ix) | 166,667 | 96,320 | ||||||
Share issue costs | - | (7,329 | ) | |||||
Balance, March 31, 2014 | 11,641,667 | 1,658,585 |
(i) | The opening balance consists of 7,775,000 common shares issued to its two founders for a consideration of $2, 1,000,000 commons shares issued to two directors and 250,000 common shares to a consultant for a total of 1,250,000 common shares for consideration of $3. |
(ii) | In May, 2012, the Company issued through a private placement, 291,667 common shares at a price of $0.59 (0.60 CAD) per share for aggregate gross proceeds of $170,815. |
(iii) | In May, 2012, 200,000 common shares valued at $117,192 were issued for settlement of accounts payable relating to services performed in the prior year. |
(iv) | In June, 2012, the Company issued through a private placement, 895,834 common shares at a price of $0.58 (0.60 CAD) per share for aggregate gross proceeds of $519,420. |
(v) | In August, 2012, 125,000 common shares each issued to the two founders on March 24, 2011, for a total of 250,000 common shares were cancelled. |
(vi) | In September, 2012, the Company issued through a private placement, 437,500 common shares at a price of $0.59 (0.60 CAD) per share for aggregate gross proceeds of $256,016. |
(vii) | In December, 2012, the Company issued through a private placement, 383,333 common shares at a price of $0.61 (0.60 CAD) per share for aggregate gross proceeds of $232,546. |
(viii) | In March 2013, the Company issued through a private placement, 516,666 common shares at a price of $0.60 (0.60 CAD) per share for aggregate gross proceeds of $308,183. $58,846 of the proceeds were not received as at March 31, 2013 and accordingly are presented as subscriptions receivable on the balance sheet. |
(ix) | In June, 2013, the Company issued through a private placement, 166,667 common shares at a price of $0.58 (0.60 CAD) per share for aggregate gross proceeds of $96,320. |
F- 16 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
9. | STOCK OPTIONS |
The Company has a stock option plan, the purpose of which is to attract, retain and motivate persons of training, experience and leadership to the Company, including their directors, officers and employees, and to advance the interests of the Company by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Company.
Options may be granted in respect of authorized and unissued shares, provided that the aggregate number of shares reserved for issuance upon the exercise of all Options granted under the Plan, shall not exceed Eight (8%) Percent of the issued share capital or such greater number of shares as may be determined by the Board and approved, if required, by the shareholders of the Company and by any applicable stock exchange or other regulatory authority. Optioned shares in respect of which options are not exercised shall be available for subsequent options.
On June 10, 2013, the Company issued 416,666 options. The options are exercisable immediately and have an exercise price of $0.54 (0.60 CAD) per share and a time to expiration of one year, being June 10, 2014, see Note 13. These options had an estimated fair value of $106,185 using the Black-Scholes option pricing model with the following key assumptions:
Expected life | 1 year | |||
Risk free rate | 0.3 | % | ||
Dividend yield | 0 | % | ||
Forfeiture rate | 0 | % | ||
Volatility (based upon similar public companies) | 114 | % |
A summary of the Company’s outstanding and exercisable options is as follows:
Number of
options |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contract Life |
||||||||||
# | $ | (Years) | ||||||||||
Outstanding, March 31, 2012 and 2013 | - | - | - | |||||||||
Granted during the year | 416,666 | 0.60 | 0.20 | |||||||||
Exercised during the year | - | - | - | |||||||||
Expired during the year | - | - | - | |||||||||
Outstanding, March 31, 2014 | 416,666 | 0.60 | 0.20 |
F- 17 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
10. | INCOME TAXES |
2014 | 2013 | |||||||
$ | $ | |||||||
Components of net loss before income taxes consists of the following: | ||||||||
U.S. | - | - | ||||||
Canada | (1,451,769 | ) | (937,059 | ) | ||||
(1,451,769 | ) | (937,059 | ) | |||||
The provision for income taxes consists of the following: | ||||||||
Current | ||||||||
U.S. | - | - | ||||||
Canada | - | - | ||||||
- | - | |||||||
Deferred | - | - | ||||||
- | - |
2014 | 2013 | |||||||
$ | $ | |||||||
Net loss before recovery of income taxes | (1,451,769 | ) | (937,059 | ) | ||||
Statutory rate | 26.5 | % | 26.5 | % | ||||
Expected income tax recovery | (384,719 | ) | (248,321 | ) | ||||
Other basis adjustment | (6,966 | ) | (8,576 | ) | ||||
Non-deductible expenses | 148,936 | (38,493 | ) | |||||
Change in valuation allowance | 242,749 | 295,390 | ||||||
Recovery of income taxes | - | - |
F- 18 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
10. | INCOME TAXES – Continued |
The components of deferred taxes are as follows:
2014 | 2013 | |||||||
$ | $ | |||||||
Deferred tax assets | ||||||||
Current | ||||||||
Convertible secured promissory note | 403 | - | ||||||
Valuation allowance | (403 | ) | - | |||||
- | - | |||||||
Long-term | ||||||||
Unrealized tax credits | $ | 19,591 | $ | 19,721 | ||||
Property and equipment | 23,985 | - | ||||||
Share issue costs | 6,461 | 7,228 | ||||||
Net operating losses | 529,889 | 310,228 | ||||||
Valuation allowance | (579,926 | ) | (337,177 | ) | ||||
- | - |
The change in the gross unrecognized tax benefits of the Company is as follows:
2014 | 2013 | |||||||
$ | $ | |||||||
Beginning balance | 1,224,777 | 108,373 | ||||||
Additions related to the current year | 882,822 | 1,116,404 | ||||||
Reductions related to prior years | - | - | ||||||
Unrecognized tax benefits end of year | 2,107,599 | 1,224,777 |
Deferred income taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:
The Company calculates its income tax expense by estimating the annual effective tax rate and applying that rate to the year-to-date ordinary income at the end of the period. The Company records a tax valuation allowance when it is more likely than not that it will not be able to recover the value of its deferred tax assets.
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest accrued on uncertain tax positions as well as interest received from favorable tax settlements within interest expense. The Company recognizes penalties accrued on unrecognized tax benefits within general and administrative expenses. As of March 31, 2014 and 2013, the Company had no uncertain tax positions.
The Company does not anticipate any significant changes to the total amounts of unrecognized tax benefits in the next twelve months. In many cases the Company’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of March 31, 2014:
Canada – Federal | 2011 – present |
Canada – Provincial | 2011 – present |
F- 19 |
BIONIK LABORATORIES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the years ended March 31, 2014 and 2013
(Amounts expressed in U.S. Dollars)
11. | CONTINGENCIES |
From time to time, the Company may be involved in a variety of claims, suits, investigations and proceedings arising in the ordinary course of our business, collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of current pending matters will not have a material adverse effect on its business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on the Company because of legal costs, diversion of management resources and other factors.
12. | RISK MANAGEMENT |
The Company’s cash balances are maintained in various banks in Canada. Deposits held in banks in Canada are insured up to $100,000 Canadian per depositor for each bank by The Canada Deposit Insurance Corporation, a federal crown corporation. Actual balances at times may exceed these limits.
Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. The loans payable all have fixed interest rates therefore the Company is exposed to interest rate risk in that they could not benefit from a decrease in market interest rates. The convertible secured promissory note bears interest at prime plus 1%; therefore, it is exposed to fluctuations in the market interest rate. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposure through its normal operating and financing activities.
13. | SUBSEQUENT EVENTS |
1. | The Company completed a $2,823,875 ($3,121,339 CAD) private placement, which includes the loan conversions listed below, and issued 3,504,726 shares at a price of $0.81 ($0.90 CAD) per share. A former director of the Company assisted in securing a significant portion of this financing. The Company paid a commission of 10% of the private placement as a finders fee, which the then director converted to 247,778 shares at $0.81 ($0.90 CAD) per share. |
2. | The conversion option on the convertible secured promissory note was exercised. The note plus accrued interest totaled $119,112 ($131,659 CAD) and was converted to equity at a 20% discount to the $0.81 ($0.90 CAD) equity financing price resulting in the issuance of 182,860 common shares. |
3. | A director converted his unsecured debt for $85,947 ($95,000 CAD) to equity at $0.81 ($0.90 CAD) per share. |
4. | Loan of $452,350 ($500,000 CAD) from Remi Gaston Dreyfus plus accrued interest and a loan of $99,517 ($110,000 CAD) from Rihan Huda (both unrelated parties) was repaid. |
5. | Subsequent to March 31, 2014 the loan from Lieberman Family Trust and accrued interest thereon was settled in common shares at $0.81 ($0.90 CAD) per share, or approximately 35,000 shares. |
6. | The Company repaid loans for $180,940 ($200,000 CAD) plus accrued interest for $12,138 ($13,417 CAD) owing to investors introduced by Pope and Co. Subject to shareholder approval, the Company intends to issue these lenders 111,109 warrants exercisable into common shares at an exercise price of $0.81 ($0.90 CAD) per share for a term of two years. |
7. | The options, as described in Note 9, were exercised prior to their expiry date of June 10, 2014. Upon exercise the Company received proceeds of $225,975 ($250,000 CAD) and issued 416,666 common shares. |
8. | On April 24, 2014, the Company signed a Letter of Intent with Highline Research Advisors (“Highline”), an affiliate of Merriman Capital, Inc. (“Merriman”), whereby Highline will act as the exclusive agent in arranging for the Company to go public by reverse merger with a public company, yet to be identified. |
9. | On April 1, the Company granted 209,000 options with an exercise price of $0.54 ($0.60 CAD) vesting 1/3 immediately, 1/3 on April 1, 2015 and 1/3 on April 1, 2016. |
F- 20 |
BIONIK LABORATORIES INC. |
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS |
December 31, 2014 |
(Amounts expressed in US Dollars) |
Index
F- 21 |
Condensed Interim Balance Sheets
(Amounts expressed in US Dollars)
As at | As at | |||||||
December 31, 2014 | March 31, 2014 | |||||||
(unaudited) | (audited) | |||||||
$ | $ | |||||||
Assets | ||||||||
Current | ||||||||
Cash and cash equivalents | 209,933 | 3,482 | ||||||
Prepaid expenses and other receivables (Note 3) | 81,130 | 505,787 | ||||||
Due from related parties (Note 7) | 44,986 | - | ||||||
Total Current Assets | 336,049 | 509,269 | ||||||
Equipment (Note 4) | 77,922 | 6,752 | ||||||
413,971 | 516,021 | |||||||
Liabilities and Shareholders' Deficiency | ||||||||
Current | ||||||||
Accounts payable (Note 7) | 308,947 | 120,751 | ||||||
Accrued liabilities (Note 7) | 155,463 | 128,739 | ||||||
Convertible secured promissory note (Note 5) | - | 119,112 | ||||||
Loans payable (Note 6) | - | 772,146 | ||||||
Due to related parties (Note 7) | - | 149,899 | ||||||
Total Liabilities | 464,410 | 1,290,647 | ||||||
Shareholders' Equity (Deficiency) | ||||||||
Common shares, no par value, unlimited authorized, 15,810,838 common shares issued and outstanding (March 31, 2014 – 11,641,667) (Note 8) | 4,837,844 | 1,658,585 | ||||||
Contributed surplus | 148,349 | 114,284 | ||||||
Deficit | (5,053,982 | ) | (2,589,235 | ) | ||||
Accumulated other comprehensive income | 17,350 | 41,740 | ||||||
Total Shareholders' Equity (Deficiency) | (50,439 | ) | (774,626 | ) | ||||
Total Liabilities and Shareholders' Equity (Deficiency) | 413,971 | 516,021 |
Contingencies (Note 10)
Subsequent Events (Note 12)
Approved by the Board | |
“Peter Bloch” Director | |
“Michal Prywata” Director |
The accompanying notes are an integral part of these condensed interim financial statements
F- 22 |
Condensed Interim Statements of Operations and Comprehensive Loss
for the nine and three month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in US Dollars)
9 month period ended | 3 month period ended | |||||||||||||||
December 31, 2014 and 2013 | December 31, 2014 and 2013 | |||||||||||||||
$ | $ | $ | $ | |||||||||||||
Expenses | ||||||||||||||||
Research and development | 1,178,837 | 747,502 | 372,362 | 249,129 | ||||||||||||
Professional and consulting fees | 601,491 | 407,941 | 120,846 | 146,506 | ||||||||||||
General and administrative | 549,947 | 205,248 | 173,959 | 71,402 | ||||||||||||
Imputed interest expense (Note 5) | 27,677 | 55,647 | - | - | ||||||||||||
Interest expense | 6,212 | 10,868 | 868 | 4,699 | ||||||||||||
Depreciation (Note 4) | 34,036 | 1,349 | 11,033 | 445 | ||||||||||||
Other income | (46,026 | ) | - | (1,285 | ) | - | ||||||||||
Stock-based compensation expense (Note 9) | 112,573 | - | - | - | ||||||||||||
2,464,747 | 1,428,555 | 677,783 | 472,181 | |||||||||||||
Net loss for the period | 2,464,747 | 1,428,555 | 677,783 | 472,181 | ||||||||||||
Foreign exchange translation adjustment for the period | 24,390 | 553 | 10,635 | 84 | ||||||||||||
Net loss and comprehensive loss for the period | 2,489,137 | 1,429,108 | 688,418 | 472,265 | ||||||||||||
Loss per share - basic and diluted | 0.16 | 0.12 | 0.04 | 0.04 | ||||||||||||
Weighted average number of shares outstanding | 15,358,291 | 11,602,879 | 15,810,838 | 11,612,443 |
The accompanying notes are an integral part of these condensed interim financial statements
F- 23 |
Condensed Interim Statements of Changes in Shareholder's Equity (Deficiency)
for the nine month period ended December 31, 2014 (unaudited) and the year ended March 31, 2014 (unaudited)
(Amounts expressed in US Dollars)
Accumulated Other | ||||||||||||||||||||||||
Number of | Common | Contributed | Comprehensive | |||||||||||||||||||||
Common | Shares | Surplus | Deficit | Income | Total | |||||||||||||||||||
Shares | $ | $ | $ | $ | $ | |||||||||||||||||||
Balance, March 31, 2013 | 11,475,000 | 1,569,594 | 16,238 | (1,137,466 | ) | 23,456 | 471,822 | |||||||||||||||||
Issuance of common shares for cash | 166,667 | 96,320 | - | - | - | 96,320 | ||||||||||||||||||
Share issue costs | - | (7,329 | ) | - | - | - | (7,329 | ) | ||||||||||||||||
Relative fair value of options issued and contributed capital from shareholders | - | - | 98,046 | - | - | 98,046 | ||||||||||||||||||
Net loss for the year | - | - | - | (1,451,769 | ) | - | (1,451,769 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | 18,284 | 18,284 | ||||||||||||||||||
Balance, March 31, 2014 | 11,641,667 | 1,658,585 | 114,284 | (2,589,235 | ) | 41,740 | (774,626 | ) | ||||||||||||||||
Issuance of common shares for cash | 3,430,756 | 2,616,062 | - | - | - | 2,616,062 | ||||||||||||||||||
Share issue costs | - | (11,609 | ) | - | - | - | (11,609 | ) | ||||||||||||||||
Shares issued on conversion of loans | 321,748 | 239,746 | - | - | - | 239,746 | ||||||||||||||||||
Beneficial conversion feature | - | - | 27,677 | 27,677 | ||||||||||||||||||||
Shares issued on exercise of stock options | 416,667 | 335,060 | (106,185 | ) | - | - | 228,875 | |||||||||||||||||
Stock compensation expense | - | - | 112,573 | - | - | 112,573 | ||||||||||||||||||
Net loss for the period | - | - | - | (2,464,747 | ) | - | (2,464,747 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | (24,390 | ) | (24,390 | ) | ||||||||||||||||
Balance, December 31, 2014 | 15,810,838 | 4,837,844 | 148,349 | (5,053,982 | ) | 17,350 | (50,439 | ) |
The accompanying notes are an integral part of these condensed interim financial statements
F- 24 |
Condensed Interim Statements of Cash Flows
for the nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in US Dollars)
2014 | 2013 | |||||||
$ | $ | |||||||
Operating activities | ||||||||
Net loss for the period | (2,464,747 | ) | (1,428,555 | ) | ||||
Adjustment for items not affecting cash | ||||||||
Depreciation of equipment | 34,036 | 1,349 | ||||||
Imputed interest | 27,677 | 55,647 | ||||||
Stock compensation expense | 112,573 | - | ||||||
(2,290,461 | ) | (1,371,559 | ) | |||||
Changes in non-cash working capital items | ||||||||
Prepaid expenses and other receivables | 420,709 | 393,900 | ||||||
Accounts payable | 195,427 | 116,122 | ||||||
Accrued liabilities | 34,847 | 70,407 | ||||||
Net cash used in operating activities | (1,639,478 | ) | (791,130 | ) | ||||
Investing activities | ||||||||
Acquisition of equipment | (109,316 | ) | (4,557 | ) | ||||
Net cash used in investing activities | (109,316 | ) | (4,557 | ) | ||||
Financing activities | ||||||||
Proceeds from issuance of shares, net of issue costs | 2,616,062 | 96,320 | ||||||
(Repayment of) proceeds from loans payable | (733,293 | ) | 482,050 | |||||
Proceeds from exercise of options | 228,875 | - | ||||||
(Repayment of) proceeds from loans from related parties | (111,357 | ) | 84,107 | |||||
Net cash provided by financing activities | 2,000,287 | 662,477 | ||||||
Effects of foreign currency exchange rate changes | (45,042 | ) | 16,377 | |||||
Net increase (decrease) in cash and cash equivalents for the period | 206,451 | (116,833 | ) | |||||
Cash and cash equivalents, beginning of period | 3,482 | 233,240 | ||||||
Cash and cash equivalents, end of period | 209,933 | 116,407 | ||||||
Supplemental information: | ||||||||
Issuance of shares on conversion of loans | $ | 239,746 | - |
The accompanying notes are an integral part of these condensed interim financial statements
F- 25 |
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
1. | NATURE OF OPERATIONS AND GOING CONCERN |
The Company and its Operations
Bionik Laboratories Inc. (the “Company” or “Bionik”) is a Canadian private company incorporated under the Canada Business Corporation Act on March 24, 2011 and domiciled in Ontario, Canada. The Company’s registered head office is located at 483 Bay Street, N105, Toronto, Ontario, M5G 2C9.
The Company is a bioengineering research and development company targeting diseases and injuries that impact human mobility. The Company is working towards its first market ready product, which will be the “ARKE”, a robotic pair of exoskeleton legs to be used for rehabilitation purposes and potentially for day-to-day use as a replacement for a wheelchair.
These condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"), which contemplates continuation of the Company as a going concern, which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business.
The Company has not yet realized any revenues from its planned operations. As at December 31, 2014 the Company has a working capital deficit of $128,361 (March 31, 2014 - $781,378) and shareholders’ deficit of $50,439 (March 31, 2014 - $774,626) and incurred a net loss and comprehensive loss of $2,489,137 for the nine-month period ended December 31, 2014 (nine months ended December 31, 2013 - $1,429,108). Further, the Company plans to initially categorize the ARKE as a Class I or Class II medical device with the U.S. Food and Drug Administration (“FDA”) and accordingly will be subject to FDA regulations, guidelines and the FDA’s Quality System Regulation (“QSR”) in order to market and sell their product in the U.S. The costs of obtaining the necessary FDA approval and maintaining compliance with the FDA could be significant, see Note 11.
F- 26 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
2. | SIGNIFICANT ACCOUNTING POLICIES |
Unaudited Condensed Interim Financial Statements
These unaudited condensed interim financial statements have been prepared on the same basis as the annual audited financial statements and should be read in conjunction with those annual audited financial statements for the year ended March 31, 2014. In the opinion of management, these unaudited condensed interim financial statements reflect adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
Recently Adopted Accounting Pronouncements
“Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements (“ASU 2014-10”) issued in June 2014, ASU 2014-10 eliminated the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 are effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 for its condensed interim financial statements and accordingly has removed the inception-to-date information.
Recently Issued Accounting Pronouncements
“Income Taxes (ASC Topic - 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists” (“ASU 2013-11”) was issued during July 2013. The FASB issued guidance on how to present an unrecognized tax benefit. The guidance is effective for annual periods beginning after December 15, 2013. Adoption of the accounting pronouncement does not have a material effect on these accompanying condensed interim financial statements.
On May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is not permitted. The impact on the condensed interim financial statements of adopting ASU 2014-09 will be assessed by management.
On August 27, 2014, the FASB issued a new financial accounting standard on going concern, ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Sub-Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The standard provides guidance about management’s responsibility to evaluate whether there is a substantial doubt about the organization’s ability to continue as a going concern. The amendments in this Update apply to all companies. They become effective in the annual period ending after December 15, 2016, with early application permitted. The impact on the condensed interim financial statements of adopting ASU 2014-15 will be assessed by management.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed interim financial statements.
F- 27 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
3. | PREPAID EXPENSES AND OTHER RECEIVABLES |
December 31,
2014 |
March 31,
2014 |
|||||||
$ | $ | |||||||
Prepaid expenses and sundry receivables | 18,172 | 11,700 | ||||||
Prepaid insurance | 40,630 | - | ||||||
IRAP Grant receivable (i) | - | 63,300 | ||||||
Investment tax credit receivable (ii) | - | 408,506 | ||||||
Sales taxes receivable (iii) | 22,328 | 22,281 | ||||||
81,130 | 505,787 |
i) | Industrial Research Assistance Program (“IRAP”) grant receivable is the value of claim receivable from the Government of Canada for recovery of eligible expenditures. The grant proceeds are recognized as ‘Other Income’ in the condensed interim statement of operations and comprehensive loss, when received. |
ii) | Investment tax credit receivable is the estimated Scientific Research and Experimental Development (“SR&ED”) claim receivable from the Government of Canada for input tax credits that are granted on qualifying SR&ED expenditures. The recovery, which was received in November 2014, is recognized as ‘Other Income’ in the condensed interim statement of operations and comprehensive loss. |
ii) | Sales tax receivable represents net harmonized sales taxes (HST) input tax credits receivable from the Government of Canada. |
4. | EQUIPMENT |
Equipment consists of the following as at December 31, 2014 and March 31, 2014
December 31, 2014 | March 31, 2014 | |||||||||||||||||||||||
Cost |
Accumulated
Depreciation |
Net | Cost |
Accumulated
Depreciation |
Net | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Computers and electronics | 77,650 | 27,438 | 50,212 | - | - | - | ||||||||||||||||||
Furniture and fixtures | 24,909 | 7,325 | 17,584 | 11,194 | 4,442 | 6,752 | ||||||||||||||||||
Tools and parts | 11,913 | 1,787 | 10,126 | - | - | - | ||||||||||||||||||
114,472 | 36,550 | 77,922 | 11,194 | 4,442 | 6,752 |
Equipment is recorded at cost less accumulated depreciation. Depreciation expense during the period ended December 31, 2014 was $34,036 (Nine months ended December 31, 2013 - $1,349).
Equipment is translated to U.S. Dollars using the rate of exchange prevailing at the balance sheet date. There were no disposals and $109,316 in additions during the nine months ended December 31, 2014 (nine months ended December 31, 2013 - $4,557). The remaining change in cost from March 31, 2014 is due to foreign exchange translation.
F- 28 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
5. | CONVERTIBLE SECURED PROMISSORY NOTE |
On December 8, 2011, the Company received $61,500 CAD from a lender that at the time was non-interest bearing and had no specified terms of repayment. On February 28, 2012 the lender and the Company agreed to the terms of a Convertible Secured Promissory Note, which securitized the previous note plus an additional $60,000 CAD for a total principal amount of $121,500 CAD. The note bears interest at prime plus 1% and was to mature on the earlier of a qualifying financing event or February 28, 2014. The “qualifying financing event” is defined as an equity financing (including convertible securities) that is completed on or prior to the maturity date where the Company issues securities for aggregate gross proceeds equal to or greater than $1.5 million CAD. The loan is secured by a general security agreement under which the Company has pledged, assigned, charged and granted to the lender a security interest in and to the property, assets and undertaking of the Company.
The lender has an option to convert the principal plus accrued interest at a discount of 20% to the share price in the event of a qualifying financing event prior to February 28, 2014. The Company evaluated the conversion option on inception and determined that it was based on a contingent event and accordingly, the option was not valued.
The Company determined that a market interest rate for similar debt would be approximately 10% per annum and accordingly, recognized the note at its present value based on a 10% discount rate, or $105,262, and allocated the discount of $16,238 from the face value of $121,500 to additional paid in capital, which due to achieving parity the USD and CAD amounts were not materially different. The discount of $16,238 was amortized to February 28, 2014 when the note was due to mature. The Company expensed imputed interest of $27,677 and $55,647 during the periods ended December 31, 2014 and 2013, respectively.
The note matured on February 28, 2014, at this point the conversion option expired and the note became due on demand; however, no repayment was demanded. Upon the occurrence of the April financing (Note 8(ii)) the Company agreed to honor the original conversion option and a beneficial conversion feature of $27,677 was recognized. As the note was due on demand the Company immediately recognized imputed interest of $27,677 in the condensed interim statement of operations and comprehensive loss.
On May 9, 2014, the lender converted the note plus accrued interest in to common shares based on the 20% discount to the $0.81 ($0.90 CAD) per share equity financing that was accomplished in April 2014 and the Company issued these shares in June (see Note 8(v)).
F- 29 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
6. | LOANS PAYABLE |
As of December 31, 2014 and March 31, 2014, the Company has the following loans:
2014 | 2014 | |||||||
$ | $ | |||||||
a) Lieberman Family Trust | ||||||||
The loan carried interest of 10% per annum and was payable within 90 days of demand or upon successful completion of a capital raise for $2,711,700 (CAD $3 million). Formerly secured by way of partial assignment of the Company’s entitlement to its SR&ED tax credit refund from the Government of Canada for the year ended March 31, 2014. | - | 27,141 | ||||||
b) Gaston-Dreyfus Remi | ||||||||
The loan carried interest of 6% per annum and was payable on demand. The loan was secured by a general security agreement on all the assets of the Company. | - | 454,729 | ||||||
c) Parvez Patel/Huda | ||||||||
The loan was unsecured, carried interest of 2% per annum and was repayable on demand or successful completion of capital raise for $5,694,570 (CAD $6.3 million). | - | 100,766 | ||||||
d) Pope & Co. | ||||||||
The loan carried interest of 10% per annum and was payable within 90 days of demand or upon successful completion of a capital raise for $2,711,700 (CAD $3 million) by no later than June 30, 2014. Formerly secured by way of partial assignment of the Company’s entitlement to its SR&ED tax credit refund from the Government of Canada for the year ended March 31, 2014. | - | 189,510 | ||||||
- | 772,146 |
(a) | During the period, the loan from Lieberman Family Trust and accrued interest thereon was settled in exchange for 33,333 common shares (Note 8(iv)). | |
(b&c) | During the period, the Company repaid the loan of $452,350 ($500,000 CAD) from Gaston-Dreyfus Remi plus accrued interest and the loan of $99,517 ($110,000 CAD) plus accrued interest from Parvez Patel/Huda (both unrelated parties). | |
(d) | During the period, the Company repaid loans for $180,940 ($200,000 CAD) plus accrued interest of $12,138 ($13,417 CAD) owing to investors introduced by Pope and Co. Subject to shareholder approval, the Company intends to issue these lenders 111,109 warrants exercisable into common shares at an exercise price of $0.77 ($0.90 CAD) per share for a term of two years |
F- 30 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
7. | RELATED PARTY TRANSACTIONS AND BALANCES |
Due from related parties
(a) | As of December 31, 2014, the Company has advances receivable from the Chief Operating Officer (“COO”) and Chief Technology Officer (“CTO”) for $44,986 (March 31, 2014 – $63,953 payable to). These advances are unsecured, bear interest at a rate of 1% based on the Canada Revenue Agency’s prescribed rate for such advances and are payable on demand in Canadian dollars. During the period the Company repaid the loans provided as of March 31, 2014; the Company advanced funds to settle a tax assessment; the Company paid additional salary amounts that had not been made during the period; and, the Company reimbursed $37,837 ($44,000 CAD) related to various out-of-pocket costs they incurred on behalf of the Company, all of which resulted in a net advance of $44,986 as at December 31, 2014. |
Issuance of shares to settle due to related party
(b) | During the nine months ended December 31, 2014, one advance amounting to $85,947 ($95,000 CAD) (2013 - $Nil) was settled by issuance of 105,555 common shares to a former director. |
Accounts payable and accrued liabilities
(c) | As at December 31, 2014 there is $4,220 (March 31, 2014 - $16,235) owing to the Chief Executive Officer (“CEO”) and $5,930 (March 31, 2014 - $Nil) owing to the CTO, both of which are included in accounts payable. |
(d) | As at December 31, 2014 there is $Nil (March 31, 2014 - $48,673) owing to a former director included in accrued liabilities. |
F- 31 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
8. | CAPITAL STOCK |
Number of | ||||||||
Common | Stated Value | |||||||
Shares | $ | |||||||
Balance, March 31, 2013 | 11,475,000 | 1,569,594 | ||||||
Issued under private placement (i) | 166,667 | 96,320 | ||||||
Share issue costs | - | (7,329 | ) | |||||
Balance, March 31, 2014 | 11,641,667 | 1,658,585 | ||||||
Issued under private placement (ii) | 3,430,756 | 2,616,062 | ||||||
Issued on conversion and settlement of debt (iii), (iv), (v) | 321,748 | 239,746 | ||||||
Issued on the exercise of options (vi) | 416,667 | 335,060 | ||||||
Share issue costs | - | (11,609 | ) | |||||
Balance December 31, 2014 | 15,810,838 | 4,837,844 |
(i) | In June, 2013, the Company issued through a private placement, 166,667 common shares at a price of $0.58 ($0.60 CAD) per share for aggregate gross proceeds of $96,320. |
(ii) | In April, 2014, the Company completed a private placement issuing 3,182,978 common shares at a price of $0.82 ($0.90 CAD) per share for gross proceeds of $2,616,062 ($2,864,680 CAD). A former director of the Company assisted in securing a significant portion of this financing. As a result the Company issued 247,778 common shares as a finder’s fee to this director. The Company also incurred $11,609 in share issue costs related to the transaction. |
(iii) | In May 2014, the Company issued 105,555 common shares to a director of the Company in exchange for the settlement of $87,638 ($95,000 CAD) of unsecured debt. |
(iv) | In May 2014, the Company issued 33,333 common shares to the Libermann Family Trust in exchange for the settlement of $27,585 ($30,000 CAD) of unsecured debt. |
(v) | In June, 2014, the Company issued 182,860 common shares on conversion of the convertible secured promissory note (Note 5). The note plus accrued interest totaled $124,523 ($131,659 CAD) and was converted at a 20% discount to the $0.68 ($0.90 CAD) April 2014 private placement. |
(vi) | In June 2014, the Company issued 416,667 common shares for the exercise of stock options. The Company received cash of $228,875 ($250,000 CAD). The value of the options, $106,185, was transferred from contributed surplus to share capital on exercise. |
F- 32 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
9. | STOCK OPTIONS |
The Company has a stock option plan, the purpose of which is to attract, retain and motivate persons of training, experience and leadership to the Company, including their directors, officers and employees, and to advance the interests of the Company by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Company.
Options may be granted in respect of authorized and unissued shares, provided that the aggregate number of shares reserved for issuance upon the exercise of all Options granted under the Plan, shall not exceed eight (8%) percent of the issued share capital or such greater number of shares as may be determined by the Board and approved, if required, by the shareholders of the Company and by any applicable stock exchange or other regulatory authority. Optioned shares in respect of which options are not exercised shall be available for subsequent options.
On June 10, 2013, the Company issued 416,667 options to a shareholder. The options vested immediately and have an exercise price of $0.52 ($0.60 CAD) per share and a time to expiration of one year. These options were valued at $106,185. These options were exercised during the year (Note 8(vi)).
On April 11, 2014 and June 20, 2014 the Company issued 209,000 and 84,000 options to employees and a consultant at an exercise price of $0.52 ($0.60 CAD) and $0.77 ($0.90 CAD), respectively, which all vest one-third on grant date and two thirds equally over the subsequent two years on the anniversary date. These options were valued at $153,348 and $61,142 respectively and have a time to expiration of seven years. During the period ended December 31, 2014, $112,573 has been recorded as stock-based compensation related to the vesting of these stock options.
On July 1, 2014, the Company issued a further 945,000 options to employees of the Company, at an exercise price of $0.77 ($0.90 CAD), which vest 90 days after the close of a reverse merger transaction with a concurrent private placement raising a minimum of $6,000,000, see Notes 12 (d) and (e). These options were valued at $719,835 and have a time to expiration of seven years.
These options were valued using the Black-Scholes option pricing model with the following key assumptions:
Expected life | 7 years | |||
Risk free rate | 1.59 | % | ||
Dividend yield | 0 | % | ||
Forfeiture rate | 0 | % | ||
Volatility (based upon similar public companies) | 114 | % |
F- 33 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended
December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
9. | STOCK OPTIONS - continued |
A summary of the Company’s outstanding and exercisable options is as follows:
Number of | Weighted Average | Weighted Average | ||||||||||
options | Exercise Price | Remaining Contract Life | ||||||||||
# | $ | (Years) | ||||||||||
Outstanding, March 31, 2012 and 2013 | - | - | - | |||||||||
Granted during the year | 416,667 | 0.52 | - | |||||||||
Outstanding March 31, 2014 | 416,667 | 0.52 | 0.20 | |||||||||
Exercised during the period | (416,667 | ) | 0.77 | - | ||||||||
Granted during the period | 1,238,000 | 0.73 | 7 | |||||||||
Cancelled during the period | (40,000 | ) | 0.52 | - | ||||||||
Outstanding, December 31, 2014 | 1,198,000 | 0.74 | 6.72 |
10. | CONTINGENCIES |
From time to time, the Company may be involved in a variety of claims, suits, investigations and proceedings arising in the ordinary course of our business, collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of current pending matters will not have a material adverse effect on its business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on the Company because of legal costs, diversion of management resources and other factors.
11. | RISK MANAGEMENT |
The Company’s cash balances are maintained in various banks in Canada. Deposits held in banks in Canada are insured up to $100,000 CAD per depositor for each bank by The Canada Deposit Insurance Corporation, a federal crown corporation. Actual balances at times may exceed these limits.
Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. The Company settled its loans payable and convertible secured promissory note; therefore, it retains minimal exposure to fluctuations in the market interest rate. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposure through its normal operating and financing activities.
Liquidity Risk
Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due. Accounts payable and accrued liabilities are due within the current operating period.
The Company has funded its operations through the issuance of capital stock, convertible debt and loans in addition to grants and investment tax credits received from the Government of Canada.
F- 34 |
BIONIK LABORATORIES INC.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the three and nine month periods ended December 31, 2014 and 2013 (unaudited)
(Amounts expressed in U.S. Dollars)
11. | RISK MANAGEMENT - continued |
Liquidity Risk - continued
During the nine months ended December 31, 2014, the Company raised net cash of $2,616,062 from issuances of common shares, net of issue costs and raised $228,875 from the exercise of options. The future of the Company is dependent upon its ability to obtain financing and upon achieving profitable operations. Subsequent to period end the Company raised approximately $6,200,000 concurrent with a merger with Drywave Technologies Inc. (“Drywave”), a U.S public company, see Note 12 (d). While the Company has been successful in securing such financing in the past, there is no assurance that it will be able to do so in the future.
Based on management’s assessment of the Company’s cash flow, and the financing completed subsequent to period end (Note 12(d)), management believes the Company has sufficient cash to sustain operations for an additional 12 month period.
12. | SUBSEQUENT EVENTS |
(a) | On January 21, 2015, the Company received a $500,000 loan from a third party which bears interest at 5% per annum and is convertible into common shares should the transaction to raise at least $6,000,000 be completed. On February 26, 2015, the transaction was completed and the loan was converted into common shares. |
(b) | On February 17, 2015 the Company issued 100,000 options to a director, employees and a consultant at $0.77 ($0.90 CAD) that vest one third immediately and two thirds over the next two anniversary dates with an expiry date of seven years. |
(c) | On February 25, 2015, 83,574 common shares were issued to two former lenders connected with a $241,185 ($250,000 CAD) loan received and repaid during fiscal 2013. In addition, as part of the consideration for the initial loan the CTO and COO had transferred 100,000 shares to the lenders. Initially it was thought that only the 100,000 shares were required; however, the lenders’ opinion was that they were entitled to additional shares based on the mechanics of a formula in the agreement. As a result of negotiation all parties agreed to a settlement by the issuance of the 83,574 additional common shares. The CTO and COO, for contributing the 100,000 shares to the lenders, will receive 320,000 common shares after giving effect to the exchange ratio for BLC (Note 12(d)) |
(d) | On February 26, 2015, the Company closed a Merger Acquisition (the “Merger”) of Drywave Technologies Inc. (“Drywave”), a U.S public company with limited operations. Pursuant to the Merger the Company became a wholly owned subsidiary of Drywave and the Company’s former shareholders became the majority owners of Drywave. Drywave, whose shares are currently quoted on the OTC Bulletin Board, changed its name to Bionik Laboratories Corp. (“BLC”) and will continue the business of Bionik as its only line of business. The Merger constitutes a reverse merger whereby Drywave was deemed to have acquired Bionik for accounting purposes only. Upon the close of the Merger existing shareholders will exchange their Bionik Laboratories Inc. shares at a ratio of 3.14576 for shares of BLC. |
Concurrently with the Merger, BLC completed a private placement for gross proceeds of approximately $6,200,000. As consideration BLC issued 7,735,750 common shares, 7,735,750 warrants exercisable at $1.40 for four years and 773,575 broker warrants exercisable at $1.40 for four years.
(e) | Upon the close of the Merger, the condition was met on the 945,000 stock options issued to management of the Company, see Note 9, and accordingly the options will vest 90 days from the close of the Merger. The result will be the issuance of 990,914 options to each of the CEO, CTO and COO after application of the exchange ratio of BLC. |
F- 35 |
Exhibit 3(i)
AMENDED AND RESTATED
CERTIFICATE of incorporation
of
drywave technologies, Inc.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State Of Delaware)
Drywave Technologies, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “DGCL”),
DOES HEREBY CERTIFY:
1. That the name of this corporation is Drywave Technologies, Inc., and that this corporation was originally incorporated pursuant to the DGCL on June 25, 2013.
2. That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation (as amended, the “Certificate of Incorporation”), declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:
3. This Amended and Restated Certificate of Incorporation amends and restates the Certificate of Incorporation of this corporation in its entirety to read as follows:
FIRST : The name of this corporation is Bionik Laboratories Corp. (the “Corporation”).
SECOND : The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801 New Castle County. The name of the registered agent of the Corporation at such address is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801 New Castle County.
THIRD : The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
FOURTH : The total number of shares of all classes of stock which the Corporation shall have authority to issue is (a) 150,000,000 shares of Common Stock, $0.001 par value per share (“Common Stock”), and (b) 10,000,000 shares of Preferred Stock, $0.001 par value per share (“Preferred Stock”). Preferred Stock may be issued from time to time in one or more series and/or classes (“Series”). The Board of Directors is hereby authorized to provide for the issuance of shares of Preferred Stock in Series and, by filing a certificate pursuant to the DGCL (hereinafter, along with any similar designation relating to any other class of stock that may hereafter be authorized, referred to as a “Preferred Stock Designation”), to established from time to time one or more Series, by fixing and determining the number of shares to be included in each such Series, and to fix the designation, powers, preferences and rights of the shares of each such Series and the qualifications, limitations and restrictions thereof. The authority of the Board of Directors with respect to each Series is hereby expressly vested in it and shall include, without limiting the generality of the foregoing, determination of the following:
(i) the designation of such Series, which may be by distinguishing number, letter or title;
(ii) the number of shares of the Series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding);
(iii) the amounts payable on, and the preferences, if any, of shares of the Series in respect of dividends payable and any other class or classes of capital stock of the Company, and whether such dividends, if any, shall be cumulative or noncumulative;
(iv) dates on which dividends, if any, shall be payable;
(v) whether the shares of such Series shall be subject to redemption by the Company, and if made subject to redemption, the redemption rights and price or prices, if any, for shares of the Series;
(vi) the terms and amount of any sinking fund provided for the purchase or redemption of shares of the Series;
(vii) the amounts payable on and the preferences, if any, of shares of the Series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company;
(viii) whether the shares of the Series shall be convertible into or exchangeable for shares of any other Series, or any other security, of the Company or any other corporation, and, if so, the specification of such other Series of such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made;
(ix) restrictions on the issuance of shares of the same Series or of any other Series; and
(x) whether the holders of the shares of such Series shall be entitled to vote, as a Series or otherwise, on any and all matters of the Company to which holders of Common Stock are entitled to vote.
The Common Stock shall be subject to the express terms of the Preferred Stock and any Series thereof. Each share of Common Stock shall be equal to each other share of Common Stock. Except as may be provided in these Amended and Restated Certificate of Incorporation or in a Preferred Stock Designation, the holders of shares of Common Stock shall be entitled to one vote for each such share upon all matters presented to the stockholders.
FIFTH : Subject to the remainder of this Article FIFTH, effective on February 13, 2015 (the “Effective Time”), a reverse stock split of the Common Stock will be effected such that every one share of Common Stock issued and outstanding immediately prior to the Effective Time will be converted into 0.831105 share of Common Stock. As of the Effective Time, the shares of Common Stock issued and outstanding immediately prior to the Effective Time (the “Old Common Stock”) will be automatically and without any action on the part of the holder thereof reclassified as and converted into that number of shares of Common Stock obtained by multiplying the shares of Common Stock by .831105 (the “New Common Stock”), subject to the treatment of fractional share interests as described below. Each old certificate that, immediately prior to the Effective Time, represented shares of Old Common Stock (the “Old Certificates”) shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent that number of whole shares of New Common Stock into which the shares of Old Common Stock represented by such Old Certificate shall have been reclassified. All fractional shares of Common Stock shall be rounded to the next higher whole number of shares of Common Stock. If more than one Old Certificate shall be surrendered at one time for the account of the same stockholder, the number of full shares of New Common Stock for which new certificates (the “New Certificates”) shall be issued shall be computed on the basis of the aggregate number of shares represented by the Old Certificates so surrendered. If any New Certificate is to be issued in a name other than that in which the Old Certificates surrendered for exchange are issued, the Old Certificates so surrendered shall be properly endorsed and otherwise in proper form for transfer, and the person or persons requesting the exchange shall affix any requisite stock transfer tax stamps to the Old Certificates surrendered, or provide funds for their purchase, or establish to the satisfaction of the transfer agent that transfer taxes are not payable. From and after the Effective Time, the amount of capital represented by the shares of New Common Stock into which and for which the shares of Old Common Stock are reclassified under the terms hereof shall be the same as the amount of capital represented by the shares of Old Common Stock so reclassified, until thereafter reduced or increased in accordance with applicable law.
SIXTH : Unless and except to the extent that the bylaws of the Corporation (the “Bylaws”) shall so require, the vote by stockholders on any matter, including the election of directors, need not be by written ballot.
SEVENTH :
(a) The Corporation shall indemnify to the fullest extent permitted under and in accordance with the laws of the State of Delaware any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that the person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation; provided, no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity by the Corporation for such expenses which the Court of Chancery or such other court shall deem proper.
(c) Expenses (including attorneys’ fees) incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding shall (in the case of any action, suit or proceeding against a director of the Corporation) or may (in the case of any action, suit or proceeding against an officer, trustee, employee or agent of the Corporation) be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors upon receipt of an undertaking by or on behalf of a person so indemnified to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article SEVENTH.
(d) The indemnification and other rights set forth in this Article SEVENTH shall not be exclusive of any provisions with respect thereto in the bylaws of the Corporation or any other contract or agreement between the Corporation and any officer, director, employee or agent of the Corporation. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against liability under this Article SEVENTH and applicable law, including the DGCL.
(e) No director shall be personally liable to the Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or limit the liability of a director: (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the DGCL; or (e) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended after the date hereof to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
(f) Neither the amendment nor repeal of this Article SEVENTH, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article SEVENTH, shall eliminate or reduce the effect of this Article SEVENTH in respect of any matter occurring before such amendment, repeal or adoption of an inconsistent provision or in respect of any cause of action, suit or claim relating to any such matter which would have given rise to a right of indemnification or right to the reimbursement of expenses pursuant to this Article SEVENTH if such provision had not been so amended or repealed or if a provision inconsistent therewith had not been so adopted.
EIGHTH: In furtherance of, and not in limitation of, the powers conferred by statute, the Board is expressly authorized to adopt, amend or repeal the Bylaws or adopt new Bylaws without any action on the part of the stockholders; provided that any Bylaw adopted or amended by the board of directors, and any powers thereby conferred, may be amended, altered or repealed by the stockholders.
NINTH : The Corporation shall have the right, subject to any express provisions or restrictions contained in the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) or the Bylaws, from time to time, to amend the Certificate of Incorporation or any provision thereof in any manner now or hereafter provided by law, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by the Certificate of Incorporation or any amendment thereof are conferred subject to such right.
TENTH : Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or the By-laws or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
4. That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of this corporation in accordance with Section 228 of the General Corporation Law.
5. That this Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.
6. That this Amended and Restated Certificate of Incorporation shall be effective as of February 13, 2015.
[Signature page to follow]
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 10 th day of February, 2015.
DRYWAVE TECHNOLOGIES, INC. | ||
By: | /s/ Austin Kibler | |
Name: | Austin Kibler | |
Title: | Chief Executive Officer |
Exhibit 3(ii)
AMENDED AND RESTATED BYLAWS
OF
BIONIK LABORATORIES CORP.
ARTICLE I — MEETINGS OF STOCKHOLDERS
1.1 Place of Meetings. Meetings of the stockholders of Bionik Laboratories Corp. (the “ Company ”) shall be held at any place determined by the Company’s board of directors (the “ Board ”). The Board may, in its sole discretion, determine that a meeting of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law, as amended (the “ DGCL ”). In the absence of any such designation or determination, the stockholders’ meetings shall be held at the Company’s principal executive office.
1.2 Annual Meeting. An annual meeting of the stockholders shall be held for the election of directors at such date , time and place as may be designated by resolution of the Board from time to time. Any other proper business may be transacted at the annual meeting.
1.3 Special Meeting. A special meeting of the stockholders may be called at any time by the Board or Chief Executive Officer. A special meeting of stockholders can be called for any purpose permissible under the DGCL.
The officer(s) receiving the request shall cause notice to be promptly given to the stockholders entitled to vote at such meeting, in accordance with these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting. No business may be transacted at such special meeting other than the business specified in such notice to the stockholders. Nothing contained in this paragraph of this Section 1.3 shall be construed as limiting, fixing, or affecting the time when a meeting of the stockholders called by action of the Board may be held.
1.4 Notice of Stockholders’ Meetings. Whenever the stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which the stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining the stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the Certificate of Incorporation of the Company, as amended and/or restated from time to time (including with respect to any Certificate(s) of Designation contemplated thereby) (the “ Certificate of Incorporation ”) or these bylaws, the written notice of any meeting of the stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.
1.5 Quorum . Except as otherwise provided by law, the Certificate of Incorporation or these bylaws, at each meeting of the stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. Where a separate vote by a class or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, except as otherwise provided by law, the Certificate of Incorporation or these bylaws.
If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, in the manner provided in Section 1.6 of these bylaws, until a quorum is present or represented.
1.6 Adjourned Meeting; Notice . Any meeting of the stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which the stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for the stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL and Section 1.10 of these bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
1.7 Conduct of Business . The chairperson of any meeting of the stockholders shall determine the order of business and the procedure at the meeting, including such regulation on the manner of voting and the conduct of business. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
1.8 Voting . The stockholders entitled to vote at any meeting of the stockholders shall be determined in accordance with the provisions of Section 1.10 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the Certificate of Incorporation, each stockholder entitled to vote at any meeting of the stockholders shall be entitled to one vote for each share of capital stock held by such stockholder which has voting power upon the matter in question. Voting at meetings of the stockholders need not be by written ballot and, unless otherwise required by law, need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting. If authorized by the Board, such requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission (as defined in Section 7.2 of these bylaws), provided that any such electronic transmission shall either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder.
Except as otherwise required by law, the Certificate of Incorporation or these bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the Certificate of Incorporation or these bylaws, directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or series or classes or series is required, in all matters other than the election of directors, the affirmative vote of the majority of shares of such class or series or classes or series present in person or represented by proxy at the meeting shall be the act of such class or series or classes or series, except as otherwise provided by law, the Certificate of Incorporation or these bylaws.
1.9 Stockholder Action by Written Consent Without a Meeting . Unless otherwise provided in the Certificate of Incorporation, any action required by the DGCL to be taken at any annual or special meeting of the stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
An electronic transmission (as defined in Section 7.2 ) consenting to an action to be taken and transmitted by a stockholder or proxy holder, or by a person or persons authorized to act for a stockholder or proxy holder, shall be deemed to be written, signed and dated for purposes of this Section 1.9 , provided that any such electronic transmission sets forth or is delivered with information from which the Company can determine (i) that the electronic transmission was transmitted by the stockholder or proxy holder or by a person or persons authorized to act for the stockholder or proxy holder and (ii) the date on which such stockholder or proxy holder or authorized person or persons transmitted such electronic transmission.
In the event that the Board shall have instructed the officers of the Company to solicit the vote or written consent of the stockholders of the Company, an electronic transmission of a stockholder written consent given pursuant to such solicitation may be delivered to the Secretary or the Chief Executive Officer of the Company or to a person designated by the Secretary or the Chief Executive Officer. The Secretary or the Chief Executive Officer of the Company or a designee of the Secretary or the Chief Executive Officer shall cause any such written consent by electronic transmission to be reproduced in paper form and inserted into the corporate records.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Company as provided in Section 228 of the DGCL. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the DGCL, if such action had been voted on by the stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning any vote of the stockholders, that written consent has been given in accordance with Section 228 of the DGCL.
1.10 Record Dates . In order that the Company may determine the stockholders entitled to notice of any meeting of the stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.
If no record date is fixed by the Board, the record date for determining the stockholders entitled to notice of and to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
A determination of the stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of the stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for the stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of the stockholders entitled to vote in accordance with the provisions of Section 213 of the DGCL and this Section 1.10 at the adjourned meeting.
In order that the Company may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board. If no record date has been fixed by the Board, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company in accordance with applicable law. If no record date has been fixed by the Board and prior action by the Board is required by law, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.
In order that the Company may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining the stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
1.11 Proxies . Each stockholder entitled to vote at a meeting of the stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.
1.12 List of Stockholders Entitled to Vote . The officer who has charge of the stock ledger of the Company shall prepare and make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Company shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten days prior to the meeting during ordinary business hours, at the Company’s principal place of business. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
ARTICLE II — DIRECTORS
2.1 Powers . The business and affairs of the Company shall be managed under the direction of the Board, acting through the authorized officers of the Company, except as may be otherwise provided in the DGCL or the Certificate of Incorporation.
2.2 Number of Directors . The Board shall consist of one or more members, each of whom shall be a natural person. Unless the Certificate of Incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
2.3 Election, Qualification and Term of Office of Directors . Except as provided in Section 2.5 of these bylaws, and subject to Sections 1.2, 1.3 and 1.9 of these bylaws, directors shall be elected at each annual meeting of the stockholders. Directors need not be stockholders unless so required by the Certificate of Incorporation or these bylaws. The Certificate of Incorporation or these bylaws may prescribe other qualifications for directors. Each director shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.
2.4 Chairperson and Vice Chairperson . The Board may elect from its members a Chairperson of the Board and a Vice Chairperson. The Chairperson shall preside over all meetings of the Board and of the stockholders. The Chairperson shall have such other powers and perform such other duties as the Board may designate. If the Board elects a Vice Chairperson, the Vice Chairperson shall, in the absence or disability of the Chairperson, perform the duties and exercise the powers of the Chairperson and have such other powers or perform such other duties as the Board may designate from time to time.
2.5 Resignation and Vacancies . Any director may resign at any time upon notice given in writing or by electronic transmission to the Company. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the Certificate of Incorporation or by these bylaws, if any vacancies shall occur in the Board by reason of death, resignation or otherwise, or if the number of directors shall be increased, the directors then in office shall continue to act and such vacancies or newly created directorships shall be filled by a vote of the directors then in office, though less than a quorum, in any way approved by the meeting. Any directorship to be filled by reason of removal of one or more directors by the shareholders may be filled pursuant to Section 2.13 below. Unless otherwise provided in the Certificate of Incorporation or these bylaws, when one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.
A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal.
2.6 Place of Meetings; Meetings by Telephone . The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
2.7 Conduct of Business . Meetings of the Board shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
2.8 Regular Meetings . Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.
2.9 Special Meetings; Notice . Special meetings of the Board for any purpose or purposes may be called at any time by the Chairperson of the Board, the Chief Executive Officer, the Secretary or any two directors.
Notice of the time and place of special meetings shall be:
(i) | delivered personally by hand, by courier or by telephone; |
(ii) | sent by United States first-class mail, postage prepaid; |
(iii) | sent by facsimile; or |
(iv) | sent by electronic mail, |
directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Company’s records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the Company’s principal executive office) nor the purpose of the meeting.
2.10 Quorum; Voting . At all meetings of the Board, a majority of the total number of the entire Board shall constitute a quorum for all purposes. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws.
If the Certificate of Incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.
2.11 Board Action by Written Consent Without a Meeting . Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
2.12 Fees and Compensation of Directors. Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.
ARTICLE III — COMMITTEES
3.1 Committees of Directors . The Board may designate one or more committees, each committee to consist of one or more of the directors of the Company. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to the stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Company.
3.2 Committee Minutes . Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
3.3 Meetings and Actions of Committees . Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) | Section 2.6 (Place of Meetings; Meetings by Telephone); |
(ii) | Section 2.8 (Regular Meetings); |
(iii) | Section 2.9 (Special Meetings; Notice); |
(iv) | Section 2.10 (Quorum; Voting); |
(v) | Section 2.11 (Board Action by Written Consent Without a Meeting); and |
(vi) | Section 7.5 (Waiver of Notice) |
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However :
(vii) | the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee; |
(viii) | special meetings of committees may also be called by resolution of the Board; and |
(ix) | notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. |
Any provision in the Certificate of Incorporation providing that one or more directors shall have more or less than one vote per director on any matter shall apply to voting in any committee or subcommittee, unless otherwise provided in the Certificate of Incorporation or these bylaws.
3.4 Subcommittees . Unless otherwise provided in the Certificate of Incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
ARTICLE IV — OFFICERS
4.1 Officers . The officers of the Company shall be a Chief Executive Officer, Secretary and a Treasurer. The Company may also have, at the discretion of the Board, a President, Chief Financial Officer, Executive Chairperson of the Board, a Vice Chairperson of the Board, one or more Assistant Treasurers, one or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.
4.2 Appointment of Officers . The Board shall appoint the officers of the Company, except such officers as may be appointed in accordance with the provisions of Section 4.3 of these bylaws.
4.3 Subordinate Officers . The Board may appoint, or empower the Chief Executive Officer to appoint, such other officers and agents as the business of the Company may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine or may delegate to the Chief Executive Officer to determine.
4.4 Removal and Resignation of Officers . With the exception of any provision to the contrary contained in an employment agreement or other similar agreement between the Company and an officer of the Company, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Company. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party.
4.5 Vacancies in Offices . Any vacancy occurring in any office of the Company shall be filled by the Board or as provided in Section 4.2 of these bylaws.
4.6 Representation of Shares of Other Corporations . Unless otherwise directed by the Board, the Chief Executive Officer or any other person authorized by the Board or the Chief Executive Officer is authorized to vote, represent and exercise on behalf of the Company all rights incident to any and all shares of any other corporation or corporations standing in the name of the Company. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
4.7 Chief Executive Officer . Subject to the provisions of these bylaws and to the direction of the Board, the Chief Executive Officer shall be responsible for the general control and management of the business, affairs and policies of the Company and shall have control over its officers and shall see that all orders and resolutions of the Board are carried into effect. The Chief Executive Officer shall have the power to sign all certificates, contracts and other instruments on behalf of the Company.
4.8 President . The President, if any, shall be subject to the direction and control of the Board of Directions and Chief Executive Officer and shall have such powers and duties as the Board of Directors or Chief Executive Officer may from time to time prescribe
4.9 Vice President . Each Vice President, if any, shall be subject to the direction and control of the Chief Executive Officer and the President, if any, and shall have such powers and duties as the Chief Executive Officer or the President, if any, may from time to time prescribe.
4.10 Chief Financial Officer . The Chief Financial Officer, if any, shall be subject to the direction and control of the Chief Executive Officer and shall have primary responsibility for the financial affairs of the Company and shall perform such other duties as the Chief Executive Officer may from time to time prescribe.
4.11 Treasurer . The Treasurer shall have the responsibility for maintaining the financial records of the Company. He or she shall make such disbursements of the funds of the Company as are authorized and shall render from time to time an account of all such transactions of the financial condition of the Company. The Treasurer shall also perform the other duties as the Chief Executive Officer may from time to time prescribe.
4.12 Secretary . The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board. He or she shall have charge of the corporate books and shall perform the other duties as the Board may from time to time prescribe.
ARTICLE V — INDEMNIFICATION
5.1 Indemnification of Directors and Officers in Third Party Proceedings . Subject to the other provisions of this Article V , the Company shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) (other than an action by or in the right of the Company) by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
5.2 Indemnification of Directors and Officers in Actions by or in the Right of the Company . Subject to the other provisions of this Article V , the Company shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
5.3 Successful Defense . To the extent that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 5.1 or Section 5.2 of these bylaws, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
5.4 Indemnification of Others . Subject to the other provisions of this Article V , the Company shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law. The Board shall have the power to delegate to such person or persons the determination of whether employees or agents shall be indemnified.
5.5 Advanced Payment of Expenses . Reasonable expenses (including attorneys’ fees) incurred by an officer or director of the Company in defending any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding upon receipt of a written request therefor (together with documentation reasonably evidencing such expenses) and an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article V or the DGCL. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Company deems appropriate. The right to advancement of expenses shall not apply to any Proceeding for which indemnity is excluded pursuant to these bylaws, but shall apply to any Proceeding referenced in Section 5.1 or 5.2 of these bylaws prior to a determination that the person is not entitled to be indemnified by the Company.
Notwithstanding the foregoing, unless otherwise determined pursuant to Section 5.8 of these bylaws, no advance shall be made by the Company to an officer of the Company (except by reason of the fact that such officer is or was a director of the Company, in which event this paragraph shall not apply) in any Proceeding if a determination is reasonably and promptly made (i) by a majority vote of the directors who are not parties to such Proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, that facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Company.
5.6 Limitation on Indemnification . Subject to the requirements in Section 5.3 of these bylaws and the DGCL, the Company shall not be obligated to indemnify any person pursuant to this Article V in connection with any Proceeding (or any part of any Proceeding):
(i) | for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid; |
(ii) | for an accounting or disgorgement of profits pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or similar provisions of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements); |
(iii) | for any reimbursement of the Company by such person of any bonus or other incentive-based or equity-based compensation or of any profits realized by such person from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), or the payment to the Company of profits arising from the purchase and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person is held liable therefor (including pursuant to any settlement arrangements); |
(iv) | initiated by such person, including any Proceeding (or any part of any Proceeding) initiated by such person against the Company or its directors, officers, employees, agents or other indemnitees, unless (a) the Board authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, (c) otherwise required to be made under Section 5.5 of these bylaws or (d) otherwise required by applicable law; or |
(v) | if prohibited by applicable law. |
5.7 Determination; Claim . If a claim for indemnification or advancement of expenses under this Article V is not paid by the Company or on its behalf within 90 days after receipt by the Company of a written request therefor, the claimant shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of expenses. To the extent not prohibited by law, the Company shall indemnify such person against all expenses actually and reasonably incurred by such person in connection with any action for indemnification or advancement of expenses from the Company under this Article V , to the extent such person is successful in such action, and, if requested by such person, shall advance such expenses to such person, subject to the provisions of Section 5.5 of these bylaws. In any such suit, the Company shall, to the fullest extent not prohibited by law, have the burden of proving that the claimant is not entitled to the requested indemnification or advancement of expenses.
5.8 Non-Exclusivity of Rights . The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation or any statute, bylaw, agreement, vote of the stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. The Company is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.
5.9 Insurance . The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Company would have the power to indemnify such person against such liability under the provisions of the DGCL.
5.10 Survival . The rights to indemnification and advancement of expenses conferred by this Article V shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
5.11 Effect of Repeal or Modification . Any amendment, alteration or repeal of this Article V shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to such amendment, alteration or repeal.
5.12 Certain Definitions . For purposes of this Article V , references to the “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article V , references to “ other enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “ serving at the request of the Company ” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the Company ” as referred to in this Article V .
ARTICLE VI — STOCK
6.1 Stock Certificates; Partly Paid Shares . The shares of the Company shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock may or shall be uncertificated shares. Any such resolution requiring uncertificated shares shall not apply to shares represented by a certificate until such certificate is surrendered to the Company. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Company by the Chairperson of the Board or Vice-Chairperson of the Board, or the Chief Executive Officer, President, if any, or a Vice-President, and by the Treasurer, Chief Financial Officer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Company representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The Company shall not have power to issue a certificate in bearer form.
The Company may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Company in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Company shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
6.2 Special Designation on Certificates . If the Company is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Company shall issue to represent such class or series of stock; provided that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Company shall issue to represent such class or series of stock, a statement that the Company will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the Company shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section 6.2 or Sections 156, 202(a) or 218(a) of the DGCL or with respect to this Section 6.2 a statement that the Company will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.
6.3 Lost Certificates . Except as provided in this Section 6.3 , no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Company and cancelled at the same time. The Company may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Company may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
6.4 Dividends . The Board, subject to any restrictions contained in the Certificate of Incorporation or applicable law, may declare and pay dividends upon the shares of the Company’s capital stock. Dividends may be paid in cash, in property, or in shares of the Company’s capital stock, subject to the provisions of the Certificate of Incorporation.
The Board may set apart out of any of the funds of the Company available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.
6.5 Registration and Transfers of Shares . The name of each person owning a share of the capital stock of the Company shall be entered on the books of the Company together with the number of shares held by him, her or it, the numbers of the certificates covering such shares and the dates of issue of such certificates. The shares of stock of the Company shall be transferable on the books of the Company by the holders thereof in person, or by their duly authorized attorney or legal representatives, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached thereto, duly executed, with such guarantee or proof of the authenticity of the signature as the Company or its agents may reasonably require and with proper evidence of payment of any applicable transfer taxes. If shares of stock to be transferred are uncertificated, such stock will be transferred upon proper instructions from the holder of such stock and in accordance with such other rules as the Board may impose from time to time. In each case, instructions for the transfer of shares of stock shall be accompanied by such proof of authenticity of signature as the Board or transfer agent or other agent of the Company may reasonably require.
6.6 Registered Stockholders . The Company shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.
ARTICLE VII — MANNER OF GIVING NOTICE AND WAIVER
7.1 Notice of Stockholder Meetings . Notice of any meeting of the stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the Company’s records. An affidavit of the Secretary or an Assistant Secretary of the Company or of the transfer agent or other agent of the Company that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
7.2 Notice by Electronic Transmission . Without limiting the manner by which notice otherwise may be given effectively to the stockholders pursuant to the DGCL, the Certificate of Incorporation or these bylaws, any notice to the stockholders given by the Company under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Company. Any such consent shall be deemed revoked if:
(i) | the Company is unable to deliver by electronic transmission two consecutive notices given by the Company in accordance with such consent; and |
(ii) | such inability becomes known to the Secretary or an Assistant Secretary of the Company or to the transfer agent, or other person responsible for the giving of notice. |
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(iii) | if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; |
(iv) | if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; |
(v) | if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and |
(vi) | if by any other form of electronic transmission, when directed to the stockholder. |
An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Company that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
An “ electronic transmission ” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.
7.3 Notice to Stockholders Sharing an Address . Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to the stockholders, any notice to the stockholders given by the Company under the provisions of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a single written notice to the stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the Company. Any stockholder who fails to object in writing to the Company, within 60 days of having been given written notice by the Company of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.
7.4 Notice to Person with Whom Communication is Unlawful . Whenever notice is required to be given, under the DGCL, the Certificate of Incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Company is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
7.5 Waiver of Notice . Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.
ARTICLE VIII — GENERAL MATTERS
8.1 Fiscal Year . The fiscal year of the Company shall be fixed by resolution of the Board and may be changed by the Board.
8.2 Seal . The Company may adopt a corporate seal, which shall be in such form as may be approved from time to time by the Board. The Company may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
8.3 Construction; Definitions . Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “ person ” includes both a corporation and a natural person.
ARTICLE IX — AMENDMENTS
These by-laws may be amended, altered, changed, adopted and repealed or new by-laws adopted by the Board of Directors. The stockholders may make additional by-laws and may alter and repeal any by-laws whether such by-laws were originally adopted by them or otherwise.
Exhibit 4.1
CERTIFICATE OF DESIGNATION
OF
THE SPECIAL VOTING PREFERRED STOCK
OF
BIONIK LABORATORIES CORP.
Pursuant to the General Corporation Law of the State of Delaware
Bionik Laboratories Corp. , a Delaware corporation (the “ Corporation ”), hereby certifies, that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Amended and Restated Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”), the Board of Directors (the “ Board ”) has duly adopted the following resolutions.
RESOLVED, that, pursuant to Article FOURTH of the Certificate of Incorporation (which authorizes a total of 10,000,000 shares of preferred stock, $0.001 par value per share (the “ Preferred Stock ”)), and the authority vested in the Board, a series of Preferred Stock be, and it hereby is, created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof are as set forth in the Certificate of Incorporation and this Certificate of Designation, as it may be amended from time to time (the “ Certificate of Designation ”) as follows:
SPECIAL VOTING PREFERRED STOCK
Section 1. Designation, Amount and Par Value . The series of Preferred Stock shall be designated as The Special Voting Preferred Stock and the number of shares so designated shall be one (1). The share of The Special Voting Preferred Stock shall have a par value of $0.001.
Section 2. Dividends . The holder of record of the share of The Special Voting Preferred Stock shall not be entitled to receive any dividends declared and paid by the Corporation.
Section 3. Voting Rights . The holder of The Special Voting Preferred Stock shall have the following voting rights:
(i) The Special Voting Preferred Stock shall entitle the holder thereof to an aggregate number of votes equal to the number of exchangeable shares (“ Exchangeable Shares ”) of Bionik Laboratories Inc., a company existing under the laws of Canada (“ Bionik ”), issued and outstanding from time to time and which are not owned by the Corporation or any direct or indirect subsidiary thereof.
(ii) Except as otherwise required by law, the holder of The Special Voting Preferred Stock and the holders of shares of the Corporation’s common stock, par value $0.001 per share (“ Common Stock ”), shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(iii) Except as otherwise provided herein or required by law, the holder of The Special Voting Preferred Stock shall have identical rights as those of the holders of Common Stock with respect to notices, reports and the right to attend all meetings of the Corporation.
(iv) Except as set forth herein, the holder of The Special Voting Preferred Stock shall have no special voting rights, and its consent shall not be required (except to the extent it is entitled to vote with the holders of shares of Common Stock) for taking any corporate action.
Section 4. Liquidation . Upon completion of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holder of record of the share of The Special Voting Preferred Stock shall be entitled to receive $1.00 in the aggregate.
Section 5. Additional Provisions .
(i) At such time as (A) The Special Voting Preferred Stock entitles its holder to a number of votes equal to zero (0) because there are no Exchangeable Shares of Bionik issued and outstanding, and (B) there is no share of stock, debt, option or other agreement, obligation or commitment of Bionik which could by its terms require Bionik to issue any Exchangeable Shares to any person (collectively, the “ Cancellation Condition ”), then The Special Voting Preferred Stock shall thereupon be retired and cancelled promptly thereafter (the “ Cancellation ”).
(ii) To the extent the holder of The Special Voting Preferred Stock must consent to the Cancellation under the Delaware General Corporation Law, the holder should be deemed to consent to the Cancellation upon the occurrence of the Cancellation Condition and irrevocably offer to sell The Special Voting Preferred Stock back to the Corporation for $1.00 in the aggregate and appoint the Secretary of the Corporation its attorney to complete such sale and Cancellation.
(iii) The Special Voting Preferred Stock, upon its cancellation in accordance with this Section 5, shall become an authorized but unissued share of Preferred Stock and may not be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance set forth in the Certificate of Incorporation.
(iv) The effective date shall be the date upon filing.
(v) The Special Voting Preferred Stock shall not have any preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption other than expressly set forth in the Certificate of Incorporation or Certificate of Designation.
Section 6. Headings . The headings of the sections of the Certificate of Designation are for convenience of reference only and shall not define, limit or affect any of the provisions hereof.
Section 7. Amendment/Alteration . This Certificate of Designation may not be amended or varied by the Corporation or its securityholders unless the holder of The Special Voting Preferred Stock consents to such amendment or variation.
[Remainder of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed and attested by the undersigned this 20 th day of February, 2015.
By: | /s/ Austin Kibler | |
Name: | Austin Kibler | |
Title: | Chief Executive Officer |
Exhibit 4.2
SCHEDULE
A to articles of amendment
of
BIONIK LABORATORIES INC.
(the “Corporation”)
The articles of the Corporation are amended as follows:
1. | to create an unlimited number of shares of a class designated as Class 1 Common Shares; |
2. | to create an unlimited number of shares of a class designated as Exchangeable Shares; |
3. | to change the 15,894,412 issued and outstanding common shares of the Corporation on a 1 for 3.14576 basis into 50,000,000 issued and outstanding Exchangeable Shares of the Corporation; |
4. | to provide that, after the exchange, 50,000,000 Exchangeable Shares in the capital of the Corporation in the aggregate will be issued and outstanding; |
5. | to remove from the authorized capital of the Corporation the class of shares designated as common shares, no shares of which shall be issued and outstanding as a result of the exchange referred to in paragraph 3 above; |
6. | to provide that, after giving effect to the foregoing, the authorized capital of the Corporation shall consist of an unlimited number of Class 1 Common Shares and an unlimited number of Exchangeable Shares; |
7. | to remove the restrictions on share transfers in paragraph 1 of the Other Provisions set out in Article 7 of the articles of incorporation; and |
8. | to provide that the rights, privileges, restrictions and conditions attaching to the Class 1 Common Shares and the Exchangeable Shares as a class, are as follows: |
SECTION 1
CLASS 1 COMMON SHARES
1. | Voting |
The holders of the Class 1 Common Shares shall be entitled to receive notice of and to attend at meetings of the shareholders and shall have one vote for each Class 1 Common Share held at all meetings of shareholders, except for meetings at which only holders of another specified class are entitled to vote separately as a class.
2. | Dividend Entitlement |
The holders of the Class 1 Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare. The Class 1 Common Shares may but need not participate equally as to dividends with any other class of shares in the capital of the Corporation and, for greater certainty, the directors may declare and pay dividends in any financial year on one or more classes of shares in the capital of the Corporation without declaring or paying any dividends on the Class 1 Common Shares of the Corporation.
3. | Priority on Liquidation Distribution |
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the Exchangeable Shares and any other class of shares ranking senior to the Class 1 Common Shares, the holders of the Class 1 Common Shares shall be entitled to receive the remaining property of the Corporation.
section
2
EXCHANGEABLE SHARES
1. | Interpretation |
For the purposes of these share provisions:
“ Acquireco ” means Bionik Acquisition Inc., a corporation incorporated under the laws of Canada and its successors.
“ Acquireco Call Notice ” has the meaning ascribed thereto in Section 6(3) of these share provisions.
“ Agency ” means any domestic or foreign court, tribunal, federal, state, provincial or local government or governmental agency, department or authority or other regulatory authority (including the TSX, and National Securities Exchange) or administrative agency or commission (including the Securities Commissions and the SEC) or any elected or appointed public official.
“ Agent ” means any chartered bank or trust company in Canada selected by the Corporation for the purposes of holding some or all of the Liquidation Amount or Redemption Price in accordance with Section 5 or Section 7, respectively.
“ Bionik US ” means Bionik Laboratories Corp., a corporation existing under the laws of the State of Delaware, and its successors.
- A 2 - |
“ Bionik US Control Transaction ” means:
(i) | any person (other than the Trustee under the Voting and Exchange Trust Agreement or the holders of the Exchangeable Shares upon exchange thereof into Bionik US Shares) acquires directly or indirectly any voting security or securities of Bionik US and immediately after such acquisition, the acquirer, together with its affiliates and joint actors and their respective affiliates, beneficially own or control voting securities representing more than 50 per cent of the total voting power of all the then outstanding voting securities of Bionik US; |
(ii) | the shareholders of Bionik US shall approve a merger, scheme of arrangements, consolidation, recapitalization or reorganization of Bionik US (other than any such transaction which would result in the holders of outstanding voting securities of Bionik US immediately prior to such transaction having at least 50.1% of the total voting power represented by the voting securities of the surviving entity outstanding immediately after such transaction, with the voting power of each such continuing holders relative to such other continuing holders being not altered substantially in the transaction; or |
(iii) | the shareholders of Bionik US shall approve a complete liquidation of Bionik US or an agreement for the sale of all or substantially all of the assets (on a consolidated basis) of Bionik US. |
“ Bionik US Dividend Declaration Date ” means the date on which the board of directors of Bionik US declares any dividend or other distribution on the Bionik US Shares that would require a corresponding payment to be made in respect of the Exchangeable Shares.
“ Bionik US Shares ” means the common stock, par value US$0.001 per share, of Bionik US.
“ Board of Directors ” means the board of directors of the Corporation.
“ business day ” means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or New York, New York under applicable law.
“ Canadian Dollar Equivalent ” means in respect of an amount expressed in a currency other than Canadian dollars (the “ Foreign Currency Amount ”) at any date the product obtained by multiplying:
(a) | the Foreign Currency Amount; by |
(b) | the noon spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as may be mutually agreed upon by Bionik US and the Corporation to be appropriate for such purpose, which determination shall be conclusive and binding. |
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“ CBCA ” means the Canada Business Corporations Act , as amended.
“ Change of Law” means any amendment to the ITA and other applicable provincial income tax laws that permits holders of Exchangeable Shares who are resident in Canada, hold the Exchangeable Shares as capital property and deal at arm's length with Bionik US and the Corporation (all for the purposes of the ITA and other applicable provincial income tax laws) to exchange their Exchangeable Shares for Bionik US Shares on a basis that will not require such holders to recognize any gain or loss or any actual or deemed dividend in respect of such exchange for the purposes of the ITA or applicable provincial income tax laws.
“ Change of Law Call Date ” has the meaning ascribed thereto in Section 9(2) of these share provisions.
“ Change of Law Call Purchase Price” has the meaning ascribed thereto in Section 9(1) of these share provisions.
“ Change of Law Call Right ” has the meaning ascribed thereto in Section 9(1) of these share provisions.
“ CLC Purchaser ” has the meaning ascribed thereto in Section 9(2) of these share provisions.
“ Common Shares ” means the Class 1 common shares in the capital of the Corporation.
“ Corporation ” means Bionik Laboratories Inc.
“ Current Market Price ” means, in respect of a Bionik US Share on any date, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive trading days ending three trading days before such date; by (b) the aggregate volume of Bionik US Shares used to calculate such Daily Value of Trades; provided that if no Bionik US Share has traded in such 20 trading day period, the Current Market Price shall be determined by the board of directors of Bionik US in good faith and such determination shall, absent manifest error, be conclusive and binding.
“ Daily Value of Trades ” means, in respect of the Bionik US Shares on any trading day, the product of (a) the volume weighted average price of Bionik US Shares on a National Securities Exchange (or, if the Bionik US Shares are not listed on a National Securities Exchange, the Canadian Dollar Equivalent of the volume weighted average price of Bionik US Shares on such other stock exchange, automated quotation system or the OTCBB on which the Bionik US Shares are listed, quoted or posted, as the case may be, as may be selected by the board of directors of Bionik US for such purpose) on such date, as determined by Bloomberg L.P. or other reputable, third party information source selected by the board of directors of Bionik US in good faith; and (b) the aggregate volume of Bionik US Shares traded on such day on a National Securities Exchange or such other stock exchange, automated quotation system or the OTCBB and used to calculate such volume weighted average price; provided that any such selections by the board of directors of Bionik US shall be conclusive and binding.
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“ Director ” means the Director appointed pursuant to Section 260 of the CBCA.
“ Dividend Amount ” means an amount equal to all declared and unpaid dividends on an Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase, redemption or other acquisition of such share by the Corporation, Acquireco or Bionik US from such holder pursuant to Section 5, Section 6, Section 7 or Section 9.
“ Exchangeable Shares ” means the non-voting, exchangeable shares in the capital of the Corporation, having the rights, privileges, restrictions and conditions set forth herein.
“ Exchangeable Share Voting Event ” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Corporation, other than an Exempt Exchangeable Share Voting Event.
“ Exempt Exchangeable Share Voting Event ” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Corporation in order to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change would be required to maintain the economic equivalence of the Exchangeable Shares and the Bionik US Shares.
“ holder ” means, when used with reference to the Exchangeable Shares, a holder of Exchangeable Shares shown from time to time in the register maintained by or on behalf of the Corporation in respect of the Exchangeable Shares.
“ including ” means including without limitation and “ includes ” means includes without limitation.
“ ITA ” means the Income Tax Act (Canada) and the regulations thereto as amended from time to time.
“ Lien ” means any encumbrance of any kind or nature whatsoever and howsoever arising (registered or unregistered) and includes a lien, security interest, hypothec, pledge, hypothecation, charge, trust or deemed trust or claim;
“ Liquidation Amount ” has the meaning ascribed thereto in Section 5(1) of these share provisions.
“ Liquidation Call Purchase Price ” has the meaning ascribed thereto in Section 5(4) of these share provisions.
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“ Liquidation Call Right ” has the meaning ascribed thereto in Section 5(4) of these share provisions.
“ Liquidation Date ” has the meaning ascribed thereto in Section 5(1) of these share provisions.
“ Liquidation Purchaser ” has the meaning ascribed thereto in Section 5(5) of these share provisions.
“ National Securities Exchange ” means The New York Stock Exchange, NYSE MKT, NASDAQ Stock Market and/or any other securities exchange that has registered with the SEC under Section 6 of the United States Securities Exchange Act of 1934.
“ OTCBB ” means any of (a) the Over The Counter Bulletin Board quotation medium or (b) any other over-the-counter market, trading platform or automated quotation system, in any case for subscribing members of equity securities of SEC reporting issuers.
“ person ” includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Agency, syndicate or other entity, whether or not having legal status.
“ Purchase Price ” has the meaning ascribed thereto in Section 6(3) of these share provisions.
“ RCR Purchaser ” has the meaning ascribed thereto in Section 6(3) of these share provisions.
“ Redemption Call Purchase Price ” has the meaning ascribed thereto in Section 7(4) of these share provisions.
“ Redemption Call Right ” has the meaning ascribed thereto in Section 7(4) of these share provisions.
“ Redemption Purchaser ” has the meaning ascribed thereto in Section 7(5) of these share provisions.
“ Redemption Date ” means the date, if any, established by the Board of Directors for the redemption by the Corporation of all but not less than all of the outstanding Exchangeable Shares pursuant to Section 7 of these share provisions, which date shall be no earlier than the tenth anniversary of the date on which Exchangeable Shares first are issued, unless:
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(a) | there are fewer than 5,000,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by Bionik US and its subsidiaries, and as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date prior to the tenth anniversary of the date on which Exchangeable Shares first are issued as they may determine, upon at least sixty (60) days’ prior written notice to the holders of the Exchangeable Shares and the Trustee; |
(b) | a Bionik US Control Transaction occurs, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that the Bionik US Control Transaction is not for the primary purpose of causing the occurrence of a Redemption Date and that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Bionik US Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Bionik US Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to the tenth anniversary of the date on which Exchangeable Shares first are issued as it may determine, upon such number of days’ prior written notice to the holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances; |
(c) | an Exchangeable Share Voting Event is proposed and (i) the holders of the Exchangeable Shares fail to take the necessary action, at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exchangeable Share Voting Event or the holders of the Exchangeable Shares do take the necessary action but, in connection therewith, the holders of more than ten percent (10%) of the outstanding Exchangeable Shares (other than those held by Bionik US and its subsidiaries) exercise rights of dissent under the CBCA, and (ii) the Board of Directors determines in good faith and in its sole discretion that it is not reasonably practicable to accomplish the business purpose (which business purpose must be bona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event, in which case the Redemption Date shall be the business day following the day on which the later of the events described in (i) and (ii) above occur and the Board of Directors shall give such number of days’ prior written notice of such redemption to the holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in the circumstances; or |
(d) | an Exempt Exchangeable Share Voting Event is proposed and holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event in which case the Redemption Date shall be the business day following the day on which the holders of the Exchangeable Shares failed to take such action, |
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provided, however, that the accidental failure or omission to give any notice of redemption under clauses (a), (b), (c) or (d) above to any of the holders of Exchangeable Shares shall not affect the validity of any such redemption.
“ Redemption Price ” has the meaning ascribed thereto in Section 7(1) of these share provisions.
“ Retracted Shares ” has the meaning ascribed thereto in Section 6(1)(a) of these share provisions.
“ Retraction Call Right ” has the meaning ascribed thereto in Section 6(1)(c) of these share provisions.
“ Retraction Date ” has the meaning ascribed thereto in Section 6(1)(b) of these share provisions.
“ Retraction Price ” has the meaning ascribed thereto in Section 6(1) of these share provisions.
“ Retraction Request ” has the meaning ascribed thereto in Section 6(1) of these share provisions.
“ SEC ” means the U.S. Securities and Exchange Commission.
“ Securities Act ” means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as amended.
“ Support Agreement ” means the agreement made between Bionik US, Acquireco and the Corporation dated February 26, 2015.
“ Transfer Agent ” means Computershare Trust Company of Canada , the Secretary of the Corporation or such other person as may from time to time be appointed by the Corporation as the registrar and transfer agent for the Exchangeable Shares.
“ Trustee ” means the trustee chosen by Bionik US and the Corporation to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada or any Province thereof and authorized to carry on the business of a trust company in all the provinces of Canada or such other person agreed to by Bionik US and the Corporation, and any successor trustee appointed under the Voting and Exchange Trust Agreement.
“Unit Offering” means the private placement offering of a minimum of 7,500,000 units and a maximum of 16,000,000 units (each unit consisting of 1 share of common stock of Bionik US and 1 warrant to purchase 1 share of common stock of Bionik US) and “reverse take-over” (or similar transaction) of Bionik US by the shareholders of the Corporation as contemplated in the confidential private placement memorandum of the Corporation dated September 10, 2014, as supplemented by that Supplement No. 1 dated January 16, 2015 as the same may be amended, restated and/or supplemented from time to time.
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“ Voting and Exchange Trust Agreement ” means an agreement to be made among Bionik US, the Corporation and the Trustee dated February 26, 2015.
2. | Ranking of Exchangeable Shares |
The Exchangeable Shares shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares with respect to the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs.
3. | Dividends |
(1) | A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each Bionik US Dividend Declaration Date, declare a dividend on each Exchangeable Share: |
(a) | in the case of a cash dividend declared on the Bionik US Shares, in an amount in cash for each Exchangeable Share in U.S. dollars, or the Canadian Dollar Equivalent thereof on the Bionik US Dividend Declaration Date equal to the cash dividend declared on each Bionik US Share; |
(b) | in the case of a stock dividend declared on the Bionik US Shares to be paid in Bionik US Shares, by the issue or transfer by the Corporation of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Bionik US Shares to be paid on each Bionik US Share unless in lieu of such stock dividend the Corporation elects to effect a corresponding and contemporaneous and economically equivalent (as determined by the Board of Directors in accordance with Section 3(5) hereof) subdivision of the outstanding Exchangeable Shares; or |
(c) | in the case of a dividend declared on the Bionik US Shares in property other than cash or Bionik US Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent (to be determined by the Board of Directors as contemplated by Section 3(5) hereof) to the type and amount of property declared as a dividend on each Bionik US Share. |
Such dividends shall be paid out of money, assets or property of the Corporation properly applicable to the payment of dividends, or out of authorized but unissued shares of the Corporation, as applicable. The holders of Exchangeable Shares shall not be entitled to any dividends other than or in excess of the dividends referred to in this Section 3(1).
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(2) | Cheques of the Corporation payable at par at any branch of the bankers of the Corporation shall be issued in respect of any cash dividends contemplated by Section 3(1)(a) hereof and the sending of such cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Written evidence of the book entry issuance or transfer to the registered holder of Exchangeable Shares shall be delivered in respect of any stock dividends contemplated by Section 3(1)(b) hereof and the sending of such written evidence to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby. Such other type and amount of property in respect of any dividends contemplated by Section 3(1)(c) hereof shall be issued, distributed or transferred by the Corporation in such manner as it shall determine and the issuance, distribution or transfer thereof by the Corporation to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Corporation any dividend that is represented by a cheque that has not been duly presented to the Corporation’s bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable. |
(3) | The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under Section 3(1) hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the Bionik US Shares. The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any subdivision, redivision or change of the Exchangeable Shares under Section 3(1)(b) hereof and the effective date of such subdivision shall be the same dates as the record and payment date, respectively, for the corresponding stock dividend declared on the Bionik US Shares. |
(4) | If on any payment date for any dividends declared on the Exchangeable Shares under Section 3(1) hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient moneys, assets or property properly applicable to the payment of such dividends. |
(5) | The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of these share provisions, including Section 3(1) hereof, and each such determination shall be conclusive and binding on the Corporation and its shareholders. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors: |
(a) | in the case of any stock dividend or other distribution payable in Bionik US Shares, the number of such shares issued in proportion to the number of Bionik US Shares previously outstanding; |
(b) | in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price; |
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(c) | in the case of the issuance or distribution of any other form of property (including any shares or securities of Bionik US of any class other than Bionik US Shares, any rights, options or warrants other than those referred to in Section 3(5)(b) hereof, any evidences of indebtedness of Bionik US or any assets of Bionik US), the relationship between the fair market value (as determined by the Board of Directors in the manner contemplated in clause (b) above) of such property to be issued or distributed with respect to each outstanding Bionik US Share and the Current Market Price of a Bionik US Share; and |
(d) | in all such cases, the general Canadian taxation consequences of the relevant event to Canadian resident holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Bionik US Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). |
4. | Certain Restrictions |
So long as any of the Exchangeable Shares are outstanding (other than as may be held by Bionik US or any subsidiary), the Corporation shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in Section 12(2) of these share provisions:
(a) | redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares; |
(b) | redeem or purchase any other shares of the Corporation ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; or |
(c) | issue any Exchangeable Shares or any other shares of the Corporation ranking equally with or superior to the Exchangeable Shares other than by way of stock dividends to the holders of such Exchangeable Shares. |
The restrictions in Sections 4(a), (b) and (c) hereof shall not apply if all dividends on the outstanding Exchangeable Shares corresponding to dividends declared and paid to date on the Bionik US Shares shall have been declared and paid on the Exchangeable Shares.
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5. | Distribution on Liquidation |
(1) | In the event of the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, subject to the exercise by Acquireco or Bionik US of the Liquidation Call Right, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Corporation in respect of each Exchangeable Share held by such holder on the effective date (the “ Liquidation Date ”) of such liquidation, dissolution, winding-up or other distribution, before any distribution of any part of the assets of the Corporation among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share (the “ Liquidation Amount ”) equal to the Current Market Price of an Bionik US Share on the last business day prior to the Liquidation Date plus the Dividend Amount, which shall be satisfied in full by the Corporation delivering or causing to be delivered to such holder one Bionik US Share, plus an amount equal to the Dividend Amount. |
(2) | On or promptly after the Liquidation Date, and provided the Liquidation Call Right has not been exercised by Acquireco or Bionik US, the Corporation shall pay or cause to be paid to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the articles of the Corporation and such additional documents, instruments and payments as the Transfer Agent and the Corporation may reasonably require, at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of the Exchangeable Shares. Payment of the Liquidation Amount for such Exchangeable Shares shall be made by transferring or causing to be transferred to each holder the Bionik US Shares to which such holder is entitled and by delivering to such holder, on behalf of the Corporation, Bionik US Shares (which shares shall be fully paid and shall be free and clear of any Lien) and a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in respect of the Dividend Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Liquidation Amount without interest, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Liquidation Amount has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred to, and deposited with, the Agent the Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof, such Liquidation Amount to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the Liquidation Amount for such Exchangeable Shares so deposited, without interest, and when received by the Agent, all dividends and other distributions with respect to the Bionik US Shares to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such Bionik US Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. |
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(3) | After the Corporation has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to Section 5(1) of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of the Corporation. |
(4) | Acquireco and Bionik US shall each have the overriding right (the “ Liquidation Call Right ”), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, pursuant to Section 5 of these share provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is Bionik US or a subsidiary of Bionik US) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder on payment by the Liquidation Purchaser of an amount per share (the “ Liquidation Call Purchase Price ”) equal to the Current Market Price of Bionik US Shares on the last business day prior to the Liquidation Date plus the Dividend Amount, which shall be satisfied in full by the Liquidation Purchaser delivering or causing to be delivered to such holder one (1) Bionik US Share plus any Dividend Amount. In the event of the exercise of the Liquidation Call Right by the Liquidation Purchaser, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to the Liquidation Purchaser on the Liquidation Date on payment by the Liquidation Purchaser to the holder of the Liquidation Call Purchase Price for each such share, and the Corporation shall have no obligation to pay any Liquidation Amount or Dividend Amount to the holders of such shares so purchased by the Liquidation Purchaser. |
(5) | To exercise the Liquidation Call Right, Acquireco or Bionik US must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and the Corporation of Acquireco’s or Bionik US’s, as the case may be, (such exercising party being referred to in this Section 5 as the “ Liquidation Purchaser ”) intention to exercise such right at least forty five (45) days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding-up of the Corporation or any other voluntary distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, and at least five (5) business days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding-up of the Corporation or any other involuntary distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not the Liquidation Purchaser has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by the Liquidation Purchaser. If the Liquidation Purchaser exercises the Liquidation Call Right, then on the Liquidation Date, the Liquidation Purchaser will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price. |
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(6) | For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, the Liquidation Purchaser shall deposit or cause to be deposited with the Transfer Agent, on or before the Liquidation Date, the aggregate number of Bionik US Shares which the Liquidation Purchaser shall deliver or cause to be delivered pursuant to Section 5(4) and a cheque or cheques of the Liquidation Purchaser payable at par at any branch of the bankers of the Liquidation Purchaser representing the aggregate Dividend Amount, if any, in payment of the total Liquidation Call Purchase Price, in each case less any amounts withheld pursuant to Section 15(3) of these share provisions. Provided that the Liquidation Purchaser has complied with the immediately preceding sentence, on and after the Liquidation Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the aggregate Liquidation Call Purchase Price without interest, unless payment of the aggregate Liquidation Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this Section 5(6), in which case the rights of the holders shall remain unaffected until the aggregate Liquidation Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of the Corporation and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of the Liquidation Purchaser shall transfer to such holder, the Bionik US Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder written evidence of the book entry issuance in uncertificated form of the Bionik US Shares to which the holder is entitled and a cheque or cheques of the Liquidation Purchaser payable at par at any branch of the bankers of the Liquidation Purchaser representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such Bionik US Shares with a record date after the Liquidation Date and before the date of the transfer of such Bionik US Shares to such holder, less any amounts withheld pursuant to Section 15(3) of these share provisions. If the Liquidation Purchaser does not exercise the Liquidation Call Right in the manner described above, on the Liquidation Date, the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the Liquidation Amount otherwise payable by the Corporation in connection with the liquidation, dissolution or winding-up of the Corporation or any distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs pursuant to Section 5 of these share provisions. |
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6. | Retraction of Exchangeable Shares by Holder |
(1) | A holder of Exchangeable Shares shall be entitled at any time, subject to the exercise by Acquireco or Bionik US of the Retraction Call Right and otherwise upon compliance with, and subject to, the provisions of this Section 6, to require the Corporation to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Current Market Price of a Bionik US Share on the last business day prior to the Retraction Date plus the Dividend Amount (the “ Retraction Price ”), which shall be satisfied in full by the Corporation delivering or causing to be delivered to such holder one Bionik US Share for each Exchangeable Share presented and surrendered by the holder together with, on the designated payment date therefor, the Dividend Amount. To effect such redemption, the holder shall present and surrender at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have the Corporation redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the articles of the Corporation and such additional documents, instruments and payments as the Transfer Agent and the Corporation may reasonably require, and together with a duly executed statement (the “ Retraction Request ”) in the form of Schedule A hereto or in such other form as may be acceptable to the Corporation: |
(a) | specifying that the holder desires to have all or any number of whole shares specified therein of the Exchangeable Shares represented by such certificate or certificates (the “ Retracted Shares ”) redeemed by the Corporation; |
(b) | stating the business day on which the holder desires to have the Corporation redeem the Retracted Shares (the “ Retraction Date ”), provided that the Retraction Date shall be not less than ten (10) business days nor more than fifteen (15) business days after the date on which the Retraction Request is received by the Corporation and further provided that, in the event that no such business day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the fifteenth (15 th ) business day after the date on which the Retraction Request is received by the Corporation; and |
(c) | acknowledging the overriding right (the “ Retraction Call Right ”) of each of Acquireco and Bionik US to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares to the RCR Purchaser in accordance with the Retraction Call Right on the terms and conditions set out in Section 6(3) hereof. |
(2) | Provided that the RCR Purchaser has not exercised the Retraction Call Right, upon receipt by the Corporation or the Transfer Agent in the manner specified in Section 6(1) of a certificate or certificates representing the number of Retracted Shares, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6(7), the Corporation shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall transfer or cause to be issued or transferred to such holder the Bionik US Shares to which such holder is entitled and shall comply with Section 6(4) hereof. If only a part of the Exchangeable Shares represented by any certificate is redeemed (or purchased by the RCR Purchaser pursuant to the Retraction Call Right), a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Corporation. For avoidance of doubt, no holder of Exchangeable Shares shall have any right to require the Corporation redeem (or Acquireco or Bionik US purchase) less than one whole Exchangeable Share. |
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(3) | Subject to the provisions of this Section 6, upon receipt by the Corporation of a Retraction Request, the Corporation shall immediately notify Acquireco and Bionik US thereof and shall provide to Acquireco and Bionik US a copy of the Retraction Request. In order to exercise the Retraction Call Right, Acquireco or Bionik US must notify the Corporation of its determination to do so (the “ Acquireco Call Notice ”) within ten (10) business days of notification to Acquireco and Bionik US by the Corporation of the receipt by the Corporation of the Retraction Request. If neither Acquireco or Bionik US does so notify the Corporation within such ten (10) business day period, the Corporation will notify the holder as soon as possible thereafter that Acquireco and Bionik US will not exercise the Retraction Call Right. If Acquireco or Bionik US delivers the Acquired Call Notice within such ten (10) business day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6(7), the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to Acquireco or Bionik US, as applicable (such party being referred to in this Section 6 as the “ RCR Purchaser ”) in accordance with the Retraction Call Right. In such event, the Corporation shall not redeem the Retracted Shares and the RCR Purchaser shall purchase from such holder and such holder shall sell to the RCR Purchaser on the Retraction Date the Retracted Shares for a purchase price (the “ Purchase Price ”) per share equal to the Retraction Price per share. To the extent that the RCR Purchaser pays the Dividend Amount in respect of the Retracted Shares, the Corporation shall no longer be obligated to pay any declared and unpaid dividends on such Retracted Shares. For the purpose of completing a purchase pursuant to the Retraction Call Right, on the Retraction Date, the RCR Purchaser shall transfer or cause to be issued or transferred to the holder of the Retracted Shares the Bionik US Shares to which such holder is entitled. Provided that the RCR Purchaser has complied with the immediately preceding sentence and Section 6(4) hereof, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Corporation of such Retracted Shares shall take place on the Retraction Date. In the event that the RCR Purchaser does not deliver a Acquired Call Notice within such ten (10) business day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6(7), the Corporation shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Section 6. |
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(4) | The Corporation or the RCR Purchaser, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder written evidence of the book entry issuance in uncertificated form of Bionik US Shares (which shares shall be fully paid and shall be free and clear of any Lien and, if applicable and on or before the payment date therefor, a cheque payable at par at any branch of the bankers of the Corporation or the RCR Purchaser, as applicable, representing the aggregate Dividend Amount, in payment of the Retraction Price or the Purchase Price, as the case may be, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom, and such delivery of such Bionik US Shares and cheques on behalf of the Corporation or by the RCR Purchaser, as the case may be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Price or Purchase Price, as the case may be, to the extent that the same is represented by such share certificates and cheques (plus any tax deducted and withheld therefrom and remitted to the proper tax authority). |
(5) | On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Retraction Price or Purchase Price, as the case may be, without interest, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the Retraction Price or the Purchase Price, as the case may be, shall not be made as provided in Section 6(4) hereof, in which case the rights of such holder shall remain unaffected until the Retraction Price or the Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of the Retraction Price or the Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Corporation or purchased by Acquireco or Bionik US shall thereafter be a holder of the Bionik US Shares delivered to it. |
(6) | Notwithstanding any other provision of this Section 6, the Corporation shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If the Corporation believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that neither Acquireco or Bionik US has exercised the Retraction Call Right with respect to the Retracted Shares, the Corporation shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two business days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Corporation. In any case in which the redemption by the Corporation of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, the Corporation shall redeem Retracted Shares in accordance with Section 6(2) of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of the Corporation, representing the Retracted Shares not redeemed by the Corporation pursuant to Section 6(2) hereof. If the Corporation would otherwise be obligated to redeem the Retracted Shares pursuant to Section 6(2) of these share provisions but is not obligated to do so as a result of solvency requirements or other provisions of applicable law, the holder of any such Retracted Shares not redeemed by the Corporation pursuant to this Section 6(6) as a result of solvency requirements or other provisions of applicable law shall be deemed by giving the Retraction Request to have instructed the Transfer Agent to require Bionik US to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by Bionik US to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided for in the Voting and Exchange Trust Agreement. |
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(7) | A holder of Retracted Shares may, by notice in writing given by the holder to the Corporation before the close of business on the business day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Acquireco and Bionik US shall be deemed to have been revoked. |
7. | Redemption of Exchangeable Shares by the Corporation |
(1) | Subject to applicable law, and provided neither Acquireco or Bionik US has exercised the Redemption Call Right, the Corporation shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share (the “ Redemption Price ”) equal to the Current Market Price of a Bionik US Share on the last business day prior to the Redemption Date plus the Dividend Amount, which shall be satisfied in full by the Corporation causing to be delivered to each holder of Exchangeable Shares one Bionik US Share for each Exchangeable Share held by such holder, together with an amount equal to the Dividend Amount. |
(2) | In any case of a redemption of Exchangeable Shares under this Section 7, the Corporation shall, at least sixty (60) days before the Redemption Date (other than a Redemption Date established in connection with a Bionik US Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by the Corporation or the purchase by Acquireco or Bionik US under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. In the case of a Redemption Date established in connection with a Bionik US Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, the written notice of the redemption by the Corporation or the purchase by Acquireco or Bionik US under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors to be reasonably practicable in the circumstances. In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right. |
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(3) | On or after the Redemption Date and provided that the Redemption Call Right has not been exercised by Acquireco or Bionik US, the Corporation shall pay or cause to be paid to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, upon presentation and surrender at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the articles of the Corporation and such additional documents, instruments and payments as the Transfer Agent and the Corporation may reasonably require. Payment of the Redemption Price for such Exchangeable Shares shall be made by transferring or causing to be issued or transferred to each holder the Bionik US Shares to which such holder is entitled and by delivering to such holder, on behalf of the Corporation, written evidence of the book entry issuance in uncertificated form of Bionik US Shares (which shares shall be fully paid and shall be free and clear of any Lien) and, if applicable, a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in payment of the Dividend Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Redemption Price without interest, unless payment of the Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Redemption Price has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to transfer or cause to be issued or transferred to, and deposited with, the Agent named in such notice the Redemption Price for the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, less any amounts withheld on account of tax required to be deducted and withheld therefrom, such aggregate Redemption Price to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the aggregate Redemption Price for such Exchangeable Shares, without interest, and when received by the Agent, all dividends and other distributions with respect to the Bionik US Shares to which such holder is entitled with a record date after the later of the date of such deposit and the Redemption Date and before the date of transfer of such Bionik US Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom), against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. |
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(4) | In addition to any other right of Acquireco and Bionik US under these share provisions, each of Acquireco and Bionik US shall have the overriding right (the “ Redemption Call Right ”), notwithstanding the proposed redemption of the Exchangeable Shares by the Corporation pursuant to Section 7 of these share provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is Bionik US or a subsidiary of Bionik US) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by the Redemption Purchaser to each holder of an amount per Exchangeable Share (the “ Redemption Call Purchase Price ”) equal to the Current Market Price of a Bionik US Share on the last business day prior to the Redemption Date plus the Dividend Amount, which shall be satisfied in full by the Redemption Purchaser delivering or causing to be delivered to such holder one (1) Bionik US Share plus any Dividend Amount. In the event of the exercise of the Redemption Call Right by the Redemption Purchaser, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to the Redemption Purchaser on the Redemption Date on payment by the Redemption Purchaser to the holder of the Redemption Call Purchase Price for each such share, and the Corporation shall have no obligation to redeem, or to pay any Dividend Amount in respect of, such shares so purchased by the Redemption Purchaser. |
(5) | To exercise the Redemption Call Right, Acquireco or Bionik US, as applicable must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and the Corporation of Acquireco’s or Bionik US’s, as applicable, (such exercising party being referred to in this Section 7 as the “ Redemption Purchaser ”) intention to exercise such right at least sixty (60) days before the Redemption Date, except in the case of a redemption occurring as a result of a Bionik US Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, in which case the Redemption Purchaser shall so notify the Transfer Agent and the Corporation on or before the Redemption Date. The Transfer Agent will notify the holders of the Exchangeable Shares as to whether or not the Redemption Purchaser has exercised the Redemption Call Right forthwith after the expiry of the period during which the same may be exercised by the Redemption Purchaser. If the Redemption Purchaser exercises the Redemption Call Right, on the Redemption Date the Redemption Purchaser will purchase and the holders of Exchangeable Shares will sell to the Redemption Purchaser all of the Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price. |
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(6) | For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Redemption Call Right, the Redemption Purchaser shall deposit or cause to be deposited with the Transfer Agent, on or before the Redemption Date, the aggregate number of Bionik US Shares which the Redemption Purchaser shall deliver or cause to be delivered pursuant to Section 7(4) and a cheque or cheques of the Redemption Purchaser payable at par at any branch of the bankers of the Redemption Purchaser representing the aggregate Dividend Amount, if any, in payment of the aggregate Redemption Call Purchase Price, in each case less any amounts withheld pursuant to Section 15(3) of these share provisions. Provided that the Redemption Purchaser has complied with the immediately preceding sentence, on and after the Redemption Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the aggregate Redemption Call Purchase Price without interest, unless payment of the aggregate Redemption Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this Section 7(6), in which case the rights of the holders shall remain unaffected until the aggregate Redemption Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of the Corporation and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of the Redemption Purchaser shall transfer to such holder, the Bionik US Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder of the Bionik US Shares to which the holder is entitled and a cheque or cheques of the Redemption Purchaser payable at par at any branch of the bankers of the Redemption Purchaser representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such Bionik US Shares with a record date after the Redemption Date and before the date of the transfer of such Bionik US Shares to such holder, less any amounts withheld pursuant to Section 15(3) of these share provisions. If neither Acquireco or Bionik US exercise the Redemption Call Right in the manner described above, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the Redemption Price otherwise payable by the Corporation in connection with the redemption of the Exchangeable Shares pursuant to Section 7 of these share provisions. |
8. | Purchase for Cancellation |
Subject to applicable law, the Corporation may at any time and from time to time purchase for cancellation all or any part of the Exchangeable Shares.
9. | Change of Law Call Right |
(1) | Each of Bionik US and Acquireco shall have the overriding right (the “ Change of Law Call Right ”), in the event of a Change of Law, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is a subsidiary of Bionik US) all but not less than all of the Exchangeable Shares held by each such holder upon payment by the CLC Purchaser of an amount per share (the “ Change of Law Call Purchase Price ”) equal to the Current Market Price of Bionik US Shares on the last business day prior to the Change of Law Call Date plus the Dividend Amount, which shall be satisfied in full by the CLC Purchaser delivering or causing to be delivered to such holder one Bionik US Share plus any Dividend Amount. In the event of the exercise of the Change of Law Call Right by the CLC Purchaser, each holder of Exchangeable Shares shall be obligated to sell all the Exchangeable Shares held by such holder to the CLC Purchaser on the Change of Law Call Date upon payment by the CLC Purchaser to such holder of the Change of Law Call Purchase Price for each such Exchangeable Share. |
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(2) | To exercise the Change of Law Call Right, Bionik US or Acquireco must notify the Transfer Agent of its intention to exercise such right at least forty five (45) days before the date on which Bionik US or Acquireco, as applicable (such party being referred to in this Section 9 as the “ CLC Purchaser ”) intends to acquire the Exchangeable Shares (the “ Change of Law Call Date ”). If the CLC Purchaser exercises the Change of Law Call Right, then, on the Change of Law Call Date, the CLC Purchaser will purchase and the holders of Exchangeable Shares will sell to the CLC Purchaser all of the Exchangeable Shares then outstanding for a price per share equal to the Change of Law Call Purchase Price. |
(3) | For the purposes of completing the purchase of the Exchangeable Shares pursuant to the exercise of the Change of Law Call Right, the CLC Purchaser shall deposit or cause to be deposited with the Transfer Agent, on or before the Change of Law Call Date, the aggregate number of Bionik US Shares which the CLC Purchaser shall deliver or cause to be delivered pursuant to Section 9(1) and a cheque or cheques of the CLC Purchaser payable at par at any branch of the bankers of the CLC Purchaser representing the aggregate Dividend Amount, if any, in payment of the aggregate Change of Law Call Purchase Price, in each case less any amounts withheld pursuant to Section 15(3) of these share provisions. Provided that the CLC Purchaser has complied with the immediately preceding sentence, on and after the Change of Law Call Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the total Change of Law Purchase Price payable by the CLC Purchaser without interest, upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Change of Law Call Date be considered and deemed for all purposes to be the holder of Bionik US Shares to which such holder is entitled. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of the Corporation and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of the CLC Purchaser shall transfer to such holder, the Bionik US Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder written evidence of the book entry issuance in uncertificated form of the Bionik US Shares to which the holder is entitled and a cheque or cheques of the CLC Purchaser payable at par at any branch of the bankers of the CLC Purchaser representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such Bionik US Shares with a record date after the Redemption Date and before the date of the transfer of such Bionik US Shares to such holder, less any amounts withheld pursuant to Section 15(3) of these share provisions. |
10. | Voting Rights |
Except as required by applicable law, with respect to an Exchangeable Share Voting Event and by Section 13 hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting. Without limiting the generality of the foregoing, the holders of the Exchangeable Shares shall not have class votes except as required by applicable law.
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11. | Specified Amount |
The amount specified in respect of each Exchangeable Share for the purposes of subsection 191(4) of the ITA shall be an amount equal to $1.00.
12. | Amendment and Approval |
(1) | The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed only with the approval of the holders of the Exchangeable Shares given as hereinafter specified. |
(2) | Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares in accordance with applicable law shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least thirty percent (30%) of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that if at any such meeting the holders of at least thirty percent (30%) of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five (5) days thereafter and to such time and place as may be designated by the Chair of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares. |
13. | Reciprocal Changes, etc. in Respect of Bionik US Shares |
(1) | Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that so long as any Exchangeable Shares not owned by Bionik US or its subsidiaries are outstanding, Bionik US will not without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions: |
(a) | issue or distribute Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares) to the holders of all or substantially all of the then outstanding Bionik US Shares by way of stock dividend or other distribution, other than an issue of Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares) to holders of Bionik US Shares (i) who exercise an option to receive dividends in Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or similar arrangement; |
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(b) | issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Bionik US Shares entitling them to subscribe for or to purchase Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares); or |
(c) | issue or distribute to the holders of all or substantially all of the then outstanding Bionik US Shares: |
(i) | shares or securities (including evidence of indebtedness) of Bionik US of any class (other than Bionik US Shares or securities convertible into or exchangeable for or carrying rights to acquire Bionik US Shares); or |
(ii) | rights, options or warrants other than those referred to in Section 13(1)(b) above; or |
(iii) | assets of Bionik US or any direct or indirect subsidiary of Bionik US, |
unless the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares and at least ten (10) days prior written notice thereof is given to the holders of Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed or that may be issued or distributed by Bionik US in order to give effect to and to consummate, in furtherance of or otherwise in connection with the transactions contemplated by, and in accordance with, the Unit Offering and the securities issued thereunder.
(2) | Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that so long as any Exchangeable Shares not owned by Bionik US or its subsidiaries are outstanding, Bionik US will not without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions: |
(a) | subdivide, redivide or change the then outstanding Bionik US Shares into a greater number of Bionik US Shares; or |
(b) | reduce, combine, consolidate or change the then outstanding Bionik US Shares into a lesser number of Bionik US Shares; or |
(c) | reclassify or otherwise change the Bionik US Shares or effect a sale of all or substantially all of the assets of Bionik US (on a consolidated basis) or effect an amalgamation, merger, arrangement, reorganization or other transaction affecting the Bionik US Shares, |
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unless the same or an economically equivalent change shall (subject to the receipt of all required approvals) simultaneously be made to, or in the rights of the holders of, the Exchangeable Shares and at least ten (10) days prior written notice is given to the holders of Exchangeable Shares. The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions.
(3) | Notwithstanding the foregoing provisions of this Section 13, in the event of a Bionik US Control Transaction: |
(a) | in which Bionik US merges or amalgamates with, or in which all or substantially all of the then outstanding Bionik US Shares are acquired by, one or more other corporations or other legal entities to which Bionik US is, immediately before such merger, amalgamation or acquisition, related within the meaning of the ITA (otherwise than virtue of a right referred to in paragraph 251(5)(b) thereof); |
(b) | which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of the definition of such term in Section 0 of these share provisions; and |
(c) | in which all or substantially all of the then outstanding Bionik US Shares are converted into or exchanged for shares or rights to receive such shares (the “ Other Shares ”) of another corporation or other legal entity (the “ Other Corporation ”) that, immediately after such Bionik US Control Transaction, owns or controls, directly or indirectly, Bionik US; |
then all references herein to “Bionik US” shall thereafter be and be deemed to be references to “Other Corporation” and all references herein to “Bionik US Shares” shall thereafter be and be deemed to be references to “Other Shares” (with appropriate adjustments, if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of shares pursuant to these share provisions or exchange of shares pursuant to the Voting and Exchange Trust Agreement immediately subsequent to the Bionik US Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, option or retraction of such shares pursuant to these share provisions or exchange of such shares pursuant to the Voting and Exchange Trust Agreement had occurred immediately prior to the Bionik US Control Transaction and the Bionik US Control Transaction was completed) without any need to amend the terms and conditions of the Exchangeable Shares and without any further action required.
14. | Actions by the Corporation under Support Agreement |
(1) | The Corporation will take all such actions and do all such things as shall be necessary to perform and comply with and to ensure performance and compliance by Bionik US, Acquireco and the Corporation with all provisions of the Support Agreement applicable to Bionik US, Acquireco and the Corporation, respectively, in accordance with the terms thereof including taking all such actions and doing all such things as shall be necessary to enforce for the direct benefit of the Corporation all rights and benefits in favour of the Corporation under or pursuant to such agreement. |
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(2) | The Corporation shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of: |
(a) | adding to the covenants of the other parties to such agreement for the protection of the Corporation or the holders of the Exchangeable Shares thereunder; |
(b) | making such amendments or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such amendments and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or |
(c) | making such changes in or corrections to such agreement which, on the advice of counsel to the Corporation, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the Board of Directors shall be of the good faith opinion that such changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares. |
15. | Legend; Call Rights; Withholding Rights |
(1) | The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of these share provisions relating to the Liquidation Call Right, the Redemption Call Right and the Change of Law Call Right, the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and automatic exchange thereunder) and the Retraction Call Right. |
(2) | Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right, the Redemption Call Right, and the Change of Law Call Right in each case in favour of Acquireco and Bionik US, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares or a Change of Law, as the case may be, and to be bound thereby in favour of Acquireco and Bionik US as herein provided. |
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(3) | The Corporation, Acquireco, Bionik US and the Transfer Agent shall be entitled to deduct and withhold from any dividend, distribution or consideration otherwise payable to any holder of Exchangeable Shares such amounts as the Corporation, Acquireco, Bionik US or the Transfer Agent is required to deduct and withhold with respect to such payment under the ITA or United States tax laws or any provision of provincial, territorial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing Agency. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, the Corporation, Acquireco, Bionik US and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to the Corporation, Acquireco, Bionik US or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and the Corporation, Acquireco, Bionik US or the Transfer Agent shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale. |
(4) | The Corporation accepts the benefit of the Liquidation Call Right, the Retraction Call Right, the Redemption Call Right and the Change of Law Call Right as trustee and agent for and on behalf of Acquireco and Bionik US, respectively. The Corporation may enforce the benefit of the Liquidation Call Right, the Retraction Call Right, the Redemption Call Right and the Change of Control Call Right for and on behalf of Acquireco and Bionik US, as applicable, as the Board of Directors determines is necessary or desirable. |
16. | Notices |
(1) | Any notice, request or other communication to be given to the Corporation by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by telecopy or by delivery to the registered office of the Corporation and addressed to the attention of the Secretary of the Corporation. Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Corporation. |
(2) | Any presentation and surrender by a holder of Exchangeable Shares to the Corporation or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of the Corporation or the retraction or redemption of Exchangeable Shares shall be made by first class mail (postage prepaid) or by delivery to the registered office of the Corporation or to such office of the Transfer Agent as may be specified by the Corporation, in each case, addressed to the attention of the Secretary of the Corporation. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Corporation or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates made by first class mail (postage prepaid) shall be at the sole risk of the holder mailing the same. |
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(3) | Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Corporation shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by delivery to the address of the holder recorded in the register of shareholders of the Corporation or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third business day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Corporation pursuant thereto. |
(4) | In the event of any interruption of mail service immediately prior to a scheduled mailing or in the period following a mailing during which delivery normally would be expected to occur, the Corporation shall make reasonable efforts to disseminate any notice by other means, such as publication. Except as otherwise required or permitted by law, if post offices in Canada are not open for the deposit of mail, any notice which the Corporation or the Transfer Agent may give or cause to be given hereunder will be deemed to have been properly given and to have been received by holders of Exchangeable Shares if it is published once in the national edition of The Globe and Mail , provided that if the national edition of The Globe and Mail is not being generally circulated, publication thereof will be made in the National Post or any other daily newspaper of general circulation published in the City of Toronto. |
Notwithstanding any other provisions of these share provisions, notices, other communications and deliveries need not be mailed if the Corporation determines that delivery thereof by mail may be delayed. Persons entitled to any deliveries (including certificates and cheques) which are not mailed for the foregoing reason may take delivery thereof at the office of the Transfer Agent to which the deliveries were made, upon application to the Transfer Agent, until such time as the Corporation has determined that delivery by mail will no longer be delayed. The Corporation will provide notice of any such determination not to mail made hereunder as soon as reasonably practicable after the making of such determination and in accordance with this Section 16(4). Such deliveries in such circumstances will constitute delivery to the persons entitled thereto.
17. | Disclosure of Interests in Exchangeable Shares |
The Corporation shall be entitled to require any holder of an Exchangeable Share or any person who the Corporation knows or has reasonable cause to believe holds any interest whatsoever in an Exchangeable Share to confirm that fact or to give such details as to whom has an interest in such Exchangeable Share as would be required (if the Exchangeable Shares were a class of “equity shares” of the Corporation) under Section 102.1 of the Securities Act or as would be required under the articles of Bionik US or any laws or regulations, or pursuant to the rules or regulations of any regulatory Agency, if the Exchangeable Shares were Bionik US Shares.
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18. | No Fractional Shares |
A holder of Exchangeable Shares shall not be entitled to any fraction of a Bionik US Share upon the exchange or purchase of such holder’s Exchangeable Shares pursuant to Sections 5, 6, 7, 8 or 9 and no certificates representing any such fractional interest shall be issued and such holder otherwise entitled to a fractional interest will receive for such fractional interest from the Corporation, Acquireco or Bionik US as the case may be on the designated payment date a cash payment equal to such fractional interest multiplied by the Current Market Price.
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Exhibit 4.3
WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
No._______ | February 26, 2015 |
Bionik Laboratories Corp.
Common Stock Purchase Warrant
THIS CERTIFIES THAT , for value received, [NAME], or his/her/our registered assigns (the “ Purchaser ”), is entitled to subscribe for and purchase from Bionik Laboratories Corp., a Delaware corporation (the “ Company ”), at any time commencing on February 26, 2015 and expiring on February 26, 2019 (the “ Warrant Exercise Term ”), the Shares at the Exercise Price (each as defined in Section 1 below).
This Warrant is issued in connection with the Company’s private offering solely to accredited investors of Units in accordance with, and subject to, the terms and conditions described in the Subscription Agreement, dated as of even date herewith (the “ Subscription Agreement ”).
This Warrant is subject to the following terms and conditions:
1. Shares . The Purchaser has, subject to the terms set forth herein, the right to purchase, at any time during the Warrant Exercise Term, up to [_NUMBER OF SHARES_] shares (the “ Shares ”) of the Company’s common stock, par value $0.001 (“ Common Stock ”), at a per share exercise price of $1.40 (the “ Exercise Price ”). The Exercise Price is subject to adjustment as provided in Section 3 hereof.
2. Exercise of Warrant .
(a) Exercise . This Warrant may be exercised by the Purchaser at any time during the Warrant Exercise Term, in whole or in part, by delivering the notice of exercise attached as Exhibit A hereto (the “ Notice of Exercise ”), duly executed by the Purchaser to the Company at its principal office, or at such other office as the Company may designate, accompanied by payment, in cash or by wire transfer of immediately available funds or by check payable to the order of the Company, or via cashless exercise (if permitted) of the amount obtained by multiplying the number of Shares designated in the Notice of Exercise by the Exercise Price (the “ Purchase Price ”). For purposes hereof, “ Exercise Date ” shall mean the date on which all deliveries required to be made to the Company upon exercise of this Warrant pursuant to this Section 2(a) shall have been made.
(b) Cashless Exercise . In addition to the provisions of Section 2(a) above, at any time prior to the effectiveness of certain resale registration statement described in the Confidential Private Placement Memorandum, dated September 10, 2014, as amended and/or supplemented, in connection with the Subscription Agreement (the “ PPM ”) or if such registration statement is no longer effective but should be in accordance with the Registration Rights attached as Annex A to the Subscription Agreement (the “ Registration Rights Agreement ”), the Purchaser may, in its sole discretion, exercise all or any part of this Warrant in a “cashless” or “net-issue” exercise (a “ Cashless Exercise ”) by delivering to the Company (1) the Notice of Exercise and (2) the original Warrant, pursuant to which the Purchaser shall surrender the right to receive upon exercise of this Warrant the full number of Warrant Shares set forth in Section 1 hereof and instead, without cash payment, shall receive a number of Warrant Shares calculated by using the following formula:
X | = | Y (A - B) | |
A |
with: | X = | the number of Warrant Shares to be issued to the Purchaser |
Y = | the number of Warrant Shares with respect to which the Warrant is being exercised | |
A = | the fair value per share of Common Stock on the date of exercise of this Warrant | |
B = | the then-current Exercise Price of the Warrant |
Solely for the purposes of this paragraph 2(b), “fair value” per share of Common Stock shall mean (A) the average of the closing sales prices, as quoted on the primary national or regional stock exchange on which the Common Stock is listed, or, if not listed, on the Nasdaq Market if quoted thereon, or, if not listed or quoted, the OTC Bulletin Board (or any tier of the OTC Markets) if quoted thereon, on the twenty (20) consecutive Trading Days (as defined below) immediately preceding the date on which the Notice of Exercise is deemed to have been sent to the Company, or (B) if the Common Stock is not publicly traded as set forth above, as reasonably and in good faith determined by the Board of Directors of the Company as of the date which the Notice of Exercise is deemed to have been sent to the Company.
For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Purchaser, and the holding period for such shares shall be deemed to have commenced, on the date this Warrant was originally issued.
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(c) Redemption . (i) All of the outstanding Warrants (but not less than all) may be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration upon notice to the Purchaser at the price of $0.001 per Warrant (the “ Redemption Price ” ), provided that the VWAP (as defined below) of the Common Stock is 200% of the exercise price or more for 20 consecutive Trading Days prior to the date on which notice of the redemption is given and provided that there is an effective registration statement covering the Common Stock issuable upon exercise of the Warrants, available throughout the 30-day period after the Redemption Date (as defined below)(unless the Company requires a cashless exercise as provided below). “ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market (as defined below), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported on OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. “ Trading Day ” means a day on which the principal Trading Market is open for trading. “ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing), the OTC Bulletin Board or OTC Markets, Inc. (ii) In the event that the Company elects to redeem all of the Warrants, the Company’s board of directors has the right to require the Purchaser to exercise the Warrants on a “cashless basis,” by surrendering the Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the difference between the Exercise Price and the average VWAP for 20 consecutive Trading Days prior to the date on which the notice of the redemption is sent to Purchaser (“ Average VWAP ”) by (y) the Average VWAP. (iii) The Company shall fix a date for the redemption (the “ Redemption Date ”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date to the Purchasers to be redeemed at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Purchaser received such notice. (iv) The notice of redemption shall contain the information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Warrants, including the VWAP and Average VWAP calculations. On and after the Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.
(d) Issuance of Certificates . As soon as practicable after the exercise of this Warrant, in whole or in part, in accordance with Section 2(a) or 2(b) hereof, the Company, at its expense, shall cause to be issued in the name of and delivered to the Purchaser (i) a certificate or certificates for the number of validly issued, fully paid and non-assessable Shares to which the Purchaser shall be entitled upon such exercise and, if applicable, (ii) a new warrant of like tenor to purchase all of the Shares that may be purchased pursuant to the portion, if any, of this Warrant not exercised by the Purchaser. The Purchaser shall for all purposes hereof be deemed to have become the Purchaser of record of such Shares on the date on which the Notice of Exercise and payment of the Purchase Price in accordance with Section 2(a) or 2(b) hereof were delivered and made, respectively, irrespective of the date of delivery of such certificate or certificates, except that if the date of such delivery, notice and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of record of such Shares at the close of business on the next succeeding date on which the stock transfer books are open. Warrant Shares purchased hereunder shall be transmitted by the transfer agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“ DWAC ”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) surrender of this Warrant (if required).
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(e) Taxes . The issuance of the Shares upon the exercise of this Warrant, and the delivery of certificates or other instruments representing such Shares, shall be made without charge to the Purchaser for any tax or other charge of whatever nature in respect of such issuance and the Company shall bear any such taxes in respect of such issuance.
3. Adjustment of Exercise Price and Number of Shares .
(a) Adjustment for Reclassification, Consolidation or Merger . If while this Warrant, or any portion hereof, remains outstanding and unexpired there shall be (i) a reorganization or recapitalization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation or other entity in which the Company shall not be the surviving entity, or a reverse merger (other than the reverse merger described in the PPM, in which case this Warrant will represent a warrant in such public entity on the terms hereof) in which the Company shall be the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other corporation or other entity in one transaction or a series of related transactions, then, as a part of such reorganization, recapitalization, merger, consolidation, sale or transfer, unless otherwise directed by the Purchaser, all necessary or appropriate lawful provisions shall be made so that the Purchaser shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the greatest number of shares of capital stock or other securities or property that a holder of the Shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, recapitalization, merger, consolidation, sale or transfer if this Warrant had been exercised immediately prior to such reorganization, recapitalization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 3. If the per share consideration payable to the Purchaser for Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company’s Board of Directors (the “ Board of Directors ”). The foregoing provisions of this paragraph shall similarly apply to successive reorganizations, recapitalizations, mergers, consolidations, sales and transfers and to the capital stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. In all events, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Purchaser after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable or issuable after such reorganization, recapitalization, merger, consolidation, sale or transfer upon exercise of this Warrant.
(b) Adjustments for Split, Subdivision or Combination of Shares . If the Company shall at any time subdivide (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock subject to acquisition hereunder, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock subject to acquisition upon exercise of the Warrant will be proportionately increased. If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock subject to acquisition hereunder, then, after the record date for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock subject to acquisition upon exercise of the Warrant will be proportionately decreased.
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(c) Adjustments for Dividends in Stock or Other Securities or Property . If while this Warrant, or any portion hereof, remains outstanding and unexpired, the holders of any class of securities as to which purchase rights under this Warrant exist at the time shall have received or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of such class of security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the class of security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available to it as aforesaid during said period, giving effect to all adjustments called for during such period by the provisions of this Section 3.
(d) Adjustment of Exercise Price Upon Issuance of Additional Shares of Common Stock . If while this Warrant, or any portion hereof, remains outstanding and unexpired, the Company shall issue Additional Shares of Common Stock (as hereinafter defined) without consideration or for a consideration per share less than the then-applicable Exercise Price, then and in such event, such Exercise Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying the then-applicable Exercise Price by a fraction, (i) the numerator of which shall be the number of shares of Common Stock issued and outstanding immediately prior to such issuance plus the quotient obtained by dividing (x) the aggregate consideration received by the Company for the total number of Additional Common Stock so issued by (y) the Exercise Price, and (ii) the denominator of which shall be the number of shares of the Common Stock issued and outstanding immediately prior to such issuance plus the number of Additional Shares of Common Stock so issued.
For the purposes hereof “ Additional Shares of Common Stock ” shall mean all shares of Common Stock, or options, rights, warrants to subscribe for Common Stock, or securities convertible into or exchangeable for shares of Common Stock, actually issued by the Company on or after the date hereof, other than shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock issued at any time:
(i) upon exercise of the Warrants;
(ii) upon the completion of the Reverse Merger in connection with the Offering.
(iii) pursuant to the exercise of options, warrants or other common stock purchase rights issued (or to be issued) to employees, officers or directors of, or consultants or advisors to, or any strategic ally of or investor in, the Company pursuant to any stock purchase plan, stock option plan, equity incentive plan or other plan or arrangement approved by the Board of Directors (or the Compensation Committee thereof) at any time;
(iv) pursuant to the exercise of options, warrants or any evidence of indebtedness, shares of capital stock (other than Common Stock) or other securities convertible into or exchangeable for Common Stock (“ Convertible Securities ”) outstanding as of the date of the issuance of this Warrant;
(v) in connection with the acquisition of all or part of another entity by stock acquisition, merger, consolidation or other reorganization, or by the purchase of all or part of the assets of such other entity (including securities issued to persons formerly employed by such other entity and subsequently hired by the Company and to any brokers or finders in connection therewith);
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(vi) bona fide commercial partners, or lessors in connection with credit arrangements, equipment financings or similar transactions approved by the Board of Directors; or
(vii) in connection with the Company’s acquisition, joint-venture, licensing or business transaction of intellectual property assets from any individuals or entities approved by the Board of Directors.
Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 3(d), the number of Shares issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(e) Notice of Adjustments . Upon any adjustment of the Exercise Price and any increase or decrease in the number of Shares purchasable upon the exercise of this Warrant, then, and in each such case, the Company, within 30 days thereafter, shall give written notice thereof to the Purchaser at the address of such Purchaser as shown on the books of the Company, which notice shall state the Exercise Price as adjusted and, if applicable, the increased or decreased number of Shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation of each.
4. Notices . All notices, requests, consents and other communications required or permitted under this Warrant shall be in writing and shall be deemed delivered (i) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid or (ii) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery or (iii) on the business day of delivery if send by facsimile transmission, in each case to the intended recipient as set forth below:
If to the Company to :
Bionik Laboratories Corp.
10 Dundas St. E. Office AMC-B202
Toronto, ON M5B 2G9
Attention: Peter Bloch
Facsimile:
With a copy (that shall not constitute notice) to:
Ruskin Moscou Faltischek, P.C.
East Tower, 15 th Floor
1425 RXR Plaza
Uniondale, New York 11556
Attention: Stephen E. Fox, Esq.
Facsimile: (516) 663-6780
If to the Purchaser at its address as furnished in the Subscription Agreement.
Either party may give any notice, request, consent or other communication under this Warrant using any other means (including personal delivery, messenger service, facsimile transmission, first class mail or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended. Either party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other party notice in the manner set forth in this Section 4.
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5. Legends . Each certificate evidencing the Shares issued upon exercise of this Warrant shall be stamped or imprinted with a legend substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
6. Removal of Legend . Upon request of a holder of a certificate with the legends required by Section 5 hereof and subject to Section 3(f) of the Registration Rights Agreement, the Company shall issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received an opinion of counsel satisfactory to the Company in form and substance to the effect that any transfer by such holder of the Shares evidenced by such certificate will not violate the Act or any applicable state securities laws.
7. Fractional Shares . No fractional Shares will be issued in connection with any exercise hereunder. Instead, the Company shall round up, as nearly as practicable to the nearest whole Share, the number of Shares to be issued.
8. Rights of Stockholders . Except as expressly provided in Section 3(c) hereof, the Purchaser, as such, shall not be entitled to vote or receive dividends or be deemed the holder of the Shares or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Purchaser, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have been issued, as provided herein.
9. Miscellaneous .
(a) This Warrant and disputes arising hereunder shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to agreements made and to be performed wholly within such State, without regard to its conflict of law rules.
(b) The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.
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(c) The covenants of the respective parties contained herein shall survive the execution and delivery of this Warrant.
(d) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or permitted assigns of the Company and of the Purchaser and of the Shares issued or issuable upon the exercise hereof.
(e) This Warrant and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subject hereof.
(f) The Company shall not, by amendment of the Certificate of Incorporation or Bylaws, or through any other means, directly or indirectly, avoid or seek to avoid the observance or performance of any of the terms of this Warrant and shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Purchaser contained herein against impairment.
(g) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company, at its expense, will execute and deliver to the Purchaser, in lieu thereof, a new Warrant of like date and tenor.
(h) This Warrant and any provision hereof may be amended, waived or terminated only by an instrument in writing signed by the Company and the Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
8 |
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer.
Bionik Laboratories Corp. | ||
By: | ||
Name: Peter Bloch | ||
Title: Chief Executive Officer |
9 |
Exhibit 10.1
INVESTMENT AGREEMENT
AMONG
BIONIK LABORATORIES INC.
AND
BIONIK ACQUISITION INC.
AND
BIONIK LABORATORIES CORP. (FORMERLY KNOWN AS DRYWAVE TECHNOLOGIES, INC.)
February 26, 2015
TABLE OF CONTENTS
Article 1 INTERPRETATION | 2 | |
1.1 | Definitions | 2 |
1.2 | Interpretation Not Affected by Headings, etc. | 4 |
1.3 | Number, etc. | 4 |
1.4 | Date for Any Action | 4 |
1.5 | Currency | 4 |
1.6 | Knowledge | 4 |
1.7 | Meanings | 4 |
Article 2 PURCHASED SHARE SUBSCRIPTION, LOAN AND ISSUANCE OF PROMISSORY NOTE | 4 | |
2.1 | Subscription for Purchased Shares | 4 |
2.2 | Loan and Issuance of Promissory Note | 5 |
2.3 | Closing | 5 |
2.4 | Closing Conditions and Deliveries | 5 |
Article 3 COVENANTS | 6 | |
3.1 | Covenants of Bionik US | 6 |
3.2 | Covenants of Bionik Canada | 7 |
Article 4 REPRESENTATIONS AND WARRANTIES | 7 | |
4.1 | Representations and Warranties of Bionik US and Purchaser | 7 |
4.2 | Representations and Warranties of Bionik Canada | 21 |
Article 5 RESALE RESTRICTIONS | 21 | |
5.1 | Acknowledgement | 21 |
5.2 | Legend | 21 |
Article 6 USE OF PERSONAL INFORMATION | 22 | |
6.1 | Acknowledgment | 22 |
6.2 | Personal Information | 22 |
6.3 | Notification | 22 |
Article 7 NOTICES | 23 | |
7.1 | Notices | 23 |
Article 8 GENERAL | 24 | |
8.1 | Binding Effect | 24 |
8.2 | Waiver and Modification | 24 |
8.3 | Assignment | 24 |
8.4 | Costs | 25 |
8.5 | Time of Essence | 25 |
8.6 | Survival | 25 |
8.7 | Governing Law | 25 |
8.8 | Severability | 25 |
8.9 | Further Assurances | 25 |
8.10 | Counterparts and Facsimile Copies | 26 |
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INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT made as of the 26 th day of February, 2015.
AMONG:
BIONIK LABORATORIES INC. , a corporation incorporated
under the laws of Canada (hereinafter called “ Bionik Canada ”)
OF THE FIRST PART
- and -
BIONIK ACQUISITION INC.
, a corporation incorporated
under
the laws of Canada (hereinafter called the “
Purchaser
”)
OF THE SECOND PART
- and -
BIONIK LABORATORIES CORP. (formerly known as
Drywave
Technologies, Inc.)
, a corporation incorporated under
the laws of the State of Delaware (hereinafter called “
Bionik
US
”)
OF THE THIRD PART
WHEREAS using the net proceeds from the Unit Offering (as defined below), Bionik US wishes, indirectly through the Purchaser, its wholly-owned subsidiary, to (i) subscribe for and purchase from Bionik Canada, 100 Class 1 common shares of Bionik Canada (the “ Purchased Shares ”), representing 100% of the Class 1 common shares of Bionik Canada, at a purchase price of $1.00 per Purchased Share, and (ii) loan $0.00 to Bionik Canada in exchange for a non-interest bearing promissory note of Bionik Canada payable on demand in an equivalent principal amount (the “ Promissory Note ”);
AND WHEREAS the Purchased Shares and the transactions contemplated hereby are part of a larger group of transactions, including a private placement offering of a minimum of 7,500,000 units and a maximum of 16,000,000 units of Bionik US for gross proceeds of not less than US$6,000,000 and not more than US$12,800,000 (each unit consisting of one (1) share of common stock of Bionik US (“ Bionik US Shares ”) and one (1) warrant to purchase one (1) Bionik US Share (the “ Unit Offering ”) and a Reverse Takeover (as defined below) of Bionik US by the shareholders of Bionik Canada, all as described in that Confidential Private Placement Memorandum of Bionik US, dated September 10, 2014, as supplemented by that Supplement No. 1 dated January 16, 2015, as amended or supplemented from time to time, including all attachments, schedules and exhibits thereto (the “ Memorandum ”);
AND WHEREAS in order to effect the Reverse Takeover, an amendment to the articles of Bionik Canada will be filed immediately prior to the Closing (as defined below), pursuant to which a reorganization of the capital of Bionik Canada will be effected, which will consist of (A) the removal of the restrictions on the transfer of securities of Bionik Canada (B) the creation of an unlimited number of shares of a new class of shares exchangeable on a one-for-one basis (the “ Exchangeable Shares ”) at any time at the option of the holder of the Exchangeable Shares into Bionik US Shares, (C) changing all the issued and outstanding common shares of Bionik Canada into Exchangeable Shares on the basis of 3.14576 Bionik US Shares for each Bionik Canada common share, and thereafter cancelling the unissued common shares and (D) creating a new class of Class 1 common shares (collectively, the (“ Articles of Amendment ”);
AND WHEREAS upon Closing existing shareholders of Bionik Canada will receive Exchangeable Shares which will represent the right to receive for each Exchangeable Share one Bionik US Share, resulting in an aggregate of not less than 50,000,000 Bionik US Shares and Bionik Canada will indirectly be acquired by Bionik US (the “ Reverse Takeover ”);
AND WHEREAS as a result of the Reverse Takeover, the shareholders of Bionik Canada will collectively through a special voting share of Bionik US (the “ Special Voting Share ”) become the beneficial holders of the majority voting rights of Bionik US;
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 Reverse Takeover;
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:
“ Agreement ”, “ this Agreement ”, “ herein ”, “ hereby ”, “ hereof ”, “ hereunder ” and similar expressions mean or refer to this agreement and any amendments hereto.
“ associate ” and “ affiliate ” have the respective meanings ascribed thereto in the Securities Act (Ontario).
“ Beneficiaries ” means the registered holders from time to time of Exchangeable Shares, other than Bionik US and any subsidiary of Bionik US.
“ Bionik US Special Voting Share ” means the special voting share in the capital of Bionik US which entitles the holder of record to a number of votes at meetings of holders of Bionik US Shares equal to the number of Exchangeable Shares outstanding from time to time (excluding Exchangeable Shares held by Bionik US and any subsidiary of Bionik US), which share is to be issued to and voted by, the Trustee as described in the Voting and Exchange Trust Agreement.
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“ 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.
“ Closing ” means the completion of the Reverse Takeover and all of the transactions contemplated hereby.
“ Closing Date ” means the date of the Closing, which shall be February 26, 2015 or such other date as the parties hereto may collectively agree, acting reasonably, and in any event not later than February 27, 2015.
“ misrepresentation ”, “ material fact ” and “ material change ” have the respective meanings ascribed thereto in the Securities Act (Ontario).
“ Material Adverse Change ” or “ Material Adverse Effect ” with respect to Bionik US or the Purchaser, 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 who believe that confirmation of the decision by the board of directors is probable), event, occurrence, state of facts, violation, inaccuracy, circumstance or effect that, individually or in the aggregate, is, or would reasonably be expected to be, material and adverse to the business, assets (including intangible assets), liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), obligations (whether absolute, accrued, conditional or otherwise), capitalization, ownership, financial condition or results of operations of Bionik US or the Purchaser, as the case may be, on a consolidated basis.
“ Material Agreement s” means collectively, the Registration Rights Agreement, the Support Agreement and the Voting and Exchange Trust Agreement.
“ Person ” shall be broadly interpreted and shall include any individual, corporation, partnership, joint venture, association, trust or other legal entity.
“ Registration Rights Agreement ” means the registration rights agreement dated February 26, 2015 among Bionik Canada and certain holders of Exchangeable Shares, as the same will be novated to Bionik US on or subsequent to the date hereof.
“ Support Agreement ” means the support agreement dated February 26, 2015 among Bionik Canada, Bionik US and Purchaser.
“ Trustee ” means Computershare Trust Company of Canada and, subject to the provisions of the Voting and Exchange Trust Agreement, includes any successor trustee.
“ United States ” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia.
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“ Voting and Exchange Trust Agreement ” means the voting and exchange trust agreement dated February 26, 2015 among Bionik US, Bionik Canada and Computershare Trust Company of Canada in connection with, among other things, the creation of a trust for the benefit for the registered holders of the Exchangeable Shares (other than Bionik US or any subsidiary thereof).
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 | Currency |
All sums of money which are referred to in this Agreement are expressed in lawful money of the United States, unless otherwise indicated.
1.6 | Knowledge |
Where any representation or warranty contained in this Agreement is expressly qualified by reference to the knowledge of Bionik US or the Purchaser, as applicable, it shall be deemed to refer to the actual knowledge after having made due inquiry of the officers of the particular company.
1.7 | Meanings |
Unless otherwise specifically indicated or the context otherwise requires “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation”.
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Article 2
PURCHASED SHARE SUBSCRIPTION, LOAN AND
ISSUANCE OF PROMISSORY NOTE
2.1 | Subscription for Purchased Shares |
At the Closing, Bionik Canada shall issue and sell to the Purchaser on a private placement basis, and the Purchaser shall purchase from Bionik Canada, 100 Purchased Shares at a price of $1.00 per Purchased Share for an aggregate purchase price of $100.00 (the “ Subscription Proceeds ”).
2.2 | Loan and Issuance of Promissory Note |
At the Closing, the Purchaser shall loan to Bionik Canada the sum of $0.00 in consideration of the issue by Bionik Canada to the Purchaser of the Promissory Note.
2.3 | Closing |
The Closing shall take place at the offices of Bionik Canada’s legal counsel in Toronto, Ontario on the Closing Date.
2.4 | Closing Conditions and Deliveries |
Upon the mutual satisfaction of the conditions in this Section 2.4, at the Closing:
(a) | the Purchaser shall pay the Subscription Proceeds for the Purchased Shares by delivery to Bionik Canada of a certified cheque, bank draft or wire transfer of immediately available funds in the amount of the Subscription Proceeds; |
(b) | the Purchaser shall advance the loan by delivery to Bionik Canada of a certified cheque, bank draft or wire transfer of immediately available funds; |
(c) | Bionik Canada shall issue and deliver to the Purchaser a certificate(s) registered to the Purchaser representing the Purchased Shares; |
(d) | Bionik Canada shall issue and deliver to the Purchaser the Promissory Note; |
(e) | Bionik Canada shall deliver to the Purchaser a certificate of status (or equivalent) of Bionik Canada dated no earlier than the Business Day immediately preceding the Closing Date; |
(f) | each of the Material Agreements shall have been duly executed and delivered by Bionik US and the Purchaser, as applicable, and shall be legally valid and binding and enforceable against each of them, as applicable, in accordance with their terms; |
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(g) | the representations and warranties of Bionik US and the Purchaser contained in this Agreement and the Material Agreements, as applicable, 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 in all respects; |
(h) | Bionik US and the Purchaser have performed, fulfilled or complied with, in all material respects, all of their obligations, covenants and agreements contained in this Agreement and the Material Agreements, as applicable, to be fulfilled or complied with by them at or prior to the Closing; |
(i) | the representations and warranties of Bionik Canada contained in this Agreement and the Material Agreement, as applicable, 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 in all respects; |
(j) | Bionik Canada has performed, fulfilled or complied with, in all material respects, all of its obligations, covenants and agreements contained in this Agreement and the Material Agreements, as applicable, to be fulfilled or complied with by it at or prior to the Closing; and |
(k) | each of the Parties having properly completed, signed and delivered any further documentation as required under applicable securities legislation or other regulatory authority. |
Article 3
COVENANTS
3.1 | Covenants of Bionik US |
(a) | At or prior to the Closing, Bionik US shall have taken all necessary steps to create and issue and shall issue to the Trustee the Bionik US Special Voting Share (and shall deliver the certificate representing such share to the Trustee) to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of the Voting and Exchange Trust Agreement. |
(b) | Bionik US covenants that the registration statement or prospectus to be filed within 180 days of the Closing covering some or all of the Bionik US Shares to be issued upon the redemption, retraction, exercise, exchange or conversion of the Exchangeable Shares, and all information incorporated by reference therein shall constitutes full, true and plain disclosure of all material facts relating to the Bionik US Shares and Bionik US, and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. No fact or information shall be omitted from such disclosure which shall be required to be stated in such disclosure or is necessary to make the statement or information contained in such disclosure not misleading in light of the circumstances under which they are to be made. Any such documents shall comply as at the date of such documents with all applicable securities laws, rules, regulations and instruments. |
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(c) | On or prior to the date hereof, (i) Bionik US, Brian Ray and John Lundgreen shall execute and deliver or shall have executed and delivered the Spin-Off Agreement (the “ Spin-Off Agreement ”), pursuant to which Bionik US shall assign all of the issued and outstanding capital stock of Strategic Dental Alliance Inc., a Colorado corporation and a wholly-owned subsidiary of Bionik US (the “ Spin-Off Subsidiary ”), together with all of the business, operations, assets, and goodwill of the Spin-Off Subsidiary (other than cash and cash equivalents) and certain liabilities, in exchange for an indemnity from Brian Ray and John Lundgreen against claims by any Persons arising in connection with such business, operation, employment matters, warranties or otherwise (the “ Spin-Off ”) and (ii) Bionik US and Tungsten 74 LLC shall execute and deliver or shall have executed and delivered the Assignment and Assumption Agreement pursuant to which Tungsten 74 LLC assumed all remaining liabilities of Bionik US through the date hereof (the “ Assignment ”). |
(d) | Prior to the Closing, Bionik US shall (i) loan $0.00, representing a portion of the net proceeds from the Unit Offering, to the Purchaser in exchange for a non-interest bearing promissory note of the Purchaser in an equivalent principal amount (the “ Bionik US Loan ”), and (ii) subscribe for common stock of the Purchaser using the balance of the net proceeds from the Unit Offering in an amount equal to the Subscription Proceeds. At or prior to the Closing, Bionik US shall cause the Purchaser to (i) provide a loan to Bionik Canada in an amount equal to the Bionik US Loan in exchange for the Promissory Note, and (ii) subscribe for the Purchased Shares at a price of $1.00 per Purchased Share for a total subscription price of $100.00. |
3.2 | Covenants of Bionik Canada |
(a) | On or prior to one (1) Business Day before the Closing Date, Bionik Canada shall have filed the Articles of Amendment with Industry Canada. |
Article 4
REPRESENTATIONS AND WARRANTIES
4.1 | Representations and Warranties of Bionik US and Purchaser |
Bionik US and Purchaser, jointly and severally, represent and warrant to and in favour of Bionik Canada as follows, and acknowledge that Bionik Canada is relying upon such representations and warranties in connection with the completion of the transactions contemplated herein:
(a) | The Purchaser and Bionik US are aware that an investment in Bionik Canada involves a significant degree of risk, involving a number of very significant risks and has carefully read and considered the matters set forth in the Memorandum. |
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(b) | None of the Purchased Shares are registered under the Securities Act of 1933, as amended (the “ Securities Act ”), or any state securities laws. The Purchaser understands that the offering and sale of the Purchased Shares are intended to be exempt from registration under the Securities Act, by virtue of Section 4(a)(2) thereof and/or the provisions of Regulation D promulgated thereunder, based, in part, upon the representations, warranties and agreements of the Purchaser contained in this Agreement. |
(c) | Prior to the execution of this Agreement, the Purchaser and Bionik US, and their respective attorneys, accountants, purchaser representatives and/or tax advisers, if any (collectively, the “ Advisers ”), have received the Memorandum and all other documents requested by the Purchaser and Bionik US, have carefully reviewed them and understand the information contained therein. |
(d) | Neither the Securities and Exchange Commission nor any state or provincial securities commission or other regulatory authority has approved the Purchased Shares, or passed upon or endorsed the merits of the offering of the Purchased Shares, or confirmed the accuracy or determined the adequacy of the Memorandum. The Memorandum has not been reviewed by any federal, state or other regulatory authority. |
(e) | All documents, records, and books pertaining to the investment in the Purchased Shares have been made available for inspection by the Purchaser, Bionik US and their respective Advisers, if any. |
(f) | The Purchaser, Bionik US and their respective Advisers, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of Bionik Canada concerning the Purchased Shares, the business and financial condition of Bionik Canada, and all such questions have been answered to the full satisfaction of the Purchaser and their respective Advisers, if any. |
(g) | The Purchaser and Bionik US are each unaware of, are in no way relying on, and did not become aware of the offering of the Purchased Shares through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or the Internet (including, without limitation, internet “blogs,” bulletin boards, discussion groups and social networking sites) in connection with the offering and sale of the Purchased Shares and are not subscribing for the Purchased Shares and did not become aware of the offering of the Purchased Shares through or as a result of any seminar or meeting to which the Purchaser or Bionik US were invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser in connection with investments in securities generally. |
(h) | Neither the Purchaser nor Bionik US is relying on Bionik Canada or any of its employees, agents, lawyers or advisers with respect to the legal, tax, economic and related considerations of an investment in the Purchased Shares, and the Purchaser and Bionik US have each relied on the advice of, or have consulted with, only their own advisers. |
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(i) | The Purchaser and Bionik US, directly and indirectly, as the case may be, are acquiring the Purchased Shares solely for their own account for investment purposes only and not with a view to or intent of resale or distribution thereof, in whole or in part. The Purchaser and Bionik US have no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of the Purchased Shares, directly and indirectly, as the case may be, and the Purchaser and Bionik US have no plans to enter into any such agreement or arrangement. |
(j) | The Purchaser and indirectly Bionik US must bear the substantial economic risks of the investment in the Purchased Shares indefinitely because none of them may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. |
(k) | The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, the consummation of the transactions contemplated hereby and the entering into of this Agreement and the Material Agreements, as applicable, is authorized by, and will not result in a violation of law or its charter, by-laws or other organizational documents, such entity has full power and authority to execute and deliver this Agreement and the Material Agreements and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the securities constituting the Purchased Shares, the execution and delivery of this Agreement and the Material Agreements have been duly authorized by all necessary action, this Agreement and the Material Agreements have been duly executed and delivered on behalf of such entity and are legal, valid and binding obligations of such entity. The execution and delivery of this Agreement and the Material Agreements will not violate, conflict or result in a breach of any term of any order, judgment, injunction, agreement or controlling document to which the Purchaser is a party or by which it is bound. |
(l) | Bionik US and the Purchaser are not insolvent and are able to meet all of their financial liabilities as they become due and no winding-up, liquidation, dissolution or bankruptcy proceedings have been commenced or are being commenced or contemplated by Bionik US or the Purchaser, and other than the Reverse Take Over, no merger, consolidation, amalgamation, sale of all or substantially all of the assets or sale of their respective businesses have been commenced or are being commenced or contemplated by Bionik US or the Purchaser and Bionik US has no knowledge of any such proceedings or transactions having been commenced or being contemplated in respect of Bionik US or the Purchaser by any other party; |
- 9 - |
(m) | Bionik US and the Purchaser have been conducting their respective businesses and operations and are conducting the Reverse Takeover and Unit Offering in compliance in all material respects with all applicable laws and regulations of each jurisdiction in which they carry on such businesses or operations, and, to the knowledge of Bionik US, there are no facts that would give rise to a notice of material non-compliance with any such laws and regulations. |
(n) | The Purchaser and Bionik US are each satisfied that they have received adequate information with respect to all matters which they or their advisers, if any, consider material to the Purchaser’s and Bionik US’s, as the case may be, decision to make this investment. |
(o) | The Purchaser and Bionik US each acknowledge that any estimates or forward-looking statements or projections included in the Memorandum were prepared by Bionik Canada in good faith but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by Bionik Canada and should not be relied upon. |
(p) | The Bionik US Shares have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and Bionik US is subject to the periodic reporting requirements of Section 13 of the Exchange Act. Bionik US has made available to Bionik Canada true, complete, and correct copies of all forms, reports, schedules, statements, and other documents required to be filed by it under the Exchange Act, as such documents have been amended since the time of the filing thereof (collectively, including all forms, reports, schedules, statements, exhibits, and other documents filed by Bionik US therewith, the “ SEC Documents ”). The SEC Documents, including, without limitation, any financial statements and schedules included therein, at the time filed or, if subsequently amended, as so amended, (i) did not contain any untrue statement of a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) complied in all material respects with the applicable requirements of the Exchange Act and the applicable rules and regulations thereunder. |
(q) | Except as otherwise disclosed in the SEC Documents, Bionik US maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that: |
(i) | all material information concerning Bionik US is made known on a timely basis to the individuals responsible for the preparation of Bionik US’s filings with the SEC and other public disclosure documents; |
(ii) | transactions are executed in accordance with management’s general or specific authorizations; |
(iii) | transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States and to maintain asset accountability; |
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(iv) | access to assets is permitted only in accordance with management’s general or specific authorization; and |
(v) | the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. |
Bionik US has made available to Bionik Canada copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures, if any. The books, records and accounts of Bionik US accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, Bionik US all to the extent required by generally accepted accounting principles in the United States.
(r) | The information and statements in the Memorandum (except information and statements relating solely to Bionik Canada and furnished in writing by Bionik Canada for use therein (“ Bionik Canada’s Information ”) and statistical, market related data and/or other information that is identified in the Memorandum as being from a third party (the “ Third Party Information ”)) are true and correct in all material respects and contain no misrepresentation and the Memorandum does not contain any untrue statement of a material fact or omit to state a material fact (except with respect to Bionik Canada’s Information and the Third Party Information) necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and the Memorandum complies with all applicable securities laws. |
(s) | The Chief Executive Officer and the Chief Financial Officer of Bionik US has signed, and Bionik US has filed with or furnished to the Securities and Exchange Commission (the “ SEC ”), as the case may be, all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Bionik US nor any of its officers has received notice from any governmental entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications. |
(t) | Bionik US has heretofore made available to Bionik Canada complete and correct copies of all certifications filed with or furnished to the SEC, as the case may be, pursuant to Sections 302 and 906 of Sarbanes-Oxley Act of 2002 and hereby reaffirms, represents and warrants to Bionik Canada the matters and statements made in such certificates. |
(u) | At the date hereof: |
(i) | each of the Bionik US Shares is eligible to trade and be quoted on, and is quoted on, the over-the-counter Bulletin Board market, and/or the OTCQB market and/or OTCQX market and/or the OTCPink market (the “ OTCBB ”) and has received no notice or other communication indicating that such eligibility is subject to challenge or review by the any applicable regulatory agency, electronic market administrator, or exchange; |
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(ii) | Bionik US has and shall have performed or satisfied all of its undertakings to, and of its obligations and requirements with, the SEC; |
(iii) | Bionik US has not, and shall not have taken any action that would preclude, or otherwise jeopardize, the inclusion of the Bionik US Shares for quotation on the OTCBB; and |
(iv) | the Bionik US Shares are eligible for participation in The Depository Trust Company book entry system. |
(v) | Except for the Purchaser, taking into account the Spin-Off, Bionik US has no subsidiaries or affiliated corporation or owns any interest in any other enterprise (whether or not such enterprise is a corporation). Bionik US has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware with full power and authority (corporate and other) to own, lease and operate its properties and conduct its business as described in the SEC Documents. Bionik US is duly qualified to do business as a foreign corporation in each jurisdiction, if any, for which its activities would require it to be so qualified, and is in good standing in each jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a Material Adverse Effect; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification; Bionik US is in possession of, and operating in compliance with, all authorizations, licenses, certificates, consents, orders and permits from state, federal, foreign and other regulatory authorities that are material to the conduct of its business, all of which are valid and in full force and effect; Bionik US is not in violation of its charter or bylaws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which it is a party or by which it or its properties or assets may be bound, which violation or default would have a Material Adverse Effect; and Bionik US is not in violation of any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over Bionik US or over its properties or assets, which violation would have a Material Adverse Effect. The SEC Documents, as of the dates thereof, accurately describe any corporation, association or other entity owned or controlled, directly or indirectly, by Bionik US. The Purchaser has no assets or liabilities as of the date hereof, was formed for the sole purpose of acquiring the Purchased Shares on behalf of Bionik US and is wholly-owned by Bionik US. |
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(w) | Bionik US has all requisite power and authority to execute, deliver, and perform this Agreement and the Material Agreements, as applicable. All necessary proceedings of Bionik US have been duly taken to authorize the execution, delivery, and performance of this Agreement and the Material Agreements. This Agreement and the Material Agreements, as applicable, have been duly authorized, executed, and delivered by Bionik US, constitute the legal, valid, and binding obligation of Bionik US, and are enforceable as to Bionik US in accordance with their terms. Except as otherwise set forth in this Agreement and the Material Agreements, as applicable, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or other tribunal is required by Bionik US for the execution, delivery, or performance of this Agreement and the Material Agreements. No consent, approval, authorization or order of, or qualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over Bionik US or over its properties or assets is required for the execution and delivery of this Agreement and the Material Agreements by Bionik US and the consummation by Bionik US of the transactions herein and therein contemplated, except such as may be required under the Securities Act or under state or other securities or blue sky laws, all of which requirements have been, or in accordance therewith will be, satisfied in all material respects. No consent of any party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which Bionik US is a party, or to which its or any of its businesses, properties, or assets are subject, is required for the execution, delivery, or performance of this Agreement and the Material Agreements, as applicable, by Bionik US; and the execution, delivery, and performance of this Agreement and the Material Agreements, as applicable, by Bionik US will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle any party to receive rights or privileges that such party was not entitled to receive immediately before this Agreement and the Material Agreements were executed under, or create any obligation on the part of Bionik US to which it was not subject immediately before this Agreement and the Material Agreements were executed under, any term of any such material contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of the certificate of incorporation or by-laws of Bionik US or (if the provisions of this Agreement and the Material Agreements are satisfied) violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over Bionik US or over its properties or assets. |
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(x) | There is not any pending or, to the best of Bionik US’s knowledge, threatened, action, suit, claim or proceeding against Bionik US or the Purchaser, or any of Bionik US’s or the Purchaser’s current or past officers or directors or any of the respective properties, assets or rights of Bionik US or the Purchaser, before any court, government or governmental agency or body, domestic or foreign, having jurisdiction over Bionik US or the Purchaser or over Bionik US’s or the Purchaser’s current or past officers or directors or the properties of Bionik US or the Purchaser, or otherwise that (i) is reasonably likely to result in any Material Adverse Change, (ii) might prevent consummation of the transactions contemplated by this Agreement, or (iii) alleging violation of any Federal, provincial or state securities laws. |
(y) | The authorized and issued and outstanding capital stock of Bionik US and the Purchaser is as set forth in the SEC Documents. Each of such outstanding shares of Bionik US Shares and shares of Purchaser is duly and validly authorized, validly issued, fully paid, and nonassessable, has not been issued and is not owned or held in violation of any pre-emptive or similar right of stockholders. Except as disclosed in the SEC Documents, (i) there is no commitment, plan, or arrangement to issue, and no outstanding option, warrant, or other right calling for the issuance of, any share of capital stock of, or any security or other instrument convertible into, exercisable for, or exchangeable for capital stock of, Bionik US or the Purchaser, and (ii) except as described in the SEC Documents, there is outstanding no security or other instrument convertible into or exchangeable for capital stock of Bionik US or the Purchaser. Other than as described in the SEC Documents, Bionik US and the Purchaser have no stock option, stock bonus and other stock plans or arrangements. |
(z) | All necessary corporate action has been taken to validly authorize and issue the Bionik US Special Voting Share as fully paid and non-assessable and with of all of the attributes as set out in the Certificate of Designation in Schedule “A” attached hereto, at or prior to the Closing. |
(aa) | Until the expiry of the rights to redeem, retract, exercise, exchange or convert the Exchangeable Shares pursuant to their terms, there shall be at all times set aside, reserved, authorized and kept available for issuance that number of authorized but unissued Bionik US Shares as shall, from time to time, be sufficient to permit the redemption, retraction, exercise, exchange or conversion, in accordance with the terms of the Exchangeable Shares, of the rights to redeem, retract, exercise, exchange or convert into Bionik US Shares attaching to all of the Exchangeable Shares then outstanding based on the number of Bionik US Shares issuable on the redemption, retraction, exercise, exchange or conversion of the Exchangeable Shares (including, without limitation, any adjustments required as a result of the terms of Exchangeable Shares). |
(bb) | The Bionik US Shares so set aside and reserved are hereby allotted to holders of the Exchangeable Shares who exercise the rights to redeem, retract, exercise, exchange or convert into Bionik US Shares attaching to the Exchangeable Shares in accordance with the terms thereof and, upon redemption, retraction, exercise, exchange or conversion of the Exchangeable Shares in accordance with the terms thereof, the Bionik US Shares to which the holders of the Exchangeable Shares are entitled shall be issued as fully paid and non-assessable. |
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(cc) | All necessary corporate action has been taken to authorize the issue and sale of, and the delivery of certificates representing, up to 16,000,000 Bionik US Shares and up to 16,000,000 Bionik US warrants to purchase up to 16,000,000 Bionik US Shares in the aggregate and, upon the issue thereof, the Bionik US Shares will be validly issued as fully paid and non-assessable shares, the warrants to purchase Bionik US Shares will be validly issued and, upon payment of the requisite consideration therefor, the underlying Bionik US Shares will be validly issued as fully paid and non-assessable shares. |
(dd) | The Unit Offering shall result in net proceeds of a minimum of $6,000,000. |
(ee) | The Purchaser is purchasing sufficient Purchased Shares so that the aggregate acquisition cost of the Purchased Shares payable in cash at the Closing is not less than $150,000 and the Purchaser is not a corporation, syndicate, partnership or other form of incorporated or non-incorporated entity or organization created solely to permit the purchase of the Purchased Shares without a prospectus by a group of individuals whose individual share of the aggregate acquisition cost of the Purchased Shares is less than $150,000. |
(ff) | The Purchaser is purchasing the Promissory Note for such principal amount so that the aggregate acquisition cost of the Promissory Note payable in cash at the Closing is not less than $150,000 and the Purchaser is not a corporation, syndicate, partnership or other form of incorporated or non-incorporated entity or organization created solely to permit the purchase of the Promissory Note without a prospectus by a group of individuals whose individual share of the aggregate acquisition cost of the Promissory Note is less than $150,000. |
(gg) | Cutler & Co., LLC, certified public accountants, examined the financial statements of Bionik US, together with the related schedules and notes, as of December 31, 2013 and for the year then ended, and Ronald R. Chadwick, P.C., certified public accountant, examined the financial statements of Bionik US, together with the related schedules and notes, for the period from January 8, 2010 (inception) through December 31, 2012, and for the years ended December 31, 2010, 2011 and 2012, filed with the SEC as a part of the SEC Documents, are independent accountants within the meaning of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder; and the audited financial statements of Bionik US, together with the related schedules and notes, and the unaudited financial information, forming part of the SEC Documents, fairly present and will fairly present the financial position and the results of operations of Bionik US at the respective dates and for the respective periods to which they apply; and all audited financial statements of Bionik US, together with the related schedules and notes, and the unaudited financial information, filed with the SEC as part of the SEC Documents, complied and will comply as to form in all material respects with applicable accounting requirements and with the rules and regulations of the SEC with respect hereto when filed, have been and will be prepared in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods involved except as may be otherwise stated therein (except as may be indicated in the notes thereto or as permitted by the rules and regulations of the SEC) and fairly present and will fairly present, subject in the case of the unaudited financial statements, to customary year end audit adjustments, the financial position of Bionik US as at the dates thereof and the results of its operations and cash flows. The procedures pursuant to which the aforementioned financial statements have been audited are compliant with generally accepted auditing standards in the United States. The selected and summary financial and statistical data included in the SEC Documents present and will present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presented therein. No other financial statements or schedules are required to be included in the SEC Documents. The financial statements referred to in this section contain all certifications and statements required under the SEC’s Order, dated June 27, 2002, pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350 (Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) with respect to the report relating thereto. Since September 30, 2014 (the “ Last Bionik US Financial Statement Date ”): |
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(i) | There has at no time been a Material Adverse Change. |
(ii) | Bionik US has not authorized, declared, paid, or effected any dividend or liquidating or other distribution in respect of its capital stock or any direct or indirect redemption, purchase, or other acquisition of any stock of Bionik US. |
(iii) | Except as set forth in the SEC Documents, the operations and businesses of Bionik US have been conducted in all respects only in the ordinary course. |
Other than a “going concern” qualification in the report of the auditors with respect to the financial statements of Bionik US, there is no fact known to Bionik US which materially adversely affects or in the future (as far as Bionik US can reasonably foresee) may materially adversely affect the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of Bionik US; provided, however, that Bionik US does not express any opinion as to political or economic matters of general applicability. Bionik US has made known, or caused to be made known, to the accountants or auditors who have prepared, reviewed, or audited the aforementioned consolidated financial statements all material facts and circumstances which could affect the preparation, presentation, accuracy, or completeness thereof.
(hh) | Subsequent to the respective dates as of which information is given in the SEC Documents, there has not been (i) any Material Adverse Change, (ii) any transaction committed to or consummated that is material to Bionik US, (iii) any obligation, direct or contingent, that is material to Bionik US incurred by Bionik US, except such obligations as have been incurred in the ordinary course of business, (iv) any change in the capital stock or outstanding indebtedness of Bionik US or any subsidiary thereof that is material to Bionik US, (v) any dividend or distribution of any kind declared, paid, or made on the capital stock of Bionik US, or (vi) any loss or damage (whether or not insured) to the property of Bionik US which has a Material Adverse Effect. |
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(ii) | As of the date hereof and giving effect to the Spin-Off and the Assignment, (A) other than the shares of the Purchaser, neither Bionik US nor the Purchaser shall have any, business operations, direct or indirect, properties or assets and Bionik US and the Purchaser shall be free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest and (B) neither Bionik US nor the Purchaser shall be party to any agreements except for this Agreement, the Material Agreements, the assignment and assumption with respect to the Assignment and the Spin-Off Agreement and each shall have been duly authorized, executed and delivered by Bionik US and the Purchaser, as applicable, and each shall be a legal, valid and binding agreement, enforceable against the parties thereto in accordance with their terms. |
(jj) | At the Closing and giving effect to the Spin-Off and the Assignment, neither Bionik US nor the Purchaser shall have any liability of any nature, accrued or contingent, direct or indirect, including, without limitation, liabilities for federal, state, local, or foreign taxes and penalties, interest, and additions to tax (“ Taxes ”), and liabilities to customers, suppliers or finders. Without limiting the generality of the foregoing, the amounts set up as provisions for Taxes, if any, in the financial statements of Bionik US at the Last Bionik US Financial Statement Date (the “ Last Bionik US Financial Statements ”) are sufficient for all accrued and unpaid Taxes of Bionik US, whether or not due and payable and whether or not disputed, under tax laws, as in effect on the Last Bionik US Financial Statement Date or now in effect, for the period ended on such date and for all fiscal periods prior thereto. The execution, delivery, and performance of this Agreement and the Material Agreements, as applicable, by Bionik US and the Purchaser will not cause any Taxes to be payable or cause any lien, charge, or encumbrance to secure any Taxes to be created either immediately or upon the non-payment of any Taxes. Bionik US and the Purchaser have filed all federal, state, local, and foreign tax returns required to be filed by them; have made available to Bionik Canada a true and correct copy of each such return which was filed; have paid (or have established on the last balance sheet included in the Last Bionik US Financial Statements a reserve for) all Taxes, assessments, and other governmental charges payable or remittable by them or levied upon them or their properties, assets, income, or franchises which are due and payable; and neither Bionik US nor the Purchaser have received any report as to adjustments from any taxing authority since inception or a statement as to any litigation, governmental or other proceeding (formal or informal), or investigation pending, threatened, or in prospect with respect to any such report or the subject matter of such report. Bionik US and the Purchaser have paid all taxes payable thereby due on or prior to the date hereof. |
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(kk) | Except as disclosed in the SEC Documents, Bionik US and the Purchaser do not have any insurance; Bionik US and the Purchaser have at no time been refused any insurance coverage sought or applied for. |
(ll) | (i) | Bionik US and the Purchaser each have no employees. |
(ii) | Bionik US and the Purchaser each do not have, or contribute to, and have never maintained or contributed to, any pension, profit-sharing, option, other incentive plan, or any other type of Employee Benefit Plan (as defined in Section 3(3) of ERISA) or Pension Plan (as defined in ERISA) and Bionik US and the Purchaser each do not have any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, sick pay, sick leave, insurance, service award, relocation, disability, tuition refund, or other benefits, whether oral or written. |
(mm) | Bionik US and the Purchaser have no, and have no rights to use, patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names, logos, or copyrights. Bionik US and the Purchaser have not received any notice of, or have knowledge of, any infringement of or conflict with asserted rights of Bionik US or the Purchaser by others with respect to any patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names, logos, or copyrights; and Bionik US and the Purchaser have not received any notice of, or have no knowledge of, any infringement of, or conflict with, asserted rights of others with respect to any patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names, logos, or copyrights described or referred to in the SEC Documents as owned by or used by them. |
(nn) | Bionik US has been advised concerning the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), and the rules and regulations thereunder, and has in the past conducted their affairs in such a manner as to ensure that it is not and will not become an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act and such rules and regulations. |
(oo) | (i) | Bionik US and the Purchaser have not, and no person or entity acting on behalf or at the request of Bionik US or the Purchaser has, at any time since their inception (i) made any unlawful contribution to any candidate for foreign office or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any other applicable jurisdiction. |
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(ii) | To the best knowledge of Bionik US, no director, officer, agent, employee, or other person associated with, or acting on behalf of, Bionik US and the Purchaser, has, directly or indirectly: used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment. Bionik US’ and the Purchaser’s internal accounting controls and procedures are sufficient to cause Bionik US and the Purchaser to each comply in all respects with the Foreign Corrupt Practices Act of 1977, as amended. |
(iii) | Neither Bionik US nor the Purchaser, nor any officer, director or affiliate of Bionik US or the Purchaser, has been, within the five years ending on the Closing Date, a party to any bankruptcy petition against such person or against any business of which such person was affiliated; convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; or found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
(pp) | Neither Bionik US nor the Purchaser have, and no person acting on behalf thereof, has taken or will take, directly or indirectly, any action designed to, or that might reasonably be expected to cause or result in, stabilization in violation of law, or manipulation, of the price of Bionik US Shares. |
(qq) | Neither Bionik US nor, to the knowledge of Bionik US, any other party thereto is in material default or breach of any contract or agreement of Bionik US 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 contract or agreement of Bionik US to which would give rise to a right of termination on the part of any other party to such agreement or contract. |
(rr) | Neither the Purchaser nor, to the knowledge of Bionik US, any other party thereto is in material default or breach of any contract or agreement of the Purchaser 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 contract or agreement of the Purchaser to which would give rise to a right of termination on the part of any other party to such agreement or contract. |
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(ss) | Except as set forth in the SEC Documents, (i) Bionik US and the Purchaser are in compliance in all material respects with all rules, laws and regulations relating to the use, treatment, storage and disposal of toxic substances and protection of health or the environment (“ Environmental Laws ”) that are applicable to their business, (ii) Bionik US and the Purchaser have not received notice from any governmental authority or third party of an asserted claim under Environmental Laws, (iii) to the best knowledge of Bionik US, Bionik US and the Purchaser are not likely to be required to make future material capital expenditures to comply with Environmental Laws (iv) no property which is owned, leased or occupied by Bionik US or the Purchaser has been designated as a Superfund site pursuant to the Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601, et seq.), or otherwise designated as a contaminated site under applicable state or local law, and (v) Bionik US and the Purchaser are not in violation of any federal or state law or regulation relating to occupational safety or health. |
(tt) | As of the date hereof, there are no outstanding loans, advances or guarantees of indebtedness by Bionik US or the Purchaser to, or for the benefit of, any of the officers, directors, or director-nominees of Bionik US and the Purchaser or any of the members of the families of any of them. Any of such loans, advances or guarantees of indebtedness that may be disclosed in the SEC Documents are terminated or assigned in full pursuant to the Spin-Off and the Assignment as of the date hereof. |
(uu) | No stockholder of Bionik US has any right to request or require Bionik US to register the sale of any shares owned by such stockholder under the Securities Act on any registration statement, except pursuant to the terms of the Unit Offering and the Registration Rights Agreement. |
(vv) | Bionik US and the Purchaser are not a party to a shareholders’ agreement nor to the knowledge of Bionik US, is there any shareholders’ agreement or other contract, which in any manner affects the voting control of any of the securities of Bionik US or the Purchaser. |
(ww) | Bionik US and the Purchaser are each in compliance with, and are not in violation of, applicable federal, state, local or foreign statutes, laws and regulations (including without limitation, any applicable building, zoning or other law, ordinance or regulation) affecting their properties or the operation of their business, including, without limitation, Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated pursuant thereto or thereunder. Bionik US and the Purchaser are each not subject to any order, decree, judgment or other sanction of any court, administrative agency or other tribunal. |
(xx) | As of the date hereof, Bionik US and the Purchaser are not party to any contract, agreement or arrangement other than this Agreement, the Material Agreements, the assignment and assumption with respect to the Assignment, the Spin-Off Agreement as applicable. Any such other contract, agreement or arrangement that may be disclosed in the SEC Documents are terminated or assigned in full pursuant to the Spin-Off as of the date hereof. |
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(yy) | No representation or warranty by Bionik US or the Purchaser in this Agreement and the Material Agreements, as applicable, or any document furnished or to be furnished by Bionik US or the Purchaser to Bionik Canada in accordance with this Agreement and the Material Agreements, as applicable, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. |
(zz) | There is no Person acting at the request or on behalf of Bionik US or the Purchaser that is entitled to any brokerage or finder’s fee or other compensation in connection with the transactions contemplated by this Agreement and the Material Agreements. |
4.2 | Representations and Warranties of Bionik Canada |
Bionik Canada represents and warrants to and in favour of Bionik US and Purchaser as follows, and acknowledges that Bionik US and Purchaser are relying upon such representations and warranties in connection with the completion of the transactions contemplated herein:
(a) | Bionik Canada is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power to own its properties and to carry on its business as presently conducted. |
(b) | This Agreement and any other agreements, documents or instruments delivered or required to be delivered together with or pursuant to this Agreement or in connection herewith (collectively “ Transaction Documents ”) have been duly authorized, executed and delivered by Bionik Canada and are valid and binding agreements of Bionik Canada enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity. Bionik Canada has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder. |
(c) | The information in the Memorandum as it relates to Bionik Canada, including, without limitation, any financial statements of Bionik Canada and schedules included therein, as of the date thereof or, if subsequently amended and/or supplemented, as so amended and/or supplemented did not contain any untrue statement of a material fact or omit to state a material fact required or necessary to be stated therein in order to make the statements contained therein with respect to Bionik Canada not misleading. |
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Article 5
RESALE RESTRICTIONS
5.1 | Acknowledgement |
The Purchaser understands and acknowledges that the Purchased Shares will be subject to resale restrictions, the terms of which may be endorsed on the certificates representing the Purchased Shares as a printed legend.
5.2 | Legend |
The Purchaser understands and acknowledges that upon the original issuance thereof, and until such time as the same is no longer required under applicable requirements of applicable securities legislation, the certificate representing the Purchased Shares: will bear the following legends in addition to any other legends that may be required to be endorsed thereon:
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE LATER OF (I) [INSERT DISTRIBUTION DATE], AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM OR THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.”
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Article 6
USE OF PERSONAL INFORMATION
6.1 | Acknowledgment |
The Purchaser acknowledges and consents to the fact Bionik Canada may be required by applicable securities laws to provide regulatory authorities any personal information provided by the Purchaser respecting itself.
6.2 | Personal Information |
Herein, “Personal Information” means any information about the Purchaser required to be disclosed to a Canadian securities commission or regulatory authority, whether pursuant to a Canadian securities commission or regulatory authority form or a request made by a Canadian securities commission or regulatory authority.
6.3 | Notification |
The Purchaser has been notified:
(a) | of the delivery to the Ontario Securities Commission (the “ OSC ”) of information with respect to the Purchaser’s full name, head office address and telephone number, the number and type of securities received, the total value of such securities, the prospectus exemption relied upon by Bionik Canada and the date of distribution (collectively the “ Purchaser Information ”), |
(b) | that the Purchaser Information is being collected indirectly by the OSC under the authority granted to it by the Securities Act (Ontario), |
(c) | that the Purchaser Information is being collected for the purposes of the administration and enforcement of the Securities Act (Ontario), and |
(d) | that the Administrative Assistant to the Director of Corporate Finance of the OSC can be contacted at Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8 or at 416-593-3684 regarding any questions about the OSC’s indirect collection of the Purchaser Information, |
and the Purchaser hereby authorizes the indirect collection of the Purchaser Information by the OSC.
Article 7
NOTICES
7.1 | Notices |
Any notice and other communications required or permitted to be given pursuant to this agreement shall be sufficiently given if delivered in person or if sent by email or facsimile transmission (provided such transmission is recorded as being transmitted successfully) to the parties at the following addresses:
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(i) | In the case of Bionik Canada to the following address: |
Bionik Laboratories Inc.
483 Bay Street
Office N105
Toronto, ON M5G 2C9
Attn: Peter Bloch
Email: pb@bioniklabs.com
With a copy to (which shall not constitute notice):
Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400
Bay Adelaide Centre, Box 20
Toronto, Ontario, Canada M5H 2T6
Attn: Scott Conover
Facsimile: 416 364 7813
Email: sconover@fasken.com
With a copy to (which shall not constitute notice):
Ruskin Moscou Faltischek P.C.
East Tower, 15
th
Floor
RXR Plaza
Uniondale, New York 11556
Attn: Stephen E. Fox, Esq.
Facsimile: 516 663 6780
Email: sfox@rmfpc.com
or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending.
Article 8
GENERAL
8.1 | Binding Effect |
This Agreement shall be binding upon and enure to the benefit of the parties hereto.
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8.2 | Waiver and Modification |
Bionik US, Purchaser and Bionik Canada 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.
8.3 | 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.
8.4 | 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.
8.5 | Time of Essence |
Time shall be of the essence of this Agreement.
8.6 | Survival |
The representations and warranties of each of Bionik US, Purchaser and Bionik Canada contained herein shall survive the execution and delivery of this Agreement.
8.7 | Governing Law |
This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Each party hereto irrevocably attorns and submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matter arising hereunder or related hereto.
Each of Bionik US, Purchaser and Bionik Canada agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably attorns and submits to the non-exclusive jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgement of the said courts and not to seek, and hereby waives, any review of the merits of any such judgement by the courts of any other jurisdiction, and Bionik US hereby appoints Bionik Canada at its registered office in the Province of Ontario as attorney for service of process.
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8.8 | 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.
8.9 | 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.
8.10 | Counterparts and Facsimile 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 copy of the executed Agreement and such facsimile copy shall be legally effective to create a valid and binding Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.
BIONIK LABORATORIES INC. | BIONIK LABORATORIES CORP. |
Per: | /s/ Peter Bloch | Per: | /s/ Austin Kibler | |
Name: Peter Bloch | Name: Austin Kibler | |||
Title: CEO | Title: Chief Executive Officer |
BIONIK ACQUISITION INC. |
Per: | /s/ Peter Bloch | |||
Name: Peter Bloch | ||||
Title: CEO |
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SCHEDULE “A”
E xhibit 10.2
VOTING AND EXCHANGE TRUST AGREEMENT
THIS AGREEMENT made as of the 26 th day of February, 2015.
AMONG:
BIONIK LABORATORIES CORP. (formerly known as DRYWAVE
Technologies Inc.)
a corporation existing under the laws of the State of Delaware
(hereinafter referred to as “
Bionik US
”)
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BIONIK LABORATORIES INC.
,
a company existing under the laws of Canada
(hereinafter referred to as the “
Corporation
”)
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COMPUTERSHARE TRUST COMPANY OF CANADA
,
a trust company incorporated under the laws of Canada
(hereinafter referred to as the “
Trustee
”)
RECITALS:
A | In connection with (i) a private placement offering of a minimum of 7,500,000 units and a maximum of 16,000,000 units of Bionik US (each unit consisting of one (1) share of common stock of Bionik US and one (1) warrant to purchase one (1) share of common stock of Bionik US) and a “reverse takeover” (or similar transaction) of Bionik US by the shareholders of the Corporation (the “ Unit Offering ”) and (ii) the articles of amendment of the Corporation dated February 26, 2015 (“ Articles of Amendment ”), Exchangeable Shares are to be issued to the holders of common shares of the Corporation pursuant to the Articles of Amendment. |
B | Bionik US and the Corporation have agreed to enter into this agreement in connection with the Unit Offering and the issuance of Exchangeable Shares. |
C | The foregoing recitals are made as representations and statements of fact by the Corporation and Bionik US and not by the Trustee. |
In consideration of the foregoing and the mutual agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are acknowledged), the parties agree as follows:
Article 1
DEFINITIONS AND INTERPRETATION
1.1 | Definitions |
In this agreement, each initially capitalized term used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “ Share Provisions ”) attaching to the Exchangeable Shares as set out in the Articles of Amendment and the following terms shall have the following meanings:
“ Authorized Investments ” means short term interest-bearing or discount debt obligations issued or guaranteed by the Government of Canada or any province thereof or a Canadian chartered bank (which may include an affiliate or related party of the Trustee), maturing not more than one year from the date of investment, provided that each such obligation is rated at least RI (middle) by DBRS Inc. or any equivalent rating by Canadian Bond Rating Service.
“ Automatic Exchange Right ” means the benefit of the obligation of Bionik US to effect the automatic exchange of Exchangeable Shares for Bionik US Shares pursuant to Section 5.12.
“ Beneficiaries ” means the registered holders from time to time of Exchangeable Shares, other than Bionik US and any subsidiary of Bionik US.
“ Beneficiary Votes ” has the meaning ascribed thereto in Section 4.2(a).
“ Bionik US Consent ” has the meaning ascribed thereto in Section 4.2(a).
“ Bionik US Meeting ” has the meaning ascribed thereto in Section 4.2(a).
“ Bionik US Special Voting Share ” means the special voting share in the capital of Bionik US which entitles the holder of record to a number of votes at meetings of holders of Bionik US Shares equal to the number of Exchangeable Shares outstanding from time to time (excluding Exchangeable Shares held by Bionik US and any subsidiary of Bionik US), which share is to be issued to and voted by, the Trustee as described herein.
“ Bionik US Successor ” has the meaning ascribed thereto in Section 10.1(a).
“ Board of Directors ” means the Board of Directors of the Corporation.
“ Exchange Right ” has the meaning ascribed thereto in Section 5.1(a).
“ Exchangeable Share Consideration ” has the meaning ascribed thereto in Section 5.4.
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“ Exchangeable Shares ” means the exchangeable shares in the capital of the Corporation as more particularly described in Appendix 1 to the Articles of Amendment.
“ including ” means “including without limitation” and “ includes ” means “includes without limitation”.
“ Indemnified Parties ” has the meaning ascribed thereto in Section 8.1(a).
“ Insolvency Event ” means (i) the institution by the Corporation of any proceeding to be adjudicated a bankrupt or insolvent or to be wound up, or the consent of the Corporation to the institution of bankruptcy, insolvency or winding-up proceedings against it, or (ii) the filing of a petition, answer or consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws, including the Companies Creditors’ Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and the failure by the Corporation to contest in good faith any such proceedings commenced in respect of the Corporation within thirty (30) days of becoming aware thereof, or the consent by the Corporation to the filing of any such petition or to the appointment of a receiver, or (iii) the making by the Corporation of a general assignment for the benefit of creditors, or the admission in writing by the Corporation of its inability to pay its debts generally as they become due, or (iv) the Corporation not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted Shares pursuant to Section 6(6) of the Share Provisions.
“ Liquidation Event ” has the meaning ascribed thereto in Subsection 5.12(b).
“ Liquidation Event Effective Date ” has the meaning ascribed thereto in Subsection 5.12(c).
“ List ” has the meaning ascribed thereto in Section 4.6.
“ Officer’s Certificate ” means, with respect to Bionik US or the Corporation, as the case may be, a certificate signed by any officer or director of Bionik US or the Corporation, as the case may be.
“ Privacy Laws ” has the meaning ascribed thereto in Section 6.19.
“ Support Agreement ” means that certain support agreement of even date herewith between the Corporation, Acquireco and Bionik US, as may be amended from time to time in accordance with the terms of the Support Agreement.
“ Trust ” means the trust created by this agreement.
“ Trust Estate ” means the Bionik US Special Voting Share, any other securities, the Automatic Exchange Right, the Exchange Right and any money or other property which may be held by the Trustee from time to time pursuant to this agreement.
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“ Trustee ” means Computershare Trust Company of Canada and, subject to the provisions of Article 9, includes any successor trustee.
“ Voting Rights ” means the voting rights attached to the Bionik US Special Voting Share.
1.2 | Interpretation Not Affected by Headings, etc. |
The division of this agreement into Articles, Sections, Subsections and other portions and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this agreement. Unless otherwise specified, references to an “Article” or “Section” or “Subsection” refer to the specified Article, Section or Subsection of this agreement.
1.3 | Number, Gender, etc. |
Words importing the singular number only shall include the plural and vice versa. Words importing any gender shall include all genders.
1.4 | Date for any Action |
If any date on which any action is required to be taken under this agreement is not a business day, such action shall be required to be taken on the next succeeding business day.
Article 2
PURPOSE OF AGREEMENT
2.1 | Establishment of Trust |
The purpose of this agreement is to create the Trust for the benefit of the Beneficiaries as herein provided. Bionik US, as the settlor of the Trust, hereby appoints the Trustee as trustee of the Trust. The delivery by Bionik US of $1.00 for the purpose of settling the Trust is hereby acknowledged by the Trustee. The Trustee shall hold the Bionik US Special Voting Share in order to enable the Trustee to exercise the Voting Rights and shall hold the Automatic Exchange Right and the Exchange Right in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this agreement.
Article 3
bionik us SPECIAL VOTING SHARE
3.1 | Issue and Ownership of the Bionik US Special Voting Share |
Immediately following execution of this agreement, Bionik US shall issue to the Trustee the Bionik US Special Voting Share (and shall deliver the certificate representing such share to the Trustee) to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of this agreement. Bionik US hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of $1.00 and other good and valuable consideration (and the adequacy thereof) for the issuance of the Bionik US Special Voting Share by Bionik US to the Trustee. During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Bionik US Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Bionik US Special Voting Share provided that the Trustee shall:
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(a) | hold the Bionik US Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and |
(b) | except as specifically authorized by this agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the Bionik US Special Voting Share and the Bionik US Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this agreement. |
3.2 | Legended Share Certificates |
The Corporation shall cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of their right to instruct the Trustee with respect to the exercise of the portion of the Voting Rights in respect of the Exchangeable Shares of the Beneficiaries.
3.3 | Safe Keeping of Certificate |
The certificate representing the Bionik US Special Voting Share shall at all times be held in safe keeping by the Trustee or its duly authorized agent.
Article 4
EXERCISE OF VOTING RIGHTS
4.1 | Voting Rights |
The Trustee, as the holder of record of the Bionik US Special Voting Share, shall be entitled to all of the Voting Rights, including the right to vote in person or by proxy attaching to the Bionik US Special Voting Share on any matters, questions, proposals or propositions whatsoever that may properly come before the shareholders of Bionik US at a Bionik US Meeting. The Voting Rights shall be and remain vested in and exercised by the Trustee subject to the terms of this agreement. Subject to Section 6.15:
(a) | the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Beneficiaries on the record date established by Bionik US or by applicable law for such Bionik US Meeting or Bionik US Consent who are entitled to instruct the Trustee as to the voting thereof; and |
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(b) | to the extent that no instructions are received from a Beneficiary with respect to the Voting Rights to which such Beneficiary is entitled, the Trustee shall not exercise or permit the exercise of such Voting Rights. |
4.2 | Number of Votes |
(a) | With respect to all meetings of shareholders of Bionik US at which holders of Bionik US Shares are entitled to vote (each, a “ Bionik US Meeting ”) and with respect to all written consents sought from shareholders of Bionik US, including holders of the Bionik US Shares (each, a “ Bionik US Consent ”), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise for each Exchangeable Share owned of record by a Beneficiary on the record date established by Bionik US or by applicable law for such Bionik US Meeting or Bionik US Consent, as the case may be (collectively, the “ Beneficiary Votes ”), in respect of each matter, question, proposal or proposition to be voted on at such Bionik US Meeting or consented to in connection with such Bionik US Consent, a pro rata number of Voting Rights determined by reference to the total number of outstanding Exchangeable Shares not owned by Bionik US and its subsidiaries on the record date established by Bionik US or by applicable law for such Bionik US Meeting or Bionik US Consent. |
(b) | The aggregate Voting Rights on a poll at a Bionik US Meeting or in connection with a Bionik US Consent, shall consist of a number of votes equal to one vote per outstanding Exchangeable Share from time to time not owned by Bionik US and its subsidiaries on the record date established by Bionik US or by applicable law for such Bionik US Meeting or Bionik US Consent, and for which the Trustee has received voting instructions from the Beneficiary. |
(c) | Pursuant to the terms of the Special Voting Share, the Trustee or its proxy is entitled on a vote on a show of hands to one vote in addition to any votes which may be cast by a Beneficiary (or its nominee) on a show of hands as proxy for the Trustee. Any Beneficiary who chooses to attend a Bionik US Meeting in person, and who is entitled to vote in accordance with Section 4.8(b), shall be entitled to one vote on a show of hands. |
4.3 | Mailings to Shareholders |
(a) | With respect to each Bionik US Meeting, the Trustee shall use its reasonable efforts promptly to mail or cause to be mailed (or otherwise communicate in the same manner as Bionik US utilizes in communications to holders of Bionik US Shares subject to applicable regulatory requirements and provided that such manner of communications is reasonably available to the Trustee) to each of the Beneficiaries named in the List, such mailing or communication to commence wherever practicable on the same day as the mailing or notice (or other communication) with respect thereto is commenced by Bionik US to its shareholders: |
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(i) | a copy of such notice, together with any related materials, including any circular or information statement or listing particulars, to be provided to shareholders of Bionik US; |
(ii) | a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such Bionik US Meeting or, pursuant to Section 4.7, to attend such Bionik US Meeting and to exercise personally the Beneficiary Votes thereat; |
(iii) | a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give: |
(A) | a proxy to such Beneficiary or his, her or its designee to exercise personally the Beneficiary Votes; or |
(B) | a proxy to a designated agent or other representative of Bionik US to exercise such Beneficiary Votes; |
(iv) | a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised; |
(v) | a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and |
(vi) | a statement of the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of a Bionik US Meeting shall not be earlier than the close of business on the fourth business day prior to such meeting, and of the method for revoking or amending such instructions. |
(b) | The materials referred to in this Section 4.3 shall be provided to the Trustee by Bionik US, and the materials referred to in Subsection 4.3(a)(iii), Subsection 4.3(a)(v) and Subsection 4.3(a)(vi) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner. Subject to the foregoing, Bionik US shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of Bionik US Shares. Bionik US agrees not to communicate with holders of Bionik US Shares with respect to the materials referred to in this Section 4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. Notwithstanding the foregoing, Bionik US may at its option exercise the duties of the Trustee to deliver copies of all materials to all Beneficiaries as required by this Section 4.3 so long as in each case Bionik US delivers a certificate to the Trustee stating that Bionik US has undertaken to perform the obligations set forth in this Section 4.3. |
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(c) | For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any Bionik US Meeting, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by Bionik US or by applicable law for purposes of determining shareholders entitled to vote at such Bionik US Meeting. Bionik US shall notify the Trustee of any decision of the board of directors of Bionik US with respect to the calling of any Bionik US Meeting and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this Section 4.3. |
4.4 | Copies of Shareholder Information |
Bionik US shall deliver to the Trustee copies of all proxy materials (including notices of Bionik US Meetings but excluding proxies to vote Bionik US Shares), information statements, reports (including all interim and annual financial statements) and other written communications that, in each case, are to be distributed by Bionik US from time to time to holders of Bionik US Shares in sufficient quantities and in sufficient time so as to enable the Trustee to send or cause to send those materials to each Beneficiary at the same time as such materials are first sent to holders of Bionik US Shares. The Trustee shall mail or otherwise send to each Beneficiary, at the expense of Bionik US, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Bionik US) received by the Trustee from Bionik US contemporaneously with the sending of such materials to holders of Bionik US Shares. The Trustee shall also make available for inspection by any Beneficiary at the Trustee’s principal office in Toronto all proxy materials, information statements, reports and other written communications that are:
(a) | received by the Trustee as the registered holder of the Bionik US Special Voting Share and made available by Bionik US generally to the holders of Bionik US Shares; or |
(b) | specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Bionik US. |
Notwithstanding the foregoing, Bionik US at its option may exercise the duties of the Trustee to deliver copies of all such materials to each Beneficiary as required by this Section 4.4 so long as in each case Bionik US delivers a certificate to the Trustee stating that Bionik US has undertaken to perform the obligations set forth in this Section 4.4.
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4.5 | Other Materials |
As soon as reasonably practicable after receipt by Bionik US or shareholders of Bionik US (if such receipt is known by Bionik US) of any material sent or given by or on behalf of a third party to holders of Bionik US Shares generally, including dissident proxy and information circulars (and related information and material) and take-over bid and securities exchange take-over bid circulars (and related information and material), provided such material has not been sent to the Beneficiaries by or on behalf of such third party, Bionik US shall use its reasonable efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward such material (unless the same has been provided directly to Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter. As soon as reasonably practicable after receipt thereof, the Trustee shall mail or otherwise send to each Beneficiary, at the expense of Bionik US, copies of all such materials received by the Trustee from Bionik US. The Trustee shall also make available for inspection by any Beneficiary at the Trustee’s principal office in Toronto copies of all such materials. Notwithstanding the foregoing, Bionik US at its option may exercise the duties of the Trustee to deliver copies of all such materials to each Beneficiary as required by this Section 4.5 so long as in each case Bionik US delivers a certificate to the Trustee stating that Bionik US has undertaken to perform the obligations set forth in this Section 4.5.
4.6 | List of Persons Entitled to Vote |
The Corporation shall, (a) prior to each annual, general and extraordinary Bionik US Meeting and (b) forthwith upon each request made at any time by the Trustee or Bionik US in writing, prepare or cause to be prepared a list (a “ List ”) of the names and addresses of the Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, in each case at the close of business on the date specified by the Trustee in such request or, in the case of a List prepared in connection with a Bionik US Meeting, at the close of business on the record date established by Bionik US or pursuant to applicable law or the by-laws of Bionik US for determining the holders of Bionik US Shares entitled to receive notice of and/or to vote at such Bionik US Meeting. Each such List shall be delivered to the Trustee and Bionik US promptly after receipt by the Corporation of such request or the record date for such meeting and in any event within sufficient time as to permit the Trustee to perform its obligations under this agreement. Bionik US agrees to give the Corporation notice (with a copy to the Trustee) of the calling of any Bionik US Meeting, together with the record date therefor, sufficiently prior to the date of the calling of such meeting so as to enable the Corporation to perform its obligations under this Section 4.6.
4.7 | Entitlement to Direct Votes |
Subject to Section 4.8 and Section 4.11, any Beneficiary named in a List prepared in connection with any Bionik US Meeting shall be entitled (a) to instruct the Trustee in the manner described in Section 4.3 with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled or (b) to attend such meeting and personally exercise thereat, as the proxy of the Trustee, the Beneficiary Votes to which such Beneficiary is entitled.
4.8 | Voting by Trustee and Attendance of Trustee Representative at Meeting |
(a) | In connection with each Bionik US Meeting, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to Section 4.3, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions) other than any Beneficiary Votes that are the subject of Section 4.8(b); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice given by the Trustee to the Beneficiary pursuant to Section 4.3. |
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(b) | The Trustee shall cause a representative who is empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights to attend each Bionik US Meeting. Upon submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee’s representative, and at the Beneficiary’s request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to Section 4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes in accordance with such proxy shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in favour of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition. |
4.9 | Distribution of Written Materials |
Any written materials distributed by the Trustee pursuant to this agreement shall be sent by mail (or otherwise communicated in the same manner as Bionik US utilizes in communications to holders of Bionik US Shares subject to applicable regulatory requirements and provided such manner of communications is reasonably available to the Trustee) to each Beneficiary at its address as shown on the books of the Corporation. Bionik US agrees not to communicate with holders of Bionik US Shares with respect to such written materials otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. The Corporation shall provide or cause to be provided to the Trustee for purposes of communication, on a timely basis and without charge or other expense:
(a) | a current List; and |
(b) | upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this agreement. |
The Corporation’s obligations under this Section 4.9 shall be deemed satisfied to the extent Bionik US exercises its option to perform the duties of the Trustee to deliver copies of materials to each Beneficiary and the Corporation provides the required information and materials to Bionik US.
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4.10 | Termination of Voting Rights |
All of the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in respect of the Exchangeable Shares held by such Beneficiary, including the right to instruct the Trustee as to the voting of or to vote personally such Beneficiary Votes, shall be deemed to be surrendered by the Beneficiary to Bionik US, as the case may be, and such Beneficiary Votes and the Voting Rights represented thereby shall cease immediately upon (i) the delivery by such holder to the Trustee of the certificates representing such Exchangeable Shares in connection with the occurrence of the automatic exchange of Exchangeable Shares for Bionik US Shares, as specified in Article 5 (unless Bionik US shall not have delivered the requisite Bionik US Shares issuable in exchange therefor to the Trustee pending delivery to the Beneficiaries), or (ii) the retraction or redemption of Exchangeable Shares pursuant to Section 6 or 7 of the Share Provisions, or (iii) the effective date of the liquidation, dissolution or winding-up of the Corporation pursuant to Section 5 of the Share Provisions, or (iv) the purchase of Exchangeable Shares from the holder thereof by Acquireco or Bionik US pursuant to the exercise by Acquireco or Bionik US of the Retraction Call Right, the Redemption Call Right, the Liquidation Call Right or the Change of Law Call Right.
4.11 | Disclosure of Interest in Exchangeable Shares |
The Trustee and/or the Corporation shall be entitled to require any Beneficiary or any person who the Trustee and/or the Corporation know or have reasonable cause to believe to hold any interest whatsoever in an Exchangeable Share to confirm that fact or to give such details as to whom has an interest in such Exchangeable Share as would be required (if the Exchangeable Shares were a class of “voting or equity securities” of the Corporation) under section 102.1 of the Securities Act (Ontario), as amended from time to time, or as would be required under the charter or organizational documents of Bionik US or any laws or regulations, or pursuant to the rules or regulations of any Agency, if the Exchangeable Shares were Bionik US Shares. If a Beneficiary does not provide the information required to be provided by such Beneficiary pursuant to this Section 4.11, the board of directors of Bionik US may take any action permitted under the charter or organizational documents of Bionik US or any laws or regulations, or pursuant to the rules or regulations of any Agency, with respect to the Voting Rights relating to the Exchangeable Shares held by such Beneficiary.
Article 5
EXCHANGE AND AUTOMATIC EXCHANGE
5.1 | Grant of Exchange Right and Automatic Exchange Right |
(a) | Bionik US hereby grants to Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries the right (the “ Exchange Right ”), upon the occurrence and during the continuance of an Insolvency Event, to require Bionik US to purchase from each or any Beneficiary all or any part of the Exchangeable Shares held by such Beneficiary and the Automatic Exchange Right, all in accordance with the provisions of this agreement. Bionik US hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Right and the Automatic Exchange Right by Bionik US to the Trustee. |
(b) | During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Automatic Exchange Right and the Exchange Right and shall be entitled to exercise all of the rights and powers of an owner with respect to the Automatic Exchange Right and the Exchange Right, provided that the Trustee shall: |
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(i) | hold the Automatic Exchange Right and the Exchange Right and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and |
(ii) | except as specifically authorized by this agreement, have no power or authority to exercise or otherwise deal in or with the Automatic Exchange Right or the Exchange Right, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this agreement. |
(c) | The obligations of Bionik US to issue Bionik US Shares pursuant to the Automatic Exchange Right or the Exchange Right are subject to all applicable laws and regulatory or stock exchange requirements. |
5.2 | Legended Share Certificates |
The Corporation shall cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of:
(a) | their right to instruct the Trustee with respect to the exercise of the Exchange Right in respect of the Exchangeable Shares held by a Beneficiary; and |
(b) | the Automatic Exchange Right. |
5.3 | General Exercise of Exchange Right |
The Exchange Right shall be and remain vested in and exercisable by Trustee. Subject to Section 6.15, the Trustee shall exercise the Exchange Right only on the basis of instructions received pursuant to this Article 5 from Beneficiaries entitled to instruct the Trustee as to the exercise thereof. To the extent that no instructions are received from a Beneficiary with respect to the Exchange Right, the Trustee shall not exercise or permit the exercise of the Exchange Right.
5.4 | Purchase Price |
The purchase price payable by Bionik US for each Exchangeable Share to be purchased by Bionik US under the Exchange Right shall be an amount per share equal to (i) the Current Market Price of a Bionik US Share on the day before the exchange, which shall be satisfied in full by Bionik US issuing to the Beneficiary one Bionik US Share, plus (ii) an additional amount equal to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange (“ Exchangeable Share Consideration ”). In connection with each exercise of the Exchange Right, Bionik US shall provide to the Trustee an Officer’s Certificate setting forth the calculation of the Exchangeable Share Consideration for each Exchangeable Share.
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5.5 | Exercise Instructions |
Subject to the terms and conditions set forth herein, a Beneficiary shall be entitled upon the occurrence and during the continuance of an Insolvency Event, to instruct the Trustee to exercise the Exchange Right with respect to all or any part of the Exchangeable Shares registered in the name of such Beneficiary on the books of the Corporation. To cause the exercise of the Exchange Right by the Trustee, the Beneficiary shall deliver to the Trustee, in person or by certified or registered mail, at its principal office in Toronto or at such other place as the Trustee may from time to designate by written notice to the Beneficiaries, the certificates representing the Exchangeable Shares which such Beneficiary desires Bionik US to purchase, duly endorsed in blank for transfer, and accompanied by such other documents and instruments as the Trustee, Bionik US and the Corporation may reasonably require together with (a) a duly completed form of notice of exercise of the Exchange Right, contained on the reverse of or attached to the Exchangeable Share certificates, stating (i) that the Beneficiary thereby instructs the Trustee to exercise the Exchange Right so as to require Bionik US to purchase from the Beneficiary the number of Exchangeable Shares specified therein, (ii) that such Beneficiary has good title to and owns all such Exchangeable Shares to be acquired by Bionik US free and clear of all Liens, (iii) the names in which the certificates representing Bionik US Shares issuable in connection with the exercise of the Exchange Right are to be issued, and (iv) the names and addresses of the persons to whom such new certificates should be delivered, and (b) payment (or evidence satisfactory to the Trustee, Bionik US and the Corporation of payment) of the taxes (if any) payable as contemplated by Section 5.7 of this agreement. If only a part of the Exchangeable Shares represented by any certificate or certificates delivered to the Trustee are to be purchased by Bionik US under the Exchange Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Corporation. For avoidance of doubt, no Beneficiary shall have any right to have Bionik US purchase less than one whole Exchangeable Share under the Exchange Right.
5.6 | Delivery of Bionik US Shares; Effect of Exercise |
Promptly after the receipt by the Trustee of the certificates representing the Exchangeable Shares which the Beneficiary desires Bionik US to purchase under the Exchange Right, together with such documents and instruments of transfer and a duly completed form of notice of exercise of the Exchange Right (and payment of taxes, if any payable as contemplated by Section 5.7 or evidence thereof), duly endorsed for transfer to Bionik US, the Trustee shall notify Bionik US and the Corporation of its receipt of the same, which notice to Bionik US and the Corporation shall constitute exercise of the Exchange Right by the Trustee on behalf of the Beneficiary in respect of such Exchangeable Shares, and Bionik US shall promptly thereafter deliver or cause to be delivered to the Trustee, for delivery to the Beneficiary in respect of such Exchangeable Shares (or to such other persons, if any, properly designated by such Beneficiary) the Exchangeable Share Consideration deliverable in connection with the exercise of the Exchange Right; provided, however, that no such delivery shall be made unless and until the Beneficiary requesting the same shall have paid (or provided evidence satisfactory to the Trustee, the Corporation and Bionik US of the payment of) the taxes (if any) payable as contemplated by Section 5.7 of this agreement. Immediately upon the giving of notice by the Trustee to Bionik US and the Corporation of the exercise of the Exchange Right, as provided in this Section 5.6, the closing of the transaction of purchase and sale contemplated by the Exchange Right shall be deemed to have occurred, and the Beneficiary of such Exchangeable Shares shall be deemed to have transferred to Bionik US all of such Beneficiary’s right, title and interest in and to such Exchangeable Shares and in the related interest in the Trust Estate and shall cease to be a holder of such Exchangeable Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive his proportionate part of the total Exchangeable Share Consideration therefor, unless such Exchangeable Share Consideration is not delivered by Bionik US to the Trustee for delivery to such Beneficiary (or to such other person, if any, properly designated by such Beneficiary) within three business days of the date of the giving of such notice by the Trustee, in which case the rights of the Beneficiary shall remain unaffected until such Exchangeable Share Consideration is delivered by Bionik US and any cheque included therein is paid. Upon delivery of such Exchangeable Share Consideration to the Trustee, the Trustee shall promptly deliver such Exchangeable Share Consideration to such Beneficiary (or to such other person, if any, properly designated by such Beneficiary). Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall be considered and deemed for all purposes to be the holder of the Bionik US Shares delivered to it pursuant to the Exchange Right.
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5.7 | Stamp or Other Transfer Taxes |
Upon any sale of Exchangeable Shares to Bionik US pursuant to the Exchange Right or the Automatic Exchange Right, the share certificate or certificates representing Bionik US Shares to be delivered in connection with the payment of the purchase price therefor shall be issued in the name of the Beneficiary in respect of the Exchangeable Shares so sold or, if permitted under applicable law, in such names as such Beneficiary may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none of Bionik US, the Corporation or the Trustee shall be required to pay) any documentary, stamp, transfer of other taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Beneficiary or (b) shall have evidenced to the satisfaction of Bionik US that such taxes, if any, have been paid.
5.8 | Notice of Insolvency Event |
As soon as practicable following the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, the Corporation and Bionik US shall give written notice thereof to the Trustee. As soon as practicable following the receipt of notice from the Corporation and Bionik US of the occurrence of an Insolvency Event, or upon the Trustee becoming aware of an Insolvency Event, the Trustee shall mail to each Beneficiary, at the expense of Bionik US (such funds to be received in advance), a notice of such Insolvency Event in the form provided by Bionik US, which notice shall contain a brief statement of the rights of the Beneficiaries with respect to the Exchange Right.
5.9 | Failure to Retract |
Upon the occurrence of an event referred to in paragraph (iv) of the definition of Insolvency Event, the Corporation hereby agrees with the Trustee and in favour of the Beneficiary promptly to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Beneficiary to the Corporation or to the transfer agent of the Exchangeable Shares (including a copy of the retraction request delivered pursuant to Section 6(1) of the Share Provisions) in connection with such proposed redemption of the Retracted Shares.
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5.10 | Listing of Bionik US Shares |
Bionik US shall use its commercially reasonable efforts (which, for greater certainty, shall not require Bionik US to consent to a term or condition of an approval or consent which Bionik US reasonably determines could have a materially adverse effect on Bionik US or its subsidiaries) to cause all Bionik US Shares (or such other shares or securities) to be delivered pursuant to the Automatic Exchange Right or the Exchange Right to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding Bionik US Shares have been listed, quoted or posted by Bionik US and remain listed, quoted or posted for trading at such time.
5.11 | Bionik US Shares |
Bionik US hereby represents, warrants and covenants that the Bionik US Shares issuable as described herein will, assuming the delivery of the Exchangeable Shares by the holders thereof in accordance with the Share Provisions and provisions hereof, be duly authorized and validly issued as fully paid and shall be free and clear of any Lien.
5.12 | Automatic Exchange on Liquidation of Bionik US |
(a) | Bionik US shall give the Trustee written notice of each of the following events at the time set forth below: |
(i) | in the event of any determination by the board of directors of Bionik US to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Bionik US or to effect any other distribution of assets of Bionik US among its shareholders for the purpose of winding up its affairs, at least sixty (60) days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and |
(ii) | as soon as practicable following the earlier of (A) receipt by Bionik US of notice of, and (B) Bionik US otherwise becoming aware of any instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Bionik US or to effect any other distribution of assets of Bionik US among its shareholders for the purpose of winding up its affairs, in each case where Bionik US has failed to contest in good faith any such proceeding commenced in respect of Bionik US within thirty (30) days of becoming aware thereof. |
(b) | As soon as practicable following receipt by the Trustee from Bionik US of notice of any event (a “ Liquidation Event ”) contemplated by Subsection 5.12(a)(i) or Subsection 5.12(a)(ii), the Trustee shall give notice thereof to the Beneficiaries. Such notice shall be provided to the Trustee by Bionik US and shall include a brief description of the automatic exchange of Exchangeable Shares for Bionik US Shares provided for in Section 5.12(c). |
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(c) | In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of Bionik US Shares in the distribution of assets of Bionik US in connection with a Liquidation Event, immediately prior to the effective date (the “ Liquidation Event Effective Date ”) of a Liquidation Event, all of the then outstanding Exchangeable Shares shall be automatically exchanged for Bionik US Shares. To effect such automatic exchange, Bionik US shall purchase each Exchangeable Share outstanding immediately prior to the Liquidation Event Effective Date and held by Beneficiaries, and each Beneficiary shall sell the Exchangeable Shares held by it at such time, free and clear of any Lien for a purchase price per share equal to (i) the Current Market Price of a Bionik US Share on the day prior to the Liquidation Event Effective Date, which shall be satisfied in full by Bionik US issuing to the Beneficiary one Bionik US Share, plus (ii) an additional amount equal to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange. Bionik US shall provide the Trustee with an Officer’s Certificate in connection with each automatic exchange setting forth the calculation of the purchase price for each Exchangeable Share. Upon payment by Bionik US of such purchase price, the relevant Beneficiary shall cease to have any right to be paid by the Corporation any amount in respect of declared and unpaid dividends on each Exchangeable Share. |
(d) | The closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for Bionik US Shares shall be deemed to have occurred immediately prior to the Liquidation Event Effective Date, and each Beneficiary shall be deemed to have transferred to Bionik US all of the Beneficiary’s right, title and interest in and to such Beneficiary’s Exchangeable Shares free and clear of any Lien and the related interest in the Trust Estate and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and Bionik US shall issue to the Beneficiary the Bionik US Shares issuable upon the automatic exchange of Exchangeable Shares for Bionik US Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, if any, of the purchase price for such Exchangeable Shares, without interest, in each case less any amounts withheld pursuant to Section 5.13. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall become the holder of the Bionik US Shares issued pursuant to the automatic exchange of such Beneficiary’s Exchangeable Shares for Bionik US Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with Bionik US pursuant to such automatic exchange shall thereafter be deemed to represent Bionik US Shares issued to the Beneficiary by Bionik US pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent Bionik US Shares, duly endorsed in blank and accompanied by such instruments of transfer as Bionik US may reasonably require, Bionik US shall deliver or cause to be delivered to the Beneficiary certificates representing the Bionik US Shares of which the Beneficiary is the holder. |
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5.13 | Withholding Rights |
Bionik US and the Corporation shall be entitled to deduct and withhold from any dividend, distribution, price or other consideration otherwise payable under this agreement to any holder of Exchangeable Shares or Bionik US Shares such amounts as Bionik US or the Corporation is required to deduct and withhold with respect to such payment under the ITA or United States tax laws or any provision of provincial, state, local or foreign tax law, in each case as amended or succeeded. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing Agency. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Bionik US and the Corporation are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Bionik US or the Corporation as the case may be, to enable it to comply with such deduction or withholding requirement and Bionik US or the Corporation shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale.
Article 6
CONCERNING THE TRUSTEE
6.1 | Powers and Duties of the Trustee |
(a) | The rights, powers, duties and authorities of the Trustee under this agreement, in its capacity as Trustee of the Trust, shall include: |
(i) | receipt and deposit of the Bionik US Special Voting Share from Bionik US as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; |
(ii) | granting proxies and distributing materials to Beneficiaries as provided in this agreement; |
(iii) | voting the Beneficiary Votes in accordance with the provisions of this agreement; |
(iv) | receiving the grant of the Automatic Exchange Right and the Exchange Right from Bionik US as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; |
(v) | enforcing the benefit of the Automatic Exchange Right and the Exchange Right, in each case in accordance with the provisions of this agreement, and in connection therewith receiving from Beneficiaries Exchangeable Shares and other requisite documents and distributing to such Beneficiaries Bionik US Shares and cheques, if any, to which such Beneficiaries are entitled pursuant to the Automatic Exchange Right or the Exchange Right, as the case may be; |
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(vi) | holding title to the Trust Estate; |
(vii) | investing any moneys forming, from time to time, a part of the Trust Estate as provided in this agreement; |
(viii) | taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of Bionik US and the Corporation under this agreement; and |
(ix) | taking such other actions and doing such other things as are specifically provided in this agreement to be carried out by the Trustee whether alone, jointly or in the alternative. |
(b) | In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers, duties and authority not in conflict with any of the provisions of this agreement as the Trustee, acting in good faith on the direction of the Beneficiaries may be required to exercise in order to effect the purpose of the Trust. The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. |
(c) | The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do, or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default or breach, which notices shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. |
6.2 | No Conflict of Interest |
The Trustee represents to Bionik US and the Corporation that to the best of its knowledge at the date of execution and delivery of this agreement there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity. The Trustee shall, within ninety (90) days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Article 9. If, notwithstanding the foregoing provisions of this Section 6.2, the Trustee has such a material conflict of interest, the validity and enforceability of this agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this Section 6.2, any interested party may apply to the Superior Court of Justice (Ontario) for an order that the Trustee be replaced as Trustee hereunder.
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6.3 | Dealings with Transfer Agents, Registrars, etc. |
(a) | Each of Bionik US and the Corporation irrevocably authorizes the Trustee, from time to time, to: |
(i) | consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and Bionik US Shares; and |
(ii) | requisition, from time to time, (A) from any such registrar or transfer agent any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under this agreement and (B) from the transfer agent of Bionik US Shares, and any subsequent transfer agent of such shares, the share certificates issuable upon the exercise from time to time of the Automatic Exchange Right and pursuant to the Exchange Right. |
(b) | Bionik US and the Corporation shall irrevocably authorize their respective registrars and transfer agents to comply with all such requests. Bionik US covenants that it shall supply its transfer agent with duly executed share certificates for the purpose of completing the exercise from time to time of the Automatic Exchange Right and the Exchange Right, in each case pursuant to Article 5. |
6.4 | Books and Records |
The Trustee shall keep available for inspection by Bionik US and the Corporation at the Trustee’s principal office in Toronto correct and complete books and records of account relating to the Trust created by this agreement, including all relevant data relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Automatic Exchange Right and the Exchange Right. On or before January 15, 2015, and on or before January 15th in every year thereafter, so long as the Bionik US Special Voting Share is registered in the name of the Trustee, the Trustee shall transmit to Bionik US and the Corporation a brief report, dated as of the preceding December 31st, with respect to:
(a) | the property and funds comprising the Trust Estate as of that date; |
(b) | the number of exercises of the Automatic Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance by Bionik US of Bionik US Shares in connection with the Automatic Exchange Right, during the calendar year ended on such December 31st; and |
(c) | any action taken by the Trustee in the performance of its duties under this agreement which it had not previously reported. |
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6.5 | Income Tax Returns and Reports |
The Trustee shall, to the extent necessary, cause to be prepared and filed, on behalf of the Trust appropriate Canadian income tax returns and any other returns or reports as may be required by applicable law or pursuant to the rules and regulations of any other Agency, including any securities exchange or other trading system through which the Exchangeable Shares are traded. In connection therewith, the Trustee may obtain the advice and assistance of such experts or advisors as the Trustee considers necessary or advisable (who may be experts or advisors to Bionik US or the Corporation). If requested by the Trustee, Bionik US or the Corporation shall retain qualified experts or advisors for the purpose of providing such tax advice or assistance.
6.6 | Indemnification Prior to Certain Actions by Trustee |
(a) | The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable funding, security or indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Bionik US Special Voting Share pursuant to Article 4, subject to Section 6.15, and with respect to the Automatic Exchange Right and the Exchange Right pursuant to Article 5. |
(b) | None of the provisions contained in this agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid. |
6.7 | Action of Beneficiaries |
No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security or indemnity referred to in Section 6.6 and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Beneficiary shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Beneficiaries shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder or the Voting Rights, the Automatic Exchange Right or the Exchange Right except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Beneficiaries.
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6.8 | Reliance Upon Declarations |
The Trustee shall not be considered to be in contravention of any of its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon statutory declarations, certificates, opinions or reports furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder if such statutory declarations, certificates, opinions or reports comply with the provisions of Section 6.9, if applicable, and with any other applicable provisions of this agreement.
6.9 | Evidence and Authority to Trustee |
(a) | Bionik US and/or the Corporation shall furnish to the Trustee evidence of compliance with the conditions provided for in this agreement relating to any action or step required or permitted to be taken by Bionik US and/or the Corporation or the Trustee under this agreement or as a result of any obligation imposed under this agreement, including in respect of the Voting Rights or the Automatic Exchange Right or the Exchange Right and the taking of any other action to be taken by the Trustee at the request of or on the application of Bionik US and/or the Corporation promptly if and when: |
(i) | such evidence is required by any other section of this agreement to be furnished to the Trustee in accordance with the terms of this Section 6.9; or |
(ii) | the Trustee, in the exercise of its rights, powers, duties and authorities under this agreement, gives Bionik US and/or the Corporation written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice. |
(b) | Such evidence shall consist of an Officer’s Certificate of Bionik US and/or the Corporation or a statutory declaration or a certificate made by persons entitled to sign an Officer’s Certificate stating that any such condition has been complied with in accordance with the terms of this agreement. |
(c) | Whenever such evidence relates to a matter other than the Voting Rights or the Automatic Exchange Right or the Exchange Right or the taking of any other action to be taken by the Trustee at the request or on the application of Bionik US and/or the Corporation, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a director, officer or employee of Bionik US and/or the Corporation it shall be in the form of an Officer’s Certificate or a statutory declaration. |
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(d) | Each statutory declaration, Officer’s Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this agreement shall include a statement by the person giving the evidence: |
(i) | declaring that he has read and understands the provisions of this agreement relating to the condition in question; |
(ii) | describing the nature and scope of the examination or investigation upon which he based the statutory declaration, certificate, statement or opinion; and |
(iii) | declaring that he has made such examination or investigation as he believes is necessary to enable him to make the statements or give the opinions contained or expressed therein. |
6.10 | Experts, Advisers and Agents |
The Trustee may:
(a) | in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by Bionik US and/or the Corporation or otherwise, and may pay proper and reasonable compensation for all such legal and other advice as aforesaid; |
(b) | employ such agents as it may reasonably require for the proper determination and discharge of its powers and duties hereunder; and |
(c) | pay all reasonable disbursements, costs and expenses incurred by it in the discharge of its duties hereunder and in the management of the Trust. |
6.11 | Investment of Moneys Held by Trustee |
Unless otherwise provided in this agreement, in the event that this section becomes applicable, any moneys held by or on behalf of the Trustee which under the terms of this agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee shall, upon the receipt by the Trustee of the written direction of the Corporation, be invested or reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust moneys, provided that such securities are stated to mature within two years after their purchase by the Trustee, or in Authorized Investments. Any direction of the Corporation to the Trustee as to investment or reinvestment of funds shall be in writing and shall be provided to the Trustee no later than 9:00 a.m. (local time) or if received on a non-business day, shall be deemed to have been given prior to 9:00 a.m. (local time) on the immediately following business day. If no such direction is received, the Trustee shall not have any obligation to invest the monies and pending receipt of such a direction all interest or other income and such moneys may be deposited in the name of the Trustee in any chartered bank in Canada or, with the consent of the Corporation, in the deposit department of the Trustee or any other specified loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits. The Trustee shall not be held liable for any losses incurred in the investment of any funds as herein provided.
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6.12 | Trustee Not Required to Give Security |
The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this agreement or otherwise in respect of the premises.
6.13 | Trustee Not Bound to Act on Request |
Except as in this agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of Bionik US and/or the Corporation or of the directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.
6.14 | Authority to Carry on Business |
The Trustee represents to Bionik US and the Corporation that at the date of execution and delivery by it of this agreement it is authorized to carry on the business of a trust company in each of the provinces of Canada but if, notwithstanding the provisions of this Section 6.14, it ceases to be so authorized to carry on business, the validity and enforceability of this agreement and the Voting Rights, the Automatic Exchange Right and the Exchange Right shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within ninety (90) days after ceasing to be authorized to carry on the business of a trust company in any province of Canada, either become so authorized or resign in the manner and with the effect specified in Article 9.
6.15 | Force Majeure |
No party shall be liable to the other or held in breach of this agreement, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this agreement shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.
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6.16 | Conflicting Claims |
(a) | If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting Rights, Automatic Exchange Right or Exchange Right subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until: |
(i) | the rights of all adverse claimants with respect to the Voting Rights, Automatic Exchange Right or Exchange Right subject to such conflicting claims or demands have been adjudicated by a final judgement of a court of competent jurisdiction; or |
(ii) | all differences with respect to the Voting Rights, Automatic Exchange Right or Exchange Right subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement certified to be in full force and effect. |
(b) | If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands. |
6.17 | Acceptance of Trust |
The Trustee hereby accepts the Trust created and provided for, by and in this agreement and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Beneficiaries, subject to all the terms and conditions herein set forth.
6.18 | Third Party Interests |
Each party to this agreement hereby represents to the Trustee that any account to be opened by, or interest to be held by the Trustee in connection with this agreement, for or to the credit of such party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the Trustee’s prescribed form as to the particulars of such third party.
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6.19 | Privacy |
The parties acknowledge that Canadian federal and/or provincial legislation that addresses the protection of individuals’ personal information (collectively, “ Privacy Laws ”) applies to obligations and activities under this agreement. Despite any other provision of this agreement, no party shall take or direct any action that would contravene, or cause the others to contravene, applicable Privacy Laws. The parties shall, prior to transferring or causing to be transferred personal information to the Trustee, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have previously been given upon which the parties can rely or are not required under the Privacy Laws. Specifically, the Trustee agrees: (a) to have a designated chief privacy officer; (b) to maintain policies and procedures to protect personal information and to receive and respond to any privacy complaint or inquiry; (c) to use personal information solely for the purposes of providing its services under or ancillary to this agreement and not to use it for any purpose except with the consent of or direction from the other parties or the individual involved; (d) not to sell or otherwise improperly disclose personal information to any third party; and (e) to employ administrative, physical and technological safeguards to reasonably secure and protect personal information against loss, theft, or unauthorized access, use or modification.
Article 7
COMPENSATION
7.1 | Fees and Expenses of the Trustee |
Bionik US agrees to pay the Trustee reasonable compensation for all of the services rendered by it under this agreement as per the fee schedule attached hereto as Schedule A and shall reimburse the Trustee for all reasonable expenses (including, but not limited to, taxes other than taxes based on the net income or capital of the Trustee, fees paid to legal counsel and other experts and advisors and travel expenses) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental Agency, reasonably incurred by the Trustee in connection with its duties under this agreement; provided that the Corporation shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation or any such proceedings in which the Trustee is determined to have acted in bad faith or with fraud, gross negligence or wilful misconduct. Any amount owing or unpaid after 30 days from the invoice date shall bear interest at a reasonable rate per annum, from the expiration of such 30 day period, equal to the then current rate charged by the Trustee and shall be payable on demand. The obligation of Bionik US under this Section 7.1 shall survive the resignation or removal of the Trustee and the termination of this Voting and Exchange Trust Agreement.
Article 8
INDEMNIFICATION AND LIMITATION OF LIABILITY
8.1 | Indemnification of the Trustee |
(a) | Bionik US and the Corporation jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this agreement (collectively, the “ Indemnified Parties ”) against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee’s legal counsel) which, without fraud, gross negligence, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee’s acceptance or administration of the Trust, its compliance with its duties set forth in this agreement, or any written or oral instruction delivered to the Trustee by Bionik US or the Corporation pursuant hereto. |
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(b) | In no case shall Bionik US or the Corporation be liable under this indemnity for any claim against any of the Indemnified Parties unless Bionik US and the Corporation shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, Bionik US and the Corporation shall be entitled to participate at their own expense in the defence and, if Bionik US and the Corporation so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by Bionik US or the Corporation; or (ii) the named parties to any such suit include both the Trustee and Bionik US or the Corporation and the Trustee shall have been advised by counsel acceptable to Bionik US or the Corporation that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to Bionik US or the Corporation and that, in the judgement of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case Bionik US and the Corporation shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). This indemnity shall survive the termination of the Trust and the resignation or removal of the Trustee. |
8.2 | Limitation of Liability |
The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this agreement, except to the extent that such loss is attributable to the fraud, gross negligence, wilful misconduct or bad faith on the part of the Trustee.
Article 9
CHANGE OF TRUSTEE
9.1 | Resignation |
The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to Bionik US and the Corporation specifying the date on which it desires to resign, provided that such notice shall not be given less than thirty (30) days before such desired resignation date unless Bionik US and the Corporation otherwise agree and provided further that such resignation shall not take effect until the date of the appointment of a successor trustee and the acceptance of such appointment by the successor trustee. Upon receiving such notice of resignation, Bionik US and the Corporation shall promptly appoint a successor trustee, which shall be a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all provinces of Canada, by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. Failing the appointment and acceptance of a successor trustee, a successor trustee may be appointed by order of a court of competent jurisdiction upon application of one or more of the parties to this agreement. If the retiring trustee is the party initiating an application for the appointment of a successor trustee by order of a court of competent jurisdiction, Bionik US and the Corporation shall be jointly and severally liable to reimburse the retiring trustee for its legal costs and expenses in connection with same.
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9.2 | Removal |
The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than thirty (30) days’ prior notice by written instrument executed by Bionik US and the Corporation, in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee.
9.3 | Successor Trustee |
Any successor trustee appointed as provided under this agreement shall execute, acknowledge and deliver to Bionik US and the Corporation and to its predecessor trustee an instrument accepting such appointment. Thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this agreement, with the like effect as if originally named as trustee in this agreement. However, on the written request of Bionik US and the Corporation or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of this agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon the request of any such successor trustee, Bionik US, the Corporation and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.
9.4 | Notice of Successor Trustee |
Upon acceptance of appointment by a successor trustee as provided herein, Bionik US and the Corporation shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List. If Bionik US or the Corporation shall fail to cause such notice to be mailed within ten (10) days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of Bionik US and the Corporation.
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Article 10
DRYWAVE SUCCESSORS
10.1 | Certain Requirements in Respect of Combination, etc. |
So long as any Exchangeable Shares not owned by Bionik US or its subsidiaries are outstanding, Bionik US shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, amalgamation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom, provided that it may do so if:
(a) | such other person or continuing corporation (the “ Bionik US Successor ”), by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the Bionik US Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Bionik US Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Bionik US under this agreement: and |
(b) | such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder. |
10.2 | Vesting of Powers in Successor |
Whenever the conditions of Section 10.1 have been duly observed and performed, the Trustee, Bionik US Successor and the Corporation shall, if required by Section 10.1, execute and deliver the supplemental trust agreement provided for in Article 11 and thereupon Bionik US Successor and such other person that may then be the issuer of the Bionik US Shares shall possess and from time to time may exercise each and every right and power of Bionik US under this agreement in the name of Bionik US or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the board of directors of Bionik US or any officers of Bionik US may be done and performed with like force and effect by the directors or officers of such Bionik US Successor.
10.3 | Wholly-Owned Subsidiaries |
Nothing herein shall be construed as preventing (i) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Bionik US with or into Bionik US, (ii) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of Bionik US (other than the Corporation or Acquireco), provided that all of the assets of such subsidiary are transferred to Bionik US or another wholly-owned direct or indirect subsidiary of Bionik US, or (iii) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of Bionik US (other than the Corporation or Acquireco) among the shareholders of such subsidiary for the purpose of winding up its affairs, and any such transactions are expressly permitted by this Article 10.
10.4 | Successor Transactions |
Notwithstanding the foregoing provisions of this Article 10, in the event of a Bionik US Control Transaction:
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(a) | in which Bionik US merges or amalgamates with, or in which all or substantially all of the then outstanding Bionik US Shares are acquired by, one or more other corporations to which Bionik US is, immediately before such merger, amalgamation or acquisition, “related” within the meaning of the ITA (otherwise than by virtue of a right referred to in paragraph 251(5)(b) thereof); |
(b) | which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of that definition; and |
(c) | in which all or substantially all of the then outstanding Bionik US Shares are converted into or exchanged for shares or rights to receive such shares (the “ Other Shares ”) of another corporation (the “ Other Corporation ”) that, immediately after such Bionik US Control Transaction, owns or controls, directly or indirectly, Bionik US, |
then, (i) all references herein to “Bionik US” shall thereafter be and be deemed to be references to “Other Corporation” and all references herein to “Bionik US Shares” shall thereafter be and be deemed to be references to “Other Shares” (with appropriate adjustments, if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of such shares pursuant to the Share Provisions or exchange of such shares pursuant to this agreement immediately subsequent to the Bionik US Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, redemption or retraction of such shares pursuant to the Share Provisions, or exchange of such shares pursuant to this agreement had occurred immediately prior to the Bionik US Control Transaction and the Bionik US Control Transaction was completed) without any need to amend the terms and conditions of this agreement and without any further action required; and (ii) Bionik US shall cause the Other Corporation to deposit one or more voting securities of such Other Corporation to allow Beneficiaries to exercise voting rights in respect of the Other Corporation substantially similar to those provided for in this agreement.
Article 11
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
11.1 | Amendments, Modifications, etc. |
Subject to Section 11.2, Section 11.4 and Section 13.1, this agreement may not be amended or modified except by an agreement in writing executed by Bionik US, the Corporation and the Trustee and approved by the Beneficiaries in accordance with Section 12(2) of the Share Provisions.
11.2 | Ministerial Amendments |
Notwithstanding the provisions of Section 11.1, the parties to this agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this agreement for the purposes of:
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(a) | adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of the Corporation and Bionik US shall be of the good faith opinion and the Trustee, acting on the advice of counsel, shall be advised that such additions will not be prejudicial to the rights or interests of the Beneficiaries; |
(b) | making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of Bionik US and the Corporation and in the opinion of counsel to the Trustee, having in mind the best interests of the Beneficiaries, it may be expedient to make, provided that such boards of directors and the Trustee, acting on the advice of counsel, shall be advised that such amendments and modifications will not be prejudicial to the interests of the Beneficiaries; or |
(c) | making such changes or corrections which, on the advice of counsel to Bionik US, the Corporation and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error. |
11.3 | Meeting to Consider Amendments |
The Corporation, at the request of Bionik US, shall call a meeting or meetings of the Beneficiaries for the purpose of considering any proposed amendment or modification requiring approval pursuant hereto. Any such meeting or meetings shall be called and held in accordance with the by-laws of the Corporation, the Share Provisions and all applicable laws.
11.4 | Changes in Capital of Bionik US and the Corporation |
At all times after the occurrence of any event contemplated pursuant to Section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which either Bionik US Shares or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis , to all new securities into which Bionik US Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications.
11.5 | Execution of Supplemental Trust Agreements |
From time to time the Corporation (when authorized by a resolution of its Board of Directors), Bionik US (when authorized by a resolution of its board of directors) and the Trustee may, subject to the provisions of these presents, and they shall, when so directed by these presents, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes:
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(a) | evidencing the succession of Bionik US Successors and the covenants of and obligations assumed by each such Bionik US Successor in accordance with the provisions of Article 10 and the successors of the Trustee or any successor trustee in accordance with the provisions of Article 9; |
(b) | making any additions to, deletions from or alterations of the provisions of this agreement or the Voting Rights, the Automatic Exchange Right or the Exchange Right which, in the opinion of counsel to the Trustee, will not be prejudicial to the interests of the Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to Bionik US, the Corporation, the Trustee or this agreement; and |
(c) | for any other purposes not inconsistent with the provisions of this agreement, including to make or evidence any amendment or modification to this agreement as contemplated hereby; provided that, in the opinion of counsel to the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby. |
Article 12
TERMINATION
12.1 | Term |
The Trust created by this agreement shall continue until the earliest to occur of the following events:
(a) | no outstanding Exchangeable Shares are held by a Beneficiary; and |
(b) | each of Bionik US and the Corporation elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with Section 12(2) of the Share Provisions. |
12.2 | Survival of Agreement |
This agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary; provided, however, that the provisions of Article 7 and Article 8 shall survive any such termination of this agreement.
Article 13
GENERAL
13.1 | Severability |
If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
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13.2 | Enurement |
This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns and, subject to the terms hereof, to the benefit of the Beneficiaries. No party may assign this agreement without the consent of the other parties and the approval by the holders of Exchangeable Shares at a meeting of holders of Exchangeable Shares called and held in accordance with the bylaws of the Corporation, the Share Provisions and all applicable laws.
13.3 | Notices to Parties |
Any notice and other communications required or permitted to be given pursuant to this agreement shall be sufficiently given if delivered in person or if sent by email or facsimile transmission (provided such transmission is recorded as being transmitted successfully) to the parties at the following addresses:
(i) | In the case of Bionik US or the Corporation to the following address: |
Bionik Laboratories Inc.
483 Bay Street
Office N105
M5G 2C9
Attn: Peter Bloch
Email: pb@bioniklabs.com
With a copy to (which shall not constitute notice):
Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400
Bay Adelaide Centre, Box 20
Toronto, Ontario, Canada M5H 2T6
Attn: Scott Conover
Facsimile: 416 364 7813
Email: sconover@fasken.com
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Ruskin Moscou Faltischek P.C.
East Tower, 15th Floor
RXR Plaza
Uniondale, New York 11556
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Attn: Stephen E. Fox, Esq.
Facsimile: 516 663 6780
Email: sfox@rmfpc.com
(ii) | In the case of Trustee to: |
Computershare Trust Company of Canada
Attn: Manager, Corporate Trust
Facsimile: 416 981-9777
Email: corporatetrust.toronto@computershare.com
or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending.
13.4 | Notice to Beneficiaries |
Any and all notices to be given and any documents to be sent to any Beneficiaries may be given or sent to the address of such Beneficiary shown on the register of holders of Exchangeable Shares in any manner permitted by the by-laws of the Corporation from time to time in force in respect of notices to shareholders and shall be deemed to be received (if given or sent in such manner) at the time specified in such by-laws, the provisions of which by-laws shall apply mutatis mutandis to notices or documents as aforesaid sent to such Beneficiaries.
13.5 | Counterparts |
This agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
13.6 | Jurisdiction |
This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.
13.7 | Specific Performance |
Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.
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The parties hereto hereby agree that irreparable damage would occur in the event that any provision of this agreement were not performed in accordance with its specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the parties hereto acknowledge and hereby agree that in the event of any breach or threatened breach by Bionik US or the Corporation of any of their covenants or obligations set forth in this agreement (the “ Breaching Party ”), the Trustee shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this agreement by the Breaching Party, and to specifically enforce the terms and provisions of this agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under this agreement. Each of Bionik US and the Corporation hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this agreement by them, and to specifically enforce the terms and provisions of this agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of a Breaching Party under this agreement. The parties hereto further agree that by seeking the remedies provided for in this Section 13.7, the Trustee shall not in any respect waive its right to seek any other form of relief that may be available to it under this agreement
13.8 | Attornment |
Each of the Trustee, Bionik US and the Corporation agrees that any action or proceeding arising out of or relating to this agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably attorns and submits to the exclusive jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgement of the said courts and not to seek, and hereby waives, any review of the merits of any such judgement by the courts of any other jurisdiction, and Bionik US hereby appoints the Corporation at its registered office in the Province of Ontario as attorney for service of process.
[Signature page to follow.]
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IN WITNESS WHEREOF the parties hereto have caused this agreement to be duly executed as of the date first above written.
BIONIK LABORATORIES CORP. | ||
By: | /s/ Austin Kibler | |
Name: Austin Kibler | ||
Title: Chief Executive Officer | ||
BIONIK LABORATORIES INC. | ||
By: | /s/ Peter Bloch | |
Name: Peter Bloch | ||
Title: CEO | ||
COMPUTERSHARE TRUST COMPANY OF CANADA | ||
By: | /s/ Lisa M. Kudo | |
Name: Lisa M. Kudo | ||
Title: Corporate Trust Associate | ||
By: | /s/ Daniel Marz | |
Name: Daniel Marz | ||
Title: Corporate Trust Associate |
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SCHEDULE
A
TRUSTee FEES
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Exhibit 10.3
SUPPORT AGREEMENT
THIS AGREEMENT made as of the 26 th day of February, 2015.
AMONG:
BIONIK LABORATORIES CORP.
a corporation existing under the laws of the State of Delaware
(hereinafter referred to as “
Bionik US
”)
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BIONIK ACQUISITION INC.
,
a company existing under the laws of Canada
(hereinafter referred to as “
Acquireco
”)
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BIONIK LABORATORIES INC.
,
a corporation existing under the laws of Canada
(hereinafter referred to as the “
Corporation
”)
RECITALS:
A | In connection with (i) a private placement offering of a minimum of 7,500,000 units and a maximum of 16,000,000 units of Bionik US (each unit consisting of one (1) share of common stock of Bionik US and one (1) warrant to purchase one (1) share of common stock of Bionik US) and a “reverse takeover” (or similar transaction) of Bionik US by the shareholders of the Corporation (the “ Unit Offering ”) and (ii) the articles of amendment of the Corporation dated February 26, 2015 (“ Articles of Amendment ”), Exchangeable Shares are to be issued to the holders of common shares of the Corporation pursuant to the Articles of Amendment and will be issuable to holders of rights to acquire Common Shares upon the due exercise of such rights and further Exchangeable Shares may be issued by the Corporation from time to time in the future for such purposes as the Corporation may require. |
B | Bionik US, Acquireco and the Corporation have agreed to enter into this agreement in connection with the Unit Offering and the issuance of Exchangeable Shares to make appropriate provision and to establish a procedure whereby each of Bionik US and Acquireco will take certain actions and make certain payments and deliveries necessary to ensure that Acquireco and the Corporation will be able to make certain payments and to deliver or cause to be delivered Bionik US Shares in satisfaction of the obligations of the Corporation and Acquireco, respectively, with respect to the payment and satisfaction of the Dividend Amount, Liquidation Amount, Redemption Price and Retraction Price all in accordance with the Share Provisions. |
In consideration of the foregoing and the mutual agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are acknowledged), the parties agree as follows:
Article 1
DEFINITIONS AND INTERPRETATION
1.1 | Defined Terms |
Each initially capitalized term used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “ Share Provisions ”) attaching to the Exchangeable Shares as set out in the Articles of Amendment. In this agreement, “ including ” means including without limitation and “ includes ” means includes without limitation.
1.2 | Interpretation Not Affected by Headings |
The division of this agreement into Articles, Sections and other portions and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this agreement. Unless otherwise specified, references to an “Article” or “Section” refer to the specified Article or Section of this agreement.
1.3 | Number, Gender |
Words importing the singular number only shall include the plural and vice versa. Words importing any gender shall include all genders.
1.4 | Date for any Action |
If any date on which any action is required to be taken under this agreement is not a business day, such action shall be required to be taken on the next succeeding business day. For the purposes of this agreement, a “business day” means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or New York, New York under applicable law.
Article 2
COVENANTS OF BIONIK US AND THE CORPORATION
2.1 | Covenants Regarding Exchangeable Shares |
So long as any Exchangeable Shares not owned by Bionik US or its subsidiaries are outstanding, Bionik US shall:
(a) | not declare or pay any dividend or make any other distribution on the Bionik US Shares unless: |
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(i) | the Corporation shall (A) on the same day declare or pay, as the case may be, an equivalent dividend or other distribution (as provided for in the Share Provisions) on the Exchangeable Shares (an “ Equivalent Dividend ”), and (B) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such Equivalent Dividend, or |
(ii) | the Corporation shall, in the case of a dividend that is a stock dividend on the Bionik US Shares (A) issue such number of Exchangeable Shares to holders of Exchangeable Shares for each Exchangeable Share as is equal to the number of Bionik US Shares to be paid on each Bionik US Share or (B) subdivide the Exchangeable Shares in lieu of a stock dividend thereon (as provided for in the Share Provisions) in a similar proportion to that in respect of the Bionik US Shares (an “ Equivalent Stock Subdivision ”), and (C) have sufficient authorized but unissued securities available to enable such issuance of Exchangeable Shares or the Equivalent Stock Subdivision; |
(b) | advise the Corporation sufficiently in advance of the declaration by Bionik US of any dividend or other distribution on the Bionik US Shares and take all such other actions as are necessary or desirable, in co-operation with the Corporation, to ensure that: |
(i) | the respective declaration date, record date and payment date for an Equivalent Dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend or other distribution on the Bionik US Shares, or |
(ii) | the record date and effective date for an Equivalent Stock Subdivision shall be the same as the record date and payment date for the corresponding stock dividend on the Bionik US Shares; |
(c) | ensure that the record date for any dividend or other distribution declared on the Bionik US Shares is not less than seven (7) days after the declaration date of such dividend or other distribution; |
(d) | take all such actions and do all such things as are necessary to enable and permit the Corporation, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price in respect of each issued and outstanding Exchangeable Share (other than Exchangeable Shares owned by Bionik US or its subsidiaries) upon the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, the delivery of a Retraction Request by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by the Corporation, as the case may be, including all such actions and all such things as are necessary or desirable to enable and permit the Corporation to cause to be delivered Bionik US Shares to the holders of Exchangeable Shares in accordance with the provisions of Sections 5, 6 or 7, as the case may be, of the Share Provisions; |
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(e) | take all such actions and do all such things as are necessary or desirable to enable and permit Acquireco, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right, the Change of Law Call Right or the Redemption Call Right, including all such actions and all such things as are necessary or desirable to enable and permit Acquireco to cause to be delivered Bionik US Shares to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right, the Change of Law Call Right or the Redemption Call Right, as the case may be; |
(f) | except in connection with any event, circumstance or action which causes or could cause the occurrence of a Redemption Date, not exercise its vote as a shareholder to initiate the voluntary liquidation, dissolution or winding up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; and |
(g) | use all reasonable efforts to cause the Corporation, Acquireco and the Transfer Agent to take all such actions and do all such things as are reasonably necessary or desirable to enable and permit the exchange of their Exchangeable Shares subject to and in accordance with the Share Provisions and the Voting and Exchange Trust Agreement. |
2.2 | Segregation of Funds |
Bionik US shall deposit or cause the Corporation to deposit a sufficient amount of funds in a separate account of the Corporation and segregate a sufficient amount of such other assets and property as is necessary to enable the Corporation to pay dividends when due and to pay or otherwise satisfy its respective obligations under Sections 3, 5, 6, 7 and 9 of the Share Provisions, as applicable.
2.3 | Reservation of Bionik US Shares |
Bionik US hereby represents, warrants and covenants in favour of the Corporation and Acquireco that Bionik US has reserved for issuance and shall, at all times while any Exchangeable Shares (other than Exchangeable Shares held by Bionik US or its subsidiaries) are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of Bionik US Shares (or other shares or securities into which Bionik US Shares may be reclassified or changed as contemplated by Section 2.7):
(a) | as is equal to the sum of (i) the number of Exchangeable Shares issued and outstanding from time to time and (ii) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares outstanding from time to time; and |
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(b) | as are now and may hereafter be required to enable and permit Bionik US to meet its obligations under the Voting and Exchange Trust Agreement and under any other security or commitment pursuant to which Bionik US may now or hereafter be required to issue Bionik US Shares, to enable and permit Acquireco or Bionik US, as the case may be, to meet its obligations under each of the Liquidation Call Right, the Retraction Call Right, the Change of Law Call Right and the Redemption Call Right and to enable and permit the Corporation to meet its obligations hereunder and under the Share Provisions. |
2.4 | Notification of Certain Events |
In order to assist Bionik US to comply with its obligations hereunder and to permit Acquireco or Bionik US to exercise, as the case may be, the Liquidation Call Right, the Retraction Call Right, the Change of Law Call Right and the Redemption Call Right, the Corporation shall notify Bionik US and Acquireco of each of the following events at the time set forth below:
(a) | in the event of any determination by the Board of Directors to institute voluntary liquidation, dissolution or winding-up proceedings with respect to the Corporation or to effect any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, at least sixty (60) days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; |
(b) | promptly, upon the earlier of receipt by the Corporation of notice of and the Corporation otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of the Corporation or to effect any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; |
(c) | promptly, upon receipt by the Corporation of a Retraction Request; |
(d) | on the same date on which notice of redemption is given to holders of Exchangeable Shares, upon the determination of a Redemption Date in accordance with the Share Provisions; |
(e) | as soon as practicable upon the issuance by the Corporation of any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the issuance of Exchangeable Shares and rights to acquire Exchangeable Shares pursuant to the Arrangement); and |
(f) | promptly, upon receiving notice of a Change of Law. |
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2.5 | Delivery of Bionik US Shares to the Corporation and Acquireco |
In furtherance of its obligations, upon notice from the Corporation or Acquireco of any event that requires the Corporation or Acquireco to cause to be delivered Bionik US Shares to any holder of Exchangeable Shares, Bionik US shall forthwith allot, issue and deliver or cause to be delivered to the relevant holder of Exchangeable Shares as directed by the Corporation or Acquireco the requisite number of Bionik US Shares to be allotted to, received by, and issued to or to the order of, the former holder of the surrendered Exchangeable Shares (but, for the avoidance of doubt, not to the Corporation or Acquireco). All such Bionik US Shares assuming the delivery of the applicable Exchangeable Shares by the relevant holder thereof in accordance with the Share Provisions, shall be duly authorized and validly issued as fully paid and shall be free and clear of any Lien. In consideration of the issuance and delivery of each such Bionik US Share, the Corporation or Acquireco, as the case may be, shall ascribe a cash amount or pay a purchase price (whether in cash, securities or other property) equal to the fair market value of such Bionik US Shares.
2.6 | Qualification of Bionik US Shares and Novation of Registration Rights Agreement |
Bionik US shall use its commercially reasonable efforts (which, for greater certainty, shall not require Bionik US to consent to a term or condition of an approval or consent which Bionik US reasonably determines could have a materially adverse effect on Bionik US or its subsidiaries) to cause all Bionik US Shares (or such other shares or securities) to be delivered hereunder to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding Bionik US Shares (or such other shares or securities) have been listed by Bionik US and remain listed and are quoted or posted for trading at such time.
Concurrently with the execution of this Agreement, Bionik US shall execute a novation agreement, substantially in the form attached to Schedule “A” hereto.
2.7 | Economic Equivalence |
So long as any Exchangeable Shares not owned by Bionik US or its subsidiaries are outstanding:
(a) | Bionik US shall not without prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of the Share Provisions: |
(i) | issue or distribute Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares) to the holders of all or substantially all of the then outstanding Bionik US Shares by way of stock dividend or other distribution, other than an issue of Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares) to holders of Bionik US Shares (A) who exercise an option to receive dividends in Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares) in lieu of receiving cash dividends, or (B) pursuant to any dividend reinvestment plan or similar arrangement; or |
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(ii) | issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Bionik US Shares entitling them to subscribe for or to purchase Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares); or |
(iii) | issue or distribute to the holders of all or substantially all of the then outstanding Bionik US Shares (A) shares or securities (including evidence of indebtedness) of Bionik US of any class (other than Bionik US Shares or securities convertible into or exchangeable for or carrying rights to acquire Bionik US Shares), or (B) rights, options, warrants or other assets other than those referred to in Subsection 2.7(a)(ii) or (C) assets of Bionik US or any direct or indirect subsidiary of Bionik US, |
unless in each case the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares and at least ten (10) days prior written notice thereof is given to the holders of Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed or that may be issued or distributed by Bionik US in order to give effect to and to consummate, is in furtherance of or is otherwise in connection with the transactions contemplated by, and in accordance with, the Unit Offering and the securities issued thereunder.
(b) | Bionik US shall not without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of the Share Provisions: |
(i) | subdivide, redivide or change the then outstanding Bionik US Shares into a greater number of Bionik US Shares; or |
(ii) | reduce, combine, consolidate or change the then outstanding Bionik US Shares into a lesser number of Bionik US Shares; or |
(iii) | reclassify or otherwise change Bionik US Shares or effect a sale of all or substantially all of the assets of Bionik US (on a consolidated basis) or effect an amalgamation, merger, arrangement, reorganization or other transaction affecting Bionik US Shares; |
unless the same or an economically equivalent change shall (subject to the receipt of all required approvals) simultaneously be made to, or in the rights of the holders of, the Exchangeable Shares and at least ten (10) days prior written notice is given to the holders of Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed or that may be issued or distributed by Bionik US in order to give effect to and to consummate, is in furtherance of or is otherwise in connection with the transactions contemplated by, and in accordance with, the Unit Offering and the securities issued thereunder.
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(c) | Bionik US shall ensure that the record date for any event referred to in Subsection 2.7(a) or Subsection 2.7(b), or (if no record date is applicable for such event) the effective date for any such event, is not less than five business days after the date on which such event is declared or announced by Bionik US (with contemporaneous notification thereof by Bionik US to the Corporation). |
(d) | The Board of Directors of the Corporation shall determine, acting in good faith and in its sole discretion, economic equivalence for the purposes of any event referred to in Subsection 2.7(a) or Subsection 2.7(b) and each such determination shall be conclusive and binding on Bionik US. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors of the Corporation to be relevant, be considered by the Board of Directors of the Corporation: |
(i) | in the case of any stock dividend or other distribution payable in Bionik US Shares, the number of such shares issued in proportion to the number of Bionik US Shares previously outstanding; |
(ii) | in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Bionik US Shares (or securities exchangeable for or convertible into or carrying rights to acquire Bionik US Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price of a Bionik US Share; |
(iii) | in the case of the issuance or distribution of any other form of property (including any shares or securities of Bionik US of any class other than Bionik US Shares, any rights, options or warrants other than those referred to in Subsection 2.7(d)(ii), any evidences of indebtedness of Bionik US or any assets of Bionik US), the relationship between the fair market value (as determined by the Board of Directors of the Corporation in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Bionik US Share and the Current Market Price of a Bionik US Share; |
(iv) | in the case of any subdivision, redivision or change of the then outstanding Bionik US Shares into a greater number of Bionik US Shares or the reduction, combination, consolidation or change of the then outstanding Bionik US Shares into a lesser number of Bionik US Shares or any amalgamation, merger, arrangement, reorganization or other transaction affecting Bionik US Shares, the effect thereof upon the then outstanding Bionik US Shares; and |
(v) | in all such cases, the general Canadian taxation consequences of the relevant event to Canadian resident holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Bionik US Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). |
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(e) | The Corporation agrees that, to the extent required, upon due notice from Bionik US, the Corporation shall use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by the Corporation, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalence with respect to the Bionik US Shares and Exchangeable Shares as provided for in this Section 2.7. |
2.8 | Tender Offers |
In the event that a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to Bionik US Shares (a “ Tender Offer ”) is proposed by Bionik US or is proposed to Bionik US or its shareholders and is recommended by the board of directors of Bionik US, or is otherwise effected or to be effected with the consent or approval of the board of directors of Bionik US, and the Exchangeable Shares are not redeemed by the Corporation or purchased by Acquireco pursuant to the Redemption Call Right, Bionik US shall expeditiously and in good faith take all such actions and do all such things as are necessary or desirable to enable and permit holders of Exchangeable Shares (other than Bionik US and its subsidiaries) to participate in such Tender Offer to the same extent and on an economically equivalent basis as the holders of Bionik US Shares, without discrimination. Without limiting the generality of the foregoing, Bionik US shall expeditiously and in good faith take all such actions and do all such things as are necessary or desirable to ensure that holders of Exchangeable Shares may participate in each such Tender Offer without being required to retract Exchangeable Shares as against the Corporation (or, if so required, to ensure that any such retraction, shall be effective only upon, and shall be conditional upon, the closing of such Tender Offer and only to the extent necessary to tender or deposit to the Tender Offer). Nothing herein shall affect the rights of the Corporation to redeem (or Acquireco or Bionik US to purchase pursuant to the Redemption Call Right) Exchangeable Shares, as applicable, in the event of a Bionik US Control Transaction.
2.9 | Ownership of Outstanding Shares |
Without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of the Share Provisions, Bionik US covenants and agrees in favour of the Corporation that, as long as any outstanding Exchangeable Shares are owned by any person other than Bionik US or any of its subsidiaries, Bionik US shall be and remain the direct or indirect beneficial owner of all issued and outstanding voting shares in the capital of the Corporation and Acquireco and shall ensure that the Corporation and Acquireco do not dispose of any material assets. Notwithstanding the foregoing, but subject to Article 3, Bionik US shall not be in violation of this Section 2.9 if any person or group of persons acting jointly or in concert acquire all or substantially all of the assets of Bionik US or the Bionik US Shares pursuant to any merger of Bionik US pursuant to which Bionik US was not the surviving corporation.
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2.10 | Bionik US and Subsidiaries Not to Vote Exchangeable Shares |
Bionik US covenants and agrees that it shall appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by it and its subsidiaries for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting. Bionik US further covenants and agrees that it shall not, and shall cause its subsidiaries not to, exercise any voting rights which may be exercisable by holders of Exchangeable Shares from time to time pursuant to the Share Provisions or pursuant to the provisions of the Canada Business Corporations Act (or any successor or other corporate statute by which the Corporation may in the future be governed) with respect to any Exchangeable Shares held by it or by its subsidiaries in respect of any matter considered at any meeting of holders of Exchangeable Shares. Bionik US covenants and agrees to cause, as a direct or indirect shareholder of each of Acquireco and the Corporation to the extent applicable and legally permitted, each of Acquireco and the Corporation to perform their obligations under this Agreement and shall be jointly and severally liable, as primary obligor and not merely as surety, in the event that Acquireco or the Corporation fail to perform their obligations hereunder.
2.11 | Ordinary Market Purchases |
For certainty, nothing contained in this agreement, including the obligations of Bionik US contained in Section 2.8, shall limit the ability of Bionik US (or any of its subsidiaries including, without limitation, Acquireco or the Corporation) to make ordinary market purchases of Bionik US Shares in accordance with applicable laws and regulatory or stock exchange requirements.
2.12 | Stock Quotation |
Bionik US covenants and agrees in favour of the Corporation that for a period of 3 years from the date hereof and, as long as any outstanding Exchangeable Shares are owned by any person other than Bionik US or any of its subsidiaries, Bionik US shall use commercially reasonable best efforts to maintain a quotation, listing or posting for trading of such Exchangeable Shares on OTCBB or a National Securities Exchange.
Article 3
BIONIK US SUCCESSORS
3.1 | Certain Requirements in Respect of Combination, etc. |
So long as any Exchangeable Shares not owned by Bionik US or its subsidiaries are outstanding, Bionik US shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, amalgamation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets (on a consolidated basis) would become the property of any other person or, in the case of a merger, amalgamation, arrangement or similar transaction, of the continuing corporation or other legal entity resulting therefrom, provided that it may do so if:
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(i) | such other person or continuing corporation or other legal entity or, in the event of any merger, amalgamation, arrangement or similar transaction pursuant to which holders of Bionik US Shares are entitled to receive shares in the capital of any corporation or other legal entity other than such person or continuing corporation or other legal entity (in each case the “ Bionik US Successor ”) by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the Bionik US Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Bionik US Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Bionik US under this agreement; and |
(ii) | such transaction shall be upon such terms and conditions as to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares. |
3.2 | Vesting of Powers in Successor |
Whenever the conditions of Section 3.1 have been duly observed and performed, the parties, if required by Section 3.1, shall execute and deliver the supplemental agreement provided for in Subsection 3.1(i) and thereupon the Bionik US Successor and such other person that may then be the issuer of the Bionik US Shares shall possess and from time to time may exercise each and every right and power of Bionik US under this agreement in the name of Bionik US or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the board of directors of Bionik US or any officers of Bionik US may be done and performed with like force and effect by the directors or officers of such Bionik US Successor.
3.3 | Wholly-Owned Subsidiaries |
Nothing herein shall be construed as preventing (i) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Bionik US with or into Bionik US, (ii) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of Bionik US, provided that all of the assets of such subsidiary are transferred to Bionik US or another wholly-owned direct or indirect subsidiary of Bionik US, or (iii) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of Bionik US among the shareholders of such subsidiary for the purpose of winding up its affairs, and any such transactions are expressly permitted by this Article 3.
3.4 | Successorship Transaction |
Notwithstanding the foregoing provisions of Article 3, in the event of an Bionik US Control Transaction:
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(i) | in which Bionik US merges or amalgamates with, or in which all or substantially all of the then outstanding Bionik US Shares are acquired by, one or more other corporations to which Bionik US is, immediately before such merger, amalgamation or acquisition, “related” within the meaning of the ITA (otherwise than by virtue of a right referred to in paragraph 251(5)(b) thereof); |
(ii) | which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of that definition; and |
(iii) | in which all or substantially all of the then outstanding Bionik US Shares are converted into or exchanged for shares or rights to receive such shares (the “ Other Shares ”) or another corporation (the “ Other Corporation ”) that, immediately after such Bionik US Control Transaction, owns or controls, directly or indirectly, Bionik US; |
then all references herein to “Bionik US” shall thereafter be and be deemed to be references to “Other Corporation” and all references herein to “Bionik US Shares” shall thereafter be and be deemed to be references to “Other Shares” (with appropriate adjustments if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of such shares pursuant to the Exchangeable Share Provisions or exchange of such shares pursuant to the Voting and Exchange Trust Agreement immediately subsequent to the Bionik US Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, redemption or retraction of such shares pursuant to the Exchangeable Share Provisions, or exchange of such shares pursuant to the Voting and Exchange Trust Agreement had occurred immediately prior to the Bionik US Control Transaction and the Bionik US Control Transaction was completed) without any need to amend the terms and conditions of the Exchangeable Shares and without any further action required.
Article 4
GENERAL
4.1 | Term |
This agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any person other than Bionik US and any of its subsidiaries.
4.2 | Changes in Capital of Bionik US and the Corporation |
At all times after the occurrence of any event contemplated pursuant to Section 2.7 and Section 2.8 or otherwise, as a result of which either Bionik US Shares or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis , to all new securities into which Bionik US Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications.
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4.3 | Severability |
If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
4.4 | Amendments, Modifications |
(a) | Subject to Section 4.2, Section 4.3 and Section 4.5, this agreement may not be amended or modified except by an agreement in writing executed by the Corporation, Acquireco and Bionik US and approved by the holders of the Exchangeable Shares in accordance with Section 12(2) of the Share Provisions. |
(b) | No amendment or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. |
4.5 | Ministerial Amendments |
Notwithstanding the provisions of Section 4.4, the parties to this agreement may in writing at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this agreement for the purposes of:
(a) | adding to the covenants of any or all parties provided that the board of directors of each of the Corporation, Acquireco and Bionik US shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; |
(b) | making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of the Corporation, Acquireco and Bionik US, it may be expedient to make, provided that each such board of directors shall be of the good faith opinion that such amendments or modifications will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; or |
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(c) | making such changes or corrections which, on the advice of counsel to the Corporation, Acquireco and Bionik US, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the boards of directors of each of the Corporation, Acquireco and Bionik US shall be of the good faith opinion that such changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares. |
4.6 | Meeting to Consider Amendments |
The Corporation shall call , and Bionik US may require that the Corporation, call, a meeting or meetings of the holders of the Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4. Any such meeting or meetings shall be called and held in accordance with the bylaws of the Corporation, the Share Provisions and all applicable laws.
4.7 | Enurement |
This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign this Agreement without the consent of the other parties and the approval by a majority of the holders of Exchangeable Shares at a meeting of holders of Exchangeable Shares called and held in accordance with the bylaws of the Corporation, the Share Provisions and all applicable laws.
4.8 | Notices to Parties |
Any notice and other communications required or permitted to be given pursuant to this agreement shall be sufficiently given if delivered in person or if sent, as applicable, by email or fax transmission (provided such transmission is recorded as being transmitted successfully) to the parties at the following addresses:
(i) | In the case of Bionik US, the Corporation or Acquireco to the following address: |
Bionik Laboratories Inc.
483 Bay Street
Office N105
Toronto, ON M5G 2C9
Attn: Peter Bloch
Email: pb@bioniklabs.com
With a copy to (which shall not constitute notice):
Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400
Bay Adelaide Centre, Box 20
Toronto, Ontario, Canada M5H 2T6
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Attn: Scott Conover
Facsimile: 416 364 7813
Email: sconover@fasken.com
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Ruskin Moscou Faltischek P.C.
East Tower, 15
th
Floor
RXR Plaza
Uniondale, New York 11556
Attn: Stephen E. Fox, Esq.
Facsimile: 516 663 6780
Email: sfox@rmfpc.com
or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending.
4.9 | Specific Performance |
Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.
The parties hereto hereby agree that irreparable damage would occur in the event that any provision of this agreement were not performed in accordance with its specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the parties hereto acknowledge and hereby agree that in the event of any breach or threatened breach by a party of any of its covenants or obligations set forth in this agreement (the “ Breaching Party ”), any other party (the “ Other Party ”) shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this agreement by the Breaching Party, and to specifically enforce the terms and provisions of this agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under this agreement. Each of the parties hereto hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this agreement by it, and to specifically enforce the terms and provisions of this agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of a Party under this Agreement. The parties hereto further agree that by seeking the remedies provided for in this Section 4.9, a party shall not in any respect waive its right to seek any other form of relief that may be available to a party under this agreement
4.10 | Counterparts |
This agreement may be executed in counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.
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4.11 | Third Party Beneficiaries |
It is acknowledged and agreed that each holder of Exchangeable Shares (other than Bionik US and its subsidiaries) is, and shall at all relevant times be, a third party beneficiary of the covenants of each of Bionik US and Acquireco given to the Corporation in this agreement and shall have all rights and remedies in connection therewith and the full benefits thereof (including to pursue claims for damages and other relief (including equitable relief) against Bionik US and Acquireco for any breach of this Agreement by Bionik US or Acquireco, which right is hereby expressly acknowledged and agreed to by each of the parties hereto) and any covenant of Bionik US and Acquireco given herein shall be enforceable by each holder of Exchangeable Shares against Bionik US and Acquireco.
4.12 | Jurisdiction |
This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Each party hereto irrevocably attorns and submits to the exclusive jurisdiction of the courts of the Province of Ontario with respect to any matter arising hereunder or related hereto.
4.13 | Attornment |
Each of Bionik US, Acquireco and the Corporation agrees that any action or proceeding arising out of or relating to this agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably attorns and submits to the non-exclusive jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgement of the said courts and not to seek, and hereby waives, any review of the merits of any such judgement by the courts of any other jurisdiction, and Bionik US hereby appoints the Corporation at its registered office in the Province of Ontario as attorney for service of process.
Bionik US hereby irrevocably designates the Corporation (in such capacity, the “ Process Agent ”), with an office at its address specified in Section 4.8, as its designee, appointee and agent to receive, for and on its behalf service of process in such jurisdiction in any legal action or proceedings with respect to this agreement or the transactions contemplated hereby, and such service shall be deemed complete upon delivery thereof to the Process Agent; provided that in the case of any such service upon the Process Agent, the party effecting such service shall also deliver a copy thereof to Bionik US in the manner provided in Section 4.8. Bionik US shall take all such action as may be necessary to continue said appointment in full force and effect or to appoint another agent (provided all parties receive notice of such appointment and all relevant information) so that Bionik US will at all times have an agent for service of process for the above purposes in the City of Toronto in the Province of Ontario in Canada.
Nothing herein shall affect the right of any Party to serve process in any manner permitted by applicable law. Bionik US expressly acknowledges that the foregoing waiver is intended to be irrevocable under all applicable laws.
[signature page to follow]
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IN WITNESS WHEREOF , the parties hereto have caused this agreement to be duly executed as of the date first above written.
BIONIK LABORATORIES CORP. | ||
By: | /s/ Austin Kibler | |
Name: Austin Kibler | ||
Title: Chief Executive Officer | ||
BIONIK ACQUISITION INC. | ||
By: | /s/ Peter Bloch | |
Name: Peter Bloch | ||
Title: CEO | ||
BIONIK LABORATORIES INC. | ||
By: | /s/ Peter Bloch | |
Name: Peter Bloch | ||
Title: CEO |
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SCHEDULE “A”
NOVATION AGREEMENT
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Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of February 26, 2015, by and between Bionik Laboratories Inc., a corporation existing under the laws of Canada (the “ Company ”), and each of the several shareholders signatory hereto (each such shareholder, a “ Shareholder ” and, collectively, the “ Shareholders ”).
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The Company and each Shareholder hereby agrees as follows:
1. Definitions . As used in this Agreement, the following terms shall have the following meanings:
“ Advice ” shall have the meaning set forth in Section 6(c).
“ Affiliate ” shall have the meaning assigned to this term in paragraph (a)(1) of Rule 144.
“ Commission ” shall mean the Securities and Exchange Commission.
“ Effectiveness Period ” shall have the meaning set forth in Section 2(a).
“ Exchangeable Shares ” means the non-voting, exchangeable shares in the capital of the Company (or, subsequent to the RTO Transaction, its subsidiary) issued or that may be issued to the Shareholders on or prior to the RTO Transaction, having the rights, privileges, restrictions and conditions set forth in the Articles of Amendment of the Company (or, subsequent to the RTO Transaction, its subsidiary) to be adopted by the Company on or prior to the RTO Transaction, a copy of which is attached hereto as Exhibit A.
“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Filing Date ” means the sixtieth (60 th ) calendar day following the Investor Effective Date, subject to Section 2(e) herein, and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.
“ Holder ” or “ Holders ” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“ Indemnified Party ” shall have the meaning set forth in Section 5(c).
“ Indemnifying Party ” shall have the meaning set forth in Section 5(c).
“ Investor Effective Date ” means the effective date of the registration statement on Form S-1 registering the shares of common stock and shares of common stock underlying warrants, acquired or that may be acquired by the RTO Investors, which registration is a condition to the RTO Transaction.
“ Losses ” shall have the meaning set forth in Section 5(a).
“ Plan of Distribution ” shall have the meaning set forth in Section 2(a).
“ Person ” means any individual, corporation, partnership, trust, limited liability company, association or other entity.
“ Prospectus ” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“ Registrable Securities ” means, as of any date of determination, the shares of common stock of Pubco (the “ Common Stock ”) then issued or issuable upon conversion or exchange of the Exchangeable Shares; provided , however , that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and reasonably acceptable to the Transfer Agent and by the Company, upon the advice of counsel to the Company.
“ Registration Statement ” means the registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c), including the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“ RTO Transaction ” means (a) that proposed reverse-takeover transaction pursuant to which (i) the Company would merge with or otherwise be acquired, directly or indirectly, by a publicly traded and reporting United States company (“ Pubco ”) and (ii) Pubco concurrently issues and sells to certain investors (the “ RTO Investors ”) in a private placement units consisting of its common stock and common stock purchase warrants, or (b) any other transaction that results in the Company becoming a reporting United States company and any of the present shareholders of the Company holding ”restricted securities” as defined in Rule 144 (a) (3) under the Securities Act, either directly or upon the exchange or conversion of one class of securities of the Company or any affiliated entity into another class of securities, in either case, as presented to the shareholders of the Company at that Special Meeting of Stockholders held on or about September 11, 2014 and duly approved thereby.
“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“ Rule 405 ” means Rule 405 promulgated by the Commission pursuant to the Securities Act.
“ Rule 415 ” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“ Rule 424 ” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“ SEC Guidance ” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.
“ Securities Act ” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Selling Stockholder Questionnaire ” shall have the meaning set forth in Section 4(a).
“ Trading Day ” means a day on which the Common Stock is traded or may be traded on a Trading Market.
“ Trading Market ” means any market or exchange on which the Common Stock is listed or quoted for trading on the date in question, which may be, without limitation, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQX, the OTCQB, the OTC Bulletin Board or OTC Link (formerly Pink Sheets) (or any successors to any of the foregoing).
2. Resale Registration .
(a) On or prior to the Filing Date, the Company shall use its reasonable best efforts to prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement filed hereunder shall contain substantially the “ Plan of Distribution ” attached hereto as Annex A . Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof and shall use its reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as reasonably determined by the outside US counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “ Effectiveness Period ”).
(b) Notwithstanding the registration obligations set forth in Section 2(a) , if the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415 or otherwise, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its reasonable best efforts to file amendments to the Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission; provided , however , that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.
(c) Notwithstanding any other provision of this Agreement, if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
a. | First, the Company shall reduce or eliminate any securities to be included by any Person other than a Holder; |
b. | Second, the Company shall reduce Registrable Securities (applied to the Holders on a pro rata basis based on the total number of unregistered Registrable Securities held by such Holders). |
In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements to register for resale those Registrable Securities that were not registered for resale on the Registration Statement, as amended.
(d) If Form S-3 is not available for the registration of the resale of all the Registrable Securities hereunder, including in the circumstances described in Section 2 (b), the Company shall (i) register the resale of the Registrable Securities on another appropriate form, including Form S-1 if required, as soon as reasonably possible and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.
(e) Notwithstanding anything herein to the contrary, if (i) (A) the Board of Directors, using good faith judgment, determines that, due to the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material, the filing of the Registration Statement covering the Registrable Securities would be detrimental to the Company and it is in the best interests of the Company to delay the filing of the Registration Statement or (B) the Company has been requested in writing by the Company’s placement agent and investor banker (the “ Placement Agent ”) with respect to the RTO Transaction, that in its good faith judgment it is reasonably necessary to delay the filing of the Registration Statement covering the Registrable Securities to continue to make an orderly market in the Company’s common stock post-RTO Transaction, and (ii) the Company furnishes to such Holders a written certification by the Company’s Chief Executive Officer of the determinations by the Board of Directors described in clause (i)(A) herein or attaching a true, correct and complete copy of the request of the Placement Agent described in clause (i)(B) herein, then the Company shall have the right to delay the filing of the Registration Statement for a period of (x) not more than one (1) one hundred twenty (120) consecutive day period commencing on the Filing Date, but in no event longer than what is required or requested, as the case may be, pursuant to clause (i)(A); and (y) not more than one (1) sixty (60) consecutive day period commencing on the Filing Date, but in no event longer than what is required or requested, as the case may be, pursuant to clause (i)(B), and in any event not more than an aggregate of one hundred twenty (120) consecutive days commencing on the Filing Date pursuant to clause (i)(A) and/or (B).
3. Registration Procedures . In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders (at such Holders’ sole cost and expense), and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to reasonable inquiries of each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holders advance copies of any universal shelf registration statement registering securities in addition to those required hereunder, or any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B (a “ Selling Stockholder Questionnaire ”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4 th ) Trading Day following the date on which such Holder receives draft materials in accordance with this Section, whichever is earlier.
(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary (in the case of an offering to be made on a continuous basis under Rule 415) to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided , however , in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries, and provided further , that a suspension based upon the grounds specified in clause (vi) above shall not be put into effect for (x) a period longer than sixty (60) consecutive days for each such particular corporate development and any related corporate development; or (y) a particular corporate development and any related corporate development that was the basis for a delay in filing the Registration Statement pursuant to Section 2(e).
(d) Use its best efforts to obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.
(f) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(c).
(g) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
(h) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by applicable law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may reasonably request.
(i) Upon the occurrence of any event contemplated by Section 3(c), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(j) Comply with all applicable rules and regulations of the Commission.
(k) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, such Holder may be omitted from any then pending Registration Statement and will be required to wait for inclusion in a subsequent Registration Statement, if any, provided such statement is then timely provided.
4. Registration Expenses . All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. In no event shall the Company be responsible for any broker or similar commissions of any Holder or any legal fees or other costs of the Holders.
5. Indemnification .
(a) Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, and employees, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “ Losses ”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(c)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(c), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(f).
(b) Indemnification by Holders . Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(c)(iii)-(vi), to the extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(c), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected.
(c) Conduct of Indemnification Proceedings . If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “ Indemnified Party ”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “ Indemnifying Party ”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution . If the indemnification under Section 6(a) or 6(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(c) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties in connection with events not covered by such indemnity and contribution agreements.
6. Miscellaneous .
(a) Remedies . In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) Compliance . Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration Statement.
(c) Discontinued Disposition . By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “ Advice ”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 6(c) to suspend the availability of a Registration Statement and Prospectus for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period (subject to the last proviso of Section 3(c)).
(d) Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and (i) the Holders of 75% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any security); and (ii) the Holders of a simple majority of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any security), excluding (A) the Company and (B) any Holder who is an executive officer or director of the Company and any other Holder of Registrable Securities which would be deemed beneficially owned by any such executive officer or director under Rule 13d-3 promulgated under the Exchange Act; provided that this Agreement may not be amended in a manner adversely affecting the rights or obligations of any Shareholder which does not adversely affect the rights or obligations of all similarly situated Shareholders in the same manner without the consent of such Shareholder. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(d). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
(e) Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as follows:
(i) In the case of Bionik Laboratories Corp. or Bionik Laboratories Inc. to the following address:
Bionik Laboratories Inc.
483 Bay Street
Office N105
M5G 2C9
Attn: | Peter Bloch |
Email: | pb@bioniklabs.com |
(ii) In the case of a Holder, at the address for such Holder shown on the register of security holders maintained by Bionik Laboratories Corp. or Bionik Laboratories Inc. or maintained on their behalf by their appointed transfer agent.
(f) Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities; provided , however , that the Company shall be required to assign all of its rights and obligations, whether by novation of this Agreement (which shall not require consent of the Holders or require them to execute any such agreement) or otherwise, hereunder to Pubco upon the consummation of the RTO Transaction and, in which case, all references to the Company hereunder shall be deemed to mean Pubco. Following such assignment or Novation the Company shall deliver the signed novation/assignment document to each Holder.
(g) No Inconsistent Agreements . Except as may be set forth or contemplated by the Investor Registration Rights Agreement, neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(h) Execution and Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
(i) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the laws of the State of Delaware, without giving effect to conflicts of laws thereof.
(j) Cumulative Remedies . The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(k) Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) Headings . The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.
(m) Independent Nature of Holders’ Obligations and Rights . The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not asset any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.
(n) Entire Agreement . This Agreement, together with the exhibits hereto, constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
(o) No Obligation of RTO Transaction; Termination . Nothing in this Agreement shall be a commitment or create an obligation on the part of the Company to consummate the RTO Transaction or to register the Registrable Securities in the event the Company does not effect or otherwise consummate an RTO Transaction. In the event an RTO Transaction is not consummated, this Agreement shall be terminated and of no further force and effect.
(Remainder of Page Intentionally Left Blank; Signature Pages Follow)
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
BIONIK LABORATORIES INC. | ||
By: | /s/ Peter Bloch | |
Name: Peter Bloch | ||
Title: Chief Executive Officer |
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO bionik laboratories inc. REGISTRATION RIGHTS AGREEMENT]
Name of Holder: __________________________
Signature of Authorized Signatory of Holder : __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
Annex A
Plan of Distribution
Each Selling Stockholder (the “ Selling Stockholders ”) of the securities and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
· | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
· | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
· | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
· | an exchange distribution in accordance with the rules of the applicable exchange; |
· | privately negotiated transactions; |
· | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
· | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; |
· | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
· | a combination of any such methods of sale; or |
· | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “ Securities Act ”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Annex B
bionik laboratories inc.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock (the “ Registrable Securities ”) of [PUBCO], a Delaware corporation (the “ Company ”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “ Commission ”) a registration statement (the “ Registration Statement ”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “ Securities Act ”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “ Registration Rights Agreement ”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “ Selling Stockholder ”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. | Name. |
(a) | Full Legal Name of Selling Stockholder |
(b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held: |
(c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire): |
2. Address for Notices to Selling Stockholder:
Telephone:______________________________________________________________________________________ |
Fax:___________________________________________________________________________________________ |
Contact Person:__________________________________________________________________________________ |
3. Broker-Dealer Status:
(a) | Are you a broker-dealer? |
Yes ¨ No ¨
(b) | If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company? |
Yes ¨ No ¨
Note: | If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
(c) | Are you an affiliate of a broker-dealer? |
Yes ¨ No ¨
(d) | If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes ¨ No ¨
Note: | If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
(a) | Type and Amount of other securities beneficially owned by the Selling Stockholder: |
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here: |
The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective.
By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto . The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Date: | Beneficial Owner: |
By: | ||
Name: | ||
Title: |
PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO THE COMPANY.
Exhibit A
Articles of Amendment
Exhibit 10.5
NOVATION AGREEMENT dated as of the 26 th day of February, 2015.
BETWEEN:
BIONIK LABORATORIES CORP.
a corporation existing under the laws of the State of Delaware
(hereinafter referred to as “
Bionik US
”)
- and -
BIONIK LABORATORIES INC.
,
a corporation existing under the laws of Canada
(hereinafter referred to as the “
Corporation
”)
WHEREAS the Corporation entered into a Registration Rights Agreement with certain shareholders of the Corporation (“Shareholders”) on February 26, 2015 (the “Registration Rights Agreement”);
AND WHEREAS the Registration Rights Agreement requires the Corporation to novate and assign all of its rights and obligations under the Registration Rights Agreement to Bionik US;
AND WHEREAS Bionik US has agreed to assume all of the Corporations’ rights and obligations under the Registration Rights Agreement and to fully perform same;
AND WHEREAS the parties hereto are therefore desirous of executing and delivering this Novation Agreement (the “ Agreement ”), all on and subject to the terms and conditions contained herein;
NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties, the parties mutually agree as follows:
AGREED TERMS
1. | The Corporation assigns and transfers to Bionik US all of its right, title and interest in, to and under the Registration Rights Agreement and all benefit and advantage to be derived therefrom. |
2. | Bionik US accepts such assignment and transfer and agrees in favour of each of the Corporation and each Shareholder, be bound by and perform all of the provisions of the Registration Rights Agreement which are remaining to be performed and which are binding upon or to be performed by the Corporation, all as fully and to the same extent as if Bionik US had been the original party to the Registration Rights Agreement instead of the Corporation. |
3. | This Agreement may be executed in any number of counterparts and by different parties on separate counterparts (which may be facsimile copies), but shall not be valid and binding until each party has executed at least one counterpart. Each counterpart shall constitute an original but all the counterparts together shall constitute a single agreement. Transmission of a copy of an executed signature page of this Agreement to the other parties to this Agreement by facsimile transmission or e-mail in pdf format shall be as effective as delivery of a manually executed counterpart. |
4. | This Agreement and any disputes or claims arising out of or in connection with its subject matter are governed by and construed in accordance with the law of the Province of Ontario and the federal laws of Canada. |
4.1 | The Parties irrevocably agree that the courts of Ontario have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement. |
5. | This Agreement may not be changed, amended or modified in any manner, except pursuant to an instrument in writing signed on behalf of each of the parties and with the written consent of each Shareholder. The failure by any party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision unless such waiver is acknowledged in writing, nor shall such failure affect the validity of this Agreement or any part thereof or the right of a party to enforce each and every provision. No waiver or breach of this Agreement shall be held to be a waiver of any other or subsequent breach. |
6. | This Agreement shall enure to the benefit of and shall be binding on and shall be enforceable by the Parties and their respective, successors and permitted assigns. |
7. | Bionik US agrees to deliver a copy of the executed agreement to each Shareholder. |
It is acknowledged and agreed by each party hereto that each Shareholder is, and shall at all relevant times be, a third party beneficiary of the covenants of Bionik US given in this agreement and shall have all rights and remedies in connection therewith and the full benefits thereof (including to pursue claims for damages and other relief (including equitable relief) against Bionik US for any breach of this Agreement by Bionik US, which right is hereby expressly acknowledged and agreed to by each of the parties hereto) and any covenant of Bionik US given herein shall be enforceable by each Shareholder against Bionik US.
IN WITNESS WHEREOF , this Agreement has been duly executed by the parties on the date stated above.
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2 - |
BIONIK LABORATORIES CORP. | ||
By: | /s/ Austin Kibler | |
Name: Austin Kibler | ||
Title: Chief Executive Officer | ||
BIONIK LABORATORIES INC. | ||
By: | /s/ Peter Bloch | |
Name: Peter Bloch | ||
Title: CEO |
3 - |
Exhibit 10.6
SPIN-OFF AGREEMENT , dated as of February 26, 2015 (this “ Agreement ”), by and among BIONIK LABORATORIES LTD. (f/k/a Drywave Technologies, Inc.), a Delaware corporation (the “ Company ” or the “ Seller ”), and BRIAN E. RAY and JON LUNDGREEN (each a “Buyer” and collectively, the “ Buyers ”).
INTRODUCTION
WHEREAS , on March 6, 2013 (the “Effective Date”), the Buyers and AAK Ventures, LLC (“ AAK ”) entered into a Securities Purchase Agreement, pursuant to which the Buyers agreed to sell an aggregate of approximately 4,777,982 shares of the Company’s common stock to AAK (the “ Purchase Agreement ”);
WHEREAS , the Purchase Agreement contemplates the Company entering into a business combination subsequent to the Effective Date, pursuant to which an operating company will become a wholly-owned subsidiary of the Company and the operations of the Company will change to those of such operating company (the “ Exchange ”);
WHEREAS , in preparation for the transactions contemplated by the Exchange, the Company has formed a wholly-owned subsidiary, Strategic Dental Alliance, Inc., a Colorado corporation (“ SDA ”), and has, pursuant to an Assignment and Assumption deemed effective immediately prior to the execution and delivery of this Agreement, contributed and assigned thereto all of the business, properties, operations, assets, and goodwill of the Company as of the date of this Agreement (other than cash and cash equivalents), and SDA has assumed all liabilities and obligations of the Company in effect or existence as of the Effective Date; and
WHEREAS , the Purchase Agreement also contemplates the Buyer and the Company entering into this Agreement to affect the assignment of the outstanding shares of SDA to the Buyers (the “ Assignment ”) on the terms and subject to the conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE , in consideration of the mutual promises, warranties and covenants set forth herein, the Parties hereto hereby agree as follows:
1. Assignment . The Company hereby assigns to each of the Buyers 50.0% of the outstanding capital stock of SDA.
2. Indemnity . As consideration for the Assignment, each Buyer, jointly and severally, hereby agrees to indemnify and hold harmless the Company and its officers, directors, employees, counsel, agents, and stockholders, in each case past, present, or as they may exist at any time after the date of this Agreement, and each person, if any, who controls, controlled, or will control any of them within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as amended, against any and all losses, liabilities, damages, and expenses whatsoever (which shall include, for all purposes of this Section 2, but not be limited to, counsel fees and any and all expenses whatsoever incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with the business of the Company and SDA prior to the date hereof (the “ SDNT Business ”).
3. Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place by the exchange of documents by the Parties by fax, email or courier, on or as of the date of the closing of the transactions contemplated by the Exchange, or such other date as the Parties may mutually determine, which date shall in no event be later than January 26, 2015, unless agreed to in writing by the Parties (the “ Closing Date ”). At the Closing, the Company shall deliver to each Buyer a stock certificate, in proper form for transfer, each representing 50.0% of the outstanding shares of capital stock of SDA.
4. Further Assurances .
(a) Each Buyer hereby covenants, jointly and severally, that it will, whenever and as reasonably requested by Company and at Buyers’ sole cost and expense, do, execute, acknowledge and deliver any and all such other and further acts, deeds, assignments, transfers, conveyances, confirmations, powers of attorney and any instruments of further assurance, approvals and consents as the Company may reasonably require in order to complete, insure and perfect the transfer, conveyance and assignment to the Buyers of all the right, title and interest of the Company in and to the shares of capital stock of SDA hereby sold, conveyed or assigned, or intended so to be.
(b) The Buyers hereby covenants, jointly and severally, that it will, whenever and as reasonably requested by Seller and at Buyers’ sole cost and expense, do, execute, acknowledge and deliver any and all such other and further documents, acts and deeds as shall be required in connection with the assumption of liabilities contemplated by Section 2 hereof, including, without limitation, the filings of any documents with an governmental or other authority and the preparation of filings with respect thereto.
5. Seller Makes no Representations or Warranties . The Seller’s interest in the shares of SDA capital stock is being acquired by the Buyers on an AS IS WHERE IS basis and the Seller makes no representations as to such securities or any other matter.
6. Confidential Information . The Company shall use its commercially reasonable efforts to insure that all confidential information which the Company or any of its respective officers, directors, employees, counsel, agents, investment bankers, or accountants (each a “ Company Party ”) may now possess or may hereafter create or obtain relating to the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of the SDNT Business and/or, any affiliate thereof, or any customer or supplier thereof or of any such affiliate shall not be published, disclosed, or made accessible by any of them to any other person or entity at any time or used by any of them; provided, however, that the restrictions of this sentence shall not apply (i) as may otherwise be required by law, (ii) as may be necessary or appropriate in connection with the enforcement of this Agreement, or (iii) to the extent the information shall have otherwise become publicly available, through no improper action of the Company.
7. Miscellaneous .
(a) Since a breach of the provisions of this Agreement could not adequately be compensated by monetary damages, any Party shall be entitled, in addition to any other right or remedy available to him, her or it, to an injunction restraining such breach or a threatened breach and to specific performance of any such provision of this Agreement, and in either case no bond or other security shall be required in connection therewith, and the parties hereby consent to the issuance of such an injunction and to the ordering of specific performance.
(b) The covenants, agreements, representations, and warranties contained in or made pursuant to this Agreement shall survive any delivery of the consideration described herein.
(c) This Agreement and the documents and instruments referred to herein or contemplated hereby set forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.
(d) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns (if not a natural person) and his assigns, heirs, and personal representatives (if a natural person).
(e) If any provision of this Agreement is invalid, illegal, or unenforceable, the balance of this Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.
(f) The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.
(g) All representations, warranties and agreements in this Agreement shall survive the Closing Date until the expiration of the applicable statute of limitations. This Agreement shall be binding upon the parties, their respective successors, representatives, heirs and estate, as applicable.
(h) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all Parties need not sign the same counterpart. Facsimile or .pdf execution and delivery of this Agreement is legal, valid and binding execution and delivery for all purposes. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of New York, without regard to the conflicts of law principles thereof.
(i) This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety any other agreement relating to or granting any rights with respect to the subject matter hereof.
(j) Each party acknowledges that its legal counsel participated in the preparation of this Agreement and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Agreement to favor any party against the other. In this Agreement, the word “ include”, “includes”, “including ” and “ such as ” are to be construed as if they were immediately followed by the words, without limitation.
(k) In this Agreement words importing the singular number include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders. The word “ person ” includes an individual, body corporate, partnership, trustee or trust or unincorporated association, executor, administrator or legal representative.
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IN WITNESS WHEREOF , the Parties have duly executed this Spin-Off Agreement as of the date first above written.
/s/ Brian E. Ray | ||
Brian E. Ray | ||
/s/ John Lundgreen | ||
John Lundgreen | ||
BIONIK LABORATORIES LTD. | ||
(f/k/a Drywave Technologies, Inc.) | ||
By: | /s/ Austin Kibler | |
Name: Austin Kibler | ||
Title: Chief Executive Officer |
Exhibit 10.7
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT , dated as of February __, 2015, by and between Bionik Laboratories Ltd. (f/k/a Drywave Technologies, Inc.), a Delaware corporation (“Assignor”), and Tungsten 74 LLC, a Delaware limited liability company (“Assignee”).
INTRODUCTION
WHEREAS, the Assignor contemplates entering into a business combination on the date hereof, pursuant to which an operating company will become a wholly-owned subsidiary of the Company and the operations of the Company will change to those of such operating company (the “Exchange”);
WHEREAS, in preparation for the transactions contemplated by the Exchange, the Company is required to contribute and assign all of the business, properties, operations, assets, goodwill, liabilities and obligations of the Company incurred, in effect or in existence as of immediately prior to the consummation of the Exchange (collectively, the “Assets and Liabilities”); and
WHEREAS, Assignee wishes to irrevocably accept the contribution and assignment of the Assets and Liabilities, on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises, warranties and covenants set forth herein, Assignee and Assignor hereby agree as follows:
1. Assignor hereby assigns, transfers, contributes and conveys to Assignee, and its successors and assigns, all of the Assets and Liabilities and all of the rights of Assignor pursuant thereto and in connection therewith, and Assignee hereby irrevocably accepts and assumes such assignment, transfer, contribution and conveyance, and agrees to perform all of Assignor’s obligations and to satisfy each liability thereof.
2. Assignor and Assignee each hereby covenants that it will, whenever and as reasonably requested by the other, do, execute, acknowledge and deliver any and all such other and further acts, deeds, assignments, transfers, conveyances, confirmations, powers of attorney and any instruments of further assurance, approvals and consents as the other may reasonably require in order to complete, insure and perfect the transfer, conveyance, contribution and assignment to Assignee of all the right, title and interest of the Company in and to the Assets and Liabilities hereby assigned, transferred, contributed and conveyed, or intended so to be. Assignee hereby covenants that it will, whenever and as reasonably requested by Assignor, do, execute, acknowledge and deliver any and all such other and further documents, acts and deeds as shall be required in connection with the assumption of liabilities and obligations of Assignor contemplated by Section 1 hereof.
3. Assignor’s interest in the Assets and Liabilities is being acquired by the Assignee on an AS IS WHERE IS basis and Assignor makes no representations thereto or any other matter.
4. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns.
5. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all Parties need not sign the same counterpart. Facsimile or .pdf execution and delivery of this Agreement is legal, valid and binding execution and delivery for all purposes. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of New York, without regard to the conflicts of law principles thereof.
6. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety any other agreement relating to or granting any rights with respect to the subject matter hereof.
7. Each party acknowledges that its legal counsel participated in the preparation of this Agreement and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Agreement to favor any party against the other.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF , the parties have duly executed this Assignment and Assumption Agreement as of the date first written above.
BIONIK LABORATORIES LTD. | ||
(f/k/a Drywave Technologies, Inc.) | ||
By: | /s/ Austin Kibler | |
Name: Austin Kibler | ||
Title: CEO | ||
Tungsten 74 LLC | ||
By: | /s/ Nickolay Kukekov | |
Name: Nickolay Kukekov | ||
Title: Member |
Exhibit 10.8
FORM OF SUBSCRIPTION AGREEMENT
Bionik Laboratories Inc.
10 Dundas St. E. Office AMC-B202
Toronto, ON M5B 2G9
Ladies and Gentlemen:
1. Subscription. The undersigned (the “ Purchaser ”), intending to be legally bound, hereby irrevocably agrees to purchase from Bionik Laboratories Inc., a [_____] corporation (“ Pubco ”), the number of Units (the “ Units ”) set forth on the signature page hereof at a purchase price of $0.80 per Unit. Each Unit consists of (i) one share of common stock, par value $0.001 per share, of Pubco (the “ Common Stock ”), and (ii) warrant to purchase one share of Common Stock (the “ Warrant Shares ”) for a four (4) year period from the first closing of the Offering (as defined below) at an initial exercise price of $1.40 per share (each a “ Warrant ” and collectively, the “ Warrants ”). The Units are being offered in connection with a share exchange, merger or similar agreement with Pubco or a wholly owned subsidiary of Pubco, on the one hand, and Bionik Laboratories Inc., a corporation organized under the Canada Business Corporations Act (the “ Company ”), on the other hand, pursuant to which the Company will merge with or otherwise be acquired, directly or indirectly, by Pubco (the “ Reverse Merger ”). Unless the context provides to the contrary, reference in this Subscription Agreement to the “Company” as of and subsequent to the closing of the Minimum Amount (as defined below), means Pubco assuming the consummation of the Reverse Merger.
This subscription is submitted to the Purchaser in accordance with and subject to the terms and conditions described in this Subscription Agreement and the Confidential Private Placement Memorandum of the Company, dated July 23, 2014, as amended or supplemented from time to time, including all attachments, schedules and exhibits thereto (the “ Memorandum ”), relating to the private placement offering (the “ Offering ”) by the Company of a minimum of ten million Units ($8,000,000) (the “ Minimum Amount ”) and a maximum of sixteen million Units ($12,800,000) (the “ Maximum Amount ”). The Units are being offered by the Company on an exclusive basis through Merriman Capital, Inc. (the “ Placement Agent ”) and such agents and/or sub-placement agents as may be engaged by the Placement Agent on a “reasonable best efforts, all or none” basis with respect to the Minimum Amount and on a “reasonable best efforts” basis with respect to all Units in excess of the Minimum Amount. The minimum purchase is 125,000 Units ($100,000), although the Company and the Placement Agent may, in their discretion, accept subscriptions for a lesser number of Units.
The terms of the Offering are more completely described in the Memorandum and such terms are incorporated by reference herein in their entirety.
2. Payment. The Purchaser encloses herewith a check payable to, or will immediately make a wire transfer payment to, “Signature Bank, as Escrow Agent for Bionik Laboratories Inc.” in the full amount of the purchase price of the Units being subscribed for. Wire transfer instructions are set forth on the instruction page accompanying this Subscription Agreement. Such funds will be held for the Purchaser’s benefit, and will be returned promptly, without interest or offset if the Purchaser’s subscription is not accepted by the Company for any reason or no reason, the Offering is terminated pursuant to its terms by the Company or the Placement Agent prior to the First Closing (as hereinafter defined), or the Minimum Amount is not sold or the Reverse Merger is not consummated.
3. Deposit of Funds. All payments made as provided in Section 2 hereof shall be deposited by the Company or the Placement Agent as soon as practicable after receipt thereof with Signature Bank (the “ Escrow Agent ”), in a non-interest-bearing escrow account (the “ Escrow Account ”) until the earliest to occur of: (a) the closing of the sale of the Units being purchased pursuant to this Subscription Agreement in accordance with the Offering terms, (b) the rejection of such subscription and (c) the termination of the Offering by the Company or the Placement Agent. The Company and the Placement Agent may continue to offer and sell the Units and conduct additional closings for the sale of additional Units after the initial closing of the Offering (“ First Closing ”) and until the termination of the Offering. In the event that the Company does not effect a closing of the Offering on or before September 30, 2014 (the “ Initial Offering Period ”), which period may be extended by the Company and the Placement Agent, in their mutual discretion to a date no later than a maximum of two 30 day extensions (the “ Termination Date ”, with this additional period, together with the Initial Offering Period, being referred to herein as the “ Offering Period ”), the Company will refund all subscription funds, without deduction, offset and/or interest accrued thereon, and will return the subscription documents to each Purchaser. If the Company rejects a subscription, either in whole or in part (which decision is in their sole discretion), the rejected subscription funds or the rejected portion thereof will be returned promptly to such Purchaser without interest accrued thereon.
4. Acceptance of Subscription. The Purchaser understands and agrees that the Company, in its sole discretion, reserves the right to accept or reject this or any other subscription for Units, in whole or in part, and for any reason or no reason, notwithstanding prior receipt by the Purchaser of notice of acceptance of this subscription. The Company shall have no obligation hereunder until the Company shall execute and deliver to the Purchaser an executed copy of this Subscription Agreement. If this subscription is rejected in whole, the Offering is terminated, or the Minimum Amount is not sold (or the Reverse Merger is not consummated) within the Offering Period, all funds received from the Purchaser will be returned without interest or offset, and this Subscription Agreement shall thereafter be of no further force or effect. If this subscription is rejected in part, the funds for the rejected portion of this subscription will be returned without interest or offset, and this Subscription Agreement will continue in full force and effect to the extent this subscription was accepted.
5. Representations and Warranties of the Purchaser . The Purchaser hereby acknowledges, represents, warrants and agrees to and with the Company as follows (it being specifically acknowledged and agreed that the Placement Agent is and shall be a third party beneficiary of the following):
(a) The Purchaser is aware that an investment in the Units involves a significant degree of risk, involving a number of very significant risks and has carefully read and considered the matters set forth in the Memorandum, including but not limited to under the caption “Risk Factors” in the Memorandum.
(b) None of the securities comprising the Units, including the Common Stock and the Warrants offered pursuant to the Memorandum, or the Warrant Shares, are registered under the Securities Act of 1933, as amended (the “ Securities Act ”), or any state securities laws. The Purchaser understands that the offering and sale of the Units (including the Common Stock and the Warrants) and the Warrant Shares are intended to be exempt from registration under the Securities Act, by virtue of Section 4(a)(2) thereof and the provisions of Regulation D promulgated thereunder (“ Regulation D ”), based, in part, upon the representations, warranties and agreements of the Purchaser contained in this Subscription Agreement.
(c) The Purchaser meets the requirements of at least one of the suitability standards for an “accredited investor” as that term is defined in Regulation D and as set forth on the Accredited Investor Certification contained herein.
(d) Prior to the execution of this Subscription Agreement, the Purchaser and the Purchaser’s attorney, accountant, purchaser representative and/or tax adviser, if any (collectively, the “ Advisers ”), have received the Memorandum and all other documents requested by the Purchaser, have carefully reviewed them and understand the information contained therein.
(e) Neither the Securities and Exchange Commission nor any state securities commission or other regulatory authority has approved the Units, the Common Stock, the Warrants, or the Warrant Shares, or passed upon or endorsed the merits of the offering of Units, or confirmed the accuracy or determined the adequacy of the Memorandum. The Memorandum has not been reviewed by any federal, state or other regulatory authority.
(f) All documents, records, and books pertaining to the investment in the Units (including, without limitation, the Memorandum) have been made available for inspection by such Purchaser and its Advisers, if any.
(g) The Purchaser and its Advisers, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the offering of the Units, the business and financial condition of the Company, and all such questions have been answered to the full satisfaction of the Purchaser and its Advisers, if any.
(h) In evaluating the suitability of an investment in the Company, the Purchaser has not relied upon any representation or information (oral or written) other than as stated in the Memorandum.
(i) The Purchaser is unaware of, is in no way relying on, and did not become aware of the Offering of the Units through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or the Internet (including, without limitation, internet “blogs,” bulletin boards, discussion groups and social networking sites) in connection with the Offering and sale of the Units and is not subscribing for the Units and did not become aware of the Offering of the Units through or as a result of any seminar or meeting to which the Purchaser was invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser in connection with investments in securities generally.
(j) The Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Subscription Agreement or the transactions contemplated hereby (other than commissions to be paid by the Company to the Placement Agent or as otherwise described in the Memorandum) and, in turn, to be paid to its selected dealers.
(k) The Purchaser, together with its Advisers, if any, has such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with the Offering to evaluate the merits and risks of an investment in the Units and the Company and to make an informed investment decision with respect thereto.
(l) The Purchaser is not relying on the Company, the Placement Agent or any of their respective employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Units, and the Purchaser has relied on the advice of, or has consulted with, only our own Advisers.
(m) The Purchaser is acquiring the Units solely for such Purchaser’s own account for investment purposes only and not with a view to or intent of resale or distribution thereof, in whole or in part. The Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of the Units, the Common Stock, the Warrants, the Warrant Shares, and the Purchaser has no plans to enter into any such agreement or arrangement.
(n) The Purchaser must bear the substantial economic risks of the investment in the Units indefinitely because none of the securities included in the Units may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. Legends shall be placed on the securities included in the Units to the effect that they have not been registered under the Securities Act or applicable state securities laws. Appropriate notations will be made in the Company’s stock books to the effect that the securities included in the Units have not been registered under the Securities Act or applicable state securities laws. Stop transfer instructions will be placed with the transfer agent, if any, of the securities. There can be no assurance that there will be any market for resale of the Units, the Common Stock, the Warrants, or the Warrant Shares nor can there be any assurance that such securities will be freely transferable at any time in the foreseeable future.
(o) The Purchaser has adequate means of providing for such Purchaser’s current financial needs and foreseeable contingencies and has no need for liquidity of its investment in the Units for an indefinite period of time.
(p) The Purchaser (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Units, such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or our charter or other organizational documents, such entity has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the securities constituting the Units, the execution and delivery of this Subscription Agreement has been duly authorized by all necessary action, this Subscription Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii) if executing this Subscription Agreement in a representative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Subscription Agreement in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom the Purchaser is executing this Subscription Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company, and represents that this Subscription Agreement constitutes a legal, valid and binding obligation of such entity. The execution and delivery of this Subscription Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Purchaser is a party or by which it is bound.
(q) The Purchaser and the Advisers, if any, have had the opportunity to obtain any additional information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information contained in the Memorandum and all documents received or reviewed in connection with the purchase of the Units and have had the opportunity to have representatives of the Company provide them with such additional information regarding the terms and conditions of this particular investment and the financial condition, results of operations, business of the Company deemed relevant by the Purchaser or the Advisers, if any, and all such requested information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, has been provided to the full satisfaction of the Purchaser and the Advisers, if any.
(r) Any information which the Purchaser has heretofore furnished or is furnishing herewith to the Company or the Placement Agent is complete and accurate and may be relied upon by the Company and the Placement Agent in determining the availability of an exemption from registration under federal and state securities laws in connection with the offering of securities as described in the Memorandum. The Purchaser further represents and warrants that it will notify and supply corrective information to the Company and the Placement Agent immediately upon the occurrence of any change therein occurring prior to the Company’s issuance of the securities contained in the Units.
(s) The Purchaser has significant prior investment experience, including investment in non-registered, high risk securities. The Purchaser is knowledgeable about investment considerations in development-stage companies. The Purchaser has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur. The Purchaser’s overall commitment to investments which are not readily marketable is not excessive in view of the Purchaser’s net worth and financial circumstances and the purchase of the Units will not cause such commitment to become excessive. The investment is a suitable one for the Purchaser.
(t) The Purchaser is satisfied that the Purchaser has received adequate information with respect to all matters which it or the Advisers, if any, consider material to the Purchaser’s decision to make this investment.
(u) The Purchaser acknowledges that any estimates or forward-looking statements or projections included in the Memorandum were prepared by the Company in good faith but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company and should not be relied upon.
(v) No oral or written representations have been made, or oral or written information furnished, to the Purchaser or the Advisers, if any, in connection with the Offering which are in any way inconsistent with the information contained in the Memorandum.
(w) Within five (5) days after receipt of a request from the Company or the Placement Agent, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company or the Placement Agent is subject.
(x) The Purchaser’s substantive relationship with the Placement Agent or subagent through which the Purchaser is subscribing for Units predates the Placement Agent’s or such subagent’s contact with the Purchaser regarding an investment in the Units.
(y) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM OR THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(z) The Purchaser acknowledges that none of the Units, the Common Stock, the Warrants, or the Warrant Shares have been recommended by any federal or state securities commission or regulatory authority. In making an investment decision investors must rely on their own examination of the Company and the terms of the Offering, including the merits and risks involved. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Subscription Agreement or the Memorandum. Any representation to the contrary is a criminal offense. The Units, the Common Stock, the Warrants, and the Warrant Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act, and the applicable state securities laws, pursuant to registration or exemption therefrom. The Purchaser should be aware that it will be required to bear the financial risks of this investment for an indefinite period of time.
(aa) (For ERISA plans only) The fiduciary of the ERISA plan (the “ Plan ”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the decision to invest in the Company; (b) is independent of the Company or any of its affiliates; (c) is qualified to make such investment decision; and (d) in making such decision, the Purchaser fiduciary or Plan has not relied primarily on any advice or recommendation of the Company or any of its affiliates.
(bb) The Purchaser should check the Office of Foreign Assets Control (“OFAC”) website at <http://www.treas.gov/ofac> before making the following representations . The Purchaser represents that the amounts invested by it in the Company in the Offering were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (the “ OFAC Programs ”) prohibit dealing with individuals 1 or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.
(cc) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser; (3) if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for whom the Purchaser is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept any amounts from a prospective investor if such prospective investor cannot make the representation set forth in the preceding paragraph. The Purchaser agrees to promptly notify the Company and the Placement Agent should the Purchaser become aware of any change in the information set forth in these representations. The Purchaser understands and acknowledges that, by law, the Company may be obligated to “freeze the account” of the Purchaser, either by prohibiting additional subscriptions from the Purchaser, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations, and the Placement Agent may also be required to report such action and to disclose the Purchaser’s identity to OFAC. The Purchaser further acknowledges that the Company may, by written notice to the Purchaser, suspend the redemption rights, if any, of the Purchaser if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company and the Placement Agent or any of the Company’s other service providers. These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.
1 These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.
(dd) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser; (3) if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for whom the Purchaser is acting as agent or nominee in connection with this investment is a senior foreign political figure, 2 or any immediate family 3 member or close associate 4 of a senior foreign political figure, as such terms are defined in the footnotes below.
(ee) If the Purchaser is affiliated with a non-U.S. banking institution (a “ Foreign Bank ”), or if the Purchaser receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Purchaser represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.
6. Company Representations and Warranties . The Company represents and warrants to and agrees with the Purchaser that:
(a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power to own its properties and to carry on its business as presently conducted. The Company is (or will be) duly qualified as a foreign corporation to do business and is (or will be) in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary.
2 A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.
3 “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.
4 A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.
(b) This Subscription Agreement and any other agreements, documents or instruments delivered or required to be delivered together with or pursuant to this Agreement or in connection herewith (collectively “ Transaction Documents ”) have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity. The Company has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder.
(c) The Company has reserved and will keep available out of its authorized but unissued shares of Common Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of the Warrants.
7. Registration Rights . The Company hereby grants to the Purchaser the registration rights with respect to the shares of Common Stock and Warrant Shares underlying the Units as described on Annex A attached hereto and incorporated herein by reference. In the event of a conflict between such Annex A and this Subscription Agreement, the Annex A shall control.
8. Indemnification. The Purchaser agrees to indemnify and hold harmless the Company, the Placement Agent (including its selected dealers, if any), and their respective officers, directors, employees, agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation or omission to state a material fact, or breach by the Purchaser of any covenant or agreement made by the Purchaser herein or in any other document delivered in connection with this Subscription Agreement.
9. Irrevocability; Binding Effect. The Purchaser hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Purchaser, except as required by applicable law, and that this Subscription Agreement shall survive the death or disability of the Purchaser and shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives, and permitted assigns. If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall be joint and several and the agreements, representations, warranties, and acknowledgments herein shall be deemed to be made by and be binding upon each such person and such person’s heirs, executors, administrators, successors, legal representatives, and permitted assigns.
10. Modification. This Subscription Agreement shall not be modified or waived except by an instrument in writing signed by the party against whom any such modification or waiver is sought.
11. Immaterial Modifications to the Transaction Documents. The Company may, at any time prior to the First Closing, modify the Warrant in the form of Annex B to the Memorandum and any other Transaction Document if necessary to clarify any provision therein, without first providing notice or obtaining prior consent of the Purchaser, if, and only if, such modification is not material in any respect.
12. Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered by facsimile transmission or by e-mail transmission, or delivered against receipt to the party to whom it is to be given (a) if to the Company, at the address set forth above, or (b) if to the Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 12). Any notice or other communication given by certified mail shall be deemed given at the time of receipt thereof. The Purchaser agrees that notice may be served upon the Purchaser in accordance with the foregoing procedures by the Placement Agent or other agent that introduced the Purchaser to the Company.
13. Assignability. This Subscription Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Purchaser and the transfer or assignment of the shares of Common Stock, the Warrants or the Warrant Shares shall be made only in accordance with all applicable laws.
14. Applicable Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts to be wholly-performed within said State, and without regard to the conflicts of laws principles thereof.
15. Arbitration. The parties agree to submit all controversies to arbitration in accordance with the provisions set forth below and understand that: (a) Arbitration is final and binding on the parties; (b) The parties are waiving their right to seek remedies in court, including the right to a jury trial; (c) Pre-arbitration discovery is generally more limited and different from court proceedings; (d) The arbitrator’s award is not required to include factual findings or legal reasoning and any party’s right to appeal or to seek modification of rulings by arbitrators is strictly limited; and (e) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.
All controversies which may arise between the parties concerning this Subscription Agreement shall be determined by arbitration pursuant to the rules then pertaining to the American Arbitration Association in New York City, New York. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Sec. 1-16, and the judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. Any notice of such arbitration or for the confirmation of any award in any arbitration shall be sufficient if given in accordance with the provisions of this Agreement. The parties agree that the determination of the arbitrators shall be binding and conclusive upon them.
16. Blue Sky Qualification. The purchase of Units under this Subscription Agreement is expressly conditioned upon the exemption from qualification of the offer and sale of the Units from applicable federal and state securities laws. The Company shall not be required to qualify this transaction under the securities laws of any jurisdiction and, should qualification be necessary, the Company shall be released from any and all obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction.
17. Use of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.
18. Confidentiality. The Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about the Company, not otherwise properly in the public domain, was received in confidence. The Purchaser agrees not to divulge, communicate or disclose, except as may be required by law or for the performance of this Agreement, or use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any confidential information of the Company, including any scientific, technical, trade or business secrets of the Company and any scientific, technical, trade or business materials that are treated by the Company as confidential or proprietary, including, but not limited to, ideas, discoveries, inventions, developments and improvements belonging to the Company and confidential information obtained by or given to the Company about or belonging to third parties.
19. Miscellaneous .
(a) This Subscription Agreement (including the annexes hereto), together with the Transaction Documents (which are to be issued or executed at closing), constitute the entire agreement between the Purchaser and the Company with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof. The terms and provisions of this Subscription Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.
(b) The representations and warranties and covenants of the Company and the Purchaser made in this Subscription Agreement (including the annexes hereto) shall survive the execution and delivery hereof and delivery of the securities contained in the Units.
(c) Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated.
(d) This Subscription Agreement may be executed in one or more counterparts each of which shall be deemed an original (including signatures sent by facsimile transmission or by email transmission of a PDF scanned document), but all of which shall together constitute one and the same instrument.
(e) Each provision of this Subscription Agreement shall be considered separable and, if for any reason any provision or provisions hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Subscription Agreement as set forth in the text.
(g) The Purchaser understands and acknowledges that there may be multiple closings for this Offering.
[The below is intended to be blank]
Annex A to the Subscription Agreement
Registration Rights
The Company hereby grants the Purchaser the following registration rights. It is the intention that this Annex A be made a part of and be incorporated into the Subscription Agreement to which this Annex A is attached (the “ Subscription Agreement ”). Capitalized terms used but not defined herein shall have the meanings as defined in the Subscription Agreement. All notice to be provided under this Annex A shall be deemed duly delivered and received in accordance with Section 12 of the Subscription Agreement.
1. Definitions .
“ Effectiveness Date ” means, with respect to the Registration Statement required to be filed hereunder, the Company’s reasonable best efforts to have such Registration Statement declared effective the 180 th calendar day following the closing of the Offering; provided , however , that in the event the Company is notified by the Securities and Exchange Commission (the “ Commission ”) that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the seventh (7 th ) Business Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Business Day, then the Effectiveness Date shall be the next succeeding Business Day.
“ FINRA ” means the Financial Industry Regulatory Authority, Inc.
“ Filing Date ” means, with respect to the Registration Statement required hereunder, the 90 th calendar day following the closing of a certain reverse merger transaction with a publicly-traded company, pursuant to which the Company will merge with such a publicly-traded company through a series of transactions including a merger or other business combination transaction (the “ Closing Date ”).
“ Holder ” or “ Holders ” means the Purchaser or the Purchaser’s permitted assigns, but solely to the extent that the subject Registrable Securities have not been transferred, sold or assigned pursuant to the Registration Statement or in the aftermarket.
“ Prospectus ” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“ Registrable Securities ” means, as of any date of determination: (a) all of the Common Stock issued in the Offering, (b) all Warrant Shares, and (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however , that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144 promulgated by the Commission pursuant to the Securities Act, or (c) such securities are eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter issued by counsel to the Company to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company.
“ Registration Statement ” means any registration statement required to be filed hereunder pursuant to Section 2(a), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“ Rule 415 ” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“ Rule 424 ” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“ SEC Guidance ” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.
“ Subscription Amount ” means, as to each Purchaser, the aggregate amount to be paid for Common Stock and Warrants purchased pursuant to the Subscription Agreement, in United States dollars and in immediately available funds.
“ Warrant Shares ” means Common Stock underlying Warrants issued in the Offering.
2. Resale Shelf Registration .
(a) On or prior to the Filing Date, the Company shall prepare and file with the Commission a Registration Statement (which shall be on Form S-1 or if permitted in accordance with SEC Guidance and applicable rules, on Form S-3) covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Subject to the terms of this Annex, the Company shall use its commercially reasonable best efforts to cause a Registration Statement filed under this Annex (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the Effectiveness Date, and shall use its commercially reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act (or file and keep continuously effective one or more replacement Registration Statements to register all Registrable Securities) until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “ Effectiveness Period ”). Notwithstanding the foregoing, the Effectiveness Period shall be no less than four (4) years from the Closing Date, provided that less than 90% of the Warrant Shares have been exercised and sold by the holder(s) of the Warrant(s) so exercised. The Company shall file a final Prospectus with the Commission as required by Rule 424 with respect to each Registration Statement.
(b) Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file amendments to the Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on such other form available to register for resale the Registrable Securities as a secondary offering; provided , however , that prior to filing such amendment, the Company shall be obligated to use commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.
(c) Notwithstanding any other provision of this Annex, if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering, unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows: (i) first, the Company shall reduce or eliminate any securities to be included by any Person other than a Holder; (ii) second, the Company shall reduce Registrable Securities represented by Warrant Shares (applied, in the case that if some Warrant Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders); and (iii) third, the Company shall reduce Registrable Securities represented by shares of Common Stock issued in the Offering (applied, in the case that if some of such shares of Common Stock may be registered, to the Holders on a pro rata basis based on the total number of unregistered shares held by such Holders)
(d) In the event the Company amends the Registration Statement in accordance with the foregoing, the Holder shall be entitled to the rights set forth in Section 6(d) of this Annex with respect to those Registrable Securities that were not registered for resale on the Registration Statement, as amended.
(e) Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Annex as Exhibit A (the “ Selling Stockholder Questionnaire ”) concurrently with the Holder’s subscription for the Registrable Securities.
3. Registration Procedures . In connection with the Company’s registration obligations hereunder, the Company shall:
(a) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the Registrable Securities for the Effectiveness Period, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Annex), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto, and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Annex) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(b) Notify the Placement Agent and each Holder as promptly as reasonably possible (i) when the Registration Statement has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any governmental action, litigation, hearing or other proceeding (“ Proceedings ”) for that purpose, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose.
(c) Use its commercially reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(d) Subject to the terms of this Annex and applicable law, consent to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.
(e) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
(f) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Subscription Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.
(g) Comply with all applicable rules and regulations of the Commission.
(h) Furnish to each Holder such number of copies of the Prospectus included in the Registration Statement (including any preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein) and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder.
(i) Use best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act.
(j) Furnish to any Holder so long as the Holder owns Registrable Securities, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act.
4. Registration Expenses . All fees and expenses incident to the performance of or compliance with this Annex by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. In no event however shall the Company be responsible for any broker or similar commissions of any Holder or any legal fees or other costs of the Holders.
5. Indemnification .
(a) Indemnification by the Company . The Company shall, notwithstanding any termination of this Annex, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “ Losses ”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto, preliminary prospectus, free writing prospectus (as defined in Rule 405 promulgated under the Securities Act),or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Annex, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus, preliminary prospectus, free writing prospectus, or in any amendment or supplement thereto (it being understood that the Holder has approved the contents of the Selling Stockholder Questionnaire for this purpose) or (ii) the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder. The Company shall notify the Holders promptly of the institution, threat or assertion of any governmental action, litigation, hearing or other proceeding arising from or in connection with the transactions contemplated by this Annex of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders.
(b) Indemnification by Holders . Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, preliminary prospectus, free writing prospectus, or in any amendment or supplement thereto, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved the contents of the Selling Stockholder Questionnaire for this purpose), such Prospectus, preliminary prospectus, free writing prospectus, or in any amendment or supplement thereto or (iii) to the extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder. In no event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings . (i) If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “ Indemnified Party ”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “ Indemnifying Party ”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Annex, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
(ii) An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
(iii) Subject to the terms of this Annex, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Business Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution . (i) If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Annex, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.
(ii) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
(iii) The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous .
(a) Remedies . In the event of a breach by the Company or by a Holder of any of their respective obligations under this Annex, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Annex, including recovery of damages, shall be entitled to specific performance of its rights under this Annex. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Annex and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) Compliance . Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration Statement.
(c) Discontinued Disposition . By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event that makes the Registration Statement outdated, defective or otherwise unavailable, such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing by the Company or an agent of the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable, and shall advise each Holder thereof as promptly as practicable in writing.
(d) Piggy-Back Registrations . If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen business days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(d) that are the subject of a then effective Registration Statement. The registration of the Registrable Securities pursuant to this Section 6(d) shall not be considered the satisfaction of the requirements of the Company pursuant to Sections 2 and 3 of this Annex, subject to Section 2(d).
To subscribe for Units in the private offering of Pubco:
1. | Date and Fill in the number of Units being purchased and Complete and Sign the Signature Page of the Subscription Agreement. |
2. | Initial the Accredited Investor Certification page attached to this letter. |
3. | Complete and return the Investor Profile and, if applicable, Wire Transfer Authorization attached to this letter. |
4. | If you are a client of Merriman Capital, Inc. fax all forms to Marta Zylka of Merriman Capital, Inc. at 646-349-1170 and then send all signed original documents with check to: |
Merriman Capital, Inc.
Attention: Marta Zylka
711 5 th Avenue, 16 th Floor
New York, New York 10022
5. | If you are not a client of Merriman Capital, Inc. fax all forms to your registered representative. |
6. | Please make your subscription payment payable to the order of “Signature Bank, Escrow Agent for Bionik Laboratories Inc.” |
For wiring funds directly to the escrow account, see the following instructions:
Acct Name: Signature Bank as Escrow Agent for Bionik Laboratories Inc.
Acct #: 1502342777
Signature Bank
ABA/Routing #: 026013576
SWIFT Code: SIGNUS33
950 Third Ave, 9th FL
New York, NY 10022
Attn: PCG# 311
FBO: Investor Name
Social Security Number
Address
Thank you for your interest,
Merriman Capital, Inc. and its’ Sub-Agents
ANTI MONEY LAUNDERING REQUIREMENTS
BIONIK LABORATORIES INC.
SIGNATURE PAGE TO THE
SUBSCRIPTION AGREEMENT
Subscriber hereby elects to subscribe under the Subscription Agreement for a total of ______ Units at a price of $0.80 per Unit (NOTE: to be completed by subscriber) and executes the Subscription Agreement.
Date (NOTE: To be completed by subscriber): __________________
If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN COMMON, as COMMUNITY PROPERTY, or as an INDIVIDUAL RETIREMENT ACCOUNT:
Print Name(s) | Social Security Number(s) | |||
Signature(s) of Subscriber(s) | Signature | |||
Date | Address |
If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or TRUST:
Name of Partnership, Corporation, Limited Liability Company or Trust |
Federal Taxpayer Identification Number |
||||
By: | |||||
Name: | State of Organization | ||||
Title: | |||||
Date | Address |
BIONIK LABORATORIES INC. | ||
By: | ||
Authorized Officer |
BIONIK LABORATORIES INC.
ACCREDITED INVESTOR CERTIFICATION
For Individual Investors Only
(all Individual Investors must INITIAL where appropriate):
Initial | I have a net worth in excess of $1 million, either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse. For purposes of the foregoing net worth calculation, I have excluded the value of my/our primary residence, after deducting any mortgage securing such primary residence). | ||
Initial | I have had an annual gross income for the past two years of at least $200,000 (or $300,000 jointly with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year. | ||
Initial | I am a director or executive officer of Bionik Laboratories Inc. | ||
For Non-Individual Investors
(all Non-Individual Investors must INITIAL where appropriate):
Initial | The investor certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet at least one of the criteria for Individual Investors set forth above. | ||
Initial | The investor certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least $5 million and was not formed for the purpose of investing in the Company. | ||
Initial | The investor certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser. | ||
Initial | The investor certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of this Agreement. | ||
Initial | The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors. | ||
Initial | The investor certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity. | ||
Initial | The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934. | ||
Initial | The investor certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in the Company. | ||
Initial | The investor certifies that it is a trust with total assets of at least $5,000,000, not formed for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment. | ||
Initial | The investor certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000. | ||
Initial | The investor certifies that it is an insurance company as defined in §2(13) of the Securities Act, or a registered investment company. | ||
Bionik Laboratories Inc.
Investor Profile
( Must be completed by Investor)
Section A - Personal Investor Information
Investor Name(s): _____________________________________________________________________________________ |
Individual executing Profile or Trustee: _____________________________________________________________________________________________________ |
Social Security Numbers / Federal I.D. Number: _____________________________________________________________________________________ _______________ |
Date of Birth:____________________ | Marital Status:__________________________ ________ | |
Joint Party Date of Birth:____________________ | Investment Experience (Years): ____________ _________ | |
Annual Income:____________________ | Liquid Net Worth: _______________________________ |
Net Worth ( excluding value of primary residence, after deducting any mortgage securing such residence ): ____________________________________________________________________________________________________
Tax Bracket: | ______ 15% or below | _____ 25% - 27.5% | _____ Over 27.5% |
Investment Objectives (check one or more):
____ Preservation of Capital
____ Income
____ Capital Appreciation
____ Trading Profits
____ Speculation
____ Other (please specify)
* See definitions on following pages
Home Street Address: _____________________________________________________________________________________________________ |
Home City, State & Zip Code: ____________________________________________________________________________________________________ |
Home Phone: _________________ | Home Fax: _________________ | Home Email: ______________ __ |
Employer: __________________________________________________________________________________________ |
Employer Street Address: ____________________________________________________________________________________________________ |
Employer City, State & Zip Code: ___________________________________________________________________________________________________ |
Bus. Phone: _______________ __ | Bus. Fax: __________________ | Bus. Email: ___________________ |
Type of Business: ________________________________________________________________________________________________ |
________________________________________________________________________________________________ |
If you are a United States citizen , please list the number and jurisdiction of issuance of any other government-issued document evidencing residence and bearing a photograph or similar safeguard (such as a driver’s license or passport), and provide a photocopy of each of the documents you have listed or indicate that such documentation has already been previously provided pursuant to your brokerage account. _______________________________________________________________________________________________
If you are NOT a United States citizen , for each jurisdiction of which you are a citizen or in which you work or reside, please list (i) your passport number and country of issuance or (ii) alien identification card number AND (iii) number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard, and provide a photocopy of each of these documents you have listed or indicate that such documentation has already been previously provided pursuant to your brokerage account.. These photocopies must be certified by a lawyer as to authenticity.
_________________________________________________________________________________________
Section B – Certificate Delivery Instructions
All certificates will be delivered for deposit in your brokerage account with your corresponding registered representative. If you do not wish for the certificates to be delivered to your brokerage account, please indicate below:
____ Please deliver certificate to the Employer Address listed in Section A.
____ Please deliver certificate to the Home Address listed in Section A.
____Please deliver certificate to the following address:
_____________________________________________________________________________________________
Section C – Form of Payment – Check or Wire Transfer
____ Check payable to Signature Bank, as Escrow Agent for Bionik Laboratories Inc.
____ Wire funds from my outside account according to the “How to subscribe for Units” Page.
____ Wire funds from my Merriman Capital, Inc. Account or my account with my registered representative who is not part of Merriman Capital, Inc. - See the “Wire Transfer Authorization” Page.
____ The funds for this investment are rolled over, tax deferred from __________ within the allowed 60 day window.
Please check if you are a FINRA member or affiliate of a FINRA member firm: ________
Investor Signature | Date |
Certain Definitions
Investment Objectives : The typical investment listed with each objective are only some examples of the kinds of investments that have historically been consistent with the listed objectives. However, neither Bionik Laboratories Inc. nor Merriman Capital, Inc. can assure that any investment will achieve your intended objective. You must make your own investment decisions and determine for yourself if the investments you select are appropriate and consistent with your investment objectives.
Neither Bionik Laboratories Inc. nor Merriman Capital, Inc. assumes responsibility to you for determining if the investments you selected are suitable for you.
Preservation of Capital : An investment objective of Preservation of Capital indicates you seek to maintain the principal value of your investments and are interested in investments that have historically demonstrated a very low degree of risk of loss of principal value. Some examples of typical investments might include money market funds and high quality, short-term fixed income products.
Income : An investment objective of Income indicates you seek to generate Income from investments and are interested in investments that have historically demonstrated a low degree of risk of loss of principal value. Some examples of typical investments might include high quality, short and medium-term fixed income products, short-term bond funds and covered call options.
Capital Appreciation : An investment objective of Capital Appreciation indicates you seek to grow the principal value of your investments over time and are willing to invest in securities that have historically demonstrated a moderate to above average degree of risk of loss of principal value to pursue this objective. Some examples of typical investments might include common stocks, lower quality, medium-term fixed income products Equity mutual funds and index funds.
Trading Profits : An investment objective of Trading Profits indicates you seek to take advantage of short-term trading opportunities, which may involve establishing and liquidating positions quickly. Some examples of typical investments might include short-term purchases and sales or volatile or low priced common stocks, put or call options, spreads, straddles and/or combinations on equities or indexes. This is a high-risk strategy.
Speculation : An investment objective of Speculation indicates you seek a significant increase in the principal value of your investments and are willing to accept a corresponding greater degree of risk by investing in securities that have historically demonstrated a high degree of risk of loss of principal value to pursue this objective. Some examples of typical investments might include lower quality, long-term fixed income products, initial public offerings, volatile or low priced common stock, the purchase of sale of put or call options, spreads, straddles and/or combinations on equities or indexes, and the use of short-term or day trading strategies.
Other : Please specify.
Memorandum
Wire Transfer Authorization
TO:
RE: | Client Wire Transfer Authorization |
Bionik Laboratories Inc. |
DATE: ________________
This memorandum authorizes the transfer of the following listed funds from my Brokerage Account as follows:
Brokerage Account # |
Wire Amount | $_______________________________________________ |
BANK NAME: | |||
ABA NUMBER: | |||
A/C NAME: | [ ], AS AGENT FOR | ||
A/C Number: |
REFERENCE : | ||
SUBSCRIBER LEGAL NAME | ||
TAX ID NUMBER | ||
SUBSCRIBER ADDRESS | ||
FBO: | ||
Investment Title: | ||
Signature: | ||
Signature: | ||
(Joint Signature) |
Annex B To The Subscription Agreement
BIONIK LABORATORIES INC.
Plan Of Distribution
Each selling stockholder of the securities offered hereby and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal trading market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling securities:
· | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
· | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
· | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
· | an exchange distribution in accordance with the rules of the applicable exchange; |
· | privately negotiated transactions; |
· | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
· | in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security; |
· | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
· | a combination of any such methods of sale; or |
· | any other method permitted pursuant to applicable law. |
The selling stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (or the Securities Act), if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
We are required to pay certain fees and expenses incurred by us incident to the registration of the securities. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders.
We have agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the selling stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended (or the Exchange Act), any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M promulgated under the Exchange Act, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Annex C to the Subscription Agreement
BIONIK LABORATORIES INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock and warrants (the “ Registrable Securities ”) of Bionik Laboratories Inc., a [_____] corporation (the “ Company ”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “ Commission ”) a registration statement (the “ Registration Statement ”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “ Securities Act ”), of the Registrable Securities, in accordance with the terms of the Subscription Agreement (the “ Subscription Agreement ”) to which this document is annexed. A copy of the Subscription Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Subscription Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “ Selling Stockholder ”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. | Name. |
(a) | Full Legal Name of Selling Stockholder |
|
(b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held: |
|
(c) | Full Legal Name of Natural Control Person(s) (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire): |
2. Address for Notices to Selling Stockholder.
|
Telephone: _______________________________________________________________________________ |
Fax: _____________________________________________________________________________ __ |
Contact Person: _____________________________________________________________________________ __ |
3. Broker-Dealer Status.
(a) | Are you a broker-dealer? | |
Yes ¨ No ¨ | ||
(b) | If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company? | |
Yes ¨ No ¨ | ||
Note: | If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. | |
(c) | Are you an affiliate of a broker-dealer? | |
Yes ¨ No ¨ | ||
(d) | If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? | |
Yes ¨ No ¨ |
Note: | If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Subscription Agreement.
(a) | Type and Amount of other securities beneficially owned by the Selling Stockholder: |
5. Relationships with the Company.
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here: |
6. Plan of Distribution.
The undersigned confirms whether the Plan of Distribution attached as Annex B to the Subscription Agreement is acceptable.
Yes ¨ No ¨
The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective. By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 6 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Date: | __________________________ | |
Name of Beneficial Owner (print): | __________________________ | |
Signature (individual): | __________________________ | |
Signature (corporate): | __________________________ |
By: |
Name: | |||
Title: |
PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL,
Ruskin Moscou Faltischek, P.C.
Attention: Stephen E. Fox, Esq.
East Tower, 15
th
Floor
1425 RXR Plaza
Uniondale, NY 11556
sfox@rmfpc.com
Fax: (516) 663-6780
Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS AGREEMENT is signed on 7 th July 2014.
B E T W E E N :
BIONIK LABORATORIES INC., a corporation incorporated under the laws of Canada (hereinafter referred to as the "Company"),
- and -
Peter Bloch, an individual resident in the City of Toronto in the Province of Ontario (hereinafter referred to as the "Employee"),
WHEREAS the Company is engaged in the business of the Medical Device Research, Development and production;
AND WHEREAS the Company and the Employee have agreed to enter into an employment relationship upon the terms and subject to the conditions hereinafter set forth;
THIS AGREEMENT witnesses that the parties have agreed that the terms and conditions of the relationship shall be as follows:
ARTICLE 1 - EMPLOYMENT AND DUTIES
1.1 Appointment . Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ the Employee, and the Employee hereby accepts employment in the Position of Chief Executive Officer (the "Position"), since March 9 th ,2013, and previously CFO since January 2012,(the "Start Date").
1.2 Reporting and Duties . The Employee shall report to The Board of Directors. The Employee shall perform the duties and responsibilities of Chief Executive Officer in the area of Strategic Direction and Business Planning, including the following;
(i) Overall management of the company, including regulatory, clinical and business strategy.
(ii) All financial functions and reporting — including tax, budgeting and expense control
(iii) Accessing grant funding
(iii) Relationship management — board of directors, rehab hospitals, clinical investigators, medical director and Medical Advisory Board, regulatory and clinical consultants, company spokespersons, including oversight of Hospital and institutional relationships.
(iv) Human Resources .
(v) Management of the corporate legal governance, documentation and agreements.
(vi) Shareholder relations
(vii) Future — further develop board and advisory board.
The Employee agrees to comply with all applicable policies and rules of Company.
1.3 Term . The Employee shall be employed on an indefinite basis, subject to the termination provisions set out in this Agreement and to any amendments as may from time to time be agreed to in writing by the Employee and the Company.
1.4 Duties and Responsibilities . The Employee shall during his period of his employment devote a normal full time employment, and devote his attention and ability to the business and affairs of the Company, including his role in his Position and other duties, if any, and shall faithfully and honestly serve the Company throughout his employment and use his best efforts to promote the interests of the Company. In addition, the Employee shall truly and faithfully account for and deliver to the Company or, where applicable, any subsidiary or other affiliate of the Company (collectively, the Subsidiaries"), all money, securities and things of value belonging to the Company or the Subsidiaries which the Employee may from time to time receive for, from or on account of the Company or the Subsidiaries.
ARTICLE 2 – COMPENSATION
2.1 Base Salary . The Employee will receive fixed remuneration for his employment pursuant to this Agreement consisting of an annual monthly base salary of Canadian Twenty CDN$20,000.00, pay in arrears, and subject to applicable statutory deductions required by law. This salary will increase to US$22,916.67 a month on the completion of a successful Reverse Takeover (RTO) transaction. The Employee's salary will be reviewed on an annual basis to determine potential increases based on the Employee's performance and that of the Company.
2.2 Options . The Employee will be granted xxx options on the date of completion of the RTO transaction, at the price of the RTO financing transaction. The options will vest 1/3 per year over the following 3 years and be subject to the additional terms of the Company's stock option plan.
2.3 Bonus . The Employee shall be entitled to a target annual bonus of 50% of base salary, payable based on performance in the previous fiscal year ending March 31. The bonus will be determined based on the achievement of the employee's objectives that will be agreed to with the Board of Directors subsequent to the completion of the RTO.
2.4 Benefits . The Employee shall be entitled to participate in all of the Company's benefit plans generally available to its employees and executives from time to time in accordance with the terms thereof and the participation and full coverage of the Employee in such plans shall become fully effective as of the commencement of his employment under this Agreement. The Company reserves the right to alter, amend, replace or discontinue the benefit plans it makes available to its employees at any time, with or without notice. In addition the Employee will be entitled to participate in the Company's Stock Option Plan as designated by the CEO of the Company based on the terms of the Stock Option Plan. The granting of any options is conditional on the written approval of the Board of Directors and the Company reserves the right to alter, amend, replace or discontinue this plan at any time, with or without notice to the Employee.
2.5 Vacation . The Employee shall be entitled to four (4) weeks' vacation per calendar year. Such vacation shall be taken at a time or times acceptable to the Company having regard to its operations. The Employee shall be allowed to carry forward any unused vacation into the next calendar year with the prior written approval of the Board of Directors.
2.6 Expense Reimbursement . The Employee shall be reimbursed for all reasonable expenses actually and properly incurred by him in connection with the performance of his duties hereunder. The Employee shall submit to the Company written, itemized expense accounts, together with supporting invoices, acceptable to the Company and such other additional substantiation and justification as the Company may reasonably request within sixty (60) days after the expenses have been incurred.
ARTICLE 3 – COVENANTS
3.1 Confidential Information . The Employee hereby acknowledges that, by reason of his employment with the Company, he has and will acquire information about certain matters and things which are confidential to the Company and the Subsidiaries (the "Confidential Information"), and which Confidential Information is the exclusive property of the Company and/or the Subsidiaries, respectively. The Confidential Information includes, without limitation, information concerning the Company's and the Subsidiaries' strategic plans, product research and development plans, details and results, trade secrets, supplier lists, data, work product developed by or for the Company or the Subsidiaries, and all other data and information concerning the business and affairs of the Company and the Subsidiaries. Notwithstanding anything to the contrary contained herein, for the purposes hereof, Confidential Information shall not include:
(a) any information that has entered or enters the public domain through lawful means; or
(b) information which the Employee is required to disclose pursuant to applicable law, policies or due processes of applicable regulatory bodies or legal or regulatory proceedings; provided that the Employee provides the Company with prompt notice of same and assists the Company in seeking to prevent or limit such requirement.
He shall not (except in the performance of his responsibilities) directly or indirectly, (i) use for his own benefit or for the benefit of others; (ii) disseminate, publish or disclose; or (iii) authorize or permit the use, dissemination or disclosure by any person, firm or entity of any Confidential Information without the express written consent of the board of directors of the Company and the Subsidiaries. Upon termination of this Agreement for any reason, the Employee agrees to return to the Company and its Subsidiaries (or, in the case of electronic items, permanently delete) all documents, records, storage, data, samples, and other property of the Company and its Subsidiaries, together with all copies thereof which contain or incorporate any Confidential Information.
3.2 Intellectual Property, Inventions and Patents .
The Employee shall take all precautions to maintain and protect the legal rights of the Company and its Subsidiaries in the Work Product, and to maintain the confidentiality of trade secrets included in the Work Product in accordance with Section 3.1 hereof. For certainty, no license to the Work Product is granted to the Employee, except to the extent required for the performance of his responsibilities under this Agreement.
The Employee hereby covenants that the Work Product will not violate or infringe any intellectual property rights of any third party or constitute an unauthorized use of confidential or proprietary information of a third party.
All of the aforesaid covenants in this Section shall he binding on the assigns, executors, administrators and other legal representatives of the Employee.
3.3 Non-Solicitation of Employees . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the Employee's employment, for any reason, directly or indirectly, hire any employees or consultants of the Company or the Subsidiaries or induce or attempt to induce, solicit or attempt to solicit any of the employees or consultants of the Company or the Subsidiaries to leave their employment or engagement with the Company.
3.4 Non-Solicitation of Customers and Suppliers . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any customers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of selling to those customers any products or services which are the same as or substantially similar to or in any way competitive with the products or services sold by the Company or the Subsidiaries, at the time of termination of this Agreement. The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any suppliers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of diverting or attempting to divert business away from the Company or the Subsidiaries.
3.5 Non-Competition . Subject as hereinafter provided, the Employee shall not, without the prior written consent of the Board of Directors of the Company at any time during the period from the date hereof to that date which is one (1) year following the date of termination this Agreement or the Employee's employment, engage in the development of similar medical devices or devices that are in any way competitive with the products or services sold by the Company or the Subsidiaries at the time of the termination of this Agreement, either individually or in partnership or jointly or in conjunction with any person as principal, agent, employee, shareholder (other than a holding of shares listed on a Canadian or United States stock exchange that does not exceed five percent (5%) of the outstanding shares so listed) or in any other manner whatsoever, nor shall the Employee lend money to, guarantee the debts or obligations of or permit his name or any part thereof to be used or employed by any person engaged in a similar business to the Company or the Subsidiaries.
3.6 Acknowledgement, Waiver and Enforcement . The Employee confirms that the restrictions contained in this Article 3 are reasonable and valid to protect the legitimate business interests of the Company and the Subsidiaries. The Employee hereby agrees and acknowledges that it would be extremely difficult to measure the damages that might result from any breach of any of the covenants of the Employee contained herein and that any breach of any of the covenants of the Employee might result in irreparable injury to the business for which monetary damages could not adequately compensate. If a breach of any of the covenants of the Employee occurs, the Company shall be entitled, in addition to any other rights or remedies the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restricting the Employee and all other parties involved therein from continuing such breach.
3.7 Survival and Enforceability . It is expressly agreed by the parties hereto that the provisions of this Article 3 shall survive the termination of this Agreement and the Employee's employment.
ARTICLE 4 – DEATH
4.1 Death . If the Employee dies while employed under this Agreement, this Agreement shall terminate immediately and the Company shall pay to the Employee's estate, the annual salary and a portion of the annual bonus earned by the Employee up to the date of his death. All options and warrants vested in the Employee prior to the date of his death shall continue in full force and effect, subject to the terms and conditions of the Stock Option Plan.
ARTICLE 5 - TERMINATION OF EMPLOYMENT
5.1 Termination by Company for Cause . The Company may terminate this Agreement for cause at any time without any notice or payment in lieu of such notice of termination. The Employee will be provided with his annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination. For the purposes of this Agreement, "cause" includes:
(a) a material breach by the Employee of the terms of this Agreement; and
(b) any act or conduct that would constitute cause at common law.
5.2 Termination by Disability . The Company may terminate this Agreement as a result of any mental or physical disability or illness which results in the Employee being unable to substantially perform his duties for a continuous period of 150 days or for periods aggregating 180 days within any period of 365 days. Permanent or indefinite inability to perform essential functions shall be based on the opinion of a qualified medical provider if a medical condition is involved, or as otherwise required by law. Termination will be effective on the date designated by Company and the Employee will be paid his annual salary, benefits and a portion of the annual bonus as set out in Section 2.2, and expenses incurred up to the date of termination.
5.3 Termination by Employee . The Employee may terminate this Agreement and his employment at any time, for any reason, provided that the Employee provides the Company with thirty (30) days' prior written notice. The Employee agrees to use his best effort to assist the Company to complete an effective reallocation of his responsibilities upon the giving of such notice. The Company may waive notice, in whole or in part, by providing the Executive pay in lieu of notice for the balance of the thirty (30) day period, including benefits as set out in Section 2.2 and expenses incurred.
5.4 Termination by Company for Other than Cause . The Company may terminate this Agreement and the Employee's employment, for any reason without cause, provided that the Company provides the Employee pay in lieu of notice, equal to 12 months plus one month for each completed year of service of salary, bonus and full benefits. In the event of termination by the Company for reasons other than cause, the Employee's benefits in Section 2.2 will be maintained. The Employee will have 6 months after termination to exercise all vested options in accordance with the terms of the Stock Option Plan. All unvested option immediately forfeit upon the Employee being provided with notice of termination of his employment.
5.5 Limitation of Liability . The Employee acknowledges, understands and agrees that the notice/pay in lieu of notice arid other benefits provided for above represent the Company's maximum termination and severance obligations to the Employee. No other notice or severance entitlements shall apply. This provision shall remain in full force and effect unamended, notwithstanding any other alterations to the terms and conditions of the Employee's employment, unless agreed to by the Company in writing. The Employee also acknowledges, understands and agrees that the giving of notice or the payment of pay in lieu of notice by the Company to the Employee on termination of the Employee's employment shall not prevent the Company from alleging cause for the termination.
5.6 Effect of Termination . Upon any termination of this Agreement, the Employee shall immediately deliver or cause to be delivered to the Company all Confidential Information and company property belonging to the Company which are in the possession, charge, control or custody of the Employee.
ARTICLE 6 - GENERAL
6.0 Release . Upon any termination of this Agreement or the Employee's employment, the Employee agrees to release the Company, the Subsidiaries, and all officers, directors and employees of the Company or Subsidiaries from all actions, causes of action, claims or demands as a result of such termination, except as otherwise expressly provided in this Agreement. Upon compliance with the applicable termination provisions of this Agreement by the Company, the Employee agrees to deliver to the Company a full and final written release of and from all actions or claims in connection with this Agreement and the Employee's employment in favour of the Company, the Subsidiaries, and their directors, officers and employees in a form to be provided by the Company.
6.1 Recitals . The parties agree that the Recitals set out herein are true and accurate and shall form part of this Agreement.
6.2 Headings . The division of this Agreement into articles and sections and the insertion of headings are for the convenience of reference only and shall not affect the construction or interpretation of this Agreement.
6.3 Assignment . This Agreement shall be personal as to the Employee and shall not be assignable by the Employee subject to the terms herein. This Agreement shall enure to the benefit of and be binding upon the heirs, executors, administrators and legal personal representatives of the Employee and the successors and permitted assigns of the Company.
6.4 Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto, whether verbal or in writing. There are no other written or verbal representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory between the parties.
6.5 Amendments . No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by both of the parties hereto. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.
6.6 Severability . If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect.
6.7 Further Acts . The parties shall do all such further acts and things and provide all such assurances and deliver all such documents in writing as may be required, from time to time in order to fully carry out the terms, provisions and intent of this Agreement.
6.8 Notice . Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing by personal delivery, electronic delivery or by registered mail addressed to the recipient as follows:
Bionik Laboratories Inc.
10 Dundas Street East, AMC-B202
Toronto, Ontario M5B 2G9
Telephone: (416) 574 4479 Email: info@bioniklabs.com
Peter Bloch
56 Wembley Rd, Toronto, On M6C2G2
Tel #: (905) 339 - 9583
or such other address, individual or telecopy number as may be designated by either party to the other in accordance herewith. Any notice given by personal delivery will be conclusively deemed to have been given on the day of actual delivery of the notice and, if given by registered mail, on the third day, other than a Saturday, Sunday or statutory holiday in Ontario, following the deposit of the notice in the mail. If the party giving any notice knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such notice may not be mailed but must be given by personal delivery. In the case of electronic delivery, on the same day that it was sent if sent on a business day and the acknowledgement of receipt is received by the sender before 5:00 p.m. (in the place of receipt) on such day, and otherwise on the first business day thereafter.
7.11 Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and any applicable federal laws of Canada. Each of the parties hereto agrees that any action or proceeding related to this Agreement must be brought in any court of competent jurisdiction in the Province of Ontario, and for that purpose hereby attorns and submits to the jurisdiction of such Ontario court.
6.9 Securities Regulatory Authority Requirement . The Company and the Employee acknowledge
that this Agreement shall be subject to compliance with any applicable rules, regulations and policies of any stock exchange or exchanges on which any securities of the Company may from time to time be listed and any other securities authority having jurisdiction.
6.10 Time of the Essence. Time shall be of the essence in this Agreement.
6.11 Independent Legal Advice. The Employee acknowledges that he has been advised to seek
independent legal counsel in respect of the Agreement and the matters contemplated herein. To the extent that he declines to receive independent legal counsel in respect of the Agreement, he waives the right, should a dispute later develop, to rely on his lack of independent legal counsel to avoid his obligations, to seek indulgences from the Company or to otherwise attack the integrity of the Agreement and the provisions thereof, in whole or in part.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first written above.
SIGNED, SEALED AND DELIVERED | ) | ||
in the presence of | |||
) | |||
) | |||
) | |||
) | |||
) | |||
/s/ | ) | ||
WITNESS |
BIONIK LABORATORIES INC. | ||
Per: | /s/ Peter Bloch | |
Authorized Signing Officer | ||
I have authority to bind the corporation. |
Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is signed on the 7th day of July, 2014.
BETWEEN:
BIONIK LABORATORIES INC. , a corporation incorporated under the laws of Canada (hereinafter referred to as the "Company"),
- and -
Michal Prywata , an individual resident in the City of Toronto in the Province of Ontario (hereinafter referred to as the "Employee"),
WHEREAS the Company is engaged in the business of the Medical Device Research, Development and production;
AND WHEREAS the Company and the Employee have agreed to enter into an employment relationship upon the terms and subject to the conditions hereinafter set forth;
THIS AGREEMENT witnesses that the parties have agreed that the terms and conditions of the relationship shall be as follows:
ARTICLE 1 - EMPLOYMENT AND DUTIES
1.1 Appointment . Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ the Employee, and the Employee hereby accepts employment in the Position of Chief Operating Officer (the "Position") of the Company effective 9th January, 2013. Previously CEO since November 12th, 2010 (the "Start Date").
1.2 Reporting and Duties . The Employee shall report to the CEO. The Employee shall perform the
duties and responsibilities;
(i) Primary objective of furthering innovation in the company and evolving
the technology portfolio.
(ii) Overall management of the company, including regulatory, clinical, sales, marketing, business strategy, and investor relations.
(iii) Management of all Patent registrations and Product Intellectual Property.
(iv) Overseeing of Hospital and Clinical Testing. Definition of testing requirements and criteria. Maintaining relationship with hospitals. Developing relationships with new clinical trial sites. Hiring a consultant to assist with clinical trial definition and planning.
(v) Company IT management - Maintenance management, set up of new technology, quality systems compliance.
(vi) Strategic relationship management.
(vii) Hiring of R&D team.
The Employee agrees to comply with all applicable policies and rules of Company.
1.3 Term . The Employee shall be employed on an indefinite basis, subject to the termination provisions set out in this Agreement and to any amendments as may from time to time be agreed to in writing by the Employee and the Company.
1.4 Duties and Responsibilities . The Employee shall during his period of his employment devote the whole of normal full time employment attention and ability to the business and affairs of the Company, including his role in his Position and other duties, if any, and shall faithfully and honestly serve the Company throughout his employment and use his best efforts to promote the interests of the Company. In addition, the Employee shall truly and faithfully account for and deliver to the Company or, where applicable, any subsidiary or other affiliate of the Company (collectively, the Subsidiaries"), all money, securities and things of value belonging to the Company or the Subsidiaries which the Employee may from time to time receive for, from or on account of the Company or the Subsidiaries.
ARTICLE 2 - COMPENSATION
2.1 Base Salary . The Employee will receive fixed remuneration for his employment pursuant to this Agreement consisting of an annual monthly base salary of CDN Fifteen Thousand dollars ($15,000.00), payable monthly in arrears, and subject to applicable statutory deductions required by law. This salary will increase to US$17,500.00 a month on the completion of a successful Reverse Takeover (RTO) transaction. The Employee's salary will be reviewed on an annual basis to determine potential increases based on the Employee's performance and that of the Company.
2.2 Options . The employee will be granted xxx options on the date of completion of the RTO transaction, at the price of the RTO financing transaction. The options will vest 1/3 per year over the following 3 years and be subject to additional terms of the Company's stock option plan.
2.3 Bonus . The Employee shall be entitled to a target annual bonus of 30% of base salary, payable based on the performances in the previous fiscal year ending March 31. The bonus will be determined based on the achievement of the employee's objectives that will be agreed to with the Board of Directors subsequent to the completion of the RTO.
2.4 Intellectual Property Incentive . The Employee shall be entitled to a cash and stock option bonus that will be taken into account after the regular company bonus structure, based on a per patent creation basis. The Employee understands that a significant part of the company value for shareholders comes from new intellectual property creation. The Board of Directors will determine what the per patent bonus is.
2.5 Benefits . The Employee shall be entitled to participate in all of the Company's benefit plans generally available to its employees from time to time in accordance with the terms thereof and the participation and full coverage of the Employee in such plans shall become fully effective as of the commencement of his employment under this Agreement. The Company reserves the right to alter. amend, replace or discontinue the benefit plans it makes available to its employees at any time, with or without notice. In addition the Employee will be entitled to participate in the Company's Stock Option Plan as designated by the CEO of the Company based on the terms of the Stock Option Plan. The granting of any options is conditional on the written approval or the Board of Directors and the Company reserves the right to alter, amend, replace or discontinue this plan at any time, with or without notice to the Employee.
2.6 Vacation . The Employee shall be entitled to four (4) weeks' vacation per calendar year. Such vacation shall be taken at a time or times acceptable to the Company having regard to its operations. The Employee shall be allowed to carry forward any unused vacation into the next calendar year with the prior written approval of the CEO.
2.7 Expense Reimbursement . The Employee shall be reimbursed for all reasonable expenses actually and properly incurred by him in connection with the performance of his duties hereunder. The Employee shall submit to the Company written, itemized expense accounts, together with supporting invoices, acceptable to the Company and such other additional substantiation and justification as the Company may reasonably request within sixty (60) days after the expenses have been incurred.
ARTICLE 3 - COVENANTS
3.1 Confidential Information . The Employee hereby acknowledges that, by reason of his employment with the Company, he has and will acquire information about certain matters and things which are confidential to the Company and the Subsidiaries (the "Confidential Information"), and which Confidential Information is the exclusive property of the Company and/or the Subsidiaries, respectively. The Confidential Information includes, without limitation, information concerning the Company's and the Subsidiaries' strategic plans, product research and development plans, details and results, trade secrets, supplier lists, data, work product developed by or for the Company or the Subsidiaries, and all other data and information concerning the business and affairs of the Company and the Subsidiaries. Notwithstanding anything to the contrary contained herein, for the purposes hereof, Confidential Information shall not include:
(a) any information that has entered or enters the public domain through lawful means: or
(b) information which the Employee is required to disclose pursuant to applicable law, policies or due processes of applicable regulatory bodies or legal or regulatory proceedings; provided that the Employee provides the Company with prompt notice of same and assists the Company in seeking to prevent or limit such requirement.
He shall not (except in the performance of his responsibilities) directly or indirectly, (i) use for his own benefit or for the benefit of others; (ii) disseminate, publish or disclose; or (iii) authorize or permit the use, dissemination or disclosure by any person, firm or entity of any Confidential Information without the express written consent of the board of directors of the Company and the Subsidiaries. Upon termination of this Agreement for any reason, the Employee agrees to return to the Company and its Subsidiaries (or, in the case of electronic items, permanently delete) all documents, records, storage, data, samples, and other property of the Company and its Subsidiaries, together with all copies thereof which contain or incorporate any Confidential Information.
3.2 Intellectual Property, Inventions and Patents . The Employee shall take all precautions to maintain and protect the legal rights of the Company and its Subsidiaries in the Work Product, and to maintain the confidentiality of trade secrets included in the Work Product in accordance with Section 3.1 hereof. For certainty, no license to the Work Product is granted to the Employee, except to the extent required for the performance of his responsibilities under this Agreement.
The Employee hereby covenants that the Work Product will not violate or infringe any intellectual property rights of any third party or constitute an unauthorized use of confidential or proprietary information of a third party.
All of the aforesaid covenants in this Section shall be binding on the assigns, executors, administrators and other legal representatives of the Employee.
3.3 Non-Solicitation of Employees . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the Employee's employment, for any reason, directly or indirectly, hire any employees or consultants of the Company or the Subsidiaries or induce or attempt to induce, solicit or attempt to solicit any of the employees or consultants of the Company or the Subsidiaries to leave their employment or engagement with the Company.
3.4 Non-Solicitation of Customers and Suppliers . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any customers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of selling to those customers any products or services which are the same as or substantially similar to or in any way competitive with the products or services sold by the Company or the Subsidiaries, at the time of termination of this Agreement. The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any suppliers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of diverting or attempting to divert business away from the Company or the Subsidiaries.
3.5 Non-Competition . Subject as hereinafter provided, the Employee shall not, without the prior written consent of the CEO of the Company at any time during the period from the date hereof to that date which is one (1) year following the date of termination this Agreement or the Employee's employment, engage in the development of similar medical devices or devices that are in any way competitive with the products or services sold by the Company or the Subsidiaries at the time of the termination of this Agreement, either individually or in partnership or jointly or in conjunction with any person as principal, agent, employee, shareholder (other than a holding of shares listed on a Canadian or United States stock exchange that does not exceed five percent (5%) of the outstanding shares so listed) or in any other manner whatsoever, nor shall the Employee lend money to, guarantee the debts or obligations of or permit his name or any part thereof to be used or employed by any person engaged in a similar business to the Company or the Subsidiaries.
3.6 Acknowledgement, Waiver and Enforcement . The Employee confirms that the restrictions contained in this Article 3 are reasonable and valid to protect the legitimate business interests of the Company and the Subsidiaries. The Employee hereby agrees and acknowledges that it would be extremely difficult to measure the damages that might result from any breach of any of the covenants of the Employee contained herein and that any breach of any of the covenants of the Employee might result in irreparable injury to the business for which monetary damages could not adequately compensate. If a breach of any of the covenants of the Employee occurs, the Company shall be entitled, in addition to any other rights or remedies the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restricting the Employee and all other parties involved therein from continuing such breach.
3.7 Survival and Enforceability . It is expressly agreed by the parties hereto that the provisions of this Article 3 shall survive the termination of this Agreement and the Employee's employment.
ARTICLE 4 - DEATH
4.1 Death . If the Employee dies while employed under this Agreement, this Agreement shall terminate immediately and the Company shall pay to the Employee's estate, the annual salary earned by the Employee up to the date of his death. All options and warrants vested in the Employee prior to the date of his death shall continue in full force and effect, subject to the terms and conditions of the Stock Option Plan.
ARTICLE 5 - TERMINATION OF EMPLOYMENT
5.1 Termination by Company for Cause . The Company may terminate this Agreement for cause at any time without any notice or payment in lieu of such notice of termination. The Employee will be provided with his annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination. For the purposes of this Agreement, "cause" includes:
(a) a material breach by the Employee of the terms of this Agreement; and
(b) any act or conduct that would constitute cause at common law.
5.2 Termination by Disability . The Company may terminate this Agreement as a result of any mental or physical disability or illness which results in the Employee being unable to substantially perform his duties for a continuous period of 150 days or for periods aggregating 180 days within any period of 365 days. Permanent or indefinite inability to perform essential functions shall be based on the opinion of a qualified medical provider if a medical condition is involved, or as otherwise required by law. Termination will be effective on the date designated by Company and the Employee will be paid his annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination.
5.3 Termination by Employee . The Employee may terminate this Agreement and his employment at any time, for any reason, provided that the Employee provides the Company with thirty (30) days' prior written notice. The Employee agrees to use his best effort to assist the Company to complete an effective reallocation of his responsibilities upon the giving of such notice. The Company may waive notice, in whole or in part, by providing the Executive pay in lieu of notice for the balance of the thirty (30) day period, including benefits as set out in Section 2.2 and expenses incurred.
5.4 Termination by Company for Other than Cause . The Company may terminate this Agreement and the Employee's employment, for any reason without cause, provided that the Company provides the Employee pay in lieu of notice, equal to 12 months pay and full benefits, plus one month for each year of service. The Employee will have 6 months after termination to exercise all vested options in accordance with the terms of the Stock Option Plan. All unvested option immediately forfeit upon the Employee being provided with notice of termination of his employment.
5.5 Limitation of Liability . The Employee acknowledges, understands and agrees that the notice/pay in lieu of notice and other benefits provided for above represent the Company's maximum termination and severance obligations to the Employee. No other notice or severance entitlements shall apply. This provision shall remain in full force and effect unamended, notwithstanding any other alterations to the terms and conditions of the Employee's employment, unless agreed to by the Company in writing. The Employee also acknowledges, understands and agrees that the giving of notice or the payment of pay in lieu of notice by the Company to the Employee on termination of the Employee's employment shall not prevent the Company from alleging cause for the termination.
5.6 Effect of Termination . Upon any termination of this Agreement, the Employee shall immediately deliver or cause to be delivered to the Company all Confidential Information and company property belonging to the Company which are in the possession, charge, control or custody of the Employee.
ARTICLE 6 - GENERAL
6.0 Release . Upon any termination of this Agreement or the Employee's employment, the Employee agrees to release the Company, the Subsidiaries, and all officers, directors and employees of the Company or Subsidiaries from all actions, causes of action, claims or demands as a result of such termination, except as otherwise expressly provided in this Agreement. Upon compliance with the applicable termination provisions of this Agreement by the Company, the Employee agrees to deliver to the Company a full and final written release of and from all actions or claims in connection with this Agreement and the Employee's employment in favour of the Company, the Subsidiaries, and their directors, officers and employees in a form to be provided by the Company.
6.1 Recitals . The parties agree that the Recitals set out herein are true and accurate and shall form part of this Agreement.
6.2 Headings . The division of this Agreement into articles and sections and the insertion of headings are for the convenience of reference only and shall not affect the construction or interpretation of this Agreement.
6.3 Assignment . This Agreement shall be personal as to the Employee and shall not be assignable by the Employee subject to the terms herein. This Agreement shall enure to the benefit of and be binding upon the heirs, executors, administrators and legal personal representatives of the Employee and the successors and permitted assigns of the Company.
6.4 Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto, whether verbal or in writing. There are no other written or verbal representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory between the parties.
6.5 Amendments . No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by both of the parties hereto. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.
6.6 Severability . If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect.
6.7 Further Acts . The parties shall do all such further acts and things and provide all such assurances and deliver all such documents in writing as may be required, from time to time in order to fully carry out the terms, provisions and intent of this Agreement.
6.8 Notice . Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing by personal delivery, electronic delivery or by registered mail addressed to the recipient as follows:
Bionik Laboratories Inc.
10 Dundas Street East, AMC-B202
Toronto, Ontario
M5B 2G9
Telephone: (416) 574 4479
Email: info@bioniklabs.com
Michal Prywata
45 Holland Ave, East York, On M4B2C7
Telephone: (416) 574 - 4479
or such other address, individual or telecopy number as may be designated by either party to the other in accordance herewith. Any notice given by personal delivery will be conclusively deemed to have been given on the day of actual delivery of the notice and, if given by registered mail, on the third day, other than a Saturday, Sunday or statutory holiday in Ontario, following the deposit of the notice in the mail. If the party giving any notice knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such notice may not be mailed but must be given by personal delivery. In the case of electronic delivery, on the same day that it was sent if sent on a business day and the acknowledgement of receipt is received by the sender before 5:00 p.m. (in the place of receipt) on such day, and otherwise on the first business day thereafter.
7.11 Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and any applicable federal laws of Canada. Each of the parties hereto agrees that any action or proceeding related to this Agreement must be brought in any court of competent jurisdiction in the Province of Ontario, and for that purpose hereby attorns and submits to the jurisdiction of such Ontario court.
6.9 Securities Regulatory Authority Requirement . The Company and the Employee acknowledge that this Agreement shall be subject to compliance with any applicable rules, regulations and policies of any stock exchange or exchanges on which any securities of the Company may from time to time be listed and any other securities authority having jurisdiction.
6.10 Time of the Essence . Time shall be of the essence in this Agreement.
6.11 Independent Legal Advice . The Employee acknowledges that he has been advised to seek independent legal counsel in respect of the Agreement and the matters contemplated herein. To the extent that he declines to receive independent legal counsel in respect of the Agreement. he waives the right, should a dispute later develop, to rely on his lack of independent legal counsel to avoid his obligations, to seek indulgences from the Company or to otherwise attack the integrity of the Agreement and the provisions thereof, in whole or in part.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first written above.
SIGNED, SEALED AND DELIVERED )
in the presence of | ) |
) | |
) | |
) | |
) | |
) |
/s/ | /s/ Michal Prywata | ||
WITNESS | Michal Prywata | ||
BIONIK LABORATORIES, INC. | |||
Per: | /s/ Peter Bloch | ||
Authorized Signing Officer | |||
I have authority to bind the corporation. |
Exhibit 10.11
EMPLOYMENT AGREEMENT
THIS AGREEMENT is signed on the 7th day of July, 2014.
BETWEEN:
BIONIK LABORATORIES INC ., a corporation incorporated under the laws of Canada (hereinafter referred to as the "Company"),
- and -
Thiago Caires , an individual resident in the City of Toronto in the Province of Ontario (hereinafter referred to as the "Employee"),
WHEREAS the Company is engaged in the business of the Medical Device Research, Development and production;
AND WHEREAS the Company and the Employee have agreed to enter into an employment relationship upon the terms and subject to the conditions hereinafter set forth;
THIS AGREEMENT witnesses that the parties have agreed that the terms and conditions of the relationship shall be as follows:
ARTICLE 1 - EMPLOYMENT AND DUTIES
1.1 Appointment . Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ the Employee, and the Employee hereby accepts employment in the Position of Chief Technology Officer (the "Position") of the Company effective 9th January, 2013. Previously President since November 12th, 2010 (the "Start Date").
1.2 Reporting and Duties . The Employee shall report to the CEO. The Employee shall perform the duties and responsibilities;
(i) Primary objective of furthering innovation in the company and evolving the technology portfolio.
(ii) Overall management of the company, including regulatory, clinical, sales, marketing, business strategy, and investor relations.
(iii) Company product development direction and vision.
(iv) Technology strategy of existing and future products, oversee all product design and implementation.
(v) Definition of R&D resources. Perform performance appraisals on key company personnel.
(vi) Help the management of strategic relationships: hospitals, manufacturing partners, government agencies and technical teams.
(vii) Develop prototyping capabilities to support engineering production. Maintain prototyping capabilities.
(viii) Direct the VP of R&D/R&D Manager and manager their performance.
The Employee agrees to comply with all applicable policies and rules of Company.
1.3 Term . The Employee shall be employed on an indefinite basis, subject to the termination provisions set out in this Agreement and to any amendments as may from time to time be agreed to in writing by the Employee and the Company.
1.4 Duties and Responsibilities . The Employee shall during his period of his employment devote the whole of normal full time employment attention and ability to the business and affairs of the Company, including his role in his Position and other duties, if any, and shall faithfully and honestly serve the Company throughout his employment and use his best efforts to promote the interests of the Company. In addition, the Employee shall truly and faithfully account for and deliver to the Company or, where applicable, any subsidiary or other affiliate of the Company (collectively, the Subsidiaries"), all money, securities and things of value belonging to the Company or the Subsidiaries which the Employee may from time to time receive for, from or on account of the Company or the Subsidiaries.
ARTICLE 2 - COMPENSATION
2.1 Base Salary . The Employee will receive fixed remuneration for his employment pursuant to this Agreement consisting of an annual monthly base salary of CDN Fifteen Thousand dollars ($15,000.00), payable monthly in arrears, and subject to applicable statutory deductions required by law. This salary will increase to US$17,500.00 a month on the completion of a successful Reverse Takeover (RTO) transaction. The Employee's salary will be reviewed on an annual basis to determine potential increases based on the Employee's performance and that of the Company.
2.2 Options . The employee will be granted xxx options on the date of completion of the RTO transaction, at the price of the RTO financing transaction. The options will vest 1/3 per year over the following 3 years and be subject to additional terms of the Company's stock option plan.
2.3 Bonus . The Employee shall be entitled to a target annual bonus of 30% of base salary, payable based on the performances in the previous fiscal year ending March 31. The bonus will be determined based on the achievement of the employee's objectives that will be agreed to with the Board of Directors subsequent to the completion of the RTO.
2.4 Intellectual Property Incentive . The Employee shall be entitled to a cash and stock option bonus that will be taken into account after the regular company bonus structure, based on a per patent creation basis. The Employee understands that a significant part of the company value for shareholders comes from new intellectual property creation. The Board of Directors will determine what the per patent bonus is.
2.5 Benefits . The Employee shall be entitled to participate in all of the Company's benefit plans generally available to its employees from time to time in accordance with the terms thereof and the participation and full coverage of the Employee in such plans shall become fully effective as of the commencement of his employment under this Agreement. The Company reserves the right to alter, amend, replace or discontinue the benefit plans it makes available to its employees at any time, with or without notice. In addition the Employee will be entitled to participate in the Company's Stock Option Plan as designated by the CEO of the Company based on the terms of the Stock Option Plan. The granting of any options is conditional on the written approval of the Board of Directors and the Company reserves the right to alter, amend, replace or discontinue this plan at any time, with or without notice to the Employee.
2.6 Vacation . The Employee shall be entitled to four (4) weeks' vacation per calendar year. Such vacation shall be taken at a time or times acceptable to the Company having regard to its operations. The Employee shall be allowed to carry forward any unused vacation into the next calendar year with the prior written approval of the CEO.
2.7 Expense Reimbursement . The Employee shall be reimbursed for all reasonable expenses actually and properly incurred by him in connection with the performance of his duties hereunder. The Employee shall submit to the Company written, itemized expense accounts, together with supporting invoices, acceptable to the Company and such other additional substantiation and justification as the Company may reasonably request within sixty (60) days after the expenses have been incurred.
ARTICLE 3 - COVENANTS
3.1 Confidential Information . The Employee hereby acknowledges that. by reason of his employment with the Company, he has and will acquire information about certain matters and things which are confidential to the Company and the Subsidiaries (the "Confidential Information"), and which Confidential Information is the exclusive property of the Company and/or the Subsidiaries, respectively. The Confidential Information includes, without limitation, information concerning the Company's and the Subsidiaries' strategic plans, product research and development plans, details and results, trade secrets, supplier lists, data, work product developed by or for the Company or the Subsidiaries, and all other data and information concerning the business and affairs of the Company and the Subsidiaries. Notwithstanding anything to the contrary contained herein, for the purposes hereof, Confidential Information shall not include:
(a) any information that has entered or enters the public domain through lawful means; or
(h) information which the Employee is required to disclose pursuant to applicable law, policies or due processes of applicable regulatory bodies or legal or regulatory proceedings; provided that the Employee provides the Company with prompt notice of same and assists the Company in seeking to prevent or limit such requirement.
He shall not (except in the performance of his responsibilities) directly or indirectly, (i) use for his own benefit or for the benefit of others; (ii) disseminate, publish or disclose: or (iii) authorize or permit the use, dissemination or disclosure by any person, firm or entity of any Confidential Information without the express written consent of the board of directors of the Company and the Subsidiaries. Upon termination of this Agreement for any reason, the Employee agrees to return to the Company and its Subsidiaries (or, in the case of electronic items, permanently delete) all documents, records, storage, data, samples, and other property of the Company and its Subsidiaries, together with all copies thereof which contain or incorporate any Confidential Information.
3.2 Intellectual Property, Inventions and Patents . The Employee shall take all precautions to maintain and protect the legal rights of the Company and its Subsidiaries in the Work Product, and to maintain the confidentiality of trade secrets included in the Work Product in accordance with Section 3.1 hereof. For certainty, no license to the Work Product is granted to the Employee, except to the extent required for the performance of his responsibilities under this Agreement.
The Employee hereby covenants that the Work Product will not violate or infringe any intellectual property rights of any third party or constitute an unauthorized use of confidential or proprietary information of a third party.
All of the aforesaid covenants in this Section shall be binding on the assigns, executors, administrators and other legal representatives of the Employee.
3.3 Non-Solicitation of Employees . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the Employee's employment, for any reason, directly or indirectly, hire any employees or consultants of the Company or the Subsidiaries or induce or attempt to induce, solicit or attempt to solicit any of the employees or consultants of the Company or the Subsidiaries to leave their employment or engagement with the Company.
3.4 Non-Solicitation of Customers and Suppliers . The Employee shall not, during the period from the date hereof to that date which is one (I) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any customers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of selling to those customers any products or services which are the same as or substantially similar to or in any way competitive with the products or services sold by the Company or the Subsidiaries, at the time of termination of this Agreement. The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any suppliers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of diverting or attempting to divert business away from the Company or the Subsidiaries.
3.5 Non-Competition . Subject as hereinafter provided, the Employee shall not, without the prior written consent of the CEO of the Company at any time during the period from the date hereof to that date which is one (1) year following the date of termination this Agreement or the Employee's employment. engage in the development of similar medical devices or devices that are in any way competitive with the products or services sold by the Company or the Subsidiaries at the time of the termination of this Agreement, either individually or in partnership or jointly or in conjunction with any person as principal, agent, employee, shareholder (other than a holding of shares listed on a Canadian or United States stock exchange that does not exceed five percent (5%) of the outstanding shares so listed) or in any other manner whatsoever, nor shall the Employee lend money to, guarantee the debts or obligations of or permit his name or any part thereof to be used or employed by any person engaged in a similar business to the Company or the Subsidiaries.
3.6 Acknowledgement, Waiver and Enforcement . The Employee confirms that the restrictions contained in this Article 3 are reasonable and valid to protect the legitimate business interests of the Company and the Subsidiaries. The Employee hereby agrees and acknowledges that it would be extremely difficult to measure the damages that might result from any breach of any of the covenants of the Employee contained herein and that any breach of any of the covenants of the Employee might result in irreparable injury to the business for which monetary damages could not adequately compensate. If a breach of any of the covenants of the Employee occurs, the Company shall be entitled, in addition to any other rights or remedies the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restricting the Employee and all other parties involved therein from continuing such breach.
3.7 Survival and Enforceability . It is expressly agreed by the parties hereto that the provisions of this Article 3 shall survive the termination of this Agreement and the Employee's employment.
ARTICLE 4 - DEATH
4.1 Death . If the Employee dies while employed under this Agreement, this Agreement shall terminate immediately and the Company shall pay to the Employee's estate, the annual salary earned by the Employee up to the date of his death. All options and warrants vested in the Employee prior to the date of his death shall continue in full force and effect, subject to the terms and conditions of the Stock Option Plan.
ARTICLE 5 - TERMINATION OF EMPLOYMENT
5.1 Termination by Company for Cause . The Company may terminate this Agreement for cause at any time without any notice or payment in lieu of such notice of termination. The Employee will be provided with his annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination. For the purposes of this Agreement, "cause" includes:
(a) a material breach by the Employee of the terms of this Agreement; and
(b) any act or conduct that would constitute cause at common law.
5.2 Termination by Disability . The Company may terminate this Agreement as a result of any mental or physical disability or illness which results in the Employee being unable to substantially perform his duties for a continuous period of 150 days or for periods aggregating 180 days within any period of 365 days. Permanent or indefinite inability to perform essential functions shall be based on the opinion of a qualified medical provider if a medical condition is involved, or as otherwise required by law. Termination will be effective on the date designated by Company and the Employee will be paid his annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination.
5.3 Termination by Employee . The Employee may terminate this Agreement and his employment at any time, for any reason, provided that the Employee provides the Company with thirty (30) days' prior written notice. The Employee agrees to use his best effort to assist the Company to complete an effective reallocation of his responsibilities upon the giving of such notice. The Company may waive notice, in whole or in part, by providing the Executive pay in lieu of notice for the balance of the thirty (30) day period, including benefits as set out in Section 2.2 and expenses incurred.
5.4 Termination by Company for Other than Cause . The Company may terminate this Agreement and the Employee's employment, for any reason without cause, provided that the Company provides the Employee pay in lieu of notice, equal to 12 months pay and full benefits, plus one month for each year of service. The Employee will have 6 months after termination to exercise all vested options in accordance with the terms of the Stock Option Plan. All unvested option immediately forfeit upon the Employee being provided with notice of termination of his employment.
5.5 Limitation of Liability . The Employee acknowledges, understands and agrees that the notice/pay in lieu of notice and other benefits provided for above represent the Company's maximum termination and severance obligations to the Employee. No other notice or severance entitlements shall apply. This provision shall remain in full force and effect unamended, notwithstanding any other alterations to the terms and conditions of the Employee's employment, unless agreed to by the Company in writing. The Employee also acknowledges, understands and agrees that the giving of notice or the payment of pay in lieu of notice by the Company to the Employee on termination of the Employee's employment shall not prevent the Company from alleging cause for the termination.
5.6 Effect of Termination . Upon any termination of this Agreement, the Employee shall immediately deliver or cause to be delivered to the Company all Confidential Information and company property belonging to the Company which are in the possession, charge, control or custody of the Employee.
ARTICLE 6 - GENERAL
6.0 Release . Upon any termination of this Agreement or the Employee's employment, the Employee agrees to release the Company, the Subsidiaries, and all officers, directors and employees of the Company or Subsidiaries from all actions, causes of action, claims or demands as a result of such termination, except as otherwise expressly provided in this Agreement. Upon compliance with the applicable termination provisions of this Agreement by the Company, the Employee agrees to deliver to the Company a full and final written release of and from all actions or claims in connection with this Agreement and the Employee's employment in favour of the Company, the Subsidiaries, and their directors, officers and employees in a form to he provided by the Company.
6.1 Recitals . The parties agree that the Recitals set out herein are true and accurate and shall form part of this Agreement.
6.2 Headings . The division of this Agreement into articles and sections and the insertion of headings are for the convenience of reference only and shall not affect the construction or interpretation of this Agreement.
6.3 Assignment . This Agreement shall be personal as to the Employee and shall not be assignable by the Employee subject to the terms herein. This Agreement shall enure to the benefit of and be binding upon the heirs, executors, administrators and legal personal representatives of the Employee and the successors and permitted assigns of the Company.
6.4 Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto, whether verbal or in writing. There are no other written or verbal representations, warranties, terms, conditions, undertakings or collateral agreements, express. implied or statutory between the parties.
6.5 Amendments . No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by both of the parties hereto. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.
6.6 Severability . If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect.
6.7 Further Acts . The parties shall do all such further acts and things and provide all such assurances and deliver all such documents in writing as may be required, from time to time in order to fully carry out the terms, provisions and intent of this Agreement.
6.8 Notice . Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing by personal delivery, electronic delivery or by registered mail addressed to the recipient as follows:
Bionik Laboratories Inc.
10 Dundas Street East, AMC-B202
Toronto, Ontario
M5B 2G9
Telephone: (416) 574 4479
Email: info@bioniklabs.com
Thiago Caires
21 Madron Cres., North York, On M3J 1 H8
Telephone#: (647) 746 - 6799
or such other address, individual or telecopy number as may be designated by either party to the other in accordance herewith. Any notice given by personal delivery will be conclusively deemed to have been given on the day of actual delivery of the notice and, if given by registered mail, on the third day, other than a Saturday, Sunday or statutory holiday in Ontario, following the deposit of the notice in the mail. If the party giving any notice knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such notice may not be mailed but must be given by personal delivery. In the case of electronic delivery, on the same day that it was sent if sent on a business day and the acknowledgement of receipt is received by the sender before 5:00 p.m. (in the place of receipt) on such day, and otherwise on the first business day thereafter.
7.1 1 Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and any applicable federal laws of Canada. Each of the parties hereto agrees that any action or proceeding related to this Agreement must be brought in any court of competent jurisdiction in the Province of Ontario, and for that purpose hereby attorns and submits to the jurisdiction of such Ontario court.
6.9 Securities Regulatory Authority Requirement . The Company and the Employee acknowledge that this Agreement shall be subject to compliance with any applicable rules, regulations and policies of any stock exchange or exchanges on which any securities of the Company may from time to time be listed and any other securities authority having jurisdiction.
6.10 Time of the Essence . Time shall be of the essence in this Agreement.
6.11 Independent Legal Advice . The Employee acknowledges that he has been advised to seek independent legal counsel in respect of the Agreement and the matters contemplated herein. To the extent that he declines to receive independent legal counsel in respect of the Agreement, he waives the right, should a dispute later develop, to rely on his lack of independent legal counsel to avoid his obligations, to seek indulgences from the Company or to otherwise attack the integrity of the Agreement and the provisions thereof, in whole or in part.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first written above.
SIGNED, SEALED AND DELIVERED | ) | ||
in the presence of | ) | ||
) | |||
) | |||
) | |||
) | |||
) | |||
/s/ | /s/ Thiago Caires | ||
WITNESS | Thiago Caires |
BIONIK LABORATORIES, INC. | ||
Per: | /s/ Peter Bloch | |
Authorized Signing Officer | ||
I have authority to bind the corporation. |
Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 6th day of August, 2014.
BETWEEN:
BIONIK LABORATORIES INC ., a corporation incorporated under the laws of Canada (hereinafter referred to as the "Company"),
- and
LESLIE MARKOW , an individual resident in the City of Toronto in the Province of Ontario (hereinafter referred to as the "Employee"),
WHEREAS the Company is engaged in the business of the Medical Device Research, Development and production;
AND WHEREAS the Company and the Employee have agreed to enter into an employment relationship upon the terms and subject to the conditions hereinafter set forth;
THIS AGREEMENT witnesses that the parties have agreed that the terms and conditions of the relationship shall be as follows:
ARTICLE 1- EMPLOYMENT AND DUTIES
1.1 Appointment . Subject to the terms and conditions of this Agreement, the Company hereby agrees to employ the Employee, and the Employee hereby accepts employment in the Position of CHIEF FINANCIAL OFFICER (the "Position") of the Company effective September 2, 2014 (the "Start Date").
1.2 Probationary Period . The Employee's employment includes a probationary period of three (3) months, ending three (3) months from the Start Date (the "Probationary Period"). This period will provide an opportunity for both the Employee and the Company to decide if the relationship is mutually agreeable. If the Company concludes, in its sole discretion, that the Employee is not suitable for the position or that the Employee is unable to properly carry out any of the assigned duties or functions, it may terminate the Employee's employment at any time during this probationary period, without cause, notice or pay in lieu of notice. Similarly, if during the probationary period the Employee concludes that the position is not suitable, for whatever reason, the Employee may resign at any time, either with or without notice.
1.3 Reporting and Duties . The Employee shall report to Peter Bloch, Chief Executive Officer, The Employee shall perform the duties and responsibilities of Chief Financial Officer, in the area of Finance for the Company and its products and such other reasonable duties as may be designated by the Chief Executive Officer of the Company from time to time. Services performed pursuant to this Agreement shall be performed at such place or places and at such times as shall be mutually agreeable to the Company and Employee and during such hours as shall not conflict with any other employment. The services that are the subject of this Agreement, and any additions or modifications to the limits contained in the preceding sentence, are describe on Schedule 1 attached hereto. The Employee agrees to comply with all applicable policies and rules of Company.
1.4 Authority . The Employee shall have authority only to provide Financial-related services and innovation with respect to the Financial operations of the Company's products and business.
1.5 Term . The Employee shall be employed on an indefinite basis, subject to the termination provisions set out in this Agreement and to any amendments as may from time to time be agreed to in writing by the Employee and the Company.
1.6 Duties and Responsibilities . The Employee shall during her period of her employment devote no less than 2.5 days a week working time, attention and ability to the business and affairs of the Company, including her role in her Position and other duties, if arty, and shall faithfully and honestly serve the Company throughout her employment and use her best efforts to promote the interests of the Company. The foregoing shall not preclude the Employee from:
(a) engaging in charitable, education, communal or recreational activities; or
(b) engaging in another business enterprise as a passive investor;
(c) working for TMF Group as MD Canada for 2.5 days a week;
(d) being a Director of leintee Inc
provided, in each case, the same does not result in a contravention of Article 3 hereof or impair the ability of the Employee to discharge her duties to the Company hereunder, it being acknowledged that, generally, it is not expected the Employee will be required to devote any significant portion of her time to any such matters during regular business hours. In addition, the Employee shall truly and faithfully account for and deliver to the Company or, where applicable, any subsidiary or other affiliate of the Company (collectively, the Subsidiaries"), all money, securities and things of value belonging to the Company or the Subsidiaries which the Employee may from time to time receive for, from or on account of the Company or the Subsidiaries.
ARTICLE 2 - COMPENSATION
2.1 Base Salary . The Employee will receive fixed remuneration for her employment pursuant to this Agreement consisting of an annual base salary of Ninety-six thousand dollars (Cdr 596,000), payable monthly in arrears, and subject to applicable statutory deductions required by law. The Employee's annual salary based on 2.5 days per week will be reviewed on an annual basis or if the position of CFO becomes full time to determine potential increases based on the Employee's performance and that of the Company.
2.2 Options . The Employee will be granted a market related option grant on the date of completion of the RTO transaction, at the price of the RTO financing transaction. The options will vest 1/3 per year over the following 3 years and be subject to the additional terms of the Company's stock option plan.
2.3 Bonus , The Employee shall be entitled to a target annual bonus of up to 30% per annum of base salary. payable based on performance in the previous fiscal year ending March 31. The bonus will be determined based on the achievement of the employee's objectives that will be agreed to with the Board of Directors .
2.4 Benefits . The Employee shall be entitled to participate in all of the Company's benefit plans generally available to its employees from time to time in accordance with the terms thereof and the participation and full coverage of the Employee in such plans shall become fully effective as of the commencement of her employment under this Agreement. The Company reserves the right to alter, amend, replace or discontinue the benefit plans it makes available to its employees at any time, with or without notice. In addition the Employee will be entitled to participate in the Company's Stock Option Plan as designated by the CEO or COO of the Company based on the terms of the Stock Option Plan. The Stock Option Plan is in the process of being revised and the Employee agrees that her participation will be based on the terms of the plan when finalized. The granting of any options is conditional on the written approval of the Board of Directors and the Company reserves the right to alter, amend, replace or discontinue this plan at any time, with or without notice to the Employee.
2.5 Vacation . The Employee shall be entitled to three (3) weeks vacation per calendar year. Such vacation shall be taken at a time or times acceptable to the Company having regard to its operations. The Employee shall be allowed to carry forward any unused vacation into the next calendar year with the prior written approval of the CEO or COO.
2.6 Expense Reimbursement . The Employee shall be reimbursed for all reasonable expenses actually and properly incurred by her in connection with the performance of her duties hereunder. The Employee shall submit to the Company written, itemized expense accounts, together with supporting invoices, acceptable to the Company and such other additional substantiation and justification as the Company may reasonably request within sixty (60) days after the expenses have been incurred.
ARTICLE 3 - COVENANTS
3.1 Confidential Information . The Employee hereby acknowledges that, by reason of her employment with the Company, she has and will acquire information about certain matters and things which are confidential to the Company and the Subsidiaries (the "Confidential Information"), and which Confidential Information is the exclusive property of the Company and/or the Subsidiaries, respectively. The Confidential Information includes, without limitation, information concerning the Company's and the Subsidiaries' strategic plans, product research and development plans, details and results, trade secrets, supplier lists, data, work product developed by or for the Company or the Subsidiaries, and all other data and information concerning the business and affairs of the Company and the Subsidiaries. Notwithstanding anything to the contrary contained herein, for the purposes hereof, Confidential Information shall not include:
(a) any information that has entered or enters the public domain through lawful means; or
(b) information which the Employee is required to disclose pursuant to applicable law, policies or due processes of applicable regulatory bodies or legal or regulatory proceedings; provided that the Employee provides the Company with prompt notice of same and assists the Company in seeking to prevent or limit such requirement.
The Employee agrees that during the Term of Employment and for five (5) years after the termination hereof, for any reason, she shall not (except in the performance of his responsibilities) directly or indirectly, (i) use for her own benefit or for the benefit of others; (ii) disseminate, publish or disclose; or (iii) authorize or permit the use, dissemination or disclosure by any person, firm or entity of any Confidential Information without the express written consent of the board of directors of the Company and the Subsidiaries. Upon termination of this Agreement for any reason, the Employee agrees to return to the Company and its Subsidiaries (or, in the case of electronic items, permanently delete) all documents, records, storage, data, samples, and other property of the Company and its Subsidiaries, together with all copies thereof which contain or incorporate any Confidential Information.
3.2 Intellectual Property, Inventions and Patents . As part of the consideration for this Agreement and for her employment by the Company, subject to the provisions of this Agreement, the Employee hereby assigns to the Company, as and when same arise, her entire right, title and interest, including all intellectual property rights and trade secret rights, in and to any and all work product that is conceived, created, developed or otherwise generated by the Employee from time to time that relates to the business of the Company or the Subsidiaries, including all inventions, research, designs, trade secrets, improvements, plans, specifications and documentation (collectively, "Work Product"). The Employee further agrees that she will promptly, fully disclose to the Company or the Subsidiaries her Work Product and will, at any time from the date hereof, including during and after her employment with the Company, at the Company's expense, render to the Company or the Subsidiaries as requested such co-operation and assistance as the Company or the Subsidiaries may deem advisable in order to obtain copyright, patent, trade-mark or industrial design registrations as the case may be on, or otherwise vest, perfect or defend the Company's or the Subsidiaries' rights with respect to, any or all Work Product, including, but not limited to, the execution of any and all applications for copyright, patent, trade-mark or industrial design registrations, assignments of copyrights and other instruments in writing which the Company and the Subsidiaries may deem necessary or desirable. The Employee hereby irrevocably waives all of her moral rights in the Work Product in favour of the Company and its Subsidiaries and their respective successors, assignees and licensees.
The Employee shall take all precautions to maintain and protect the legal rights of the Company and its Subsidiaries in the Work Product, and to maintain the confidentiality of trade secrets included in the Work Product in accordance with Section 3.1 hereof. For certainty, no license to the Work Product is granted to the Employee, except to the extent required for the performance of her responsibilities under this Agreement.
The Employee irrevocably appoints any officer of the Company or the Subsidiaries from time to time to be her attorney, with full power of substitution, to do on the behalf of the Employee anything that the Employee can lawfully do by an attorney to do all acts and things in relation to ownership of the Work Product which the Company or the Subsidiaries shall deem desirable, and to do, sign and execute all documents, conveyances, deeds, assignments, transfers, assurances and other instruments which may reasonably be necessary or desirable for the purpose of registering, vesting, perfecting; defending, assigning or otherwise dealing with the Work Product. Such power of attorney is given for valuable consideration acknowledged by the Employee to be coupled with an interest, shall not be revoked by the bankruptcy or insolvency of the Company or the Subsidiaries and may be exercised by the officers of any successor or assign of the Company or the Subsidiaries.
The Employee hereby covenants that the Work Product will not violate or infringe any intellectual property rights of any third party or constitute an unauthorized use of confidential or proprietary information of a third party.
All of the aforesaid covenants in this Section shall be binding on the assigns, executors, administrators and other legal representatives of the Employee.
33 Non-Solicitation of Employees . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the Employee's employment, for any reason, directly or indirectly, hire any employees or consultants of the Company or the Subsidiaries or induce or attempt to induce, solicit or attempt to solicit any of the employees or consultants of the Company or the Subsidiaries to leave their employment or engagement with the Company.
3.4 Non-Solicitation of Customers and Suppliers . The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any customers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of selling to those customers any products or services which are the same as or substantially similar to or in any way competitive with the products or services sold by the Company or the Subsidiaries, at the time of termination of this Agreement. The Employee shall not, during the period from the date hereof to that date which is one (1) year following the termination of this Agreement or the termination of the Employee's employment, for any reason, directly or indirectly, without the prior written consent of the Company, solicit or attempt to solicit any suppliers of the Company or the Subsidiaries with whom the Employee had contact with or material knowledge of, for the purpose of diverting or attempting to divert business away from the Company or the Subsidiaries.
3.5 Non-Competition . Subject as hereinafter provided, the Employee shall not, without the prior written consent of the CEO of the Company at any time during the period from the date hereof to that date which is one (1) year following the date of termination this Agreement or the Employee's employment, engage in the development of similar medical devices or devices that are in any way competitive with the products or services sold by the Company or the Subsidiaries at the time of the termination of this Agreement, either individually or in partnership or jointly or in conjunction with any person as principal, agent, employee, shareholder (other than a holding of shares listed on a Canadian or United States stock exchange that does not exceed five percent (5%) of the outstanding shares so listed) or in any other manner whatsoever, nor shall the Employee lend money to, guarantee the debts or obligations of or permit her name or any part thereof to be used or employed by any person engaged in a similar business to the Company or the Subsidiaries.
3.6 Acknowledgement, Waiver and Enforcement . The Employee confirms that the restrictions contained in this Article 3 are reasonable and valid to protect the legitimate business interests of the Company and the Subsidiaries. The Employee hereby agrees and acknowledges that it would be extremely difficult to measure the damages that might result from any breach of any of the covenants of the Employee contained herein and that any breach of any of the covenants of the Employee might result in irreparable injury to the business for which monetary damages could not adequately compensate. If a breach of any of the covenants of the Employee occurs, the Company shall be entitled, in addition to any other rights or remedies the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restricting the Employee and all other parties involved therein from continuing such breach.
3.7 Survival and Enforceability . It is expressly agreed by the parties hereto that the provisions of this Article 3 shall survive the termination of this Agreement and the Employee's employment.
ARTICLE 4 - DEATH
4.1 Death . If the Employee dies while employed under this Agreement, this Agreement shall terminate immediately and the Company shall pay to the Employee's estate, the annual salary earned by the Employee up to the date of her death. All options and warrants vested in the Employee prior to the date of her death shall continue in frill force and effect, subject to the terms and conditions of the Stock Option Plan.
ARTICLE 5 - TERMINATION OF EMPLOYMENT
5.1 Termination by Company for Cause . The Company may terminate this Agreement for cause at any time without any notice or payment in lieu of such notice of termination. The Employee will be provided with her annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination. For the purposes of this Agreement, "cause" includes:
(a) a material breach by the Employee of the terms of this Agreement; and
(b) any act or conduct that would constitute cause at common law.
5.2 Termination by Disability . The Company may terminate this Agreement as a result of any mental or physical disability or illness which results in the Employee being unable to substantially perform her duties for a continuous period of 150 days or for periods aggregating 180 days within any period of 365 days. Permanent or indefinite inability to perform essential functions shall be based on the opinion of a qualified medical provider if a medical condition is involved, or as otherwise required by law_ Termination will be effective on the date designated by Company and the Employee will he paid her annual salary, benefits as set out in Section 2.2, and expenses incurred up to the date of termination.
5.3 Termination by Employee . The Employee may terminate this Agreement and her employment at any time, for any reason, provided that the Employee provides the Company with thirty (30) days' prior written notice. The Employee agrees to use her best effort to assist the Company to complete an effective reallocation of her responsibilities upon the giving of such notice. The Company may waive notice, in whole or in part, by providing the Executive pay in lieu of notice for the balance of the thirty (30) day period, including benefits as set out in Section 2.2 and expenses incurred.
5.4 Termination by Company for Other than Cause . The Company may terminate this Agreement and the Employee's employment, for any reason after the completion of the Probationary Period and without cause, provided that the Company provides the Employee with notice of termination, pay in lieu of notice, or some combination of the two, equal to the greater of: (i) three (3) weeks' notice or pay in lieu of notice for each completed year of service to a maximum of nine (9) months; or (ii) the minimum amounts required to be provided to the Employee in respect of termination and severance pay, if applicable, and all other entitlements owing pursuant to the Ontario Employment Standards Act, 2000. In the event of termination by the Company for reasons other than cause, the Employee's benefits in Section 2.2 will be maintained for the minimum period required pursuant to the Ontario Employment Standards Act, 2000, at which time ail coverage will be discontinued. The Employee will be eligible to exercise all vested options in accordance with the terms of the Stock Option Plan. An unvested option immediately forfeit upon the Employee being provided with notice of termination of her employment.
5.5 Limitation of Liability . The Employee acknowledges, understands and agrees that the notice/pay in lieu of notice and other benefits provided for above represent the Company's maximum termination and severance obligations to the Employee. No other notice or severance entitlements shall apply. This provision shall remain in full force and effect unamended, notwithstanding any other alterations to the terms and conditions of the Employee's employment, unless agreed to by the Company in writing. The Employee also acknowledges, understands and agrees that the giving of notice or the payment of pay in lieu of notice by the Company to the Employee on termination of the Employee's employment shall not prevent the Company from alleging cause for the termination.
5.6 Effect of Termination . Upon any termination of this Agreement., the Employee shall immediately deliver or cause to be delivered to the Company all Confidential Information and company property belonging to the Company which are in the possession, charge, control or custody of the Employee.
ARTICLE 6 - GENERAL
6.0 Release . Upon any termination of this Agreement or the Employee's employment, the Employee vets to release the Company, the Subsidiaries, and all officers, directors and employees of the Company or Subsidiaries from all actions, causes of action, claims or demands as a result of such termination, except as otherwise expressly provided in this Agreement Upon compliance with the applicable termination provisions of this Agreement by the Company, the Employee agrees to deliver to the Company a full and final written release of and from all actions or claims in connection with this Agreement and the Employee's employment in favour of the Company, the Subsidiaries, and their directors, officers and employees in a form to be provided by the Company.
6.1 Recitals . The parties agree that the Recitals set out herein are true and accurate and shall form part of this Agreement.
6.2 Headings . The division of this Agreement into articles and sections and the insertion of headings are for the convenience of reference only and shall not affect the construction or interpretation of this
Agreement
Assignment . This Agreement shall be personal as to the Employee and shall not be assignable by the Employee subject to the terms herein. This Agreement shall enure to the benefit of and be binding upon the heirs, executors, administrators and legal personal representatives of the Employee and the successors and permitted assigns of the Company.
6.3 Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto, whether verbal or in writing. There are no other written or verbal representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory between the parties.
6.4 Amendments . No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by both of the parties hereto. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.
6.5 Severability . If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect.
6.6 Further Acts . The parties shall do all such further acts and things and provide all such assurances and deliver all such documents in writing as may be required, from time to time in order to fully carry out the terms, provisions and intent of this Agreement.
6.7 Notice . Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing by personal delivery, electronic delivery or by registered mail addressed to the recipient as follows:
Bionik Laboratories Inc.
10 Dundas Street East, AMC-B202
Toronto, Ontario
M5B 2G9
Telephone: (416) 640-7887
Email: pb@bionildabs.com
Leslie Markow
215 Glendonwynne Raod
Toronto, ON M6P 304
or such other address, individual or telecopy number as may be designated by either party to the other in accordance herewith. Any notice given by personal delivery will be conclusively deemed to have been given on the day of actual delivery of the notice and, if given by registered mail, on the third day, other than a Saturday, Sunday or statutory holiday in Ontario, following the deposit of the notice in the mail. If the party giving any notice knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such notice may not be mailed but must be given by personal delivery. In the case of electronic delivery, on the same day that it was sent if sent on a business day and the acknowledgement of receipt is received by the sender before 5:00 p.m. (in the place of receipt) on such day, and otherwise on the first business day thereafter.
7.11 Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and any applicable federal laws of Canada. Each of the parties hereto agrees that any action or proceeding related to this Agreement must be brought in any court of competent jurisdiction in the Province of Ontario, and for that purpose hereby attorns and submits to the jurisdiction of such Ontario court.
6.8 Securities Regulatory Authority Requirement . The Company and the Employee acknowledge that this Agreement shall be subject to compliance with any applicable rules, regulations and policies of any stock exchange or exchanges on which any securities of the Company may from time to time be listed and any other securities authority having jurisdiction.
6.9 Time of the Essence . Time shall be of the essence in this Agreement.
6.10 Independent Legal Advice . The Employee acknowledges that she has been advised to seek independent legal counsel in respect of the Agreement and the matters contemplated herein. To the extent that she declines to receive independent legal counsel in respect of the Agreement, she waives the right, should a dispute later develop, to rely on her lack of independent legal counsel to avoid her obligations, to seek indulgences from the Company or to otherwise attack the integrity of the Agreement and the provisions thereof, in whole or in part.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first written above.
SIGNED, SEALED AND DELIVERED | ) |
in the presence of | ) |
) | |
) | |
) | |
) | |
) |
/s/ Michael S. King | /s/ Leslie Markow | ||
WITNESS | Leslie Markow | ||
BIONIK LABORATORIES, INC. | |||
Per: | /s/ Peter Bloch | ||
Authorized Signing Officer | |||
I have authority to bind the corporation. |
SCHEDULE I
JOB DESCRIPTION
• All financial reporting
• Quarterly MD&A in compliance with GAAP
• Drafting of Management discussion and analysis
• All public reporting
• Budgeting and planning
• Preparation of packages for board of directors
• Analysis to support business
• Assistance in negotiation of partnerships
• Operations responsibilities
• Investment of excess cash
• Management of banking and auditors relationships
• Investor communications
• Reporting on government grants
• Responsibility for all Corporate Tax and I-IST
• Management of Bookkeeper
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements are provided for informational purposes only and do not purport to represent what the actual combined results of operations or the combined financial position of the combined company would be had the Acquisition Transaction occurred on the dates assumed, nor are they necessarily indicative of future combined results of operations or combined financial position. The unaudited combined financial statements do not reflect any cost savings or synergies that the management of Bionik Laboratories Inc. and Bionik Laboratories Corp. could have achieved if they were together through this period.
The unaudited pro forma combined statements of operations for the periods presented give effect to the Acquisition Transaction and The Offering as if they had been consummated on April 1, 2013 the start of the March 31, 2014 year end and at April 1, 2014 the starting period of the nine months ended December 31, 2014, the beginning of the earliest period presented. The unaudited pro forma balance sheets give effect to the Acquisition Transaction as if they had occurred on the dates of those balances sheets.
The effects of the Acquisition Transaction have been prepared using the purchase method of accounting and applying the assumptions and adjustments described in the accompanying notes.
We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should also be read in conjunction with these unaudited pro forma financial statements. Please read this information in conjunction with:
· | The audited financial statements of Bionik Laboratories Inc. at March 31, 2014 and 2013. |
· | The unaudited financial statements of Bionik Laboratories Inc. for the nine months ended December 31, 2014 and 2013. |
· | The unaudited financial statements of Bionik Laboratories Corp. (then known as Drywave Technologies Inc.) included in its Quarterly Report on Form 10-Q at March 31, 2014 and 2013 |
· | The unaudited financial statements of Bionik Laboratories Corp. (then known as Drywave Technologies Inc.) included in its Quarterly Report on Form 10-Q at September 30, 2014 and 2013. |
The audited pro forma combined financial statements should be read in conjunction with the information contained in the Current Report on Form 8-K.
Bionik Laboratories Corporation
Pro Forma Combined Statements of Financial Position
As at December 31, 2014 and September 30, 2014
Expressed in US $
(Unaudited)
Pro Forma | Pro Forma | |||||||||||||||||
December 31, 2014 | September 30, 2014 | Note | Adjustment | Consolidated | ||||||||||||||
Bionik
Laboratories Inc. |
Drywave
Technologies Inc. |
|||||||||||||||||
Assets | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equilvents | 209,933 | 8,787 | (a) | 5,332,042 | 5,541,975 | |||||||||||||
(d) | (8,787 | ) | ||||||||||||||||
Prepaid and other receivables | 81,130 | - | - | 81,130 | ||||||||||||||
Due from related parties | 44,986 | - | - | 44,986 | ||||||||||||||
Total current assets | 336,049 | 8,787 | 5,323,255 | 5,668,091 | ||||||||||||||
Equipment | 77,922 | - | - | 77,922 | ||||||||||||||
Total Assets | 413,971 | 8,787 | 5,323,255 | 5,746,013 | ||||||||||||||
Liabilities | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable and accrued expenses | 308,947 | 3,585 | (c) | 150,000 | 458,947 | |||||||||||||
(d) | (3,585 | ) | ||||||||||||||||
Accrued liabilities | 155,463 | - | - | 155,463 | ||||||||||||||
Due to related party | - | 20,874 | (d) | (20,874 | ) | - | ||||||||||||
Total current liabilities | 464,410 | 24,459 | 125,541 | 614,410 | ||||||||||||||
Stockholders' equity (deficit): | ||||||||||||||||||
Common stock, | 4,837,844 | 116,218 | (b.1) | (116,218 | ) | 10,169,886 | ||||||||||||
(a) | 5,332,042 | |||||||||||||||||
Additional paid-in capital | 148,349 | (91,005 | ) | (b.2) | 91,005 | 148,349 | ||||||||||||
Deficit accumulated during the development stage | (5,053,982 | ) | (40,885 | ) | (b.3) | 40,885 | (5,203,982 | ) | ||||||||||
(c) | (150,000 | ) | ||||||||||||||||
Accumulated other comprehensive income | 17,350 | - | - | 17,350 | ||||||||||||||
Total stockholders' equity (deficit) | (50,439 | ) | (15,672 | ) | 5,197,714 | 5,131,603 | ||||||||||||
Total Liabilities and Stockholders' Equity (Deficit) | 413,971 | 8,787 | 5,323,255 | 5,746,013 |
Bionk Laboratories Corp.
Pro Forma Consolidated Statements of Operations and Comprehensive Loss
Expressed in US $
For the Nine months ended December 31, 2014 and September 30, 2014
(Unaudited)
12/31/2014 | 9/30/2014 | |||||||||||||||||||
9months | 9 months | |||||||||||||||||||
Bionik Labratories Inc. | Drywave Technologies Inc. | Note | Pro Forma Adjustment | Pro Forma Consolidated | ||||||||||||||||
Revenue - related party | - | 4,500 | 4,500 | |||||||||||||||||
- | ||||||||||||||||||||
Operating expenses: | - | |||||||||||||||||||
Research and development | 1,178,837 | - | 1,178,837 | |||||||||||||||||
Professional and consulting fees | 601,491 | - | (c) | 150,000 | 751,491 | |||||||||||||||
General and administrative | 549,947 | 10,362 | 560,309 | |||||||||||||||||
Imputed Interest | 27,677 | - | 27,677 | |||||||||||||||||
Interest | 6,212 | - | 6,212 | |||||||||||||||||
Depreciation | 34,036 | - | 34,036 | |||||||||||||||||
Other income | (46,026 | ) | - | (46,026 | ) | |||||||||||||||
Stock based compensation expense | 112,573 | - | 112,573 | |||||||||||||||||
Total operating expenses | 2,464,747 | 10,362 | - | 150,000 | 2,625,109 | |||||||||||||||
- | ||||||||||||||||||||
Income (loss) from operations | (2,464,747 | ) | (5,862 | ) | - | 150,000 | (2,620,609 | ) | ||||||||||||
- | ||||||||||||||||||||
Other income (expense): | - | |||||||||||||||||||
Foreign Exchange | 24,390 | - | 24,390 | |||||||||||||||||
Miscellaneous income | - | - | - | |||||||||||||||||
Interest expense | - | - | - | |||||||||||||||||
Total other income (expense) | 24,390 | - | 24,390 | |||||||||||||||||
- | ||||||||||||||||||||
Net income (loss) | (2,489,137 | ) | (5,862 | ) | $ | - | 150,000 | (2,596,219 | ) | |||||||||||
- | ||||||||||||||||||||
Net income (loss) per common share - basic | (0.16 | ) | (0.00 | ) | (0.04 | ) | ||||||||||||||
Weighted average number of common shares outstanding - basic and diluted | 15,358,291 | 116,218,383 | 63,750,750 |
Bionik Laboratories Corporation
Pro Forma Combined Statements of Financial Position
As at March 31, 2014
Expressed in US $
(Unaudited)
Pro Forma | Pro Forma | |||||||||||||||||
March 31 2014 | March 31 2014 | Note | Adjustment | Consolidated | ||||||||||||||
Bionik
Laboratories Inc. |
Drywave
Technologies Inc. |
|||||||||||||||||
Assets | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equilvents | 3,482 | 5,877 | (a) | 5,332,042 | 5,335,524 | |||||||||||||
(d) | (5,877 | ) | ||||||||||||||||
Prepaid and other receivables | 505,787 | - | 505,787 | |||||||||||||||
Due from related parties | - | - | - | |||||||||||||||
Total current assets | 509,269 | 5,877 | 5,326,165 | 5,841,311 | ||||||||||||||
Equipment | 6,752 | - | 6,752 | |||||||||||||||
Total Assets | 516,021 | 5,877 | 5,326,165 | 5,848,063 | ||||||||||||||
Liabilities | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable and accrued expenses | 120,751 | 150 | (c) | 150,000 | 270,751 | |||||||||||||
(d) | (150 | ) | ||||||||||||||||
Accrued liabilities | 128,739 | - | 128,739 | |||||||||||||||
Convertible secured promissory note | 119,112 | - | 119,112 | |||||||||||||||
Loans payable | 772,146 | - | 772,146 | |||||||||||||||
Due to related party | 149,899 | 16,454 | (d) | (16,454 | ) | 149,899 | ||||||||||||
Total current liabilities | 1,290,647 | 16,604 | 133,396 | 1,440,647 | ||||||||||||||
Commitments and Contingencies (Note 8) | ||||||||||||||||||
Stockholders' equity (deficit): | ||||||||||||||||||
Common stock, | 1,658,585 | 116,218 | (b.1) | (116,218 | ) | 6,990,627 | ||||||||||||
(a) | 5,332,042 | |||||||||||||||||
Additional paid-in capital | 114,284 | (91,005 | ) | (b.2) | 91,005 | 114,284 | ||||||||||||
Deficit accumulated during the development stage | (2,589,235 | ) | (35,940 | ) | (b.3) | 35,940 | (2,739,235 | ) | ||||||||||
(150,000 | ) | |||||||||||||||||
Accumulated other comprehensive income | 41,740 | - | - | 41,740 | ||||||||||||||
Total stockholders' equity (deficit) | (774,626 | ) | (10,727 | ) | 5,192,769 | 4,407,416 | ||||||||||||
- | ||||||||||||||||||
Total Liabilities and Stockholders' Equity (Deficit) | 516,021 | $ | 5,877 | 5,326,165 | 5,848,063 |
Bionk Laboratories Corp.
Pro Forma Consolidated Statements of Operations and Comprehensive Loss
Expressed in US $
For the Year ended March 31 2014
(Unaudited)
12 months | 12 months | |||||||||||||||||||
Bionik
Labratories Inc. |
Drywave
Technologies Inc. |
Note |
Pro
Forma
Adjustment |
Pro
Forma
Consolidated |
||||||||||||||||
Revenue - related party | - | 5,500 | 5,500 | |||||||||||||||||
- | ||||||||||||||||||||
Operating expenses: | - | |||||||||||||||||||
Research and development | 937,426 | - | 937,426 | |||||||||||||||||
Professional and consulting fees | 574,875 | - | (c) | 150,000 | 724,875 | |||||||||||||||
General and administrative | 302,353 | 16,644 | 318,997 | |||||||||||||||||
Imputed Interest | 101,985 | - | 101,985 | |||||||||||||||||
Interest | 28,629 | - | 28,629 | |||||||||||||||||
Depreciation | 1,772 | - | 1,772 | |||||||||||||||||
Other income | (495,271 | ) | - | (495,271 | ) | |||||||||||||||
Total operating expenses | 1,451,769 | 16,644 | - | 150,000 | 1,618,413 | |||||||||||||||
- | ||||||||||||||||||||
Income (loss) from operations | (1,451,769 | ) | (11,144 | ) | - | 150,000 | (1,612,913 | ) | ||||||||||||
- | ||||||||||||||||||||
Other income (expense): | - | |||||||||||||||||||
Foreign Exchange | (18,284 | ) | - | (18,284 | ) | |||||||||||||||
Miscellaneous income | - | - | - | |||||||||||||||||
Interest expense | - | - | - | |||||||||||||||||
Total other income (expense) | (18,284 | ) | - | (18,284 | ) | |||||||||||||||
- | ||||||||||||||||||||
Net income (loss) | (1,433,485 | ) | (11,144 | ) | - | 150,000 | (1,631,197 | ) | ||||||||||||
- | ||||||||||||||||||||
Net income (loss) per common share - basic | (0.12 | ) | (0.00 | ) | (0.03 | ) | ||||||||||||||
Weighted average number of common shares outstanding - basic and diluted | 11,612,900 | 116,218,383 | (a) | 63,750,750 |
Bionik Laboratories Corp.
Notes to Pro Forma Combined Financial Statements
(Expressed in US $)
(Unaudited)
1. | The Transaction |
On February 26, 2015, Bionik Laboratories Inc. (“BLI”), a private a company existing under the laws of Canada, was acquired by a wholly-owned subsidiary (“Acquireco”) of Bionik Laboratories Corp. (“BLC”), a Delaware corporation (the “Acquisition Transaction”), and raised an aggregate of $6,188,600 of Units, each Unit consisting of one share of common stock of BLC and one warrant to purchase a share of common stock at $1.40 per share (the “Offering”). The Acquisition Transaction was accounted for as a reverse merger whereby BLI was deemed to have acquired BLC for accounting purposes only.
Also on February 26, 2015, BLI created a new class of exchangeable shares (the “Exchangeable Shares”), which were issued to the existing common shareholders of BLI in exchange for all of their outstanding common shares, all of which were cancelled (the “Exchangeable Share Transaction”).
Pursuant to the rights and privileges of the Exchangeable Shares, the holders of such Exchangeable Shares maintain the right to (i) receive dividends equal to, and paid concurrently with, dividends paid by BLC to the holders of its common stock; (ii) vote, through a share of Special Voting Preferred Stock issued by BLC, on all matters that the holders of common stock of BLC are entitled to vote upon; and (iii) receive shares of common stock upon the liquidation or insolvency of BLC upon the redemption of the Exchangeable Shares by Acquireco.
As a result of the Acquisition Transaction, the Exchangeable Share Transaction and the Offering, as of February 26, 2015:
(a) | BLC had outstanding: |
(i) | 6,000,000 shares of common stock held by its existing shareholders (of which 1,905,700 shares of common stock are subject to forfeiture depending on whether any additional amounts are subsequently raised in the Offering and |
(ii) | 7,735,750 shares of common stock issued to investors in the Offering, |
(b) BLC reserved 50,000,000 shares of common stock which may be issued upon the exchange of up to 50,000,000 Exchangeable Shares held by the existing shareholders of BLI, which Exchangeable Shares vote with the common stock of BLC as if converted into common stock on a one-for-one basis through the issuance of a single share of The Special Voting Preferred Stock of BLC,
Bionik Laboratories Corp.
Notes to Pro Forma Combined Financial Statements
(Expressed in US $)
(Unaudited)
(c) BLC issued 7,735,750 four-year warrants exercisable at a price per share of $1.40, to the investors in the Offering and;
(d) BLC issued 773,575 four-year warrants to the brokers in the Offering.
The Acquisition Transaction will constitute a reverse merger of BLC under the policies of Financial Industry Regulatory Authority. The total number of shares in BLI before the transaction was 15,894,412 and these shares were converted at a ratio of 3.14576 to 50,000,000 Exchangeable Shares, which represent the right to vote and to receive 50,000,000 shares of the common stock of BLC. With the existing shares in BLC before the transaction of 6,000,000, the shares issued in the Offering and the Exchangeable Shares, there are an aggregate of 63,735,750 shares of common stock of BLC outstanding (or in the case of the Exchangeable Shares, deemed to be outstanding) in BLC upon completion of the Acquisition Transaction.
2. | Basis of Presentation |
The unaudited pro forma combined financial information for BLC as at and for the nine month period ended December 31, 2014 and year ended March 31, 2014, respectively, has been prepared by management to reflect the Acquisition Transaction of BLC by BLI as described in note 1.
The audited pro forma combined financial information that follows for the year ended March 31, 2014 has been derived from the historical audited financial statements of BLI for the year ended March 31, 2014 and from the Quarterly Reports on Form 10-Q of BLC (then known as Drywave Technologies Inc.) as at March 31, 2014 and for the period ended March 31, 2014.
The unaudited pro forma combined financial information that follows for the nine months ended December 31, 2014 has been derived from BLI unaudited financial statements for this period and the September 30, 2014 information from the Quarterly Report on Form 10-Q of BLC (then known as Drywave Technologies Inc.) as at September 30, 2014.
Certain adjustments have been made while combining the two companies which are detailed in note 3. The pro forma adjustments are based on available information and assumptions that BLC believes are reasonable. Such adjustments are estimates and are subject to change.
Bionik Laboratories Corp.
Notes to Pro Forma Combined Financial Statements
(Expressed in US $)
(Unaudited)
The unaudited pro forma combined financial statement of operations for the year ended March 31, 2014 and period ended December 31, 2014 have been prepared as if the Acquisition Transaction happened at April 1, 2013 and 2014, respectively, the first day of the year and period then presented.
The Acquisition Transaction will be accounted for as a reverse acquisition in accordance with the Financial Accounting Standards Board (ASC 805, Business Combinations). BLC’s management has evaluated the guidance contained in ASC 805 with respect to the identification of the acquirer in the Acquisition Transaction and concluded, based on a consideration of the pertinent facts and circumstances, that BLI will acquire BLC for financial accounting purposes. Accordingly, the Acquisition Transaction has been accounted for in the unaudited pro forma combined financial statements as a continuation of the financial statements of BLC together with an exchange of shares, to the former shareholders of BLI and a re-capitalization of the equity of BLC.
Accordingly, the Acquisition Transaction has been accounted for in the unaudited pro forma combined financial statements as a continuation of the financial statements of BLI, together with the exchanged shares of BLI to BLC, totaling 50,0000,000, the existing shares of BLC totaling 6,000,000, and new shareholders of BLC totaling 7,735,750, for a total of 63,735,750 common shares outstanding.
3. | Pro Forma Assumptions and Adjustments |
The unaudited pro forma combined financial statements give effect to the following assumptions and adjustments:
(a) | On February 26, 2015, BLC issued 7,735,750 shares of common stock along with 7,734,750 warrants exercisable at $1.40 for four years, for net proceeds of $5,383,734. This issuance includes the conversion of the $500,000 loan received in early 2015. |
(b) | Eliminates the capital stock, additional paid in capital and deficit of BLC. |
(c) | The company has accrued for an additional $150,000 of costs that may reduce the net proceeds for invoices related to this transaction that have not yet been presented. |
(d) | To eliminate the cash, accounts payable and related party payables from BLC that will be assumed by the prior shareholders of Drywave Technologies Inc. |