UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2020
Commission File Number: 001-38781
HEXO Corp.
(Translation of registrants name into English)
3000 Solandt Road
Ottawa, Ontario, Canada K2K 2X2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
EXPLANATORY NOTE
Exhibits 99.1 to 99.4 included with this Report on Form 6-K are hereby incorporated by reference into the Registration Statement on Form F-10 of HEXO Corp. (File No. 333-228924).
Exhibit |
Description |
|
99.1 | Material Change Report dated July 7, 2020 | |
99.2 | First Supplemental Indenture dated May 29, 2020 | |
99.3 | Indenture dated December 5, 2019 | |
99.4 | Warrant Indenture dated June 5, 2020 |
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.
HEXO Corp. | ||||||
Date: July 10, 2020 | By: |
/s/ Sebastien St-Louis |
||||
Name: Sebastien St-Louis | ||||||
Title: President and Chief Executive Officer |
Exhibit 99.1
FORM 51-102F3
MATERIAL CHANGE REPORT
1. |
Name and Address of Company |
HEXO Corp. (the Company)
3000 Solandt Road
Ottawa, Ontario K2K 2X2
2. |
Date of Material Change |
June 30, 2020
3. |
News Release |
A news release dated June 30, 2020 was disseminated through the facilities of GlobeNewswire and was filed on the System for Electronic Document Analysis and Retrieval (SEDAR). A copy of the news release is available under the Companys profile on SEDAR at www.sedar.com.
4. |
Summary of Material Change |
On June 30, 2020, the Company completed its previously announced early conversion option (the Early Conversion Option) in respect of $29.86 million aggregate principal amount of its outstanding $70 million aggregate principal amount of 8% unsecured convertible debentures maturing December 5, 2022 (the Debentures).
5. |
Full Description of Material Change |
On June 30, 2020, the Company completed its previously announced Early Conversion Option in respect of $29.86 million aggregate principal amount of its outstanding $70 million aggregate principal amount of Debentures. The Early Conversion Option was completed in two closings, with a final closing on June 30, 2020 in which $6,265,000 aggregate principal amount of Debentures was converted into 7,831,250 units of the Company (the Conversion Units) at a price of $0.80 per Conversion Unit, and an initial closing on June 10, 2020 in which $23,595,000 aggregate principal amount of Debentures was converted into 29,493,750 Conversion Units at the same price, for a total of $29,860,000 aggregate principal amount of Debentures converted into 37,325,000 Conversion Units under the Early Conversion Option.
Each Conversion Unit consisted of one common share of the Company (a Conversion Share) and one-half of one common share purchase warrant of the Company (each whole warrant, a Conversion Warrant). Each Conversion Warrant is exercisable by the holder to purchase one common share of the Company (a Conversion Warrant Share) at an exercise price of $1.00 per share for a period of three years from issuance. The Conversion Shares are subject to restrictions against resale for 12 months from issuance as part of the terms of the Early Conversion Option. In addition, the Conversion Warrants and the common shares of the Company issuable upon exercise of the Conversion Warrants are subject to resale restrictions for four months and one day following issuance under applicable securities laws.
The Early Conversion Option does not affect the rights of those Debenture holders who have not accepted it. Debenture holders who did not accept the Early Conversion Option are not entitled to the benefit of the Early Conversion Option and will not receive the Conversion Units issuable upon conversion of the Debentures subject to the Early Conversion Option, and retain their full rights under the Debentures including their existing conversion rights.
As part of the initial closing of the Early Conversion Option, certain insiders of the Company holding, directly or indirectly, $7.87 million aggregate principal amount of Debentures converted their Debentures into an aggregate of 9,837,500 Conversion Units. As a result of the participation of such insiders in the Early Conversion Option, the Early Conversion Option constitutes a related party transaction with each of these insiders under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (MI 61-101). The issuance of the Conversion Units to the insiders under the Early Conversion Option was exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, as the fair market value of the Conversion Units issuable to, and the consideration payable by, such persons did not exceed 25% of the Companys market capitalization.
6. |
Reliance on Section 7.1(2) of National Instrument 51-102 |
Not Applicable.
7. |
Omitted Information |
Not Applicable.
8. |
Executive Officer |
The name and business number of the executive officer of the Company who is knowledgeable about the material change and this report is:
Sébastien St-Louis, President and Chief Executive Officer
1-866-438-8429
invest@HEXO.com
9. |
Date of Report |
July 7, 2020
- 2 -
Exhibit 99.2
FIRST SUPPLEMENTAL INDENTURE
THIS First Supplemental Indenture is made as of the 29th day of May, 2020 between
HEXO CORP., a corporation incorporated under the laws of the Province of Ontario
(the Corporation)
AND
TSX TRUST COMPANY, a trust company existing under the laws of Canada and registered to carry on business in the Province of Ontario
(the Trustee)
RECITALS:
A. |
The Corporation and the Trustee executed an indenture (the Original Indenture) dated as of December 5, 2019 providing for the issue of up to $100 million aggregate principal amount of 8% unsecured convertible debentures due December 5, 2022 (the Debentures); |
B. |
The Corporation desires to supplement the Original Indenture by amending and adding to certain terms and provisions and schedules contained in the Original Indenture; |
C. |
Section 14.1 of the Original Indenture provides for the creation of indentures supplemental to the Original Indenture for the purposes of making provisions of the Original Indenture which are not inconsistent with the Original Indenture as may be necessary or desirable with respect to matters or questions arising thereunder, including the making of any modifications in the form of the Debentures which do not affect the substance thereof and which in the opinion of the Trustee relying on an opinion of Counsel will not be prejudicial to the interests of the Debentureholders; |
D. |
The Trustee is authorized and directed to enter into this first supplemental indenture (the First Supplemental Indenture) and to hold all rights, interests and benefits contained herein for and on behalf of those persons who are Debentureholders issued pursuant to the Indenture as modified by this First Supplemental Indenture from time to time; |
E. |
All necessary acts and proceedings have been performed and taken and all necessary resolutions have been passed to authorize the execution and delivery of this First Supplemental Indenture and to make this First Supplemental Indenture legal, valid, effective and binding upon each of the Corporation and the Trustee for and on behalf of the Debentureholders in accordance with the terms of the Original Indenture, as amended by this First Supplemental Indenture; and |
F. |
The foregoing recitals are made as representations and statements of fact by the Corporation and not by the Trustee. |
NOW THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSES that for good and valuable consideration mutually given and received, the receipt and sufficiency of which is hereby acknowledged, and the parties hereto agree as follows:
1. |
This First Supplemental Indenture is supplemental to the Original Indenture and the Original Indenture will henceforth be read in conjunction with this First Supplemental Indenture and all the provisions of the Original Indenture, except only insofar as the same may be inconsistent with the express provisions hereof, will apply and have the same effect as if all the provisions of the Original Indenture and of this First Supplemental Indenture were contained in one instrument and the expressions used herein will have the same meaning as is ascribed to the corresponding expressions in the Indenture. |
2. |
All capitalized terms contained in this First Supplemental Indenture (including the recitals hereto), unless otherwise defined herein, shall, for the purposes hereof, have their respective meanings as set out in the Original Indenture, unless otherwise or the context otherwise requires. |
3. |
On and after the date hereof, each reference to the Original Indenture, as amended by this First Supplemental Indenture, this indenture, herein, hereby, and similar references, and each reference to the Original Indenture in any other agreement, certificate, document or instrument relating thereto, will mean and refer to the Original Indenture as amended by this First Supplemental Indenture. |
4. |
The Original Indenture is hereby amended as follows: |
(a) |
Section 1.1 shall be amended by inserting the following new definitions in alphabetical order, and the definition subsections in Section 1.1 shall be renumbered accordingly (including any applicable cross-references thereto): |
Early Conversion Acceptance Notice means the written notice to the Corporation from each of the Early Conversion Electing Debentureholders that they have accepted and wish to exercise the Early Conversion Option to convert the aggregate principal amount of the Debentures identified by them into Early Conversion Units in accordance with the terms and conditions of the Early Conversion Option;
Early Conversion Electing Debentureholders means holders of $29,860,000 aggregate principal amount of Debentures who have provided written notice to the Corporation that they have accepted and wish to exercise the Early Conversion Option to convert the aggregate principal amount of the Debentures identified by them into Early Conversion Units in accordance with the terms and conditions of the Early Conversion Option;
Early Conversion Option means the option provided to all of the Debentureholders by written notice from the Corporation to the Debentureholders dated May 14, 2020 to convert Debentures into Early Conversion Units at the Early Conversion Price, subject to: (i) holders of a minimum of $20,000,000 aggregate principal amount of Debentures electing to accept the option; (ii) a limit on conversion of $30,000,000 aggregate principal amount of the Debentures and, if there were Debentureholders electing to accept the early conversion option for more than this maximum amount, a requirement for pro rata conversion to the maximum amount of $30,000,000; (iii) approval of the TSX and the New York Stock Exchange; (iv) the Early Conversion Resale Restrictions; (v) the Corporations right not to proceed with the Early Conversion Option in its sole discretion; and (vi) acceptance of the option by holders by written notice to the Corporation on or before May 17, 2020;
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Early Conversion Price means the dollar amount for which each Early Conversion Unit shall be issued upon the conversion of Debentures under the Early Conversion Option in accordance with the provisions of Article 5, being $0.80;
Early Conversion Resale Restrictions means: (i) in respect of the Early Conversion Shares, contractual restrictions against resale for a period of one year from issuance as part of the terms of the Early Conversion Option; and (ii) in respect of the Early Conversion Warrants and the Early Conversion Warrant Shares, restrictions against resale for a period of 4 months and one day from issuance of the Early Conversion Warrants in accordance with applicable securities laws;
Early Conversion Shares means the Common Shares partially comprising the Early Conversion Units;
Early Conversion Surrender Deadline means 5:00 p.m. (Toronto time) on Thursday, June 4, 2020, or such later date as the Corporation may advise the Early Conversion Electing Debentureholders and the Trustee in writing before 5:00 p.m. (Toronto time) on June 4, 2020;
Early Conversion Units means units of the Corporation to be issued upon the conversion of Debentures under the Early Conversion Option, each unit consisting of one Common Share and one-half of one Early Conversion Warrant;
Early Conversion Warrants means the common share purchase warrants of the Corporation partially comprising the Early Conversion Units, each whole warrant being exercisable by the holder thereof to acquire one Common Share at an exercise price of $1.00 per share for a period of three years, and which will be issued under and governed by a warrant indenture to be entered into between the Corporation and the Trustee as warrant agent;
Early Conversion Warrant Shares means the Common Shares issuable upon exercise of the Early Conversion Warrants;
(b) |
Section 2.1 shall be amended by inserting the following new Subsection 2.1(11): |
(11) Early Conversion Option. Upon and subject to the terms and conditions of Article 5 and Section 3.6, pursuant to the Early Conversion Option, each Early Conversion Electing Debentureholder may convert the principal amount of the Debentures identified by them in their Early Conversion Acceptance Notice into Early Conversion Units at the Early Conversion Price, such that 1,250 Early Conversion Units (consisting of 1,250 Early Conversion Shares and 625 Early Conversion Warrants) shall be issued for each $1,000 principal amount of Debentures so converted. Early Conversion Electing Debentureholders converting their Debentures will receive, in addition to the applicable number of Early Conversion Units, accrued and unpaid interest (less any taxes required to be deducted) in respect of the Debentures surrendered for conversion up to but excluding the Date of Conversion from, and including, the last Interest Payment Date prior to the Date of Conversion.
In order to convert the principal amount of their Debentures into Early Conversion Units at the Early Conversion Price pursuant to the Early Conversion Option, Early Conversion Electing Debentureholders must surrender the Debenture
3
Certificate representing their Debentures to the Trustee at its principal office in the City of Toronto, Ontario together with the conversion notice in the form of Schedule B1 on or before the Early Conversion Surrender Deadline in accordance with Section 5.13 hereof. For greater certainty, a maximum of 37,325,000 Early Conversion Shares and 18,662,500 Early Conversion Warrants may be issued pursuant to the Early Conversion Electing Debentureholders.
The Early Conversion Option does not affect the rights of those Debentureholders who are not Early Conversion Electing Debentureholders exercising the Early Conversion Option. Debentureholders who are not Early Conversion Electing Debentureholders exercising the Early Conversion Option will not be entitled to exercise the Early Conversion Option and will not receive the Conversion Units issuable upon conversion of the Debentures subject to the Early Conversion Option, and will retain their full rights under this Indenture including their existing conversion rights as set out in this Indenture.
(c) |
The third sentence of Section 2.10(1) shall be deleted in its entirety and replaced with the following: |
Without limitation to the foregoing, other than the issuance of the Early Conversion Units under the Early Conversion Option including the Early Conversion Warrant Shares issuable upon exercise of the Early Conversion Warrants: (i) no more than an aggregate of 64,252,771 Common Shares shall be issued upon the conversion of the Debentures and/or the exercise of the Share Payment Right unless approval therefor is obtained by the Corporations shareholders by a majority of votes cast, (ii) no more than 10,851,108 Common Shares shall be issued upon the conversion of the Debentures and/or the exercise of the Share Payment Right to holders who are insiders of the Corporation or were insiders of the Corporation at the time their Debentures were acquired unless approval therefor is obtained by the Corporations shareholders by a majority of votes cast, other than insiders of the Corporation holding Debentures, their associates and affiliates; and (iii) should the issuance of Common Shares in excess of 31,645,570 Common Shares (being $100,000,000 aggregate principal amount of the Debentures divided by the Conversion Price) materially affect control of the Corporation, such issuance shall require approval by the Corporations shareholders by a majority of votes cast.
(d) |
Article 5 shall be amended to include the following new Section 5.13: |
Section 5.13 Early Conversion Option Conversion
(1) In order to exercise the Early Conversion Option, an Early Conversion Electing Debentureholder shall, on or before Early Conversion Surrender Deadline, surrender the Debenture Certificate representing their Debentures to the Trustee at its principal office in the City of Toronto, Ontario together with the conversion notice in the form of Schedule B1, duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Debenture in the amount identified by them in their Early Conversion Acceptance Notice to acquire Early Conversion Shares and Early Conversion Warrants comprising the Early Conversion Units in accordance with the provisions of this Article.
4
(2) Upon receipt of an Early Conversion Electing Debentureholders Debenture Certificate and conversion notice in the form of Schedule B1, such Early Conversion Electing Debentureholder or, subject to compliance with the applicable terms and provisions hereof and payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) as set out in the conversion notice in the form of Schedule B1, shall be entitled to be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified in Section 5.4(2)) as the holder of the number of Early Conversion Shares and Early Conversion Warrants comprising the Early Conversion Units into which such Debenture is convertible in accordance with the provisions of this Article and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), certificates for such Early Conversion Shares and Early Conversion Warrants, or at the direction of the Corporation, Direct Registration System Advices for such Early Conversion Shares to be held in book entry form and a certificate for such Early Conversion Warrants, and make or cause to be made any payment of interest to which such holder is entitled in accordance with Section 5.4(6).
(3) The certificates representing Early Conversion Shares issued upon conversion of such Debentures (or Direct Registration System Advices), will bear the following legend in accordance with the terms and conditions of the Early Conversion Option:
THESE SECURITIES ARE SUBJECT TO RESALE RESTRICTIONS UNDER THE TERMS AND CONDITIONS OF A CONVERTIBLE DEBENTURE EARLY CONVERSION OPTION. THE HOLDER OF THESE SECURITIES MUST NOT TRADE THE SECURITIES BEFORE [INSERT DATE WHICH IS ONE YEAR FROM ISSUANCE].
(4) The certificates representing Early Conversion Warrants issued upon conversion of such Debentures, together with any Early Conversion Warrants Shares issuable upon exercise of the Early Conversion Warrants prior to the date below, will bear the following legend in accordance with Applicable Securities Legislation:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT DATE WHICH IS 4 MONTHS AND 1 DAY FROM ISSUANCE].
(5) Debenture Certificates bearing the U.S. Legend shall be converted into Early Conversion Shares and Early Conversion Warrants comprising the Early Conversion Units marked to bear the U.S. Legend; provided that upon the Trustee receiving an executed conversion notice as set out in Schedule B1 with the box therein being ticked, the Trustee will issue Early Conversion Shares and Early Conversion Warrants comprising the Early Conversion Units without the US Legend.
(6) A Debenture in respect of which an Early Conversion Electing Debentureholder has accepted a notice in respect of a Change of Control Purchase Option pursuant to the provisions of Section 2.11 may be surrendered for conversion only if such notice is withdrawn in accordance with this Indenture.
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(7) An Early Conversion Electing Debentureholder surrendering a Debenture for conversion in accordance with this Section 5.13 shall be entitled to receive accrued and unpaid interest in respect thereof (less any taxes required to be deducted), in cash, from and including the last Interest Payment Date prior to the Date of Conversion up to but excluding the Date of Conversion, and the Common Shares comprising the Early Conversion Shares issued upon such conversion shall rank only in respect of distributions or dividends declared in favour of shareholders of record on and after the Date of Conversion or such later date as such holder shall become the holder of record of such Common Shares pursuant to Section 5.13(2), from which applicable date they will for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.
(8) An Early Conversion Electing Debentureholder who is a holder of a Debenture of which only a part is converted pursuant to the Early Conversion Option shall, upon the exercise of its right of conversion under the Early Conversion Option surrender such Debenture to the Trustee in accordance with Section 5.13(1), and the Trustee shall cancel the same and shall without charge forthwith certify and deliver to the holder a new Debenture or Debentures in an aggregate principal amount equal to the unconverted part of the principal amount of the Debenture so surrendered.
(d) |
Schedule B1 to this First Supplemental Indenture shall be included as Schedule B1 to the Indenture: |
5. The Debentures issued and outstanding shall be deemed to include the amendments as set forth herein, without any further action of the Debentureholders or surrender or exchange of their Debenture Certificates.
6. The Corporation and the Trustee hereby acknowledge and confirm that, except as specifically supplemented, modified or changed by the provisions of this First Supplemental Indenture, all of the terms and conditions contained in the Original Indenture are and shall remain in full force and effect, unamended, in accordance with the provisions thereof. The matters provided for in this First Supplemental Indenture shall not prejudice any act or thing done prior to the date hereof and do not constitute a novation.
7. This First Supplemental Indenture shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts, with respect to any suit, action or proceedings relating to this First Supplemental Indenture, each party irrevocably submits and attorns to the non-exclusive jurisdictions of the courts of the Province of Ontario.
8. The First Supplemental Indenture may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.
9. For the purpose of convenience, this First Supplement Indenture may be referred to as bearing the formal date of May 29, 2020 irrespective of the actual date of execution hereof.
[The balance of this page is intentionally left blank. The execution page follows.]
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IN WITNESS WHEREOF the parties have executed this First Supplemental Indenture as of the date set out above.
HEXO CORP. | ||
By: |
(signed) Sebastien St-Louis |
|
Name: Sebastien St-Louis | ||
Title: CEO | ||
TSX TRUST COMPANY | ||
By: |
(signed) Brett Higgs |
|
Name: Brett Higgs | ||
Title: Corporate Trust Officer | ||
By: |
(signed) Janet Shopido |
|
Name: Janet Shopido | ||
Title: Corporate Trust Officer |
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Schedule B1 Form of Notice of Conversion
CONVERSION NOTICE
(EARLY CONVERSION OPTION)
NOTE: In order to convert their Debentures into Early Conversion Units pursuant to the Early Conversion Option, Early Conversion Electing Debentureholders must deliver this conversion notice together with the Debenture Certificate representing their Debentures to the Trustee at the address indicated below by 5:00 p.m. (Toronto time) on Thursday, June 4, 2020, or such later date as the Corporation may advise the Early Conversion Electing Debentureholders and the Trustee in writing before 5:00 p.m. (Toronto time) on June 4, 2020.
To: |
HEXO CORP. (the Corporation) |
c/o: |
TSX TRUST COMPANY (the Trustee) |
100 Adelaide Street West, Suite 301
Toronto, Ontario M5H 4H1
Attention: Vice President Trust Services
All capitalized terms used herein have the meaning ascribed thereto in the Indenture dated December 5, 2019 between the Corporation and the Trustee, as amended, unless otherwise indicated.
The undersigned registered holder of Debentures, being an Early Conversion Electing Debentureholder, irrevocably elects to convert such Debentures (in the principal amount of $_____________________ as set out in the undersigneds Early Conversion Acceptance Notice) pursuant to the undersigneds exercise of the Early Conversion Option in accordance with the terms of the Indenture and tenders herewith the Debentures and directs that the Early Conversion Shares and Early Conversion Warrants comprising the Early Conversion Units issuable upon conversion of the Debentures be issued and delivered to the person indicated below. (If Early Conversion Shares and Early Conversion Warrants are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned and a Residency Declaration Form must be completed and delivered in respect of such other person).
In connection with the undersigneds exercise of the Early Conversion Option, the undersigned acknowledges and agrees that: [check all]
☐ | A. | The Early Conversion Shares partially comprising the Early Conversion Units to be issued to the undersigned, shall be subject to the Early Conversion Resale Restrictions such that the undersigned shall be restricted from selling the Early Conversion Shares for a period of one year from issuance, and the certificates (or Direct Registration System Advices) representing the Early Conversion Shares shall bear restrictive legends to such effect; | ||||
☐ | B. | The Early Conversion Warrants partially comprising the Early Conversion Units to be issued to the undersigned and the Early Conversion Warrant Shares issuable upon exercise of the Early Conversion Warrants, shall be subject to the Early Conversion Resale Restrictions such that the undersigned shall be restricted from selling the Early Conversion Warrants and the Early Conversion Warrant Shares for a period of 4 months and one day from issuance, and the certificates |
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representing the Early Conversion Warrants and any Early Conversion Warrant Shares issued during such period shall bear restrictive legends to such effect; and | ||||||
☐ | C. | Upon the issuance of the Early Conversion Shares and Early Conversion Warrants comprising the Early Conversion Units to the undersigned and the payment to the undersigned of all accrued and unpaid interest (less any taxes required to be deducted) in respect of the Debentures surrendered for conversion in accordance with the terms of the Indenture, the Corporation shall be deemed to have fully paid, satisfied and discharged all of the outstanding Debentures converted and the undersigned shall irrevocably release the Corporation from all obligations thereunder. | ||||
The undersigned represents and warrants that it: [check one only] | ||||||
☐ | A. | is not in the United States or a U.S. Person as defined in Rule 902(k) of Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act) and is not converting the Debentures for the account or benefit of a U.S. Person (as defined in Rule 902(k) of Regulation S under the U.S. Securities Act) or a person in the United States; or | ||||
☐ | B. | is a registered holder that acquired the Debentures in a transaction that was exempt from registration under the U.S. Securities Act and applicable state securities laws and acquired the Debentures in a transaction that was: (a) within the United States in accordance with: (1) Rule 144A under the Securities Act or (2) Rule 144 under the Securities Act and in each case in compliance with applicable state securities laws; or (b) in another transaction that does not require registration under the Securities Act or any applicable state securities laws, provided that in the case of transfers pursuant to (a) or (b) above, a legal opinion reasonably satisfactory to the Corporation must first be provided. |
Dated: |
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|
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(Signature of Registered Holder) | ||||
NOTE: | If Early Conversion Shares and Early Conversion Warrants are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or by a member of an acceptable Medallion Guarantee Program. The Guarantor must affix a stamp bearing the actual words: SIGNATURE GUARANTEED. | |||
(Print name in which Early Conversion Shares and Early Conversion Warrants are to be issued, delivered and registered): |
Name: |
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|
||||
Address | ||||
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(City, Province and Postal Code) | ||||
Name of guarantor: |
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Authorized signature: |
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Exhibit 99.3
Execution Copy
INDENTURE
Made as of December 5, 2019
Between
HEXO CORP.
(the Corporation)
and
TSX TRUST COMPANY
(the Trustee)
TABLE OF CONTENTS
RECITALS |
1 | |||
ARTICLE 1 INTERPRETATION |
1 | |||
Section 1.1 Definitions |
1 | |||
Section 1.2 Meaning of Outstanding |
5 | |||
Section 1.3 Interpretation |
6 | |||
Section 1.4 Headings, etc. |
7 | |||
Section 1.5 Time of Essence |
7 | |||
Section 1.6 Monetary References |
7 | |||
Section 1.7 Invalidity, etc. |
7 | |||
Section 1.8 Language |
7 | |||
Section 1.9 Successors and Assigns |
7 | |||
Section 1.10 Severability |
7 | |||
Section 1.11 Entire Agreement |
7 | |||
Section 1.12 Benefits of Indenture |
7 | |||
Section 1.13 Applicable Law and Attornment |
8 | |||
Section 1.14 Currency of Payment |
8 | |||
Section 1.15 Non-Business Days |
8 | |||
Section 1.16 Accounting Terms |
8 | |||
Section 1.17 Calculations |
8 | |||
Section 1.18 Schedules |
8 | |||
ARTICLE 2 THE DEBENTURES |
9 | |||
Section 2.1 Limit, Terms and Form of Debentures |
9 | |||
Section 2.2 Ranking of Debentures; Subordination and Postponement to Senior Debt |
10 | |||
Section 2.3 Execution of Debentures |
13 | |||
Section 2.4 Certification |
13 | |||
Section 2.5 Legends |
13 | |||
Section 2.6 Interim Debentures or Certificates |
14 | |||
Section 2.7 Mutilation, Loss, Theft or Destruction |
15 | |||
Section 2.8 Payments of Amounts Due on Maturity |
15 | |||
Section 2.9 Prepayment of Principal Amount During First Year |
16 | |||
Section 2.10 Payment of Principal Amount in Common Shares |
17 | |||
Section 2.11 Change of Control |
18 | |||
Section 2.12 Payment of Interest |
20 | |||
Section 2.13 Concerning Interest |
21 | |||
ARTICLE 3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP |
21 | |||
Section 3.1 Register and Transfer |
21 | |||
Section 3.2 Transferee Entitled to Registration |
22 | |||
Section 3.3 No Notice of Trusts |
22 | |||
Section 3.4 Registers Open for Inspection |
22 | |||
Section 3.5 Exchanges of Debentures |
22 | |||
Section 3.6 Closing of Registers |
23 | |||
Section 3.7 Charges for Registration, Transfer and Exchange |
23 | |||
Section 3.8 Ownership of Debentures |
23 |
(i)
ARTICLE 4 PURCHASE OF DEBENTURES |
24 | |||
Section 4.1 Purchase of Debentures by the Corporation |
24 | |||
Section 4.2 Deposit of Maturity Monies |
24 | |||
ARTICLE 5 CONVERSION OF DEBENTURES |
25 | |||
Section 5.1 Applicability of Article |
25 | |||
Section 5.2 Notice of Expiry of Conversion Privilege |
25 | |||
Section 5.3 Revival of Right to Convert |
25 | |||
Section 5.4 Manner of Exercise of Right to Convert |
25 | |||
Section 5.5 Adjustment of Conversion Price |
26 | |||
Section 5.6 No Requirement to Issue Fractional Common Shares |
32 | |||
Section 5.7 Mandatory Conversion |
32 | |||
Section 5.8 Corporation to Reserve Common Shares |
33 | |||
Section 5.9 Cancellation of Converted Debentures |
33 | |||
Section 5.10 Certificate as to Adjustment |
33 | |||
Section 5.11 Notice of Special Matters |
33 | |||
Section 5.12 Protection of Trustee |
34 | |||
ARTICLE 6 COVENANTS OF THE CORPORATION |
34 | |||
Section 6.1 To Pay Principal, Premium (if any) and Interest |
34 | |||
Section 6.2 To Pay Trustees Remuneration |
34 | |||
Section 6.3 To Give Notice of Default |
35 | |||
Section 6.4 Preservation of Existence, etc. |
35 | |||
Section 6.5 Keeping of Books |
35 | |||
Section 6.6 Annual Certificate of Compliance |
35 | |||
Section 6.7 Performance of Covenants by Trustee |
35 | |||
Section 6.8 Maintain Listing |
35 | |||
Section 6.9 No Dividends on Common Shares if Event of Default |
36 | |||
Section 6.10 Withholding Matters |
36 | |||
ARTICLE 7 DEFAULT |
36 | |||
Section 7.1 Events of Default |
36 | |||
Section 7.2 Notice of Events of Default |
38 | |||
Section 7.3 Waiver of Default |
38 | |||
Section 7.4 Enforcement by the Trustee |
38 | |||
Section 7.5 No Suits by Debentureholders |
39 | |||
Section 7.6 Application of Monies by Trustee |
40 | |||
Section 7.7 Notice of Payment by Trustee |
40 | |||
Section 7.8 Trustee May Demand Production of Debentures |
41 | |||
Section 7.9 Remedies Cumulative |
41 | |||
Section 7.10 Immunity of Directors, Officers and Others |
41 | |||
ARTICLE 8 SATISFACTION AND DISCHARGE |
41 | |||
Section 8.1 Cancellation and Destruction |
41 | |||
Section 8.2 Non-Presentation of Debentures |
41 | |||
Section 8.3 Repayment of Unclaimed Monies |
42 | |||
Section 8.4 Discharge |
42 | |||
Section 8.5 Satisfaction |
42 | |||
Section 8.6 Continuance of Rights, Duties and Obligations |
44 |
(ii)
ARTICLE 9 SUCCESSORS |
44 | |||
Section 9.1 Corporation may Consolidate, etc., Only on Certain Terms |
44 | |||
Section 9.2 Successor Substituted |
45 | |||
ARTICLE 10 COMPULSORY ACQUISITION |
45 | |||
Section 10.1 Definitions In this Indenture: |
45 | |||
Section 10.2 Offer for Debentures |
46 | |||
Section 10.3 Offerors Notice to Dissenting Shareholders |
46 | |||
Section 10.4 Delivery of Debenture Certificates |
47 | |||
Section 10.5 Payment of Consideration to Trustee |
47 | |||
Section 10.6 Consideration to be held in Trust |
47 | |||
Section 10.7 Completion of Transfer of Debentures to Offeror |
47 | |||
Section 10.8 Communication of Offer to the Corporation |
48 | |||
Section 10.9 Agreement with the Trustee |
48 | |||
ARTICLE 11 MEETINGS OF DEBENTUREHOLDERS |
48 | |||
Section 11.1 Right to Convene Meeting |
48 | |||
Section 11.2 Notice of Meetings |
48 | |||
Section 11.3 Chairman |
49 | |||
Section 11.4 Quorum |
49 | |||
Section 11.5 Power to Adjourn |
49 | |||
Section 11.6 Show of Hands |
49 | |||
Section 11.7 Poll |
49 | |||
Section 11.8 Voting |
50 | |||
Section 11.9 Proxies |
50 | |||
Section 11.10 Persons Entitled to Attend Meetings |
51 | |||
Section 11.11 Powers Exercisable by Extraordinary Resolution |
51 | |||
Section 11.12 Meaning of Extraordinary Resolution |
52 | |||
Section 11.13 Powers Cumulative |
53 | |||
Section 11.14 Minutes |
53 | |||
Section 11.15 Instruments in Writing |
53 | |||
Section 11.16 Binding Effect of Resolutions |
53 | |||
Section 11.17 Evidence of Rights Of Debentureholders |
54 | |||
ARTICLE 12 NOTICES |
54 | |||
Section 12.1 Notice to Corporation |
54 | |||
Section 12.2 Notice to Debentureholders |
54 | |||
Section 12.3 Notice to Trustee |
54 | |||
Section 12.4 Mail Service Interruption |
55 | |||
ARTICLE 13 CONCERNING THE TRUSTEE |
55 | |||
Section 13.1 No Conflict of Interest |
55 | |||
Section 13.2 Replacement of Trustee |
55 | |||
Section 13.3 Duties of Trustee |
56 | |||
Section 13.4 Reliance Upon Declarations, Opinions, etc. |
56 | |||
Section 13.5 Evidence and Authority to Trustee, Opinions, etc. |
56 | |||
Section 13.6 Officers Certificates Evidence |
57 | |||
Section 13.7 Experts, Advisers and Agents |
57 | |||
Section 13.8 Trustee May Deal in Debentures |
58 |
(iii)
Section 13.9 Investment of Monies Held by Trustee |
58 | |||
Section 13.10 Trustee Not Ordinarily Bound |
58 | |||
Section 13.11 Trustee Not Required to Give Security |
58 | |||
Section 13.12 Trustee Not Bound to Act on Trusts Request |
59 | |||
Section 13.13 Conditions Precedent to Trustees Obligations to Act Hereunder |
59 | |||
Section 13.14 Authority to Carry on Business |
59 | |||
Section 13.15 Compensation and Indemnity |
59 | |||
Section 13.16 Acceptance of Trust |
60 | |||
Section 13.17 Third Party Interests |
60 | |||
Section 13.18 Anti-Money Laundering |
60 | |||
Section 13.19 Privacy Laws |
60 | |||
Section 13.20 Force Majeure |
61 | |||
Section 13.21 Representations to the Trustee regarding U.S. Matters |
61 | |||
ARTICLE 14 SUPPLEMENTAL INDENTURES |
62 | |||
Section 14.1 Supplemental Indentures |
62 | |||
ARTICLE 15 EXECUTION AND FORMAL DATE |
63 | |||
Section 15.1 Execution |
63 | |||
Section 15.2 Formal Date |
63 |
Schedule A Form of Debenture
Schedule B Form of Notice of Conversion
Schedule C Form of Notice of Exercise of Share Payment Right on Maturity Date
Schedule D Form of Declaration for Removal of Legend
(iv)
INDENTURE
This Agreement is made as of December 5, 2019, between
HEXO CORP.
a corporation existing under the laws of the Province of Ontario
(the Corporation)
AND
TSX TRUST COMPANY
a trust company existing under the laws of Canada and registered to
carry on business in the Province of Ontario
(the Trustee)
RECITALS
A. The Corporation wishes to create and issue the Debentures in the manner and subject to the terms and conditions of this Indenture;
B. The Corporation, under the laws relating thereto, is duly authorized to create and issue the Debentures to be issued as herein provided;
C. All necessary steps in relation to the Corporation have been duly enacted, passed and/or confirmed and other proceedings taken and conditions complied with to create and issue the Debentures proposed to be issued hereunder, and when certified by the Trustee and issued as provided in this Indenture, such Debentures shall be legal, valid and binding on the Corporation in accordance with the laws relating to the Corporation; and
D. The foregoing recitals are made as representations and statements of fact by the Corporation and not by the Trustee;
FOR VALUE RECEIVED, the parties agree as follows:
ARTICLE 1 INTERPRETATION
Section 1.1 Definitions
In this Indenture and in the Debentures, unless there is something in the subject matter or context inconsistent therewith, the expressions following shall have the following meanings, namely:
(1) 1933 Act means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
(2) 90% Redemption Right has the meaning ascribed thereto in Section 2.11;
(3) this Indenture, this Convertible Debenture Indenture, hereto, herein, hereby, hereunder, hereof and similar expressions refer to this Indenture and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto;
(4) Applicable Securities Legislation means applicable securities laws (including rules, regulations, policies and instruments) in each of the applicable provinces and territories of Canada;
(5) Approved Bank has the meaning ascribed thereto in Section 13.9.
(6) Auditors of the Corporation means an independent firm of chartered accountants duly appointed as auditors of the Corporation;
(7) Board of Directors means the board of directors of the Corporation or any committee thereof;
(8) Business Day means any day other than a Saturday, Sunday or any other day that the Trustee in Toronto, Ontario is not generally open for business;
(9) Change of Control means (i) the acquisition by any person or group of persons acting jointly or in concert of beneficial ownership or control or direction over 50% or more of the then outstanding Common Shares; or (ii) the sale or transfer of all or substantially all of the consolidated assets of the Corporation to a third party. A Change of Control will not include a sale, merger, reorganization or other similar transaction if the previous holders of the Common Shares hold at least 50% of the voting shares of such merged, reorganized or other continuing entity;
(10) Change of Control Notice has the meaning ascribed thereto in Section 2.11;
(11) Change of Control Purchase Date has the meaning ascribed thereto in Section 2.11;
(12) Change of Control Purchase Option has the meaning ascribed thereto in Section 2.11;
(13) Change of Control Purchase Price has the meaning ascribed thereto in Section 2.11;
(14) Common Shares means the common shares in the capital of the Corporation, as such common shares are constituted on the date of execution and delivery of this Indenture; provided that in the event of a change or a subdivision, revision, reduction, combination or consolidation thereof, any reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding- up, or such successive changes, subdivisions, redivisions, reductions, combinations or consolidations, reclassifications, capital reorganizations, consolidations, amalgamations, arrangements, mergers, sales or conveyances or liquidations, dissolutions or windings-up, then, subject to adjustments, if any, having been made in accordance with the provisions of Section 5.5, Common Shares shall, as the context may require, mean the shares or other securities or property resulting from such change, subdivision, redivision, reduction, combination or consolidation, reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up;
(15) Conversion Period means the period of time starting on December 7, 2020 and ending at 5:00 p.m. (Eastern Time) on the earliest of (i) the Maturity Date, or (ii) if subject to repurchase pursuant to a Change of Control, on the Business Day immediately preceding the payment date (the earlier of which will be the Time of Expiry for the purposes of Article 5);
(16) Conversion Price means the dollar amount for which each Common Share may be issued from time to time upon the conversion of Debentures in accordance with the provisions of Article 5, being $3.16 on the date hereof, subject to adjustment pursuant to the provisions of Section 5.5.
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(17) Corporation means HEXO Corp. and includes any successor to or of the Corporation which shall have complied with the provisions of Article 9;
(18) Counsel means a barrister or solicitor or firm of barristers or solicitors retained or employed by the Trustee or retained or employed by the Corporation and reasonably acceptable to the Trustee;
(19) Credit Agreement means the credit agreement dated as of February 14, 2019 among, inter alios, the Corporation, as borrower, Canadian Imperial Bank of Commerce, as administrative agent, and the lenders from time to time parties thereto, as the same may be amended, supplemented, restated or replaced from time to time;
(20) Current Market Price means the VWAP of the Common Shares on the TSX, if the Common Shares are listed on the TSX, for the 5 consecutive trading days ending on the date immediately preceding the applicable date. If the Common Shares are not listed on the TSX, reference shall be made for the purpose of the above calculation to the principal securities exchange or market on which the Common Shares are listed or quoted or if no such prices are available Current Market Price shall be the fair value of a Common Share as reasonably determined by the Board of Directors;
(21) Date of Conversion has the meaning ascribed thereto in Section 5.4(2);
(22) Debenture Certificate means a certificate evidencing Debentures substantially in the form attached as Schedule A hereto;
(23) Debentureholders or holders means the Persons for the time being entered in the register for Debentures as registered holders of Debentures or any transferees of such Persons by endorsement or delivery;
(24) Debentures means the debentures of the Corporation designated as 8.0% Unsecured Convertible Debentures and described in Section 2.1 and issued and certified hereunder, or deemed to be issued and certified hereunder, and for the time being outstanding, whether in definitive or interim form;
(25) Default Notice has the meaning ascribed thereto in Section 2.2;
(26) Defeased Debentures has the meaning ascribed thereto in Section 8.6(2);
(27) Event of Default has the meaning ascribed thereto in Section 7.1;
(28) Extraordinary Resolution has the meaning ascribed thereto in Section 11.12;
(29) Government Obligations means securities issued or guaranteed by the Government of Canada or any province thereof;
(30) Ineligible Consideration shall have the meaning ascribed to it in Section 5.5(m);
(31) IFRS means International Financial Reporting Standards issued by the International Accounting Standards Board (including as further described in Section 1.16);
(32) Interest Payment Date means a date specified in the Debentures as the date on which interest on such Debenture shall become due and payable, and as defined in Section 2.1(3);
(33) Internal Procedures means in respect of the making of any one or more entries to, changes in or deletions of any one or more entries in the register of Debentureholders at any time (including without
- 3 -
limitation, original issuance or registration of transfer of ownership) the minimum number of the Trustees internal procedures customary at such time for the entry, change or deletion made to be complete under the operating procedures followed by the time by the Trustee, it being understood that neither preparation and issuance shall constitute part of such procedures for any purpose of this definition;
(34) Mandatory Conversion Date has the meaning ascribed thereto in Section 5.7;
(35) Mandatory Conversion Notice has the meaning ascribed thereto in Section 5.7;
(36) Material Subsidiary means any Subsidiary of the Corporation which has consolidated assets equal to or greater than 5% of the consolidated assets of the Corporation and its Subsidiaries;
(37) Maturity Account means an account or accounts required to be established by the Corporation (and which shall be maintained by and subject to the control of the Trustee) for the Debentures issued pursuant to and in accordance with this Indenture;
(38) Maturity Date means December 5, 2022, or such earlier date as the principal amount of the Debentures then outstanding may be declared due and payable by the Trustee under Section 7.1;
(39) Merger Event has the meaning ascribed thereto in Section 5.5(c);
(40) NI 62-104 means National Instrument 62-104 Take-Over Bids and Issuer Bids;
(41) Offering means the non-brokered private placement of up to $100,000,000 of Debentures;
(42) Offerors Notice has the meaning ascribed thereto in Section 10.3;
(43) Officers Certificate means a certificate of the Corporation signed by any one authorized officer or director of the Corporation, in their capacity as an officer or director of the Corporation, and not in their personal capacity;
(44) Person includes an individual, corporation, company, partnership, joint venture, association, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof (and for the purposes of the definition of Change of Control, in addition to the foregoing, Person shall include any syndicate or group that would be deemed to be a Person under NI 62-104);
(45) Prepayment Date has the meaning ascribed thereto in Section 2.9(1)
(46) Prepayment Notice has the meaning ascribed thereto in Section 2.9(1)
(47) Prepayment Right has the meaning ascribed thereto in Section 2.9(1);
(48) Privacy Laws has the meaning ascribed thereto in Section 13.19;
(49) Senior Debt means all present and future indebtedness, liabilities and obligations of the Corporation under the Credit Agreement;
(50) Senior Lenders means all present and future Lenders as defined in the Credit Agreement;
(51) Share Payment Right has the meaning ascribed thereto in Section 2.10(1);
(52) Subsidiary has the meaning ascribed thereto in the Securities Act (Ontario);
- 4 -
(53) Subordinate Obligations has the meaning ascribed thereto in Section 2.2;
(54) Tax Act means the Income Tax Act (Canada), as amended;
(55) Time of Expiry means the time of expiry of certain rights with respect to the conversion of Debentures under Article 5, and has the meaning ascribed thereto in the definition of Conversion Period above;
(56) trading day means, with respect to the TSX or other market for securities, any day on which such exchange or market is open for trading or quotation;
(57) Trustee means TSX Trust Company, or its successor or successors for the time being as trustee hereunder;
(58) TSX means the Toronto Stock Exchange;
(59) Unclaimed Funds Return Date has the meaning ascribed thereto in Section 2.11(g);
(60) United States or U.S. means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
(61) U.S. Legend has the meaning ascribed thereto in Section 2.5(2).
(62) U.S. Securities Exchange Act means the U.S. Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder;
(63) VWAP means the per share volume weighted average trading price of the Common Shares for the applicable period (which must be calculated utilizing days in which the Common Shares actually trade) on the TSX (or if the Common Shares are no longer traded on the TSX, on such other exchange as the Common Shares are then traded);
(64) Withheld Amount means an amount equal to the difference between (i) the aggregate amount deposited by or on behalf of the Corporation into the Maturity Account in accordance with Section 2.8, and (ii) the principal amount of the Debentures satisfied through the issuance of Common Shares in accordance with the Corporations exercise of the Right of Partial Payment;
(65) Withholding Taxes has the meaning ascribed to it in Section 6.10; and
(66) Written Direction of the Corporation means an instrument in writing signed by any one officer or director of the Corporation.
Section 1.2 Meaning of Outstanding
Every Debenture certified and delivered by the Trustee hereunder shall be deemed to be outstanding until it is cancelled, converted or redeemed or delivered to the Trustee for cancellation, conversion or redemption for monies, as the case may be, or the payment thereof shall have been set aside under Section 8.2, provided that:
(a) |
Debentures which have been partially redeemed, purchased or converted shall be deemed to be outstanding only to the extent of the unredeemed, unpurchased or unconverted part of the principal amount thereof; |
- 5 -
(b) |
when a new Debenture has been issued in substitution for a Debenture which has been lost, stolen or destroyed, only one of such Debentures shall be counted for the purpose of determining the aggregate principal amount of Debentures outstanding; and |
(c) |
for the purposes of any provision of this Indenture entitling holders of outstanding Debentures to vote, sign consents, requisitions or other instruments or take any other action under this Indenture, or to constitute a quorum of any meeting of Debentureholders, Debentures owned directly or indirectly, legally or equitably, by the Corporation shall be disregarded except that: |
(i) |
for the purpose of determining whether the Trustee shall be protected in relying on any such vote, consent, requisition or other instrument or action, or on the holders of Debentures present or represented at any meeting of Debentureholders, only the Debentures which the Trustee knows are so owned shall be so disregarded; |
(ii) |
Debentures so owned which have been pledged in good faith other than to the Corporation shall not be so disregarded if the pledgee shall establish to the satisfaction of the Trustee the pledgees right to vote such Debentures, sign consents, requisitions or other instruments or take such other actions in his discretion free from the control of the Corporation or a Subsidiary of the Corporation; and |
(iii) |
as at the date hereof, neither the Corporation nor any Subsidiary holds any Debentures. |
Section 1.3 Interpretation
In this Indenture:
(a) |
words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa; |
(b) |
all references to Articles and Schedules refer, unless otherwise specified, to articles of and schedules to this Indenture; |
(c) |
all references to Sections, subsections or clauses refer, unless otherwise specified, to Sections, subsections or clauses of this Indenture; |
(d) |
words and terms denoting inclusiveness (such as include or includes or including), whether or not so stated, are not limited by and do not imply limitation of their context or the words or phrases which precede or succeed them; |
(e) |
reference to any agreement or other instrument in writing means such agreement or other instrument in writing as amended, modified, replaced or supplemented from time to time; |
(f) |
unless otherwise indicated, reference to a statute shall be deemed to be a reference to such statute as amended, re-enacted or replaced from time to time; and |
(g) |
unless otherwise indicated, time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated by including the day on which the period commences and excluding the day on which the period ends. |
- 6 -
Section 1.4 Headings, etc.
The division of this Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Debentures.
Section 1.5 Time of Essence
Time shall be of the essence of this Indenture.
Section 1.6 Monetary References
Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise expressed.
Section 1.7 Invalidity, etc.
Any provision hereof which is prohibited or unenforceable shall be ineffective only to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof.
Section 1.8 Language
Each of the parties hereto hereby acknowledges that it has consented to and requested that this Indenture and all documents relating hereto, including, without limiting the generality of the foregoing, the form of Debenture attached hereto as Schedule A, be drawn up in the English language only.
Section 1.9 Successors and Assigns
All covenants and agreements of the Corporation in this Indenture and the Debentures shall bind its successors and assigns, whether so expressed or not. All covenants and agreements of the Trustee in this Indenture shall bind its successors.
Section 1.10 Severability
In case any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, such provision shall be deemed to be severed herefrom or therefrom and the validity, legality and enforceability of the remaining provisions shall not in any way be affected, prejudiced or impaired thereby.
Section 1.11 Entire Agreement
This Indenture and all supplemental indentures and Schedules hereto and thereto, and the Debentures issued hereunder and thereunder, together constitute the entire agreement between the parties hereto with respect to the indebtedness created hereunder and thereunder and under the Debentures and supersedes as of the date hereof all prior memoranda, agreements, negotiations, discussions and term sheets, whether oral or written, with respect to the indebtedness created hereunder or thereunder and under the Debentures.
Section 1.12 Benefits of Indenture
Nothing in this Indenture or in the Debentures, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any paying agent, the holders of Debentures, (to the
- 7 -
extent provided in Section 7.10) the holders of Common Shares and (to the extent provided in Section 2.2) the Senior Lenders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.13 Applicable Law and Attornment
This Indenture, any supplemental indenture and the Debentures shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts, with respect to any suit, action or proceedings relating to this Indenture, any supplemental indenture or any Debenture, the Corporation, the Trustee and each holder irrevocably submit and attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario.
Section 1.14 Currency of Payment
Unless otherwise indicated in a supplemental indenture with respect to the Debentures, all payments to be made under this Indenture or a supplemental indenture shall be made in Canadian dollars.
Section 1.15 Non-Business Days
Whenever any payment to be made hereunder shall be due, any period of time would begin or end, any calculation is to be made or any other action is to be taken on, or as of, or from a period ending on, a day other than a Business Day, such payment shall be made, such period of time shall begin or end, such calculation shall be made and such other action shall be taken, as the case may be, unless otherwise specifically provided herein, on or as of the next succeeding Business Day without any additional interest, cost or charge to the Corporation.
Section 1.16 Accounting Terms
Except as hereinafter provided or as otherwise indicated in this Indenture, all calculations required or permitted to be made hereunder pursuant to the terms of this Indenture shall be made in accordance with IFRS. For greater certainty, IFRS shall include any accounting standards that may from time to time be approved for general application by the Canadian Institute of Chartered Accountants.
Section 1.17 Calculations
The Corporation shall be responsible for making all calculations called for hereunder including, without limitation, calculations of Current Market Price. The Corporation shall make such calculations in good faith and, absent manifest error, the Corporations calculations shall be final and binding on holders and the Trustee. The Corporation will provide a schedule of its calculations to the Trustee and the Trustee shall be entitled to rely conclusively on the accuracy of such calculations without independent verification.
Section 1.18 Schedules
(1) The following Schedules are incorporated into and form part of this Indenture:
Schedule A Form of Debenture
Schedule B Form of Notice of Conversion
Schedule C Form of Notice of Exercise of Share Payment Right on Maturity Date
Schedule D Form of Declaration for Removal of Legend
- 8 -
(2) In the event of any inconsistency between the provisions of any Section of this Indenture and the provisions of the Schedules which form a part hereof, the provisions of this Indenture shall prevail to the extent of the inconsistency.
ARTICLE 2 THE DEBENTURES
Section 2.1 Limit, Terms and Form of Debentures
(1) Designation and Limit. The Debentures authorized to be issued under this Indenture, upon and subject to the conditions and limitations herein set forth, shall be designated as 8.0% Unsecured Convertible Debentures and shall be limited to $100,000,000 aggregate principal amount.
(2) Issuance and Maturity. The Debentures shall be dated as of the date of closing of the Offering and shall mature on the Maturity Date.
(3) Interest. The Debentures shall bear interest from the date of issue at the rate of 8.0% per annum (based on a year of 360 days composed of twelve 30-day months), payable in quarterly payments in arrears on March 31, June 30, September 30 and December 31 in each year (each, an Interest Payment Date), with the exception of the first interest payment, which will include interest from and including the date of closing of the Offering as set forth below, the first such payment to fall due on December 31, 2019 and the last such payment, representing interest payable from the last Interest Payment Date to, but excluding, the Maturity Date of the Debentures, to fall due on December 5, 2022, payable after as well as before maturity and after as well as before default, with interest on amounts in default at the same rate, compounded quarterly. For certainty, the first interest payment will include interest accrued from and including the date of closing of the Offering to, but excluding December 31, 2019, which will be equal to $57.77 for each $1,000 principal amount of Debentures. Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. The record date for the payment of interest on the Debentures will be the date that is five (5) Business Days prior to each applicable Interest Payment Date.
(4) RankUnsecured Debt. The Debentures shall rank pari passu with each other in right of payment of principal and interest (regardless of their actual date or terms of issue) and, except as prescribed by law, with all other unsecured indebtedness of the Corporation.
(5) Rank, Subordination and PostponementSenior Debt. The Debentures shall rank subordinate and be postponed in right of payment to the Senior Debt in accordance with the provisions of Section 2.2.
(6) Conversion Right. Upon and subject to the terms and conditions of Article 5 and Section 3.6, the holder of each Debenture shall have the right at such holders option, at any time during the Conversion Period, to convert any part, being $1,000 or an integral multiple thereof, of the principal amount of a Debenture into Common Shares at the Conversion Price in effect on the Date of Conversion. Notwithstanding the foregoing, no Debentures may be converted on an Interest Payment Date or during the five Business Days preceding each Interest Payment Date.
The Conversion Price in effect on the date hereof for each Common Share to be issued upon the conversion of Debentures shall be equal to $3.16, such that approximately 316.45 Common Shares shall be issued for each $1,000 principal amount of Debentures so converted. The Conversion Price applicable to, and the Common Shares, securities or other property receivable on the conversion of, the Debentures is subject to adjustment pursuant to the provisions of Section 5.5. Except as provided in Article 5, no adjustment in the number of Common Shares to be issued upon conversion will be made for dividends or distributions on Common Shares issuable upon conversion, the record date for the payment of which precedes the date upon which the holder becomes a holder of Common Shares in accordance with Article 5,
- 9 -
or for interest accrued on Debentures surrendered. Holders converting their Debentures will receive, in addition to the applicable number of Common Shares, accrued and unpaid interest (less any taxes required to be deducted) in respect of the Debentures surrendered for conversion up to but excluding the Date of Conversion from, and including, the last Interest Payment Date prior to the Date of Conversion.
(7) Mandatory Conversion. Upon and subject to the terms and conditions of Section 5.7 and Section 3.6, the Corporation may at any time during the Conversion Period force the conversion of all of the principal amount of the then outstanding Debentures at the Conversion Price on not less than 30 days notice should the daily VWAP be greater than $7.50 for any 15 consecutive trading days.
(8) Payment in Common Shares. Upon and subject to the terms and conditions of Section 2.10, on the Maturity Date, the holders of the Debentures shall have the right to require the Corporation to repay all or any portion of the outstanding principal amount of the Debentures then outstanding through the issuance of Common Shares in satisfaction of such amounts at a price equal to the Current Market Price at the close of business on the Business Day immediately prior to the Maturity Date.
(9) Change of Control. Within 30 days following a Change of Control, and subject to the terms and conditions of Section 2.11, the Corporation shall, at the discretion of the Debentureholders, be obligated to offer to purchase or convert all of the Debentures then outstanding.
(10) Form of Debenture. The Debentures shall be issued in denominations of $1,000 and integral multiples of $1,000. Each Debenture and the certificate of the Trustee endorsed thereon shall be issued in substantially the form set out in Schedule A, with such insertions, omissions, substitutions or other variations as shall be required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto or with any rules or regulations of any securities exchange or securities regulatory authority or to conform with general usage, all as may be determined by the authorized director or officer of the Corporation executing such Debenture in accordance with Section 2.3 hereof, as conclusively evidenced by their execution of a Debenture. Each Debenture shall additionally bear such distinguishing letters and numbers as the Trustee shall approve. Notwithstanding the foregoing, a Debenture may be in such other form or forms as may, from time to time, be, approved by a resolution of the Board of Directors, or as specified in an Officers Certificate. The Debentures may be engraved, lithographed, printed, mimeographed or typewritten or partly in one form and partly in another. All Debentures need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided herein, by or pursuant to such resolution of the Board of Directors, Officers Certificate or in an indenture supplemental hereto.
Section 2.2 Ranking of Debentures; Subordination and Postponement to Senior Debt
(1) The Debentures shall be direct unsecured obligations of the Corporation. The Debentures shall rank pari passu with each other in right of payment of principal and interest (regardless of their actual date or terms of issue) and, except as prescribed by law, with all other unsecured indebtedness of the Corporation.
(2) The Debentures shall rank subordinate and be postponed in right of payment to the Senior Debt. In connection with such subordination and postponement, the Debentures and the Debentureholders rights under this Indenture shall be subject to the following terms and conditions, which terms and conditions shall be in favour of and for the benefit of the Senior Lenders, and each holder of any Debentures by his, her or its acceptance thereof agrees to and shall be bound by the provisions of this Section 2.2:
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(a) |
The payment of present and future obligations, liabilities and indebtedness of the Corporation to the Debentureholders (the Subordinate Obligations), including without limitation payment by way of exchange, set-off, purchase or redemption but excluding conversion into or payment by Common Shares, is hereby postponed and subordinated to the Senior Debt until the Senior Debt is repaid in full. No Person shall grant, and no Debentureholder shall accept, any lien, mortgage, hypothec or security interest with respect to the Subordinate Obligations. |
(b) |
Until the date upon which the Senior Debt has been repaid in full, if an event or events occur which constitutes, or with notice or lapse of time or both would constitute, an event of default under the Credit Agreement, or if the Senior Lenders determine that any scheduled payment in respect of the Subordinate Obligations would result in, or with notice or lapse of time or both would result in, a default or event of default under the Credit Agreement or mandatory prepayment of the Senior Debt, and upon receipt by the Debentureholders of written notice thereof from the Senior Lenders (the Default Notice), and for so long as such Default Notice remains in effect, the Corporation shall be prohibited from making, and the Debentureholders shall not receive, any payment in cash, property or security but excluding conversion into or payment by Common Shares, by set-off or otherwise, owing and which may hereafter come owing by the Corporation to the Debentureholders (including, without limitation, interest and principal payments), without the prior written consent of the Senior Lenders. For the avoidance of doubt but without limitation, the principal amount of the Debentures may not be repaid or prepaid at any time that any Senior Debt is outstanding (other than by way of conversion into or payment by Common Shares in accordance with this Indenture), regardless of whether a Default Notice has or has not been issued, without written consent of the Senior Lenders. |
(c) |
So long as no Default Notice is in effect, the Corporation may pay and Debentureholders may receive: (i) all payments of interest due and payable in accordance with this Indenture (at the rate of 8% per annum); and (ii) all fees chargeable upon issuance and reasonable expenses due and payable pursuant to this Indenture; and (iii) payment in full of the principal amount of the Debentures by way of conversion into or payment by Common Shares in accordance with this Indenture. |
(d) |
Upon receipt by the Debentureholders of a Default Notice, and for so long as such Default Notice remains in effect, no payment in cash, property or security, by set-off or otherwise (other than by way of conversion into or payment by Common Shares), shall be made or agreed to by the Corporation or accepted by the Debentureholders on account of the Subordinate Obligations including any payments permitted by Section 2.7(c)(i) or (ii), without the prior written consent of the Senior Lenders. Upon expiration or termination of the event or events outlined in the Default Notice, and provided that all amounts then due and owing on account of the Senior Debt has been paid, the Corporation shall pay to the Debentureholders all amounts which, but for the event or events noted in the Default Notice, would otherwise have been paid to the Debentureholders pursuant to Section 2.2(c)(i) or (ii). |
(e) |
Until all of the Senior Debt has been paid in full, the Senior Lenders shall have the right to take and continue (or refrain from taking and continuing) any action in respect of their security over the assets of the Corporation and any Affiliate or other Person to exercise and enforce all rights and remedies thereunder, in such order and manner as they may determine in their sole discretion, and the Debentureholders shall not interfere with any pending or proposed sale or realization process initiated, or consented to, by the Senior Lenders. |
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(f) |
Upon receipt by the Debentureholders of a Default Notice, and for so long as such Default Notice remains in effect, the Debentureholders shall not, without the prior written consent of the Senior Lenders: (i) exercise any right or remedy with respect to the Subordinate Obligations, including any collection or enforcement right or remedy; (ii) institute any action or proceeding against the Corporation, or enforce any right or remedy; (iii) appoint an interim receiver, receiver, receiver-manager, monitor or trustee in respect of the Corporation or any Affiliate or over all or any part of their assets, or apply for a bankruptcy order against the Corporation or any Affiliate; (iv) object to any enforcement process or action initiated by the Senior Lenders; or (v) accelerate the Subordinate Obligations unless the Senior Debt has been accelerated. |
(g) |
Notwithstanding the provisions of Section 2.2(f), the Debentureholders may: (a) file a proof of claim or attend and vote at a meeting of creditors in connection with any bankruptcy or insolvency proceeding, so long as such vote does not impair any rights of the Senior Lenders (it being understood that such restriction shall, without limitation, prevent the Debentureholders from voting against, objecting to, or otherwise opposing (i) a sale consented to the Senior Lenders, (ii) a motion filed or supported by the Senior Lenders, or (iii) any plan of liquidation, reorganization, arrangement, composition or extension in connection with an insolvency proceeding that is approved in writing by the Senior Lenders); (b) take action that is required to preserve the validity or priority of the Subordinate Obligations, including the commencement or initiation of any action required to comply with statutory limitation periods (provided that such proceeding is then stayed); and (c) provide the Corporation with notice of default, demand, enforcement or similar notice, so long as written notice is also provided to the Senior Lenders. |
(h) |
Any and all proceeds received by the Debentureholders (including, without limitation, from the Debentureholders realization, from the Corporation, any Affiliate or their respective assets, from any insolvency or similar proceedings, or from insurance proceeds) shall be paid to the Senior Lenders and dealt with in accordance with this Section 2.2. The priorities contained in this Section 2.2 shall extend to and include all principal, interest, fees, reimbursement and indemnity obligations, and enforcement costs. Until all of the Senior Debt has been paid in full, any payment or distribution of any kind or character from the Corporation, any Affiliate, or any other person, in respect of the Subordinate Obligations in violation of this Section 2.2, shall be held in trust by the Debentureholders for the benefit of the Senior Lenders and forthwith paid to the Senior Lenders upon demand. |
(i) |
The provisions of this Section 2.2 shall be effective, before, during and after the commencement of any insolvency or similar proceedings. All references in this Section 2.2 to the Corporation or any Affiliate shall include any interim receiver, receiver, receiver manager, monitor, proposal trustee or other similar trustee for the Corporation or any Affiliate or over the assets of the Corporation or any Affiliate. |
(3) The Corporation shall notify the Debentureholders and the Trustee of any Default Notice received by them and provide a copy of such Default Notice with such notice in accordance with the provisions of Section 12.2 and 12.3 respectively.
(4) This Section 2.2 may not be amended without the prior written consent of the Senior Lenders.
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Section 2.3 Execution of Debentures
All Debentures shall be signed (either manually or by facsimile or other electronic signature) by any one authorized director or officer of the Corporation holding office at the time of signing. A facsimile or electronic signature upon a Debenture shall for all purposes of this Indenture be deemed to be the signature of the person whose signature it purports to be. Notwithstanding that any person whose signature, either manual or in facsimile or electronic form, appears on a Debenture as a director or officer may no longer hold such office at the date of the Debenture or at the date of the certification and delivery thereof, such Debenture shall be valid and binding upon the Corporation and entitled to the benefits of this Indenture.
Section 2.4 Certification
(1) No Debenture shall be issued or, if issued, shall be obligatory or shall entitle the holder to the benefits of this Indenture, until it has been manually certified by or on behalf of the Trustee substantially in the form set out in this Indenture, in the relevant supplemental indenture, or in some other form approved by the Trustee. Such certification or authentication of any Debenture shall be conclusive evidence that such Debenture is duly issued, is a valid obligation of the Corporation and the holder is entitled to the benefits hereof. Debentures will be authenticated on a Written Direction of the Corporation.
(2) The certificate of the Trustee signed on the Debentures, or interim Debentures hereinafter mentioned, shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or of the Debentures or interim Debentures or as to the issuance of the Debentures or interim Debentures and the Trustee shall in no respect be liable or answerable for the use made of the Debentures or interim Debentures or any of them or the proceeds thereof. The certificate of the Trustee on the Debentures or interim Debentures shall, however, be a representation and warranty by the Trustee that the Debentures or interim Debentures have been duly certified by or on behalf of the Trustee pursuant to the provisions of this Indenture.
Section 2.5 Legends
(1) The Debenture Certificates representing the Debentures will bear the following legend:
THIS SECURITY IS SUBJECT TO SUBORDINATION AND POSTPONEMENT TERMS IN FAVOUR OF SENIOR LENDERS.
In addition, the Debenture Certificates representing the Debentures, and the certificates representing any Common Shares issued upon conversion or repayment of such Debentures (if issued prior to April 6, 2020), if any, will bear the following legend in accordance with Applicable Securities Legislation:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 6, 2020.
(2) The Debentures and Common Shares issuable upon conversion or repayment thereof have not been and will not be registered under the 1933 Act or any state securities laws. To the extent that Debentures are offered and sold in the United States, such Debentures and all Common Shares issuable on conversion or repayment thereof (collectively, the Securities), shall be restricted securities within the meaning assigned to that term in Rule 144(a)(3) under the 1933 Act. Subject to Section 2.5(4), the certificates representing such Securities, as well as all securities issued in exchange for or in substitution of the Securities, shall, until such time as the same is no longer required under applicable requirements of the 1933 Act or state securities laws, shall bear the following additional legend (the US Legend):
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THE SECURITIES REPRESENTED HEREBY [for Debentures, insert: AND THE SECURITIES ISSUABLE UPON CONVERSION OR PAYMENT HEREOF] HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH (I) RULE 144A, IF AVAILABLE, OR (II) RULE 144, IF AVAILABLE, AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
provided, that, if the Debentures or Common Shares are being sold in compliance with the requirements of Rule 904 of Regulation S in circumstances where Rule 905 of Regulation S does not apply, and in compliance with Canadian local laws and regulations, the U.S. Legend may be removed by providing an executed declaration to the Corporation and the Trustee (or the registrar and transfer agent for the Common Shares, as applicable) substantially as set forth in Schedule D (or as the Corporation may prescribe from time to time), together with any other evidence reasonably requested by the Corporation, which evidence may include an opinion of counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation, to the effect that the transfer is being made in compliance with Rule 904 of Regulation S; and provided further that, if any Debentures or Common Shares are being sold in accordance with Rule 144 under the 1933 Act, if available, the Debentures or Common Shares, as applicable, the U.S. Legend may be removed by delivery to the Corporation and the Trustee (or the registrar and transfer agent for the Common Shares, as applicable) of an opinion of counsel, of recognized standing, in form and substance reasonably satisfactory to the Corporation, that the U.S. Legend is no longer required under applicable requirements of the 1933 Act or applicable state securities laws. Provided that the Trustee (or the registrar and transfer agent for the Common Shares, as applicable) obtains confirmation from the Corporation that such counsel is satisfactory to it, it shall be entitled to rely on such opinion of counsel without further inquiry.
(3) The parties hereto hereby acknowledge and agree that the Securities may not be reoffered, or resold, pledged or otherwise transferred, directly or indirectly, except: (i) to the Corporation; (ii) outside the United States in accordance with Regulation S and in compliance with applicable local laws and regulations; (iii) in compliance with the exemption from registration under the 1933 Act provided by Rule 144 or Rule 144A under the 1933 Act, if available, and in accordance with applicable state securities laws; or (iv) in another transaction that does not require registration under the 1933 Act or any applicable state securities laws.
(4) Prior to the issuance of the Debentures, the Corporation shall notify the Trustee, in writing, concerning which Debentures shall bear the U.S. Legend. All Securities issued pursuant to Rule 144 under the 1933 Act shall bear the U.S. Legend. The Trustee will thereafter maintain a list of all registered holders from time to time of such legended Debentures.
Section 2.6 Interim Debentures or Certificates
Pending the delivery of definitive Debentures to the Trustee, the Corporation may issue and the Trustee certify in lieu thereof interim Debentures in such forms and in such denominations and signed in
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such manner as provided herein, entitling the holders thereof to definitive Debentures when the same are ready for delivery; or the Corporation may execute and the Trustee certify a temporary Debenture for the whole principal amount of Debentures then authorized to be issued hereunder and deliver the same to the Trustee and thereupon the Trustee may issue its own interim certificates in such form and in such amounts, not exceeding in the aggregate the principal amount of the temporary Debenture so delivered to it, as the Corporation and the Trustee may approve entitling the holders thereof to definitive Debentures when the same are ready for delivery; and, when so issued and certified, such interim or temporary Debentures or interim certificates shall, for all purposes but without duplication, rank in respect of this Indenture equally with Debentures duly issued hereunder and, pending the exchange thereof for definitive Debentures, the holders of the interim or temporary Debentures or interim certificates shall be deemed without duplication to be Debentureholders and entitled to the benefit of this Indenture to the same extent and in the same manner as though the said exchange had actually been made. Forthwith after the Corporation shall have delivered the definitive Debentures to the Trustee, the Trustee shall cancel such temporary Debentures, if any, and shall call in for exchange all interim Debentures or certificates that shall have been issued and forthwith after such exchange shall cancel the same. No charge shall be made by the Corporation or the Trustee to the holders of such interim or temporary Debentures or interim certificates for the exchange thereof. All interest paid upon interim or temporary Debentures or interim certificates shall be noted thereon as a condition precedent to such payment unless paid by cheque to the registered holders thereof. |
Section 2.7 Mutilation, Loss, Theft or Destruction
In case any of the Debentures issued hereunder shall become mutilated or be lost, stolen or destroyed, the Corporation, in its discretion, may issue, and thereupon the Trustee shall certify and deliver, a new Debenture upon surrender and cancellation of the mutilated Debenture, or in the case of a lost, stolen or destroyed Debenture, in lieu of and in substitution for the same, and the substituted Debenture shall be in a form approved by the Trustee and shall be entitled to the benefits of this Indenture and rank equally in accordance with its terms with all other Debentures issued or to be issued hereunder. In case of loss, theft or destruction, the applicant for a substituted Debenture shall furnish to the Corporation and to the Trustee such evidence of the loss, theft or destruction of the Debenture as shall be satisfactory to them in their discretion and shall also furnish an indemnity and surety bond satisfactory to them in their discretion. The applicant shall pay all reasonable expenses incidental to the issuance of any substituted Debenture.
Section 2.8 Payments of Amounts Due on Maturity
(1) On the Maturity Date, the Corporation will pay or cause to be paid to the Debentureholders the outstanding principal amount of the Debentures, together with all accrued and unpaid interest.
(2) Payments of amounts due upon maturity of the Debentures will be made in the following manner:
(a) |
The Corporation will establish and maintain with the Trustee a Maturity Account for the Debentures. The Maturity Account shall be maintained by and be subject to the control of the Trustee for the purposes of this Indenture. |
(b) |
On or before 11:00 a.m. (Eastern time) not less than one Business Day immediately prior to the Maturity Date, the Corporation will deliver to the Trustee a certified cheque or wire transfer for deposit in the Maturity Account in an amount sufficient to pay the cash amount payable in respect of such Debentures (including the principal amount together with any accrued and unpaid interest thereon). |
(c) |
The delivery of such funds to the Trustee for deposit to the applicable Maturity Account will satisfy and discharge the liability of the Corporation for the Debentures to which the |
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delivery of funds relates to the extent of the amount delivered (plus the amount of any tax deducted as aforesaid) and such Debentures will thereafter to that extent not be considered as outstanding under this Indenture and such holder will have no other right in regard thereto other than to receive out of the money so delivered or made available the amount to which it is entitled. Interest shall cease to accrue on the Debentures upon the Maturity Date provided the Trustee has received, by the Maturity Date, from the Corporation, all the funds due and payable on the Debentures. |
(d) |
The Trustee, on behalf of the Corporation, will pay to each holder entitled to receive payment the principal amount of, premium on, if any, and accrued and unpaid interest on the Debentures, upon surrender of the Debentures at any branch of the Trustee designated for such purpose from time to time by the Corporation and the Trustee. |
Section 2.9 Prepayment of Principal Amount During First Year
(1) At any time on or before December 4, 2020, the Corporation shall have the right, subject to Section 2.2, to repay all, but not less than all, of the outstanding principal amount of the Debentures without penalty (the Prepayment Right), upon giving the Debentureholders not less than 10 days advance written notice (the Prepayment Notice), in accordance with Section 12.2. In the event that the Corporation exercises the Prepayment Right pursuant to this Section 2.9, the effective date for the repayment (the Prepayment Date) shall be: (a) the date stipulated in the Prepayment Notice; or (b) if no date is so stipulated in the Prepayment Notice, the date that is 10 days following the date of such Prepayment Notice.
(2) Payments of amounts under the Prepayment Right will be made in the following manner:
(a) |
The Corporation will establish and maintain with the Trustee a Maturity Account for the Debentures. The Maturity Account shall be maintained by and be subject to the control of the Trustee for the purposes of this Indenture. |
(b) |
On or before 11:00 a.m. (Eastern time) not less than one Business Day immediately prior to the Prepayment Date, the Corporation will deliver to the Trustee a certified cheque or wire transfer for deposit in the Maturity Account in an amount sufficient to pay the cash amount payable in respect of such Debentures (including the principal amount together with any accrued and unpaid interest thereon). |
(c) |
The delivery of such funds to the Trustee for deposit to the Maturity Account will satisfy and discharge the liability of the Corporation for the Debentures to which the delivery of funds relates to the extent of the amount delivered (plus the amount of any tax deducted as aforesaid) and such Debentures will thereafter to that extent not be considered as outstanding under this Indenture and such holder will have no other right in regard thereto other than to receive out of the money so delivered or made available the amount to which it is entitled. Interest shall cease to accrue on the Debentures upon the Prepayment Date provided the Trustee has received, by the Prepayment Date, from the Corporation, all the funds due and payable on the Debentures. |
(d) |
The Trustee, on behalf of the Corporation, will pay to each holder entitled to receive payment the principal amount of, premium on, if any, and accrued and unpaid interest on the Debentures, upon surrender of the Debentures at any branch of the Trustee designated for such purpose from time to time by the Corporation and the Trustee. |
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Section 2.10 Payment of Principal Amount in Common Shares
(1) On the Maturity Date, the Debentureholders shall have the right to require the Corporation to repay all or any portion of the outstanding principal amount of the Debentures then outstanding in Common Shares (the Share Payment Right). In the event that a Debentureholder exercises the Share Payment Right, the Common Shares to be issued to the Debentureholder will be valued at the Current Market Price at the close of business on the Business Day immediately prior to the Maturity Date, subject to compliance with the applicable policies of the TSX and/or other principal exchange for trading of the Common Shares at that time. Without limitation to the foregoing: (i) no more than an aggregate of 64,252,771 Common Shares shall be issued upon the conversion of the Debentures and/or the exercise of the Share Payment Right unless approval therefor is obtained by the Corporations shareholders by a majority of votes cast, (ii) no more than 25,701,108 Common Shares shall be issued upon the conversion of the Debentures and/or the exercise of the Share Payment Right to insiders of the Corporation unless approval therefor is obtained by the Corporations shareholders by a majority of votes cast, other than insiders of the Corporation holding Debentures, their associates and affiliates; and (iii) should the issuance of Common Shares in excess of 31,645,570 Common Shares (being $100,000,000 aggregate principal amount of the Debentures divided by the Conversion Price) materially affect control of the Corporation, such issuance shall require approval by the Corporations shareholders by a majority of votes cast. The Corporation is solely responsible for compliance with the restrictions regarding shareholder and TSX approval in this Section 2.10(1) including with respect to all calculations regarding the number of Common Shares issuable upon any conversion of the Debentures or any exercise of the Share Payment Right, and in processing and facilitating any conversion of the Debentures or exercise of the Share Payment Right, the Trustee shall be entitled to assume that no applicable limits have been exceeded and that all required shareholder and TSX approvals have been obtained unless the Corporation expressly notifies the Trustee in advance that any such limits have been exceeded or required shareholder or TSX approvals have not been obtained.
(2) A Debentureholder desiring to exercise the Share Payment Right shall surrender the Debenture Certificate representing the Debentures held by the Debentureholder to the Trustee at its principal office in the City of Toronto, Ontario together with the Share Payment Right notice in the form of Schedule C or any other written notice in a form satisfactory to the Trustee, duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, at least 10 Business Days prior to the Maturity Date, and indicating the principal amount of the Debentures in respect of which the Debentureholder wishes to exercise the Share Payment Right as set out in Schedule C. Common Shares issuable in respect of the principal amount of Debentures represented by Debenture Certificates bearing the U.S. Legend shall be marked to bear the U.S. Legend; provided that upon the Trustee receiving an executed Share Payment Right notice as set out in Schedule C with the box therein being ticked, the Trustee will issue Common Shares without the U.S. Legend. Thereupon such Debentureholder or, subject to compliance with the applicable terms and provisions hereof and payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Corporation as at the Maturity Date (or such later date as is specified in Section 5.4(2)) as the holder of the number of Common Shares, as applicable, issuable for the principal amount of the Debentures in respect of which the Share Payment Right is exercised in accordance with the provisions of this Article and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), a certificate or certificates for such Common Shares, or at the direction of the Corporation, Direct Registration System Advices for such Common Shares to be held in book entry form, and make or cause to be made any payment of interest to which such holder is entitled in accordance with Section 5.4(6). In the event that not all of the principal amount of the Debentures held by the Debentureholder is paid in Common Shares pursuant to the exercise of the Share Payment Right, the Corporation will pay or cause to be paid to the Debentureholder the balance of the principal amount of the Debentures not so satisfied in
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Common Shares in accordance with the provisions of Section 2.8. The Corporation shall also pay or cause to be paid to the Debentureholder all accrued and unpaid interest in accordance with the provisions of Section 2.8.
(3) A Debenture in respect of which a holder has accepted a notice in respect of a Change of Control Purchase Option pursuant to the provisions of Section 2.11 may be surrendered for payment in Common Shares pursuant to the Share Payment Right only if such notice is withdrawn in accordance with this Indenture.
(4) Any part, being $1,000 or an integral multiple thereof, of a Debenture in a denomination in excess of $1,000 may be paid in Common Shares pursuant to the exercise of the Share Payment Right as provided in this Section 2.10 and all references in this Indenture to conversion of Debentures shall be deemed to include conversion of such parts.
Section 2.11 Change of Control
Within 30 days following a Change of Control, and subject to the terms and conditions of this Section 2.11, the Corporation shall, at the discretion of the Debentureholders, be obligated, subject to Section 2.2, to offer to purchase or convert all of the Debentures then outstanding. The terms and conditions of such obligation are set forth below:
(a) |
Not less than 30 days following the occurrence of a Change of Control, the Corporation shall deliver to the Trustee, and the Trustee shall promptly deliver to the holders of the Debentures, a notice stating that there has been a Change of Control and specifying the date on which such Change of Control occurred and the circumstances or events giving rise to such Change of Control (a Change of Control Notice). Prior to the Change of Control Purchase Date (as defined below), the Debentureholders shall, in their sole discretion, have the right to require the Corporation to, either: (i) purchase the Debentures (the Change of Control Purchase Option) at 115% of the principal amount thereof plus unpaid interest to, but excluding, the Change of Control Purchase Date (the Change of Control Purchase Price); or (ii) convert the Debentures at the Conversion Price. The Change of Control Purchase Date shall be the date that is 30 Business Days after the date of the Change of Control Notice is delivered to holders of Debentures. |
(b) |
If 90% or more in aggregate principal amount of Debentures outstanding on the date the Corporation provides the Change of Control Notice to holders of the Debentures have been surrendered for purchase pursuant to the Change of Control Purchase Option on the expiration thereof, the Corporation has the right, upon written notice provided to the Trustee within 10 days following the expiration of the Change of Control Purchase Option, to redeem all the Debentures remaining outstanding on the expiration of the Change of Control Purchase Option at the Change of Control Purchase Price as at the Change of Control Purchase Date (the 90% Redemption Right). |
(c) |
Upon receipt of notice that the Corporation has exercised or is exercising the 90% Redemption Right and is acquiring the remaining Debentures, the Trustee shall promptly provide written notice to each Debentureholder that did not previously accept the Change of Control Purchase Option that: |
(i) |
the Corporation has exercised the 90% Redemption Right and is purchasing all outstanding Debentures effective on the expiry of the Change of Control Purchase Option at the Change of Control Purchase Price, and shall include a calculation of |
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the amount payable to such holder as payment of the Change of Control Purchase Price as at the Change of Control Purchase Date; |
(ii) |
each such holder must transfer their Debentures to the Corporation on the same terms as those holders that accepted the Change of Control Purchase Option and must send their respective Debentures, duly endorsed for transfer, to the Trustee within 10 days after the sending of such notice; and |
(iii) |
the rights of such holder under the terms of the Debentures and this Indenture cease effective as of the date of expiry of the Change of Control Purchase Option provided the Corporation has, on or before the time of notifying the Trustee of the exercise of the 90% Redemption Right, paid the Change of Control Purchase Price to, or to the order of, the Trustee and thereafter the Debentures shall not be considered to be outstanding and the holder shall not have any right except to receive such holders Change of Control Purchase Price upon surrender and delivery of such holders Debentures in accordance with this Indenture. |
(d) |
The Corporation shall, on or before 11:00 a.m. (Eastern time) on the Business Day immediately prior to the Change of Control Purchase Date, deposit with the Trustee or any paying agent to the order of the Trustee, such sums of money as may be sufficient to pay the Change of Control Purchase Price of the Debentures to be purchased or redeemed by the Corporation on the Change of Control Purchase Date, provided the Corporation may elect to satisfy this requirement by providing the Trustee with a certified cheque or wire transfer for such amounts required under this Section 2.11 post-dated to the date of expiry of the Change of Control Purchase Option. The Corporation shall also deposit with the Trustee a sum of money sufficient to pay any reasonable charges or expenses which may be incurred by the Trustee in connection with such purchase. Every such deposit shall be irrevocable. From the sums so deposited, the Trustee shall pay or cause to be paid to the holders of such Debentures, the Change of Control Purchase Price to which they are entitled (less any tax required by law to be deducted in respect of accrued and unpaid interest) on the Corporations purchase. |
(e) |
In the event that one or more of such Debentures being purchased in accordance with this Section 2.11 becomes subject to purchase in part only, upon surrender of such Debentures for payment of the Change of Control Purchase Price, the Corporation shall execute and the Trustee shall certify and deliver without charge to the holder thereof or upon the holders order, one or more new Debentures for the portion of the principal amount of the Debentures not purchased. |
(f) |
Debentures for which holders have accepted the Change of Control Purchase Option and Debentures which the Corporation has elected to redeem in accordance with this Section 2.11 shall become due and payable at the Change of Control Purchase Price on the Change of Control Purchase Date, in the same manner and with the same effect as if it were the date of maturity specified in such Debentures, anything therein or herein to the contrary notwithstanding, and, from and after the Change of Control Purchase Date, if the money necessary to purchase or redeem, or the Common Shares necessary to purchase or redeem, the Debentures shall have been deposited as provided in this Section 2.11 and affidavits or other proofs satisfactory to the Trustee as to the publication and/or mailing of such notices shall have been lodged with it, interest on the Debentures shall cease. If any question shall arise as to whether any notice has been given as above provided and such deposit made, |
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such question shall be decided by the Trustee whose decision shall be final and binding upon all parties in interest. |
(g) |
In case the holder of any Debenture to be purchased or redeemed in accordance with this Section 2.11 shall fail on or before the Change of Control Purchase Date to so surrender such holders Debenture or shall not within such time accept payment of the monies payable, to take delivery of certificates representing such Common Shares issuable in respect thereof, or give such receipt therefor, if any, as the Trustee may require, such monies may be set aside in trust, or such certificates may be held in trust, without interest, either in the deposit department of the Trustee or in a chartered bank, and such setting aside shall for all purposes be deemed a payment to the Debentureholder of the sum or the Common Shares so set aside and the Debentureholder shall have no other right except to receive payment of the monies so paid and deposited, or take delivery of the certificates so deposited, or both, upon surrender and delivery of such holders Debenture. In the event that any money or certificates representing Common Shares required to be deposited hereunder with the Trustee or any depository or paying agent on account of principal, premium, if any, or interest, if any, on Debentures issued hereunder shall remain so deposited for a period of six years from the Change of Control Purchase Date, then such monies, or certificates representing Common Shares, or any distributions paid thereon, shall at the end of such period be paid over or delivered over by the Trustee or such depository or paying agent to the Corporation and the Trustee shall not be responsible to Debentureholders for any amounts owing to them. Notwithstanding the foregoing, the Trustee will pay any remaining funds deposited hereunder on that date which is six years after the Change of Control Purchase Date (the Unclaimed Funds Return Date) to the Corporation and the Debenture Trustee shall not be responsible to Debentureholders for any amounts owing to them. If the remaining funds are paid to the Corporation prior to the Unclaimed Funds Return Date, the Corporation shall reimburse the Trustee for any amounts required to be paid by the Trustee to a holder of a Debenture pursuant to the Change of Control Purchase Option after the date of such payment of the remaining funds to the Corporation but prior to the Unclaimed Funds Return Date. |
(h) |
Subject to the provisions above related to Debentures purchased in part, all Debentures redeemed and paid under this Section 2.11 shall forthwith be delivered to the Trustee and cancelled and no Debentures shall be issued in substitution therefor. |
Section 2.12 Payment of Interest
(1) Except as otherwise provided in Section 2.1(3) or specified in a resolution of the Board of Directors or an Officers Certificate, and subject to Section 2.2, as interest becomes due on each Debenture (except, subject to certain exceptions set forth herein including in Section 2.1(3), on conversion or on redemption, when interest may at the option of the Corporation be paid upon surrender of such Debenture), the Corporation, either directly or through the Trustee or any agent of the Trustee, shall send or forward by prepaid ordinary mail, electronic transfer of funds or such other means as may be agreed to by the Trustee, payment of such interest (less any tax required to be withheld therefrom) to the order of the registered holder of such Debenture appearing on the registers maintained by the Trustee at the close of business on the date that is five (5) Business Days prior to each applicable Interest Payment Date and addressed to the holder at the holders last address appearing on the register, unless such holder otherwise directs. If payment is made by cheque, such cheque shall be forwarded at least three Business Days prior to each date on which interest becomes due, and if payment is made by other means (such as electronic transfer of funds), the Trustee must receive confirmation of receipt of funds by wire at least three Business Days in advance prior
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to being able to forward funds or cheques to holders) and such payment shall be made in a manner whereby the holder receives credit for such payment on the date such interest on such Debenture becomes due.
(2) The mailing of such cheque or the making of such payment by other means shall, to the extent of the sum represented thereby, plus the amount of any tax withheld as aforesaid, satisfy and discharge all liability for interest on such Debenture, unless in the case of payment by cheque, such cheque is not paid at par on presentation. In the event of non-receipt of any cheque for or other payment of interest by the person to whom it is so sent as aforesaid, the Corporation will issue to such person a replacement cheque or other payment for a like amount upon being furnished with such evidence of non-receipt as it shall reasonably require and upon being indemnified to its satisfaction. Notwithstanding the foregoing, if the Corporation is prevented by circumstances beyond its control (including, without limitation, any interruption in mail service) from making payment of any interest due on each Debenture in the manner provided above, the Corporation may make payment of such interest or make such interest available for payment in any other manner acceptable to the Trustee with the same effect as though payment had been made in the manner provided above.
Section 2.13 Concerning Interest
(1) All Debentures issued hereunder, whether originally or upon exchange or in substitution for previously issued Debentures which are interest bearing, shall bear interest (i) from and including their issue date, or (ii) from and including the last Interest Payment Date to which interest shall have been paid or made available for payment on the outstanding Debentures, whichever shall be the later, in each case, to and excluding the next Interest Payment Date.
(2) Interest shall be computed on the basis of a year of 360 days composed of twelve 30-day months. Whenever interest is computed on the basis of a year (the deemed year) which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year.
ARTICLE 3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP
Section 3.1 Register and Transfer
(1) The Corporation shall cause to be kept by and at the principal office of the Trustee in Toronto, Ontario and by the Trustee or such other registrar as the Corporation, with the approval of the Trustee, may appoint at such other place or places, if any, as the Corporation may designate with the approval of the Trustee, a register in which shall be entered the names and addresses of the holders of the Debentures and particulars of the Debentures held by them respectively and of all transfers of the Debentures. Such registration shall be noted on the Debentures by the Trustee or other registrar unless a new Debenture shall be issued upon such transfer.
(2) No transfer of a Debenture shall be valid unless made on such register referred to in Section 3.1(1) by the registered holder or such holders executors, administrators or other legal representatives or an attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee or other registrar upon surrender of the Debentures together with a duly executed form of transfer in the form attached to the Debenture Certificate and acceptable to the Trustee upon compliance with such other reasonable requirements as the Trustee or other registrar may prescribe, or unless the name of the transferee shall have been noted on the Debenture by the Trustee or other registrar.
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(3) Notwithstanding any other provision in this Indenture or the Debentures, any transfer of a Debenture by a holder must be completed in accordance with all applicable laws, including Applicable Securities Legislation and any applicable United States federal or state securities laws, including without limitation, exemptions from any applicable prospectus and registration requirements. The Corporation will be entitled to request reasonable evidence of compliance with all applicable laws including Applicable Securities Legislation and any applicable United States federal or state securities laws prior to recording and effecting a transfer of Debentures. No duty shall rest with the Trustee to determine compliance of the transferor or transferee of a Debenture with applicable laws, including Applicable Securities Legislation and any applicable United States federal or state securities laws, and the Trustee shall be entitled to assume that all transfers are legal and proper.
Section 3.2 Transferee Entitled to Registration
The transferee of a Debenture shall be entitled, after the appropriate form of transfer is lodged with the Trustee or other registrar and upon compliance with all other conditions in that behalf required by this Indenture or by law, to be entered on the register as the owner of such Debenture free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Debenture, save in respect of equities of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction. Upon surrender for registration of transfer of Debentures, the Corporation shall issue and thereupon the Trustee shall certify and deliver a new Debenture Certificate of like tenor in the name of the designated transferee and register such transfer in accordance with Section 3.1. If less than all the Debentures evidenced by the Debenture Certificate(s) so surrendered are transferred, the transferor shall be entitled to receive, in the same manner, a new Debenture Certificate registered in its name evidencing the Debentures not transferred.
Section 3.3 No Notice of Trusts
Neither the Corporation nor the Trustee nor any registrar shall be bound to take notice of or see to the execution of any trust (other than that created by this Indenture) whether express, implied or constructive, in respect of any Debenture, and may transfer the same on the direction of the person registered as the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.
Section 3.4 Registers Open for Inspection
The registers referred to in Section 3.1 shall at all reasonable times be open for inspection by the Corporation, the Trustee or any Debentureholder. Every registrar, including the Trustee, shall from time to time when requested so to do by the Corporation, in writing, furnish the Corporation with a list of names and addresses of holders of registered Debentures entered on the register kept by them and showing the principal amount and serial numbers of the Debentures held by each such holder.
Section 3.5 Exchanges of Debentures
(1) Subject to Section 3.1 and 3.6, Debentures in any authorized form or denomination may be exchanged for Debentures in any other authorized form or denomination, of the same date of maturity, bearing the same interest rate and of the same aggregate principal amount as the Debentures so exchanged.
(2) In respect of exchanges of Debentures permitted by Section 3.5(1), Debentures may be exchanged only at the principal offices of the Trustee in the city of Toronto, Ontario or at such other place or places, if any, as may from time to time be designated by the Corporation with the approval of the Trustee. Any Debentures surrendered for exchange shall be surrendered to the Trustee. The Corporation shall execute
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and the Trustee shall certify all Debentures necessary to carry out exchanges as aforesaid. All Debentures surrendered for exchange shall be cancelled.
(3) Debentures issued in exchange for Debentures which at the time of such issue have been selected or called for redemption at a later date shall be deemed to have been selected or called for redemption in the same manner and shall have noted thereon a statement to that effect.
Section 3.6 Closing of Registers
(1) Neither the Corporation nor the Trustee nor any registrar shall be required to:
(a) |
make transfers or exchanges or convert any Debentures on any Interest Payment Date for such Debentures or during the five preceding Business Days; |
(b) |
make transfers or exchanges of, or convert any Debentures on the day of any selection by the Trustee of Debentures to be redeemed or during the ten preceding Business Days; or |
(c) |
make exchanges of any Debentures which will have been selected or called for redemption unless upon due presentation thereof for redemption such Debentures shall not be redeemed, as the register for the Debentures shall be closed in respect of such actions on such dates. |
(2) Subject to any restriction herein provided, the Corporation with the approval of the Trustee may at any time close any register for the Debentures, other than those kept at the principal offices of the Trustee in Toronto, Ontario, and transfer the registration of any Debentures registered thereon to another register (which may be an existing register) and thereafter such Debentures shall be deemed to be registered on such other register. Notice of such transfer shall be given to the holders of such Debentures.
Section 3.7 Charges for Registration, Transfer and Exchange
For each Debenture exchanged, registered, transferred or discharged from registration, the Trustee or other registrar, except as otherwise herein provided, may make a reasonable charge for its services and in addition may charge a reasonable sum for each new Debenture issued (such amounts to be agreed upon from time to time by the Trustee and the Corporation), and payment of such charges and reimbursement of the Trustee or other registrar for any stamp taxes or governmental or other charges required to be paid shall be made by the party requesting such exchange, registration, transfer or discharge from registration as a condition precedent thereto. Notwithstanding the foregoing provisions, no charge shall be made to a Debentureholder hereunder:
(a) |
for any exchange, registration, transfer or discharge from registration of any Debenture applied for within a period of two months from the date of the first delivery of the Debentures; or |
(b) |
for any exchange of any interim or temporary Debenture or interim certificate that has been issued under Section 2.6 for a definitive Debenture. |
Section 3.8 Ownership of Debentures
(1) Unless otherwise required by law, the person in whose name any registered Debenture is registered shall for all purposes of this Indenture be and be deemed to be the owner thereof and payment of or on
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account of the principal of and premium, if any, on such Debenture and interest thereon shall be made to such registered holder.
(2) The registered holder for the time being of any registered Debenture shall be entitled to the principal, premium, if any, and/or interest evidenced by such instruments, respectively, free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt of any such registered holder for any such principal, premium and/or interest shall be a good discharge to the Trustee, any registrar and to the Corporation for the same and none shall be bound to inquire into the title of any such registered holder.
(3) Where Debentures are registered in more than one name, the principal, premium, if any, and interest from time to time payable in respect thereof may be paid to the order of all such holders, and the receipt of any one of such holders therefor shall be a valid discharge, to the Trustee, any registrar and to the Corporation.
(4) In the case of the death of one or more joint holders of any Debenture the principal, premium, if any, and interest from time to time payable thereon may be paid to the order of the survivor or survivors of such registered holders upon receipt of documents that may be required by the Trustee and the receipt of any such survivor or survivors therefor shall be a valid discharge to the Trustee and any registrar and to the Corporation.
ARTICLE 4PURCHASE OF DEBENTURES
Section 4.1 Purchase of Debentures by the Corporation
(1) The Corporation may, if it is not at the time in default hereunder, at any time and from time to time, purchase Debentures in the market (which shall include purchases from or through an investment dealer or a firm holding membership on a recognized stock exchange) or by tender or by contract, at any price. All Debentures so purchased may be delivered to the Trustee and shall be cancelled and no Debentures shall be issued in substitution therefor.
(2) If, upon an invitation for tenders, more Debentures are tendered at the same lowest price than the Corporation is prepared to accept, the Debentures to be purchased by the Corporation shall be selected by the Trustee on a pro rata basis from the Debentures tendered by each tendering Debentureholder who tendered at such lowest price. For this purpose the Trustee may make, and from time to time amend, regulations with respect to the manner in which Debentures may be so selected, and regulations so made shall be valid and binding upon all Debentureholders, notwithstanding the fact that as a result thereof one or more of such Debentures become subject to purchase in part only. The holder of a Debenture of which a part only is purchased, upon surrender of such Debenture for payment, shall be entitled to receive, without expense to such holder, one or more new Debentures for the unpurchased part so surrendered, and the Trustee shall certify and deliver such new Debenture or Debentures upon receipt of the Debenture so surrendered.
Section 4.2 Deposit of Maturity Monies
Payment on maturity of Debentures shall be provided for by the Corporation depositing with the Trustee or any paying agent to the order of the Trustee, on or before 11:00 a.m. (Eastern time) not less than one Business Day immediately prior to the Maturity Date such sums of money as may be sufficient to pay all accrued and unpaid interest thereon up to and excluding the Maturity Date. The Corporation shall also deposit with the Trustee a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection therewith. Every such deposit shall be in immediately available funds and
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shall be irrevocable. From the sums so deposited, the Trustee shall pay or cause to be paid to the holders of such Debentures, upon surrender of such Debentures, the principal and interest to which they are respectively entitled on the Maturity Date.
ARTICLE 5CONVERSION OF DEBENTURES
Section 5.1 Applicability of Article
(1) The Debentures issued hereunder will be convertible into Common Shares in accordance with the provisions hereof including Sections 2.1(6) and 3.6 hereof.
(2) Such right of conversion shall extend only to the maximum number of whole Common Shares into which the aggregate principal amount of the Debenture or Debentures surrendered for conversion at any one time by the holder thereof may be converted. Fractional interests in Common Shares shall be adjusted for in the manner provided in Section 5.6.
Section 5.2 Notice of Expiry of Conversion Privilege
Notice of the expiry of the conversion privileges of the Debentures shall be given by or on behalf of the Corporation, not more than 60 days and not less than 30 days prior to the date fixed for the Time of Expiry, in the manner provided in Section 12.2.
Section 5.3 Revival of Right to Convert
If the redemption of any Debenture called for redemption by the Corporation is not made or the payment of the purchase price of any Debenture which has been tendered in acceptance of an offer by the Corporation to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case of a purchase on the date on which such purchase is required to be made, as the case may be, then, provided the Time of Expiry has not passed, the right to convert such Debentures shall revive and continue as if such Debenture had not been called for redemption or tendered in acceptance of the Corporations offer, respectively.
Section 5.4 Manner of Exercise of Right to Convert
(1) The holder of a Debenture Certificate desiring to convert such Debenture in whole or in part into Common Shares shall surrender such Debenture Certificate to the Trustee at its principal office in the City of Toronto, Ontario together with the conversion notice in the form of Schedule B or any other written notice in a form satisfactory to the Trustee, duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Debenture in accordance with the provisions of this Article. Debenture Certificates bearing the U.S. Legend shall be converted into Common Shares marked to bear the U.S. Legend; provided that upon the Trustee receiving an executed conversion notice as set out in Schedule B with the box therein being ticked, the Trustee will issue Common Shares without the US Legend. Thereupon such Debentureholder or, subject to compliance with the applicable terms and provisions hereof and payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified in Section 5.4(2)) as the holder of the number of Common Shares, as applicable, into which such Debenture is convertible in accordance with the provisions of this Article and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), a certificate or certificates for such Common Shares, or
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at the direction of the Corporation, Direct Registration System Advices for such Common Shares to be held in book entry form, and make or cause to be made any payment of interest to which such holder is entitled in accordance with Section 5.4(6).
(2) For the purposes of this Article, a Debenture shall be deemed to be surrendered for conversion on the date (herein called the Date of Conversion) on which it is so surrendered when the register of the Trustee is open and in accordance with the provisions of this Article and, in the case of a Debenture so surrendered by mail or other means of transmission, on the date on which it is received by the Trustee at one of its offices specified in Section 5.4(1); provided that: (i) if a Debenture is surrendered for conversion on a day on which the register of Common Shares is closed, the Person or Persons entitled to receive Common Shares shall become the holder or holders of record of such Common Shares as at the date on which such registers are next reopened; and (ii) if a Debenture is surrendered for conversion on an Interest Payment Date or during the five Business Days preceding each Interest Payment Date, the Person or Persons entitled to receive Common Shares in respect of the Debenture so surrendered for conversion shall not become the holder or holders of record of such Common Shares until the Business Day following such Interest Payment Date and, for clarity, any interest payable on such Debentures will be for the account of the holder of record of such Debentures at the close of business on the date that is five (5) Business Days prior to the relevant Interest Payment Date.
(3) A Debenture in respect of which a holder has accepted a notice in respect of a Change of Control Purchase Option pursuant to the provisions of Section 2.11 may be surrendered for conversion only if such notice is withdrawn in accordance with this Indenture.
(4) Any part, being $1,000 or an integral multiple thereof, of a Debenture in a denomination in excess of $1,000 may be converted as provided in this Article and all references in this Indenture to conversion of Debentures shall be deemed to include conversion of such parts.
(5) The holder of any Debenture of which only a part is converted shall, upon the exercise of its right of conversion surrender such Debenture to the Trustee in accordance with Section 5.4(1), and the Trustee shall cancel the same and shall without charge forthwith certify and deliver to the holder a new Debenture or Debentures in an aggregate principal amount equal to the unconverted part of the principal amount of the Debenture so surrendered.
(6) The holder of a Debenture surrendered for conversion in accordance with this Section 5.4 shall be entitled to receive accrued and unpaid interest in respect thereof (less any taxes required to be deducted), in cash, from and including the last Interest Payment Date prior to the Date of Conversion up to but excluding the Date of Conversion, and the Common Shares issued upon such conversion shall rank only in respect of distributions or dividends declared in favour of shareholders of record on and after the Date of Conversion or such later date as such holder shall become the holder of record of such Common Shares pursuant to Section 5.4(2), from which applicable date they will for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.
Section 5.5 Adjustment of Conversion Price
The Conversion Price in effect at any date shall be subject to adjustment from time to time as set forth below.
(a) |
If and whenever at any time prior to the Time of Expiry the Corporation shall: |
(i) |
subdivide or redivide the outstanding Common Shares into a greater number of shares, |
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(ii) |
reduce, combine or consolidate the outstanding Common Shares into a smaller number of shares, or |
(iii) |
issue Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a dividend or distribution (other than the issue of Common Shares to holders of Common Shares who have elected to receive dividends or distributions in the form of Common Shares in lieu of cash dividends or cash distributions paid in the ordinary course on the Common Shares), |
the Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Common Shares by way of a dividend or distribution, as the case may be, shall in the case of any of the events referred to in (i) and (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, redivision or dividend, or shall, in the case of any of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this Section 5.5(a) shall occur. Any such issue of Common Shares by way of a dividend or distribution shall be deemed to have been made on the record date for the dividend or distribution for the purpose of calculating the number of outstanding Common Shares under subsections (b) and (c) of this Section 5.5.
(b) |
If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the issuance of options, rights or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible into Common Shares) at a price per share (or having a conversion or exchange price per share) less than 95% of the Current Market Price on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible securities so offered) by such Current Market Price, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such options, rights or warrants are not so issued or any such options, rights or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Common Shares (or securities convertible into Common Shares) actually issued upon the exercise of such options, rights or warrants were included in such fraction, as the case may be. |
(c) |
If and whenever at any time prior to the Time of Expiry, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 5.5(a) or a consolidation, amalgamation, arrangement, share exchange, merger of the Corporation with or into any other Person or other entity or acquisition of the Corporation or other combination pursuant to which the Common Shares are converted |
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into or acquired for cash, securities or other property; or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other Person (other than a direct or indirect wholly-owned subsidiary of the Corporation) or other entity or a liquidation, dissolution or winding-up of the Corporation (any such event, a Merger Event), any holder of a Debenture who has not exercised its right of conversion prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, upon the exercise of such right thereafter, shall be entitled to receive and shall accept, in lieu of the number of Common Shares then sought to be acquired by it, such amount of cash or the number of shares or other securities or property of the Corporation or of the Person or other entity resulting from such merger, amalgamation, arrangement, acquisition, combination or consolidation, or to which such sale or conveyance may be made or which holders of Common Shares receive pursuant to such liquidation, dissolution or winding-up, as the case may be, that such holder of a Debenture would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, if, on the record date or the effective date thereof, as the case may be, the holder had been the registered holder of the number of Common Shares sought to be acquired by it and to which it was entitled to acquire upon the exercise of the conversion right, subject to Section 5.5(l). If determined appropriate by the Board of Directors, to give effect to or to evidence the provisions of this Section 5.5(c), the Corporation, its successor, or such purchasing Person or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the holder of Debentures to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any cash, shares or other securities or property to which a holder of Debentures is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Trustee pursuant to the provisions of this Section 5.5(c) shall be a supplemental indenture entered into pursuant to the provisions of Article 14. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing Person or other entity and the Trustee shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 5.5(c) and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, share exchanges, acquisitions, combinations, sales or conveyances. For greater certainty, nothing in this Section 5.5(c) shall affect or reduce the requirement for any Person to make a Change of Control Offer, and notice of any transaction to which this Section 5.5(c) applies shall be given in accordance with Section 5.10. |
(d) |
If the Corporation shall make a distribution to all or substantially all of the holders of Common Shares of shares in the capital of the Corporation, other than Common Shares, or evidences of indebtedness or other assets of the Corporation, including securities (but excluding (i) any issuance of rights or warrants for which an adjustment was made pursuant to Section 5.5(b) and (ii) any dividend or distribution paid exclusively in cash (the Distributed Securities), then in each such case (unless the Corporation distributes such Distributed Securities to the holders of Debentures on such dividend or distribution date (as if each holder had converted such Debenture into Common Shares immediately |
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preceding the record date with respect to such distribution)) the Conversion Price in effect immediately preceding the record date fixed for the determination of shareholders entitled to receive such dividend or distribution shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately preceding such record date by a fraction of which the denominator shall be the Current Market Price per Common Share on such record date and of which the numerator shall be the Current Market Price per Common Share on such record date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value, subject to approval by the TSX (or such other recognized stock exchange on which the Common Shares are listed for trading) and which shall be evidenced by an Officers Certificate delivered to the Trustee) on such record date of the portion of the Distributed Securities so distributed applicable to one Common Share (determined on the basis of the number of Common Shares outstanding at the close of business on such record date). Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared. If the then fair market value (as so determined) of the portion of the Distributed Securities so distributed applicable to one Common Share is equal to or greater than the Current Market Price per Common Share on such record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of a Debenture shall have the right to receive upon conversion the amount of Distributed Securities so distributed that such holder would have received had such holder converted each Debenture on such record date. If the Board of Directors determines the fair market value of any distribution for purposes of this clause (d) of Section 5.5 by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Shares. |
Notwithstanding the foregoing, if the securities distributed by the Corporation to all holders of its Common Shares consist of capital stock of, or similar equity interests in, a Subsidiary or other business of the Corporation (the Spinoff Securities), the Conversion Price shall be adjusted, unless the Corporation makes an equivalent distribution to the holders of Debentures, so that the same shall be equal to the rate determined by multiplying the Conversion Price in effect on the record date fixed for the determination of shareholders entitled to receive such distribution by a fraction, the denominator of which shall be the sum of (A) the weighted average trading price of one Common Share over the 20 consecutive trading day period (the Spinoff Valuation Period) commencing on and including the fifth trading day after the date on which ex-dividend trading commences for such distribution on the TSX (or such other exchange on which the Common Shares are then listed) and (B) the product of (i) the weighted average trading price (calculated in substantially the same way as the Current Market Price is calculated for the Common Shares) over the Spinoff Valuation Period of the Spinoff Securities or, if no such prices are available, the fair market value of the Spinoff Securities as reasonably determined by the Board of Directors (which determination shall be conclusive and shall be evidenced by an Officers Certificate delivered to the Trustee) multiplied by (ii) the number of Spinoff Securities distributed in respect of one Common Share and the numerator of which shall be the weighted average trading price of one Common Share over the Spinoff Valuation Period, such adjustment to become effective immediately preceding the opening of business on the 25th trading day after the date on which ex-dividend trading commences; provided, however, that the Corporation may in lieu of the foregoing adjustment elect to
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make adequate provision so that each holder of Debentures shall have the right to receive upon conversion thereof the amount of such Spinoff Securities that such holder of Debentures would have received if such Debentures had been converted on the record date with respect to such distribution. |
(e) |
If any issuer bid made by the Corporation or any of its Subsidiaries for all or any portion of Common Shares shall expire, then, if the issuer bid shall require the payment to shareholders of consideration per Common Share having a fair market value (determined as provided below) that exceeds the Current Market Price on the last date (the Expiration Date) tenders could have been made pursuant to such issuer bid (as it may be amended) (the last time at which such tenders could have been made on the Expiration Date is hereinafter sometimes called the Expiration Time), the Conversion Price shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Price in effect immediately preceding the close of business on the Expiration Date by a fraction of which (i) the denominator shall be the sum of (A) the fair market value of the aggregate consideration (the fair market value as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers Certificate delivered to the Trustee) payable to shareholders based on the acceptance (up to any maximum specified in the terms of the issuer bid) of all Common Shares validly tendered and not withdrawn as of the Expiration Time (the Common Shares deemed so accepted, up to any such maximum, being referred to as the Purchased Common Shares) and (B) the product of the number of Common Shares outstanding (less any Purchased Common Shares and excluding any Common Shares held in the treasury of the Corporation) at the Expiration Time and the Current Market Price on the Expiration Date and (ii) the numerator of which shall be the product of the number of Common Shares outstanding (including Purchased Common Shares but excluding any Common Shares held in the treasury of the Corporation) at the Expiration Time multiplied by the Current Market Price on the Expiration Date, such increase to become effective immediately preceding the opening of business on the day following the Expiration Date. In the event that the Corporation is obligated to purchase Common Shares pursuant to any such issuer bid, but the Corporation is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would have been in effect based upon the number of Common Shares actually purchased, if any. If the application of this clause (e) of Section 5.5 to any issuer bid would result in a decrease in the Conversion Price, no adjustment shall be made for such issuer bid under this clause (e). |
For purposes of this Section 5.5(e), the term issuer bid shall mean an issuer bid under Applicable Securities Legislation or a take-over bid under Applicable Securities Legislation by a Subsidiary of the Corporation for the Common Shares and all references to purchases of Common Shares in issuer bids (and all similar references) shall mean and include the purchase of Common Shares in issuer bids and all references to tendered Common Shares (and all similar references) shall mean and include Common Shares tendered in issuer bids.
(f) |
In any case in which this Section 5.5 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the holder of any Debenture converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event before |
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giving effect to such adjustment; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holders right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the Date of Conversion or such later date as such holder would, but for the provisions of this Section 5.5(f), have become the holder of record of such additional Common Shares pursuant to Section 5.4(2). |
(g) |
The adjustments provided for in this Section 5.5 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section, provided that, notwithstanding any other provision of this Section, no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided however, that any adjustments which by reason of this Section 5.5(g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. |
(h) |
For the purpose of calculating the number of Common Shares outstanding, Common Shares owned by or for the benefit of the Corporation shall not be counted. |
(i) |
In the event of any question arising with respect to the adjustments provided in this Section 5.5, such question shall be conclusively determined by the Board of Directors, and in the event holders of not less than 25% of the principal amount of the Debentures then outstanding notify the Trustee that they do not agree with such determination within 14 days of such determination being communicated to all the holders, such determination shall be made by a firm of nationally recognized chartered accountants appointed by the Corporation and acceptable to the Trustee (who may be the Auditors of the Corporation); such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation, the Trustee, and the Debentureholders. In the absence of notice by holders of not less than 25% of the principal amount of the Debentures then outstanding of their disagreement as aforesaid, the determination of the Board of Directors shall be binding. |
(j) |
In case the Corporation shall take any action (other than the payment of cash dividends) affecting the Common Shares other than action described in this Section 5.5, which in the opinion of the Board of Directors, would materially affect the rights of Debentureholders, the Conversion Price shall be adjusted in such manner and at such time, by action of the Board of Directors, as the Board of Directors, in their sole discretion may determine to be equitable in the circumstances. Failure of the directors to make such an adjustment shall be conclusive evidence that they have determined that it is equitable to make no adjustment in the circumstances. |
(k) |
No adjustment in the Conversion Price shall be made in respect of any event described in Sections 5.5(a), 5.5(b), 5.5(c), 5.5(d), 5.5(e) or 5.5(f) other than the events described in 5.5(a)(i) or 5.5(a)(ii) if the holders of the Debentures are entitled to participate in such event on the same terms mutatis mutandis as if they had converted their Debentures prior to the effective date or record date, as the case may be, of such event. Participation in such event by the holders of the Debentures shall be subject to prior approval by the TSX. |
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(l) |
Except as stated above in this Section 5.5, no adjustment will be made in the Conversion Price for any Debentures as a result of the issuance of Common Shares at less than the Current Market Price on the date of issuance or the then applicable Conversion Price. |
(m) |
Notwithstanding any of the foregoing in this Section 5.5, if a holder of a Debenture would otherwise be entitled to receive, upon conversion of the Debenture, any property (including cash) or securities that would not constitute prescribed securities for the purposes of clause 212(1)(b)(vii)(E) of the Tax Act as it applied on December 31, 2007 (Ineligible Consideration), such holder of a Debenture shall not be entitled to receive such Ineligible Consideration and the Corporation or the successor or acquirer, as the case may be, shall have the right (at the sole option of the Corporation or the successor or acquirer, as the case may be) to deliver to such holder prescribed securities for the purposes of clause 212(1)(b)(vii)(E) of the Tax Act as it applied on December 31, 2007 with a market value (as conclusively determined by the Board of Directors) equal to the market value of such Ineligible Consideration. |
Section 5.6 No Requirement to Issue Fractional Common Shares
The Corporation shall not be required to issue fractional Common Shares upon the conversion of Debentures pursuant to this Article. If more than one Debenture shall be surrendered for conversion at one time by the same holder, the number of whole Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of such Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of this Section, be deliverable upon the conversion of any principal amount of Debentures, the number of Common Shares so issuable shall be rounded down to the nearest whole number.
Section 5.7 Mandatory Conversion
(1) Notwithstanding anything to the contrary contained herein and subject to any required regulatory approval and provided no Event of Default has occurred and is continuing, if, at any time during the Conversion Period, the VWAP is greater than $7.50 per Common Share, as adjusted in accordance with Section 5.5, for any 15 consecutive trading days, the Corporation may force the conversion of all but not less than all of the principal amount of the then outstanding Debentures at the then applicable Conversion Price, upon giving the Debentureholders not less than 30 days advance written notice the Mandatory Conversion Notice), in accordance with Section 12.2.
(2) In the event that the Corporation exercises its right to force conversion of all of the principal amount of the Debentures pursuant to this Section 5.7, the effective date for the mandatory conversion (the Mandatory Conversion Date) shall be: (a) the date stipulated in the Mandatory Conversion Notice; or (b) if no date is so stipulated in the Mandatory Conversion Notice, the date that is 30 days following the date of such Mandatory Conversion Notice, and upon such Mandatory Conversion Date: (i) all of the principal amount of the then outstanding Debentures shall be deemed to be converted into Common Shares at the then applicable Conversion Price; and (ii) the Debentureholders shall be entered in the books of the Corporation as at the Mandatory Conversion Date as the holders of the number of Common Shares, as applicable, into which the Debentures held by them are convertible. Upon the surrender of Debenture Certificates to the Trustee at its principal office in the City of Toronto, Ontario by the Debentureholders, the Corporation shall deliver to the Debentureholders certificates for the Common Shares for the Common Shares into which the Debentures held by them have been converted, or at the direction of the Corporation, Direct Registration System Advices for such Common Shares to be held in book entry form.
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(3) The holder of a Debenture converted in accordance with this Section 5.7 shall be entitled to receive accrued and unpaid interest in respect thereof (less any taxes required to be deducted), in cash, from and including the last Interest Payment Date prior to the Mandatory Conversion Date up to but excluding the Mandatory Conversion Date, and the Common Shares issued upon such conversion shall rank only in respect of distributions or dividends declared in favour of shareholders of record on and after the Mandatory Conversion Date or such later date as such holder shall become the holder of record of such Common Shares pursuant to Section 5.7(2), from which applicable date they will for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.
Section 5.8 Corporation to Reserve Common Shares
The Corporation covenants with the Trustee that it will at all times reserve and keep available out of its authorized Common Shares (if the number thereof is or becomes limited), solely for the purpose of issue upon conversion of Debentures as in this Article provided, and conditionally allot to Debentureholders who may exercise their conversion rights hereunder, such number of Common Shares as shall then be issuable upon the conversion of all outstanding Debentures. The Corporation covenants with the Trustee that all Common Shares which shall be so issuable shall be duly and validly issued as fully-paid and non-assessable.
Section 5.9 Cancellation of Converted Debentures
Subject to the provisions of Section 5.4 as to Debentures converted in part, all Debentures converted in whole or in part under the provisions of this Article shall be forthwith delivered to and cancelled by the Trustee and no Debenture shall be issued in substitution for those converted.
Section 5.10 Certificate as to Adjustment
The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 5.5, deliver an Officers Certificate to the Trustee specifying the nature of the event requiring the same and the amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate and the amount of the adjustment specified therein shall be verified by advice of a firm of nationally recognized chartered accountants appointed by the Corporation and acceptable to the Trustee (who may be the Auditors of the Corporation) and shall be conclusive and binding on all parties in interest. When so approved, the Corporation shall forthwith give notice to the Debentureholders in the manner provided in Section 12.2 specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Conversion Price; provided that, if the Corporation has given notice under Section 5.11 covering all the relevant facts in respect of such event and if the Trustee approves, no such notice need be given under this Section 5.10.
Section 5.11 Notice of Special Matters
(1) The Corporation covenants with the Trustee that so long as any Debenture remains outstanding, it will give notice to the Trustee, and to the Debentureholders in the manner provided in Section 12.2, of its intention to fix a record date for any event referred to in Section 5.5(a), Section 5.5(b), Section 5.5(c), 5.5(d), or Section 5.5(e) (other than the subdivision, redivision, reduction, combination or consolidation of its Common Shares) which may give rise to an adjustment in the Conversion Price, and, in each case, such notice shall specify the particulars of such event and the record date and the effective date for such event; provided that the Corporation shall only be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days in each case prior to such applicable record date.
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(2) In addition, the Corporation covenants with the Trustee that so long as any Debenture remains outstanding, it will give notice to the Trustee, and to the Debentureholders in the manner provided in Section 12.2, at least 30 days prior to the (i) effective date of any transaction referred to in Section 5.5(c) stating the consideration into which the Debentures will be convertible after the effective date of such transaction, and (ii) Expiration Date of any transaction referred to in Section 5.5(e) stating the consideration paid per Common Share in such transaction.
Section 5.12 Protection of Trustee
The Trustee:
(a) |
shall not at any time be under any duty or responsibility to any Debentureholder to determine whether any facts exist which may require any adjustment in the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same; |
(b) |
shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any time be issued or delivered upon the conversion of any Debenture; and |
(c) |
shall not be responsible for any failure of the Corporation to make any cash payment or to issue, transfer or deliver Common Shares or share certificates upon the surrender of any Debenture for the purpose of conversion, or to comply with any of the covenants contained in this Article. |
ARTICLE 6 COVENANTS OF THE CORPORATION
The Corporation hereby covenants and agrees with the Trustee for the benefit of the Trustee and the Debentureholders, that so long as any Debentures remain outstanding:
Section 6.1 To Pay Principal, Premium (if any) and Interest
Subject to Section 2.2, the Corporation will duly and punctually pay or cause to be paid to every Debentureholder the principal of, premium (if any) and interest accrued on the Debentures of which it is the holder on the dates, at the places and in the manner mentioned herein and in the Debentures.
Section 6.2 To Pay Trustees Remuneration
The Corporation will pay the Trustee reasonable remuneration for its services as Trustee hereunder and will repay to the Trustee on demand all monies which shall have been paid by the Trustee in connection with the execution of the trusts hereby created, including the reasonable compensation and disbursements of its counsel and all other assistants and advisors not regularly under its employ, and such monies including the Trustees remuneration, shall be payable out of any funds coming into the possession of the Trustee in priority to payment of any principal of the Debentures or interest or premium, if any, thereon. Such remuneration shall continue to be payable until the trusts hereof be finally wound up and whether or not the trusts of this Indenture shall be in the course of administration by or under the direction of a court of competent jurisdiction.
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Section 6.3 To Give Notice of Default
The Corporation shall notify the Trustee immediately upon obtaining knowledge of any Event of Default hereunder. The Corporation shall also notify the Trustee immediately upon receiving any Default Notice from the Senior Lenders.
Section 6.4 Preservation of Existence, etc.
Subject to the express provisions hereof, the Corporation will carry on and conduct its activities, and cause its Subsidiaries to carry on and conduct their businesses, in a business-like manner and in accordance with good business practices, and, subject to the express provisions hereof, it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and rights; provided that the foregoing covenant shall not prevent or restrict the Corporation from completing a transaction to which Article 9 would apply if carried out in accordance with Article 9.
Section 6.5 Keeping of Books
The Corporation will keep or cause to be kept proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Corporation in accordance with generally accepted accounting principles.
Section 6.6 Annual Certificate of Compliance
The Corporation shall deliver to the Trustee, within 120 days after the end of each calendar year, (and at any reasonable time upon demand by the Trustee) an Officers Certificate as to the knowledge of such officers of the Corporation who execute the Officers Certificate of the Corporations compliance with all conditions and covenants in this Indenture certifying that after reasonable investigation and inquiry, the Corporation has complied with all covenants, conditions or other requirements contained in this Indenture, the non-compliance with which would, with the giving of notice, lapse of time or otherwise, constitute an Event of Default hereunder, or if such is not the case, setting forth with reasonable particulars the circumstances of any failure to comply and steps taken or proposed to be taken to eliminate such circumstances and remedy such Event of Default, as the case may be.
Section 6.7 Performance of Covenants by Trustee
If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Trustee may notify the Debentureholders of such failure on the part of the Corporation or may itself perform any of the covenants capable of being performed by it, but shall be under no obligation to do so or to notify the Debentureholders. All sums so expended or advanced by the Trustee shall be repayable as provided in Section 6.2. No such performance, expenditure or advance by the Trustee shall be deemed to relieve the Corporation of any default hereunder.
Section 6.8 Maintain Listing
The Corporation will use reasonable commercial efforts to maintain the listing of the Common Shares on the TSX, and to maintain the Corporations status as a reporting issuer not in default of the requirements of the Applicable Securities Legislation; provided that the foregoing covenant shall not prevent or restrict the Corporation from carrying out a transaction to which Article 9 would apply if carried out in compliance with Article 9 even if as a result of such transaction the Corporation ceases to be a reporting issuer in all or any of the provinces of Canada or the Common Shares cease to be listed on the TSX or any other stock exchange.
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Section 6.9 No Dividends on Common Shares if Event of Default
The Corporation shall not declare or pay any dividend to the holders of its issued and outstanding Common Shares after the occurrence of an Event of Default unless and until such default shall have been cured or waived or shall have ceased to exist.
Section 6.10 Withholding Matters
All payments made by or on behalf of the Corporation under or with respect to the Debentures (including, without limitation, any penalties, interest and other liabilities related thereto) will be made free and clear of and without withholding, or deduction for, or on account of, any present or future tax, duty, levy, impost, assessment or other governmental charge (including, without limitation, penalties, interest and other liabilities related hereto) imposed or levied by or on behalf of the Government of Canada or the United States or elsewhere, or of any province or territory thereof or by any authority or agency therein or thereof having power to tax (Withholding Taxes), unless the Corporation is required by law or the interpretation or administration thereof, to withhold or deduct any amounts for, or on account of Withholding Taxes. If the Corporation is so required to withhold or deduct any amount for, or on account of, Withholding Taxes from any payment made under or with respect to the Debentures, the Corporation shall deduct and withhold such Withholding Taxes from any payment to be made or with respect to the Debentures and, provided that the Corporation forthwith remits such amount to the relevant governmental authority or agency, the amount of any such deduction or withholding will be considered an amount paid in satisfaction of the Corporations obligations under the Debentures. There is no obligation on the Corporation to gross-up or pay additional amounts to a holder of Debentures in respect of such deductions or withholdings. For greater certainty, if any amount is required to be deducted or withheld in respect of Withholding Taxes upon a conversion of a Debenture, the Corporation shall be entitled to liquidate such number of Common Shares (or other securities) issuable as a result of such conversion as shall be necessary in order to satisfy such requirement. The Corporation shall provide the Trustee with copies of receipts or other communications relating to the remittance of such withheld amount or the filing of any forms received from such government authority or agency promptly after receipt thereof.
ARTICLE 7 DEFAULT
Section 7.1 Events of Default
(1) Each of the following events constitutes, and is herein sometimes referred to as, an Event of Default:
(a) |
failure for 30 days to pay interest on the Debentures when due; |
(b) |
failure to pay principal or premium (whether by way of payment of cash or delivery of Common Shares), if any, when due on the Debentures whether at maturity, upon redemption or a Change of Control, by declaration or otherwise; |
(c) |
default in the delivery, when due, of any Common Shares or other consideration, payable on conversion with respect to the Debentures, which default continues for 15 days; |
(d) |
default in the observance or performance of any covenant or condition of this Indenture by the Corporation and the failure to cure (or obtain a waiver for) such default for a period of 30 days after notice in writing has been given by the Trustee or from holders of not less than 25% in aggregate principal amount of the Debentures to the Corporation specifying |
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such default and requiring the Corporation to rectify such default or obtain a waiver for same; |
(e) |
if a decree or order of a Court having jurisdiction is entered adjudging the Corporation or any Material Subsidiary a bankrupt or insolvent under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or issuing sequestration or process of execution against, or against any substantial part of, the property of the Corporation or any Material Subsidiary, or appointing a receiver of, or of any substantial part of, the property of the Corporation or any Material Subsidiary or ordering the winding-up or liquidation of its affairs, and any such decree or order continues unstayed and in effect for a period of 60 days; |
(f) |
if the Corporation or any Material Subsidiary institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or consents to the filing of any such petition or to the appointment of a receiver of, or of any substantial part of, the property of the Corporation or any Material Subsidiary or makes a general assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due; |
(g) |
if a resolution is passed for the winding-up or liquidation of the Corporation or any Material Subsidiary except in the course of carrying out or pursuant to a transaction in respect of which the conditions of Section 9.1 are duly observed and performed; or |
(h) |
if, after the date of this Indenture, any proceedings with respect to the Corporation or any Material Subsidiary are taken with respect to a compromise or arrangement, with respect to creditors of the Corporation or any Material Subsidiary generally, under the applicable legislation of any jurisdiction; |
then: (i) in each and every such event listed above, the Trustee may, in its discretion, but subject to the provisions of this section and Section 2.2, and shall, subject to Section 2.2, upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures then outstanding, subject to the provisions of Section 7.3, by notice in writing to the Corporation declare the principal of and interest and premium, if any, on all Debentures then outstanding and all other monies outstanding hereunder to be due and payable and the same shall thereupon forthwith become immediately due and payable to the Trustee, and (ii) on the occurrence of an Event of Default under Sections 7.1(1)(e), 7.1(1)(f) or 7.1(1)(g), the principal of and interest and premium, if any, on all Debentures then outstanding hereunder and all other monies outstanding hereunder, shall automatically without any declaration or other act on the part of the Trustee or any Debentureholder become immediately due and payable to the Trustee and, in either case, upon such amounts becoming due and payable in either (i) or (ii) above, the Corporation shall forthwith pay to the Trustee for the benefit of the Debentureholders such principal, accrued and unpaid interest and premium, if any, and interest on amounts in default on such Debenture and all other monies outstanding hereunder, together with subsequent interest at the rate borne by the Debentures on such principal, interest, premium, if any, and such other monies from the date of such declaration or event until payment is received by the Trustee, such subsequent interest to be payable at the times and places and in the manner mentioned in and according to the tenor of the Debentures. Such payment when made shall be deemed to have been made in discharge of the Corporations obligations hereunder and any monies so received by the Trustee shall be applied in the manner provided in Section 7.6.
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Section 7.2 Notice of Events of Default
If an Event of Default shall occur and be continuing the Trustee shall, within 30 days after it receives written notice of the occurrence of such Event of Default, give notice of such Event of Default to the Debentureholders in the manner provided in Section 12.2, provided that notwithstanding the foregoing, unless the Trustee shall have been requested to do so by the holders of at least 25% of the principal amount of the Debentures then outstanding, the Trustee shall not be required to give such notice if the Trustee in good faith shall have determined that the withholding of such notice is in the best interests of the Debentureholders and shall have so advised the Corporation in writing.
When notice of the occurrence of an Event of Default has been given and the Event of Default is thereafter cured, notice that the Event of Default is no longer continuing shall be given by the Trustee to the Debentureholders within 15 days after the Trustee becomes aware the Event of Default has been cured.
Section 7.3 Waiver of Default
(1) Upon the happening of any Event of Default hereunder:
(a) |
the holders of the Debentures shall have the power (in addition to the powers exercisable by Extraordinary Resolution as hereinafter provided) by requisition in writing by the holders of more than 50% of the principal amount of Debentures then outstanding, to instruct the Trustee to waive any Event of Default and to cancel any declaration made by the Trustee pursuant to Section 7.1 and the Trustee shall thereupon waive the Event of Default and cancel such declaration, or either, upon such terms and conditions as shall be prescribed in such requisition; and |
(b) |
the Trustee, so long as it has not become bound to declare the principal and interest on the Debentures then outstanding to be due and payable, or to obtain or enforce payment of the same, shall have power to waive any Event of Default if, in the Trustees opinion, the same shall have been cured or adequate satisfaction made therefor, and in such event to cancel any such declaration theretofore made by the Trustee in the exercise of its discretion, upon such terms and conditions as the Trustee may deem advisable. |
(2) No such act or omission either of the Trustee or of the Debentureholders shall extend to or be taken in any manner whatsoever to affect any subsequent Event of Default or the rights resulting therefrom.
Section 7.4 Enforcement by the Trustee
(1) Subject to the provisions of Section 7.3 and Section 2.2 and to the provisions of any Extraordinary Resolution that may be passed by the Debentureholders, if the Corporation shall fail to pay to the Trustee, forthwith after the same shall have been declared to be due and payable under Section 7.1, the principal of and interest on all Debentures then outstanding, together with any other amounts due hereunder, the Trustee may in its discretion and shall upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures then outstanding and upon being funded and indemnified to its reasonable satisfaction against all costs, expenses and liabilities to be incurred, proceed in its name as trustee hereunder to obtain or enforce payment of such principal and interest on all the Debentures then outstanding together with any other amounts due hereunder by such proceedings authorized by this Indenture or by law or equity as the Trustee in such request shall have been directed to take, or if such request contains no such direction, or if the Trustee shall act without such request, then by such proceedings authorized by this Indenture or by suit at law or in equity as the Trustee shall deem expedient.
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(2) The Trustee shall be entitled and empowered, either in its own name or as trustee of an express trust, or as attorney-in-fact for the holders of the Debentures, or in any one or more of such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claims of the Trustee and of the holders of the Debentures allowed in any insolvency, bankruptcy, liquidation or other judicial proceedings relative to the Corporation or its creditors or relative to or affecting its property. The Trustee is hereby irrevocably appointed (and the successive respective holders of the Debentures by taking and holding the same shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective holders of the Debentures with authority to make and file in the respective names of the holders of the Debentures or on behalf of the holders of the Debentures as a class, subject to deduction from any such claims of the amounts of any claims filed by any of the holders of the Debentures themselves, any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceedings and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of such holders of the Debentures, as may be necessary or advisable in the opinion of the Trustee, in order to have the respective claims of the Trustee and of the holders of the Debentures against the Corporation or its property allowed in any such proceeding, and to receive payment of or on account of such claims; provided, however, that subject to Section 7.3, nothing contained in this Indenture shall be deemed to give to the Trustee, unless so authorized by Extraordinary Resolution, any right to accept or consent to any plan of reorganization or otherwise by action of any character in such proceeding to waive or change in any way any right of any Debentureholder.
(3) The Trustee shall also have the power at any time and from time to time to institute and to maintain such suits and proceedings as it may be advised shall be necessary or advisable to preserve and protect its interests and the interests of the Debentureholders.
(4) All rights of action hereunder may be enforced by the Trustee without the possession of any of the Debentures or the production thereof on the trial or other proceedings relating thereto.
(5) Any such suit or proceeding instituted by the Trustee shall be brought in the name of the Trustee as trustee of an express trust, and any recovery of judgment shall be for the rateable benefit of the holders of the Debentures subject to the provisions of this Indenture. In any proceeding brought by the Trustee (and also any proceeding in which a declaratory judgment of a court may be sought as to the interpretation or construction of any provision of this Indenture, to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceeding.
Section 7.5 No Suits by Debentureholders
No holder of any Debenture shall have any right to institute any action, suit or proceeding at law or in equity for the purpose of enforcing payment of the principal of or interest on the Debentures or for the execution of any trust or power hereunder or for the appointment of a liquidator or receiver or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to have the Corporation wound up or to file or prove a claim in any liquidation or bankruptcy proceeding or for any other remedy hereunder, unless: (a) such holder shall previously have given to the Trustee written notice of the happening of an Event of Default hereunder; and (b) the Debentureholders by Extraordinary Resolution or by written instrument signed by the holders of at least 25% in principal amount of the Debentures then outstanding shall have made a request to the Trustee and the Trustee shall have been afforded reasonable opportunity either itself to proceed to exercise the powers hereinbefore granted or to institute an action, suit or proceeding in its name for such purpose; and (c) the Debentureholders or any of them shall have furnished to the Trustee, when so requested by the Trustee, sufficient funds and security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; (d) the Trustee shall have failed to act within a reasonable time
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after such notification, request and offer of indemnity; and (e) no direction inconsistent with such request has been received by the Trustee from holders of a majority in principal amount of the outstanding Debentures, and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to any such proceeding or for any other remedy hereunder by or on behalf of the holder of any Debentures.
Section 7.6 Application of Monies by Trustee
(1) Except as herein otherwise expressly provided, including in Section 2.2, any monies received by the Trustee from the Corporation pursuant to the foregoing provisions of this Article 7, or as a result of legal or other proceedings or from any trustee in bankruptcy or liquidator of the Corporation, shall be applied, together with any other monies in the hands of the Trustee available for such purpose, as follows:
(a) |
first, in payment or in reimbursement to the Trustee of its compensation, costs, charges, expenses, borrowings, advances or other monies furnished or provided by or at the instance of the Trustee in or about the execution of its trusts under, or otherwise in relation to, this Indenture, with interest thereon as herein provided; |
(b) |
second, but subject as hereinafter in this Section 7.6 provided, in payment, rateably and proportionately to the holders of Debentures, of the principal and accrued and unpaid interest and interest on amounts in default on the Debentures which shall then be outstanding in the priority of principal first and then premium, if any, and then accrued and unpaid interest and interest on amounts in default unless otherwise directed by Extraordinary Resolution and in that case in such order or priority as between principal and interest as may be directed by such resolution; and |
(c) |
third, in payment of the surplus, if any, of such monies to the Corporation or its assigns; |
provided, however, that no payment shall be made pursuant to clause (b) above in respect of the principal or interest on any Debenture held, directly or indirectly, by or for the benefit of the Corporation or any Subsidiary (other than any Debenture pledged for value and in good faith to a person other than the Corporation or any Subsidiary but only to the extent of such persons interest therein) except subject to the prior payment in full of the principal and interest (if any) on all Debentures which are not so held.
(2) The Trustee shall not be bound to apply or make any partial or interim payment of any monies coming into its hands if the amount so received by it, after reserving thereout such amount as the Trustee may think necessary to provide for the payments mentioned in Section 7.6(1), is insufficient to make a distribution of at least 2% of the aggregate principal amount of the outstanding Debentures, but it may retain the money so received by it and invest or deposit the same as provided in Section 13.9 until the money or the investments representing the same, with the income derived therefrom, together with any other monies for the time being under its control shall be sufficient for the said purpose or until it shall consider it advisable to apply the same in the manner hereinbefore set forth. The foregoing shall, however, not apply to a final payment in distribution hereunder.
Section 7.7 Notice of Payment by Trustee
Not less than 15 days notice shall be given in the manner provided in Section 12.2 by the Trustee to the Debentureholders of any payment to be made under this Article 7. Such notice shall state the time when and place where such payment is to be made and also the liability under this Indenture to which it is to be applied. After the day so fixed, unless payment shall have been duly demanded and have been refused, the Debentureholders will be entitled to interest only on the balance (if any) of the principal monies, and
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interest due (if any) to them, respectively, on the Debentures, after deduction of the respective amounts payable in respect thereof on the day so fixed.
Section 7.8 Trustee May Demand Production of Debentures
The Trustee shall have the right to demand production of the Debentures in respect of which any payment of principal, interest or premium required by this Article 7 is made and may cause to be endorsed on the same a memorandum of the amount so paid and the date of payment, but the Trustee may, in its discretion, dispense with such production and endorsement, upon such indemnity being given to it and to the Corporation as the Trustee shall deem sufficient.
Section 7.9 Remedies Cumulative
No remedy herein conferred upon or reserved to the Trustee, or upon or to the holders of Debentures is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now existing or hereafter to exist by law or by statute.
Section 7.10 Immunity of Directors, Officers and Others
The Debentureholders and the Trustee hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any past, present or future officer, director or employee of the Corporation or holder of Common Shares of the Corporation or of any successor for the payment of the principal of or premium, if any, or interest on any of the Debentures or on any covenant, agreement, representation or warranty by the Corporation contained herein or in the Debentures.
ARTICLE 8 SATISFACTION AND DISCHARGE
Section 8.1 Cancellation and Destruction
All Debentures shall forthwith after payment thereof be delivered to the Trustee and cancelled by it. All Debentures cancelled or required to be cancelled under this or any other provision of this Indenture shall be destroyed by the Trustee and, if required by the Corporation, the Trustee shall furnish to it a destruction certificate setting out the designating numbers of the Debentures so destroyed.
Section 8.2 Non-Presentation of Debentures
In case the holder of any Debenture shall fail to present the same for payment on the date on which the principal of or the interest thereon or represented thereby becomes payable either at maturity or otherwise or shall not accept payment on account thereof and give such receipt therefor, if any, as the Trustee may require:
(a) |
the Corporation shall be entitled to pay or deliver to the Trustee and direct it to set aside; or |
(b) |
in respect of monies in the hands of the Trustee which may or should be applied to the payment of the Debentures, the Corporation shall be entitled to direct the Trustee to set aside; or |
(c) |
if the redemption was pursuant to notice given by the Trustee, the Trustee may itself set aside; |
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the monies in trust to be paid to the holder of such Debenture upon due presentation or surrender thereof in accordance with the provisions of this Indenture; and thereupon the principal of, or the interest payable on, or represented by each Debenture in respect whereof such monies have been set aside shall be deemed to have been paid and the holder thereof shall thereafter have no right in respect thereof except that of receiving delivery and payment of the monies so set aside by the Trustee upon due presentation and surrender thereof, subject always to the provisions of Section 8.3.
Section 8.3 Repayment of Unclaimed Monies
Subject to applicable law, any monies set aside under Section 8.2 and not claimed by and paid to holders of Debentures as provided in Section 8.2 within six years after the date of such setting aside shall be repaid and delivered upon written request of the Corporation to the Trustee and thereupon the Trustee shall be released from all further liability with respect to such monies and thereafter the holders of the Debentures in respect of which such monies were so repaid to the Corporation shall have no rights in respect thereof except to obtain payment and delivery of the monies from the Corporation subject to any limitation provided by the laws of the Province of Ontario.
Section 8.4 Discharge
The Trustee shall at the written request of the Corporation release and discharge this Indenture and execute and deliver such instruments as it shall be advised by Counsel are requisite for that purpose and to release the Corporation from its covenants herein contained (other than the provisions relating to the indemnification of the Trustee), upon proof being given to the reasonable satisfaction of the Trustee that the principal of, and interest (including interest on amounts in default, if any), on all the Debentures and all other monies payable hereunder have been paid or satisfied or that all the Debentures having matured or having been duly called for redemption, payment of the principal of and interest (including interest on amounts in default, if any) on such Debentures and of all other monies payable hereunder has been duly and effectually provided for in accordance with the provisions hereof including the payment of all costs, charges and expenses properly incurred by the Trustee and all interest thereon.
Section 8.5 Satisfaction
(1) The Corporation shall be deemed to have fully paid, satisfied and discharged all of the outstanding Debentures and the Trustee, at the expense of the Corporation, shall execute and deliver proper instruments acknowledging the full payment, satisfaction and discharge of such Debentures, when, with respect to all of the outstanding Debentures:
(a) |
the Corporation has deposited or caused to be deposited with the Trustee as trust funds or property in trust for the purpose of making payment on such Debentures, an amount in money sufficient to pay, satisfy and discharge the entire amount of principal of, and interest, if any, to maturity, or any Change of Control Purchase Date, or upon conversion or otherwise as the case may be, of such Debentures; |
(b) |
the Corporation has deposited or caused to be deposited with the Trustee as trust property in trust for the purpose of making payment on such Debentures: |
(i) |
if the Debentures are issued in Canadian dollars, such amount in Canadian dollars of direct obligations of, or obligations the principal and interest of which are guaranteed by, the Government of Canada; or |
(ii) |
if the Debentures are issued in a currency or currency unit other than Canadian dollars, cash in the currency or currency unit in which the Debentures are payable |
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and/or such amount in such currency or currency unit of direct obligations of, or obligations the principal and interest of which are guaranteed by, the Government of Canada or the government that issued the currency or currency unit in which the Debentures are payable; |
as will be sufficient to pay and discharge the entire amount of principal of, and accrued and unpaid interest to maturity or any repayment date, as the case may be, of all such Debentures; or
(c) |
all Debentures authenticated and delivered (other than (A) Debentures which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7 and (B) Debentures for whose payment has been deposited in trust and thereafter repaid to the Corporation as provided in Section 8.3) have been delivered to the Trustee for cancellation; |
so long as in any such event:
(d) |
the Corporation has paid, caused to be paid or made provisions to the satisfaction of the Trustee for the payment of all other sums payable or which may be payable with respect to all of such Debentures (together with all applicable expenses and fees of the Trustee in connection with the payment of such Debentures); and |
(e) |
the Corporation has delivered to the Trustee an Officers Certificate stating that all conditions precedent herein provided relating to the payment, satisfaction and discharge of all such Debentures have been complied with. |
Any deposits with the Trustee referred to in this Section 8.5 shall be irrevocable, subject to Section 8.6, and shall be made under the terms of an escrow and/or trust agreement in form and substance satisfactory to the Trustee and which provides for the due and punctual payment of the principal of and interest on the Debentures being satisfied.
(2) Upon the satisfaction of the conditions set forth in this Section 8.5 with respect to all the outstanding Debentures, the terms and conditions of the Debentures, including the terms and conditions with respect thereto set forth in this Indenture (other than those contained in Article 2 and Article 4 and the provisions of Article 1 pertaining to Article 2 and Article 4) shall no longer be binding upon or applicable to the Corporation.
(3) Any funds or obligations deposited with the Trustee pursuant to this Section 8.5 shall be denominated in the currency or denomination of the Debentures in respect of which such deposit is made.
(4) If the Trustee is unable to apply any money or securities in accordance with this Section 8.5 by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Corporations obligations under this Indenture and the affected Debentures shall be revived and reinstated as though no money or securities had been deposited pursuant to this Section 8.5 until such time as the Trustee is permitted to apply all such money or securities in accordance with this Section 8.5, provided that if the Corporation has made any payment in respect of principal of, or interest on Debentures or, as applicable, other amounts because of the reinstatement of its obligations, the Corporation shall be subrogated to the rights of the holders of such Debentures to receive such payment from the money or securities held by the Trustee.
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Section 8.6 Continuance of Rights, Duties and Obligations
(1) Where trust funds or trust property have been deposited pursuant to Section 8.5, the holders of Debentures and the Corporation shall continue to have and be subject to their respective rights, duties and obligations under Article 2 and Article 4.
(2) In the event that, after the deposit of trust funds or trust property pursuant to Section 8.5 in respect of the Debentures (the Defeased Debentures), any holder of any of the Defeased Debentures from time to time converts its Debentures to Common Shares or other securities of the Corporation in accordance with Section 2.1, Article 5 or any other provision of this Indenture, the Trustee shall upon receipt of a Written Direction of the Corporation return to the Corporation from time to time the proportionate amount of the trust funds or other trust property deposited with the Trustee pursuant to Section 8.5 in respect of the Defeased Debentures which is applicable to the Defeased Debentures so converted (which amount shall be based on the applicable principal amount of the Defeased Debentures being converted in relation to the aggregate outstanding principal amount of all the Defeased Debentures).
(3) In the event that, after the deposit of trust funds or trust property pursuant to Section 8.5, the Corporation is required to purchase any outstanding Debentures pursuant to Subsection 2.1(7), the Corporation shall be entitled to use any trust money or trust property deposited with the Trustee pursuant to Section 8.5 for the purpose of paying to any holders of Defeased Debentures who have accepted any such offer of the Corporation the Change of Control Purchase Price payable to such holders in respect of such Change of Control Purchase Option in respect of the Debentures. Upon receipt of a Written Direction from the Corporation, the Trustee shall be entitled to pay to such holder from such trust money or trust property deposited with the Trustee pursuant to Section 8.5 in respect of the Defeased Debentures which is applicable to the Defeased Debentures held by such holders who have accepted any such offer to the Corporation (which amount shall be based on the applicable principal amount of the Defeased Debentures held by accepting offerees in relation to the aggregate outstanding principal amount of all the Defeased Debentures).
ARTICLE 9 SUCCESSORS
Section 9.1 Corporation may Consolidate, etc., Only on Certain Terms
(1) The Corporation may not, without the consent of the holders of the Debentures by Extraordinary Resolution hereunder, consolidate with or amalgamate or merge with or into any Person (other than a directly or indirectly wholly-owned Subsidiary of the Corporation) or sell, convey, transfer or lease all or substantially all of the properties and assets of the Corporation to another Person (other than a directly or indirectly wholly-owned Subsidiary of the Corporation) unless:
(a) |
the Person formed by such consolidation or into which the Corporation is amalgamated or merged, or the Person which acquires by sale, conveyance, transfer or lease all or substantially all of the properties and assets of the Corporation is a corporation, organized and existing under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof and such corporation (if other than the Corporation or the continuing corporation resulting from the amalgamation of the Corporation with another corporation under the laws of Canada or any province or territory thereof) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the obligations of the Corporation under the Debentures and this Indenture and the performance or observance of every covenant and provision of this Indenture and the Debentures required on the part of the Corporation to be performed or observed and the conversion rights shall be provided for in accordance |
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with Article 5, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Corporation or the continuing corporation resulting from the amalgamation of the Corporation with another corporation under the laws of Canada or any province or territory thereof) formed by such consolidation or into which the Corporation shall have been merged or by the Person which shall have acquired the Corporations assets; |
(b) |
after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and |
(c) |
if the Corporation or the continuing corporation resulting from the amalgamation or merger of the Corporation with another Person under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof will not be the resulting, continuing or surviving corporation, the Corporation shall have, at or prior to the effective date of such consolidation, amalgamation, merger or sale, conveyance, transfer or lease, delivered to the Trustee an Officers Certificate and an opinion of Counsel, each stating that such consolidation, merger or transfer complies with this Article and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article, and that all conditions precedent herein provided for relating to such transaction have been complied with. |
(2) For purposes of the foregoing, the sale, conveyance, transfer or lease (in a single transaction or a series of related transactions) of the properties or assets of one or more Subsidiaries of the Corporation (other than to the Corporation or another wholly-owned Subsidiary of the Corporation), which, if such properties or assets were directly owned by the Corporation, would constitute all or substantially all of the properties and assets of the Corporation and its Subsidiaries, taken as a whole, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Corporation.
Section 9.2 Successor Substituted
Upon any consolidation of the Corporation with, or amalgamation or merger of the Corporation into, any other Person or any sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Corporation and its Subsidiaries, taken as a whole, in accordance with Section 9.1, the successor Person formed by such consolidation or into which the Corporation is amalgamated or merged or to which such sale, conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Corporation under this Indenture with the same effect as if such successor Person had been named as the Corporation herein, and thereafter, except in the case of a lease, and except for obligations the predecessor Person may have under a supplemental indenture entered into pursuant to Section 9.1(1)(c), the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Debentures.
ARTICLE 10 COMPULSORY ACQUISITION
Section 10.1 Definitions In this Indenture:
(1) Affiliate and Associate shall have their respective meanings set forth in the Securities Act (Ontario);
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(2) Dissenting Debentureholders means a Debentureholder who does not accept an Offer referred to in Section 10.2 and includes any assignee of the Debenture of a Debentureholder to whom such an Offer is made, whether or not such assignee is recognized under this Indenture;
(3) Offer means an offer to acquire outstanding Debentures, which is a takeover bid for Debentures within the meaning ascribed thereto in NI 62-104, whereas of the date of the offer to acquire, the Debentures that are subject to the offer to acquire, together with the Offerors Debentures, constitute in the aggregate 20% or more of the outstanding principal amount of the Debentures;
(4) offer to acquire includes an acceptance of an offer to sell;
(5) Offeror means a person, or two or more persons acting jointly or in concert, who make an Offer to acquire Debentures;
(6) Offerors Debentures means Debentures beneficially owned, or over which control or direction is exercised, on the date of an Offer by the Offeror, any Affiliate or Associate of the Offeror or any person or company acting jointly or in concert with the Offeror; and
(7) Offerors Notice means the notice described in Section 10.3.
Section 10.2 Offer for Debentures
If an Offer for all of the outstanding Debentures (other than Debentures held by or on behalf of the Offeror or an Affiliate or Associate of the Offeror) is made and:
(a) |
within the time provided in the Offer for its acceptance or within 120 days after the date the Offer is made, whichever period is the shorter, the Offer is accepted by Debentureholders representing at least 90% of the outstanding principal amount of the Debentures, other than the Offerors Debentures; |
(b) |
the Offeror is bound to take up and pay for, or has taken up and paid for the Debentures of the Debentureholders who accepted the Offer; |
(c) |
the Offeror complies with Sections 10.3 and 10.5; and |
(d) |
the Offer complies with Applicable Securities Legislation, |
the Offeror is entitled to acquire, and the Dissenting Debentureholders are required to sell to the Offeror, the Debentures held by the Dissenting Debentureholder for the same consideration per Debenture payable or paid, as the case may be, under the Offer.
Section 10.3 Offerors Notice to Dissenting Shareholders
Where an Offeror is entitled to acquire Debentures held by Dissenting Debentureholders pursuant to Section 10.2 and the Offeror wishes to exercise such right, the Offeror shall send by registered mail within 30 days after the date of termination of the Offer a notice (the Offerors Notice) to each Dissenting Debentureholder stating that:
(a) |
Debentureholders holding at least 90% of the principal amount of all outstanding Debentures, other than Offerors Debentures, have accepted the Offer; |
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(b) |
the Offeror is bound to take up and pay for, or has taken up and paid for, the Debentures of the Debentureholders who accepted the Offer; |
(c) |
Dissenting Debentureholders must transfer their respective Debentures to the Offeror on the terms on which the Offeror acquired the Debentures of the Debentureholders who accepted the Offer within 21 days after the date of the sending of the Offerors Notice; and |
(d) |
Dissenting Debentureholders must send their respective Debenture Certificate(s) to the Trustee within 21 days after the date of the sending of the Offerors Notice. |
Section 10.4 Delivery of Debenture Certificates
A Dissenting Debentureholder to whom an Offerors Notice is sent pursuant to Section 10.3 shall, within 21 days after the sending of the Offerors Notice, send his or her Debenture Certificate(s) to the Trustee duly endorsed for transfer.
Section 10.5 Payment of Consideration to Trustee
Within 21 days after the Offeror sends an Offerors Notice pursuant to Section 10.3, the Offeror shall pay or transfer to the Trustee, or to such other Person as the Trustee may direct, the cash or other consideration that is payable to Dissenting Debentureholders pursuant to Section 10.2. The acquisition by the Offeror of all Debentures held by all Dissenting Debentureholders shall be effective as of the time of such payment or transfer.
Section 10.6 Consideration to be held in Trust
The Trustee, or the person directed by the Trustee, shall hold in trust for the Dissenting Debentureholders the cash or other consideration they or it receives under Section 10.5. The Trustee, or such persons, shall deposit cash in a separate account in a Canadian chartered bank, or other body corporate, any of whose deposits are insured by the Canada Deposit Insurance Corporation, and shall place other consideration in the custody of a Canadian chartered bank or such other body corporate.
Section 10.7 Completion of Transfer of Debentures to Offeror
Within 30 days after the date of the sending of an Offerors Notice pursuant to Section 10.3, the Trustee, if the Offeror has complied with Section 10.5, shall:
(a) |
do all acts and things and execute and cause to be executed all instruments as in the Trustees opinion, relying on the advice of Counsel, may be necessary or desirable to cause the transfer of the Debentures of the Dissenting Debentureholders to the Offeror; |
(b) |
send to each Dissenting Debentureholder who has complied with Section 10.4 the consideration to which such Dissenting Debentureholder is entitled under this Article 10 (net of applicable withholdings); and |
(c) |
send to each Dissenting Debentureholder who has not complied with Section 10.4 a notice stating that: |
(i) |
his or her Debentures have been transferred to the Offeror; |
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(ii) |
the Trustee or some other Person designated in such notice are holding in trust the consideration for such Debentures; and |
(iii) |
the Trustee, or such other Person, will send the consideration to such Dissenting Debentureholder as soon as possible after receiving such Dissenting Debentureholders Debenture certificate(s) or such other documents as the Trustee or such other Person may require in lieu thereof; |
and the Trustee is hereby appointed the agent and attorney of the Dissenting Debentureholders for the purposes of giving effect to the foregoing provisions.
Section 10.8 Communication of Offer to the Corporation
An Offeror cannot make an Offer for Debentures unless, concurrent with the communication of the Offer to any Debentureholder, a copy of the Offer is provided to the Corporation and the Trustee.
Section 10.9 Agreement with the Trustee
If the Offeror chooses to appoint the Trustee to provide the services outlined in this Article 10, the Offeror and the Trustee shall enter into an agreement providing for the terms and conditions (including remuneration, indemnification and the return of cash or other consideration that is payable to the Dissenting Debentureholders who have not complied with Section 10.4) of such appointment.
ARTICLE 11 MEETINGS OF DEBENTUREHOLDERS
Section 11.1 Right to Convene Meeting
The Trustee or the Corporation may at any time and from time to time, and the Trustee shall, on receipt of a Written Direction of the Corporation or a written request signed by the holders of not less than 25% of the principal amount of the Debentures then outstanding and upon receiving funding and being indemnified to its reasonable satisfaction by the Corporation or by the Debentureholders signing such request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Debentureholders. In the event of the Trustee failing, within 30 days after receipt of any such request and such funding of indemnity, to give notice convening a meeting, the Corporation or such Debentureholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Toronto or at such other place as may be approved or determined by the Corporation and the Trustee.
Section 11.2 Notice of Meetings
At least 21 days notice of any meeting shall be given to the Debentureholders in the manner provided in Section 12.2 and a copy of such notice shall be sent by post to the Trustee, unless the meeting has been called by it. Such notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat and it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article. The accidental omission to give notice of a meeting to any holder of Debentures shall not invalidate any resolution passed at any such meeting. A holder may waive notice of a meeting either before or after the meeting.
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Section 11.3 Chairman
Some person, who need not be a Debentureholder, nominated in writing by the Corporation (in case it convenes the meeting) or by the Trustee (in any other case) shall be chairman of the meeting and if no person is so nominated, or if the person so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, a majority of the Debentureholders present in person or by proxy shall choose some person present to be chairman.
Section 11.4 Quorum
Subject to the provisions of Section 11.12, at any meeting of the Debentureholders a quorum shall consist of Debentureholders present in person or by proxy and representing at least 25% in principal amount of the outstanding Debentures. If a quorum of the Debentureholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Debentureholders or pursuant to a request of the Debentureholders, shall be dissolved, but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day in which case it shall be adjourned to the next following Business Day thereafter) at the same time and place to the extent possible and no notice shall be required to be given in respect of such adjourned meeting. At the adjourned meeting, the Debentureholders present in person or by proxy representing 25% of the principal amount of the outstanding Debentures shall form a quorum and may transact the business for which the meeting was originally convened. Any business may be brought before or dealt with at an adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless the required quorum is present at the commencement of business.
Section 11.5 Power to Adjourn
The chairman of any meeting at which a quorum of the Debentureholders is present may, with the consent of the holders of a majority in principal amount of the Debentures represented thereat, adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.
Section 11.6 Show of Hands
Every question submitted to a meeting shall, subject to Section 11.7, be decided in the first place by a majority of the votes given on a show of hands except that votes on Extraordinary Resolutions shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Debentures, if any, held by him.
Section 11.7 Poll
On every Extraordinary Resolution, and on any other question submitted to a meeting when demanded by the chairman or by one or more Debentureholders or proxies for Debentureholders, a poll shall be taken in such manner and either at once or after an adjournment as the chairman shall direct. Questions other than Extraordinary Resolutions shall, if a poll be taken, be decided by the votes of the holders of a majority in principal amount of the Debentures, represented at the meeting and voted on the poll.
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Section 11.8 Voting
On a show of hands every person who is present and entitled to vote, whether as a Debentureholder or as proxy for one or more Debentureholders or both, shall have one vote. On a poll each Debentureholder present in person or represented by a proxy duly appointed by an instrument in writing shall be entitled to one vote in respect of each $1,000 principal amount of Debentures of which he shall then be the holder. In the case of any Debenture denominated in a currency or currency unit other than Canadian dollars, the principal amount thereof for these purposes shall be computed in Canadian dollars on the basis of the conversion of the principal amount thereof at the applicable spot buying rate of exchange for such other currency or currency unit as reported by the Bank of Canada at the close of business on the Business Day next preceding the meeting. Any fractional amounts resulting from such conversion shall be rounded to the nearest $100. A proxy need not be a Debentureholder. In the case of joint holders of a Debenture, any one of them present in person or by proxy at the meeting may vote in the absence of the other or others but in case more than one of them be present in person or by proxy, they shall vote together in respect of the Debentures of which they are joint holders.
Section 11.9 Proxies
A Debentureholder may be present and vote at any meeting of Debentureholders by an authorized representative. The Corporation (in case it convenes the meeting) or the Trustee (in any other case) for the purpose of enabling the Debentureholders to be present and vote at any meeting without producing their Debentures, and of enabling them to be present and vote at any such meeting by proxy and of lodging instruments appointing such proxies at some place other than the place where the meeting is to be held, may from time to time make and vary such regulations as it shall think fit providing for and governing any or all of the following matters:
(a) |
the form of the instrument appointing a proxy, which shall be in writing, and the manner in which the same shall be executed and the production of the authority of any person signing on behalf of a Debentureholder; |
(b) |
the deposit of instruments appointing proxies at such place as the Trustee, the Corporation or the Debentureholder convening the meeting, as the case may be, may, in the notice convening the meeting, direct and the time, if any, before the holding of the meeting or any adjournment thereof by which the same must be deposited; and |
(c) |
the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed, faxed, or sent by other electronic means before the meeting to the Corporation or to the Trustee at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting. |
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as the holders of any Debentures, or as entitled to vote or be present at the meeting in respect thereof, shall be Debentureholders and persons whom Debentureholders have by instrument in writing duly appointed as their proxies.
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Section 11.10 Persons Entitled to Attend Meetings
The Corporation and the Trustee, by their respective employees, officers and directors, the Auditors of the Corporation and the legal advisors of the Corporation, the Trustee or any Debentureholder may attend any meeting of the Debentureholders, but shall have no vote as such.
Section 11.11 Powers Exercisable by Extraordinary Resolution
(1) In addition to the powers conferred upon them by any other provisions of this Indenture or by law, a meeting of the Debentureholders shall have the following powers exercisable from time to time by Extraordinary Resolution (subject in the case of the matters in paragraphs (a) (d) and (l) to the prior approval of the TSX (or such other recognized stock exchange on which the Common Shares are listed for trading)):
(a) |
power to authorize the Trustee to grant extensions of time for payment of any principal, premium or interest on the Debentures, whether or not the principal, premium, or interest, the payment of which is extended, is at the time due or overdue; |
(b) |
power to sanction any modification, abrogation, alteration, compromise or arrangement of the rights of the Debentureholders or the Trustee (with its consent) against the Corporation, or against its property, whether such rights arise under this Indenture or the Debentures or otherwise; |
(c) |
power to assent to any modification of or change in or addition to or omission from the provisions contained in this Indenture or any Debenture which shall be agreed to by the Corporation and to authorize the Trustee to concur in and execute any indenture supplemental hereto embodying any modification, change, addition or omission; |
(d) |
power to sanction any scheme for the reconstruction, reorganization or recapitalization of the Corporation or for the consolidation, amalgamation, arrangement, combination or merger of the Corporation with any other Person or for the sale, leasing, transfer or other disposition of all or substantially all of the undertaking, property and assets of the Corporation or any part thereof, provided that no such sanction shall be necessary in respect of any such transaction if the provisions of Section 9.1 shall have been complied with; |
(e) |
power to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Indenture in any manner specified in any such Extraordinary Resolution or to refrain from exercising any such power, right, remedy or authority; |
(f) |
power to waive, and direct the Trustee to waive, any default hereunder and/or cancel any declaration made by the Trustee pursuant to Section 7.1 either unconditionally or upon any condition specified in such Extraordinary Resolution; |
(g) |
power to restrain any Debentureholder from taking or instituting any suit, action or proceeding for the purpose of enforcing payment of the principal, premium or interest on the Debentures, or for the execution of any trust or power hereunder; |
(h) |
power to direct any Debentureholder who, as such, has brought any action, suit or proceeding to stay or discontinue or otherwise deal with the same upon payment, if the taking of such suit, action or proceeding shall have been permitted by Section 7.5, of the |
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costs, charges and expenses reasonably and properly incurred by such Debentureholder in connection therewith; |
(i) |
power to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation; |
(j) |
power to appoint a committee with power and authority (subject to such limitations, if any, as may be prescribed in the resolution) to exercise, and to direct the Trustee to exercise, on behalf of the Debentureholders, such of the powers of the Debentureholders as are exercisable by Extraordinary Resolution or other resolution as shall be included in the resolution appointing the committee. The resolution making such appointment may provide for payment of the expenses and disbursements of and compensation to such committee. Such committee shall consist of such number of persons as shall be prescribed in the resolution appointing it and the members need not be themselves Debentureholders. Every such committee may elect its chairman and may make regulations respecting its quorum, the calling of its meetings and the filling of vacancies occurring in its number and its procedure generally. Such regulations may provide that the committee may act at a meeting at which a quorum is present or may act by minutes signed by the number of members thereof necessary to constitute a quorum. All acts of any such committee within the authority delegated to it shall be binding upon all Debentureholders. Neither the committee nor any member thereof shall be liable for any loss arising from or in connection with any action taken or omitted to be taken by them in good faith; |
(k) |
power to remove the Trustee from office and to appoint a new Trustee or Trustees provided that no such removal shall be effective unless and until a new Trustee or Trustees shall have become bound by this Indenture; |
(l) |
power to sanction the exchange of the Debentures for or the conversion thereof into shares, bonds, debentures or other securities or obligations of the Corporation or of any other Person formed or to be formed; |
(m) |
power to authorize the distribution in specie of any shares or securities received pursuant to a transaction authorized under the provisions of Section 11.11(1); and |
(n) |
power to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Debentureholders or by any committee appointed pursuant to Section 11.11(1)(j). |
Section 11.12 Meaning of Extraordinary Resolution
(1) The expression Extraordinary Resolution when used in this Indenture means, subject as hereinafter in this Article provided, a resolution proposed to be passed as an Extraordinary Resolution at a meeting of Debentureholders (including an adjourned meeting) duly convened for the purpose and held in accordance with the provisions of this Article at which the holders of not less than 25% of the principal amount of the Debentures then outstanding, are present in person or by proxy and passed by the favourable votes of the holders of not less than 662⁄3% of the principal amount of the Debentures, present or represented by proxy at the meeting and voted upon on a poll on such resolution.
(2) If, at any such meeting, the holders of not less than 25% of the principal amount of the Debentures then outstanding are not present in person or by proxy within 30 minutes after the time appointed for the
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meeting, then the meeting, if convened by or on the requisition of Debentureholders, shall be dissolved but in any other case it shall stand adjourned to such date, being not less than 14 nor more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 10 days notice shall be given of the time and place of such adjourned meeting in the manner provided in Section 12.2. At the adjourned meeting, the holders present in person or by proxy representing not less than 25% of the principal amount of the Debentures then outstanding shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed thereat by the affirmative vote of holders of not less than 662⁄3% of the principal amount of the Debentures present or represented by proxy at the meeting and voted upon on a poll shall be an Extraordinary Resolution within the meaning of this Indenture.
(3) Votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary.
Section 11.13 Powers Cumulative
Any one or more of the powers in this Indenture stated to be exercisable by the Debentureholders by Extraordinary Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers from time to time shall not be deemed to exhaust the rights of the Debentureholders to exercise the same or any other such power or powers thereafter from time to time.
Section 11.14 Minutes
Minutes of all resolutions and proceedings at every meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee, and any such minutes as aforesaid, if signed by the chairman of the meeting at which such resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the Debentureholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made, shall be deemed to have been duly held and convened, and all resolutions passed thereat or proceedings taken thereat to have been duly passed and taken.
Section 11.15 Instruments in Writing
All actions which may be taken and all powers that may be exercised by the Debentureholders at a meeting held as hereinbefore in this Article provided may also be taken and exercised by the holders of 662⁄3% of the principal amount of all the outstanding Debentures by an instrument in writing signed in one or more counterparts and the expression Extraordinary Resolution when used in this Indenture shall include an instrument so signed.
Section 11.16 Binding Effect of Resolutions
Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article at a meeting of Debentureholders shall be binding upon all the Debentureholders, whether present at or absent from such meeting, and every instrument in writing signed by Debentureholders in accordance with Section 11.15 shall be binding upon all the Debentureholders, whether signatories thereto or not, and each and every Debentureholder and the Trustee (subject to the provisions for its indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing.
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Section 11.17 Evidence of Rights Of Debentureholders
(1) Any request, direction, notice, consent or other instrument which this Indenture may require or permit to be signed or executed by the Debentureholders may be in any number of concurrent instruments of similar tenor signed or executed by such Debentureholders.
(2) The Trustee may, in its discretion, require proof of execution in cases where it deems proof desirable and may accept such proof as it shall consider proper.
ARTICLE 12 NOTICES
Section 12.1 Notice to Corporation
Any notice to the Corporation under the provisions of this Indenture shall be valid and effective if delivered to the Corporation at: 490 Boul. St-Joseph, Suite 204, Gatineau, Quebec, J8Y 3Y7, Attention: Chief Executive Officer, if given by registered letter, postage prepaid, to such offices and so addressed and if mailed, shall be deemed to have been effectively given three days following the mailing thereof, or if given by electronic mail to sebastien@hexo.com, shall be deemed to have been effectively given upon transmission. The Corporation may from time to time notify the Trustee in writing of a change of address which thereafter, until changed by like notice, shall be the address of the Corporation for all purposes of this Indenture.
Section 12.2 Notice to Debentureholders
(1) All notices to be given hereunder with respect to the Debentures shall be deemed to be validly given to the holders thereof if sent by first class mail, postage prepaid, by letter or circular addressed to such holders at their post office addresses appearing in any of the registers hereinbefore mentioned and shall be deemed to have been effectively given three days following the day of mailing. Accidental error or omission in giving notice or accidental failure to mail notice to any Debentureholder or the inability of the Corporation to give or mail any notice due to anything beyond the reasonable control of the Corporation shall not invalidate any action or proceeding founded thereon.
(2) If any notice given in accordance with the foregoing paragraph would be unlikely to reach the Debentureholders to whom it is addressed in the ordinary course of post by reason of an interruption in mail service, whether at the place of dispatch or receipt or both, the Corporation shall give such notice by publication at least once in the city of Toronto (or in such of those cities as, in the opinion of the Trustee, is sufficient in the particular circumstances), each such publication to be made in a daily newspaper of general circulation in the designated city.
(3) Any notice given to Debentureholders by publication shall be deemed to have been given on the day on which publication shall have been effected at least once in each of the newspapers in which publication was required.
(4) All notices with respect to any Debenture may be given to whichever one of the holders thereof (if more than one) is named first in the registers hereinbefore mentioned, and any notice so given shall be sufficient notice to all holders of any persons interested in such Debenture.
Section 12.3 Notice to Trustee
Any notice to the Trustee under the provisions of this Indenture shall be valid and effective if delivered, receipt confirmed, to the Trustee at its principal office in the City of Toronto, at 100 Adelaide
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Street West, Suite 301, Toronto, Ontario M5H 4H1, Attention: Vice President Trust Services and shall be deemed to have been effectively given as of the date of such receipt confirmation, if given by registered letter, postage prepaid, to such office and so addressed and, if mailed, shall be deemed to have been effectively given three days following the mailing thereof, or if given by facsimile (at 416.361.0470) or electronic mail (at tmxestaff-corporatetrust@tmx.com) transmission to the Trustee, Attention: Vice President Trust Services, shall be deemed to have been effectively given upon transmission.
Section 12.4 Mail Service Interruption
If by reason of any interruption of mail service, actual or threatened, any notice to be given to the Trustee would reasonably be unlikely to reach its destination by the time notice by mail is deemed to have been given pursuant to Section 12.3, such notice shall be valid and effective only if delivered at the appropriate address in accordance with Section 12.3.
ARTICLE 13 CONCERNING THE TRUSTEE
Section 13.1 No Conflict of Interest
The Trustee represents to the Corporation that, to the best of its knowledge, at the date of execution and delivery by it of this Indenture, there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder but, if, notwithstanding the provisions of this Section 13.1, such a material conflict of interest exists, or hereafter arises, the validity and enforceability of this Indenture, and the Debentures issued hereunder, shall not be affected in any manner whatsoever by reason only that such material conflict of interest exists or arises but the Trustee shall, within 30 days after ascertaining that it has a material conflict of interest, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 13.2.
Section 13.2 Replacement of Trustee
(1) The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder by giving to the Corporation 90 days notice in writing or such shorter notice as the Corporation may accept as sufficient. If at any time a material conflict of interest exists in the Trustees role as a fiduciary hereunder the Trustee shall, within 30 days after ascertaining that such a material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in this Section 13.2. The validity and enforceability of this Indenture and of the Debentures issued hereunder shall not be affected in any manner whatsoever by reason only that such a material conflict of interest exists. In the event of the Trustee resigning or being removed or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new Trustee unless a new Trustee has already been appointed by the Debentureholders. Failing such appointment by the Corporation, the retiring Trustee or any Debentureholder may apply to a Judge of the Ontario Superior Court of Justice, on such notice as such Judge may direct at the Corporations expense, for the appointment of a new Trustee but any new Trustee so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Debentureholders and the appointment of such new Trustee shall be effective only upon such new Trustee becoming bound by this Indenture. Any new Trustee appointed under any provision of this Section 13.2 shall be a corporation authorized to carry on the business of a trust company in all of the Provinces of Canada. On any new appointment the new Trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee.
(2) Any company into which the Trustee may be merged or, with or to which it may be consolidated, amalgamated or sold, or any company resulting from any merger, consolidation, sale or amalgamation to
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which the Trustee shall be a party, or any company which shall purchase all or substantially all of the corporate trust book of business of the Trustee, shall be the successor trustee under this Indenture without the execution of any instrument or any further act. Nevertheless, upon the written request of the successor Trustee or of the Corporation, the Trustee ceasing to act shall execute and deliver an instrument assigning and transferring to such successor Trustee, upon the trusts herein expressed, all the rights, powers and trusts of the Trustee so ceasing to act, and, shall duly assign, transfer and deliver all property and money held by such Trustee to the successor Trustee so appointed in its place. Should any deed, conveyance or instrument in writing from the Corporation be required by any new Trustee for more fully and certainly vesting in and confirming to it such estates, properties, rights, powers and trusts, then any and all such deeds, conveyances and instruments in writing shall on request of said new Trustee, be made, executed, acknowledged and delivered by the Corporation.
Section 13.3 Duties of Trustee
In the exercise of the rights, duties and obligations prescribed or conferred by the terms of this Indenture, the Trustee shall act honestly and in good faith and exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.
Section 13.4 Reliance Upon Declarations, Opinions, etc.
In the exercise of its rights, duties and obligations hereunder the Trustee may, if acting in good faith, rely, as to the truth of the statements and accuracy of the opinions expressed therein, upon statutory declarations, opinions, reports or certificates furnished pursuant to any covenant, condition or requirement of this Indenture or required by the Trustee to be furnished to it in the exercise of its rights and duties hereunder, if the Trustee examines such statutory declarations, opinions, reports or certificates and determines that they comply with Section 13.5, if applicable, and with any other applicable requirements of this Indenture. The Trustee may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. Without restricting the foregoing, the Trustee may rely on an opinion of Counsel satisfactory to the Trustee notwithstanding that it is delivered by a solicitor or firm which acts as solicitors for the Corporation.
Section 13.5 Evidence and Authority to Trustee, Opinions, etc.
(1) The Corporation shall furnish to the Trustee evidence of compliance with the conditions precedent provided for in this Indenture relating to any action or step required or permitted to be taken by the Corporation or the Trustee under this Indenture or as a result of any obligation imposed under this Indenture, including without limitation, the certification and delivery of Debentures hereunder, the satisfaction and discharge of this Indenture and the taking of any other action to be taken by the Trustee at the request of or on the application of the Corporation, forthwith if and when (a) such evidence is required by any other Section of this Indenture to be furnished to the Trustee in accordance with the terms of this Section 13.5, or (b) the Trustee, in the exercise of its rights and duties under this Indenture, gives the Corporation written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice.
(2) Such evidence shall consist of:
(a) |
a certificate made by any one officer or director of the Corporation, stating that any such condition precedent has been complied with in accordance with the terms of this Indenture; |
(b) |
in the case of a condition precedent compliance with which is, by the terms of this Indenture, made subject to review or examination by a solicitor, an opinion of Counsel that |
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such condition precedent has been complied with in accordance with the terms of this Indenture; and |
(c) |
in the case of any such condition precedent compliance with which is subject to review or examination by auditors or accountants, an opinion or report of the Auditors of the Corporation whom the Trustee for such purposes hereby approves, that such condition precedent has been complied with in accordance with the terms of this Indenture. |
(3) Whenever such evidence relates to a matter other than the certificates and delivery of Debentures and the satisfaction and discharge of this Indenture, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, auditor, accountant, engineer or appraiser 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 trustee, officer or employee of the Corporation it shall be in the form of a statutory declaration. Such evidence shall be, so far as appropriate, in accordance with the immediately preceding paragraph of this Section.
(4) Each statutory declaration, certificate, opinion or report with respect to compliance with a condition precedent provided for in this Indenture shall include (a) a statement by the person giving the evidence that he has read and is familiar with those provisions of this Indenture relating to the condition precedent in question, (b) a brief statement of the nature and scope of the examination or investigation upon which the statements or opinions contained in such evidence are based, (c) a statement that, in the belief of the person giving such evidence, he has made such examination or investigation as is necessary to enable him to make the statements or give the opinions contained or expressed therein, and (d) a statement whether in the opinion of such person the conditions precedent in question have been complied with or satisfied.
(5) The Corporation shall furnish or cause to be furnished to the Trustee at any time if the Trustee reasonably so requires, its certificate that the Corporation has complied with all covenants, conditions or other requirements contained in this Indenture, the non-compliance with which would, with the giving of notice or the lapse of time, or both, or otherwise, constitute an Event of Default, or if such is not the case, specifying the covenant, condition or other requirement which has not been complied with and giving particulars of such non-compliance. The Corporation shall, whenever the Trustee so requires, furnish the Trustee with evidence by way of statutory declaration, opinion, report or certificate as specified by the Trustee as to any action or step required or permitted to be taken by the Corporation or as a result of any obligation imposed by this Indenture.
Section 13.6 Officers Certificates Evidence
Except as otherwise specifically provided or prescribed by this Indenture, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, the Trustee, if acting in good faith, may rely upon an Officers Certificate.
Section 13.7 Experts, Advisers and Agents
The Trustee may:
(a) |
employ or retain and act and rely on the opinion or advice of or information obtained from any solicitor, auditor, valuer, engineer, surveyor, appraiser or other expert, whether obtained by the Trustee or by the Corporation, or otherwise, and shall not be liable for acting, or refusing to act, in good faith on any such opinion or advice and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid. |
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The reasonable costs of such services shall be added to and become part of the Trustees remuneration hereunder; and |
(b) |
employ such agents and other assistants as it may reasonably require for the proper discharge of its duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the trusts hereof and any solicitors employed or consulted by the Trustee may, but need not be, solicitors for the Corporation. |
Section 13.8 Trustee May Deal in Debentures
Subject to Sections 13.1 and 13.3, the Trustee may, in its personal or other capacity, buy, sell, lend upon and deal in the Debentures and generally contract and enter into financial transactions with the Corporation or otherwise, without being liable to account for any profits made thereby.
Section 13.9 Investment of Monies Held by Trustee
Until released in accordance with this Indenture, monies held by Trustee shall be kept segregated in the records of the Trustee and shall be deposited in one or more interest-bearing trust accounts to be maintained by the Trustee in the name of the Trustee at one or more banks having a Standard and Poors Issuer Credit rating of AA- or above (an Approved Bank). All amounts held by the Trustee pursuant to this Indenture shall be held by the Trustee pursuant to the term of this Indenture and shall not give rise to a debtor-creditor or other similar relationship. The amounts held by the Trustee pursuant to this Indenture are at the sole risk of Corporation and, without limiting the generality of the foregoing, the Trustee shall have no responsibility or liability for any diminution of the monies which may result from any deposit made with an Approved Bank pursuant to this Section 13.9, including any losses resulting from a default by the Approved Bank or other credit losses (whether or not resulting from such a default) and any credit or other losses on any deposit liquidated or sold prior to maturity. The parties hereto acknowledge and agree that the Trustee will have acted prudently in depositing the monies at any Approved Bank,
Section 13.10 Trustee Not Ordinarily Bound
Except as provided in Section 7.2 and as otherwise specifically provided herein, the Trustee shall not, subject to Section 13.3, be bound to give notice to any person of the execution hereof, nor to do, observe or perform, or see to the observance or performance by the Corporation of, any of the obligations herein imposed upon the Corporation or the covenants on the part of the Corporation herein contained, nor in any way to supervise or interfere with the conduct of the Corporations business, unless the Trustee shall have been required to do so in writing by the holders of not less than 25% of the aggregate principal amount of the Debentures then outstanding or by any Extraordinary Resolution of the Debentureholders passed in accordance with the provisions contained in Article 11, and then only after it shall have been funded and indemnified to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all costs, charges, damages and expenses which it may incur by so doing.
Section 13.11 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 and powers of this Indenture or otherwise in respect of the premises.
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Section 13.12 Trustee Not Bound to Act on Trusts Request
Except as otherwise specifically provided in this Indenture, the Trustee shall not be bound to act in accordance with any direction or request of the Corporation 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.
Section 13.13 Conditions Precedent to Trustees Obligations to Act Hereunder
(1) The obligation of the Trustee to commence or continue any act, action or proceeding for the purpose of enforcing the rights of the Trustee and of the Debentureholders hereunder shall be conditional upon the Debentureholders furnishing when required by notice in writing by the Trustee, sufficient funds to commence or continue such act, action or proceeding and indemnity reasonably satisfactory to the Trustee to protect and hold harmless the Trustee against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof.
(2) None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified as aforesaid.
(3) The Trustee may, before commencing or at any time during the continuance of any such act, action or proceeding require the Debentureholders at whose instance it is acting to deposit with the Trustee the Debentures held by them for which Debentures the Trustee shall issue receipts.
Section 13.14 Authority to Carry on Business
The Trustee represents to the Corporation that at the date of execution and delivery by it of this Indenture it is authorized to carry on the business of a trust company in each of the provinces and territories of Canada but if, notwithstanding the provisions of this Section 13.14, it ceases to be so authorized to carry on business, the validity and enforceability of this Indenture and the securities issued hereunder shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any of the provinces or territories of Canada, either become so authorized or resign in the manner and with the effect specified in Section 13.2.
Section 13.15 Compensation and Indemnity
(1) The Corporation shall pay to the Trustee, from time to time, compensation for its services hereunder as agreed separately by the Corporation and the Trustee, and shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of its duties under this Indenture (including the reasonable and documented compensation and disbursements of its Counsel and all other advisers and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Trustee under this Indenture shall be finally and fully performed. The Trustees compensation shall not be limited by any law on compensation of a trustee of an express trust.
(2) The Corporation hereby indemnifies and holds the Trustee and its affiliates, their successors and assigns, as well as its and their respective directors, officers, employees and agents, harmless from and against any and all claims, demands, assessments, interest, penalties, actions, suits, proceedings, liabilities, losses, damages, costs and expenses, including, without limiting the foregoing, expert, consultant and
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counsel fees and disbursements on a solicitor and client basis, arising from or in connection with any actions or omissions that the Trustee or they take pursuant to this Indenture, provided that the Corporation need not reimburse any cost or expense or indemnify against any loss or liability incurred by the Trustee through gross negligence or bad faith or breach of the Trustees duties hereunder. This indemnity shall survive the resignation or removal of the Trustee and the termination or discharge of this Indenture.
(3) Notwithstanding any other provision of this Indenture, the Trustee shall not be liable for any (i) breach by any other party of the Applicable Securities Legislation, (ii) lost profits or (iii) punitive, consequential or special damages of any Person.
(4) The Trustee shall notify the Corporation promptly of any claim for which it may seek indemnity. The Corporation shall defend the claim and the Trustee shall co-operate in the defence. The Trustee may have separate Counsel and the Corporation shall pay the reasonable fees and expenses of such Counsel. The Corporation need not pay for any settlement made without its consent, which consent must not be unreasonably withheld.
Section 13.16 Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture declared and provided for 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 Debentureholders, subject to all the terms and conditions herein set forth.
Section 13.17 Third Party Interests
Each party to this Indenture (in this paragraph referred to as a representing party) hereby represents to the Trustee that any account to be opened by, or interest to be held by, the Trustee in connection with this Indenture, for or to the credit of such representing 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 representing party hereby agrees to complete, execute and deliver forthwith to the Trustee a declaration, in the Trustees prescribed form or in such other form as may be satisfactory to it, as to the particulars of such third party.
Section 13.18 Anti-Money Laundering
The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, acting reasonably, determines that such act might cause it to be in noncompliance with any applicable anti-money laundering or anti-terrorist or economic sanctions legislation, regulation or guideline. Further, should the Trustee, in its sole judgment, acting reasonably, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist or economic sanctions legislation, regulation or guideline, then it shall have the right to resign on 10 days prior written notice sent to the Corporation provided that (i) the Trustees written notice shall describe the circumstances of such non-compliance; and (ii) if such circumstances are rectified to the Trustees satisfaction within such 10-day period, then such resignation shall not be effective.
Section 13.19 Privacy Laws
(1) The parties acknowledge that federal and provincial legislation that addresses the protection of individuals personal information (collectively, the Privacy Laws) applies to obligations and activities under this Indenture. Despite any other provision of this Indenture, neither the Corporation nor the Trustee
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shall take or direct any action that would contravene, or cause the other to contravene, applicable Privacy Laws.
(2) The Corporation 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.
(3) The Trustee shall use commercially reasonable efforts to ensure that its services hereunder comply with 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 Indenture and not to use it for any other purpose except with the consent of or direction from the Corporation 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.
Section 13.20 Force Majeure
Neither party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section 13.20.
Section 13.21 Representations to the Trustee regarding U.S. Matters
The Corporation represents and warrants to the Trustee that, so long as any Debentures remain outstanding hereunder:
(1) the Corporation will engage in marijuana-related activities in Canada only in accordance with the Cannabis Act (Canada) and all other applicable laws in Canada;
(2) the Corporation does not and will not invest or engage (directly or indirectly) in any business or activity that is focused on serving the non-medical or medical marijuana market internationally, unless and until such time as the production and sale of non-medical and/or medical marijuana becomes legal under the applicable laws in the respective international jurisdiction, as applicable;
(3) the Corporation does not and will not invest or engage (directly or indirectly) in any business or activity that is focused on serving the non-medical or medical marijuana market in the United States unless and until such time as the production and sale of non-medical and/or medical marijuana becomes legal under applicable state and federal laws in the United States;
(4) the Corporation does not and will not specifically target or derive (or reasonably expect to derive) revenues or funds from any of the prohibited activities described in items (2) and (3), above, unless and until such time that any such activities become legal under all applicable laws in Canada, the United States or internationally, as applicable; and
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(5) the Corporation will provide the Trustee with reasonable prior notice if it decides to engage in any of the activities described in items (2), (3) or (4) above, and the Corporation agrees that the Trustee may, in its sole discretion, immediately terminate any contract for services between the Corporation and the Trustee in the event that the Corporation is in breach of representations (2), (3) or (4) above, or as otherwise permitted under any such contract for service.
ARTICLE 14 SUPPLEMENTAL INDENTURES
Section 14.1 Supplemental Indentures
From time to time the Trustee and, when authorized by a resolution of the Board of Directors of Corporation, the Corporation, may, subject to the provisions hereof and subject to the prior approval of the TSX, as need be, and they shall when required by this Indenture, execute, acknowledge and deliver by their proper officers deeds or indentures supplemental hereto which thereafter shall form part hereof, for any one or more of the following purposes:
(a) |
adding to the covenants of the Corporation herein contained for the protection of the Debentureholders, or providing for events of default, in addition to those herein specified; |
(b) |
making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder, including the making of any modifications in the form of the Debentures which do not affect the substance thereof and which in the opinion of the Trustee relying on an opinion of Counsel will not be prejudicial to the interests of the Debentureholders; |
(c) |
evidencing the succession, or successive successions, of others to the Corporation and the covenants of and obligations assumed by any such successor in accordance with the provisions of this Indenture; |
(d) |
giving effect to any Extraordinary Resolution passed as provided in Article 11; and |
(e) |
for any other purpose not inconsistent with the terms of this Indenture. |
Unless the supplemental indenture requires the consent or concurrence of Debentureholders by Extraordinary Resolution, the consent or concurrence of Debentureholders shall not be required in connection with the execution, acknowledgement or delivery of a supplemental indenture. The Corporation and the Trustee may amend any of the provisions of this Indenture related to matters of United States law or the issuance of Debentures into the United States in order to ensure that such issuances can be made in accordance with applicable law in the United States without the consent or approval of the Debentureholders. Further, the Corporation and the Trustee may without the consent or concurrence of the Debentureholders by supplemental indenture or otherwise, make any changes or corrections in this Indenture which it shall have been advised by Counsel are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or clerical omissions or mistakes or manifest errors contained herein or in any indenture supplemental hereto or any Written Direction of the Corporation provided for the issue of Debentures, providing that in the opinion of the Trustee (relying upon an opinion of Counsel) the rights of the Debentureholders are in no way prejudiced thereby.
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ARTICLE 15 EXECUTION AND FORMAL DATE
Section 15.1 Execution
This Indenture may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.
Section 15.2 Formal Date
For the purpose of convenience this Indenture may be referred to as bearing the formal date of December 5, 2019 irrespective of the actual date of execution hereof.
[Remainder of Page Intentionally Left Blank]
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The parties have executed this Agreement as of the date set out above.
HEXO CORP. | ||
By: | (signed) Sebastien St-Louis | |
Name: Sebastien St-Louis | ||
Title: President & CEO |
TSX TRUST COMPANY | ||
By: |
(signed) Brett Higgs |
|
Name: Brett Higgs | ||
Title: Corporate Trust Officer | ||
By: |
(signed) Don Crawford |
|
Name: Don Crawford | ||
Title: Sr. Trust Officer |
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Schedule A Form of Debenture
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 6, 2020.
THIS SECURITY IS SUBJECT TO SUBORDINATION AND POSTPONEMENT TERMS IN FAVOUR OF SENIOR LENDERS.
[U.S. LEGEND TO BE INCLUDED ON ALL DEBENTURES ISSUED TO U.S. PERSONS OR IN THE UNITED STATES:]
THE SECURITIES REPRESENTED HEREBY [for Debentures, insert: AND THE SECURITIES ISSUABLE UPON CONVERSION OR PAYMENT HEREOF] HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH (I) RULE 144A, IF AVAILABLE, OR (II) RULE 144, IF AVAILABLE, AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
No. [●] | $[●] |
HEXO CORP.
(A corporation incorporated under the laws of the Province of Ontario)
8.0% UNSECURED CONVERTIBLE DEBENTURE
DUE DECEMBER 5, 2022
HEXO CORP. (the Corporation) for value received hereby acknowledges itself indebted and, subject to the provisions of the Debenture Indenture (the Indenture) dated as of December 5, 2019 between the Corporation and TSX TRUST COMPANY (the Trustee), promises to pay to [●], the registered holder hereof on December 5, 2022 or on such earlier date as the principal amount hereof may become due in accordance with the provisions of the Indenture (any such date, the Maturity Date) the principal sum of [●] Dollars ($[●]) in lawful money of Canada on presentation and surrender of this Debenture at the main branch of the Trustee in Toronto, Ontario in accordance with the terms of the Indenture and, subject as hereinafter provided, to pay interest on the principal amount hereof from, and including, the date hereof, or from the last Interest Payment Date to which interest shall have been paid or made available for payment hereon, whichever is later, at the rate of 8.0% per annum (based on a year of 360 days comprised of twelve
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30-day months), in like money, in arrears in equal (with the exception of the first interest payment which will include interest from December 5, 2019 as set forth below) quarterly instalments (less any tax required by law to be deducted) on March 31, June 30, September 30 and December 31 in each year commencing on December 31, 2019 and the last payment (representing interest payable from the last Interest Payment Date to, but excluding, the Maturity Date) to fall due on the Maturity Date and, should the Corporation at any time make default in the payment of any principal, premium, if any, or interest, to pay interest on the amount in default at the same rate, in like money and on the same dates. For certainty, the first interest payment will include interest accrued from December 5, 2019 to December 31, 2019, which will be equal to $57.77 for each $1,000 principal amount of the Debentures.
This Debenture is one of the 8.0% Unsecured Convertible Debentures (referred to herein as the Debentures) of the Corporation issued or issuable under the provisions of the Indenture. The Debentures authorized for issue immediately are limited to an aggregate principal amount of $100,000,000 in lawful money of Canada, in connection with the non-brokered private placement thereof. Reference is hereby expressly made to the Indenture for a description of the terms and conditions upon which the Debentures are or are to be issued and held and the rights and remedies of the holders of the Debentures and of the Corporation and of the Trustee, all to the same effect as if the provisions of the Indenture were herein set forth to all of which provisions the holder of this Debenture by acceptance hereof assents.
The Debentures are issuable only in denominations of $1,000 and integral multiples thereof. Upon compliance with the provisions of the Indenture, Debentures of any denomination may be exchanged for an equal aggregate principal amount of Debentures in any other authorized denomination or denominations.
At any time on or after December 7, 2020, any part, being $1,000 or an integral multiple thereof, of the principal of this Debenture, provided that the principal amount of this Debenture is in a denomination in excess of $1,000, is convertible, at the option of the holder hereof, upon surrender of this Debenture at the principal office of the Trustee in Toronto, Ontario, at any time prior to 5:00 p.m. (Eastern Time) on the Maturity Date or, if called for repurchase pursuant to a Change of Control (as defined in the Indenture) on the Business Day immediately prior to the payment date, into common shares of the Corporation (the Common Shares) (without adjustment for interest accrued hereon or for dividends or distributions on Common Shares issuable upon conversion) at a conversion price of $3.16 (the Conversion Price) per Common Share, being a rate of approximately 316.45 Common Shares for each $1,000 principal amount of Debentures, all subject to the terms and conditions and in the manner set forth in the Indenture. No Debentures may be converted during the five Business Days preceding each of March 31, June 30, September 30 and December 31 in each year, commencing December 31, 2019, as the registers of the Trustee will be closed during such periods. The Indenture makes provision for the adjustment of the Conversion Price in the events therein specified. No fractional Common Shares will be issued on any conversion, and any Common Shares so issuable will be rounded down to the nearest whole number. Holders converting their Debentures will receive accrued and unpaid interest thereon. If a Debenture is surrendered for conversion on an Interest Payment Date or during the five preceding Business Days, the person or persons entitled to receive Common Shares in respect of the Debentures so surrendered for conversion shall not become the holder or holders of record of such Common Shares until the Business Day following such Interest Payment Date and, for clarity, any interest payable on such Debentures will be for the account of the holder of record of such Debentures at the close of business on the date that is five (5) Business Days prior to the relevant Interest Payment Date.
Subject to the provisions in the Indenture and without further action on the part of the registered holder, if at any time during the Conversion Period, the volume weighted average price of the Common Shares on the Toronto Stock Exchange (the TSX) (or such other recognized stock exchange on which the Common Shares are listed for trading) for 15 consecutive trading days equals or exceeds $7.50, as adjusted in
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accordance with the Indenture, the Corporation may deliver a written notice (the Mandatory Conversion Notice) to the registered holder to cause the registered holder to convert all but not less than the principal amount of the Debentures into that number of Common Shares of the Corporation equal to the principal amount of the Debentures to the date of such mandatory conversion divided by the Conversion Price. The effective date for the mandatory conversion (the Mandatory Conversion Date) shall be: (a) the date stipulated in the Mandatory Conversion Notice; or (b) if no date is so stipulated in the Mandatory Conversion Notice, the date that is 30 days following the date of such Mandatory Conversion Notice, and upon such Mandatory Conversion Date: (i) all of the principal amount of the Debentures shall be deemed to be converted into Common Shares at the then applicable Conversion Price; and (ii) the registered holder shall be entered in the books of the Corporation as at the Mandatory Conversion Date as the holder of the number of Common Shares, as applicable, into which the Debentures are convertible. In the event that the Corporation delivers a Mandatory Conversion Notice, upon surrender of this Debenture to the Trustee, the Corporation shall deliver certificates for the Common Shares into which the Debentures have been converted, or at the direction of the Corporation, Direct Registration System Advices for such Common Shares to be held in book entry form.
Upon and subject to the terms and conditions of the Indenture, on the Maturity Date, the holders of the Debentures shall have the right to require the Corporation to repay all or any portion of the outstanding principal amount of the Debentures then outstanding through the issuance of Common Shares in satisfaction of such amounts at a price equal to the Current Market Price at the close of business on the Business Day immediately prior to the Maturity Date, being the VWAP of the Common Shares on the TSX, if the Common Shares are listed on the TSX, for the 5 consecutive trading days ending on the date immediately preceding the applicable date, or if the Common Shares are not listed on the TSX, the principal securities exchange or market on which the Common Shares are listed or quoted, or if no such prices are available, the fair value of a Common Share as reasonably determined by the Board of Directors.
Upon the occurrence of a Change of Control, the holders of the Debentures shall, in their sole discretion, have the right to require the Corporation to, either: (i) purchase the Debentures (the Change of Control Purchase Option) at 115% of the principal amount thereof plus unpaid interest to (but excluding) the date the Debentures are so repurchased; or (ii) convert the Debentures at the Conversion Price. If 90% or more of the principal amount of all Debentures outstanding on the date the Corporation provides notice of a Change of Control to the Trustee have been surrendered for purchase pursuant to the Change of Control Purchase Option, the Corporation has the right to redeem all the remaining outstanding Debentures on the same date and at the same price.
If an offer is made for the Debentures which is a take-over bid for the Debentures within the meaning of applicable Canadian securities laws and 90% or more of the principal amount of all the Debentures (other than Debentures held at the date of the offer by or on behalf of the Offeror, associates or affiliates of the Offeror or anyone acting jointly or in concert with the Offeror) are taken up and paid for by the Offeror, the Offeror will be entitled to acquire the Debentures of those holders who did not accept the offer on the same terms as the Offeror acquired the first 90% of the principal amount of the Debentures.
The indebtedness evidenced by this Debenture, and by all other Debentures now or hereafter certified and delivered under the Indenture, is a direct unsecured obligation of the Corporation.
The Debentures rank subordinate in right of payment to all Senior Debt. Specifically but without limitation, (a) payment of principal, interest or any other amount under the Debentures (including without limitation, payment by way of exchange, set-off, purchase or redemption but excluding conversion) shall be indefinitely postponed where a default or event of default exists under any Senior Debt or would be caused thereby, (b) enforcement of the Debentures shall be subject to an indefinite
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standstill in favour of the Senior Debt (subject only to traditional rights preservation steps) where a default or event of default exists under any Senior Debt, and (c) there shall be turnover obligations in favour of the Senior Debt with respect to any payments received in contravention of such terms.
These Debentures and the Common Shares issuable upon conversion hereof have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act), or the securities laws of any state of the United States. The Debentures and Common Shares may not be offered or sold in the United States or to U.S. persons (as such term is defined in Rule 902(k) of Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or unless an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available.
The Indenture contains provisions making binding upon all holders of Debentures outstanding thereunder resolutions passed at meetings of such holders held in accordance with such provisions and instruments signed by the holders of a specified majority of Debentures outstanding, which resolutions or instruments may have the effect of amending the terms of this Debenture or the Indenture.
The Indenture contains provisions disclaiming any personal liability on the part of holders of Common Shares and officers, directors and employees of the Corporation in respect of any obligation or claim arising out of the Indenture or this Debenture.
This Debenture may only be transferred, upon compliance with the conditions prescribed in the Indenture, in one of the registers to be kept at the principal office of the Trustee in the City of Toronto and in such other place or places and/or by such other registrars (if any) as the Corporation with the approval of the Trustee may designate. No transfer of this Debenture shall be valid unless made on the register by the registered holder hereof or his executors or administrators or other legal representatives, or his or their attorney duly appointed by an instrument in form and substance satisfactory to the Trustee or other registrar, and upon compliance with such reasonable requirements as the Trustee and/or other registrar may prescribe and upon surrender of this Debenture for cancellation. Thereupon a new Debenture or Debentures in the same aggregate principal amount shall be issued to the transferee in exchange hereof.
This Debenture shall not become obligatory for any purpose until it shall have been certified by the Trustee under the Indenture.
Capitalized words or expressions used in this Debenture shall, unless otherwise defined herein, have the meaning ascribed thereto in the Indenture. In the event of any inconsistency between the terms of this Debenture and the Indenture, the terms of the Indenture shall govern.
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IN WITNESS WHEREOF HEXO CORP. has caused this Debenture to be signed by its authorized representatives as of December 5, 2019.
HEXO CORP. | ||
By: |
|
|
Name: | ||
Title: |
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TRUSTEES CERTIFICATE
This Debenture is one of the 8.0% Unsecured Convertible Debentures due December 5, 2022 referred to in the Indenture within mentioned.
Dated: _________________________________, 20_____.
TSX TRUST COMPANY | ||
By: |
|
|
Authorized Signatory |
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FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________________, whose address and social insurance number, if applicable, are set forth below, this Debenture (or $ principal amount hereof*) of HEXO CORP. (the Corporation) standing in the name(s) of the undersigned in the register maintained by the Corporation with respect to such Debenture and does hereby irrevocably authorize and direct the Trustee to transfer such Debenture in such register, with full power of substitution in the premises.
Dated: |
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Address of Transferee: |
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(Street Address, City, Province and Postal Code) |
Social Insurance Number of Transferee, if applicable: |
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*If less than the full principal amount of the Debenture is to be transferred, indicate in the space provided the principal amount (which must be $1,000 or an integral multiple thereof, unless you hold a Debenture in a non-integral multiple of $1,000 by reason of your having exercised your right to exchange pursuant to your election to pursue the Change of Control Purchase Option, in which case such Debenture is transferable only in its entirety) to be transferred.
1. |
In the case of a Debenture bearing any Canadian restrictive legends that remain in effect, the undersigned hereby represents, warrants and certifies that the transfer is being made pursuant to an exemption from the prospectus requirements of Applicable Securities Legislation and the undersigned has taken diligent steps to ensure that such exemption is available and the requirements for such exemption have been complied with by the undersigned in accordance with Applicable Securities Legislation. |
2. |
In the case of a Debenture bearing any United States restrictive legends that remain in effect, the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked): |
☐ |
(A) the transfer is being made to the Corporation; |
☐ |
(B) the transfer is being made outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act in circumstances where Rule 905 of Regulation S does not apply, and in compliance with any applicable local securities laws and regulations, and the holder has provided herewith a certificate in the form of Schedule D to the Indenture, including the certifications therein, |
☐ |
(C) the transfer is being made pursuant to the exemption from the registration requirements of the U.S. Securities Exchange Act provided by Rule 144 or Rule 144A under the U.S. Securities Act and in accordance with applicable state securities laws, or |
☐ |
(D) the transfer is being made in another transaction that does not require registration under the U.S. Securities Exchange Act or any applicable state securities laws. |
The undersigned represents and warrants that it: [check one only]
☐ | A. | is not in the United States or a U.S. Person as defined in Rule 902(k) of Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities |
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Act) and is not transferring the Debentures to or for the account or benefit of a U.S. Person (as defined in the U.S. Securities Act) or a person in the United States.
☐ | B. | is a registered holder that acquired the Debentures in a transaction that was exempt from registration under the U.S. Securities Act and applicable state securities laws and acquired the Debentures in a transaction that was: (a) within the United States in accordance with: (1) Rule 144A under the Securities Act or (2) Rule 144 under the Securities Act and in each case in compliance with applicable state securities laws; or (b) in another transaction that does not require registration under the Securities Act or any applicable state securities laws, provided that in the case of transfers pursuant to (a) or (b) above, a legal opinion reasonably satisfactory to the Corporation must first be provided. |
3. |
In the case of a transfer in accordance with 2(C) or 2(D) above, the Trustee and the Corporation shall first have received an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation, to such effect. |
4. |
The registered holder of this Debenture is responsible for the payment of any documentary, stamp or other transfer taxes that may be payable in respect of the transfer of this Debenture. |
5. |
Unless the Corporation has otherwise instructed the Trustee in writing, no transfer of Debentures will be valid unless this Transfer Form is accompanied by such evidence as the Trustee may reasonably require that the transfer of such Debentures is being made in accordance with all applicable securities legislation. |
DATED this ____ day of ____________________, 20_____.
SPACE FOR GUARANTEES OF
SIGNATURES (BELOW) |
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)
)
)
)
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Signature of Transferor |
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Guarantors Signature/Stamp |
)
)
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Name of Transferor |
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CERTAIN REQUIREMENTS RELATING TO TRANSFERS READ CAREFULLY
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. All securityholders or a legally authorized representative must sign this form. The signature(s) on this form must be guaranteed in accordance with the transfer agents then-current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):
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Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words Medallion Guaranteed, with the correct prefix covering the face value of the certificate. |
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Canada: A Medallion Signature Guarantee with the correct prefix covering the face value of the certificate. |
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Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed. |
OR
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. The signature(s) on this form must be guaranteed by a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed signatures are not acceptable as guaranteed signatures. The Guarantor must affix a stamp bearing the actual words: SIGNATURE GUARANTEED, MEDALLION GUARANTEED OR SIGNATURE & AUTHORITY TO SIGN GUARANTEE, all in accordance with the transfer agents then current guidelines and requirements at the time of transfer. For corporate holders, corporate signing resolutions, including certificate of incumbency, will also be required to accompany the transfer with a MEDALLION GUARANTEED Stamp affixed to the Form of Transfer, with the correct prefix covering the face value of the certificate.
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Schedule B Form of Notice of Conversion
CONVERSION NOTICE
To: | HEXO CORP. (the Corporation) | |
c/o: | TSX TRUST COMPANY (the Trustee) |
All capitalized terms used herein have the meaning ascribed thereto in the Indenture dated December 5, 2019 between the Corporation and the Trustee, unless otherwise indicated.
The undersigned registered holder of Debentures irrevocably elects to convert such Debentures (or $_____________________ principal amount thereof *) in accordance with the terms of the Indenture and tenders herewith the Debentures and directs that the Common Shares issuable upon conversion be issued and delivered to the person indicated below. (If Common Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned and a Residency Declaration Form must be completed and delivered in respect of such other person).
The undersigned represents and warrants that it: [check one only]
☐ | A. |
is not in the United States or a U.S. Person as defined in Rule 902(k) of Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act) and is not converting the Debentures for the account or benefit of a U.S. Person (as defined in Rule 902(k) of Regulation S under the U.S. Securities Act) or a person in the United States; or |
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☐ | B. |
is a registered holder that acquired the Debentures in a transaction that was exempt from registration under the U.S. Securities Act and applicable state securities laws and acquired the Debentures in a transaction that was: (a) within the United States in accordance with: (1) Rule 144A under the Securities Act or (2) Rule 144 under the Securities Act and in each case in compliance with applicable state securities laws; or (b) in another transaction that does not require registration under the Securities Act or any applicable state securities laws, provided that in the case of transfers pursuant to (a) or (b) above, a legal opinion reasonably satisfactory to the Corporation must first be provided. |
Dated: |
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(Signature of Registered Holder) |
* | If less than the full principal amount of the Debentures, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof). | |
NOTE: | If Common Shares are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or by a member of an |
B - 1
acceptable Medallion Guarantee Program. The Guarantor must affix a stamp bearing the actual words: SIGNATURE GUARANTEED. |
(Print name in which Common Shares are to be issued, delivered and registered)
Name: |
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Address | ||
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(City, Province and Postal Code) |
Name of guarantor: |
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Authorized signature: |
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B - 2
Schedule C Form of Notice of Exercise of Share Payment Right on Maturity Date
SHARE PAYMENT RIGHT NOTICE
To: | HEXO CORP. (the Corporation) | |
c/o: | TSX TRUST COMPANY (the Trustee) |
All capitalized terms used herein have the meaning ascribed thereto in the Indenture dated December 5, 2019 between the Corporation and the Trustee, unless otherwise indicated.
The undersigned registered holder of Debentures irrevocably elects to have the Corporation repay such Debentures (or $_____________________ principal amount thereof *) on the Maturity Date in Common Shares of the Corporation pursuant to the exercise of its Share Payment Right in accordance with the terms of the Indenture and tenders herewith the Debentures and directs that the Common Shares issuable upon repayment be issued and delivered to the person indicated below. (If Common Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned and a Residency Declaration Form must be completed and delivered in respect of such other person).
The undersigned represents and warrants that it: [check one only]
☐ | A. |
is not in the United States or a U.S. Person as defined in Rule 902(k) of Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act) and is not converting the Debentures for the account or benefit of a U.S. Person (as defined in Rule 902(k) of Regulations S under the U.S. Securities Act) or a person in the United States; or |
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☐ | B. |
is a registered holder that acquired the Debentures in a transaction that was exempt from registration under the U.S. Securities Act and applicable state securities laws and acquired the Debentures in a transaction that was: (a) within the United States in accordance with: (1) Rule 144A under the Securities Act or (2) Rule 144 under the Securities Act and in each case in compliance with applicable state securities laws; or (b) in another transaction that does not require registration under the Securities Act or any applicable state securities laws, provided that in the case of transfers pursuant to (a) or (b) above, a legal opinion reasonably satisfactory to the Corporation must first be provided. |
Dated: |
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(Signature of Registered Holder) |
* | If less than the full principal amount of the Debentures, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof). | |
NOTE: | If Common Shares are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or by a member of an |
C - 1
acceptable Medallion Guarantee Program. The Guarantor must affix a stamp bearing the actual words: SIGNATURE GUARANTEED. |
(Print name in which Common Shares are to be issued, delivered and registered)
Name: |
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Address | ||
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(City, Province and Postal Code) |
Name of guarantor: |
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Authorized signature: |
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C - 2
Schedule D Form of Declaration for Removal of Legend
TO: | HEXO Corp. (the Corporation) | |
AND TO: | [TSX Trust Company] [The registrar and transfer agent of the Corporation] |
The undersigned (a) acknowledges that the sale of ____________________ securities of the Corporation to which this declaration relates is being made in reliance on Rule 904 of Regulation S (Regulation S) under the United States Securities Act of 1933, as amended (the U.S. Securities Act) and (b) certifies that (1) it is not an affiliate (as defined in Rule 405 under the U.S. Securities Act) of the Corporation or acting on behalf of an affiliate of the Corporation, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of the Toronto Stock Exchange and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts (within the meaning of Rule 902(c) of Regulation S under the U.S. Securities Act) in the United States in connection with the offer and sale of such securities, (4) the sale was bona fide and not for the purpose of washing off the resale restrictions imposed because the securities are restricted securities (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the seller does not intend to replace the securities sold in reliance on Rule 904 of the U.S. Securities Act with fungible unrestricted securities of the Corporation, (6) the undersigned is not a distributor (as that term is defined in Rule 902(d) of Regulation S under the U.S. Securities Act) or an affiliate of a distributor or acting on behalf of any of the foregoing, and (7) the sale was not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. The undersigned in making such sale has complied with (a) Rule 904(b) of Regulation S if applicable and (b) all applicable state securities laws. Terms used herein have the meanings given to them by Regulation S.
Dated: _________________
By: ________________________________
Name:
Title:
Affirmation by Sellers Broker-Dealer
We have read the foregoing representations of our customer, ___________________ (the Seller), dated ___________, with regard to our sale, for such Sellers account, of _________________ securities of the Corporation, represented by certificate number ______________ (the Securities), and on behalf of ourselves we certify and affirm that (A) we have no knowledge that the transaction had been prearranged with a buyer in the United States, (B) at the time the buy order was originated, the buyer was outside the United States, or the Seller and any person acting on its behalf reasonably believed that the buyer was outside of the United States or the transaction was executed on or through the facilities of the Toronto Stock Exchange, (C) neither we, nor any person acting on our behalf, engaged in any directed selling efforts (within the meaning of Rule 902(c) of Regulation S under the U.S. Securities Act) in connection with the offer and sale of such securities and (D) we have complied with the provisions of Rule 904(b) of Regulation S, if applicable, in connection with the sale of the Securities by the Seller. Terms used herein have the
D - 1
meanings given to them by Regulation S under the U.S. Securities Act. Legal counsel to the Corporation shall be entitled to rely upon the representations, warranties and covenants contained in this affirmation to the same extent as if this letter had been addressed to them, it being agreed that such representations, warranties and covenants shall be deemed to be made both as of the date of this letter and at the time of the sale of the Securities.
D - 2
Exhibit 99.4
HEXO CORP.
as the Corporation
and
TSX TRUST COMPANY
as the Warrant Agent
WARRANT INDENTURE
Providing for the Issue of Warrants
Dated as of June 5, 2020
TABLE OF CONTENTS
Page | ||||||
ARTICLE 1 INTERPRETATION |
2 | |||||
Section 1.1 |
Definitions | 2 | ||||
Section 1.2 |
Gender and Number | 7 | ||||
Section 1.3 |
Headings, Etc. | 7 | ||||
Section 1.4 |
Day not a Business Day | 7 | ||||
Section 1.5 |
Time of the Essence | 7 | ||||
Section 1.6 |
Monetary References | 7 | ||||
Section 1.7 |
Applicable Law | 7 | ||||
ARTICLE 2 ISSUE OF WARRANTS |
7 | |||||
Section 2.1 |
Creation and Issue of Warrants | 7 | ||||
Section 2.2 |
Terms of Warrants | 8 | ||||
Section 2.3 |
Warrantholder not a Shareholder | 8 | ||||
Section 2.4 |
Warrants to Rank Pari Passu | 8 | ||||
Section 2.5 |
Form of Warrants and Certificated Warrants | 8 | ||||
Section 2.6 |
Book Entry Only Warrants | 9 | ||||
Section 2.7 |
Warrant Certificate | 11 | ||||
Section 2.8 |
Register of Warrants | 12 | ||||
Section 2.9 |
Issue in Substitution for Warrant Certificates Lost, etc. | 13 | ||||
Section 2.10 |
Exchange of Warrant Certificates | 14 | ||||
Section 2.11 |
Transfer and Ownership of Warrants | 14 | ||||
Section 2.12 |
Cancellation of Surrendered Warrants | 15 | ||||
Section 2.13 |
Withdrawal of Warrants from Warrant Indenture | 16 | ||||
Section 2.14 |
Legends | 16 | ||||
ARTICLE 3 EXERCISE OF WARRANTS |
18 | |||||
Section 3.1 |
Right of Exercise | 18 | ||||
Section 3.2 |
Warrant Exercise | 19 | ||||
Section 3.3 |
Common Share Resale Restrictions | 21 | ||||
Section 3.4 |
Transfer Fees and Taxes | 22 | ||||
Section 3.5 |
Warrant Agency | 22 | ||||
Section 3.6 |
Effect of Exercise of Warrant Certificates | 22 | ||||
Section 3.7 |
Partial Exercise of Warrants; Fractions | 24 | ||||
Section 3.8 |
Expiration of Warrants | 24 | ||||
Section 3.9 |
Accounting and Recording | 24 | ||||
Section 3.10 |
Securities Restrictions | 24 |
(i)
ARTICLE 4 ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE |
26 | |||||
Section 4.1 |
Adjustment of Number of Common Shares and Exercise Price | 26 | ||||
Section 4.2 |
Entitlement to Common Shares on Exercise of Warrant | 30 | ||||
Section 4.3 |
No Adjustment for Certain Transactions | 31 | ||||
Section 4.4 |
Determination by Auditors | 31 | ||||
Section 4.5 |
Proceedings Prior to any Action Requiring Adjustment | 31 | ||||
Section 4.6 |
Certificate of Adjustment | 31 | ||||
Section 4.7 |
Notice of Special Matters | 31 | ||||
Section 4.8 |
No Action after Notice | 32 | ||||
Section 4.9 |
Other Action | 32 | ||||
Section 4.10 |
Protection of Warrant Agent | 32 | ||||
Section 4.11 |
Participation by Warrantholder | 33 | ||||
ARTICLE 5 RIGHTS OF THE CORPORATION AND COVENANTS |
33 | |||||
Section 5.1 |
Optional Purchases by the Corporation | 33 | ||||
Section 5.2 |
General Covenants | 33 | ||||
Section 5.3 |
Warrant Agents Remuneration and Expenses | 35 | ||||
Section 5.4 |
Performance of Covenants by Warrant Agent | 35 | ||||
Section 5.5 |
Enforceability of Warrants | 35 | ||||
ARTICLE 6 ENFORCEMENT |
35 | |||||
Section 6.1 |
Suits by Registered Warrantholders | 35 | ||||
Section 6.2 |
Suits by the Corporation | 35 | ||||
Section 6.3 |
Immunity of Shareholders, etc. | 36 | ||||
Section 6.4 |
Waiver of Default | 36 | ||||
ARTICLE 7 MEETINGS OF REGISTERED WARRANTHOLDERS |
36 | |||||
Section 7.1 |
Right to Convene Meetings | 36 | ||||
Section 7.2 |
Notice | 37 | ||||
Section 7.3 |
Chairman | 37 | ||||
Section 7.4 |
Quorum | 37 | ||||
Section 7.5 |
Power to Adjourn | 37 | ||||
Section 7.6 |
Show of Hands | 38 | ||||
Section 7.7 |
Poll and Voting | 38 | ||||
Section 7.8 |
Regulations | 38 | ||||
Section 7.9 |
Corporation and Warrant Agent May be Represented | 39 | ||||
Section 7.10 |
Powers Exercisable by Extraordinary Resolution | 39 | ||||
Section 7.11 |
Meaning of Extraordinary Resolution | 40 | ||||
Section 7.12 |
Powers Cumulative | 41 | ||||
Section 7.13 |
Minutes | 41 | ||||
Section 7.14 |
Instruments in Writing | 41 |
(ii)
Section 7.15 |
Binding Effect of Resolutions | 42 | ||||
Section 7.16 |
Holdings by Corporation Disregarded | 42 | ||||
ARTICLE 8 SUPPLEMENTAL INDENTURES |
42 | |||||
Section 8.1 |
Provision for Supplemental Indentures for Certain Purposes | 42 | ||||
Section 8.2 |
Successor Entities | 43 | ||||
ARTICLE 9 CONCERNING THE WARRANT AGENT |
44 | |||||
Section 9.1 |
Indenture Legislation | 44 | ||||
Section 9.2 |
Rights and Duties of Warrant Agent | 44 | ||||
Section 9.3 |
Evidence, Experts and Advisers | 44 | ||||
Section 9.4 |
Documents, Monies, etc. Held by Warrant Agent | 46 | ||||
Section 9.5 |
Actions by Warrant Agent to Protect Interest | 46 | ||||
Section 9.6 |
Warrant Agent Not Required to Give Security | 46 | ||||
Section 9.7 |
Protection of Warrant Agent | 46 | ||||
Section 9.8 |
Replacement of Warrant Agent; Successor by Merger | 47 | ||||
Section 9.9 |
Conflict of Interest | 48 | ||||
Section 9.10 |
Acceptance of Agency | 49 | ||||
Section 9.11 |
Warrant Agent Not to be Appointed Receiver | 49 | ||||
Section 9.12 |
Warrant Agent Not Required to Give Notice of Default | 49 | ||||
Section 9.13 |
Anti-Money Laundering | 49 | ||||
Section 9.14 |
Compliance with Privacy Code | 50 | ||||
Section 9.15 |
Securities Exchange Commission Certification | 50 | ||||
ARTICLE 10 GENERAL |
51 | |||||
Section 10.1 |
Notice to the Corporation and the Warrant Agent | 51 | ||||
Section 10.2 |
Notice to Registered Warrantholders | 52 | ||||
Section 10.3 |
Ownership of Warrants | 52 | ||||
Section 10.4 |
Counterparts | 52 | ||||
Section 10.5 |
Satisfaction and Discharge of Indenture | 52 | ||||
Section 10.6 |
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders | 53 | ||||
Section 10.7 |
Common Shares or Warrants Owned by the Corporation or its SubsidiariesCertificate to be Provided | 53 | ||||
Section 10.8 |
Severability | 53 | ||||
Section 10.9 |
Force Majeure | 54 | ||||
Section 10.10 |
Assignment, Successors and Assigns | 54 | ||||
Section 10.11 |
Rights of Rescission and Withdrawal for Holders | 54 |
(iii)
SCHEDULES
Schedule AForm of Warrant
Schedule BConfirmation of Exercise Price to Warrant Agent
Schedule CForm of Warrant Agreement
Schedule DForm of Withdrawal Notice and Return to Treasury
Schedule EForm of Declaration for Removal of Legend
Schedule FForm of U.S. Warrantholder Certification Upon Exercise of Warrants
(iv)
WARRANT INDENTURE
THIS WARRANT INDENTURE is dated as of June 5, 2020.
BETWEEN:
HEXO CORP., a corporation incorporated under the laws of the Province of Ontario
(the Corporation),
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TSX TRUST COMPANY, a trust company existing under the laws of Canada and authorized to carry on business in all provinces of Canada
(the Warrant Agent),
WHEREAS pursuant to the terms and conditions of an indenture dated December 5, 2019 as amended by a first supplemental indenture dated May 29, 2020 (collectively, the Debenture Indenture), the Corporation proposes to issue up to 37,325,000 units (Units) of the Corporation (the Offering), each Unit comprised of one Common Share (as defined herein) and one-half of one Warrant (as defined herein), upon the conversion of certain Debentures (as defined in the Debenture Indenture) pursuant to the Early Conversion Option (as defined in the Debenture Indenture);
AND WHEREAS for the purpose of the conversion of the Debentures pursuant to the Early Conversion Option, the Corporation is proposing to issue up to 18,662,500 Warrants pursuant to this Indenture;
AND WHEREAS each whole Warrant shall, subject to adjustment, entitle the holder thereof to acquire one (1) Common Share upon payment of the Exercise Price upon the terms and conditions herein set forth;
AND WHEREAS all acts and deeds necessary have been done and performed to make the Warrants, when created and issued as provided in this Indenture, legal, valid and binding upon the Corporation with the benefits and subject to the terms of this Indenture;
AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Corporation and not by the Warrant Agent;
NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Corporation hereby appoints the Warrant Agent as warrant agent to hold the rights, interests and benefits contained herein for and on behalf of those persons who from time to time become the holders of Warrants issued pursuant to this Indenture and the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions.
In this Indenture, including the recitals and schedules hereto, and in all indentures supplemental hereto:
Adjustment Period means the period from the Effective Date up to and including the Expiry Time;
Applicable Legislation means any statute of Canada or a province thereof, and the regulations under any such named or other statute, relating to warrant indentures or to the rights, duties and obligations of warrant agents under warrant indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;
Auditors means a firm of chartered accountants duly appointed as auditors of the Corporation, from time to time;
Authenticated means (a) with respect to the issuance of a Warrant Certificate, one which has been duly signed by the Corporation and authenticated by manual signature of an authorized officer of the Warrant Agent, and (b) with respect to the issuance of an Uncertificated Warrant, one in respect of which the Warrant Agent has completed all Internal Procedures such that the particulars of such Uncertificated Warrant as required by Section 2.7 are entered in the register of holders of Warrants. Authenticate, Authenticating and Authentication have the appropriate correlative meanings;
Bloomberg means Bloomberg, L.P.;
Book Entry Only Participants means institutions that participate directly or indirectly in the Depositorys book entry registration system for the Warrants;
Book Entry Only Warrants means Warrants that are to be or are held only by or on behalf of the Depository;
Business Day means any day other than Saturday, Sunday or a statutory or civic holiday, or any other day on which banks are not open for in-person business in the City of Toronto, Province of Ontario;
Buy-in has the meaning set forth in Section 3.6(4);
Certificated Warrant means a Warrant evidenced by a writing or writings substantially in the form of Schedule A, attached hereto;
Common Share Delivery Date has the meaning set forth in Section 3.6(2);
Common Shares means, subject to Article 4, fully paid and non-assessable common shares in the capital of the Corporation as presently constituted;
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Confirmation has the meaning set forth in Section 3.2(2);
Convertible Security means a security of the Corporation (other than the Warrants) or of any other issuer convertible into or exchangeable for or otherwise carrying the right to acquire Common Shares;
Counsel means a barrister or solicitor or a firm of barristers and solicitors retained by the Warrant Agent or retained by the Corporation and acceptable to the Warrant Agent, which may or may not be counsel for the Corporation;
Current Market Price of the Common Shares at any date means the VWAP for the 20 consecutive Trading Days immediately preceding such date;
Depository means CDS Clearing and Depository Services Inc., The Depository Trust Company or such other Person as is designated in writing by the Corporation to act as depository in respect of the Warrants;
Depository Global Warrants means Warrants representing all or a portion of the aggregate number of Warrants issued in the name of the applicable Depository represented by an Uncertificated Warrant, or if requested by the applicable Depository or the Corporation, by a Warrant Certificate;
Dividends means any dividends paid by the Corporation;
Effective Date means the date of this Indenture;
Equity Shares means the Common Shares and any shares of any other class or series of the Corporation which may from time to time be authorized for issue if by their terms such shares confer on the holders thereof the right to participate in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation beyond a fixed sum or a fixed sum plus accrued dividends;
Exchange Rate means the number of Common Shares subject to the right of purchase under each Warrant which as of the date hereof is one;
Exercise Date means, in relation to the Warrants, the Business Day on which an Exercise Notice attached to such Warrant is validly exercised or deemed to be validly exercised in accordance with Article 3 hereof;
Exercise Notice has the meaning set forth in Section 3.2(1);
Exercise Price at any time means the price at which a whole Common Share may be purchased by the exercise of a whole Warrant, which is initially $1.00 per Common Share, payable in immediately available Canadian funds, subject to adjustment in accordance with the provisions of Article 4;
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Expiry Date for any Warrant is the date which is three (3) years from the original issuance of the Warrant;
Expiry Time means 5:00 p.m. (Eastern time) on the Expiry Date;
Extraordinary Resolution has the meaning set forth in Section 7.11;
Internal Procedures means in respect of the making of any one or more entries to, changes in or deletions of any one or more entries in the register at any time (including without limitation, original issuance or registration of transfer of ownership) the minimum number of the Warrant Agents internal procedures customary at such time for the entry, change or deletion made to be complete under the operating procedures followed at the time by the Warrant Agent;
Issue Date for any Warrant is the date such Warrant was issued as indicated on the register;
NYSE means the New York Stock Exchange;
Person means an individual, body corporate, partnership, trust, warrant agent, executor, administrator, legal representative or any unincorporated organization;
register means the one set of records and accounts maintained by the Warrant Agent pursuant to Section 2.8;
Registered Warrantholders means the persons who are registered owners of Warrants as such names appear on the register, and for greater certainty, shall include the Depository as well as the holders of Uncertificated Warrants appearing on the register of the Warrant Agent;
Regulatory Authorities means the securities regulatory authorities in each of the provinces and territories of Canada;
Rights Offering has the meaning set forth in Section 4.1(b);
SEC means the United States Securities and Exchange Commission;
Shareholders means holders of Common Shares;
Special Distribution has the meaning set forth in Section 4.1(c);
this Warrant Indenture, this Indenture, this Agreement, hereto herein, hereby, hereof and similar expressions mean and refer to this indenture and any indenture, deed or instrument supplemental hereto; and the expressions Article, Section, subsection and paragraph followed by a number, letter or both mean and refer to the specified article, section, subsection or paragraph of this indenture;
Trading Day means, a day on which any of the NYSE or the TSX is open for trading or, if the Common Shares are not then listed on the NYSE or the TSX, a day on which
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such other exchange or an over-the-counter market on which the Common Shares are listed is open for trading;
Trading Market means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the TSX, the NYSE, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the NYSE American (or any successors to any of the foregoing);
Transaction Instruction means a written order signed by the Registered Warrantholder or the Depository or electronic confirmation from the Depository, entitled to request that one or more actions be taken, or such other form as may be reasonably acceptable to the Warrant Agent, requesting one or more such actions to be taken in respect of an Uncertificated Warrant;
TSX means the Toronto Stock Exchange;
Uncertificated Warrant means any Warrant which is not a Certificated Warrant;
United States means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia;
U.S. Exchange Act means the United States Securities Exchange Act of 1934, as amended;
U.S. Person has the meaning set forth in Rule 902(k) of Regulation S;
U.S. Securities Act means the United States Securities Act of 1933, as amended;
U.S. Securities Laws means all applicable securities legislation in the United States, including without limitation, the U.S. Securities Act, the U.S. Exchange Act and the rules and regulations promulgated thereunder, and any applicable state securities laws;
U.S. Warrantholder means any (a) Warrantholder that (i) is a U.S. Person, (ii) is in the United States, (iii) received an offer to acquire Warrants while in the United States, or (iv) was in the United States at the time such Warrantholders buy order was made or such Warrantholder executed or delivered its purchase order for the Warrants or (b) person who acquired Warrants on behalf of, or for the account or benefit of, any U.S. Person or any person in the United States;
U.S. Warrantholder Letter means the U.S. Warrantholder letter in substantially the form attached hereto as Schedule F;
VWAP means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the principal Trading Market based on trading volume as reported by Bloomberg on which the Common Shares are then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (Eastern
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time) to 4:02 p.m. (Eastern time)), (b) if the Common Shares are not listed or quoted on a Trading Market and is then quoted on OTCQB or OTCQX, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Shares are then reported in the Pink Sheets published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Shares so reported, or (d) in all other cases, the fair market value of a share of Common Shares as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation;
Warrants means the Common Share purchase warrants created by and authorized by and issuable under this Indenture, to be issued and Authenticated hereunder in certificated form and/or held through the book entry registration system on a no certificate issued basis, entitling the holder thereof to purchase one Common Share (subject to adjustment as herein provided) at the Exercise Price prior to the Expiry Time or means the warrants issued and Authenticated hereunder, whether by way of Warrant Certificate or Uncertificated Warrant;
Warrant Agency means the principal offices of the Warrant Agent in Toronto (TSX Trust Company), or such other place as may be designated in accordance with Section 3.5;
Warrant Agent means TSX Trust Company, in its capacity as warrant agent of the Warrants, or its successors from time to time;
Warrant Agreement means a warrant agreement, in substantially in the form set forth in Schedule C hereto, by and between the Corporation and a Warrantholder, to be administered by the Corporation outside the terms of this Warrant Indenture and Warrant Agency;
Warrant Certificate means a certificate, substantially in the form set forth in Schedule A hereto, to evidence those Warrants that will be evidenced by a certificate;
Warrantholders, or holders without reference to Warrants, means the warrantholders as, and in respect of Warrants registered in the name of the Depository, includes owners of Warrants who beneficially hold securities entitlements in respect of the Warrants through a Book Entry Only Participant or means, at a particular time, the Persons entered in the register hereinafter mentioned as holders of Warrants outstanding at such time;
Warrantholders Request means an instrument signed in one or more counterparts by Registered Warrantholders holding in the aggregate not less than 50% of the Warrants then unexercised and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein; and written order of the Corporation, written request of the Corporation, written consent of the Corporation and
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certificate of the Corporation mean, respectively, a written order, request, consent and certificate signed in the name of the Corporation by any one director or officer of the Corporation and may consist of one or more instruments so executed; and
Withdrawal Notice means the Withdrawal Notice, in substantially in the form set forth in Schedule D hereto, to be delivered by a Registered Warrantholder upon surrender of to withdraw Warrants represented by Warrant Certificate(s) from this Warrant Indenture and Warrant Agency in substitution for a Warrant Agreement.
Section 1.2 Gender and Number.
Words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa.
Section 1.3 Headings, Etc.
The division of this Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Warrants.
Section 1.4 Day not a Business Day.
If any day on or before which any action or notice is required to be taken or given hereunder is not a Business Day, then such action or notice shall be required to be taken or given on or before the requisite time on the next succeeding day that is a Business Day.
Section 1.5 Time of the Essence.
Time shall be of the essence of this Indenture.
Section 1.6 Monetary References.
Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise expressed.
Section 1.7 Applicable Law.
This Indenture, the Warrants, the Warrant Certificates (including all documents relating thereto, which by common accord have been and will be drafted in English) shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as legally-binding contracts. Each of the parties hereto, which shall include the Warrantholders, irrevocably attorns to the exclusive jurisdiction of the courts of the Province of Ontario with respect to all matters arising out of this Indenture and the transactions contemplated herein.
ARTICLE 2
ISSUE OF WARRANTS
Section 2.1 Creation and Issue of Warrants.
A maximum of 18,662,500 Warrants (subject to adjustment as herein provided) are hereby created and authorized to be issued in accordance with the terms and conditions
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hereof. By written order of the Corporation, the Warrant Agent shall deliver Authenticated Warrants to Warrantholders and record the name of the Warrantholders on the Warrant register. Registration of interests in Warrants held by the Depository may be evidenced by a position appearing on the register for Warrants of the Warrant Agent for an amount representing the aggregate number of such Warrants outstanding from time to time.
Section 2.2 Terms of Warrants.
(1) |
Subject to the applicable conditions for exercise set out in Article 3 having been satisfied and subject to adjustment in accordance with Article 4, each Warrant shall entitle each Warrantholder thereof, upon exercise at any time after the Issue Date and prior to the Expiry Time, to acquire one Common Share upon payment of the Exercise Price. |
(2) |
No fractional Warrants shall be issued or otherwise provided for hereunder and Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Warrants shall be rounded down to the nearest whole number. |
(3) |
Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture. |
(4) |
The number of Common Shares which may be purchased pursuant to the Warrants and the Exercise Price therefor shall be adjusted upon the events and in the manner specified in Article 4. |
Section 2.3 Warrantholder not a Shareholder.
Except as may be specifically provided herein, nothing in this Indenture or in the holding of a Warrant Certificate, entitlement to a Warrant or otherwise, shall, in itself, confer or be construed as conferring upon a Warrantholder any right or interest whatsoever as a Shareholder of the Corporation, including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings of the Corporation, or the right to Dividends and other allocations.
Section 2.4 Warrants to Rank Pari Passu.
All Warrants shall rank equally and without preference over each other, whatever may be the actual date of issue thereof.
Section 2.5 Form of Warrants and Certificated Warrants.
The Warrants may be issued in both certificated and uncertificated form, as in the sole discretion of the Holder, subject to relevant securities laws. All Warrants issued in certificated form shall be evidenced by the Warrant Certificates (including all replacements issued in accordance with this Indenture), substantially in the form set out in Schedule A hereto, which shall be dated as of the Issue Date, shall bear such distinguishing letters and numbers as the Corporation may, with the approval of the Warrant Agent, prescribe, and shall be issuable in any denomination excluding fractions. All Warrants issued to the Depository may be in either a certificated or uncertificated form, such uncertificated form being evidenced by
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a book position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with Section 2.8.
Section 2.6 Book Entry Only Warrants.
(1) |
Reregistration of beneficial interests in and transfers of Warrants held by the Depository shall be made only through the book entry registration system and no Warrant Certificates shall be issued in respect of such Warrants except where physical certificates evidencing ownership in such securities are required or as set out herein or as may be requested by a Depository, as determined by the Corporation, from time to time. Except as provided in this Section 2.6, owners of beneficial interests in any Depository Global Warrants shall not be entitled to have Warrants registered in their names and shall not receive or be entitled to receive Warrants in definitive form or to have their names appear in the register referred to in Section 2.8 herein. |
(2) |
Notwithstanding any other provision in this Indenture, no Depository Global Warrants may be exchanged in whole or in part for registered Warrants, and no transfer of a Depository Global Warrant in whole or in part may be registered, in the name of any Person other than the Depository for such Depository Global Warrants or a nominee thereof unless: |
(a) |
the Depository notifies the Corporation that it is unwilling or unable to continue to act as depository in connection with the Book Entry Only Warrants and the Corporation is unable to locate a qualified successor; |
(b) |
the Corporation determines that the Depository is no longer willing, able or qualified to discharge properly its responsibilities as holder of the Depository Global Warrants and the Corporation is unable to locate a qualified successor; |
(c) |
the Depository ceases to be a clearing agency or otherwise ceases to be eligible to be a depository and the Corporation is unable to locate a qualified successor; |
(d) |
the Corporation determines that the Warrants shall no longer be held as Book Entry Only Warrants through the Depository; or |
(e) |
such right is required by Applicable Legislation or U.S. Securities Laws, as determined by the Corporation and the Corporations Counsel; |
following which Warrants for those holders requesting such shall be registered and issued to the beneficial owners of such Warrants or their nominees as directed by the holder. The Corporation shall provide an officers certificate giving notice to the Warrant Agent of the occurrence of any event outlined in this Section 2.6 (2).
(3) |
Subject to the provisions of this Section 2.6, any exchange of Depository Global Warrants for Warrants which are not Depository Global Warrants may be made in whole or in part in accordance with the provisions of Section 2.10, mutatis mutandis. All such Warrants issued in exchange for a Depository Global Warrant or any portion thereof shall be registered in such names as the Depository for such Depository Global Warrants shall direct and shall be entitled to the same benefits and subject to the same |
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terms and conditions (except insofar as they relate specifically to Depository Global Warrants) as the Depository Global Warrants or portion thereof surrendered upon such exchange. |
(4) |
Every Warrant Authenticated upon registration of transfer of a Depository Global Warrant, or in exchange for or in lieu of a Depository Global Warrant or any portion thereof, whether pursuant to this Section 2.6, or otherwise, shall be Authenticated in the form of, and shall be, a Depository Global Warrant, unless such Warrant is registered in the name of a person other than the Depository for such Depository Global Warrant or a nominee thereof. |
(5) |
Notwithstanding anything to the contrary in this Indenture, subject to applicable law, the Depository Global Warrant will be issued as an Uncertificated Warrant, unless otherwise requested in writing by the Depository or the Corporation. |
(6) |
The rights of beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system shall be limited to those established by applicable law and agreements between the Depository and the Book Entry Only Participants and between such Book Entry Only Participants and the beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system, and such rights must be exercised through a Book Entry Only Participant in accordance with the rules and procedures of the Depository. |
(7) |
Notwithstanding anything herein to the contrary, neither the Corporation nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for: |
(a) |
the electronic records maintained by the Depository relating to any ownership interests or any other interests in the Warrants or the depository system maintained by the Depository, or payments made on account of any ownership interest or any other interest of any person in any Warrant represented by an electronic position in the book entry registration system (other than the Depository or its nominee); |
(b) |
maintaining, supervising or reviewing any records of the Depository or any Book Entry Only Participant relating to any such interest; or |
(c) |
any advice or representation made or given by the Depository or those contained herein that relate to the rules and regulations of the Depository or any action to be taken by the Depository on its own direction or at the direction of any Book Entry Only Participant. |
(8) |
The Corporation may terminate the application of this Section 2.6 in its sole discretion in which case all Warrants shall be evidenced by Warrant Certificates registered in the name of a Person other than the Depository. |
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Section 2.7 Warrant Certificate.
(1) |
For Warrants issued in certificated form, the form of certificate representing Warrants shall be substantially as set out in Schedule A hereto or such other form as is authorized from time to time by the Warrant Agent and the Corporation. Each Warrant Certificate shall be Authenticated manually on behalf of the Warrant Agent. Each Warrant Certificate shall be signed by any one director or officer of the Corporation; whose signature shall appear on the Warrant Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event, certificates so signed are as valid and binding upon the Corporation as if it had been signed manually. Any Warrant Certificate which has two signatures as hereinbefore provided shall be valid notwithstanding that one or more of the persons whose signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Warrant Agent may determine. |
(2) |
Any Warrant Certificate validly issued in accordance with the terms of this Indenture in effect at the time of issue of such Warrant Certificate shall, subject to the terms of this Indenture and applicable law, validly entitle the holder to acquire Common Shares, notwithstanding that the form of such Warrant Certificate may not be in the form currently required by this Indenture. |
(3) |
No Warrant shall be considered issued and shall be valid or obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by the Warrant Agent. Authentication by the Warrant Agent shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrant Certificates or Uncertificated Warrants (except the due Authentication thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the Warrants or any of them or of the consideration thereof. Authentication by the Warrant Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated have been duly issued hereunder and that the holder thereof is entitled to the benefits of this Indenture. |
(4) |
The Warrant Agent shall Authenticate Uncertificated Warrants (whether upon original issuance, exchange, registration of transfer, or otherwise) by completing its Internal Procedures and the Corporation shall, and hereby acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Warrants under this Indenture. Such Authentication shall be conclusive evidence that such Uncertificated Warrant has been duly issued hereunder and that the holder or holders are entitled to the benefits of this Indenture. The register shall be final and conclusive evidence as to all matters relating to Uncertificated Warrants with respect to which this Indenture requires the Warrant Agent to maintain records or accounts. In case of differences between the register at any time and any other time the register at the later time shall be controlling, absent manifest error and such Uncertificated Warrants are binding on the Corporation. |
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(5) |
No Certificated Warrant shall be considered issued and shall be obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by manual signature by or on behalf of the Warrant Agent substantially in the form of the Warrant set out in Schedule A hereto. Such Authentication on any such Certificated Warrant shall be conclusive evidence that such Certificated Warrant is duly Authenticated and is valid and a binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture. The Authentication by the Warrant Agent on any such Certificated Warrant hereunder shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrant or its issuance (except the due Authentication thereof and any other warranties by law) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the Warrants or any of them or the proceeds thereof. |
(6) |
No Uncertificated Warrant shall be considered issued and shall be obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by entry on the register of the particulars of the Uncertificated Warrant. Such entry on the register of the particulars of an Uncertificated Warrant shall be conclusive evidence that such Uncertificated Warrant is a valid and binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture. Authenticating by way of entry on the register shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrants (except the due Authentication thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be liable or answerable for the use made of the Uncertificated Warrants or any of them or the proceeds thereof. |
Section 2.8 Register of Warrants
(1) |
The Warrant Agent shall maintain records and accounts concerning the Warrants, whether certificated and uncertificated, which shall contain the information called for below with respect to each Warrant, together with such other information as may be required by law or as the Warrant Agent may elect to record. All such information shall be kept in one set of accounts and records which the Warrant Agent shall designate (in such manner as shall permit it to be so identified as such by an unaffiliated party) as the register of the holders of Warrants. The information to be entered for each account in the register of Warrants at any time shall include (without limitation): |
(a) |
the name and address of the holder of the Warrants, the date of Authentication thereof and the number of Warrants; |
(b) |
whether such Warrant is a Certificated Warrant or an Uncertificated Warrant and, if a Warrant Certificate, the unique number or code assigned to and imprinted thereupon and, if an Uncertificated Warrant, the unique number or code assigned thereto if any; |
(c) |
whether such Warrant has been cancelled; and |
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(d) |
a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered. |
The register shall be available for inspection by the Corporation and or any Registered Warrantholder during the Warrant Agents regular business hours on a Business Day and upon payment to the Warrant Agent of its reasonable fees. Any Registered Warrantholder exercising such right of inspection shall first provide an affidavit in form satisfactory to the Corporation and the Warrant Agent stating the name and address of the Registered Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders or to influence the voting of Warrantholders at any meeting of Warrantholders.
(2) |
Once an Uncertificated Warrant has been Authenticated, the information set forth in the register with respect thereto at the time of Authentication may be altered, modified, amended, supplemented or otherwise changed only to reflect exercise or proper instructions to the Warrant Agent from the holder as provided herein, except that the Warrant Agent may act unilaterally to make purely administrative changes internal to the Warrant Agent and changes to correct errors. Each person who becomes a holder of an Uncertificated Warrant, by his, her or its acquisition thereof shall be deemed to have irrevocably (i) consented to the foregoing authority of the Warrant Agent to make such error corrections, and (ii) agreed to pay to the Warrant Agent, promptly upon written demand, the full amount of all losses and expenses (including without limitation reasonable legal fees of the Corporation and the Warrant Agent) plus interest, at an appropriate then prevailing rate of interest to the Warrant Agent, sustained by the Corporation or the Warrant Agent as a proximate result of such error if but only if and only to the extent that such present or former holder realized any benefit as a result of such error and could reasonably have prevented, forestalled or minimized such loss and expense by prompt reporting of the error or avoidance of accepting benefits thereof whether or not such error is or should have been timely detected and corrected by the Warrant Agent; provided, that no person who is a bona fide purchaser shall have any such obligation to the Corporation or to the Warrant Agent. |
Section 2.9 Issue in Substitution for Warrant Certificates Lost, etc.
(1) |
If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Warrant Agent shall certify and deliver, a new Warrant Certificate of like tenor and bearing the same legend, if applicable, as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Warrant Agent and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder. |
(2) |
The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.9 shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as |
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a condition precedent to the issuance thereof, furnish to the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent, in their sole discretion, and such applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation and the Warrant Agent, in their sole discretion, and shall pay the reasonable charges of the Corporation and the Warrant Agent in connection therewith. |
Section 2.10 Exchange of Warrant Certificates.
(1) |
Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Warrant Agent (including compliance with applicable securities laws), be exchanged for one or more other Warrant Certificates representing the same aggregate number of Warrants and bearing the same legend, if applicable, as represented by the Warrant Certificate or Warrant Certificates so exchanged. |
(2) |
Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is designated by the Corporation with the approval of the Warrant Agent. Any Warrant Certificate or duly executed Transaction Instruction from the holder (or such other instructions, in form satisfactory to the Warrant Agent), tendered for exchange shall be cancelled and surrendered by the Warrant Agency to the Warrant Agent. |
Section 2.11 Transfer and Ownership of Warrants.
(1) |
The Warrants may only be transferred on the register kept by the Warrant Agent at the Warrant Agency by the Registered Warrantholder or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Warrant Agent only upon (a) in the case of a Warrant Certificate, surrendering to the Warrant Agent at the Warrant Agency the Warrant Certificates representing the Warrants to be transferred together with a duly executed transfer form as set forth in Schedule A (together with a declaration for removal of legend or opinion of counsel, if required by Section 2.11(3)), (b) in the case of Book Entry Only Warrants, in accordance with procedures prescribed by the Depository under the book entry registration system, (c) in the case of Uncertificated Warrants, surrendering to the Warrant Agent at the Warrant Agency, a duly executed Transaction Instruction from the holder (or such other instructions, in form satisfactory to the Warrant Agent), and (d) upon compliance with: |
(i) |
the conditions herein; |
(ii) |
such reasonable requirements as the Warrant Agent may prescribe; and |
(iii) |
all applicable securities laws and requirements of Regulatory Authorities; |
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and such transfer shall be duly noted in such register by the Warrant Agent. Upon compliance with such requirements, the Warrant Agent shall issue to the transferee of a Certificated Warrant, a Warrant Certificate, and to the transferee of an Uncertificated Warrant, an Uncertificated Warrant (or it shall Authenticate and deliver a Certificated Warrant instead, upon request), representing the Warrants transferred and the transferee of a Book Entry Only Warrant shall be recorded through the relevant Book Entry Only Participant in accordance with the book entry registration system as the entitlement holder in respect of such Warrants.
(2) |
Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled to the rights and privileges attaching to the Warrants, and the issue of Common Shares by the Corporation upon the exercise of Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and the Warrant Agent with respect to such Warrants and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder. |
(3) |
If a Warrant Certificate tendered for transfer bears the legend set forth in Section 2.14(2), the Warrant Agent shall not register such transfer unless the transferor has provided the Warrant Agent with the Warrant Certificate and: (A) the transfer is made to the Corporation; (B) the transfer is made outside of the United States in a transaction meeting the requirements of Rule 904 of Regulation S in circumstances where Rule 905 of Regulation S does not apply, and in compliance with applicable local laws and regulations, and the transferor delivers to the Warrant Agent a declaration substantially in the form set forth in Schedule E to this Warrant Indenture, or in such other form as the Warrant Agent or the Corporation may from time to time prescribe, together with such other evidence of the availability of an exemption (which may, without limitation, include an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation and the Warrant Agent) as the Warrant Agent may reasonably require; (C) the transfer is made pursuant to the exemption from the registration requirements of the U.S. Securities Act provided by Rule 144 thereunder, if available, and in each case in accordance with any applicable state securities or blue sky laws; or (D) the transfer is made in another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws; provided that, it has prior to any transfer pursuant to Sections 2.11(3)(C) or 2.11(3)(D) furnished to the Warrant Agent and the Corporation an opinion of counsel in form and substance reasonably satisfactory to the Corporation and the Warrant Agent, to such effect. In relation to a transfer under (C) or (D) above, unless the Corporation and the Warrant Agent receive an opinion of counsel, of recognized standing, reasonably satisfactory to the Corporation in form and substance to the effect that the U.S. restrictive legend set forth in Section 2.14(2) is no longer required on the Warrant Certificates representing the transferred Warrants, the Warrant Certificates received by the transferee will continue to bear the legend set forth in Section 2.14(2). |
Section 2.12 Cancellation of Surrendered Warrants.
All Warrant Certificates surrendered pursuant to Section 2.13, Section 3.1 or Section 3.4 shall be cancelled by the Warrant Agent and upon such circumstances all such
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Uncertificated Warrants, as applicable, shall be deemed cancelled and so noted on the register by the Warrant Agent. Upon request by the Corporation, the Warrant Agent shall furnish to the Corporation a cancellation certificate identifying the Warrant Certificates so cancelled, the number of Warrants evidenced thereby, the number of Common Shares, if any, issued pursuant to such Warrants and the details of any Warrant Certificates issued in substitution or exchange for such Warrant Certificates cancelled.
Section 2.13 Withdrawal of Warrants from Warrant Indenture.
(1) |
Subject to compliance with Applicable Securities Laws, the requirements of Regulatory Authorities and this Section 2.13, a Registered Warrantholder (or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Warrant Agent) may elect to withdraw Warrants represented by Warrant Certificates from this Warrant Indenture in exchange for a Warrant Agreement in the form set forth in Schedule C by delivering the Warrant Certificates representing the Warrants to be withdrawn to the Warrant Agent, together with a duly executed and completed Withdrawal Form in the form set forth as Schedule D to each of the Warrant Agent and the Corporation. |
(2) |
Upon receipt by the Warrant Agent of the Withdrawal Form, and the applicable Warrant Certificates, the Warrant Agent shall immediately notify the Corporation, and upon receipt of a cancellation direction from the Corporation in regards to the applicable Warrants set out in the Withdrawal Form, such withdrawal shall thereafter be duly noted in such register by the Warrant Agent and the number of Warrants evidenced thereby shall be removed from the register and the Warrant Certificate(s) cancelled. Upon withdrawal from this Warrant Indenture, the Warrant Agent shall have no further obligations with respect to such Warrants under this Warrant Indenture and no Warrant Agency shall exist with the Warrantholder. |
(3) |
Immediately upon the delivery to the Warrant Agent and the Corporation of the duly executed and completed Withdrawal Form in compliance with this Section 2.13 the Warrant Agreement to be issued to such Warrantholder shall be deemed to have been concurrently issued, and the Person or Persons to whom such Warrant Agreement is to be issued shall be deemed to have become the holder or holders of record of such Warrants on the date of delivery of the Withdrawal Form and bound by the terms set forth in the Warrant Agreement. |
(4) |
As soon as possible following receipt of the written notice from the Warrant Agent referred to in Section 2.13(2), but in any event no later than one (1) Trading Day after delivery of the Withdrawal Notice to the Warrant Agent and the Corporation, the Corporation shall cause to be delivered or mailed to the Person or Persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such Person or Persons at the offices of the Warrant Agent where the Warrant Certificate was surrendered, the Warrant Agreement. |
Section 2.14 Legends.
(1) |
Each Certificated Warrant and each Uncertificated Warrant issued on the date hereof (and each such Certificated Warrant or Uncertificated Warrant, as the case may be, |
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issued in exchange therefore or in substitution thereof prior to the date that is four months and a day after the date hereof) shall bear or be deemed to bear the following legend or such variations thereof as the Corporation my prescribe from time to time: |
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT DATE WHICH IS 4 MONTHS PLUS 1 DAY FROM ISSUANCE OF WARRANTS].
(2) |
Neither the Warrants nor the Common Shares issuable upon exercise of the Warrants have been or will be registered under the U.S. Securities Act or under any United States state securities laws. Each Warrant Certificate and Uncertificated Warrant originally issued for the benefit or account of a U.S. Warrantholder, and each Warrant Certificate and each Uncertificated Warrant issued in exchange therefor or in substitution thereof, shall bear or be deemed to bear the following legends or such variations thereof as the Corporation may prescribe from time to time: |
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE HOLDING SUCH SECURITIES, AGREES, FOR THE BENEFIT OF HEXO CORP. (THE CORPORATION), THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ALL LOCAL LAWS AND REGULATIONS; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT GOOD DELIVERY OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.
THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE
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WARRANTS AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. UNITED STATES AND U.S. PERSON ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.;
provided that, if the Warrants are being sold outside the United States in accordance with Rule 904 of Regulation S in circumstances where Rule 905 of Regulation S does not apply, and in compliance with Canadian local laws and regulations, this legend may be removed by the transferor providing a declaration to the Warrant Agent in the form set forth in 0 or as the Warrant Agent or the Corporation may prescribe from time to time; and provided, further, that, if any such securities are being sold pursuant to Rule 144 under the U.S. Securities Act, if available, or another transaction that does not require registration under the U.S. Securities Act or applicable state securities laws, the legend may be removed by delivery to the Warrant Agent and the Corporation of an opinion of counsel, of recognized standing satisfactory to the Corporation and the Warrant Agent, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act and applicable state securities laws.
The Warrant Agent shall be entitled to request any other documents that it may require in accordance with its internal policies for the removal of the legend set forth above.
(3) |
Notwithstanding any other provisions of this Indenture, in processing and registering transfers of Warrants, no duty or responsibility whatsoever shall rest upon the Warrant Agent to determine the compliance by any transferor or transferee with the terms of the legend contained in Section 2.14(2), or with the relevant securities laws or regulations, including, without limitation, Regulation S, and the Warrant Agent shall be entitled to assume that all transfers that are processed in accordance with this Indenture are legal and proper. |
ARTICLE 3
EXERCISE OF WARRANTS
Section 3.1 Right of Exercise.
Subject to the provisions hereof, each Registered Warrantholder may exercise the right conferred on such holder to subscribe for and purchase one Common Share for each Warrant after the Issue Date and prior to the Expiry Time and in accordance with the conditions herein; provided, however, that if a Warrant tendered for exercise bears the legend set forth in Section 2.14(2), such exercise must be permitted under the U.S. Securities Act or under any United States state securities laws.
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Section 3.2 Warrant Exercise.
(1) |
Registered Warrantholders of Warrant Certificates who wish to exercise the Warrants held by them in order to acquire Common Shares must, if permitted pursuant to the terms and conditions hereunder and as set forth in any applicable legend, either: |
(a) |
complete the exercise form (the Exercise Notice) attached to the Warrant Certificate(s) in the form set forth in Schedule A hereto, which may be amended by the Corporation with the consent of the Warrant Agent, if such amendment does not, in the reasonable opinion of the Corporation and the Warrant Agent, which may be based on the advice of Counsel, materially and adversely affect the rights, entitlements and interests of the Warrantholders and deliver such certificate(s), the executed Exercise Notice and a certified cheque, bank draft or money order payable to or to the order of the Corporation for the aggregate Exercise Price to the Warrant Agent at the Warrant Agency; or |
(b) |
complete the Exercise Notice attached to the Warrant Certificate(s) in the form set forth in Schedule A hereto, and deliver such certificate(s) and the executed Exercise Notice to the Warrant Agent with a copy of such certificate(s) and the executed Exercise Notice to the Corporation and send a wire transfer to the Corporation for the Exercise Price in accordance with the following wire transfer instructions: |
Bank: [REDACTED]
Swift Code: [REDACTED]
Bank Number: [REDACTED]
Branch Number: [REDACTED]
Account Number: [REDACTED]
Beneficiary: [REDACTED]
The Corporation will provide written confirmation in the form attached as Schedule B to the Warrant Agent upon receipt of the Exercise Price in accordance with this section. A copy of such written confirmation to be forwarded to the Warrant Agent by e-mail pursuant to Section 10.1.
(c) |
In either case, the Warrants represented by a Warrant Certificate shall be deemed to be surrendered upon personal delivery of such certificate, Exercise Notice and aggregate Exercise Price or, if such documents are sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the Warrant Agency. |
(2) |
A beneficial holder of Uncertificated Warrants evidenced by a security entitlement in respect of Warrants in the book entry registration system who desires to exercise his, her or its Warrants must do so by causing a Book Entry Only Participant to deliver to the Depository on behalf of the entitlement holder, notice of the owners intention to exercise Warrants in a manner acceptable to the Depository. Forthwith upon receipt |
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by the Depository of such notice, as well as payment for the Exercise Price, the Depository shall deliver to the Warrant Agent confirmation of its intention to exercise Warrants (Confirmation) in a manner acceptable to the Warrant Agent, including by electronic means through the book entry registration system. |
(3) |
Payment representing the aggregate Exercise Price must be provided to the appropriate office of the Book Entry Only Participant in a manner acceptable to it. A notice in form acceptable to the Book Entry Only Participant and payment from such beneficial holder should be provided to the Book Entry Only Participant sufficiently in advance so as to permit the Book Entry Only Participant to deliver notice and payment to the Depository and for the Depository in turn to deliver notice and payment to the Warrant Agent prior to the Expiry Time. The Depository will initiate the exercise by way of the Confirmation and forward the aggregate Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to the Depository through the book entry registration system the Common Shares to which the exercising Warrantholder is entitled pursuant to the exercise. Any expense associated with the exercise process will be for the account of the entitlement holder exercising the Warrants and/or the Book Entry Only Participant exercising the Warrants on its behalf. |
(4) |
By causing a Book Entry Only Participant to deliver notice to the Depository, a Warrantholder shall be deemed to have irrevocably surrendered his or her Warrants so exercised and appointed such Book Entry Only Participant to act as his or her exclusive settlement agent with respect to the exercise and the receipt of Common Shares in connection with the obligations arising from such exercise. |
(5) |
Any notice which the Depository determines to be incomplete, not in proper form or not duly executed shall for all purposes be void and of no effect and the exercise to which it relates shall be considered for all purposes not to have been exercised thereby. A failure by a Book Entry Only Participant to exercise or to give effect to the settlement thereof in accordance with the Warrantholders instructions will not give rise to any obligations or liability on the part of the Corporation or Warrant Agent to the Book Entry Only Participant or the Warrantholder. |
(6) |
Any exercise form or Exercise Notice referred to in this Section 3.2 shall be signed by the Registered Warrantholder, or its executors or administrators or other legal representatives or an attorney of the Registered Warrantholder, duly appointed by an instrument in writing satisfactory to the Warrant Agent but such exercise form need not be executed by the Depository. |
(7) |
Any exercise referred to in this Section 3.2 shall require that the entire Exercise Price for Common Shares subscribed must be paid within one Business Day of subscription and such Exercise Price and original Exercise Notice executed by the Registered Warrantholder or the Confirmation from the Depository must be received by the Warrant Agent prior to the Expiry Time. |
(8) |
Notwithstanding the foregoing in this Section 3.2, Warrants may only be exercised pursuant to this Section 3.2 by or on behalf of a Registered Warrantholder, except the |
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Depository or Warrantholder, as applicable, who makes the certifications set forth on the Exercise Notice attached to the Warrant Certificate and delivers, if applicable, any opinion or other evidence as required thereby. |
(9) |
If the form of Exercise Notice set forth in the Warrant Certificate shall have been amended, the Corporation shall cause the amended Exercise Notice to be forwarded to all Registered Warrantholders. |
(10) |
Exercise Notices and Confirmations must be delivered to the Warrant Agent at any time during the Warrant Agents actual business hours on any Business Day prior to the Expiry Time. Any Exercise Notice or Confirmations received by the Warrant Agent after business hours on any Business Day will be deemed to have been received by the Warrant Agent on the next following Business Day. |
(11) |
Any Warrant with respect to which an Exercise Notice or a Confirmation is not received by the Warrant Agent before the Expiry Time shall be deemed to have expired and become void and all rights with respect to such Warrants shall terminate and be cancelled. |
(12) |
A beneficial owner of Warrants issued in uncertificated form evidenced by a security entitlement in respect of Warrants in the book entry registration system may submit an informational Exercise Notice to the Corporation via facsimile or email and upon the Corporations receipt or deemed receipt of such notice, such beneficial owner shall be deemed to have become the holder of record of the Common Shares solely for purposes of Rule 200 under Commission Regulation SHO so long as such beneficial owner also causes its broker, bank or other nominee to submit an Exercise Notice by way of an electronic notice through the Depository within one Trading Day of delivery of the informational Exercise Notice. |
(13) |
In addition to completing the Exercise Notice attached to the Warrant Certificate(s), a Warrantholder who is (i) present in the United States, (ii) a U.S. Person, (iii) a person exercising such Warrants for the account or benefit of a U.S. Person or a person in the United States, (iv) executing or delivering the Exercise Form attached to the Warrant Certificate in the United States, or (v) requesting delivery in the United States of the Common Shares issuable upon exercise of the Warrants, must provide: (a) a completed and executed U.S. Warrantholder Letter; or (b) an opinion of counsel, of recognised standing, in form and substance reasonably satisfactory to the Corporation and the Warrant Agent, that the exercise is exempt from the registration requirements of the U.S. Securities Act and applicable securities laws of any state of the United States. |
Section 3.3 Common Share Resale Restrictions.
Certificates representing Common Shares issued upon the exercise of Warrants (and issued in substitution or exchange therefor) prior to the date that is four months and one day after the date hereof shall bear the following legend: UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE
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SECURITY BEFORE [INSERT DATE WHICH IS 4 MONTHS PLUS 1 DAY FROM ISSUANCE OF WARRANTS].
Section 3.4 Transfer Fees and Taxes.
If any of the Common Shares subscribed for are to be issued to a Person or Persons other than the Registered Warrantholder, the Registered Warrantholder shall execute the form of transfer and will comply with such reasonable requirements as the Warrant Agent may stipulate and will pay to the Corporation or the Warrant Agent on behalf of the Corporation, all applicable transfer or similar taxes and the Corporation will not be required to issue or deliver certificates evidencing Common Shares unless or until such Warrantholder shall have paid to the Corporation or the Warrant Agent on behalf of the Corporation, the amount of such tax or shall have established to the satisfaction of the Corporation and the Warrant Agent that such tax has been paid or that no tax is due.
Section 3.5 Warrant Agency.
To facilitate the exchange, transfer or exercise of Warrants and compliance with such other terms and conditions hereof as may be required, the Corporation has appointed the Warrant Agency, as the agency at which Warrants may be surrendered for exchange or transfer or at which Warrants may be exercised and the Warrant Agent has accepted such appointment. The Corporation may from time to time designate alternate or additional places as the Warrant Agency (subject to the Warrant Agents prior approval) and will give notice to the Warrant Agent of any proposed change of the Warrant Agency. Branch registers shall also be kept at such other place or places, if any, as the Corporation, with the approval of the Warrant Agent, may designate. The Warrant Agent will from time to time when requested to do so by the Corporation or any Registered Warrantholder, upon payment of the Warrant Agents reasonable charges (and in the case of a Registered Warrantholder the affidavit required by Section 2.8(1)), furnish a list of the names and addresses of Registered Warrantholders showing the number of Warrants held by each such Registered Warrantholder.
Section 3.6 Effect of Exercise of Warrant Certificates.
(1) |
Upon the exercise of Warrants pursuant to and in compliance with Section 3.2 and subject to Section 3.3 and Section 3.4, the Common Shares to be issued pursuant to the Warrants exercised shall be deemed to have been issued and the Person or Persons to whom such Common Shares are to be issued shall be deemed to have become the holder or holders of record of such Common Shares on the Exercise Date, unless the transfer registers of the Corporation shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such Person or Persons deemed to have become the holder or holders of record of such Common Shares, on the date on which such transfer registers are reopened. It is hereby understood that in order for holders to be holders of Warrants on record on an Exercise Date, beneficial holders must commence the exercise process sufficiently in advance so that the Warrant Agent is in receipt of all items of exercise at least one Business Day prior to such Exercise Date. |
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(2) |
As soon as practicable, and in any event no later than within two (2) Business Days after the Exercise Date with respect to a Warrant (the Common Share Delivery Date), the Warrant Agent shall cause to be delivered or mailed to the Person or Persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such Person or Persons at the Warrant Agency where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for, or any other appropriate evidence of the issuance of Common Shares to such Person or Persons in respect of Common Shares issued under the book entry registration system. The Warrant Agent will not be liable to the Corporation for any payment made by the Corporation under Section 3.6(4) of this Indenture. |
(3) |
If the Corporation fails to cause the Warrant Agent to deliver to the Warrantholder the Warrant Shares issuable pursuant to Section 3.6(2) by the Common Share Delivery Date, then the Warrantholder will have the right to rescind such exercise. |
(4) |
In addition to any other rights available to a Warrantholder, if the Corporation fails to cause the Warrant Agent to deliver to the Warrantholder the Common Shares issuable in accordance with Section 3.6(2) pursuant to an exercise on or before the Common Share Delivery Date and, if after such date, the Warrantholder is required by its broker to purchase (in an open market transaction or otherwise) or the Warrantholders brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Warrantholder of the Warrant Shares that the Warrantholder anticipated receiving upon such exercise (a Buy-In), then the Corporation shall (A) pay in cash to the Warrantholder the amount, if any, by which (x) the Warrantholders total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Common Shares that the Corporation was required to deliver to the Warrantholder in connection with the exercise at issue, times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Warrantholder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honoured (in which case such exercise shall be deemed rescinded) or deliver to the Warrantholder the number of Common Shares that would have been issued had the Corporation timely complied with its delivery obligations under Section 3.6(2). For example, if the Warrantholder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay to the Warrantholder $1,000. The Warrantholder shall provide the Corporation written notice indicating the amounts payable to the Warrantholder in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Warrantholders right to pursue any other remedies available to it under this Indenture, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporations failure to timely deliver Warrant Shares as required under Section 3.6(2) following the valid exercise of Warrants under this Indenture. |
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Section 3.7 Partial Exercise of Warrants; Fractions.
(1) |
The holder of any Warrants may exercise its right to acquire a number of whole Common Shares less than the aggregate number which the holder is entitled to acquire pursuant to the Warrants exercised in connection therewith. In the event of any exercise of a number of Warrants less than the maximum number that the holder is entitled to exercise, the holder of Warrants upon such exercise shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate evidence of Warrants, in respect of the balance of the Warrants held by such holder and which were not then exercised. |
(2) |
Notwithstanding anything herein contained including any adjustment provided for in Article 4, the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Common Shares. Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares. Any fractional Common Shares shall be rounded down to the nearest whole number and the holder of such Warrants shall not be entitled to any compensation in respect of any fractional Common Share which is not issued. |
Section 3.8 Expiration of Warrants.
Immediately after the Expiry Time, all rights under any Warrant in respect of which the right of acquisition provided for herein shall not have been exercised shall cease and terminate and each Warrant shall be void and of no further force or effect.
Section 3.9 Accounting and Recording.
(1) |
The Warrant Agent shall promptly account to the Corporation with respect to Warrants exercised, and shall forward, as soon as practicable, to the Corporation (or into an account or accounts of the Corporation with the bank or trust company designated by the Corporation for that purpose), all monies received by the Warrant Agent on the subscription of Common Shares through the exercise of Warrants. All such monies and any securities or other instruments, from time to time received by the Warrant Agent shall be received for the benefit of, and shall be segregated and kept apart by the Warrant Agent for the Warrantholders and the Corporation as their interests may appear. |
(2) |
The Warrant Agent shall record the particulars of Warrants exercised, which particulars shall include the names and addresses of the persons who become holders of Common Shares on exercise and the Exercise Date, in respect thereof. The Warrant Agent shall provide such particulars in writing to the Corporation within five Business Days of any request by the Corporation therefore. |
Section 3.10 Securities Restrictions.
The Warrant Agent shall be entitled to assume that Common Shares will be issued pursuant to the exercise of any Warrant without violating the securities laws of any applicable jurisdiction and without legending any certificate representing the Common Shares unless the Warrant Agent has received notice in writing from the Corporation stating otherwise and
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setting forth the restrictions on the exercise of the Warrants and any legend the certificates representing the Common Shares should bear.
Section 3.11 U.S. Securities Law Matters.
The Warrants and the Common Shares issuable upon exercise thereof have not been and will not be registered under the U.S. Securities Act or any state securities laws, and the Warrants may not be exercised within the United States by or on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States unless an exemption from such registration requirements is available. Certificates representing Common Shares issued upon the exercise of Warrants (and issued in substitution or exchange therefor) (i) which bear the legend set forth in Section 2.14(2), (ii) other than pursuant to Box A of the Exercise Form attached to the Warrant Certificate or (iii) pursuant to Box A of the Exercise Form attached to the Warrant Certificate in the event that the Corporation determines that Rule 905 of Regulation S applies to such issuance, shall be issued in certificated form and, upon such issuance, shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE HOLDING SUCH SECURITIES, AGREES, FOR THE BENEFIT OF HEXO CORP. (THE CORPORATION), THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ALL LOCAL LAWS AND REGULATIONS; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT GOOD DELIVERY OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.
provided, that, if any such securities are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S in circumstances where Rule 905 of Regulation S does not apply, and in compliance with Canadian laws and regulations, the legend set forth above may be removed by providing an executed declaration to the Corporations registrar and transfer agent in such form as the Corporation may prescribe from time to time; and provided, further, that, if any such securities are being sold pursuant to Rule 144 under the U.S. Securities Act, if available, the legend may be removed by delivery to the
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registrar and transfer agent of the Corporation of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act and applicable state securities laws.
ARTICLE 4
ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE
Section 4.1 Adjustment of Number of Common Shares and Exercise Price.
The subscription rights in effect under the Warrants for Common Shares issuable upon the exercise of the Warrants shall be subject to adjustment from time to time as follows:
(a) |
if, at any time during the Adjustment Period , the Corporation shall: |
(i) |
subdivide, re-divide or change its outstanding Common Shares into a greater number of Common Shares; |
(ii) |
reduce, combine or consolidate its outstanding Common Shares into a smaller number of Common Shares; or |
(iii) |
issue Common Shares or securities exchangeable for, or convertible into, Common Shares to all or substantially all of the holders of Common Shares by way of distribution (other than a distribution of Common Shares upon the exercise of Warrants); |
the Exercise Price in effect on the effective date of such subdivision, re-division, change, reduction, combination, consolidation or on the record date of such distribution, as the case may be, shall in the case of the events referred to in (i) or (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, re-division, change or distribution, or shall, in the case of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this Section 4.1(a) shall occur. Upon any adjustment of the Exercise Price pursuant to Section 4.1(a), the Exchange Rate shall be contemporaneously adjusted by multiplying the number of Common Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;
(b) |
if and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible or exchangeable into Common Shares) on such record date (a Rights Offering), then, subject to |
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the approval of the TSX and the consent of a majority of the Registered Warrantholders, given in accordance with Article 7, in addition to any adjustments pursuant to Section 4.1, the Warrantholder will be entitled to acquire, upon the terms applicable to such Rights Offering, the aggregate number of Common Shares that the Warrantholder could have acquired if the Warrantholder had held the number of Common Shares acquirable upon complete exercise of the Warrantholders Warrants then held (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Rights Offering, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Rights Offering (provided, however, to the extent that the Warrantholders right to participate in any such Rights Offering would result in the Warrantholder exceeding the Beneficial Ownership Limitation, then the Warrantholder shall not be entitled to participate in such Rights Offering to such extent (or beneficial ownership of such Common Shares as a result of such Rights Offering to such extent) and such Rights Offering, to such extent, shall be held in abeyance for the Warrantholder until such time, if ever, as its right thereto would not result in the Warrantholder exceeding the Beneficial Ownership Limitation). Any Common Shares owned by or held for the account of the Corporation or a Subsidiary shall be deemed not to be outstanding for the purpose of any such computation. If all the rights, options or warrants are not so issued or if all rights, options or warrants are not exercised prior to the expiration thereof, the number of Common Shares issuable upon exercise of a Warrant shall be readjusted to that number in effect immediately prior to the record date, and such number shall be further adjusted based upon the number of Common Shares (or Convertible Securities that are convertible into Common Shares) actually delivered upon the exercise of the rights, options or warrants, as the case may be, but subject to any other adjustment required hereunder by reason of any event arising after that record date; for the avoidance of doubt, the Corporation covenants and agrees that it shall not fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Common Shares without obtaining both the approval of the TSX to permit the Warrantholders to fully participate in such issuance (as contemplated in this Section 4.1(b)) and the prior consent of a majority of the Registered Warrantholders given in accordance with Article 7. |
(c) |
if and whenever at any time during the Adjustment Period the Corporation shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of (i) securities of any class, whether of the Corporation or any other entity (other than Common Shares), (ii) rights, options or warrants to subscribe for or purchase Common Shares (or other securities convertible into or exchangeable for Common Shares), other than pursuant to a Rights Offering; (iii) evidences of its indebtedness or (iv) any property or other assets then (any of those non-excluded events being herein called a Special Distribution), in each such case, the Warrantholder |
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shall be entitled to participate in such Special Distribution to the same extent that the Warrantholder would have participated therein if the Warrantholder had held the number of Common Shares acquirable upon complete exercise of the Warrantholders Warrants then held (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Special Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Special Distribution (provided, however, to the extent that the Warrantholders right to participate in any such Special Distribution would result in the Warrantholder exceeding the Beneficial Ownership Limitation, then the Warrantholder shall not be entitled to participate in such Special Distribution to such extent (or in the beneficial ownership of any Common Shares as a result of such Special Distribution to such extent) and the portion of such Special Distribution shall be held in abeyance for the benefit of the Warrantholder until such time, if ever, as its right thereto would not result in the Warrantholder exceeding the Beneficial Ownership Limitation). To the extent that a Warrantholders Warrants have not been partially or completely exercised at the time of such Special Distribution, such portion of the Special Distribution shall be held in abeyance for the benefit of the Warrantholder until the Warrantholder has exercised the Warrantholders Warrants as to such undistributed amount of the Special Distribution. Any Common Shares owned by or held for the account of the Corporation or a Subsidiary shall be deemed not to be outstanding for the purpose of any such computation. To the extent that the distribution of shares, rights, options, warrants, evidences of indebtedness or assets is not so made or to the extent that any rights, options or warrants so distributed are not exercised, the number of Common Shares issuable upon exercise of a Warrant shall be readjusted to the number that would then be in effect based upon shares, rights, options, warrants, evidences of indebtedness or assets actually distributed or based upon the number of Common Shares or Convertible Securities actually delivered upon the exercise of the rights, options or warrants, as the case may be, but subject to any other adjustment required hereunder by reason of any event arising after the record date. To the extent that the Warrantholders Warrants have not been partially or completely exercised at the time of such Special Distribution, such portion of the Special Distribution shall be held in abeyance for the benefit of the Warrantholder until, and only if, the Warrantholder has exercised such Warrantholders Warrants; |
(d) |
if and whenever at any time during the Adjustment Period, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 4.1(a) or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity, any Registered Warrantholder who has not exercised its right of acquisition prior |
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to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, upon the exercise of such right thereafter, shall be entitled to receive upon payment of the Exercise Price and shall accept, in lieu of the number of Common Shares that prior to such effective date the Registered Warrantholder would have been entitled to receive, the number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such merger, amalgamation or consolidation, or to which such sale or conveyance may be made, as the case may be, that such Registered Warrantholder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, if, on the effective date thereof, as the case may be, the Registered Warrantholder had been the registered holder of the number of Common Shares to which prior to such effective date it was entitled to acquire upon the exercise of the Warrants. If determined appropriate by the Warrant Agent, relying on advice of Counsel, to give effect to or to evidence the provisions of this Section 4.1(d), the Corporation, its successor, or such purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Registered Warrantholders to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which a Registered Warrantholder is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Warrant Agent pursuant to the provisions of this Section 4.1(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 8 hereof. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Warrant Agent shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, sales or conveyances; |
(e) |
in any case in which this Section 4.1 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the Registered Warrantholder of any Warrant exercised after the record date and prior to the completion of such event the additional Common Shares issuable by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such Registered Warrantholder an appropriate instrument evidencing such Registered Warrantholders right to receive such additional |
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Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the relevant date of exercise or such later date as such Registered Warrantholder would, but for the provisions of this Section 4.1(e), have become the holder of record of such additional Common Shares pursuant to Section 4.1; |
(f) |
in any case in which Section 4.1(a)(iii) or 4.1(c) require that an adjustment be made to the Exercise Price no such adjustment shall be made if the Registered Warrantholders of the outstanding Warrants receive, subject to the approval of the TSX and NYSE, if required, the rights or warrants referred to in Section 4.1(a)(iii) and Section 4.1(c) in such kind and number as they would have received if they had been holders of Common Shares on the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised into Common Shares at the Exercise Price in effect on the applicable record date or effective date, as the case may be; |
(g) |
the adjustments provided for in this Section 4.1 are cumulative, and shall, in the case of adjustments to the Exercise Price be computed to the nearest whole cent and shall apply to successive subdivisions, re-divisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section 4.1, provided that, notwithstanding any other provision of this Section, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect; provided, however, that any adjustments which by reason of this Section 4.1(g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; and |
(h) |
after any adjustment pursuant to this Section 4.1, the term Common Shares where used in this Indenture shall be interpreted to mean securities of any class or classes which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Registered Warrantholder is entitled to receive upon the exercise of his Warrant, and the number of Common Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Registered Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant. |
Section 4.2 Entitlement to Common Shares on Exercise of Warrant.
All Common Shares or shares of any class or other securities, which a Registered Warrantholder is at the time in question entitled to receive on the exercise of its Warrant, whether or not as a result of adjustments made pursuant to this Article 4, shall, for the purposes of the interpretation of this Indenture, be deemed to be Common Shares which such Registered Warrantholder is entitled to acquire pursuant to such Warrant.
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Section 4.3 No Adjustment for Certain Transactions.
Notwithstanding anything in this Article 4, no adjustment shall be made in the acquisition rights attached to the Warrants if the issue of Common Shares is being made pursuant to this Indenture or in connection with (a) any share incentive plan or restricted share plan or share purchase plan in force from time to time for directors, officers, employees, consultants or other service providers of the Corporation; or (b) the satisfaction of existing instruments issued at the date hereof.
Section 4.4 Determination by Auditors.
In the event of any question arising with respect to the adjustments provided for in this Article 4 such question shall be conclusively determined by an independent firm of chartered accountants other than the Auditors, who shall have access to all necessary records of the Corporation, and such determination shall be binding upon the Corporation, the Warrant Agent, all holders and all other persons interested therein.
Section 4.5 Proceedings Prior to any Action Requiring Adjustment.
As a condition precedent to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any of the Warrants, including the number of Common Shares which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of Counsel, be necessary in order that the Corporation has unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Common Shares which the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions hereof.
Section 4.6 Certificate of Adjustment.
The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Article 4, deliver a certificate of the Corporation to the Warrant Agent specifying the nature of the event requiring the same and the amount of the adjustment or readjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate shall be supported by a certificate of the Corporations Auditors verifying such calculation. The Warrant Agent shall rely, and shall be protected in so doing, upon the certificate of the Corporation or of the Corporations Auditor and any other document filed by the Corporation pursuant to this Article 4 for all purposes. The Corporation shall file such certificate of adjustment on a Form 6-K with the SEC on the same date it is submitted to the Warrant Agent.
Section 4.7 Notice of Special Matters.
The Corporation covenants with the Warrant Agent that, so long as any Warrant remains outstanding, it will give notice to the Warrant Agent and to the Registered Warrantholders of its intention to fix a record date that is prior to the Expiry Date for any matter for which an adjustment may be required pursuant to Section 4.1. Such notice shall specify the particulars of such event and the record date for such event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which the notice is given. The notice
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shall be given in each case not less than 10 Business Days prior to such applicable record date. If notice has been given and the adjustment is not then determinable, the Corporation shall promptly, after the adjustment is determinable, file with the Warrant Agent a computation of the adjustment and give notice to the Registered Warrantholders of such adjustment computation.
Section 4.8 No Action after Notice.
The Corporation covenants with the Warrant Agent that it will not close its transfer books or take any other corporate action which might deprive the Registered Warrantholder of the opportunity to exercise its right of acquisition pursuant thereto during the period of 10 Business Days after the giving of the certificate or notices set forth in Section 4.6 and Section 4.7.
Section 4.9 Other Action.
If the Corporation, after the date hereof, shall take any action affecting the Common Shares other than action described in Section 4.1, which in the reasonable opinion of the directors of the Corporation would materially affect the rights of Registered Warrantholders, the Exercise Price and/or the Exchange Rate, the number of Common Shares which may be acquired upon exercise of the Warrants shall be adjusted in such manner and at such time, by action of the directors, acting reasonably, in their sole discretion as they may determine to be equitable to the Registered Warrantholders in the circumstances, provided that no such adjustment will be made unless any requisite prior approval of any stock exchange on which the Common Shares are listed for trading has been obtained.
Section 4.10 Protection of Warrant Agent.
The Warrant Agent shall not:
(a) |
at any time be under any duty or responsibility to any Registered Warrantholder to determine whether any facts exist which may require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same; |
(b) |
be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Warrant; |
(c) |
be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article 4; and |
(d) |
incur any liability or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations, warranties or covenants herein contained or of any acts of the directors, officers, employees, agents or servants of the Corporation. |
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Section 4.11 Participation by Warrantholder.
No adjustments shall be made pursuant to this Article 4 if the Registered Warrantholders are entitled to participate in any event described in this Article 4 on the same terms, mutatis mutandis, as if the Registered Warrantholders had exercised their Warrants prior to, or on the effective date or record date of, such event.
ARTICLE 5
RIGHTS OF THE CORPORATION AND COVENANTS
Section 5.1 Optional Purchases by the Corporation.
Subject to compliance with applicable securities laws and approval of applicable Regulatory Authorities, the Corporation may from time to time purchase by private contract or otherwise any of the Warrants. Any such purchase shall be made at the lowest price or prices at which, in the opinion of the directors, such Warrants are then obtainable, plus reasonable costs of purchase, and may be made in such manner, from such persons and on such other terms as the Corporation, in its sole discretion, may determine. In the case of Certificated Warrants, Warrant Certificates representing the Warrants purchased pursuant to this Section 5.1 shall forthwith be delivered to and cancelled by the Warrant Agent and reflected accordingly on the register of Warrants. In the case of Uncertificated Warrants, the Warrants purchased pursuant to this Section 5.1 shall be reflected accordingly in accordance with procedures prescribed by the Depository under the book entry registration system. No Warrants shall be issued in replacement thereof.
Section 5.2 General Covenants.
The Corporation covenants with the Warrant Agent for the benefit of the Warrant Agent and the Warrantholders that so long as any Warrants remain outstanding:
(a) |
it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common Shares upon the exercise of the Warrants; |
(b) |
it will cause the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance with the Warrants and the terms hereof; |
(c) |
all Common Shares which shall be issued upon exercise of the right to acquire provided for herein will be fully paid and non-assessable; |
(d) |
it will use reasonable commercial efforts to maintain its existence and carry on its business in the ordinary course; |
(e) |
it will use reasonable commercial efforts to ensure that all Common Shares outstanding or issuable from time to time (including without limitation the Common Shares issuable on the exercise of the Warrants) (or, if the Corporation enters into an amalgamation, arrangement or merger of the Corporation with or into any other corporation or other entity which effects a |
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change of the Common Shares into other shares or an exchange of the Common Shares for other securities (including securities of another entity), such securities) continue to be or are listed and posted for trading on the TSX (or such other Canadian stock exchange acceptable to the Corporation) and the NYSE; |
(f) |
it will make all requisite filings under applicable Canadian and US securities legislation including those necessary to remain a reporting issuer not in default in each of the provinces and other jurisdictions where it is or becomes a reporting issuer; |
(g) |
generally, it will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture; |
(h) |
it will give notice to the Warrant Agent and Warrantholders of a default under the terms of the Indenture; and |
(i) |
it will engage in marijuana-related activities in Canada only in accordance with the Cannabis Act (Canada) and all other applicable laws in Canada; |
(j) |
it does not and will not invest or engage (directly or indirectly) in any business or activity that is focused on serving the non-medical or medical marijuana market internationally unless and until such time as the production and sale of non-medical and/or medical marijuana, as applicable, becomes legal under the applicable laws in the respective international jurisdiction; |
(k) |
it does not and will not invest or engage (directly or indirectly) in any business or activity that is focused on serving the medical or non-medical marijuana market in the United States unless and until such time as the production and sale of medical and/or non-medical marijuana, as applicable, becomes legal under applicable state and federal laws in the United States; |
(l) |
it does not and will not specifically target or derive (or reasonably expect to derive) revenues or funds from any of the prohibited activities described in items (j) and (k), above, unless and until such time that any such activities become legal under all applicable laws in the United States and/or internationally, as applicable; and |
(m) |
it will provide the Warrant Agent with reasonable prior notice if it decides to engage in any of the activities described in items (j), (k) or (l), above, and the Corporation agrees that the Warrant Agent may, in its sole discretion, immediately terminate any contract for services between the Corporation and the Warrant Agent upon receipt of any information relating to the Corporations marijuana-related business activities, or as otherwise permitted under any such contract for service. |
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Section 5.3 Warrant Agents Remuneration and Expenses.
The Corporation covenants that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and will pay or reimburse the Warrant Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Warrant Agent in the administration or execution of the duties hereby created (including the reasonable compensation and the disbursements of its Counsel and all other advisers and assistants not regularly in its employ) both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder shall be finally and fully performed. Any amount owing hereunder and remaining unpaid after 30 days from the invoice date will bear interest at the then current rate charged by the Warrant Agent against unpaid invoices and shall be payable upon demand. This Section shall survive the resignation or removal of the Warrant Agent and/or the termination of this Indenture.
Section 5.4 Performance of Covenants by Warrant Agent.
If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Warrant Agent may notify the Registered Warrantholders of such failure on the part of the Corporation and may itself perform any of the covenants capable of being performed by it but, subject to Section 9.2, shall be under no obligation to perform said covenants or to notify the Registered Warrantholders of such performance by it. All sums expended or advanced by the Warrant Agent in so doing shall be repayable as provided in Section 5.3. No such performance, expenditure or advance by the Warrant Agent shall relieve the Corporation of any default hereunder or of its continuing obligations under the covenants herein contained.
Section 5.5 Enforceability of Warrants.
The Corporation covenants and agrees that it is duly authorized to create and issue the Warrants to be issued hereunder and that the Warrants, when issued and Authenticated as herein provided, will be valid and enforceable against the Corporation in accordance with the provisions hereof and the terms hereof and that, subject to the provisions of this Indenture, the Corporation will cause the Common Shares from time to time acquired upon exercise of Warrants issued under this Indenture to be duly issued and delivered in accordance with the terms of this Indenture.
ARTICLE 6
ENFORCEMENT
Section 6.1 Suits by Registered Warrantholders.
All or any of the rights conferred upon any Registered Warrantholder by any of the terms of this Indenture may be enforced by the Registered Warrantholder by appropriate proceedings but without prejudice to the right which is hereby conferred upon the Warrant Agent to proceed in its own name to enforce each and all of the provisions herein contained for the benefit of the Registered Warrantholders.
Section 6.2 Suits by the Corporation.
The Corporation shall have the right to enforce full payment of the Exercise Price of all Common Shares issued by the Warrant Agent to a Registered Warrantholder hereunder
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and shall be entitled to demand such payment from the Registered Warrantholder or alternatively to instruct the Warrant Agent to cancel or cause to be cancelled the share certificates and amend the securities register accordingly.
Section 6.3 Immunity of Shareholders, etc.
The Warrant Agent and the Warrantholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any incorporator or any past, present or future shareholder, trustee, employee or agent of the Corporation or any successor Corporation on any covenant, agreement, representation or warranty by the Corporation herein.
Section 6.4 Waiver of Default.
Upon the happening of any default hereunder:
(a) |
the Registered Warrantholders of not less than 66 2/3% of the Warrants then outstanding shall have power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in writing to instruct the Warrant Agent to waive any default hereunder and the Warrant Agent shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or |
(b) |
the Warrant Agent shall have power to waive any default hereunder upon such terms and conditions as the Warrant Agent may deem advisable, on the advice of Counsel, if, in the Warrant Agents opinion, based on the advice of Counsel, the same shall have been cured or adequate provision made therefor; |
provided that no delay or omission of the Warrant Agent or of the Registered Warrantholders to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act or omission either of the Warrant Agent or of the Registered Warrantholders in the premises shall extend to or be taken in any manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.
ARTICLE 7
MEETINGS OF REGISTERED WARRANTHOLDERS
Section 7.1 Right to Convene Meetings.
The Warrant Agent may at any time and from time to time, and shall on receipt of a written request of the Corporation or of a Warrantholders Request and upon being indemnified and funded to its reasonable satisfaction by the Corporation or by the Registered Warrantholders signing such Warrantholders Request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Registered Warrantholders. If the Warrant Agent fails to so call a meeting within seven days after receipt of such written request of the Corporation or such Warrantholders Request and the indemnity and funding given as aforesaid, the Corporation or such Registered Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be
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held in the City of Toronto, Ontario or at such other place as may be approved or determined by the Warrant Agent.
Section 7.2 Notice.
At least 21 days prior written notice of any meeting of Registered Warrantholders shall be given to the Registered Warrantholders in the manner provided for in Section 10.2 and a copy of such notice shall be sent by mail to the Warrant Agent (unless the meeting has been called by the Warrant Agent) and to the Corporation (unless the meeting has been called by the Corporation). Such notice shall state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Registered Warrantholders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Section 7.2.
Section 7.3 Chairman.
An individual (who need not be a Registered Warrantholder) designated in writing by the Warrant Agent shall be chairman of the meeting and if no individual is so designated, or if the individual so designated is not present within fifteen minutes from the time fixed for the holding of the meeting, the Registered Warrantholders present in person or by proxy shall choose an individual present to be chairman.
Section 7.4 Quorum.
Subject to the provisions of Section 7.11, at any meeting of the Registered Warrantholders a quorum shall consist of Registered Warrantholder(s) present in person or by proxy and holding at least 10% of the aggregate number of all the then-outstanding Warrants. If a quorum of the Registered Warrantholders shall not be present within thirty minutes from the time fixed for holding any meeting, the meeting, if summoned by Registered Warrantholders or on a Warrantholders Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day, in which case it shall be adjourned to the next following Business Day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not be holding at least 10% of the aggregate number of all then outstanding Warrants.
Section 7.5 Power to Adjourn.
The chairman of any meeting at which a quorum of the Registered Warrantholders is present may adjourn any such meeting, and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.
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Section 7.6 Show of Hands.
Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an Extraordinary Resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.
Section 7.7 Poll and Voting.
(1) |
On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the chairman or by one or more of the Registered Warrantholders acting in person or by proxy and holding in the aggregate at least 5% of all the Warrants then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by Extraordinary Resolution shall be decided by a majority of the votes cast on the poll. |
(2) |
On a show of hands, every person who is present and entitled to vote, whether as a Registered Warrantholder or as proxy for one or more absent Registered Warrantholders, or both, shall have one vote. On a poll, each Registered Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each Warrant then held or represented by it. A proxy need not be a Registered Warrantholder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by the chairman. |
Section 7.8 Regulations.
(1) |
The Warrant Agent, or the Corporation with the approval of the Warrant Agent, may from time to time make and from time to time vary such regulations as it shall think fit for: |
(a) |
the setting of the record date for a meeting for the purpose of determining Registered Warrantholders entitled to receive notice of and to vote at the meeting; |
(b) |
the issue of voting certificates by any bank, trust company or other depository satisfactory to the Warrant Agent stating that the Warrant Certificates specified therein have been deposited with it by a named person and will remain on deposit until after the meeting, which voting certificate shall entitle the persons named therein to be present and vote at any such meeting and at any adjournment thereof or to appoint a proxy or proxies to represent them and vote for them at any such meeting and at any adjournment thereof in the same manner and with the same effect as though the persons so named in such voting certificates were the actual bearers of the Warrant Certificates specified therein; |
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(c) |
the deposit of voting certificates and instruments appointing proxies at such place and time as the Warrant Agent, the Corporation or the Registered Warrantholders convening the meeting, as the case may be, may in the notice convening the meeting direct; |
(d) |
the deposit of voting certificates and instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed or telecopied before the meeting to the Corporation or to the Warrant Agent at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting; |
(e) |
the form of the instrument of proxy; and |
(f) |
generally for the calling of meetings of Registered Warrantholders and the conduct of business thereat. |
(2) |
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as a Registered Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to Section 7.9), shall be Registered Warrantholders or proxies of Registered Warrantholders. |
Section 7.9 Corporation and Warrant Agent May be Represented.
The Corporation and the Warrant Agent, by their respective directors, officers agents, and employees and the Counsel for the Corporation and for the Warrant Agent may attend any meeting of the Registered Warrantholders.
Section 7.10 Powers Exercisable by Extraordinary Resolution.
In addition to all other powers conferred upon them by any other provisions of this Indenture or by law, the Registered Warrantholders at a meeting shall, subject to the provisions of Section 7.11, have the power exercisable from time to time by Extraordinary Resolution:
(a) |
to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Registered Warrantholders or the Warrant Agent in its capacity as warrant agent hereunder (subject to the Warrant Agents prior consent, acting reasonably) or on behalf of the Registered Warrantholders against the Corporation whether such rights arise under this Indenture or otherwise; |
(b) |
to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Registered Warrantholders; |
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(c) |
to direct or to authorize the Warrant Agent, subject to Section 9.2(2) hereof, to enforce any of the covenants on the part of the Corporation contained in this Indenture or to enforce any of the rights of the Registered Warrantholders in any manner specified in such Extraordinary Resolution or to refrain from enforcing any such covenant or right; |
(d) |
to waive, and to direct the Warrant Agent to waive, any default on the part of the Corporation in complying with any provisions of this Indenture either unconditionally or upon any conditions specified in such Extraordinary Resolution; |
(e) |
to restrain any Registered Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or to enforce any of the rights of the Registered Warrantholders; |
(f) |
to direct any Registered Warrantholder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Registered Warrantholder in connection therewith; |
(g) |
to assent to any change in or omission from the provisions contained in this Indenture or any ancillary or supplemental instrument which may be agreed to by the Corporation, and to authorize the Warrant Agent to concur in and execute any ancillary or supplemental indenture embodying the change or omission; |
(h) |
with the consent of the Corporation, such consent not to be unreasonably withheld, to remove the Warrant Agent or its successor in office and to appoint a new warrant agent or warrant agents to take the place of the Warrant Agent so removed; and |
(i) |
to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation. |
Section 7.11 Meaning of Extraordinary Resolution.
(1) |
The expression Extraordinary Resolution when used in this Indenture means, subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution proposed at a meeting of Registered Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 7 at which there are present in person or by proxy Registered Warrantholders holding at least 20% of the aggregate number of all then outstanding Warrants and passed by the affirmative votes of Registered Warrantholders holding not less than 66 2/3% of the aggregate number of all then outstanding Warrants at the meeting and voted on the poll upon such resolution. |
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(2) |
If, at the meeting at which an Extraordinary Resolution is to be considered, Registered Warrantholders holding at least 20% of the aggregate number of all then outstanding Warrants are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by Registered Warrantholders or on a Warrantholders Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 14 days prior notice shall be given of the time and place of such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Section 7.11(1) shall be an Extraordinary Resolution within the meaning of this Indenture notwithstanding that Registered Warrantholders holding at least 20% of the aggregate number of all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting. |
(3) |
Subject to Section 7.14, votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary. |
Section 7.12 Powers Cumulative.
Any one or more of the powers or any combination of the powers in this Indenture stated to be exercisable by the Registered Warrantholders by Extraordinary Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Registered Warrantholders to exercise such power or powers or combination of powers then or thereafter from time to time.
Section 7.13 Minutes.
Minutes of all resolutions and proceedings at every meeting of Registered Warrantholders shall be made and duly entered in books to be provided from time to time for that purpose by the Warrant Agent at the expense of the Corporation, and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes shall have been made shall be deemed to have been duly convened and held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.
Section 7.14 Instruments in Writing.
All actions which may be taken and all powers that may be exercised by the Registered Warrantholders at a meeting held as provided in this Article 7 may also be taken and exercised by Registered Warrantholders holding at least 66 2/3% of the aggregate number of all then outstanding Warrants by an instrument in writing signed in one or more counterparts
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by such Registered Warrantholders in person or by attorney duly appointed in writing, and the expression Extraordinary Resolution when used in this Indenture shall include an instrument so signed.
Section 7.15 Binding Effect of Resolutions.
Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article 7 at a meeting of Registered Warrantholders shall be binding upon all the Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed by Registered Warrantholders in accordance with Section 7.14 shall be binding upon all the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and the Warrant Agent (subject to the provisions for indemnity herein contained) shall be bound to give effect accordingly to every such resolution and instrument in writing.
Section 7.16 Holdings by Corporation Disregarded.
In determining whether Registered Warrantholders holding Warrants evidencing the required number of Warrants are present at a meeting of Registered Warrantholders for the purpose of determining a quorum or have concurred in any consent, waiver, Extraordinary Resolution, Warrantholders Request or other action under this Indenture, Warrants owned legally or beneficially by the Corporation shall be disregarded in accordance with the provisions of Section 10.7.
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1 Provision for Supplemental Indentures for Certain Purposes.
From time to time, subject to the prior approval of the TSX, the Corporation (when authorized by action of the directors) and the Warrant Agent may, subject to the provisions hereof and they shall, when so directed in accordance with the provisions hereof, execute and deliver by their proper officers, indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:
(a) |
setting forth any adjustments resulting from the application of the provisions of Article 4; |
(b) |
adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of Counsel, are necessary or advisable in the premises, provided that the same are not in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders; |
(c) |
giving effect to any Extraordinary Resolution passed as provided in 7.11; |
(d) |
making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder, provided that such provisions are not, in the opinion of the Warrant Agent, |
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relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders; |
(e) |
adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrants, and making any modification in the form of the Warrant Certificates which does not affect the substance thereof; |
(f) |
modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such modification or relief in no way prejudices any of the rights of the Registered Warrantholders or of the Warrant Agent, and provided further that the Warrant Agent may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection to the Warrant Agent when the same shall become operative; |
(g) |
providing for the issuance of additional Warrants hereunder and any consequential amendments hereto as may be required by the Warrant Agent relying on the advice of counsel; and |
(h) |
for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Warrant Agent, relying on the advice of Counsel, the rights of the Warrant Agent and of the Registered Warrantholders are in no way prejudiced thereby. |
Section 8.2 Successor Entities.
In the case of the consolidation, amalgamation, arrangement, merger or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to or with another entity (successor entity), the successor entity resulting from such consolidation, amalgamation, arrangement, merger or transfer (if not the Corporation) shall expressly assume, by supplemental indenture satisfactory in form to the Warrant Agent and executed and delivered to the Warrant Agent, the due and punctual performance and observance of each and every covenant and condition of this Indenture to be performed and observed by the Corporation.
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ARTICLE 9
CONCERNING THE WARRANT AGENT
Section 9.1 Indenture Legislation.
(1) |
If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail. |
(2) |
The Corporation and the Warrant Agent agree that each will, at all times in relation to this Indenture and any action to be taken hereunder, observe and comply with and be entitled to the benefits of Applicable Legislation. |
Section 9.2 Rights and Duties of Warrant Agent.
(1) |
In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Warrant Agent shall exercise that degree of care, diligence and skill that a reasonably prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Warrant Agent from liability for its own gross negligent action, wilful misconduct, bad faith or fraud under this Indenture. |
(2) |
The obligation of the Warrant Agent to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Warrant Agent or the Registered Warrantholders hereunder shall be conditional upon the Registered Warrantholders furnishing, when required by notice by the Warrant Agent, sufficient funds to commence or to continue such act, action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to protect and to hold harmless the Warrant Agent and its officers, directors, employees and agents, against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the Warrant Agent to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid. |
(3) |
The Warrant Agent may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Registered Warrantholders, at whose instance it is acting to deposit with the Warrant Agent the Warrants Certificates held by them, for which Warrants the Warrant Agent shall issue receipts. |
(4) |
Every provision of this Indenture that by its terms relieves the Warrant Agent of liability or entitles it to rely upon any evidence submitted to it is subject to the provisions of Applicable Legislation. |
Section 9.3 Evidence, Experts and Advisers.
(1) |
In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Corporation shall furnish to the Warrant Agent such additional evidence of compliance with any provision hereof, and in such form, as may be |
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prescribed by Applicable Legislation or as the Warrant Agent may reasonably require by written notice to the Corporation. |
(2) |
In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good faith, rely as to the truth of the statements and the accuracy of the opinions expressed in statutory declarations, opinions, reports, written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Warrant Agent pursuant to a request of the Warrant Agent, provided that such evidence complies with Applicable Legislation and that the Warrant Agent complies with Applicable Legislation and that the Warrant Agent, acting on the advice of Counsel, examines the same and determines that such evidence complies with the applicable requirements of this Indenture. |
(3) |
Whenever it is provided in this Indenture or under Applicable Legislation that the Corporation shall deposit with the Warrant Agent resolutions, certificates, reports, opinions, requests, orders or other documents, it is intended that the truth, accuracy and good faith on the effective date thereof and the facts and opinions stated in all such documents so deposited shall, in each and every such case, be conditions precedent to the right of the Corporation to have the Warrant Agent take the action to be based thereon. |
(4) |
The Warrant Agent may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct or negligence on the part of any such experts or advisers who have been appointed with due care by the Warrant Agent. The Corporation shall pay or reimburse the Warrant Agent for any reasonable fees, expenses and disbursements of such counsel and advisors. |
(5) |
The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained from any Counsel, accountant, appraiser, engineer or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in the administration of the agency hereof. |
(6) |
Proof of the execution of an instrument in writing, including a Warrantholders Request, by any Warrantholder may be made by the certificate of a notary, solicitor or commissioner for oaths, or other officer with similar powers, that the person signing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution or in any other manner which the Warrant Agent may consider adequate and in respect of a corporate Warrantholder, shall include a certificate of incumbency of such Warrantholder together with a certified resolution authorizing the person who signs such instrument to sign such instrument. |
(7) |
Whenever Applicable Legislation requires that evidence referred to in subsection 9.3(1) be in the form of a statutory declaration, the Warrant Agent may accept such statutory declaration in lieu of a certificate of the Corporation required by any |
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provision hereof. Any such statutory declaration may be made by any one or more duly authorized representative of the Corporation. |
Section 9.4 Documents, Monies, etc. Held by Warrant Agent.
Any monies, securities, documents of title or other instruments that may at any time be held by the Warrant Agent shall be placed in the deposit vaults of the Warrant Agent or of any Canadian chartered bank listed in Schedule I of the Bank Act (Canada), or deposited for safekeeping with any such bank. Any monies held pending the application or withdrawal thereof under any provisions of this Indenture, shall be held in a segregated non-interest bearing account.
Section 9.5 Actions by Warrant Agent to Protect Interest.
The Warrant Agent shall have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect or enforce its interests and the interests of the Registered Warrantholders.
Section 9.6 Warrant Agent Not Required to Give Security.
The Warrant Agent shall not be required to give any bond or security in respect of the execution of the agency and powers of this Indenture or otherwise in respect of the premises.
Section 9.7 Protection of Warrant Agent.
By way of supplement to the provisions of any law for the time being relating to the Warrant Agent it is expressly declared and agreed as follows:
(a) |
the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates (except the representation contained in Section 9.9 or in the certificate of the Warrant Agent on the Warrant Certificates) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation; |
(b) |
nothing herein contained shall impose any obligation on the Warrant Agent to see to or to require evidence of the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto; |
(c) |
the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof; |
(d) |
the Warrant Agent shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of the Corporation of any of its covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation; |
(e) |
the Corporation hereby indemnifies and agrees to hold harmless the Warrant Agent, its affiliates, their current and former officers, directors, employees , agents, successors and assigns from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, |
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including legal fees and disbursements of whatever kind and nature which may at any time be imposed on or incurred by or asserted against the Warrant Agent, whether groundless or otherwise, arising from or out of any act, omission or error of the Warrant Agent, provided that the Corporation shall not be required to indemnify the Warrant Agent in the event of the gross negligence or wilful misconduct of the Warrant Agent, and this provision shall survive the resignation or removal of the Warrant Agent or the termination or discharge of this Indenture; |
(f) |
the Warrant Agent shall not be liable for any error in judgment or for any act done or step taken or omitted by it in good faith or for any mistake, in fact or law, or for anything which it may do or refrain from doing in connection herewith except arising out of its own gross negligence, bad faith or willful misconduct; and |
(g) |
notwithstanding the foregoing or any other provision of this Indenture, any liability of the Warrant Agent shall be limited, in the aggregate, to the amount of annual retainer fees paid by the Corporation to the Warrant Agent under this Indenture in the twelve (12) months immediately prior to the Warrant Agent receiving the first notice of the claim. Notwithstanding any other provision of this Indenture, and whether such losses or damages are foreseeable or unforeseeable, the Warrant Agent shall not be liable under any circumstances whatsoever for any: (a) breach by any other party of securities law or other rule of any securities regulatory authority; (b) lost profits; or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages. |
(h) |
The forwarding of a cheque or the sending of funds by wire transfer by the Warrant Agent will satisfy and discharge the liability of any amounts due to the extent of the sum represented thereby unless such cheque is not honoured on presentation, provided that in the event of the non-receipt of such cheque by the payee, or the loss or destruction thereof, the Warrant Agent, upon being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to it, will issue to such payee a replacement cheque for the amount of such cheque. |
Section 9.8 Replacement of Warrant Agent; Successor by Merger.
(1) |
The Warrant Agent may resign its agency and be discharged from all further duties and liabilities hereunder, subject to this Section 9.8, by giving to the Corporation not less than 60 days prior notice in writing or such shorter prior notice as the Corporation may accept as sufficient. The Registered Warrantholders by Extraordinary Resolution and with the consent of the Corporation (such consent not be unreasonably withheld) shall have power at any time to remove the existing Warrant Agent and to appoint a new Warrant Agent. In the event of the Warrant Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new Warrant Agent unless a new Warrant Agent has already been appointed by the |
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Registered Warrantholders; failing such appointment by the Corporation, the retiring Warrant Agent or any Registered Warrantholder may apply to a judge of the Supreme Court of the Province of Ontario on such notice as such judge may direct, for the appointment of a new Warrant Agent; but any new Warrant Agent so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Registered Warrantholders. Any new Warrant Agent appointed under any provision of this Section 9.8 shall be an entity authorized to carry on the business of a trust company in the Province of Ontario and, if required by the Applicable Legislation for any other provinces, in such other provinces. On any such appointment the new warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Warrant Agent hereunder. |
(2) |
Upon the appointment of a successor Warrant Agent, the Corporation shall promptly notify the Registered Warrantholders thereof in the manner provided for in Section 10.2. |
(3) |
Any Warrant Certificates Authenticated but not delivered by a predecessor Warrant Agent may be Authenticated by the successor Warrant Agent in the name of the predecessor or successor Warrant Agent. |
(4) |
Any corporation in to which the Warrant Agent may be merged or consolidated or amalgamated or to which all or substantially all of its corporate trust business is sold or otherwise transferred, or any corporation resulting therefrom to which the Warrant Agent shall be a party, or any corporation succeeding to substantially all of the corporate trust business of the Warrant Agent shall be the successor to the Warrant Agent hereunder without any further act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as successor Warrant Agent under Section 9.8(1). |
Section 9.9 Conflict of Interest.
(1) |
The Warrant Agent represents to the Corporation that at the time of execution and delivery of this Indenture no material conflict of interest exists between its role as a Warrant Agent hereunder and its role in any other capacity and agrees that in the event of a material conflict of interest arising hereafter it will, within 30 days after ascertaining that it has such material conflict of interest, either eliminate the same or assign its agency hereunder to a successor Warrant Agent approved by the Corporation and meeting the requirements set forth in Section 9.8(1). Notwithstanding the foregoing provisions of this Section 9.9(1), if any such material conflict of interest exists or hereafter shall exist, the validity and enforceability of this Indenture and the Warrant Certificate shall not be affected in any manner whatsoever by reason thereof. |
(2) |
Subject to Section 9.9(1), the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in securities of the Corporation and generally may contract and enter into financial transactions with the Corporation without being liable to account for any profit made thereby. |
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Section 9.10 Acceptance of Agency.
The Warrant Agent hereby accepts the agency in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth.
Section 9.11 Warrant Agent Not to be Appointed Receiver.
The Warrant Agent and any person related to the Warrant Agent shall not be appointed a receiver, a receiver and manager or liquidator of all or any part of the assets or undertaking of the Corporation.
Section 9.12 Warrant Agent Not Required to Give Notice of Default.
The Warrant Agent shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall have been required so to do under the terms hereof; nor shall the Warrant Agent be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Warrant Agent and the Warrant Agent shall promptly provide the Warrantholders with any such notice and in the absence of any such notice the Warrant Agent may for all purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. Any such notice shall in no way limit any discretion herein given to the Warrant Agent to determine whether or not the Warrant Agent shall take action with respect to any default.
Section 9.13 Anti-Money Laundering.
(1) |
Each party to this Agreement other than the Warrant Agent hereby represents to the Warrant Agent that any account to be opened by, or interest to be held by the Warrant Agent in connection with this Agreement, for or to the credit of such party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the Warrant Agents prescribed form as to the particulars of such third party. |
(2) |
The Warrant Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Warrant Agent, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, economic sanctions, regulation or guideline. Further, should the Warrant Agent, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, economic sanctions, regulation or guideline, then it shall have the right to resign on 10 days written notice to the other parties to this Indenture, provided (i) that the Warrant Agents written notice shall describe the circumstances of such non-compliance; (ii) that if such circumstances are rectified to the Warrant Agents satisfaction within such 10 day period, then such resignation shall not be effective. |
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Section 9.14 Compliance with Privacy Code.
The Corporation acknowledges that the Warrant Agent may, in the course of providing services hereunder, collect or receive financial and other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:
(a) |
to provide the services required under this Indenture and other services that may be requested from time to time; |
(b) |
to help the Warrant Agent manage its servicing relationships with such individuals; |
(c) |
to meet the Warrant Agents legal and regulatory requirements; and |
(d) |
if Social Insurance Numbers are collected by the Warrant Agent, to perform tax reporting and to assist in verification of an individuals identity for security purposes. |
The Corporation acknowledges and agrees that the Warrant Agent may receive, collect, use and disclose personal information provided to it or acquired by it in the course of its acting as agent hereunder for the purposes described above and, generally, in the manner and on the terms described in its Privacy Code, which the Warrant Agent shall make available on its website or upon request, including revisions thereto. Further, the Corporation agrees that it shall not provide or cause to be provided to the Warrant Agent any personal information relating to an individual who is not a party to this Indenture unless the Corporation has assured itself that such individual understands and has consented to the aforementioned uses and disclosures.
Section 9.15 Securities Exchange Commission Certification.
The Corporation confirms that it has either (i) a class of securities registered pursuant to Section 12 of the US Exchange Act or (ii) a reporting obligation pursuant to Section 15(d) of the U.S. Exchange Act, and has provided the Warrant Agent with an Officers Certificate (in a form provided by the Warrant Agent) certifying such reporting obligation and other information as requested by the Warrant Agent. The Corporation covenants that in the event that any such registration or reporting obligation shall be terminated by the Corporation in accordance with the Warrant Agent, the Corporation shall promptly notify the Warrant Agent of such termination and such other information as the Warrant Agent may require at the time. The Corporation acknowledges that the Warrant Agent is relying upon the foregoing representation and covenants in order to meet certain SEC obligations with respect to those clients who are filing with the SEC.
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ARTICLE 10
GENERAL
Section 10.1 Notice to the Corporation and the Warrant Agent.
(1) |
Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or the Warrant Agent shall be deemed to be validly given if delivered, sent by registered letter, postage prepaid, facsimile or e-mail: |
(a) |
If to the Corporation: |
HEXO Corp.
3000 Solandt Road
Ottawa, Ontario K2K 2X2
Attention: Chief Financial Officer
Facsimile: N/A
E-mail: [REDACTED]
(b) |
If to the Warrant Agent: |
TSX Trust Company
100 Adelaide Street West, Suite 301
Toronto, Ontario M5H 4H1
Attention: Manager, Corporate Trust Services
Facsimile: N/A
E-mail: [REDACTED]
and any such notice delivered in accordance with the foregoing shall be deemed to have been received and given on the date of delivery or, if mailed, on the fifth Business Day following the date of mailing such notice or, if facsimiled or sent by e-mail, on the next Business Day following the date of transmission.
(2) |
The Corporation or the Warrant Agent, as the case may be, may from time to time notify the other in the manner provided in Section 10.1(1) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Warrant Agent, as the case may be, for all purposes of this Indenture. |
(3) |
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrant Agent or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed, as provided in Section 10.1(1), or given by facsimilie or other means of prepaid, transmitted and recorded communication. |
(4) |
Accidental error or omission in giving notice or accidental failure to mail notice to any Warrantholder will not invalidate any action or proceeding founded thereon. |
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Section 10.2 Notice to Registered Warrantholders.
(1) |
Unless otherwise provided herein, notice to the Registered Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or sent by ordinary post addressed to such holders at their post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively received and given on the date of delivery or, if mailed, on the third Business Day following the date of mailing such notice. In the event that Warrants are held in the name of the Depository, a copy of such notice shall also be sent by electronic communication to the Depository and shall be deemed received and given on the day it is so sent. |
(2) |
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Registered Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to such Registered Warrantholders to the address for such Registered Warrantholders contained in the register maintained by the Warrant Agent or such notice may be given, at the Corporations expense, by means of publication in the Globe and Mail, National Edition, or any other English language daily newspaper or newspapers of general circulation in Canada, in each two successive weeks, and any so notice published shall be deemed to have been received and given on the latest date the publication takes place. |
Section 10.3 Ownership of Warrants.
The Corporation and the Warrant Agent may deem and treat the Registered Warrantholders as the absolute owner thereof for all purposes, and the Corporation and the Warrant Agent shall not be affected by any notice or knowledge to the contrary except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction. The receipt of any such Registered Warrantholder of the Common Shares which may be acquired pursuant thereto shall be a good discharge to the Corporation and the Warrant Agent for the same and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction.
Section 10.4 Counterparts.
This Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution they shall be deemed to be dated as of the date hereof.
Section 10.5 Satisfaction and Discharge of Indenture.
Upon the earlier of:
(a) |
the date by which there shall have been delivered to the Warrant Agent for exercise or cancellation all Warrants theretofore Authenticated hereunder, in the case of Certificated Warrants, or by way of a Transaction Instruction (or |
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such other instructions, in a form satisfactory to the Warrant Agent), in the case of Uncertificated Warrants, or by way of standard processing through the book entry only system in the case of a Depository Global Warrant; and |
(b) |
the Expiry Time; |
and if all certificates or other entry on the register representing Common Shares required to be issued in compliance with the provisions hereof have been issued and delivered hereunder or to the Warrant Agent in accordance with such provisions, this Indenture shall cease to be of further effect and the Warrant Agent, on demand of and at the cost and expense of the Corporation and upon delivery to the Warrant Agent of a certificate of the Corporation stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. Notwithstanding the foregoing, the indemnities provided to the Warrant Agent by the Corporation hereunder shall remain in full force and effect and survive the termination of this Indenture.
Section 10.6 Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders.
Nothing in this Indenture or in the Warrants, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the Registered Warrantholders, as the case may be, any legal or equitable right, remedy or claim under this Indenture, or under any covenant or provision herein or therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Registered Warrantholders.
Section 10.7 Common Shares or Warrants Owned by the Corporation or its SubsidiariesCertificate to be Provided.
For the purpose of disregarding any Warrants owned legally or beneficially by the Corporation in Section 7.16, the Corporation shall provide to the Warrant Agent, from time to time, a certificate of the Corporation setting forth as at the date of such certificate:
(a) |
the names (other than the name of the Corporation) of the Registered Warrantholders which, to the knowledge of the Corporation, are owned by or held for the account of the Corporation; and |
(b) |
the number of Warrants owned legally or beneficially by the Corporation; |
and the Warrant Agent, in making the computations in Section 7.16, shall be entitled to rely on such certificate without any additional evidence.
Section 10.8 Severability.
If, in any jurisdiction, any provision of this Indenture or its application to any party or circumstance is restricted, prohibited or unenforceable, such provision will, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Indenture and without
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affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other parties or circumstances.
Section 10.9 Force Majeure.
No party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.
Section 10.10 Assignment, Successors and Assigns.
Neither of the parties hereto may assign its rights or interest under this Indenture, except as provided in Section 9.8 in the case of the Warrant Agent, or as provided in Section 8.2 in the case of the Corporation. Subject thereto, this Indenture shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
Section 10.11 Rights of Rescission and Withdrawal for Holders.
Should a holder of Warrants exercise any legal, statutory, contractual or other right of withdrawal or rescission that may be available to it, and the holders funds which were paid on exercise have already been released to the Corporation by the Warrant Agent, the Warrant Agent shall not be responsible for ensuring the exercise is cancelled and a refund is paid back to the holder. In such cases, the holder shall seek a refund directly from the Corporation and subsequently, the Corporation, upon surrender to the Warrant Agent of any underlying shares that may have been issued, or such other procedure as agreed to by the parties hereto, shall instruct the Warrant Agent in writing, to cause the cancellation of the exercise transaction and any such underlying shares on the register, which may have already been issued upon the Warrant exercise. In the event that any payment is received from the Corporation by virtue of the holder being a shareholder for such Warrants that were subsequently rescinded, such payment must be returned by the Corporation to the holder and the Warrant Agent shall not be under any duty or obligation to take any steps to ensure or enforce that the funds are returned pursuant to this section, nor shall the Warrant Agent be in any other way responsible in the event that any payment is not delivered or received pursuant to this section. Notwithstanding the foregoing, in the event that the Corporation provides the refund to the Warrant Agent for distribution to the holder, the Warrant Agent shall return such funds to the holder as soon as reasonably practicable, and in so doing, the Warrant Agent shall incur no liability with respect to the delivery or non-delivery of any such funds.
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IN WITNESS WHEREOF the parties hereto have executed this Indenture under the hands of their proper officers in that behalf as of the date first written above.
HEXO CORP. | ||
By: |
(signed) Stephen Burwash |
|
Stephen Burwash | ||
Chief Financial Officer |
TSX TRUST COMPANY | ||
By: |
(signed) Brett Higgs |
|
Name: Brett Higgs | ||
Title: Corporate Trust Officer | ||
By: |
(signed) Donald Crawford |
|
Name: Donald Crawford | ||
Title: Senior Trust Officer |
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Schedule A
FORM OF WARRANT
For all Warrants include the following legend until such time as it is no longer required in accordance with applicable Canadian securities laws:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT DATE WHICH IS 4 MONTHS PLUS 1 DAY FROM ISSUANCE OF WARRANTS].
For all Warrants originally issued for the benefit or account of a U.S. Warrantholder, and each Warrant Certificate issued in exchange therefor or in substitution thereof, also include the following legends:
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE HOLDING SUCH SECURITIES, AGREES, FOR THE BENEFIT OF HEXO CORP. (THE CORPORATION), THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ALL LOCAL LAWS AND REGULATIONS; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION, TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT GOOD DELIVERY OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.
THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THE WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. UNITED STATES AND U.S. PERSON ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.
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WARRANT
To acquire Common Shares of
HEXO CORP.
(incorporated under the laws of Ontario)
Warrant Certificate No. [●] |
Certificate for Warrants, each entitling the holder to acquire one (1) Common Share subject to adjustment in accordance with the terms of the Warrant Indenture
CUSIP: [●]
ISIN: [●] |
THIS IS TO CERTIFY THAT, for value received,
(the Warrantholder) is the registered holder of the number of common share purchase warrants (the Warrants) of HEXO Corp. (the Corporation) specified above, and is entitled, on exercise of these Warrants upon and subject to the terms and conditions set forth herein and in the Warrant Indenture hereinafter referred to (as defined below), to purchase at any time before 5:00 p.m. (Eastern time) (the Expiry Time) on [INSERT DATE WHICH IS 3 YEARS FROM THE ORIGINAL ISSUANCE OF THE WARRANTS] (the Expiry Date), one fully paid and non-assessable common share without par value in the capital of the Corporation as constituted on the date hereof (a Common Share) for each Warrant subject to adjustment in accordance with the terms of the Warrant Indenture.
The Warrants evidenced hereby are exercisable at or before the Expiry Time, after which time the Warrants evidenced hereby shall be deemed to be void and of no further force or effect.
The right to purchase Common Shares may only be exercised by the holder within the time set forth above by:
(a) duly completing and executing the exercise form (the Exercise Form) attached hereto; and
(b) surrendering this warrant certificate (the Warrant Certificate), with the Exercise Form to the Warrant Agent at the principal office of the Warrant Agent, in the city of Toronto, Ontario, together with a certified cheque, bank draft or money order in the lawful money of Canada payable to or to the order of the Corporation in an amount equal to the purchase price of the Common Shares so subscribed for or surrendering this the Warrant Certificate, with the Exercise Form to the Warrant Agent at the principal office of the Warrant Agent, in the city of Toronto, Ontario, with a copy of such certificate(s) and the executed Exercise Form to the Corporation and
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send a wire transfer to the Corporation in an amount equal to the purchase price of the Common Shares so subscribed for in accordance with the following wire transfer instructions:
Bank: [REDACTED]
Swift Code: [REDACTED]
Bank Number: [REDACTED]
Branch Number: [REDACTED]
Account Number: [REDACTED]
Beneficiary: [REDACTED]
The surrender of this Warrant Certificate, the duly completed Exercise Form and payment as provided above will be deemed to have been effected only on personal delivery thereof to, or if sent by mail or other means of transmission on actual receipt thereof by, the Warrant Agent at its principal office as set out above.
Subject to adjustment thereof in the events and in the manner set forth in the Warrant Indenture hereinafter referred to, the exercise price payable for each Common Share upon the exercise of Warrants shall be $1.00 per Common Share.
Neither the Warrants nor the Common Shares issuable upon exercise hereof have been or will be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act), or U.S. state securities laws. The Warrants may not be exercised by a person in the United States, a U.S. Person, a person exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, or a person requesting delivery in the United States of the Common Shares issuable upon such exercise unless (i) this Warrant and such Common Shares have been registered under the U.S. Securities Act and the applicable laws of any such state, or (ii) an exemption from such registration requirements is available and the requirements set forth in the Exercise Form have been satisfied. United States and U.S. Person are as defined in Regulation S under the U.S. Securities Act.
Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein or, if so specified in the Exercise Form, delivered to such persons at the office where this Warrant Certificate is surrendered. If fewer Common Shares are purchased than the number that can be purchased pursuant to this Warrant Certificate, the holder hereof will be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not so purchased. No fractional Common Shares will be issued upon exercise of any Warrant. Any fractional Common Shares shall be rounded down to the nearest whole number and the holder of such Warrants shall not be entitled to any compensation in respect of any fractional Common Share which is not issued.
This Warrant Certificate evidences Warrants of the Corporation issued or issuable under the provisions of a warrant indenture (which indenture together with all other instruments supplemental or ancillary thereto is herein referred to as the Warrant Indenture) dated as of June 5, 2020 between the Corporation and TSX Trust Company, as Warrant Agent, to which Warrant Indenture reference is hereby made for particulars of the rights of the holders of Warrants, the Corporation and the Warrant Agent in respect thereof and the terms and conditions on which the Warrants are issued and held, all to the same effect as if the provisions of the Warrant Indenture were herein set forth, to all of which the holder, by acceptance hereof, assents.
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The Corporation will furnish to the holder, on request and without charge, a copy of the Warrant Indenture.
On presentation at the principal office of the Warrant Agent as set out above, subject to the provisions of the Warrant Indenture and on compliance with the reasonable requirements of the Warrant Agent, one or more Warrant Certificates may be exchanged for one or more Warrant Certificates entitling the holder thereof to purchase in the aggregate an equal number of Common Shares as are purchasable under the Warrant Certificate(s) so exchanged.
The Warrant Indenture contains provisions for the adjustment of the price payable for each Common Share upon the exercise of Warrants and the number of Common Shares issuable upon the exercise of Warrants in the events and in the manner set forth therein.
The Warrant Indenture also contains provisions making binding on all holders of Warrants outstanding thereunder resolutions passed at meetings of holders of Warrants held in accordance with the provisions of the Warrant Indenture and instruments in writing signed by Warrantholders of Warrants holding a specific majority of the all then outstanding Warrants.
Nothing contained in this Warrant Certificate, the Warrant Indenture or elsewhere shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or any other right or interest except as herein and in the Warrant Indenture expressly provided. In the event of any discrepancy between anything contained in this Warrant Certificate and the terms and conditions of the Warrant Indenture, the terms and conditions of the Warrant Indenture shall govern.
Warrants may only be transferred in compliance with the conditions of the Warrant Indenture on the register to be kept by the Warrant Agent in Toronto, Ontario, or such other registrar as the Corporation, with the approval of the Warrant Agent, may appoint at such other place or places, if any, as may be designated, upon surrender of this Warrant Certificate to the Warrant Agent or other registrar accompanied by a written instrument of transfer in form and execution satisfactory to the Warrant Agent or other registrar and upon compliance with the conditions prescribed in the Warrant Indenture and with such reasonable requirements as the Warrant Agent or other registrar may prescribe and upon the transfer being duly noted thereon by the Warrant Agent or other registrar. Time is of the essence hereof.
This Warrant Certificate will not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent from time to time under the Warrant Indenture.
The parties hereto have declared that they have required that these presents and all other documents related hereto be in the English language. Les parties aux présentes déclarent quelles ont exigé que la présente convention, de même que tous les documents sy rapportant, soient rédigés en anglais.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be duly executed as of ______________, 2020.
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HEXO CORP. | ||
By: |
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Authorized Signatory |
Countersigned and Registered by: | ||
TSX TRUST COMPANY | ||
By: |
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Authorized Signatory | ||
Date: _______________________ |
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FORM OF TRANSFER
ANY TRANSFER OF WARRANTS WILL REQUIRE COMPLIANCE WITH APPLICABLE SECURITIES LEGISLATION. TRANSFERORS AND TRANSFEREES ARE URGED TO CONTACT LEGAL COUNSEL BEFORE EFFECTING ANY SUCH TRANSFER.
To: TSX Trust Company
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to _________________________________________________________ _______________________________________________________________________________________________________(print name and address) the Warrants represented by this Warrants Certificate and hereby irrevocable constitutes and appoints ____________________ as its attorney with full power of substitution to transfer the said securities on the appropriate register of the Warrant Agent.
THE UNDERSIGNED TRANSFEROR HEREBY CERTIFIES AND DECLARES that the Warrants are not being offered, sold or transferred unless the Common Shares underlying the Warrants are registered under the United States Securities Act of 1933, as amended, and any applicable state securities laws or is exempt from such registration requirements.
In the case of Warrants that contain a U.S. restrictive legend, the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
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(A) the transfer is being made to the Corporation; |
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(B) the transfer is being made outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act, and in compliance with any applicable local securities laws and regulations and the holder has provided herewith the Declaration for Removal of Legend attached as Schedule E to the Warrant Indenture, |
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(C) the transfer is being made pursuant to the exemption from the registration requirements of the U.S. Securities Act provided by Rule 144 under the U.S. Securities Act and in accordance with applicable state securities laws, or |
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(D) the transfer is being made in another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws. |
In the case of a transfer in accordance with (C) or (D) above, the Warrant Agent and the Corporation shall first have received an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation and the Warrant Agent, to such effect.
DATED this ____ day of_________________, 20____.
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SPACE FOR GUARANTEES OF | ) | |||
SIGNATURES (BELOW) | ||||
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Guarantors Signature/Stamp | ) | Name of Transferor | ||
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REASON FOR TRANSFER For US Residents only (where the individual(s) or corporation receiving the securities is a US resident). Please select only one (see instructions below).
☐ Gift | ☐ Estate | ☐ Private Sale | ☐ Other (or no change in ownership) | |||||||
Date of Event (Date of gift, death or sale): | Value per Warrant on the date of event: | |||||||||
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CAD OR | USD |
CERTAIN REQUIREMENTS RELATING TO TRANSFERS READ CAREFULLY
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. All securityholders or a legally authorized representative must sign this form. The signature(s) on this form must be guaranteed in accordance with the transfer agents then current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):
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Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words Medallion Guaranteed, with the correct prefix covering the face value of the certificate. |
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Canada: A Signature Guarantee obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust. The Guarantor must affix a stamp bearing the actual words Signature Guaranteed, sign and print their full name and alpha numeric signing number. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a Signature & Authority to Sign Guarantee Stamp affixed to the transfer (as opposed to a Signature Guaranteed Stamp) obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a Medallion Signature Guarantee with the correct prefix covering the face value of the certificate. |
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Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed. |
OR
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. The signature(s) on this form must be guaranteed by an authorized officer of Royal Bank of Canada, Scotia Bank or TD Canada Trust whose sample signature(s) are on file with the transfer agent, or by a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed signatures are not acceptable as guaranteed signatures. The Guarantor must affix a stamp bearing the actual words: SIGNATURE GUARANTEED, MEDALLION GUARANTEED OR SIGNATURE & AUTHORITY TO SIGN GUARANTEE, all in accordance with the transfer agents then current guidelines and requirements at the time of transfer. For corporate holders, corporate signing resolutions, including certificate of incumbency, will also be required to accompany the transfer unless there is a SIGNATURE & AUTHORITY TO SIGN GUARANTEE Stamp affixed to the Form of Transfer obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a MEDALLION GUARANTEED Stamp affixed to the Form of Transfer, with the correct prefix covering the face value of the certificate.
REASON FOR TRANSFER FOR US RESIDENTS ONLY
Consistent with US IRS regulations, TSX Trust Company is required to request cost basis information from US securityholders. Please indicate the reason for requesting the transfer as well as the date of event relating to the reason. The event date is not the day in which the transfer is finalized, but rather the date of the event which led to the transfer request (i.e. date of gift, date of death of the securityholder, or the date the private sale took place).
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EXERCISE FORM
ANY TRANSFER OF WARRANTS WILL REQUIRE COMPLIANCE WITH APPLICABLE SECURITIES LEGISLATION. TRANSFERORS AND TRANSFEREES ARE URGED TO CONTACT LEGAL COUNSEL BEFORE EFFECTING ANY SUCH TRANSFER.
TO: |
HEXO Corp. |
AND TO: |
TSX Trust Company |
100 Adelaide Street West, Suite 301
Toronto, Ontario M5H 4H1
The undersigned holder of the Warrants evidenced by this Warrant Certificate hereby exercises the right to acquire ___________ (A) Common Shares of HEXO Corp.
Exercise Price Payable: __________________________________________________
((A) multiplied by $1.00, subject to adjustment)
The undersigned hereby exercises the right of such holder to be issued, and hereby subscribes for, Common Shares that are issuable pursuant to the exercise of such Warrants on the terms specified in such Warrant Certificate and in the Warrant Indenture.
The undersigned hereby acknowledges that the undersigned is aware that the Common Shares received on exercise may be subject to restrictions on resale under applicable securities legislation.
Any capitalized term in this Warrant Certificate that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture.
The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):
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(A) the undersigned holder at the time of exercise of the Warrants (i) is not present in the United States, (ii) is not a U.S. Person, (iii) is not exercising the Warrants on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States, (iv) did not acquire the Warrants in the United States or on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States; (v) did not receive an offer to exercise the Warrants in the United States; (vi) did not execute or deliver this exercise form in the United States; and (vii) is not requesting delivery in the United States of the Common Shares issuable upon such exercise; OR |
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(B) the undersigned holder |
(i) |
is (1) present in the United States, (2) a U.S. Person, (3) a person exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, (4) executing or delivering this exercise form in the United States, or (5) requesting delivery in the United States of the Common Shares issuable upon such exercise, and |
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(ii) |
is an accredited investor (a U.S. Accredited Investor) within the meaning assigned in Rule 501(a) of Regulation D under the United States Securities Act of 1933, as amended (the U.S. Securities Act), the undersigned holder has delivered to the Corporation and the Corporations transfer agent a completed and executed U.S. Warrantholder Letter in substantially the form attached to the Warrant Indenture as Schedule F; |
OR
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(C) the undersigned holder |
(i) |
is (1) present in the United States, (2) a U.S. Person, (3) a person exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, or (4) requesting delivery in the United States of the Common Shares issuable upon such exercise, and |
(ii) |
the undersigned holder has an exemption from the registration requirements of the U.S. Securities Act and all applicable state securities laws available for the exercise of the Warrants, and has delivered to the Corporation and the Corporations transfer agent a written opinion of U.S. counsel, in form and substance reasonably satisfactory to the Corporation, or such other evidence reasonably satisfactory to the Corporation to that effect. |
It is understood that the Corporation and the Warrant Agent may require evidence to verify the foregoing representations.
Notes: (1) |
Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked. |
(2) |
If Box C above is checked, holders are encouraged to consult with the Corporation in advance to determine that the legal opinion tendered in connection with the exercise will be satisfactory in form and substance to the Corporation. |
United States and U.S. Person are as defined in Rule 902 of Regulation S under the U.S. Securities Act.
The undersigned hereby irrevocably directs that the said Common Shares be issued, registered and delivered as follows:
Name(s) in Full and Social Insurance Number(s) (if applicable) |
Address(es) |
Number of Common Shares |
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Name(s) in Full and Social Insurance Number(s) (if applicable) |
Address(es) |
Number of Common Shares |
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Please print full name in which certificates representing the Common Shares are to be issued. If any Common Shares are to be issued to a person or persons other than the registered holder, the registered holder must pay to the Warrant Agent all exigible transfer taxes or other government charges, if any, and the Form of Transfer must be duly executed.
Once completed and executed, this Exercise Form must be mailed or delivered to TSX Trust Company, c/o Manager, Corporate Trust Services, 100 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 4H1, Attention: Manager, Corporate Trust Services.
It is understood that the Corporation and TSX Trust Company may require evidence to verify the foregoing representation.
DATED this ____day of _____, 20__.
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Witness | ) | (Signature of Warrantholder, to be the same as | ||
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Name of Registered Warrantholder |
☐ Please check if the certificates representing the Common Shares are to be delivered at the office where this Warrant Certificate is surrendered, failing which such certificates will be mailed to the address set out above. Certificates will be delivered or mailed as soon as practicable after the surrender of this Warrant Certificate to the Warrant Agent.
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Schedule B
CONFIRMATION OF EXERCISE PRICE TO WARRANT AGENT
TO: |
TSX Trust Company |
100 Adelaide Street West, Suite 301
Toronto, Ontario M5H 4H1
The undersigned confirms the receipt of $_________________________ in connection with the exercise of Warrant Certificate# _________________________ by Registered Warrant holder:______________________________ to acquire __________________ Common Shares of HEXO Corp.
Once completed and executed, this Confirmation Form must be mailed or delivered to TSX Trust Company, c/o Manager, Corporate Trust Services, 100 Adelaide Street West, Suite 301, Toronto, Ontario M5H 4H1.
DATED this ____day of _____, 20__.
HEXO CORP. | ||
By: |
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Schedule C
FORM OF WARRANT AGREEMENT
For all Warrants include the following legend until such time as it is no longer required in accordance with applicable Canadian securities laws:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT DATE WHICH IS 4 MONTHS PLUS 1 DAY FROM ISSUANCE OF WARRANTS].
For all Warrants originally issued for the benefit or account of a U.S. Warrantholder, and each Warrant Certificate issued in exchange therefor or in substitution thereof, also include the following legends:
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE HOLDING SUCH SECURITIES, AGREES, FOR THE BENEFIT OF HEXO CORP. (THE CORPORATION), THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ALL LOCAL LAWS AND REGULATIONS; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION, TO SUCH EFFECT. THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT GOOD DELIVERY OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.
THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THE WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. UNITED STATES AND U.S. PERSON ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.
WARRANT
To acquire Common Shares of
HEXO CORP.
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(incorporated under the laws of Ontario)
Warrant Certificate No. 2020 WC - [●] |
Certificate for ____________________________ Warrants, each entitling the holder to acquire one (1) Common Share subject to adjustment in accordance with the terms of the Warrant Indenture |
THIS IS TO CERTIFY THAT, for value received,
(the Warrantholder) is the registered holder of the number of common share purchase warrants (the Warrants) of HEXO Corp. (the Corporation) specified above, and is entitled, on exercise of these Warrants upon and subject to the terms and conditions set forth herein, to purchase at any time before 5:00 p.m. (Eastern time) (the Expiry Time) on [INSERT DATE WHICH IS 3 YEARS FROM THE ORIGINAL ISSUANCE OF THE WARRANTS] (the Expiry Date), one fully paid and non-assessable common share without par value in the capital of the Corporation as constituted on the date hereof (a Common Share) for each Warrant, subject to adjustment in accordance with the terms of the Warrant Indenture dated June 5, 2020, by and between the Corporation and TSX Trust Company (the Warrant Indenture). This Warrant Agreement was entered into by and between the Corporation and the Warrantholder in consideration of the withdrawal of Warrants from the Warrant Indenture and Warrant Agency pursuant to Section 2.13 of the Warrant Indenture. Certain undefined terms used herein have the meanings set forth in the Warrant Indenture.
The Warrants represented by this Warrant Agreement shall be subject to the terms set forth in Sections 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 2.0, 2.3, 2.4, 2.10, 2.11, 2.12, 2.14, 3.1, 3.2(6), 3.2(7), 3.2(9), 3.2(10), 3.2(11), 3.2(13), 3.4, 3.6, 3.7, 3.8, 3.10, 3.11, 4.1, 4.2, 4.3, 4.4, 4.5. 4.6, 4.7, 4.8, 4.9, 4.11, 5.1, 5.2, 5.5, 10.1, 10.2, 10.3, 10.8, 10.9 and 10.11 of the Warrant Indenture, as of the date of this Warrant Agreement, as applied to Certificated Warrants and such terms are hereby incorporated by reference, except that any reference to the Warrant Agent shall refer to the Corporation as the context may required. The Corporation will furnish to the holder, on request and without charge, a copy of the Warrant Indenture. This Warrant Agreement is not subject to the Warrant Agency under the Warrant Indenture. For purposes of this Warrant Agreement, references in the Warrant Indenture to a Registered Warrantholder shall be deemed to include the Warrantholder and any references to the Warrant Agent shall be deemed to refer to the Corporation.
The Corporation covenants and agrees that it shall not fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Common Shares without obtaining both the approval of the TSX to permit the Warrantholder to fully participate in such issuance and the prior consent of a majority of the Registered Warrantholders together with holders of Warrants governed by Warrant Agreements is given.
The Warrants evidenced hereby are exercisable at or before the Expiry Time, after which time the Warrants evidenced hereby shall be deemed to be void and of no further force or effect.
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Exercise of the purchase rights represented by this Warrant Agreement may be made, in whole or in part, by delivery to the Corporation of the exercise form in the form annexed hereto (the Exercise Form), duly completed and executed by the Warrantholder or his, her or its executors, administrators (or other legal representatives or his, her or its attorney duly appointed by an instrument in writing in form and manner satisfactory to the Corporation, acting reasonably), either (i) by personal delivery, mail or courier to HEXO Corp., 3000 Solandt Road, Ottawa, Ontario, K2K 2X2, Attention: Chief Financial Officer (or such other office or agency of the Corporation as it may designate by notice in writing to the Warrantholder at the address of the Warrantholder appearing on the books of the Company) by delivery of a facsimile copy to the Corporation, Attention: Chief Financial Officer (e-mail: [REDACTED]), and within one (1) Trading Day of the date said Exercise Form is delivered to the Corporation, payment of the aggregate Exercise Price of the Common Shares thereby purchased by wire transfer to:
Bank: [REDACTED]
Swift Code: [REDACTED]
Bank Number: [REDACTED]
Branch Number: [REDACTED]
Account Number: [REDACTED]
Beneficiary: [REDACTED]
or by delivery to the Corporation at the address specified in (i) above of a certified cheque, bank draft or money order in the lawful money of Canada payable to or to the order of the Corporation.
No ink original Exercise Form shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Exercise Form be required. Notwithstanding anything herein to the contrary, the Warrantholder shall not be required to physically surrender this Warrant to the Corporation until the Warrantholder has purchased all of the Common Shares available hereunder and the Warrant has been exercised in full, in which case, the Warrantholder shall surrender this Warrant to the Corporation for cancellation within two (2) Trading Days of the date the final Exercise Form is delivered to the Corporation. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Common Shares available hereunder shall have the effect of lowering the outstanding number of Common Shares purchasable hereunder in an amount equal to the applicable number of Common Shares purchased. The Warrantholder and the Corporation shall maintain records showing the number of Common Shares purchased and the date of such purchases. The Company shall deliver any objection to any Exercise within one (1) Business Day of receipt of such notice. The Warrantholder and any assignee, by acceptance of this Warrant Agreement, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Common Shares hereunder, the number of Common Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
Within two (2) Trading Days after the Exercise Date with respect to a Warrant (the Common Share Delivery Date), the Corporation shall cause to be delivered or mailed to the Person or Persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such Person or Persons at the offices of the Corporation specified above where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for, or any other appropriate evidence of the
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issuance of Common Shares to such Person or Persons in respect of Common Shares issued under the book entry registration system.
Subject to adjustment thereof in the events and in the manner set forth in the Warrant Indenture, the exercise price payable for each Common Share upon the exercise of Warrants shall be $1.00 per Common Share.
Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein or, if so specified in the Exercise Form, delivered to such persons at the office where this Warrant Certificate is surrendered. If fewer Common Shares are purchased than the number that can be purchased pursuant to this Warrant Certificate, the holder hereof will be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not so purchased. No fractional Common Shares will be issued upon exercise of any Warrant.
On presentation at the principal office of the Corporation as set out above, subject to the applicable provisions of the Warrant Indenture incorporated herein by reference and on compliance with the reasonable requirements of the Corporation, one or more Warrant Agreements may be exchanged for one or more Warrant Agreements entitling the holder thereof to purchase in the aggregate an equal number of Common Shares as are purchasable under the Warrant Agreement(s) so exchanged.
Neither the Warrants nor the Common Shares issuable upon exercise hereof have been or will be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act), or U.S. state securities laws. The Warrants may not be exercised by a person in the United States, a U.S. Person, a person exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, or a person requesting delivery in the United States of the Common Shares issuable upon such exercise unless (i) this Warrant and such Common Shares have been registered under the U.S. Securities Act and the applicable laws of any such state, or (ii) an exemption from such registration requirements is available and the requirements set forth in the Exercise Form have been satisfied. United States and U.S. Person are as defined in Regulation S under the U.S. Securities Act.
Terms adopted and incorporated into this Warrant Agreement from the Warrant Indenture provide for the adjustment of the price payable for each Common Share upon the exercise of Warrants and the number of Common Shares issuable upon the exercise of Warrants in the events and in the manner set forth therein.
Terms adopted and incorporated into this Warrant Agreement from the Warrant Indenture also provide for making binding on all holders of Warrants outstanding thereunder resolutions passed at meetings of holders of Warrants held in accordance with the provisions of the Warrant Indenture and instruments in writing signed by Warrantholders of Warrants entitled to purchase a specific majority of the Common Shares that can be purchased pursuant to such Warrants. Such resolutions shall be binding on the Warrantholder under this Warrant Agreement.
Nothing contained in this Warrant Agreement or elsewhere shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or any other right or interest except as herein expressly provided. In the event of any discrepancy between anything contained in this Warrant Agreement and the terms and conditions of the Warrant
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Indenture, the terms and conditions of adopted and incorporated into this Warrant Agreement from the Warrant Indenture shall govern.
Warrants may only be transferred in compliance with the conditions adopted and incorporated into this Warrant Agreement from the Warrant Indenture on the register to be kept by the Corporation in its principal office, or such other registrar as the Corporation may appoint at such other place or places, if any, as may be designated, upon surrender of this Warrant Agreement to the Corporation or other registrar as the Corporation may appoint accompanied by a written instrument of transfer in form and execution satisfactory to the Corporation and upon compliance with the conditions adopted and incorporated into this Warrant Agreement from the Warrant Indenture and with such reasonable requirements as the may prescribe and upon the transfer being duly noted thereon by the Corporation or other registrar as the Corporation may appoint. A transferee will be bound by the terms and conditions set forth in the Warrant Agreement. Time is of the essence hereof.
This Warrant Agreement will not be valid for any purpose until it has been countersigned by the Corporation.
The parties hereto have declared that they have required that these presents and all other documents related hereto be in the English language. Les parties aux présentes déclarent quelles ont exigé que la présente convention, de même que tous les documents sy rapportant, soient rédigés en anglais.
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IN WITNESS WHEREOF the Corporation has caused this Warrant Agreement to be duly executed as of ______________, 20___.
HEXO CORP. | ||
By: |
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Authorized Signatory |
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FORM OF TRANSFER
To: HEXO Corp.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to _______________________________________________________________________________________________________________________ _____________________________________(print name and address) the Warrants represented by this Warrants Agreement and hereby irrevocable constitutes and appoints ____________________ as its attorney with full power of substitution to transfer the said securities on the appropriate register of the Corporation.
THE UNDERSIGNED TRANSFEROR HEREBY CERTIFIES AND DECLARES that the Warrants are not being offered, sold or transferred unless the Common Shares underlying the Warrants are registered under the United States Securities Act of 1933, as amended, and any applicable state securities laws or is exempt from such registration requirements. By acceptance of the Warrant Agreement issued under this Form of Transfer, the transferee will be bound by the terms and conditions set forth in the Warrant Agreement.
In the case of Warrants that contain a U.S. restrictive legend, the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
☐ |
(A) the transfer is being made to the Corporation; |
☐ |
(B) the transfer is being made outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act, and in compliance with any applicable local securities laws and regulations and the holder has provided herewith the Declaration for Removal of Legend attached as Schedule E to the Warrant Indenture, |
☐ |
(C) the transfer is being made pursuant to the exemption from the registration requirements of the U.S. Securities Act provided by Rule 144 under the U.S. Securities Act and in accordance with applicable state securities laws, or |
☐ |
(D) the transfer is being made in another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws. |
In the case of a transfer in accordance with (C) or (D) above, the Corporation shall first have received an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation, to such effect.
DATED this ____ day of_________________, 20____.
SPACE FOR GUARANTEES OF | ) | |||
SIGNATURES (BELOW) | ||||
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) | Signature of Transferor |
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Guarantors Signature/Stamp | ) | Name of Transferor | ||
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REASON FOR TRANSFER For US Residents only (where the individual(s) or corporation receiving the securities is a US resident). Please select only one (see instructions below).
☐ Gift | ☐ Estate | ☐ Private Sale | ☐ Other (or no change in ownership) | |||||||
Date of Event (Date of gift, death or sale): | Value per Warrant on the date of event: | |||||||||
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CERTAIN REQUIREMENTS RELATING TO TRANSFERS READ CAREFULLY
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. All securityholders or a legally authorized representative must sign this form. The signature(s) on this form must be guaranteed in accordance with the transfer agents then current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):
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Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words Medallion Guaranteed, with the correct prefix covering the face value of the certificate. |
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Canada: A Signature Guarantee obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust. The Guarantor must affix a stamp bearing the actual words Signature Guaranteed, sign and print their full name and alpha numeric signing number. Signature Guarantees are not accepted from Treasury Branches, Credit |
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Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a Signature & Authority to Sign Guarantee Stamp affixed to the transfer (as opposed to a Signature Guaranteed Stamp) obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a Medallion Signature Guarantee with the correct prefix covering the face value of the certificate. |
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Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed. |
OR
The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. The signature(s) on this form must be guaranteed by an authorized officer of Royal Bank of Canada, Scotia Bank or TD Canada Trust whose sample signature(s) are on file with the transfer agent, or by a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed signatures are not acceptable as guaranteed signatures. The Guarantor must affix a stamp bearing the actual words: SIGNATURE GUARANTEED, MEDALLION GUARANTEED OR SIGNATURE & AUTHORITY TO SIGN GUARANTEE, all in accordance with the transfer agents then current guidelines and requirements at the time of transfer. For corporate holders, corporate signing resolutions, including certificate of incumbency, will also be required to accompany the transfer unless there is a SIGNATURE & AUTHORITY TO SIGN GUARANTEE Stamp affixed to the Form of Transfer obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a MEDALLION GUARANTEED Stamp affixed to the Form of Transfer, with the correct prefix covering the face value of the certificate.
REASON FOR TRANSFER FOR US RESIDENTS ONLY
Consistent with US IRS regulations, the Corporation is required to request cost basis information from US securityholders. Please indicate the reason for requesting the transfer as well as the date of event relating to the reason. The event date is not the day in which the transfer is finalized, but rather the date of the event which led to the transfer request (i.e. date of gift, date of death of the securityholder, or the date the private sale took place).
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EXERCISE FORM
TO: HEXO Corp.
The undersigned holder of the Warrants evidenced by this Warrant Agreement hereby exercises the right to acquire ____________ (A) Common Shares of HEXO Corp.
Exercise Price Payable: __________________________________________________ ((A) multiplied by $1.00, subject to adjustment)
The undersigned hereby exercises the right of such holder to be issued, and hereby subscribes for, Common Shares that are issuable pursuant to the exercise of such Warrants on the terms specified in such Warrant Agreement and in the Warrant Indenture.
The undersigned hereby acknowledges that the undersigned is aware that the Common Shares received on exercise may be subject to restrictions on resale under applicable securities legislation.
Any capitalized term in this Warrant Certificate that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture.
The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):
☐ |
(A) the undersigned holder at the time of exercise of the Warrants (i) is not present in the United States, (ii) is not a U.S. Person, (iii) is not exercising the Warrants on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States, (iv) did not acquire the Warrants in the United States or on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States; (v) did not receive an offer to exercise the Warrants in the United States; (vi) did not execute or deliver this exercise form in the United States; and (vii) is not requesting delivery in the United States of the Common Shares issuable upon such exercise; OR |
☐ |
(B) the undersigned holder |
(i) |
is (1) present in the United States, (2) a U.S. Person, (3) a person exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, (4) executing or delivering this exercise form in the United States, or (5) requesting delivery in the United States of the Common Shares issuable upon such exercise, and |
(ii) |
is an accredited investor (a U.S. Accredited Investor) within the meaning assigned in Rule 501(a) of Regulation D under the United States Securities Act of 1933, as amended (the U.S. Securities Act), the undersigned holder has delivered to the Corporation and the Corporations transfer agent a completed and executed U.S. Warrantholder Letter in substantially the form attached to the Warrant Indenture as Schedule F; |
OR
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☐ (C) |
the undersigned holder |
(i) |
is (1) present in the United States, (2) a U.S. Person, (3) a person exercising the Warrants for the account or benefit of a U.S. Person or a person in the United States, or (4) requesting delivery in the United States of the Common Shares issuable upon such exercise, and |
(ii) |
the undersigned holder has an exemption from the registration requirements of the U.S. Securities Act and all applicable state securities laws available for the exercise of the Warrants, and has delivered to the Corporation and the Corporations transfer agent a written opinion of U.S. counsel, in form and substance reasonably satisfactory to the Corporation, or such other evidence reasonably satisfactory to the Corporation to that effect. |
It is understood that the Corporation and the Warrant Agent may require evidence to verify the foregoing representations.
Notes: (1) |
Certificates representing Common Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked. |
(2) |
If Box C above is checked, holders are encouraged to consult with the Corporation in advance to determine that the legal opinion tendered in connection with the exercise will be satisfactory in form and substance to the Corporation. |
United States and U.S. Person are as defined in Rule 902 of Regulation S under the U.S. Securities Act.
The undersigned hereby irrevocably directs that the said Common Shares be issued, registered and delivered as follows:
Name(s) in Full and Social Insurance Number(s) (if applicable) |
Address(es) |
Number of Common Shares |
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Please print full name in which certificates representing the Common Shares are to be issued. If any Common Shares are to be issued to a person or persons other than the registered
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holder, the registered holder must pay to the Corporation all eligible transfer taxes or other government charges, if any, and the Form of Transfer must be duly executed.
Once completed and executed, this Exercise Form must be: (i) mailed or delivered to HEXO Corp., 3000 Solandt Road, Ottawa, Ontario, K2K 2X2, Attention: Chief Financial Officer or (ii) e-mailed to HEXO Corp., Attention: Chief Financial Officer, e-mail: [REDACTED] (with confirmation of receipt by the Corporation).
It is understood that the Corporation may require evidence to verify the foregoing representation.
DATED this ____day of _____, 20__.
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Witness | ) | (Signature of Warrantholder, to be the same as | ||
) | appears on the face of this Warrant Agreement) | |||
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) | Name of Registered Warrantholder |
☐ Please check if the certificates representing the Common Shares are to be delivered at the office where this Warrant Agreement is surrendered, failing which such certificates will be mailed to the address set out above.
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Schedule D
FORM OF WITHDRAWAL NOTICE AND RETURN TO TREASURY
Date: | [] | |
To: |
TSX Trust Company (TSX Trust) 100 Adelaide Street West, Suite 301 Toronto, Ontario M5H 4H1 |
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And to: |
HEXO Corp. 3000 Solandt Road Ottawa, Ontario K2K 2X2 Attention: Chief Financial Officer |
______________________________________________________(the Warrantholder) is the registered holder of the number of common share purchase warrants (the Warrants) of HEXO Corp. (the Corporation) specified below:
Name and Address | Registration Particulars | Number of Warrants: | Certificate # | |||
Total Warrants: |
You are hereby authorized and directed to cancel and return to treasury the certificates set out above for warrants issued pursuant to a warrant indenture dated June 5, 2020 between the Corporation and TSX Trust (the Warrant Indenture).
The warrants are being cancelled pursuant to section 2.13 of the Warrant Indenture by the Warrantholder and are to be surrendered to treasury for cancellation.
The Warrantholder hereby releases, indemnifies, and agrees to save harmless TSX Trust from all costs, charges, claims, demands, losses and expenses resulting from TSX Trusts compliance in good faith with regards to the above instructions.
[Signature page follows]
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THE UNDERSIGNED WARRANTHOLDER, with all requisite legal power and authority to execute and deliver this Withdrawal Notice and Return to Treasury, by acceptance of the Warrant Agreement, agrees to be bound by the terms and conditions set forth in the Warrant Agreement.
DATED this ____day of _____, 20__. |
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Witness |
(Signature of Warrantholder, to be the same as appears on the face of this Warrant Certificate) |
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Name of Registered Warrantholder |
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Schedule E
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: TSX TRUST COMPANY,
as registrar and transfer agent for the Warrants and Common Shares issuable upon exercise of the Warrants of HEXO Corp. (the Corporation).
The undersigned (A) acknowledges that the sale of _______________________ (the Securities) of the Corporation, to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act), and (B) certifies that (1) the undersigned is not (a) an affiliate of the Corporation (as that term is defined in Rule 405 under the U.S. Securities Act), except solely by virtue of being an officer or director of the Corporation, (b) a distributor or (c) an affiliate of a distributor; (2) the offer of such Securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (b) the transaction was executed on or through the facilities of the Toronto Stock Exchange, the TSX Venture Exchange, the Canadian Securities Exchange or another designated offshore securities market, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States; (3) none of the seller, any affiliate of the seller or any person acting on their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of washing off the resale restrictions imposed because the Securities are restricted securities (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace such securities with fungible unrestricted securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions, which, although in technical compliance with Regulation S under the U.S. Securities Act, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.
DATED this ____ day of ____________________, 20_____.
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Signature of individual (if Seller is an individual) |
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Authorized signatory (if Seller is not an individual) |
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Name of Seller (please print) |
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Name of authorized signatory (please print) |
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Official capacity of authorized signatory (please print) |
Affirmation by Sellers Broker-Dealer
(Required for sales pursuant to Section (B)(2)(b) above)
We have read the foregoing representations of our customer, __________________________ (the Seller) with regard to the sale, for such Sellers account, of ______________________ common shares (the Shares) of the Corporation. We have executed sales of the Securities pursuant to Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act), on behalf of the Seller. In that connection, we hereby represent to you as follows:
1. |
no offer to sell the Shares was made to a person in the United States; |
2. |
the sale of the Shares was executed in, on or through the facilities of the Toronto Stock Exchange, the TSX Venture Exchange, the Canadian Securities Exchange or another designated offshore securities market (as defined in Rule 902(b) of Regulation S under the U.S. Securities Act), and, to the best of our knowledge, the sale was not pre-arranged with a buyer in the United States; |
3. |
no directed selling efforts were made in the United States by the undersigned, any affiliate of the undersigned, or any person acting on behalf of the undersigned; and |
4. |
we have done no more than execute the order or orders to sell the Shares as agent for the Seller and will receive no more than the usual and customary brokers commission that would be received by a person executing such transaction as agent. |
For purposes of these representations: affiliate means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the undersigned; directed selling efforts means any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the Shares (including, but not be limited to, the solicitation of offers to purchase the Shares from persons in the United States); and United States means the United States of America, its territories or possessions, any State of the United States, and the District of Columbia.
Legal counsel to the Corporation shall be entitled to rely upon the representations, warranties and covenants contained herein to the same extent as if this affirmation had been addressed to them.
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DATED ____________________, 20_____. |
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Schedule F
FORM OF U.S. WARRANTHOLDER CERTIFICATION UPON EXERCISE OF WARRANTS
HEXO Corp.
3000 Solandt Road
Ottawa, Ontario K2K 2X2
- and to -
TSX Trust Company
200 University Avenue, Suite 300
Toronto, Ontario M5H 4H1
as Warrant Agent
Dear Sirs:
The undersigned is delivering this letter in connection with the purchase of common shares (the Common Shares) of HEXO Corp., a corporation existing under the laws of the Province of Ontario (the Corporation) upon the exercise of warrants of the Corporation (Warrants), issued under the warrant indenture, dated as of June 5, 2020 between the Corporation and TSX Trust Company.
The undersigned hereby represents and warrants to the Corporation that the undersigned, and each beneficial owner (each a Beneficial Owner), if any, on whose behalf the undersigned is exercising such Warrants, satisfies one or more of the following categories of accredited investor (please write W/H for the undersigned holder, and B/O for each beneficial owner, if any, on each line that applies):
(a) |
____________ Any bank as defined in Section 3(a)(2) of the U.S. Securities Act of 1933, as amended (the U.S. Securities Act) or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934 or any insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; any investment company registered under the U.S. Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees if such plan has total assets in excess of US$5,000,000; any employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000, |
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or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors, as such term is defined in Rule 501 of Regulation D of the U.S. Securities Act (which definition, as it applies to certain natural persons, has been amended by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act); |
(b) |
____________ Any private business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940; |
(c) |
____________ Any organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, Corporation, Massachusetts or similar business trust, limited liability company or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000; |
(d) |
____________ Any trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person (being defined as a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment); |
(e) |
____________ Any director, executive officer or general partner of the Corporation; |
(f) |
____________ A natural person whose individual net worth, or joint net worth with that persons spouse, at the time of his or her purchase exceeds US$1,000,000 (for the purposes of calculating net worth: (i) the persons primary residence shall not be included as an asset; (ii) indebtedness that is secured by the persons primary residence, up to the estimated fair market value of the primary residence at the time of the sale and purchase of securities contemplated by the accompanying Warrant exercise form, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale and purchase of securities contemplated by the accompanying Warrant exercise form exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the persons primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability); |
(g) |
____________ Any natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that persons spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or |
(h) |
____________ Any entity in which each of the equity owners meets the requirements of one of the above categories (if this alternative is checked, you must identify each equity owner and provide statements signed by each demonstrating how each qualifies as an accredited investor). |
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The undersigned further represents and warrants to the Corporation that:
1. |
the undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Common Shares, and the undersigned is able to bear the economic risk of loss of his or her entire investment; |
2. |
the undersigned is: (i) purchasing the Common Shares for his or her own account or for the account of one or more U.S. Accredited Investors with respect to which the undersigned is exercising sole investment discretion, and not on behalf of any other person; (ii) is purchasing the Common Shares for investment purposes only and not with a view to resale, distribution or other disposition in violation of United States federal or state securities laws; and (iii) in the case of the purchase by the undersigned of the Common Shares as agent or trustee for any other person or persons (each a Beneficial Owner), the undersigned holder has due and proper authority to act as agent or trustee for and on behalf of each such Beneficial Owner in connection with the transactions contemplated hereby; provided that: (x) if the undersigned holder, or any Beneficial Owner, is a corporation, a limited liability company or a partnership, syndicate, trust or other form of unincorporated organization, the undersigned holder or each such Beneficial Owner was not incorporated or created solely, nor is it being used primarily, to permit purchases without a prospectus or registration statement under applicable law; and (y) each Beneficial Owner, if any, is a U.S. Accredited Investor; |
3. |
the undersigned has not exercised the Warrants as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, television, the Internet or other form of telecommunications, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and |
4. |
the funds representing the purchase price for the Common Shares, which will be advanced by the undersigned to the Corporation, will not represent proceeds of crime for the purposes of the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the PATRIOT Act), and the undersigned acknowledges that the Corporation may in the future be required by law to disclose the undersigneds name and other information relating to this exercise form and the undersigneds subscription hereunder, on a confidential basis, pursuant to the PATRIOT Act. No portion of the purchase price to be provided by the undersigned (i) has been or will be derived from or related to any activity that is deemed criminal under the laws of the United States of America, or any other jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been identified to or by the undersigned, and the undersigned shall promptly notify the Corporation if the undersigned discovers that any of such representations ceases to be true and provide the Corporation with appropriate information in connection therewith. |
The undersigned also acknowledges and agrees that:
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5. |
the Corporation has provided to the undersigned the opportunity to ask questions and receive answers concerning the terms and conditions of the offering, and the undersigned has had access to such information concerning the Corporation as he or she has considered necessary or appropriate in connection with his or her investment decision to acquire the Common Shares; |
6. |
if the undersigned decides to offer, sell or otherwise transfer any of the Common Shares, the undersigned must not, and will not, offer, sell or otherwise transfer any of such Common Shares directly or indirectly, unless: |
(a) |
the sale is to the Corporation; |
(b) |
the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations; |
(c) |
the sale is made pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in accordance with any applicable state securities or blue sky laws; or |
(d) |
the Common Shares are sold in another transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities, and it has prior to such sale furnished to the Corporation an opinion of counsel reasonably satisfactory to the Corporation; |
7. |
the Common Shares are restricted securities (as defined in Rule 144(a)(3) under the U.S. Securities Act) and that the U.S. Securities Act and the rules of the United States Securities and Exchange Commission provide in substance that the undersigned may dispose of the Common Shares only pursuant to an effective registration statement under the U.S. Securities Act or an exemption or exclusion therefrom; |
8. |
the Corporation has no obligation to register any of the Common Shares or to take any other action so as to permit sales pursuant to the U.S. Securities Act (including Rule 144 thereunder); |
9. |
the certificates representing the Common Shares as well as all certificates issued in exchange for or in substitution of therefor, until such time as is no longer required under the applicable requirements of the U.S. Securities Act and applicable state securities laws, will bear, on the face of such certificate, restrictive legend substantially in the form set forth in Section 3.3(c) of the Warrant Indenture; provided that if the Common Shares are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S and the Corporation was a foreign issuer (as defined in Rule 902 of Regulation S) at the time of execution and delivery of this exercise form, such restrictive legend may be removed by providing a declaration to the registrar and transfer agent of the Corporation, substantially in the form annexed to the Warrant Indenture as 0 thereto (or in such other form as the Corporation may prescribe from time to time) and, if |
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requested by the Corporation or transfer agent, an opinion of counsel, of recognized standing, in form and substance satisfactory to the Corporation to the effect that the transfer is in compliance with Rule 904; and provided, further, that, if any Common Shares are being sold otherwise than in accordance with Regulation S and other than to the Corporation, the legend may be removed by delivery to the registrar and transfer agent and the Corporation of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws; |
10. |
the financial statements of the Corporation have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, which differ in some respects from United States generally accepted accounting principles and, thus, may not be comparable to financial statements of United States companies; |
11. |
there may be material tax consequences to the undersigned of an acquisition or disposition of the Common Shares, and the Corporation gives no opinion and makes no representation with respect to the tax consequences to the undersigned under United States, state, local or foreign tax law of the undersigneds acquisition or disposition of such securities; in particular, no determination has been made whether the Corporation will be a passive foreign investment company (commonly known as a PFIC) within the meaning of Section 1297 of the United States Internal Revenue Code; |
12. |
it consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described in this Warrant Exercise Form; and |
13. |
it acknowledges and consents to the fact that the Corporation is collecting personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) and any other applicable similar, replacement or supplemental provincial or federal legislation or laws in effect from time to time) of the undersigned for the purpose of facilitating the subscription for the Common Shares hereunder. The undersigned acknowledges and consents to the Corporation retaining such personal information for as long as permitted or required by law or business practices and agrees and acknowledges that the Corporation may use and disclose such personal information: (a) for internal use with respect to managing the relationships between and contractual obligations of the Corporation and the undersigned; (b) for use and disclosure for income tax-related purposes, including without limitation, where required by law disclosure to Canada Revenue Agency; (c) disclosure to professional advisers of the Corporation in connection with the performance of their professional services; (d) disclosure to securities regulatory authorities and other regulatory bodies with jurisdiction with respect to reports of trade or similar regulatory filings; (e) disclosure to a governmental or other authority to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure; (f) disclosure to any person where such disclosure is necessary for legitimate business reasons and is made with your prior written consent; (g) disclosure to a court determining the rights of the parties under this Agreement; and (h) for use and disclosure as otherwise required or permitted by law. |
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We acknowledge that you will rely upon our confirmations, acknowledgements and agreements set forth herein, and we agree to notify you promptly in writing if any of our representations or warranties herein ceases to be accurate or complete.
DATED ____________________, 20_____.
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Name of U.S. Warrantholder (please print) |
X |
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Signature of individual (if U.S. Warrantholder is an individual) |
X |
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Authorized signatory (if U.S. Warrantholder is not an individual) |
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Name of authorized signatory (please print) |
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Official capacity of authorized signatory (please print) |
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