UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of T he Securities Exchange Act of 1934

 


 

Date of Report (Date of earliest event reported): May 31 , 2019

 


 

diamedica therapeutics inc.

(Exact name of registrant as specified in its charter)

 

British Columbia

001-36291

Not Applicable

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

2 Carlson Parkway, Suite 260

Minneapolis, Minnesota

 

55447

(Address of principal executive offices)

(Zip Code)

  (763) 496-5454

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on

which registered

Voting common shares, no par value per share

DMAC

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

  Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 



 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

The information set forth under Item 3.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.03. Material Modification to Rights of Security Holders .

 

The Continuance

 

On May 31, 2019, DiaMedica Therapeutics Inc. (the “Company”) continued its existence from a corporation incorporated under the Canada Business Corporations Act (“CBCA”) into British Columbia under British Columbia’s Business Corporation Act (“BCBCA”) (the “Continuance”). The Continuance was approved by the Company’s shareholders at the Company’s 2019 Annual General and Special Meeting of Shareholders held on May 22, 2019.

 

Effects of the Continuance

 

Upon the effectiveness of the Continuance:

 

 

the affairs of the Company ceased to be governed by the CBCA, the Company’s existing Certificate of Continuance, as amended by those Certificates of Amendment dated December 28, 2016, September 24, 2018 and November 15, 2018 (collectively, the “Canada Articles”) and the Company’s existing By-Law No. 1 and 2, as amended and restated on September 30, 2018 (the “Canada Bylaws”), and the affairs of the Company became subject to the BCBCA and a new Notice of Articles and Articles (collectively, the “BC Articles”);

 

 

the Company as a corporation continued under the BCBCA (“DiaMedica BC”) (i) is deemed to be the same entity as the Company when it was a corporation incorporated under the CBCA (“DiaMedica Canada”) for all purposes under the BCBCA, (ii) continues to have all of the rights, privileges and powers of DiaMedica Canada, (iii) continues to possess all of the properties of DiaMedica Canada and (iv) continues to have all of the debts, liabilities and obligations of DiaMedica Canada;

 

 

each outstanding voting common share of DiaMedica Canada continued as an outstanding voting common share of DiaMedica BC;

 

 

each outstanding option, warrant or other right to acquire voting common shares of DiaMedica Canada continued as an equivalent option, warrant or other right to acquire, upon the same terms and conditions (including the vesting schedule and exercise price per share applicable to each such option), the same number of voting common shares of DiaMedica BC;

 

 

each employee benefit plan, incentive compensation plan or other similar plan of DiaMedica Canada continued to be an employee benefit plan, incentive compensation plan or other similar plan of DiaMedica BC;

 

 

each director and officer of DiaMedica Canada continued to hold his or her respective position with DiaMedica BC; and

 

 

the name of DiaMedica BC remains DiaMedica Therapeutics Inc.

 

 

 

 

Certain rights of the Company’s shareholders were also changed as a result of the Continuance, as described in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on April 8, 2019 (the “2019 Proxy Statement”), under the section entitled “Voting Proposal Three – Continuance of DiaMedica Therapeutics Inc. from the Canada Business Corporations Act to British Columbia’s Business Corporation Act,” which description is incorporated herein by reference.

 

The Continuance did not affect any of the Company’s material contracts with any third parties, and the Company’s rights and obligations under such material contractual arrangements continue to be rights and obligations of the Company after the Continuance. The Continuance did not result in any change in headquarters, business, jobs, management, location of any of the offices or facilities, number of employees, assets, liabilities or net worth of the Company.

 

Differences between the CBCA and the BCBCA

 

The Company is governed by the BCBCA. Although the rights and privileges of shareholders under the CBCA are in many instances comparable to those under the BCBCA, there are several notable differences. In general terms, the BCBCA provides to shareholders substantively the same rights as are available to shareholders under the CBCA, including rights of dissent and appraisal and rights to bring derivative actions and oppression actions. There are, however, important differences concerning the qualifications of directors, location of shareholder meetings and certain shareholder remedies. The differences include but are not limited to:

 

 

the BCBCA provides that a public company must have a minimum of three directors but does not impose any residency requirements on the directors; whereas, under the CBCA, at least 25% of the Company’s directors must be resident Canadians;

 

 

the BCBCA and the BC Articles require a special resolution to remove a director; whereas, under the CBCA, directors may be removed by an ordinary resolution of shareholders;

 

 

the BCBCA permits amendments to the BC Articles to be approved by ordinary resolution; whereas, under the CBCA, changes to the Canada Articles generally require approval by shareholders by special resolution and changes to the Canada By-laws require shareholder approval by ordinary resolution;

 

 

in order for one or more record or non-record shareholders to be entitled to submit a proposal under the BCBCA, they must have held voting shares for an uninterrupted period of at least two years before the date the proposal is signed by the shareholders and must own not less than 1% of the total number of voting shares or voting shares with a fair market value in excess of CAD$2,000; whereas, under the CBCA, a record or non-record shareholder may submit a proposal, although the record or non-record shareholder must either: (i) have owned for six months not less than 1% of the total number of voting shares or voting shares with a fair market value of at least CAD$2,000, or (ii) have the support of persons who, in the aggregate, have owned for six months not less than 1% of the total number of voting shares or voting shares with a fair market value of at least CAD$2,000;

 

 

the BCBCA requires the Company to hold a special shareholders meeting within not more than four months after a demand from a shareholder holding 5% of the outstanding voting equity; whereas, under the CBCA, the Company was required to hold a special shareholders meeting within 21 days after a demand from a shareholder holding 5% of the outstanding voting equity;

 

 

 

 

 

to dissent from certain corporate actions, the BCBCA requires a dissenting shareholder to generally send notice of dissent prior to a resolution being passed; whereas, the CBCA allows a shareholder to dissent within 20 days after learning of a resolution’s passage if the shareholder had not previously voted in favor of the resolution;

 

 

when oppression of a shareholder is alleged, the BCBCA allows a court to grant relief where a prejudicial effect to the shareholder is merely threatened; whereas, under the CBCA, a court is only allowed to grant relief where the oppressive effect actually exists;

 

 

non-shareholders also require the leave of a court in order to bring an oppression claim; whereas, under the CBCA, non-shareholders may bring an oppression claim without court leave;

 

 

under the BCBCA, a court may grant leave for an application to commence a shareholder derivative action if (i) the complainant has made reasonable efforts to cause the directors of the Company to prosecute or defend the legal proceeding, (ii) notice of the application for leave has been given to the Company and to any other person the court may order, (iii) the complainant is acting in good faith, and (iv) it appears to the court that it is in the best interests of the Company for the legal proceeding to be prosecuted or defended; whereas, under the CBCA, a court may grant leave for application to commence a shareholder derivative action if (i) the complainant has given at least 14 days’ notice to the directors of the corporation or its subsidiary of the complainant’s intention to apply to the court if the directors of the corporation or its subsidiary do not bring, diligently prosecute, defend or discontinue the action, (ii) the complainant is acting in good faith, and (iii) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued;

 

 

under the BCBCA, general meetings of shareholders are to be held in British Columbia, or may be held at a location outside of British Columbia if: (i) the location is provided for in the BC Articles, (ii) the BC Articles do not restrict the Company from approving a location outside of British Columbia and the location is approved by the resolution required by the BC Articles for that purpose, or if no resolution is required for that purpose by the Articles, is approved by ordinary resolution, or (iii) the location is approved in writing by the Registrar of Companies before the meeting is held; whereas, under the CBCA, general meetings of shareholders at (i) the location provided in the Canada Bylaws or (ii) if no location is stated in the Canada Bylaws, then in a location determined by the directors, provided if the location is outside of Canada, then such location must be in the Canada Articles or all the shareholders entitled to vote at the meeting agree that the meeting is to be held at that place;

 

 

the BCBCA permits a subsidiary to hold shares of its parent entity; whereas, the CBCA does not permit a subsidiary to hold shares of its parent entity; and

 

 

the BCBCA permits a corporate group to implement horizontal short-form amalgamations even though all the shares of the amalgamating companies are not held by the same company within the group and permits a company to amalgamate with a foreign corporation to form a British Columbia company, if permitted by the foreign jurisdiction; whereas, the CBCA does not permit such short-form amalgamations.

 

The foregoing descriptions of the CBCA and BCBCA do not purport to be complete and are qualified in their entirety by reference to the full provisions of the CBCA and BCBCA, as applicable.

 

More information about the differences between the CBCA and BCBCA may be found in the 2019 Proxy Statement under the Section entitled “Voting Proposal Three – Continuance of DiaMedica Therapeutics Inc. from the Canada Business Corporations Act to British Columbia’s Business Corporation Act,” which description is incorporated herein by reference.

 

 

 

 

The Charter Documents of DiaMedica Canada and DiaMedica BC

 

Under the CBCA, the charter documents of DiaMedica Canada consisted of: (i) Canada Articles, which set forth, among other things, the name of the corporation, the province in which the corporation’s registered office is to be located, the authorized share capital including any rights, privileges, restrictions and conditions thereon, whether there are any restrictions on the transfer of shares of the corporation, the number of directors (or the minimum and maximum number of directors), any restrictions on the business that the corporation may carry on and other provisions such as the ability of the directors to appoint additional directors between annual meetings, and (ii) the Canada By-laws, which governed the management of the corporation. The Canada Articles were filed with Corporations Canada and the Canada By-laws were filed only at the registered office.

 

Under the BCBCA, the charter documents of DiaMedica BC consist of (i) Notice of Articles, which sets forth the name of the Company, the Company’s registered and records office, the names and addresses of the directors of the Company and the amount and type of authorized capital, and (ii) Articles, which govern the management of the Company and set out any special rights or restrictions attached to shares. The Notice of Articles is filed with the Registrar of Companies and the Articles are filed only with a Company’s registered and records office.

 

The provisions of the Canada Articles and Canada By-laws are similar in substance to the BC Articles in most respects. The differences include but are not limited to:

 

 

the BC Articles need to specify that the directors are authorized to set the remuneration paid to the auditors of the Company; whereas, the Canada Articles and Canada By-laws did not;

 

 

the BC Articles provide additional clarity regarding the conduct of shareholder meetings, including (i) confirming that access to ballots and proxies voted at the shareholder meeting will be provided as soon as reasonably practicable after the meeting, (ii) confirming the authority of the chair of the shareholder meeting and the Company’s board of directors to waive the time by which proxies must be deposited with the Company or its agent in respect of a shareholder meeting, (iii) revising authority for determining which persons, in addition to shareholders, proxy holders, directors and the auditors, may attend shareholder meetings, (iv) revising authority for adjourning a shareholder meeting due to lack of quorum, (v) clarifying that the chair of the meeting has authority to determine certain disputes in good faith and (vi) clarifying that both the chair of the meeting and the Company’s board of directors have the authority to require evidence of ownership of shares and authority to vote at a shareholder meeting; whereas, the Canada Articles and Canada Bylaws did not provide such clarity;

 

 

under the BC Articles, the Company’s board of directors may approve the following without shareholder approval: (i) a subdivision of all or any of the unissued, or fully paid issued, shares, (ii) a consolidation of all or any of the unissued, or fully paid issued, shares, and (iii) a change of name of the Company; whereas, under the Canada Articles and Canada Bylaws, such matters required the passage of a special resolution by the shareholders; and

 

 

the BC Articles may be altered by an ordinary resolution of the shareholders, including creation, variation or elimination of special rights or restrictions attached to issued shares; whereas, the Canada Articles and Canada Bylaws required a special resolution of the shareholders to alter the Canada Articles and an ordinary resolution of the shareholders to alter the Canada Bylaws.

 

 

 

 

The foregoing descriptions of the BC Articles do not purport to be complete and are qualified in their entirety by reference to the full text of the Notice of Articles and Articles of the Company, copies of which are filed as exhibits to this Current Report on Form 8-K and incorporated herein by reference.

 

More information about the differences between the Canada Articles or Canada Bylaws and the BC Articles may be found in the 2019 Proxy Statement under the Section entitled “Voting Proposal Three – Continuance of DiaMedica Therapeutics Inc. from the Canada Business Corporations Act to British Columbia’s Business Corporation Act,” which description is incorporated herein by reference.

 

Entry into Indemnification Agreements

 

In connection with the Continuance, the Company will enter into a new indemnification agreement (collectively, the “Indemnification Agreements”) with each of its directors and executive officers (collectively, the “Indemnitees”), in substantially the form of the Company’s existing Indemnification Agreements, but to reflect applicable references to the BCBCA and the BC Articles as opposed to the CBCA and Canada Bylaws.

 

The Indemnification Agreements will provide indemnification, among other things, to the fullest extent permitted by law and the BC Articles, against any and all expenses (including attorneys’ fees) and liabilities, judgments, fines and amounts paid in settlement that are paid or incurred by the Indemnitees or on his or her behalf in connection with such action, suit or proceeding. The Company will be obligated to pay these amounts only if the Indemnitees acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal or administrative proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful. The Indemnification Agreements will provide that the Indemnitees will not be indemnified and expenses advanced with respect to an action, suit or proceeding initiated by the executive unless (i) so authorized or consented to by the Company’s board of directors or the Company has joined in such action, suit or proceeding or (ii) the action, suit or proceeding is one to enforce the Indemnitee’s rights under the Indemnification Agreements. The Company’s indemnification and expense advance obligations will be subject to the condition that an appropriate person or body not party to the particular action, suit or proceeding shall not have determined that the Indemnitee is not permitted to be indemnified under applicable law. The Indemnification Agreements also set forth procedures that apply in the event an Indemnitee requests indemnification or an expense advance.

 

The foregoing description of the Indemnification Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Indemnification Agreement, which is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The information set forth under Item 3.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)      Exhibits .

 

Exhibit No.

 

Description

3.1

 

Notice of Articles of DiaMedica Therapeutics Inc. dated May 31, 2019 (filed herewith)

     

3.2

 

Articles of DiaMedica Therapeutics Inc. dated May 31, 2019 (filed herewith)

     

4.1

 

Shareholder Rights Plan Agreement dated December 21, 2017 by and between DiaMedica Therapeutics Inc. and Computershare Investor Services Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission on November 9, 2018 (File No. 333-228313))

     

4.2

 

Specimen Certificate representing Voting Common Shares of DiaMedica Therapeutics Inc. (filed herewith)

     

10.1

 

Form of Indemnification Agreement between DiaMedica Therapeutics Inc. and each Director and Officer (filed herewith)

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

DIAMEDICA THERAPEUTICS INC.

 

 

 

 

 

       

 

 

 

 

 

By:

/s/  Scott Kellen

 

 

 

Scott Kellen

 

 

 

Chief Financial Officer and Secretary

 

 

Dated: June 4, 2019

 

 

 

Exhibit 3.1

 

 

Mailing Address:

PO Box 9431 Stn Prov Govt

Victoria BC V8W 9V3

www.corporateonline.gov.bc.ca  

Location:

2nd Floor - 940 Blanshard Street

Victoria BC

1 877 526-1526

 

 

CERTIFIED COPY

Of a Document filed with the Province of

British Columbia Registrar of Companies

 

  Notice of Articles /s/ Carol Prest
  BUSINESS CORPORATIONS ACT CAROL PREST

 

 

 

This Notice of Articles was issued by the Registrar on: May 31, 2019 09:44 AM Pacific Time

 

Incorporation Number:     C1210914

 

Recognition Date and Time: Continued into British Columbia on May 31, 2019 09:44 AM Pacific Time

 

 

 
NOTICE OF ARTICLES
 

Name of Company:

 

DIAMEDICA THERAPEUTICS INC.

 

   
REGISTERED OFFICE INFORMATION  
   

Mailing Address:

C/O PUSHOR MITCHELL LLP

301 - 1665 ELLIS STREET

KELOWNA BC V1Y 2B3

CANADA

 

Delivery Address:

C/O PUSHOR MITCHELL LLP

301 - 1665 ELLIS STREET

KELOWNA BC V1Y 2B3

CANADA

   
   
RECORDS OFFICE INFORMATION  
   

Mailing Address:

C/O PUSHOR MITCHELL LLP

301 - 1665 ELLIS STREET

KELOWNA BC V1Y 2B3

CANADA

Delivery Address:

C/O PUSHOR MITCHELL LLP

301 - 1665 ELLIS STREET

KELOWNA BC V1Y 2B3

CANADA

 

Page: 1 of 2

 

 

   
DIRECTOR INFORMATION  
   

Last Name, First Name, Middle Name:

Pilnik, Richard

 
   

Mailing Address:

7975 N. ILLINOIS STREET

INDIANAPOLIS IN 46260

UNITED STATES

Delivery Address:

7975 N. ILLINOIS STREET

INDIANAPOLIS IN 46260

UNITED STATES

   
   

Last Name, First Name, Middle Name:

Giuffre, Michael

 
   

Mailing Address:

4203 – 14A STREET SW

CALGARY AB T2T 3Y3

CANADA

Delivery Address:

4203 – 14A STREET SW

CALGARY AB T2T 3Y3

CANADA

   
   

Last Name, First Name, Middle Name:

Paul, Rick

 
   

Mailing Address:

260 – TWO CARLSON PARKWAY

MINNEAPOLIS MN 55447

UNITED STATES

Delivery Address:

260 – TWO CARLSON PARKWAY

MINNEAPOLIS MN 55447

UNITED STATES

   
   

Last Name, First Name, Middle Name:

Parsons, James

 
   

Mailing Address:

1215 IRONWOOD COURT

MISSISSAUGA ON L5C 3R9

CANADA

Delivery Address:

1215 IRONWOOD COURT

MISSISSAUGA ON L5C 3R9

CANADA

   
   

Last Name, First Name, Middle Name:

Xiao, Zhenyu

 
   

Mailing Address:

ROOM 501, UNIT 4, 36 LANE ZHENGZHONG RD

SHANGHAI

CHINA

Delivery Address:

ROOM 501, UNIT 4, 36 LANE ZHENGZHONG RD

SHANGHAI

CHINA

   

 

AUTHORIZED SHARE STRUCTURE

   

1.  No Maximum

 

 

 

Voting Common Shares

Without Par Value

 

With Special Rights or

Restrictions attached

 

 

Page: 2 of 2

Exhibit 3.2

 

 

 

 

Index of Articles

 

of

 

DiaMedica Therapeutics Inc.

 

 

  Article 1. Interpretation
  Article 2. Shares and Share Certificates
  Article 3. Issue of Shares
  Article 4. Share Registers
  Article 5. Share Transfers
  Article 6. Transmission of Shares
  Article 7. Purchase of Shares
  Article 8. Borrowing Powers
  Article 9. Alterations
  Article 10. Meetings of Shareholders
  Article 11. Proceedings at Meetings of Shareholders
  Article 12. Votes of Shareholders
  Article 13. Directors
  Article 14. Election and Removal of Directors
  Article 15. Powers and Duties of Directors
  Article 16. Interests of Directors and Officers
  Article 17. Proceedings of Directors
  Article 18. Executive and Other Committees
  Article 19. Officers
  Article 20. Indemnification
  Article 21. Dividends
  Article 22. Accounting Records and Auditors
  Article 23. Notices
  Article 24. Execution of Documents
  Article 25. Special Rights or Restrictions

 

 

- 2 -

 

Articles

 

of

 

DiaMedica Therapeutics Inc.

(the “Company”)

 

 

 

1.

INTERPRETATION

   
1.1 Definitions

 

In these Articles, unless the context otherwise requires:

 

 

(a)

"appropriate person", has the meaning assigned in the Securities Transfer Act;

 

 

(b)

“board of directors”, “directors” and “board” mean the directors or sole director of the Company for the time being;

 

 

(c)

“Business Corporations Act” means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

 

 

(d)

"Canadian securities legislation" means the securities legislation in any province or territory of Canada and includes the Securities Act;

 

 

(e)

“Interpretation Act” means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

 

 

(f)

“legal personal representative” means the personal or other legal representative of a shareholder;

 

 

(g)

“protected purchaser" has the meaning assigned in the Securities Transfer Act;

 

 

(h)

“registered address” of a shareholder means the shareholder’s address as recorded in the central securities register;

 

 

(i)

“seal” means the seal of the Company, if any;

 

 

(j)

"Securities Act" means the Securities Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

 

 

(k)

"securities legislation" means statutes concerning the regulation of securities markets and trading in securities and the regulations, rules, forms and schedules under those statutes, all as amended from time to time, and the blanket rulings and orders, as amended from time to time, issued by the securities commissions or similar regulatory authorities appointed under or pursuant to those statutes;

 

 

- 3 -

 

 

(l)

"Securities Transfer Act" means the Securities Transfer Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act; and

 

 

(m)

"U.S. securities legislation" means the securities legislation in the federal jurisdiction of the United States and in any state of the United States and includes the Securities Act of 1933 and the Securities Exchange Act of 1934.

 

1.2

Business Corporations Act and Interpretation Act Definitions Applicable

 

The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict or inconsistency between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

 

2.

SHARES AND SHARE CERTIFICATES

 

2.1

Authorized Share Structure

 

The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.

 

2.2

Form of Share Certificate

 

The Company may issue shares in certificate or uncertificated form. In the event that shares are issued in certificated form, the share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act.

 

2.3

Shareholder Entitled to Certificate or Acknowledgment

 

Unless the shares of which the shareholder is the registered owner are uncertificated shares within the meaning of the Business Corporations Act, each shareholder is entitled, without charge, to:

 

 

(a)

one share certificate representing the shares of each class or series of shares registered in the shareholder’s name; or

 

 

(b)

a non-transferable written acknowledgment of the shareholder’s right to obtain such a share certificate,

 

provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate or acknowledgement and delivery of a share certificate or an acknowledgement to one of several joint shareholders or to a duly authorized agent of one of the joint shareholders will be sufficient delivery to all.

 

2.4

Delivery by Mail

 

Any share certificate or non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

 

 

- 4 -

 

2.5

Replacement of Worn Out or Defaced Certificate or Acknowledgement

 

If the directors are satisfied that a share certificate or a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as they think fit:

 

 

(a)

order the share certificate or acknowledgment, as the case may be, to be cancelled; and

 

 

(b)

issue a replacement share certificate or acknowledgment, as the case may be.

 

2.6

Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment

 

If a person entitled to a share certificate claims that the share certificate has been lost, destroyed or wrongfully taken, the Company must issue a new share certificate, if that person:

 

 

(a)

so requests before the Company has notice that the share certificate has been acquired by a protected purchaser;

 

 

(b)

provides the Company with an indemnity bond sufficient in the Company’s judgement to protect the Company from any loss that the Company may suffer by issuing a new certificate; and

 

 

(c)

satisfies any other reasonable requirements imposed by the directors.

 

A person entitled to a share certificate may not assert against the Company a claim for a new share certificate where a share certificate has been lost, apparently destroyed or wrongfully taken if that person fails to notify the Company of that fact within a reasonable time after that person has notice of it and the Company registers a transfer of the shares represented by the certificate before receiving a notice of the loss, apparent destruction or wrongful taking of the share certificate.

 

2.7

Recovery of New Share Certificate

 

If, after the issue of a new share certificate, a protected purchaser of the original share certificate presents the original share certificate for the registration of transfer, then in addition to any rights under any indemnity bond, the Company may recover the new share certificate from a person to whom it was issued or any person taking under that person other than a protected purchaser.

 

2.8

Splitting Share Certificates

 

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

 

 

- 5 -

 

2.9

Certificate Fee

 

The Company may charge a fee in relation to the issue of any share certificate under Articles 2.5, 2.6 or 2.8; provided, however, that the amount of the fee, if any, must not exceed the amount prescribed under the Business Corporations Act.

 

2.10

Recognition of Trusts

 

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or shared interest in any share or fraction of a share or (except as required by law or statute or these Articles or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

 

3.

ISSUE OF SHARES

 

3.1

Directors Authorized

 

Subject to the Business Corporations Act and the rights, if any, of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

 

3.2

Commissions and Discounts

 

The Company may at any time, pay a reasonable commission or allow a reasonable discount to any person in consideration of that person:

 

 

(a)

purchasing or agreeing to purchase shares of the Company from the Company or any other person; or

     
  (b) procuring or agreeing to procure purchasers for shares of the Company.

 

3.3

Brokerage

 

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

 

3.4

Conditions of Issue

 

Except as provided for by the Business Corporations Act, no share may be issued until it is fully paid. A share is fully paid when:

 

 

(a)

consideration is provided to the Company for the issue of the share by one or more of the following:

 

    (i) past services performed for the Company;
       
    (ii) property;
       
    (iii) money; and

 

 

(b)

the value of the consideration received by the Company equals or exceeds the issue price set for the share under Article 3.1.

 

 

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3.5

Share Purchase Warrants and Rights

 

Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

 

4.

SHARE REGISTERS

   
4.1 Central Securities Register

 

As required by and subject to the Business Corporations Act, the Company must maintain in British Columbia a central securities register. The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

 

4.2

Closing Register

 

The Company must not at any time close its central securities register.

 

5.

SHARE TRANSFERS

   
5.1 Registering Transfers

 

The Company must register a transfer of a share of the Company if either:

 

 

(a)

the Company or the transfer agent or registrar for the class or series of share to be transferred has received:

 

 

(i)

in the case where the Company has issued a share certificate in respect of the share to be transferred, that share certificate and a written instrument of transfer (which may be on a separate document or endorsed on the share certificate) made by the shareholder or other appropriate person or by an agent who has actual authority to act on behalf of that person;

     
 

(ii)

in the case of a share that is not represented by a share certificate (including an uncertificated share within the meaning of the Business Corporations Act and including the case where the Company has issued a non-transferable written acknowledgement of the shareholder’s right to obtain a share certificate in respect of the share to be transferred), a written instrument of transfer, made by the shareholder or other appropriate person or by an agent who has actual authority to act on behalf of that person; and

     
 

(iii)

such other evidence, if any, as the Company or the transfer agent or registrar for the class or series of share to be transferred may require to prove the title of the transferor or the transferor’s right to transfer the share, that the written instrument of transfer is genuine and authorized and that the transfer is rightful or to a protected purchaser; or

 

 

(b)

all the preconditions for a transfer of a share under the Securities Transfer Act have been met and the Company is required under the Securities Transfer Act to register the transfer.

 

 

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5.2

Waiver of Requirements for Transfer

 

The Company may waive any of the requirements set out in Article 5.1(a) and any of the preconditions referred to in Article 5.1(b).

 

5.3

Transferor Remains Shareholder

 

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

 

5.4

Signing of Instrument of Transfer

 

If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

 

 

(a)

in the name of the person named as transferee in that instrument of transfer; or

 

 

(b)

if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

 

5.5

Enquiry as to Title Not Required

 

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

 

5.6

Transfer Fee

 

The Company may charge a fee in relation to the registration of any transfer in such amount as may be determined by the directors, from time to time.

 

 

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6.

TRANSMISSION OF SHARES

   
6.1 Legal Personal Representative Recognized on Death

 

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

 

6.2

Rights of Legal Personal Representative

 

The legal personal representative of a shareholder has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

 

7.

PURCHASE OF SHARES

   
7.1 Company Authorized to Purchase Shares

 

Subject to Article 7.2, the special rights or restrictions attached to the shares of any class or series and the Business Corporations Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

 

7.2

Purchase When Insolvent

 

The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that:

 

 

(a)

the Company is insolvent; or

     
  (b) making the payment or providing the consideration would render the Company insolvent.

 

7.3

Sale and Voting of Purchased Shares

 

If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

 

 

(a)

is not entitled to vote the share at a meeting of its shareholders;

     
  (b) must not pay a dividend in respect of the share; and
     
  (c) must not make any other distribution in respect of the share.

 

 

 

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8.

BORROWING POWERS

 

The Company, if authorized by the directors, may:

 

 

(a)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

     
  (b) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;
     
  (c) guarantee the repayment of money by any other person or the performance of any obligation of any other person; and
     
  (d) mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

 

9.

ALTERATION S

   
9.1 Alteration of Authorized Share Structure

 

Subject to Article 9.2 and the Business Corporations Act, the Company may by directors’ resolution, unless an alteration to the Company’s Notice of Articles would be required, in which case by ordinary resolution:

 

 

(a) create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;
     
  (b) increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;
     
  (c) subdivide or consolidate all or any of its unissued, or fully paid issued, shares;
     
  (d) if the Company is authorized to issue shares of a class of shares with par value:

 

    (i) decrease the par value of those shares; or
       
    (ii) if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

 

  (e) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;
     
  (f) alter the identifying name of any of its shares; or
     
  (g) otherwise alter its shares or authorized share structure when required or permitted to do so by the Business Corporations Act;

 

and, if applicable, alter its Notice of Articles and, if applicable, its Articles, accordingly.

 

 

- 10 -

 

9.2

Special Rights or Restrictions

 

Subject to the Business Corporations Act, the Company may by ordinary resolution:

 

  (a) create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or
     
  (b) vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued;

 

and alter its Articles and Notice of Articles accordingly.

 

9.3

Change of Name

 

The Company may by directors’ resolution authorize an alteration of its Notice of Articles in order to change its name.

 

9.4

Other Alterations

 

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by ordinary resolution alter these Articles.

 

10.

MEETINGS OF SHAREHOLDERS

   
10.1 Annual General Meetings

 

Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

 

10.2

Resolution Instead of Annual General Meeting

 

If all the shareholders who are entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select as the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

 

10.3

Calling of Meetings of Shareholders

 

The chairman of the board, the chief executive officer or president (in the absence of a chief executive officer), or a majority of the directors, by resolution, may, at any time, call a meeting of shareholders. Subject to compliance with the Business Corporations Act, shareholders holding no less than 1/20 th (5%) of the issued shares of the Company that carry the right to vote may request a meeting of shareholders.

 

 

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10.4

Location of Meetings of Shareholders

 

Subject to the Business Corporations Act, a meeting of shareholders may be held in or outside of British Columbia as determined by a resolution of the directors. For greater certainty, and without limiting the generality of the foregoing, a meeting of shareholders may be held electronically, in Minneapolis, Minnesota, or in such other city in the United States of America as the directors may be determined by a resolution of the directors.

 

10.5

Notice for Meetings of Shareholders

 

Notice of the time and place of a meeting of shareholders must be sent not less than twenty-one days and not more than fifty days before the meeting:

 

 

(a)

to each shareholder entitled to vote at the meeting;

 

 

(b)

to each director; and

 

 

(c)

to the auditor of the Corporation.

 

10.6

Record Date for Notice

 

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than 21 days.

 

If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

 

10.7

Record Date for Voting

 

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

 

10.8

Failure to Give Notice and Waiver of Notice

 

The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting. Attendance of a person at a meeting of shareholders is a waiver of entitlement to notice of the meeting unless that person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

 

 

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10.9

Notice of Special Business at Meetings of Shareholders

 

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

 

  (a) state the general nature of the special business; and
     
  (b) if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

 

    (i) at the Company’s records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and
       
    (ii) during statutory business hours on any one or more specified days before the day set for the holding of the meeting.

 

11.

PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

   
11.1 Special Business

 

At a meeting of shareholders, the following business is special business:

 

  (a) at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;
     
  (b) at an annual general meeting, all business is special business except for the following:

 

    (i) business relating to the conduct of or voting at the meeting;
       
    (ii) consideration of any financial statements of the Company presented to the meeting;
       
    (iii) consideration of any reports of the directors or auditor;
       
    (iv) the setting or changing of the number of directors;
       
    (v) the election or appointment of directors;
       
    (vi) the appointment of an auditor;
       
    (vii) business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;
       
    (viii) any other business which, under these Articles or the Business Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

 

 

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11.2

Voting Thresholds

 

The majority of votes required for the Company to pass an ordinary resolution at a meeting of shareholders is a simple majority of the votes cast on the resolution.

 

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

 

11.3

Quorum

 

Subject to the special rights or restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders shall be any number of shareholders who, in the aggregate, hold at least 33 1/3 % of the issued shares entitled to be voted at the meeting.

 

11.4

Other Persons May Attend

 

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

 

11.5

Requirement of Quorum

 

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

 

11.6

Lack of Quorum

 

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

 

 

(a)

in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

 

 

(b)

in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

 

11.7

Chair

 

The following individual is entitled to preside as chair at a meeting of shareholders:

 

 

(a)

the chair of the board, if any; or

 

 

(b)

if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any; or

 

 

(c)

if the chair of the board and the president are absent or unwilling to act as chair of the meeting, the chief executive officer, if any; or

 

 

(d)

if the chair of the board, the president and the chief executive officer are absent or unwilling to act as chair of the meeting, the chief financial officer.

 

 

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11.8

Selection of Alternate Chair

 

If, at any meeting of shareholders, there is no chair of the board, president, chief executive officer or chief financial officer present within 15 minutes after the time set for holding the meeting, or if all of the foregoing are unwilling to act as chair of the meeting or have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present at the meeting must choose one of their number to be chair of the meeting or if all of the directors present decline to take the chair or fail to so choose or if no director is present at the meeting, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

 

11.9

Adjournments

 

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. For greater certainty, a meeting of shareholders may be adjourned multiple times if so required.

 

11.10

Notice of Adjourned Meeting

 

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

 

11.11

Decisions by Show of Hands or Poll

 

Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

 

11.12

Declaration of Result

 

The chair of a meeting of shareholders may declare to the meeting the decision on a question in accordance with the result of the show of hands or the poll, as the case may be, and that decision, if so declared, must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.11, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

 

11.13

Motion Need Not be Seconded

 

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

 

 

- 15 -

 

11.14

Casting Vote

 

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

 

11.15

Manner of Taking Poll

 

Subject to Article 11.16, if a poll is duly demanded at a meeting of shareholders:

 

 

(a)

the poll must be taken:

 

 

  (i)

at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

       
    (ii) in the manner, at the time and at the place that the chair of the meeting directs;

 

 

(b)

the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

     
  (c) the demand for the poll may be withdrawn by the person who demanded it.

 

11.16

Demand for Poll on Adjournment

 

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

 

11.17

Chair Must Resolve Dispute

 

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is final and conclusive.

 

11.18

Casting of Votes

 

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

 

11.19

Demand for Poll

 

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

 

11.20

Demand for Poll Not to Prevent Continuance of Meeting

 

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

 

11.21

Retention of Ballots and Proxies

 

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

 

 

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11.24

Meetings by Telephone or Other Communications Medium

 

A shareholder or proxy holder who is entitled to participate in, including vote, at a meeting of shareholders may do so by telephone or other communications medium if all shareholders participating in the meeting, whether in person, by telephone or other communications medium, are able to communicate with each other. Nothing in this Article 11.24 obligates the company to take any action or provide any facility to permit or facilitate the use of any communications medium at a meeting of shareholders. A shareholder who participates in a meeting in a manner contemplated by this Article 11.24 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner .

 

12.

VOTES OF SHAREHOLDERS

   
12.1 Number of Votes by Shareholder or by Shares

 

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

 

 

(a)

on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

 

 

(b)

on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

 

12.2

Votes of Persons in Representative Capacity

 

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

 

12.3

Votes by Joint Holders

 

If there are joint shareholders registered in respect of any share:

 

 

(a)

any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

 

 

(b)

if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

 

12.4

Legal Personal Representatives as Joint Shareholders

 

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders.

 

 

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12.5

Representative of a Corporate Shareholder

 

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

 

 

(a)

for that purpose, the instrument appointing a representative must:

 

 

  (i)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

       
    (ii) be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting;

 

 

(b)

if a representative is appointed under this Article 12.5:

 

 

  (i)

the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

       
    (ii) the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

 

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

 

12.6

When Proxy Provisions Do Not Apply to the Company

 

Articles 12.7 to 12.15 apply only insofar as they are not inconsistent with any Canadian securities legislation applicable to the Company, any U.S. securities legislation applicable to the Company or any rules of an exchange on which securities of the Company are listed.

 

12.7

Appointment of Proxy Holders

 

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

 

12.8

Alternate Proxy Holders

 

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

 

 

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12.9

Deposit of Proxy

 

A proxy for a meeting of shareholders must:

 

 

(a)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

 

 

(b)

unless the notice provides otherwise, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting.

 

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

 

12.10

Validity of Proxy Vote

 

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

 

 

(a)

at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

 

 

(b)

by the chair of the meeting, before the vote is taken.

 

12.11

Form of Instrument of Proxy

 

An instrument of proxy, whether for a specified meeting or otherwise, must be in substantially the following form or in any other form approved by the directors or the chair of the meeting:

 

Name of Company

 

(the “Company”)

 

The undersigned, being a shareholder of the Company, hereby appoints            or, failing that person,            , as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on                 and at any adjournment of that meeting.

 

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy is given in respect of all shares registered in the name of the shareholder): _____________________

 

Signed                                                                                                                                                          

 

(month, day, year)

                                                                                                                                                                         

(Signature of shareholder) - print name

 

 

- 19 -

 

12.12

Revocation of Instrument of Proxy

 

Subject to Article 12.13, every instrument of proxy may be revoked by an instrument in writing that is:

 

 

(a)

received at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the instrument of proxy is to be used; or

 

 

(b)

provided, at the meeting, to the chair of the meeting.

 

12.13

Revocation of Instrument of Proxy Must Be Signed

 

An instrument referred to in Article 12.12 must be signed as follows:

 

 

(a)

if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or his or her legal personal representative or trustee in bankruptcy;

 

 

(b)

if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under Article 12.5.

 

12.14

Production of Evidence of Authority to Vote

 

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

 

12.15

Chair to Determine Validity

 

The chair of the meeting may determine whether or not a proxy, deposited for use at such meeting, which may not strictly comply with the requirements of these Articles as to form, execution, accompanying documentation, time of filing, or otherwise, shall be valid for use at such meeting and any such determination made in good faith shall be final, conclusive and binding upon such meeting.

 

12.16

Consent Resolution In Counterparts

 

A resolution consented to in writing by the shareholders may be consented to in any number of counterparts which together shall be deemed to constitute one resolution in writing. A consent resolution passed in this manner which meets the requirements of the Business Corporations Act is effective on the date stipulated in the resolution or, if no date is stipulated, then on the latest date stated on any counterpart.

 

12.17

Consent Resolution

 

A resolution or any counterpart thereof consented to in writing by the shareholders which has been sent to the records office of the Company by fax or any other method of transmitting such resolution or counterpart thereof which indicates written consent of such resolution by such shareholders shall, subject to evidence to the contrary, be deemed to be proof that the resolution has been passed.

 

 

- 20 -

 

13.

DIRECTORS

   
13.1 First Director; Number of Directors

 

The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Business Corporations Act. The number of directors, excluding additional directors appointed under Article 14.8, is set at the greater of three and the most recently set of: (i) the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given); and (ii) the number of directors set under Article 14.4.

 

13.2

Election or Appointment of Directors

 

If the number of directors is set under Article 13.1:

 

 

(a)

the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors up to that number;

 

 

(b)

if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of directors up to that number contemporaneously with the setting of that number, then the directors, subject to Article 14.8, may appoint, or the shareholders may elect or appoint, directors to fill those vacancies.

 

13.3

Directors’ Acts Valid Despite Vacancy

 

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

 

13.4

Qualifications of Directors

 

A director is not required to hold a share in the capital of the Company as qualification for his or her office but must be qualified as required by the Business Corporations Act to become, act or continue to act as a director.

 

13.5

Remuneration of Directors

 

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director.

 

13.6

Reimbursement of Expenses of Directors

 

The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.

 

 

- 21 -

 

14.

ELECTION AND REMOVAL OF DIRECTORS

   
14.1 Election at Annual General Meeting

 

At every annual general meeting and in every unanimous resolution contemplated by Article 10.2:

 

 

(a)

the shareholders entitled to vote at the annual general meeting for the election of directors must elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and

 

 

(b)

all the directors cease to hold office immediately before the election or appointment of directors under Article 14.1(a), but are eligible for re-election or re-appointment.

 

14.2

Consent to be a Director

 

No election, appointment or designation of an individual as a director is valid unless:

 

 

(a)

that individual consents to be a director in the manner provided for in the Business Corporations Act;

 

 

(b)

that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or

 

 

(c)

with respect to first directors, the designation is otherwise valid under the Business Corporations Act.

 

14.3

Failure to Elect or Appoint Directors

 

If:

 

 

(a)

the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by Article 10.2, on or before the date by which the annual general meeting is required to be held under the Business Corporations Act; or

 

 

(b)

the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by Article 10.2, to elect or appoint any directors;

 

then each director then in office continues to hold office until the earlier of:

 

 

(c)

the date on which his or her successor is elected or appointed; and

 

 

(d)

the date on which he or she otherwise ceases to hold office under the Business Corporations Act or these Articles.

 

14.4

Places of Retiring Directors Not Filled

 

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

 

 

- 22 -

 

14.5

Directors May Fill Casual Vacancies

 

Any casual vacancy occurring in the board of directors may be filled by the directors.

 

14.6

Remaining Directors Power to Act

 

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business Corporations Act, for any other purpose.

 

14.7

Shareholders May Fill Vacancies

 

If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

 

14.8

Additional Directors

 

Notwithstanding Articles 13.1 and 13.2, between annual general meetings or unanimous resolutions contemplated by Article 10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.8 must not at any time exceed:

 

 

(a)

one-third of the number of first directors, if, at the time of the appointments, one or more of the first directors have not yet completed their first term of office; or

 

 

(b)

in any other case, one-third of the number of the current directors who were elected or appointed as directors other than under this Article 14.8.

 

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under Article 14.1(a), but is eligible for re-election or re-appointment.

 

14.9

Ceasing to be a Director

 

A director ceases to be a director when:

 

 

(a)

the term of office of the director expires;

 

 

(b)

the director dies;

 

 

(c)

the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or

 

 

(d)

the director is removed from office pursuant to Articles 14.10 or 14.11.

 

14.10

Removal of Director by Shareholders

 

The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

 

 

- 23 -

 

14.11

Removal of Director by Directors

 

The directors may remove any director before the expiration of his or her term of office if the director is charged with an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

 

15.

POWERS AND DUTIES OF DIRECTORS

   
15.1 Powers of Management

 

The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company.

 

15.2

Appointment of Attorney of Company

 

Subject to the provisions of Part 24 of these Articles, the directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such resolution of appointment of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

 

16.

INTERESTS OF DIRECTORS AND OFFICERS

   
16.1 Obligation to Account for Profits

 

A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act.

 

16.2

Restrictions on Voting by Reason of Interest

 

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

 

 

- 24 -

 

16.3

Interested Director Counted in Quorum

 

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

 

16.4

Disclosure of Conflict of Interest or Property

 

A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act.

 

16.5

Director Holding Other Office in the Company

 

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

 

16.6

Director or Officer in Other Corporations

 

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.

 

17.

PROCEEDINGS OF DIRECTORS

   
17.1 Meetings of Directors

 

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

 

17.2

Voting at Meetings

 

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.

 

 

- 25 -

 

17.3

Chair of Meetings

 

The following individual is entitled to preside as chair at a meeting of directors:

 

 

(a)

the chair of the board, if any;

     
  (b) in the absence of the chair of the board, the president, if any, if the president is a director; or
     
  (c) any other director chosen by the directors if:

 

 

  (i)

neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes after the time set for holding the meeting;

       
    (ii) neither the chair of the board nor the president, if a director, is willing to chair the meeting; or
       
    (iii) the chair of the board and the president, if a director, have advised the secretary, if any, or any other director, that they will not be present at the meeting.

 

17.4

Meetings by Telephone or Other Communications Medium

 

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who participates in a meeting in a manner contemplated by this Article 17.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner .

 

17.5

Calling of Meetings

 

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

 

17.6

Notice of Meetings

 

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 17.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors by any method set out in Article 23.1 or orally or by telephone.

 

17.7

When Notice Not Required

 

It is not necessary to give notice of a meeting of the directors to a director if:

 

 

(a)

the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or

 

 

(b)

the director has waived notice of the meeting.

 

17.8

Meeting Valid Despite Failure to Give Notice

 

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director, does not invalidate any proceedings at that meeting.

 

 

- 26 -

 

17.9

Waiver of Notice of Meetings

 

Any director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company, and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director.

 

17.10

Quorum

 

The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at two directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

 

17.11

Validity of Acts Where Appointment Defective

 

Subject to the Business Corporations Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

 

17.12

Consent Resolutions in Writing

 

A resolution of the directors consented to in writing by all of the directors entitled to vote on it is as valid and effective as if it had been passed at a meeting of the directors duly called and held that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors. A resolution of the directors consented to in writing in accordance with this Article 17.12 is deemed to be a proceeding at a meeting of directors.

 

17.13

Consent Resolution in Counterparts

 

A resolution consented to in writing by each of the directors entitled to vote on it may be consented to in any number of counterparts which together shall be deemed to constitute one resolution in writing. A consent resolution passed in this manner is effective on the date stipulated in the resolution or on the latest date stated on any counterpart.

 

17.14

Consent Resolution

 

A resolution or any counterpart thereof consented to in writing by each of the directors entitled to vote on it which has been sent to the records office of the Company by fax or any other method of transmitting such resolution or counterpart thereof which indicates written consent of such resolution shall, subject to evidence to the contrary, be deemed to be proof that the resolution has been passed.

 

 

- 27 -

 

18.

EXECUTIVE AND OTHER COMMITTEES

   
18.1 Appointment and Powers of Executive Committee

 

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors’ powers, except:

 

 

(a)

the power to fill vacancies in the board of directors;

     
  (b) the power to remove a director;
     
  (c) the power to change the membership of, or fill vacancies in, any committee of the directors; and
     
  (d) such other powers, if any, as may be set out in the resolution or any subsequent directors’ resolution.

 

18.2

Appointment and Powers of Other Committees

 

The directors may, by resolution:

 

 

(a)

appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;

     
  (b) delegate to a committee appointed under Article 18.2(a) any of the directors’ powers, except:

 

 

  (i)

the power to fill vacancies in the board of directors;

       
    (ii) the power to remove a director;
       
    (iii) the power to change the membership of, or fill vacancies in, any committee of the directors; and
       
    (iv) the power to appoint or remove officers appointed by the directors; and

 

  (c) make any delegation referred to in Article 18.2(b) subject to the conditions set out in the resolution or any subsequent directors’ resolution.

 

18.3

Obligations of Committees

 

Any committee appointed under Articles 18.1 or 18.2, in the exercise of the powers delegated to it, must:

 

  (a) conform to any rules that may from time to time be imposed on it by the directors; and
     
  (b) report every act or thing done in exercise of those powers at such times as the directors may require.

 

18.4

Powers of Board

 

The directors may, at any time, with respect to a committee appointed under Articles 18.1 or 18.2:

 

  (a) revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;
     
  (b) terminate the appointment of, or change the membership of, the committee; and
     
  (c) fill vacancies in the committee.

 

 

- 28 -

 

18.5

Committee Meetings

 

Subject to Article 18.3(a) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 18.1 or 18.2:

 

 

(a)

the committee may meet and adjourn as it thinks proper;

 

 

(b)

the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;

 

 

(c)

a majority of the members of the committee constitutes a quorum of the committee; and

 

 

(d)

questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.

 

18.6

Consent Resolutions in Writing

 

A resolution of a committee of the directors appointed under this Article 18 consented to in writing by all of the directors entitled to vote on it is as valid and effective as if it had been passed at a meeting of such committee of the directors duly called and held that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of such committee of the directors. A resolution of such committee of the directors consented to in writing in accordance with this Article 18.6 is deemed to be a proceeding at a meeting of such committee of the directors.

 

18.7

Consent Resolution in Counterparts

 

A resolution consented to in writing by each member of a committee entitled to vote on it may be consented to in any number of counterparts which together shall be deemed to constitute one resolution in writing. A consent resolution passed in this manner is effective on the date stipulated in the resolution or on the latest date stated on any counterpart.

 

18.8

Consent Resolution

 

A resolution or any counterpart thereof consented to in writing by each of the members of a committee entitled to vote on it which has been sent to the records office of the Company by fax or any other method of transmitting such resolution or counterpart thereof which indicates written consent of such resolution shall, subject to evidence to the contrary, be deemed to be proof that the resolution has been passed.

 

19.

OFFICERS

   
19.1 Appointment of Officers

 

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment. Without limiting the generality of the foregoing, the directors may delegate the authority to appoint and terminate officers on such terms and conditions as the directors may determine from time to time.

 

 

- 29 -

 

19.2

Functions, Duties and Powers of Officers

 

The directors may, for each officer:

 

  (a) determine the functions and duties of the officer;
     
 

(b)

entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and
     
  (c) revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.

 

19.3

Qualifications

 

No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as the managing director must be a director. Any other officer need not be a director.

 

19.4

Remuneration and Terms of Appointment

 

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.

 

20.

INDEMNIFICATION

   
20.1 Definitions

 

In this Article 20:

 

  (a) “eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;
     
  (b) “eligible proceeding” means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which a director or former director of the Company (an “eligible party”) or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director of the Company:

 

    (i) is or may be joined as a party; or
       
    (ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;

 

  (c) “expenses” has the meaning set out in the Business Corporations Act.

 

 

- 30 -

 

20.2

Mandatory Indemnification of Directors and Former Directors

 

Subject to the Business Corporations Act, the Company must indemnify a director or former director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, either as they are incurred in advance of the final disposition of an eligible proceeding, or after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director is deemed to have contracted with the Company on the terms of the indemnity contained in this Article 20.2.

 

20.3

Indemnification of Other Persons

 

Subject to any restrictions in the Business Corporations Act, the Company may indemnify any person.

 

20.4

Non-Compliance with Business Corporations Act

 

The failure of a director or officer of the Company to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which he or she is entitled under this Part.

 

20.5

Company May Purchase Insurance

 

The Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives) who:

 

 

(a)

is or was a director, officer, employee or agent of the Company;

 

 

(b)

is or was a director, officer, employee or agent of a corporation at a time when the corporation is or was an affiliate of the Company;

 

 

(c)

at the request of the Company, is or was a director, officer, employee or agent of a corporation or of a partnership, trust, joint venture or other unincorporated entity;

 

 

(d)

at the request of the Company, holds or held a position equivalent to that of a director or officer of a partnership, trust, joint venture or other unincorporated entity;

 

against any liability incurred by him or her as such director, officer, employee or agent or person who holds or held such equivalent position.

 

21.

DIVIDENDS

   
21.1 Payment of Dividends Subject to Special Rights

 

The provisions of this Article 21 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

 

21.2

Declaration of Dividends

 

Subject to the Business Corporations Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

 

21.3

No Notice Required

 

The directors need not give notice to any shareholder of any declaration under Article 21.2.

 

 

- 31 -

 

21.4

Record Date

 

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5 p.m. on the date on which the directors pass the resolution declaring the dividend.

 

21.5

Manner of Paying Dividend

 

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

 

21.6

Settlement of Difficulties

 

If any difficulty arises in regard to a distribution under Article 21.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

 

 

(a)

set the value for distribution of specific assets;

 

 

(b)

determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and

 

 

(c)

vest any such specific assets in trustees for the persons entitled to the dividend.

 

21.7

When Dividend Payable

 

Any dividend may be made payable on such date as is fixed by the directors.

 

21.8

Dividends to be Paid in Accordance with Number of Shares

 

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

 

21.9

Receipt by Joint Shareholders

 

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

 

21.10

Dividend Bears No Interest

 

No dividend bears interest against the Company.

 

21.11

Fractional Dividends

 

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

 

 

- 32 -

 

21.12

Payment of Dividends

 

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the address of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

 

21.13

Capitalization of Retained Earnings or Surplus

 

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any retained earnings or surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the retained earnings or surplus so capitalized or any part thereof.

 

22.

ACCOUNTING RECORDS AND AUDITORS

   
22.1 Recording of Financial Affairs

 

The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Business Corporations Act.

 

22.2

Inspection of Accounting Records

 

Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

 

22.3

Remuneration of Auditor

 

The directors may set the remuneration of the auditor of the Company. Without limiting the generality of the foregoing, the directors may delegate the authority to set the remuneration of the auditor of the Company to the Company’s audit committee on such terms as the directors may determine, from time to time.

 

 

- 33 -

 

23.

NOTICES

   
23.1 Method of Giving Notice

 

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person may be sent by any one of the following methods:

 

 

(a)

mail addressed to the person at the applicable address for that person as follows:

 

 

  (i)

for a record mailed to a shareholder, the shareholder’s registered address;

       
    (ii) for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class;
       
    (iii) in any other case, the mailing address of the intended recipient;

 

 

(b)

delivery at the applicable address for that person as follows, addressed to the person:

 

 

  (i)

for a record delivered to a shareholder, the shareholder’s registered address;

       
    (ii) for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class;
       
    (iii) in any other case, the delivery address of the intended recipient;

 

 

(c)

sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;

     
  (d) sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class;
     
  (e) physical delivery to the intended recipient.

 

23.2

Deemed Receipt of Mailing

 

A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 23.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

 

23.3

Certificate of Sending

 

A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required by Article 23.1, prepaid and mailed or otherwise sent as permitted by Article 23.1 is conclusive evidence of that fact.

 

23.4

Notice to Joint Shareholders

 

If two or more persons are registered as joint holders of any share, notice to one of those persons is sufficient notice to all of them. A notice must be addressed to all those joint holders and the address to be used by the Corporation must be the address appearing in the securities register of the Corporation in respect of that joint holding or the first address appearing if there is more than one address.

 

 

- 34 -

 

24.

EXECUTION OF DOCUMENTS

   
24.1 Execution of Documents

 

All instruments in writing requiring execution by the Company shall be signed by the person or persons authorized by board from time to time. The Board shall have power from time to time by resolution to appoint any person or persons on behalf of the Company either to sign instruments generally or to sign specific instruments.

 

24.2

Who May Execute Documents

 

In the absence of any resolution passed pursuant to Article 24.1, all instruments in writing requiring execution by the Company may be signed by any one officer, or his or her delegate, on behalf of the Company.

 

24.3

Mechanical Reproduction of Signature

 

The directors may authorize the signature of any director, officer or agent of the Company be printed, lithographed, engraved or otherwise mechanically reproduced upon all instruments executed or issued by the Company as they may determine appropriate from time to time. Instruments on which the signature of any such person of the Company is so reproduced in accordance with the Business Corporations Act or these Articles, shall be deemed to have been manually signed by such person whose signature is so reproduced and shall be as valid to all intents and purposes as if such instrument had been signed manually and notwithstanding that the person whose signature is so reproduced may have ceased to hold office at the date of the delivery or issue of such instrument. The term “instrument” as used in this Article shall include deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property, real or personal, agreements, releases, receipt and discharges for the payment of money or other obligations, certificates of the Company’s shares, share warrants of the Company, bonds, debentures and other debt obligations of the Company, and all paper writings.

 

24.4

Electronic Signatures

 

An instrument or any other document required to be signed by a director, officer or agent of the Company may be signed electronically in accordance with the applicable laws.

 

25.

SPECIAL RIGHTS OR RESTRICTIONS

 

The Voting Common Shares (the “Common Shares”) shall have the following rights and be subject to the following restrictions, conditions and limitations:

 

25.1

Voting

 

The holders of the Common Shares shall be entitled to one vote for each Common Share held by them at all meetings of shareholders except meetings at which, pursuant to the Business Corporations Act, only holders of a specified class of shares are entitled to vote.

 

25.2

Dividends

 

 

(a)

The holders of the Common Shares shall be entitled, in each financial year of the Company, to receive, if declared by the directors of the Company out of the monies or other property of the Company properly applicable to the payment of dividends, non-cumulative dividends in an amount to be determined by and in the discretion of the directors of the Company. If in any year the directors of the Company, in their discretion, decide to declare a dividend, the same amount of dividend must be declared on each such share, without preference or distinction. If in any year the directors in their discretion do not declare any dividend, then the rights of the holders of Common Shares to any dividend for the year shall forever be extinguished.

 

 

(b)

It shall be in the sole discretion of the directors of the Company whether, in any financial year of the Company, any dividend is declared on the shares of the Company, provided that the provisions of Article 25.2(a) shall always be complied with. For purposes of greater certainty, it is herewith stated that a dividend may be paid in money or property or by issuing fully paid shares of the Company.

 

 

- 35 -

 

These Articles bearing a signature of an incorporator sent by facsimile or other electronic communication medium will for all purposes be treated and accepted as an original copy.

 

 

FULL NAME AND SIGNATURE
OF EACH INCORPORATOR

 

DATE OF SIGNING

         
 

/s/ Rick Pauls

  May 31, 2019  
  Rick Pauls      

 

Exhibit 4.2

 

 

 

 

 

 

 

Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “ Agreement ”) made and entered into as of ________________ (the “ Effective Date ”) by and between DiaMedica Therapeutics Inc., a corporation organized and existing under the laws of British Columbia (the “ Company ”), and ___________________ (the “ Indemnitee ”).

 

WHEREAS, the Company recognizes that competent and experienced persons are increasingly reluctant to serve or to continue to serve as directors and officers of corporations unless they are protected by comprehensive liability insurance or indemnification, or both, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no reasonable relationship to the compensation of such directors;

 

WHEREAS, directors and officers of public companies are subject to an increased risk of litigation and claims being asserted against them;

 

WHEREAS, the Company’s articles (the “ Articles ”) require the Company to indemnify its directors and officers to the extent permitted under the Business Corporations Act (British Columbia), or other applicable law;

 

WHEREAS, Indemnitee is or has agreed to become or will continue to serve as a director or officer of the Company or an Affiliate of the Company;

 

WHEREAS, the Company desires (i) to provide Indemnitee with specific contractual assurance that the protection promised by such Articles will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Articles, change in the composition of the Company’s Board of Directors (“ Board of Directors ”), or any change in the ownership of the Company, (ii) to provide for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and (iii) to the extent insurance is available, to provide for continued coverage of Indemnitee under the Company’s directors and officers liability insurance policies; and

 

WHEREAS, Indemnitee is relying upon the rights afforded under this Agreement in accepting or continuing Indemnitee’s position as a director or officer of the Company or an Affiliate of the Company.

 

NOW, THEREFORE, in consideration of the Indemnitee’s agreement to serve or continue to serve as a director and/or officer of the Company or an Affiliate of the Company and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company has agreed to the covenants set forth herein for the purpose of further securing to the Indemnitee the indemnification provided by the Articles:

 

 

 

 

1.

Definitions .

 

 

(a)

Affiliate ” has the meaning set forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder.

 

 

(b)

Agreement ” shall have the meaning specified in the introductory paragraph hereof.

 

 

(c)

Articles ” shall have the meaning specified in the Recitals hereto.

 

 

(d)

Change in Control ” shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all the Company’s assets.

 

 

(e)

Claim ” means any threatened, pending, or completed action, suit, or proceeding, or any inquiry or investigation, whether instituted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other and whether formal or informal.

 

 

(f)

Company ” shall have the meaning specified in the introductory paragraph hereof.

 

2

 

 

 

(g)

Expense Advance ” shall have the meaning specified in Section 2 (b) .

 

 

(h)

Expenses ” include reasonable attorneys’ fees and all other costs, expenses and obligations (including, without limitation, experts’ fees, court costs, retainers, transcript fees, duplicating, printing and binding costs, as well as telecommunications, postage and courier charges) paid or incurred in connection with investigating, defending, being a witness in or participating in, or preparing to investigate, defend, be a witness in or participate in, any Claim relating to any Indemnifiable Event.

 

 

(i)

Indemnifiable Amounts ” include any and all Expenses, damages, judgments, fines, penalties, excise taxes and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties, excise taxes or amounts paid in settlement) arising out of or resulting from any Claim relating to an Indemnifiable Event.

 

 

(j)

Indemnifiable Event ” means any event or occurrence arising out of or related to the fact that Indemnitee is or was a director, officer, employee, or agent of the Company or an Affiliate of the Company, or is or was serving at the request of the Company or an Affiliate of the Company as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, or by reason of anything done or not done by Indemnitee in any such capacity.

 

 

(k)

Indemnitee ” shall have the meaning specified in the introductory paragraph hereof.

 

 

(l)

Independent Legal Counsel ” means an attorney or firm of attorneys, selected in accordance with the provisions of Section 3 , who shall not have otherwise performed services for the Company or Indemnitee within the last five (5) years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

 

 

(m)

Reviewing Party ” means any appropriate person or body consisting of a member or members of the Board of Directors or any other person or body appointed by the Board who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.

 

 

(n)

Voting Securities ” are any securities of the Company that vote generally in the election or appointment of directors.

 

3

 

 

2.

Indemnification Arrangement; Advancement of Expenses .

 

 

(a)

In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable, but in any event no later than thirty (30) days after written demand is presented to the Company, against any and all Indemnifiable Amounts. For the avoidance of doubt, the foregoing indemnification obligation includes, without limitation, claims for monetary damages against Indemnitee in respect of an alleged breach of fiduciary duties, to the fullest extent permitted under applicable law.

 

 

(b)

If requested by Indemnitee, and subject to the limitations contained in Sections 2(c) and 2(d), the Company shall advance, to the fullest extent permitted by applicable law, any and all Expenses incurred by Indemnitee (an “ Expense Advance ”). The Company, in its sole discretion, shall, in accordance with such request (but without duplication), either (i) pay such Expenses on behalf of Indemnitee, or (ii) reimburse Indemnitee for such Expenses within thirty (30) days of receiving invoices or other documentation itemizing the Expenses incurred. Subject to the limitations contained in Sections 2(c) and 2 (d) , Indemnitee’s right to an Expense Advance is absolute and shall not be subject to any prior determination by the Reviewing Party or any other person, that the Indemnitee has satisfied any applicable standard of conduct for indemnification. In making any request for an Expense Advance, Indemnitee shall submit to the Company a schedule setting forth in reasonable detail the dollar amount expended or incurred and expected to be expended or incurred. Each such listing shall be supported by the bill, agreement, or other documentation relating thereto, each of which shall be appended to the schedule as an exhibit.

 

 

(c)

Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification or an Expense Advance pursuant to this Agreement in connection with any Claim initiated by Indemnitee unless (i) the Company has joined in or the Board of Directors has authorized or consented to the initiation of such Claim or (ii) the Claim is one to enforce Indemnitee’s rights under this Agreement.

 

4

 

 

 

(d)

Notwithstanding anything in this Agreement to the contrary, (i) the indemnification obligations of the Company under Section 2 (a) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 2 (b) shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid (it being understood and agreed that the foregoing agreement by Indemnitee shall be deemed to satisfy any requirement that Indemnitee provide the Company with an undertaking to repay any Expense Advance if it is ultimately determined that the Indemnitee is not entitled to indemnification under applicable law); provided , however , that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee’s undertaking to repay such Expense Advances shall be unsecured and interest-free. If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control, the Reviewing Party shall be the Independent Legal Counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld). If there has been no determination by the Reviewing Party within thirty (30) days after written demand is presented to the Company or if the Reviewing Party determines that Indemnitee would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in accordance with this Agreement seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.

 

3.

Change in Control . The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and any Expense Advance under this Agreement or any other agreement or the Articles, now or later in effect, relating to Claims for Indemnifiable Events, the Company shall seek legal advice only from Independent Legal Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

4.

Indemnification for Additional Expenses . The Company shall indemnify Indemnitee against any and all expenses (including attorneys’ fees) and, if requested by Indemnitee, shall advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or the Articles, now or later in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors and officers liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment, or insurance recovery, as the case may be.

 

5

 

 

5.

Partial Indemnity . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines, penalties, and amounts paid in settlement of a Claim but not, however, for all of the total amount of the Claim, the Company shall nevertheless indemnify Indemnitee for the portion of the Claim to which Indemnitee is entitled. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter related to an Indemnifiable Event, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

 

6.

Burden of Proof . In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder the Reviewing Party or court shall presume that the Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the burden of proof shall be on the Company to establish, by a preponderance of the evidence, that Indemnitee is not so entitled.

 

7.

Reliance . For purposes of this Agreement, Indemnitee shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company if Indemnitee’s actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to Indemnitee by the officers or employees of the Company in the course of their duties, or by committees of the Board of Directors, or by any other person (including legal counsel, accountants, consultants and financial advisors) as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any other director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnity hereunder.

 

8.

No Presumptions . For purposes of this Agreement, the termination of any claim, action, suit, or proceeding by judgment, order, settlement (whether with or without court approval), or conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Company (including, without limitation, the Board of Directors, any committee of the Board of Directors, legal counsel, or the stockholders) to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Company (including, without limitation, the Board of Directors, any committee of the Board of Directors, legal counsel, or the stockholders) that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief.

 

6

 

 

9.

Nonexclusivity . The rights of the Indemnitee under this Agreement shall be in addition to any other rights that Indemnitee may have under the Articles (or under such other law as may be applicable pursuant to the second sentence of Section 19). To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Articles or this Agreement, it is the intent of the Company and Indemnitee that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.

 

10.

Amendments; Waiver . No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by the Company and Indemnitee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement, nor shall such waiver constitute a continuing waiver.

 

11.

Insurance and Subrogation .

 

 

(a)

To the extent the Company or an Affiliate of the Company maintains an insurance policy or policies providing directors and officers liability insurance, Indemnitee shall be covered by such policy or policies in accordance with its or their terms and to the maximum extent of the coverage available for any Company or Affiliate director or officer.

 

 

(b)

The Company represents that it presently has in force and effect directors and officers liability insurance on behalf of Indemnitee against certain customary liabilities which may be asserted against or incurred by Indemnitee. The Company hereby agrees that, so long as Indemnitee shall continue to serve as a director or officer, and thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Indemnitee served as an officer or director, the Company shall purchase and maintain in effect for the benefit of Indemnitee such insurance providing (a) coverage at least comparable to that presently provided or (b) if such coverage is hereafter changed to provide any enhanced rights or benefits, the same coverage provided to the most favorably insured of the Company’s directors or officers; provided , however , if, the then Board of Directors determines in good faith that, either (x) the premium cost for such insurance is substantially disproportionate to the amount of coverage, or (y) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance, then and in that event, the Company shall not be required to maintain such insurance; provided further , however , that if, after a Change in Control, the Board of Directors determines that the Company shall not be required to maintain such insurance, the Company shall be required to purchase a “tail” policy which (i) has an effective term of six (6) years from a Change in Control, (ii) covers Indemnitee for actions and omissions occurring on or prior to the date of the Change in Control, (iii) contains terms and conditions that are, in the aggregate, no less favorable to Indemnitee than those of the Indemnitee immediately prior to the Change in Control. The Company shall promptly notify Indemnitee of any good faith determination to reduce or not provide such coverage.

 

7

 

 

 

(c)

In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be reasonably necessary to secure such rights, including the execution of such documents reasonably necessary to enable the Company effectively to bring suit to enforce such rights.

 

12.

No Duplication of Payments . The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy provision of the Certificate of Incorporation, By-law or otherwise) of the amounts otherwise indemnifiable under this Agreement.

 

13.

Defense of Claims . The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event or, in its sole discretion, to assume the defense of such Claim, with counsel reasonably satisfactory to the Indemnitee; provided , however , that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that (i) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict of interest, (ii) the named parties in any such Claim (including any impleaded parties) include both the Company and Indemnitee and Indemnitee concludes that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company, or (iii) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Claim) at the Company’s expense. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any Claim relating to an Indemnifiable Event effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any Claim relating to an Indemnifiable Event which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of Indemnitee from all liability on all claims that are the subject matter of such Claim. Neither the Company nor Indemnitee shall unreasonably withhold its or his or her consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee.

 

14.

Binding Effect . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, executors, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director or officer of the Company or of any other enterprise at the Company’s request. The Company shall require and cause any successor to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee and his or her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

8

 

 

15.

Severability . The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of the remaining provisions of this Agreement shall not be in any way impaired and shall remain enforceable to the fullest extent permitted by law.

 

16.

Service of Process and Venue . Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the state or federal courts located in the State of Delaware, including the Delaware Court of Chancery, in the event any dispute arises out of this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that it will not bring any action relating to this Agreement in any court other than the state or federal courts located in the State of Delaware, unless under applicable law exclusive jurisdiction over such matter is vested in another jurisdiction within the United States or Canada, and (iv) consents to service being made through the notice procedures set forth in Section 17. Each of the parties hereto hereby agrees that service of any process, summons, notice or document by U.S. certified mail, return receipt requested, to the respective addresses set forth in Section 17 shall be effective service of process for any suit or proceeding in connection with this Agreement.

 

17.

Form and Delivery of Communications . Any notice, request or other communication required or permitted to be given to the parties under this Agreement shall be in writing and either delivered in person or sent by telecopy, overnight mail or courier service, or certified or registered mail, return receipt requested, postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified from time to time by such party by like notice):

 

If to the Company:

 

DiaMedica Therapeutics, Inc.

c/o DiaMedica USA, Inc.

Two Carlson Parkway, Suite 265

Minneapolis, MN 55447

Attn: Corporate Secretary

Facsimile: 763-710-44556

 

If to Indemnitee, to the address set forth below Indemnitee’s name on the signature page hereto.

 

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18.

Supersedes Prior Agreement . This Agreement supersedes any prior indemnification agreement between Indemnitee and the Company or its predecessors; provided, however, that this Agreement does not supersede or modify any prior agreement between Indemnitee and Company.

 

19.

Governing Law . This Agreement shall be governed exclusively by and construed according to the substantive laws of the Province of British Columbia, without regard to conflicts-of-laws principles that would require the application of any other law. If a court of competent jurisdiction shall make a final determination that the provisions of the law of any other jurisdiction govern indemnification by the Company of its officers and directors, then the indemnification provided under this Agreement shall in all instances be enforceable to the fullest extent permitted under such law, notwithstanding any provision of this Agreement to the contrary.

 

20.

Specific Performance . The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.

 

21.

No Right to Continue Employment or Service . Nothing in this Agreement is intended to create in Indemnitee any right to employment or continued employment or to continue in the service of the Company or any Affiliate.

 

22.

Counterparts . This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

23.

Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements between the parties, whether written or oral, with respect to the subject matter hereof, except as provided in Section 18.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

 

  DIAMEDICA THERAPEUTICS INC.
           
           
  By:        
  Name:    
  Title:      

 

 

  INDEMNITEE:
           
           
  By:        
  Name:    
  Title:      
     
  Address for Notices:  
     
     
     
     
     
  Facsimile:  
     
     
     

 

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