VMAR Vision Marine Technologies Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of September 2023

 

Commission File No. 001-39730

 

VISION MARINE TECHNOLOGIES INC.

(Translation of registrant’s name into English)

 

730 Boulevard du Curé-Boivin

Boisbriand, Québec, J7G 2A7, Canada

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

 

Form 20-F x  Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) ¨

 

The information contained in Exhibits 99.1, 99.2, 99.3, 99.4, and 99.5 to this Report on Form 6-K is hereby incorporated by reference into the Company’s Registration Statement on Form F-3 (File No. 333-267893) and Registration Statement on Form S-8 (File No. 333-264089).

 

 

 

Exhibits

 

Exhibit No.		Exhibit
99.1		Form of Subscription Agreement between Vision Marine Technologies Inc. and the purchasers signatory thereto
99.2		Form of Investor Warrant
99.3		Form of Registration Rights Agreement
99.4		Agency Agreement
99.5		Pricing Press Release

 

 

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.

 

	VISION MARINE TECHNOLOGIES INC.
Date: September 20, 2023	By:	/s/ Kulwant Sandher
	Name:	Kulwant Sandher
	Title:	Chief Financial Officer

 

 

Exhibit 99.1

 

THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “US SECURITIES ACT”), OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.

 

VISION MARINE TECHNOLOGIES INC.

(the “Corporation”)

 

SUBSCRIPTION AGREEMENT (UNITS)
(CANADIAN, UNITED STATES & OFFSHORE SUBSCRIBERS)

 

IMPORTANT INSTRUCTIONS
The following items in this Subscription Agreement have been completed (Subscriber, please initial each applicable box):
Canadian Accredited Investors Only:
		SCHEDULE "B"– CANADIAN ACCREDITED INVESTOR CERTIFICATE– All accredited investors resident in a province or territory of Canada must complete and execute SCHEDULE "B" If you select categories (j), (k) and/or (l) of SCHEDULE "B", you must also complete Appendix 1 to Schedule “B” – Risk Acknowledgement Certificate.
U.S. Investors Only
		SCHEDULE "C"– UNITED STATES INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE– If you are in the United States (as defined herein), a U.S. Person (as defined herein) or purchasing the Purchased Units for the account or benefit of a person or persons that is/are in the United States or U.S. Persons, were offered the Units while in the United States, executed or delivered this subscription agreement while in the United States or initiated your buy order for the Purchased Units while in the United States, complete and execute the U.S. Institutional Accredited Investor Certificate in SCHEDULE "C"”.
Offshore Investors Only:
		SCHEDULE "D"– FOREIGN PURCHASER CERTIFICATE– If you are NOT resident of or otherwise subject to the securities laws of Canada or the United States, complete and execute Schedule “D”.
All Subscribers:
		SCHEDULE "F"– FORM OF REGISTRATION RIGHTS AGREEMENT– All subscribers must complete, execute and deliver a Registration Rights Agreement in the form attached hereto as SCHEDULE "F"”.

 

 

Delivery of Subscription Agreement and Payment of Aggregate Subscription Amount:   A completed and fully executed copy of this Agreement, including the items required to be completed as set out above and receipt of funds must be received by no later than 10:00 a.m. (Eastern time) on September 18, 2023, at the offices of iA Capital Markets, a division of iA Private Wealth Inc. at 26 Wellington Street East, Suite 700, Attention: Laura Cristello (E-mail: ECMCanada@iacapitalmarkets.ca), together with payment of the Aggregate Subscription Amount (as defined herein) as described herein or in such other manner as may be provided for by the Agent (as defined herein).

Delivery of Securities   It is anticipated that the undersigned subscriber will receive certificates or book entry statements representing the securities purchased hereunder from the Corporation.

 

 

SUBSCRIPTION AGREEMENT FOR UNITS

 

TO:	VISION MARINE TECHNOLOGIES INC. (the “Corporation”)
AND TO:	iA Capital Markets, a division of iA Private Wealth Inc. (the “Agent”)
AND TO:	One or more United States registered broker-dealers affiliated with or appointed by the Agent (the “U.S. Affiliates”)

 

The undersigned (the “Subscriber”), on its own behalf and, if applicable, on behalf of those for whom the Subscriber is contracting hereunder as trustee or agent (a “Disclosed Principal”), hereby subscribes for and agrees to purchase from the Corporation that number of units of the Corporation (the “Purchased Units”) set out below at a price of $4.05 per Purchased Unit (the “Subscription Price”). The aggregate Subscription Price (the “Aggregate Subscription Amount”) of the Purchased Units shall be an amount equal to the number of Purchased Units multiplied by the Subscription Price.

 

Each Purchased Unit consists of one Common Share (as defined herein) in the capital of the Corporation (a “Unit Share”) and one Common Share purchase warrant (each whole Common Share purchase warrant, a “Warrant”). Each Warrant shall entitle the holder thereof to acquire one Common Share (a “Warrant Share”) at an exercise price of $4.05 until the date which is 36 months following the Closing Date (as defined herein).

 

The Warrants will be governed by the terms and conditions set out in the certificate(s) representing the Warrants (each, a “Warrant Certificate”), to be delivered by the Corporation ‎on Closing (as defined herein). The Warrant Certificates will contain, among other things, provision for the appropriate adjustment in a class, number and exercise price of the Warrant Shares upon the occurrence of certain events, including any subdivision, consolidation or re-classification of the common shares of the Corporation or payments of stock dividends or upon the merger or re-organization of the Corporation.‎ The description of the Warrants contained herein is subject in all respects to the terms and conditions set forth in the Warrant Certificates. In the event of a conflict or inconsistency between the description of the Warrants contained herein, including the Term Sheet (as defined below), and the Warrant Certificates, the Warrant Certificates shall be paramount and shall govern.

 

This subscription agreement, which for greater certainty includes and incorporates the attached schedules, as applicable, is referred to herein as the “Agreement”. The Subscriber agrees to be bound by the terms and conditions set forth in this Agreement, including, without limitation, the attached “Terms and Conditions of Subscription for Units” and the representations, warranties and covenants set forth in the schedules attached thereto. The Subscriber further agrees, without limitation, that the Corporation and the Agent may rely on the Subscriber’s representations, warranties and covenants contained in such documents.

 

The Purchased Units are available upon and subject to the terms and conditions set forth herein, including the terms, representations, warranties, covenants and acknowledgements herein and in the schedules attached hereto. References to “$” refer to United States dollars.

 

 

SUBSCRIPTION AND SUBSCRIBER INFORMATION
Please print all information (other than signatures), as applicable, in the space provided below

 

NAME AND ADDRESS OF SUBSCRIBER: (please print clearly)		SUBSCRIPTION FOR PURCHASED UNITS
______________________________________________________________ Name of Subscriber (please print)		Number of Purchased Units:	____________________
By:  X_________________________________________________________ Signature/Authorized signature		Subscription Price:	$4.05 per Purchased Unit
______________________________________________________________ Name and official capacity or title (only if the Subscriber is NOT an individual)		Aggregate Subscription Amount:	$___________________
______________________________________________________________ Subscriber’s Address, including city, province/territory/state, country and postal/zip code (required) ______________________________________________________________ Subscriber’s Telephone Number (required)   ______________________________________________________________ Subscriber’s E-mail Address (required)   Disclosed Principal Information:   If the Subscriber is signing as agent for a principal and is not a trust company or trust corporation purchasing as trustee or agent for accounts fully managed by the Subscriber or a person acting on behalf of a fully managed account managed by the Subscriber, and in each case satisfying the criteria set forth in Section 73.3(1) of the Securities Act (Ontario) or National Instrument 45-106 – Prospectus Exemptions (“NI 45-106”), as applicable, complete the following and ensure that Schedule “B” is completed on behalf of such principal:   ______________________________________________________________ Name of Principal ______________________________________________________________ Address of Principal   ______________________________________________________________ Telephone Number of Principal ______________________________________________________________ Account Reference (if applicable)		REGISTRATION INSTRUCTIONS (please print clearly):   ______________________________________________________________ Registration Name (please print)   ______________________________________________________________ Registration Address, including city, province/territory/state, country and postal/zip code   ______________________________________________________________   ______________________________________________________________ Account # (ONLY applicable if registering and depositing the securities into a brokerage or corporate account – not if registering in own name)   DELIVERY INSTRUCTIONS: (if different from registration instructions) (please print clearly):   ______________________________________________________________ Name of Contact (please print) ______________________________________________________________ Delivery Address including city, province/territory/state, country and postal/zip code ______________________________________________________________ Contact’s Telephone Number ______________________________________________________________ Contact’s Email Address

 

Number and kind of securities of the Corporation held, directly or indirectly, if any: _____________________________________________________   _____________________________________________________   State whether Subscriber is an Insider of the Corporation:   Yes  ¨             No   ¨   State whether Subscriber is a Registrant:   Yes  ¨              No  ¨   Note: A “Registrant” means a dealer, adviser, investment fund manager, an ultimate designated person or chief compliance officer as those terms are used pursuant to the Canadian Securities Laws (as defined herein), or a person (as that term is defined herein) registered or otherwise required to be registered under the Canadian Securities Laws.

 

TERMS AND CONDITIONS OF SUBSCRIPTION FOR UNITS

 

ARTICLE 1 – INTERPRETATION

 

1.1

Definitions

 

Whenever used in this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following words and phrases shall have the respective meanings ascribed to them as follows:

 

(a)

“Act” means the Securities Act (Ontario);

 

(b)

“Agency Agreement” means the agency agreement to be entered into on or about the Closing Date to be entered into between the Agent and the Corporation in respect of the Offering;

 

(c)

“Agent” means iA Capital Markets, a division of iA Private Wealth Inc.;

 

(d)

“Aggregate Subscription Amount” shall have the meaning ascribed to such term on page 3 of this Agreement;

 

(e)

“Agreement” has the meaning ascribed to such term on page 3 of this Agreement;

 

(f)

“Business Day” means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in Montréal, Québec or New York, New York are not open for business.

 

(g)

“Canadian Securities Laws” means, collectively, the securities laws and regulations in each of the provinces and territories of Canada, together with all written instruments, rules and orders having the force of law of the securities regulators or regulatory authorities in each of the provinces and territories of Canada;

 

(h)

“CDS” means CDS Clearing and Depository Services Inc.;

 

(i)

“Closing” shall have the meaning ascribed to such term in Section 4.1;

 

(j)

“Closing Date” shall have the meaning ascribed to such term in Section 4.1;

 

(k)

“Closing Time” shall have the meaning ascribed to such term in Section 4.1;

 

(l)

“Commission” shall have the meaning ascribed to such term in Section 8.1;

 

(m)

“Common Shares” means the common shares in the capital of the Corporation;

 

(n)

“Control Person” shall have the meaning as defined in subsection 1(1) of the Act;

 

(o)

“Corporation” means the Corporation, and includes any successor corporation to or of the Corporation;

 

(p)

“Disclosed Principal” shall have the meaning ascribed to such term on page 3 of this Agreement;

 

(q)

“Distributor” means any underwriter, dealer, or other person who participates, pursuant to a contractual arrangement, in the distribution of the Securities offered or sold in reliance on Regulation S;

 

(r)

“Insider” means (a) a director or senior officer of the Corporation (or a subsidiary of the Corporation); (b) a director or officer of a person that is itself an Insider of the Corporation; (c) any person that has: (A) beneficial ownership of, or control over, directly or indirectly; or (B) a combination of beneficial ownership of, or control or direction over, directly or indirectly, securities of the Corporation carrying more than 10% of the voting rights attached to all the Corporation’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person or company as underwriter in the course of a distribution; (c) a person or company designated as an insider in an order made pursuant to applicable securities laws; or (d) a person or company that is in a prescribed class of persons or companies;

 

 

(s)

“International Jurisdictions” has the meaning ascribed to such term in Section 6.1;

 

(t)

“NI 45-106” means Regulation 45-106 respecting Prospectus Exemptions (Québec) or National Instrument 45-106 – Prospectus Exemptions;

 

(u)

“Offering” shall have the meaning ascribed to such term in Section 3.2;

 

(v)

“PATRIOT Act” shall have the meaning ascribed to such term in Section 6.1(ff);

 

(w)

“PCMLTFA” shall have the meaning ascribed to such term in Section 6.1(ff);

 

(x)

“person” includes any individual (whether acting as an executor, trustee administrator, legal representative or otherwise), corporation, firm, partnership, sole proprietorship, syndicate, joint venture, trustee, trust, unincorporated organization or association, and pronouns have a similar extended meaning;

 

(y)

“Purchased Units” shall have the meaning ascribed to such term on page 3 of this Agreement;

 

(z)

“Registrant” shall have the meaning ascribed to such term on page 4 of this Agreement;

 

(aa)

“Registration Rights Agreement” means the registration rights agreement to be entered into between the Corporation and the Subscriber contemporaneously with this Subscription Agreement pursuant to which, among other things, the Corporation will agree to provide certain registration rights with respect to the Unit Shares and Warrant Shares under the U.S. Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws, substantially in the form attached hereto as SCHEDULE "F".

 

(bb)

“Regulation D” means Regulation D under the U.S. Securities Act;

 

(cc)

“Regulation S” means Regulation S under the U.S. Securities Act;

 

(dd)

“SEC” means the United States Securities and Exchange Commission;

 

(ee)

“Securities” means, collectively, the Purchased Units, the Unit Shares, the Warrants and the Warrant Shares;

 

(ff)

“Securities Laws” means, collectively, Canadian Securities Laws, U.S. Securities Laws and the applicable security laws (including all rules and regulations thereunder) in any International Jurisdiction;

 

(gg)

“Subscriber” means the person purchasing the Purchased Units and whose name appears on the first execution page hereof and who has signed this Agreement or, if the person whose name appears on the first execution page hereof has signed this Agreement as agent for, or on behalf of, a Disclosed Principal and is not a trust company, trust corporation or portfolio manager deemed to be purchasing the Purchased Units as principal under NI 45-106, the person who is the Disclosed Principal of the Purchased Units as disclosed on the execution pages hereof;

 

(hh)

“Subscription Price” shall have the meaning ascribed to such term on page 3 of this Agreement;

 

(ii)

“Term Sheet” means the term sheet delivered by the Agent to potential purchasers of Units, a copy of which is attached hereto as SCHEDULE "A";

 

(jj)

“Trade Sanction” shall have the meaning ascribed to such term in Section 6.1(ff);

 

(kk)

“Unit Shares” shall have the meaning ascribed to such term on page 3 of this Agreement;

 

 

(ll)

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

 

(mm)

“Units” shall have the meaning ascribed to such term in Section 3.2;

 

(nn)

“U.S. Institutional Accredited Investor” means an institutional “accredited investor” that satisfies one or more of the categories set forth in Rule 501(a)(1), (2), (3), (7), (8), (9), (12), and/or (13) of Regulation D;

 

(oo)

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

 

(pp)

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

 

(qq)

“U.S. Securities Laws” means the U.S. Securities Act, the United States Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder and the applicable securities or “Blue Sky” laws of the states of the United States;

 

(rr)

“Warrant Certificates” shall have the meaning ascribed to such term on page 3 of this Agreement;

 

(ss)

“Warrants” shall have the meaning ascribed to such term on page 3 of this Agreement; and

 

(tt)

“Warrant Shares” shall have the meaning ascribed to such term on page 3 of this Agreement.

 

1.2

Gender and Number

 

Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine gender and words importing persons shall include firms and corporations and vice versa.

 

1.3

Currency

 

Unless otherwise specified, all dollar amounts in this Agreement, including the symbol “$”, are expressed in United States dollars.

 

1.4

Subdivisions and Headings

 

The division of this Agreement into Articles, Sections, Schedules and other subdivisions and the inclusion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The headings in this Agreement are not intended to be full or precise descriptions of the text to which they refer. Unless something in the subject matter or context is inconsistent therewith, references herein to an Article, Section, Subsection, paragraph, clause or Schedule are to the applicable article, section, subsection, paragraph, clause or schedule of this Agreement.

 

ARTICLE 2 – SCHEDULES

 

2.1

Description of Schedules

 

The following are the Schedules attached to and incorporated in this Agreement by reference and deemed to be a part hereof:

 

SCHEDULE "A" -	TERM SHEET
SCHEDULE "B" -	CANADIAN ACCREDITED INVESTOR CERTIFICATE
SCHEDULE "C" -	UNITED STATES INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE
SCHEDULE "D" -	FOREIGN PURCHASER CERTIFICATE
SCHEDULE "E" -	CONTACT INFORMATION FOR CANADIAN SECURITIES COMMISSIONS
SCHEDULE "F" -	FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

ARTICLE 3– SUBSCRIPTION AND OFFERING

 

3.1

Subscription for the Units

 

The Subscriber hereby confirms its subscription for and offer to purchase Purchased Units from the Corporation, on and subject to the terms and conditions set out in this Subscription Agreement, for the Aggregate Subscription Amount which is payable as described in ARTICLE 4 hereto. The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of any Disclosed Principal) that upon acceptance of this Agreement by the Corporation, this Agreement will constitute a binding obligation of the Subscriber (including, if applicable, any Disclosed Principal) subject to the terms and conditions contained herein.

 

3.2

Offering

 

The Subscriber acknowledges that this subscription forms part of a larger offering by the Corporation of up to 372,870 units of the Corporation (“Units”) for aggregate gross proceeds of approximately $1.51 million (the “Offering”) pursuant to an Agency Agreement which the Corporation intends to enter into with the Agent and under which the Agent will arrange, on a commercially reasonable “best efforts” agency basis, for subscribers to purchase Units under the terms of the Offering immediately prior to the Closing.

 

3.3

Acceptance and Rejection of Subscription by the Corporation

 

The Subscriber acknowledges and agrees that the Corporation reserves the right, in its absolute discretion, to reject this subscription for Purchased Units, in whole or in part, at any time prior to the Closing Time. If this subscription is rejected in whole, any cheques or other forms of payment delivered to the Agent representing the Aggregate Subscription Amount will be promptly returned to the Subscriber without interest, deduction or penalty. If this subscription is accepted only in part, a cheque representing any refund of the Aggregate Subscription Amount for that portion of the subscription for the Purchased Units which is not accepted will be promptly delivered to the Subscriber without interest, deduction or penalty.

 

ARTICLE 4 – CLOSING

 

4.1

Closing

 

Delivery and sale of the Purchased Units and payment of the Aggregate Subscription Amount will be completed (the “Closing”) at the offices of the Corporation’s counsel at 8:00 a.m. (Eastern time) (the “Closing Time”) on September 20, 2023, or such other place or date or time as the Corporation and the Agent may mutually agree (the “Closing Date”). If, at or prior to the Closing Time, the terms and conditions contained in this Agreement and the Agency Agreement have been complied with to the satisfaction of the Agent and the Corporation, or waived by the Agent or the Corporation, the Agent shall deliver to the Corporation all completed Subscription Agreements and payment of the Aggregate Subscription Amount for all of the Units sold pursuant to the Agency Agreement against delivery of a share certificate or book entry statement at the Corporation’s transfer agent representing the Unit Shares (the “Share Certificate”) and Warrant Certificates representing the Warrants, together comprising the Purchased Units, as the Agent and the Corporation may agree, and such other documentation as may be required pursuant to this Agreement and the Agency Agreement.

 

If, prior to the Closing Time, the terms and conditions contained in this Agreement (other than such evidence of the issuance of the Purchased Units as the Agent and the Corporation may agree) and the Agency Agreement have not been complied with to the satisfaction of the Agent or the Corporation, or waived by the relevant party (provided that any waiver will not adversely prejudice any rights or entitlements of the Subscriber), the Agent, the Corporation and the Subscriber will have no further obligations under this Agreement.

 

It is anticipated that the Unit Shares comprising the Purchased Units will be issued in the form of a Share Certificate and the Warrants comprising the Purchased Units will be issued in the form of a Warrant Certificate, in each case registered in the name of the Subscriber.

 

 

4.2

Conditions of Closing

 

The Subscriber acknowledges and agrees that the Corporation is relying on the truth of the representations and warranties of the Subscriber contained in this Agreement as of the date of this Agreement, and as of the Closing Time as if made at and as of the Closing Time, and the fulfillment of the following additional conditions prior to the Closing Time:

 

(a)

payment by the Subscriber of the Aggregate Subscription Amount in such manner as may be agreed to by the Agent against delivery of the Purchased Units;

 

(b)

on or before September 18, 2023, the Subscriber having properly completed, signed and delivered this Agreement (including all applicable Schedules hereto) to:

 

iA Capital Markets, a division of iA Private Wealth Inc.

26 Wellington Street East, Suite 700

Toronto, Ontario M5E 1S2, Canada

Attention:	Laura Cristello
E-mail:	ECMCanada@iacapitalmarkets.ca

 

(c)

on or before the Closing Date, the Subscriber having properly completed, signed and delivered a Registration Rights Agreement, in the form attached hereto as SCHEDULE "F";

 

(d)

the Subscriber having executed and returned to the Corporation, at the Corporation’s reasonable request, all other documents as may be required by the Securities Laws for delivery by the Corporation on behalf of the Subscriber;

 

(e)

the Corporation having obtained all necessary approvals and consents, including regulatory approvals in respect of the Offering;

 

(f)

the Corporation having accepted the Subscriber’s subscription, in whole or in part;

 

(g)

the representations and warranties of the Subscriber set forth herein being true and correct as of the Closing Time;

 

(h)

all covenants and agreements contained herein to be performed by the Subscriber (including, if applicable, each Disclosed Principal) on or prior to the Closing Time shall have been performed or complied with in all material respects;

 

(i)

the issue and sale of the Units being exempt from the registration and prospectus requirements under applicable Securities Laws relating to the sale of the Units, or the Corporation having received such orders, consents or approvals as may be required to permit such sale without the requirement to file a prospectus or deliver an offering memorandum (provided that the Corporation shall be obligated to file a registration statement under the U.S. Securities Act with the SEC in respect of resales of the Unit Shares and Warrant Shares, as set forth in the Registration Rights Agreement);

 

(j)

the closing conditions in the Agency Agreement having been satisfied or waived by the relevant party; and

 

(k)

the Corporation having provided notification to the Nasdaq Capital Market for the listing of the Unit Shares and the Warrant Shares.

 

The Corporation acknowledges and agrees that the Subscriber’s obligation to purchase the Purchased Units is subject to, among other things, the following conditions:

 

(l)

the representations and warranties of the Corporation contained or otherwise incorporated by reference in this Agreement and the Agency Agreement are true and correct when made and shall be true and correct on the Closing Date with the same force and effect as if they had been made on and as of the Closing Date;

 

 

(m)

all covenants, agreements and conditions contained or otherwise incorporated by reference in this Agreement to be performed by the Corporation on or prior to the Closing Date shall have been performed or complied with in all material respects to the satisfaction of the Subscriber, acting reasonably;

 

(n)

the closing conditions contained in the Agency Agreement in favour of the Agent (and the Subscriber) being satisfied; and

 

(o)

the Subscriber having received copies of the opinions listed in the Agency Agreement, which opinions shall be addressed to the Subscriber.

 

4.3

Authorization of the Agent

 

The Subscriber authorizes the Agent, on behalf of the Agent, in their discretion, to act as the Subscriber’s representative at the Closing, and hereby appoints the Agent, on behalf of the Agent, with full power of substitution, as its agent to act in the best interests of the Subscriber:

 

(a)

to execute in the Subscriber’s name and on its behalf all closing receipts and required documents, to complete and correct any manifest errors or omissions in any form or document provided by the Subscriber, including this Subscription Agreement and the Schedules hereto, in connection with the subscription for the Purchased Units and to exercise any rights of termination contained in the Agency Agreement;

 

(b)

to extend such time periods and to waive, in whole or in part, any representations, warranties, covenants or conditions for the Subscriber’s benefit contained in the Agency Agreement or any ancillary or related document other than this Agreement, provided that any waiver will not adversely prejudice any rights or entitlements of the Subscriber;

 

(c)

to terminate, prior to Closing, this Agreement if any condition precedent is not satisfied, in such manner and on such terms and conditions as the Agent in their discretion may determine, acting reasonably; and

 

(d)

without limiting the generality of the foregoing, to negotiate, settle, execute, deliver and amend the Agency Agreement and any ancillary documents in connection with the Offering.

 

ARTICLE 5– REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

 

5.1

Representations, Warranties and Covenants of the Corporation

 

The Subscriber shall have the benefit of the representations, warranties and covenants to be made by the Corporation to the Agent and set forth in the Agency Agreement which the Corporation intends to enter into prior to the Closing Time, to the extent that such representations, warranties and covenants are not amended or waived by the Agent, provided that any amendment or waiver will not adversely prejudice any rights or entitlements of the Subscriber. Such representations, warranties and covenants shall form an integral part of this Agreement and shall survive the Closing and shall continue in full force and effect for the benefit of the Subscriber in accordance with the Agency Agreement. The Corporation acknowledges that, in making its decision to invest in the Corporation, the Subscriber is relying on this Agreement, the representation, warranties and covenants of the Corporation to be contained in the Agency Agreement and information about the Corporation which will be filed by the Corporation on SEDAR at www.sedar.com and with the SEC at www.sec.gov.

 

ARTICLE 6 – ACKNOWLEDGEMENTS, REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SUBSCRIBER

 

6.1

Representations, Warranties and Covenants of the Subscriber

 

By executing this Agreement, the Subscriber, on its own behalf and, if applicable, on behalf of a Disclosed Principal for whom it is acting hereunder, hereby represents, warrants, covenants and acknowledges to and with the Corporation (and acknowledges that the Corporation, the Agent, the U.S. Affiliates and their respective counsels are relying thereon) that:

 

Authorization and Effectiveness

 

(a)

if the Subscriber is an individual, the Subscriber is of the full age of majority in the jurisdiction in which this Agreement is executed and has all requisite legal capacity and competence to execute, deliver and be bound by this Agreement, to perform all of its obligations and covenants hereunder and to undertake all actions required of the Subscriber hereunder;

 

 

(b)

if the Subscriber is not an individual, the Subscriber has the requisite power, authority and legal capacity to execute, deliver and be bound by this Agreement, to perform all of its obligations and covenants hereunder and to undertake all actions required of the Subscriber hereunder, all necessary approvals of its directors, partners, shareholders, trustees or otherwise with respect to such matters have been given or obtained and the individual signing this Agreement has been duly authorized to do so;

 

(c)

if the Subscriber is a body corporate, the Subscriber is incorporated and validly subsisting under the laws of its jurisdiction of incorporation;

 

(d)

if the Subscriber is acting as principal, this Agreement has been duly and validly authorized, executed and delivered by the Subscriber, and, when accepted by the Corporation, will constitute a legal, valid and binding obligation enforceable against the Subscriber in accordance with the terms hereof (subject to bankruptcy, insolvency and other laws limiting the enforceability of creditors’ rights and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction);

 

(e)

if the Subscriber is acting as agent or trustee (including, for greater certainty, a portfolio manager or comparable adviser) for a principal, the Subscriber is duly authorized to execute and deliver this Agreement and all other necessary documents in connection with such subscription on behalf of such principal, each of whom is subscribing as principal for its own account and not for the benefit of any other person, and this Agreement has been duly and validly authorized, executed and delivered by or on behalf of, and, when accepted by the Corporation, will constitute a legal, valid and binding obligation enforceable in accordance with the terms hereof (subject to bankruptcy, insolvency and other laws limiting the enforceability of creditors’ rights and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction) against, such principal;

 

(f)

the execution and delivery of this Agreement, the performance and compliance with the terms hereof, the subscription for the Purchased Units (and any subsequent exercise of the Warrants) and the completion of the transactions contemplated hereby will not result in any material breach of, or be in material conflict with or constitute a material default under, or create a state of facts which, after notice or lapse of time, or both, would constitute a material default under any term or provision of the constating documents of the Subscriber (if not an individual) or Canadian Securities Laws;

 

(g)

the Subscriber is not a person created or used solely to purchase or hold securities in order to comply with or rely upon an exemption from the prospectus and registration requirements of applicable Securities Laws and except as disclosed in writing to the Corporation, the Subscriber does not act jointly or in concert with any other person or company for the purposes of acquiring securities of the Corporation;

 

Residence

 

(h)

the Subscriber is resident, or if not an individual, has a head office, in the jurisdiction indicated on the “Subscription and Subscriber Information” section of this Agreement and such address was not created and is not used solely for the purpose of acquiring the Purchased Units. The purchase by and sale to the Subscriber of the Purchased Units, and any act, solicitation, conduct or negotiation directly or indirectly in furtherance of such purchase or sale, has occurred only in such jurisdiction and the Subscriber intends that the Securities Laws of such jurisdiction govern such sale to and purchase by the Subscriber;

 

 

All Subscribers

 

(i)

the Subscriber is eligible to purchase the Purchased Units pursuant to an exemption from the prospectus and registration requirements of applicable Securities Laws;

 

(j)

the Subscriber: (i) is not an Insider of the Corporation or a Registrant; or (ii) has identified itself to the Corporation as an Insider or a Registrant (as applicable) on page 4 hereof;

 

(k)

the Subscriber is not purchasing the Purchased Units with a view to resale, distribution or other ‎disposition of ‎such securities in a manner which would violate applicable Securities Laws;

 

(l)

unless the Subscriber is acting as agent or trustee pursuant to Section 6.1(e), above, or has filled out the “Disclosed Principal” on the “Subscription and Subscriber Information” page, the Subscriber (as indicated under “Name of Subscriber” on such page) is purchasing the Purchased Units for its own account, and not for the benefit of any other person;

 

(m)

the Subscriber confirms that the acknowledgements, representations, warranties, covenants and information contained herein and therein are true and correct as of the date hereof and will be true and correct as of the Closing Time and if less than a complete copy of this Agreement is delivered to the Corporation and its advisors are entitled to assume that the Subscriber accepts and agrees to all the terms and conditions of the pages not delivered, unaltered;

 

Canadian Subscribers

 

(n)

if the Subscriber is resident in Canada and is subject to applicable Securities Laws of any jurisdiction of Canada, the Subscriber is an accredited investor as such term is defined in Section 73.3(1) of the Act or NI 45-106, as applicable, and has completed, executed and delivered to the Corporation, the Canadian Accredited Investor Certificate in the form attached hereto as Schedule “B” (and Appendix 1 to Schedule “B”, if applicable) indicating that the Subscriber fits within one of the prospectus exemption categories under applicable Canadian Securities Laws as set forth therein, and confirms the truth and accuracy of all representations, warranties and covenants made in such certificate as of the date of this Agreement and as of the Closing Time;

 

U.S. Subscribers

 

(o)

if the Subscriber is, or is subscribing for the account or benefit of, a person in the United States or a U.S. Person, the Subscriber is a U.S. Institutional Accredited Investor, and the Subscriber has completed, executed and delivered SCHEDULE "C" hereto and identified the appropriate category of U.S. Institutional Accredited Investor that correctly and in all respects describes the Subscriber;

 

Non-U.S. Subscribers

 

(p)

unless the Subscriber is, or is subscribing for the account or benefit of, a person in the United States or a U.S. Person and the Subscriber has completed, executed and delivered SCHEDULE "C" hereto (in which case the Subscriber makes the representations, warranties and covenants therein), the Subscriber acknowledges and agrees that:

 

(i)

the Purchased Units have not been offered to the Subscriber while the Subscriber was in the United States, and the individual making the order to purchase the Purchased Units and executing and delivering this Agreement for the account or benefit of the Subscriber was not in the United States when the order was placed or when this Agreement was executed and delivered;

 

(ii)

the Subscriber is not in the United States or a U.S. Person and is not purchasing the Purchased Units for the account or benefit of a person in the United States or a U.S. Person;

 

(iii)

the Subscriber is not purchasing the Purchased Units as the result of any “directed selling efforts” (as defined in Rule 902(c) of Regulation S and, including any press releases disseminated or otherwise made available in the United States relating to the proposed Offering) made in the United States by the Corporation, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing;

 

 

(iv)

the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act or any applicable state securities laws;

 

(v)

the Subscriber has no intention to distribute either directly or indirectly any of the Securities in the United States or to, or for the account or benefit of U.S. Persons, except in compliance with the U.S. Securities Act and any applicable state securities laws;

 

(vi)

the Securities have not been registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of unless the transaction is exempt from, or not subject to, the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws;

 

(vii)

until 40 calendar days after the later of (A) the day on which the Securities are first offered to persons other than Distributors in reliance on Regulation S and (B) the Closing Date (such 40 calendar day period, the “Distribution Compliance Period”), an offer or sale of the Securities within the United States or to a U.S. Person may violate the registration requirements of the U.S. Securities Act;

 

(viii)

the Subscriber is neither an underwriter of, or dealer in, the common shares of the Corporation, nor participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

 

(ix)

the Subscriber: (A) is not in the United States or a U.S. Person and is acquiring the Securities in an “offshore transaction” (as such term is used in Regulation S) pursuant to Regulation S, for its own account and not with a view to any resale or distribution of such Securities in violation of U.S. federal or state securities laws; (B) agrees on its own behalf and on behalf of any investor account for which it has purchased Securities that it will not during the Distribution Compliance Period, offer, sell or otherwise transfer the Securities except (x) to the Corporation, (y) to non-U.S. Persons outside the United States in accordance with Regulation S, or (z) pursuant to any other available exemption or exclusion from the registration requirement of the U.S. Securities Act; and (C) agrees that during such period that it will give to each person to whom the Securities are transferred a notice substantially to the effect of this provision;

 

International Subscribers

 

(q)

if the Subscriber is resident in or otherwise subject to the Securities Laws of any jurisdiction outside of Canada and the United States (the “International Jurisdiction”), then:

 

(i)

the Subscriber has completed, executed and delivered to the Corporation, a Foreign Purchaser Certificate in the form attached hereto as SCHEDULE "D";

 

(ii)

the Subscriber is knowledgeable of, or has been independently advised as to, the applicable Securities Laws of the International Jurisdiction which would apply to this subscription, if any;

 

(iii)

the delivery of this Agreement, the acceptance of it by the Corporation and the issuance of the Purchased Units to the Subscriber complies with all laws applicable to the Subscriber, including the laws of such Subscriber’s jurisdiction of residence, and all other applicable laws, and will not cause the Corporation to become subject to, or require it to comply with, any disclosure, prospectus, filing or reporting requirements under any applicable laws of the International Jurisdiction;

 

 

(iv)

the Corporation is offering and selling the Purchased Units and the Subscriber is purchasing the Purchased Units pursuant to exemptions from the prospectus and registration requirements under the applicable Securities Laws of the International Jurisdiction or, if such is not applicable, the Corporation is permitted to offer and sell the Purchased Units and the Subscriber is permitted to purchase the Purchased Units under the applicable Securities Laws of such International Jurisdiction without the need to rely on exemptions;

 

(v)

the applicable Securities Laws do not require the Corporation to register any of the Purchased Units, file a prospectus, registration statement, offering memorandum or similar document, or make any filings or disclosures or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the International Jurisdiction; and

 

(vi)

the Subscriber will, if requested by the Corporation, deliver to the Corporation a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subparagraphs (iii) through (v) above to the satisfaction of the Corporation, acting reasonably;

 

Risks of Private Placement

 

(r)

the Subscriber acknowledges that:

 

(i)

no securities commission, agency, governmental authority, regulatory body, stock exchange or similar regulatory authority has reviewed or passed on the merits of the Purchased Units, Unit Shares or Warrants comprising the Purchased Units (or the underlying Warrant Shares) nor have any such agencies or authorities made any recommendations or endorsement with respect to the Units;

 

(ii)

there is no government or other insurance covering the Purchased Units;

 

(iii)

there are significant risks associated with the purchase of the Purchased Units and the Subscriber understands such risks and is comfortable investing in the Purchased Units notwithstanding such risks;

 

(iv)

there are restrictions on the Subscriber’s ability to resell the Purchased Units (including the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares)) and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Purchased Units (including the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares));

 

(v)

the Subscriber has been advised to consult its own legal advisors with respect to the execution, delivery and performance by it of this Agreement and the transactions contemplated herein, including trading in the Unit Shares, Warrants and Warrant Shares, and with respect to the hold periods imposed by the applicable Securities Laws of the jurisdiction in which the Subscriber resides and other applicable Securities Laws, and acknowledges that no representation has been made by the Corporation, the Agent or the U.S. Affiliates respecting the applicable hold periods imposed by applicable Securities Laws or other resale restrictions applicable to such securities which restrict the ability of the Subscriber (or others for whom it is contracting hereunder) to resell such securities, that the Subscriber (or others for whom it is contracting hereunder) is solely responsible to find out what these restrictions are, that the Subscriber is solely responsible (and neither the Corporation nor the Agent nor the U.S. Affiliates are in any way responsible) for compliance with applicable resale restrictions under applicable Securities Laws and that the Subscriber (or others for whom it is contracting hereunder) is aware that it may not resell such securities except in accordance with limited exemptions under applicable Securities Laws; and

 

(vi)

the Corporation has advised the Subscriber that the Corporation is relying on an exemption from the requirements to provide the Subscriber with a prospectus or registration statement and to sell the Purchased Units through a person registered to sell securities under applicable Securities Laws and, as a consequence of acquiring the Purchased Units pursuant to these exemptions, certain protections, rights and remedies provided by applicable Securities Laws, including applicable statutory rights of rescission or damages, will not be available to the Subscriber;

 

 

No Prospectus or Undisclosed Information

 

(s)

the Subscriber understands that the Purchased Units are only being offered on a private placement basis and that the sale of the Purchased Units is therefore conditional upon such sale being exempt from the requirements to file and obtain a receipt for a prospectus or registration statement or to deliver an offering memorandum, and no prospectus or registration statement has been filed by the Corporation with any securities commission or similar regulatory authority in any jurisdiction in connection with the issuance of the Purchased Units. As a result of acquiring the Purchased Units pursuant to such exemptions, the Subscriber acknowledges and confirms that:

 

(i)

the Subscriber may be restricted from using some of the protections, rights and remedies otherwise available under Securities Laws, including applicable statutory rights of rescission or damages in the event of a misrepresentation;

 

(ii)

the Subscriber may not receive information that would otherwise be required to be provided to it under Securities Laws or contained in a prospectus or registration statement prepared in accordance with applicable Securities Laws;

 

(iii)

the Corporation is relieved from certain obligations that would otherwise apply under Securities Laws; and

 

(iv)

the common law may not provide investors with an adequate remedy in the event they suffer investment losses in connection with Purchased Units acquired in a private placement;

 

(t)

the Subscriber has not received or been provided with a prospectus, registration statement or offering memorandum, within the meaning of Securities Laws, or any sales or advertising literature in connection with the Offering or any document purporting to describe the business and affairs of the Corporation which has been prepared for review by prospective purchasers to assist in making an investment decision in respect of the Purchased Units and the Subscriber’s decision to subscribe for the Purchased Units was not based upon, and the Subscriber has not relied upon, any verbal or written representations as to any fact made by or on behalf of the Corporation and its respective directors, officers, employees, agent and representatives, other than set out in this Agreement and the schedules attached hereto. The Subscriber’s decision to subscribe for the Purchased Units was based solely upon this Agreement and the schedules attached hereto and information about the Corporation which is publicly available (any such information having been obtained by the Subscriber without independent investigation);

 

(u)

the Subscriber understands that the Agent has been appointed by the Corporation to offer the Units on a commercially reasonable “best efforts” private placement basis and that neither counsel to the Corporation nor counsel to the Agent assume responsibility or liability of any nature whatsoever for the accuracy or adequacy of information regarding the Corporation which is publicly available, and that the Agent, the U.S. Affiliates and the representatives thereof are not liable for any information given or statement made to the Subscriber by the Corporation in connection with the Corporation or the transaction contemplated by this Agreement;

 

(v)

neither counsel to the Corporation nor counsel to the Agent assume responsibility or liability of any nature whatsoever for the accuracy or adequacy of any such publicly available information concerning the Corporation or as to whether all information concerning the Corporation that is required to be disclosed or filed by the Corporation under the Securities Laws has been so disclosed or filed;

 

(w)

the Subscriber is not purchasing the Purchased Units with knowledge of any material information concerning the Corporation that has not been generally disclosed;

 

 

Investment Suitability

 

(x)

the Subscriber confirms that the Subscriber:

 

(i)

has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of its investment in the Purchased Units, including the potential loss of its entire investment;

 

(ii)

is capable of assessing the proposed investment in the Purchased Units as a result of the Subscriber’s own experience or as a result of advice received from a person registered under applicable Securities Laws;

 

(iii)

is aware of the characteristics of the Purchased Units and the risks relating to an investment therein; and

 

(iv)

is able to bear the economic risk of loss of its investment in the Purchased Units;

 

No Representations

 

(y)

the Subscriber confirms that none of the Corporation, the Agent or the U.S. Affiliates, or any their respective directors, employees, officers, representatives, agent or affiliates have made any representations (written or oral) to the Subscriber:

 

(i)

regarding the future price or value of the Unit Shares or the Warrants comprising the Purchased Units (or the underlying Warrant Shares);

 

(ii)

that any person will resell or repurchase the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares); or

 

(iii)

that any person will refund the Subscription Price of the Purchased Units;

 

Limitations on Resale of the Securities and Exercise of the Warrants

 

(z)

the Subscriber understands that it may not be able to resell the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) except in accordance with limited exemptions available under applicable Securities Laws, and that the Subscriber is solely responsible for (and the Corporation, the Agent and the U.S. Affiliates are not in any way responsible for) the Subscriber’s compliance with applicable resale restrictions. The Subscriber will comply with all applicable Securities Laws concerning the subscription, purchase, holding and resale of the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) and will not resell any of Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) except in accordance with the provisions of applicable Securities Laws;

 

(aa)

the Subscriber acknowledges that the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) may only be transferred or assigned in compliance with applicable laws (including applicable Securities Laws) and will be subject to statutory resale restrictions under the Securities Laws in which the Subscriber resides or under other applicable Securities Laws; the Subscriber covenants that it will not resell the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) except in compliance with such laws and the Subscriber acknowledges that it is solely responsible (and neither the Corporation nor the Agent nor the U.S. Affiliates are in any way responsible) for such compliance;

 

 

(bb)

upon the original issuance of any of the Securities and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws or under the terms of the Registration Rights Agreement, certificates (including the Share Certificates) representing such Securities, and all certificates (including the Share Certificates) issued in exchange therefor or in substitution thereof, shall bear the following legend:

 

"THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT."

 

(cc)

the Subscriber acknowledges and agrees the Warrants may not be exercised by or on behalf of a U.S. Person or a person in the United States unless an exemption is available from the registration requirements of the U.S. Securities Act and the securities laws of all applicable states;

 

(dd)

the Subscriber acknowledges and agrees that upon the original issuance of the Warrants and until such time as it is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, any certificates representing the Warrants and any certificates issued in exchange therefor or in substitution thereof, shall bear a legend to the following effect:

 

“THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE SECURITIES AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”;

 

(ee)

there are restrictions on the ability to resell Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) and the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) may not be resold under Canadian Securities Laws until after the expiry of the applicable “hold” or “restricted” period attaching to such securities unless sold pursuant to an exemption under applicable Securities Laws. The Share Certificates evidencing the Unit Shares and the Warrant Certificates representing the Warrants, together comprising the Purchased Units (and the Share Certificates evidencing the underlying Warrant Shares) (and any replacement Share Certificates or Warrant Certificate, as applicable, issued prior to the expiration of the applicable hold periods) or other electronic book entry system (as applicable), which it shall receive will bear a legend referring to such restrictions on resale and neither the Corporation nor any transfer agent of the Corporation will register any transfers of such Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) not made in compliance with such restrictions on resale. For purposes of complying with applicable Securities Laws and National Instrument 45-102 – Resale of Securities, the Subscriber understands and acknowledges that the Share Certificates evidencing the Unit Shares and the Warrant Certificates representing the Warrants, together comprising the Purchased Units (and the Share Certificates evidencing the underlying Warrant Shares) (and any replacement Share Certificates or Warrant Certificates, as applicable, issued prior to the expiration of the applicable hold periods) or other electronic book entry system (as applicable), which it shall receive will bear a legend, substantially in the following form (and with the necessary information inserted), referring to such restrictions on resale and neither the Corporation nor any transfer agent of the Corporation will register any transfers of such Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) not made in compliance with such restrictions on resale:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE CLOSING DATE.”

 

 

Not Proceeds of Crime

 

(ff)

the funds representing the Aggregate Subscription Amount which will be advanced by the Subscriber hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as may be amended from time to time (the “PCMLTFA”) and for the purposes of the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, as may be amended from time to time (the “PATRIOT Act”) and the Subscriber acknowledges that the Corporation may in the future be required by law to disclose the Subscriber’s name and other information relating to this Agreement and the Subscriber’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA and the PATRIOT Act. To the best of its knowledge: (i) none of the funds representing the Subscription Price to be provided by the Subscriber: (A) have been or will be derived from or related to any activity that is deemed criminal under the laws of Canada, the United States, any International Jurisdiction or any other jurisdiction; or (B) are being tendered on behalf of a person or entity who has not been identified to the Subscriber; and (ii) it shall promptly notify the Corporation if the Subscriber discovers that any of such representations cease to be true, and to provide the Corporation with appropriate information in connection therewith;

 

(gg)

The Subscriber is not a person or entity identified in any regulation made under (i) the United Nations Act including the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism, the United Nations Al-Qaida and Taliban Regulations, the Regulations Implementing the United Nations Resolution on the Democratic People’s Republic of Korea, the Regulations Implementing the United Nations Resolution on Iran, the Regulations Implementing the United Nations Resolution on Eritrea, the Regulations Implementing the United Nations Resolution on Lebanon, the Regulations Implementing the United Nations Resolution on Libya, the Regulations Implementing the United Nations Resolution on Somalia, the United Nations Cote d’Ivoire Regulations, the United Nations Democratic Republic of the Congo Regulations, the Regulations Implement the United Nations Resolutions on Liberia, the United Nations Iraq Regulations, the Regulations Implementing the United Nations Resolution on the Central African Republic, and the United Nations Sudan Regulations; (ii) the Special Economic Measures Act including the Special Economic Measures (Zimbabwe) Regulations, the Special Economic Measures (Burma) Regulations, the Special Economic Measures (Democratic People’s Republic of Korea) Regulations, the Special Economic Measures (Iran) Regulations, the Special Economic Measures (Syria) Regulations, the Special Economic Measures (Ukraine) Regulations, and the Special Economic Measures (Russia) Regulations; (iii) the Freezing Assets of Corrupt Foreign Officials Act or, (iv) the Criminal Code of Canada; (collectively, the “Trade Sanctions”). The Subscriber acknowledges that the Corporation may in the future be required by law to disclose the name and other information of the Subscriber related to the acquisition of the Offered Shares hereunder, on a confidential basis, pursuant to the Trade Sanctions or as otherwise may be required by applicable laws or regulations.

 

No Financial Assistance

 

(hh)

the Subscriber has not received and does not expect to receive any financial assistance from the Corporation, directly or indirectly, in respect of the Subscriber’s purchase of the Purchased Units and the Corporation has had no regard to the Subscriber’s particular objectives, financial situation and needs;

 

Future Financings

 

(ii)

the Subscriber acknowledges that the Corporation may complete additional financings in the future to develop the proposed business of the Corporation and to fund its ongoing development. There is no assurance that such financings will be available and if available, will be on reasonable terms. Any such future financings may have a dilutive effect on securityholders of the Corporation, including the Subscriber;

 

 

No Advertising

 

(jj)

the Subscriber has not become aware of any advertisement in printed media of general and regular paid circulation or on radio, television or other form of telecommunication or any other form of advertisement (including electronic display or the Internet including but not limited to the Corporation’s website) or sales literature with respect to the distribution of the Purchased Units or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

Fees

 

(kk)

other than the Agent and the U.S. Affiliates (and members of their respective selling groups and as otherwise agreed to by the Corporation as contemplated in the Term Sheet), to the best of the Subscriber’s knowledge, there is no person acting or purporting to act on behalf of the Subscriber in connection with the transactions contemplated herein who is entitled to any brokerage or finder’s fee;

 

Other Documents

 

(ll)

if required by Securities Laws or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing such reports, undertakings and other documents with respect to the subscription for and issuance of the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares);

 

Subscriber’s Responsibility for Legal and Financial Advice

 

(mm)

the Subscriber acknowledges that purchasing, holding and disposing of the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) may have legal and tax consequences in any applicable jurisdictions and the Subscriber confirms that it is solely responsible for obtaining its own legal, tax, investment and other professional advice with respect to the execution, delivery and performance by it of this Agreement and the transactions contemplated hereunder including the suitability of the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) as an investment for the Subscribers the tax consequences of purchasing and dealing with the Purchased Units, and the resale restrictions and “hold periods” to which the Unit Shares and the Warrants comprising the Purchased Units (and the underlying Warrant Shares) are or may be subject under Securities Laws. The Subscriber has not relied upon any statements made by or purporting to have been made on behalf of the Corporation or its counsel with respect to such matters;

 

(nn)

the Subscriber acknowledges that all costs and expenses incurred by the Subscriber (including any fees and disbursements of legal counsel, tax advisors, or other professional advisors retained by the Subscriber) relating to the Offering shall be borne solely by the Subscriber;

 

Not a Control Person

 

(oo)

the Subscriber is not a Control Person of the Corporation and will not become a Control Person of the Corporation by virtue of its subscription for Purchased Units hereunder and the Subscriber does not intend to act in concert with any other person or persons to form a control group of the Corporation;

 

Personal Information

 

(pp)

the Subscriber acknowledges that this Agreement, SCHEDULE "B", SCHEDULE "C" and SCHEDULE "D" attached hereto require the Subscriber to provide certain personal information relating to the Subscriber to the Corporation. Such information is being collected and will be used by the Corporation for the purposes of completing the Offering, which includes, without limitation, determining the Subscriber’s eligibility to purchase the Purchased Units under Securities Laws, preparing and registering certificates, including Warrant Certificates, or Share Certificates representing Securities or arranging for non-certificated, electronic delivery of same, and completing filings required by any securities regulatory authority or exchange. Such personal information may be disclosed by the Corporation to (a) securities regulatory authorities and commissions, or stock exchanges, (b) the Corporation’s registrar and transfer agent, (c) any government agency (including any taxing authorities), board or other entity and (d) any of the other parties involved in this Offering, including the legal counsel of the Corporation and the Agent, and may be included in record books in connection with this Offering. By executing this Agreement, the Subscriber consents to the foregoing collection, use and disclosure of such personal information;

 

 

(qq)

the Subscriber acknowledges being notified that if the Subscriber is resident or otherwise subject to the applicable securities legislation of a jurisdiction in Canada: (i) the Corporation will deliver to the applicable securities regulatory authority or regulator certain personal information pertaining to the Subscriber, including such Subscriber’s full name, residential address and telephone number, email address, the number of Purchased Units purchased by such Subscriber, the total purchase price paid for such Purchased Units, the prospectus exemption relied on and the date of distribution of the Purchased Units; (ii) such information is being collected indirectly by the applicable securities regulatory authority or regulator under the authority granted to it in securities legislation; (iii) such information is being collected for the purposes of the administration and enforcement of the securities legislation of the local Canadian jurisdiction; and (iv) the Subscriber may contact the public officials listed on SCHEDULE "E" with respect to questions about the security regulatory authority’s or regulator’s indirect collection of such information;

 

Larger Offering and No Guarantee of Completion

 

(rr)

the Subscriber acknowledges that the purchase by the Subscriber forms part of the Offering described herein for gross proceeds of up to approximately US$1.51 million;

 

Resale Registration Statement

 

(ss)

the Subscriber acknowledges that, pursuant to the terms of the Registration Rights Agreement, the Corporation has agreed to use its best efforts to (i) file a U.S. resale registration statement for the Unit Shares and Warrant Shares issuable pursuant to the Offering within 15 calendar days of the closing date of the Offering (the “Filing Date”) and (ii) have such registration statement declared effective for such securities by the staff at the SEC prior to the end of the hold period under Canadian Securities Laws (unless the staff at the SEC notifies the Corporation that it does not intend to review such registration statement, then such registration statement shall be declared effective within 15 calendar days of such notification (the “Effectiveness Date”)). If such registration statement is not filed by the Filing Date, effective by the Effectiveness Date or the registration statement is not effective to permit resales thereunder after it is declared effective by the staff at the SEC for a period exceeding 10 calendar days (a “Suspension”) and Rule 144 is not available for the resale of the Unit Shares and Warrant Shares without volume or manner of sale limitations, then the Corporation will be subject to certain liquidated damage provisions whereby it shall pay the Subscriber for such Securities 1% of the total amount invested by such Subscriber for each 15-day period that such Filing Date, Effectiveness Date or Suspension period is exceeded, but in no event shall the total amount of such payments exceed 5% of the total amount invested by such Subscriber; and

 

Counsel to Corporation and the Agent

 

(tt)

Dentons US LLP and Dentons Canada LLP (collectively, “Dentons”) is acting solely as legal counsel to the Corporation and Fasken Martineau DuMoulin LLP and Troutman Pepper Hamilton Sanders LLP are acting solely as legal counsel to the Agent and neither Dentons, Fasken Martineau DuMoulin LLP nor Troutman Pepper Hamilton Sanders LLP are acting as counsel to the Subscriber or assume any responsibility or liability of any nature whatsoever for the accuracy or adequacy of any of the information furnished to the Subscriber in connection with the Offering.

 

6.2

Reliance on Representations, Warranties, Covenants and Acknowledgements

 

The Subscriber acknowledges and agrees that the representations, warranties, covenants and acknowledgements made by the Subscriber in this Agreement are made with the intention that they may be relied upon by the Corporation, the Agent, the U.S. Affiliates and their respective legal counsel in determining the Subscriber’s eligibility (and if applicable, the eligibility of the Disclosed Principal) to purchase the Purchased Units. The Subscriber further agrees that by accepting the Purchased Units, the Subscriber shall be representing and warranting that such representations, warranties, acknowledgements and covenants are true as at the Closing Time with the same force and effect as if they had been made by the Subscriber at the Closing Time.

 

 

ARTICLE 7 – SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

 

7.1

Survival of Representations and Warranties of the Subscriber

 

The representations, warranties and covenants of the Subscriber contained in this Agreement shall survive the Closing and continue in full force and effect for the benefit of the Corporation for a period of one (1) year, and notwithstanding any subsequent disposition by the Subscriber of any of the Unit Shares or the Warrants comprising the Units (or the underlying Warrant Shares).

 

ARTICLE 8– COMMISSION

 

8.1

Commission to the Agent

 

The Subscriber understands that in connection with the issue and sale of the Units pursuant to the Offering, the Agent will receive from the Corporation on Closing a cash commission (the “Commission”) equal to 6.0% of the gross proceeds from the issuance of Units. Except as disclosed in the Agency Agreement, no other fee or commission is payable by the Corporation in connection with the completion of the Offering; however, the Corporation will pay certain fees and expenses of the Agent (including fees and expenses of counsel to the Agent) plus applicable taxes in connection with the Offering, as set out in the Agency Agreement.

 

ARTICLE 9 – MISCELLANEOUS

 

9.1            Further Assurances

 

Each of the parties hereto upon the reasonable request of each of the other parties hereto, whether before or after the Closing Time, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances and assurances as may reasonably be necessary to complete the transactions contemplated herein.

 

9.2            Notices

 

(a)

Any notice, direction or other instrument required or permitted to be given to any party hereto shall be in writing and shall be sufficiently given if delivered personally, or transmitted by e-mail tested prior to transmission to such party, as follows:

 

(i)

in the case of the Corporation, to:

 

Vision Marine Technologies Inc.

730 Boulevard du Curé-Boivin

Boisbriand, Québec, J7G 2A7, Canada

 

Attention:	Kulwant Sandher, Chief Financial Officer
E-mail:	ks@v-mti.com

 

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

 

Dentons US LLP

1221 Avenue of the Americas

New York, NY 10020

 

Attention:	Rob Condon, Esq.
E-mail:	rob.condon@dentons.com

 

 

(ii)

in the case of the Subscriber, at the address specified on page 3 of this Agreement, with a copy to the Agent at:

 

iA Capital Markets, a division of iA Private Wealth Inc.

26 Wellington Street East, Suite 700

Toronto, Ontario M5E 1S2, Canada

 

Attention:	Laura Cristello
E-mail:	ECMCanada@iacapitalmarkets.ca

 

and

 

Fasken Martineau DuMoulin LLP

800 Square-Victoria, suite 3500

Montréal, Québec H4Z 1E9, Canada

 

Attention:	Sébastien Bellefleur, Partner
E-mail:	sbellefleur@fasken.com

 

(b)

Any such notice, direction or other instrument, if delivered personally, shall be deemed to have been given and received on the day on which it was delivered, provided that if such day is not a Business Day then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following such day and if transmitted by e-mail, shall be deemed to have been given and received on the day of its transmission, provided that if such day is not a Business Day or if it is transmitted or received after the end of normal business hours then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following the day of such transmission.

 

(c)

Any party hereto may change its address for service from time to time by notice given to each of the other parties hereto in accordance with the foregoing provisions.

 

9.3           Time of the Essence

 

Time shall be of the essence of this Agreement and every part hereof.

 

9.4           Costs and Expenses

 

Subject to the Agency Agreement with respect to the cost of the Agents to be paid by the Corporation, All costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Agreement and the transactions herein contemplated shall be paid and borne by the party incurring such costs and expenses.

 

9.5           Applicable Law

 

This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the Province of Québec and the laws of Canada applicable therein. Any and all disputes arising under this Subscription Agreement, whether as to interpretation, performance or otherwise, shall be subject to the non-exclusive jurisdiction of the courts of the Province of Québec and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of such Province.

 

9.6           Entire Agreement

 

This Agreement, including the Schedules hereto, constitutes the entire agreement between the parties with respect to the transactions contemplated herein and cancels and supersedes any prior understandings, agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions, undertakings or collateral agreements or understandings, express or implied, between the parties hereto other than those expressly set forth in this Agreement or in any such agreement, certificate, affidavit, statutory declaration or other document as aforesaid. This Agreement may not be amended or modified in any respect except by written instrument executed by each of the parties hereto.

 

 

9.7           Counterparts

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Agreement. Counterparts may be delivered either in original, PDF or faxed form and the parties adopt any signatures received by PDF or a receiving fax machine as original signatures of the parties. If less than a complete copy of this Agreement is delivered to the Corporation, the Agent or a U.S. Affiliate, the Corporation, the Agent, the U.S. Affiliates and their respective advisors are entitled to assume that the Subscriber accepts and agrees to all the terms and conditions of the pages not delivered, unaltered.

 

9.8           [INTENTIONALLY OMITTED]

 

9.9           Assignment

 

This Agreement may not be assigned by either party except with the prior written consent of the other party hereto.

 

9.10        Enurement

 

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, successors (including any successor by reason of the amalgamation or merger of any party), administrators and permitted assigns.

 

9.11        Language

 

The parties confirm their express wish that this subscription agreement and all related documents be drafted in the English language. Les parties confirment leur volonté expresse que la présente convention de souscription et tous les documents s’y rattachant soient rédigés en langue anglaise.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

 

The Corporation hereby accepts the subscription for the Purchased Units as set forth on page 3 of this Agreement on the terms and conditions contained in this Agreement (including all applicable Schedules) this 18^th day of September, 2023.

 

VISION MARINE TECHNOLOGIES INC.

 

	Per:
		Authorized Signing Officer

 

 

 

SCHEDULE "A"
TERM SHEET 

best-efforts private placement of units 

June 15, 2023

 

(Figures in US$, unless otherwise indicated)

 

This term sheet (the “Term Sheet”) summarizes the principal terms of a proposed offering of up to $10 million of units of Vision Marine Technologies Inc. to certain qualified subscribers pursuant to a brokered best-efforts private placement. This Term Sheet is for discussion purposes only and does not constitute a legally binding offer or agreement, which will in all respects be contingent upon and subject to satisfactory completion of due diligence and the negotiation, execution of definitive documentation and receipt of all required regulatory approvals.
Issuer:	Vision Marine Technologies Inc. (the “Corporation”).
Offering (the “Offering”):	Up to 2,469,136 units (“Units”).
Units:	Each Unit will consist of one (1) common share of the Corporation (a “Common Share”) and one (1) common share purchase warrant of the Corporation (a “Warrant”). Each Warrant will be exercisable after six (6) months from the date of issuance into one (1) Common Share of the Corporation (a “Warrant Share”) at an exercise price of $4.05 per Warrant Share, for a period three (3) years from the date of issuance thereof.
Offering Price:	US $4.05 per Unit (the “Offering Price”).
Amount:	Up to $10,000,000.
Form of Offering:	The Units will be marketed on a commercially reasonable best-efforts basis and shall be sold pursuant to private placement exemptions from any prospectus or registration requirements to investors: (i) resident or located in all the provinces and territories of Canada; (ii) in the “United States” or that are “U.S. persons” (as such terms are defined in Regulation S under the United States Securities Act of 1933, as amended); and (iii) in jurisdictions outside of Canada and the United States to be mutually agreed to by the Corporation and the Agents, each acting reasonably, in each case in accordance with all applicable laws provided that no prospectus, registration statement or similar document is required to be filed in such jurisdiction, and in the case of (iii) that the Corporation does not thereafter become subject to continuous disclosure obligations in such jurisdictions.
Use of Proceeds:	Net proceeds of the Offering will be used for building up inventory for order fulfilment, development of the E-Motion electric powertrain technology and increasing brand awareness.
Agent:	iA Capital Markets will act as exclusive Canadian placement agent (the “Agent”).
Commission:	6.0% of the gross proceeds of the Offering payable in cash.
Listing:	The common shares of the Corporation are listed on the NASDAQ under the symbol “VMAR”.

 

 

Hold Period:	The securities issuable pursuant to this Offering will be (i) subject to a four month and one day hold period under applicable securities laws in Canada (the “Canadian Hold Period”); and (ii) may deemed “restricted securities” under applicable United States federal and state securities laws and subject to hold periods under applicable United States federal and state securities laws.  The Corporation has agreed to use its best efforts to (i) file a U.S. resale registration statement for the Common Shares issuable pursuant to the Offering within 15 calendar days of the closing date of the Offering (the “Filing Date”) and (ii) have such registration statement declared effective for such securities by the staff at the United States Securities and Exchange Commission (“SEC”) prior to the end of the Canadian Hold Period (unless the staff at the SEC notifies the Corporation that it does not intend to review such registration statement, then such registration statement shall be declared effective within 15 calendar days of such notification (the “Effectiveness Date”)). If such registration statement is not filed by the Filing Date, effective by the Effectiveness Date or the registration statement is not effective to permit resales thereunder after it is declared effective by the staff at the SEC for a period exceeding 10 calendar days (a “Suspension”) and Rule 144 is not available for the resale of the Common Shares without volume or manner of sale limitations, then the Corporation will be subject to certain liquidated damage provisions whereby it shall pay the purchaser of such securities 1% of the total amount invested by such purchaser for each 15-day period that such Filing Date, Effectiveness Date or Suspension period is exceeded, but in no event shall the total amount of such payments exceed 5% of the total amount invested by such purchaser.
Warrants:	The Warrants shall be exercisable for cash or in a cashless manner if there is no effective registration statement registering the Warrant Shares.  When the Warrants are exercised in a cashless manner, the Warrant Shares issuable thereunder shall be issued to the holder of such warrant free of any U.S. or Canadian restrictive legends.
Accredited Investors:	The Offering will only be offered (i) to, or for the account or benefit of, persons in the United States or U.S. persons who are “accredited investors” (as such term is defined under (i) Rule 501(a) of Regulation D under the United States Securities Act of 1933, as amended), and (ii) to persons outside of the United States who are non-U.S. persons to “accredited investors” (as such term is defined under applicable Canadian securities laws).
Eligibility:	The Common Shares and Warrant Shares will be eligible under applicable Canadian Laws for RRSPs, RRIFs, RDSPs, RESPs, TFSAs and DPSPs.
Closing Date:	On or about September [  ], 2023, or such other date as mutually agreed to between the Agent and the Corporation.

 

 

SCHEDULE "B"
CANADIAN Accredited Investor Certificate

 

TO:            VISION MARINE TECHNOLOGIES INC. (the “Corporation”)

 

AND TO: iA Capital Markets, a division of iA Private Wealth Inc. (the “Agent”)

 

The categories listed herein contain certain specifically defined terms. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your broker and/or legal advisor before completing this certificate.

 

Capitalized terms not specifically defined in this SCHEDULE "B" have the meanings ascribed to them in the Subscription Agreement to which this SCHEDULE "B"” is attached.

 

In connection with the purchase by the undersigned Subscriber of the Purchased Units, the Subscriber hereby represents, warrants, covenants and certifies to the Corporation (and acknowledges that the Corporation and its counsel are relying thereon) that:

 

(a)

the Subscriber is resident in or otherwise subject to the securities laws of one of the Provinces or Territories of Canada;

 

(b)

the Subscriber is purchasing the Purchased Units as principal for its own account and not for the benefit of any other person or is deemed to be purchasing as principal pursuant to NI 45-106;

 

(c)

the Subscriber is, and at the Closing Time, will be, an “accredited investor” within the meaning of NI 45-106 or Section 73.3 of the Securities Act (Ontario) on the basis that the undersigned fits within one of the categories of an “accredited investor” reproduced below beside which the undersigned has indicated the undersigned belongs to such category;

 

(d)

the Subscriber was not created or is not used, solely to purchase or hold securities as an accredited investor as described in paragraph (m) below;

 

(e)

if the Subscriber is purchasing under category (j), (k) or (l) below, it has completed and signed Appendix 1 attached hereto; and

 

(f)

upon execution of this Schedule “B” by the Subscriber, including, if applicable, Appendix 1 to this Schedule “B”, this Schedule “B” shall be incorporated into and form a part of the Subscription Agreement.

 

(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)

 

NOTE: If you check the box beside paragraphs (j), (k) or (l) below, you must complete and execute Appendix 1 to this Schedule “B”.

 

¨	(a)	a Canadian financial institution, or a Schedule III bank (or in Ontario, a bank listed in Schedule I, II, or III of the Bank Act (Canada));
¨	(b)	the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);
¨	(c)	a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;
¨	(d)	a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer;

 

 

¨	(e)	an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);
¨	(e.1)	an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);
¨	(f)	the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly-owned entity of the Government of Canada or a jurisdiction of Canada;
¨	(g)	a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;
¨	(h)	any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;
¨	(i)	a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction of Canada;
¨	(j)	an individual who, either alone or with a spouse, beneficially owns, financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000;   See definition of “financial assets” below and section 3.5(3) of Companion Policy 45-106CP to NI 45-106 which provides guidance as to the ‎meaning of beneficial ownership of financial assets. If individual accredited investors wish to ‎purchase through wholly-owned holding companies or similar entities, such purchasing entities ‎must qualify under paragraph (t) below, or (w) if a family trust.‎   If you check beside paragraph (j) above, you must complete and execute Appendix 1 to this Schedule “B”.
¨	(j.1)	an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000;   See definition of “financial assets” below and section 3.5(3) of Companion Policy 45-106CP to NI 45-106 which provides guidance as to the ‎meaning of beneficial ownership of financial assets.
¨	(k)	an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;   If you check beside paragraph (k) above, you must complete and execute Appendix 1 to this Schedule “B”.
¨	(l)	an individual who, either alone or with a spouse, has net assets of at least $5,000,000; ‎
		See definition of “net assets” below and section 3.5(4) of Companion Policy 45-106CP to NI 45-106 which provides guidance as to the ‎calculation of an individual purchasers net assets.
		If you check beside paragraph (l) above, you must complete and execute Appendix 1 to this Schedule “B”.

 

 

¨	(m)	a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;   ‎
		See definition of “net assets” below. The minimum net asset threshold of $5,000,000 must be shown on the entity’s “most recently ‎prepared financial statements”, which must be prepared in accordance with applicable generally ‎accepted accounting principles.
¨	(n)	an investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment], or 2.19 [Additional investment in investment funds] of NI 45-106, or (iii) a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106;
¨	(o)	an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;
¨	(p)	a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;
¨	(q)	a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction;
¨	(r)	a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;
¨	(s)	an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;
¨	(t)	a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors;
		If you checked (t), please indicate the name and category of accredited investor (by reference to the applicable letter in this Certificate) of each owner:

 

		Name	Category of Accredited Investor
	Owner:
	Owner:
	Owner:

		[attach sheet if more than 3 owners]
¨	(u)	an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser;
¨	(v)	a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor; or

 

 

¨	(w)	a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse.
		If you checked (w), please indicate the name and category of accredited investor (by reference to the applicable letter in this Certificate) of the accredited investor that established the trust and the applicable trustees:

	Name (and indicate if established trust or if trustee)	Category of Accredited Investor

		[attach sheet if more than 3 names]

 

For the purposes hereof, the following definitions are included for convenience:

 

A.

“bank” means a bank named in Schedule I or II of the Bank Act (Canada);

 

B.

“Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under Section 473(1) of that Act, or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or credit union league or federation that, in each case, is authorized by an enactment of a statute of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

 

C.

“company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization;

 

D.

“entity” means a company, syndicate, partnership, trust or unincorporated organization;

 

E.

“financial assets” means (i) cash, (ii) securities, or (iii) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;

 

F.

“founder” means, in respect of an issuer, a person who, (i) acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and (ii) at the time of the distribution or trade is actively involved in the business of the issuer;

 

G.

“fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;

 

H.

“individual” means a natural person, but does not include a partnership, unincorporated association, unincorporated organization, trust, or a natural person in his or her capacity as trustee, executor, administrator or other legal personal representative;

 

I.

“investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes an employee venture capital corporation that does not have a restricted constitution, and is registered under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments and a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is making multiple investments;

 

 

J.

“person” includes (a) an individual, (b) a corporation, (c) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and (d) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

 

K.

“related liabilities” means (i) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets or (ii) liabilities that are secured by financial assets;

 

L.

“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);

 

M.

“spouse” means an individual who (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and

 

N.

“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

 

In NI 45-106 a person or company is an affiliate of another person or company if one is a subsidiary of the other, or if each of them is controlled by the same person or company.

 

In NI 45-106 and except in Part 2 Division 4 of NI 45-106, a person (first person) is considered to control another person (second person) if (a) the first person beneficially owns or directly or indirectly exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation, (b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or (c) the second person is a limited partnership and the general partner of the limited partnership is the first person.

 

In NI 45-106 a trust company or trust corporation described in paragraph (p) above of the definition of “accredited investor” (other than in respect of a trust company or trust corporation registered under the laws of Prince Edward Island that is not registered or authorized under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada) is deemed to be purchasing as principal.

 

In NI 45-106 a person described in paragraph (q) above of the definition of “accredited investor” is deemed to be purchasing as principal.

 

The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Corporation prior to the Closing Time.

 

DATED:			SIGNED:
X			X
Witness (if Subscriber is an individual)
Print the name of Witness			Print the name of Subscriber
			If Subscriber is not an Individual, print name and title of Authorized Signing Officer

 

 

APPENDIX 1 TO SCHEDULE “B”
RISK ACKNOWLEDGEMENT CERTIFICATE

 

Form 45-106F9
Form for Individual Accredited Investors

 

WARNING! This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.

 

SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
1. About your investment
Type of securities: Units (comprised of one common share and one common share purchase warrant)	Issuer: Vision Marine Technologies Inc.
Purchased from: Vision Marine Technologies Inc.
SECTIONS 2 TO 4 TO BE COMPLETED BY THE SUBSCRIBER
2. Risk acknowledgement
This investment is risky. Initial to the right of each category that you understand that:				Your initials
Risk of loss – You could lose your entire investment of $_____________. [Instruction: Insert the total dollar amount of the investment.]
Liquidity risk – You may not be able to sell your investment quickly – or at all.
Lack of information – You may receive little or no information about your investment.
Lack of advice – You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca.
3. Accredited investor status
You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria.				Your initials
·      Your net income before taxes was more than $200,000 in each of the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.)
·      Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.
·      Either alone or with your spouse, you own more than $1,000,000 in cash and securities, after subtracting any debt related to the cash and securities.
·      Either alone or with your spouse, you have net assets worth more than $5,000,000 million. (Your net assets are your total assets (including real estate) minus your total debt.)

 

 

4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
First and last name (please print):
Signature: X			Date: ____________, 2023
SECTION 5 TO BE COMPLETED BY THE SALESPERSON
5. Salesperson information
[Instruction: The salesperson is the person who meets with, or provides information to, the Subscriber with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
First and last name of salesperson (please print):
Telephone:		E-mail:
Name of firm (if registered):
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
6. For more information about this investment
iA Capital Markets, a division of iA Private Wealth Inc. 26 Wellington Street East, Suite 700 Toronto, Ontario M5E 1S2, Canada Attention:  Laura Cristello E-mail:        ECMCanada@iacapitalmarkets.ca   For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca.

 

Form instructions:

 

1. The information in sections 1, 5 and 6 must be completed before the Subscriber completes and signs the form.

 

2. The Subscriber must sign this form. Each of the Subscriber and the issuer or selling security holder must receive a copy of this form signed by the Subscriber. The issuer or selling security holder is required to keep a copy of this form for 8 years after the distribution.

 

 

SCHEDULE "C"
ANNEX 1 - UNITED STATES Institutional accredited investor certificate

 

Subscribers that are in the United States or are U.S. Persons must review and complete the following United States Institutional Accredited Investor Certificate (the “Certificate”):

 

TO:            VISION MARINE TECHNOLOGIES INC. (the “Corporation”)

 

AND TO:   iA Capital Markets, a division of iA Private Wealth Inc. (the “Agent”)

 

AND TO:   One or more United States registered broker-dealers affiliated with or appointed by the Agent (the “U.S. Affiliates”)

 

This Certificate is being delivered in connection with the execution and delivery of the Subscription Agreement (as defined below) of the undersigned subscriber (the “Subscriber”) in connection with the purchase of units (the “Purchased Units”) of the Corporation. Capitalized terms used herein and not defined herein will have the meanings ascribed thereto in the accompanying subscription agreement between the Corporation and the undersigned dated as of the date thereof and delivered by the undersigned concurrently herewith (the “Subscription Agreement”).

 

Part A - U.S. Institutional Accredited Investor

 

Each Subscriber that is, or that is purchasing for the account or benefit of, a person in the United States or a U.S. Person hereby represents, warrants and covenants (which representations, warranties and covenants will survive the Closing Date) to and with the Corporation, the Agent and the U.S. Affiliates and acknowledges that the Corporation, the Agent and the U.S. Affiliates and their counsel are relying thereon that:

 

(a)

The Subscriber is purchasing the Purchased Units for its own account or for the account of one or more persons for whom it is exercising sole investment discretion, (a “Beneficial Purchaser”), and it, and if applicable, each Beneficial Purchaser for whose account it is purchasing the Subscription Receipts, is an institutional “accredited investor” that satisfies one or more criteria set forth in Rule 501(a)(1), (2), (3), (7), (8), (9), (12) and/or (13) of Regulation D (a “U.S. Institutional Accredited Investor”), and the Subscriber has initialled the category of U.S. Institutional Accredited Investor applicable to the Subscriber in paragraph (b) below.

 

(b)

The Subscriber and if applicable, each Beneficial Purchaser for whose account it is purchasing the Purchased Units, is a U.S. Institutional Accredited Investor as a result of satisfying the requirements of the paragraphs below that the Subscriber has indicated (the Subscriber must initial “SUB” for the U.S. Subscriber, and “BP” for each Beneficial Purchaser, if any, on the appropriate line(s)):

 

 

 

_________		Category 1.   [Rule 501(a)(1)]	A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
_________		Category 2.   [Rule 501(a)(1)]	A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
_________		Category 3.   [Rule 501(a)(1)]	A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended; or
_________		Category 4.   [Rule 501(a)(1)]	An investment adviser registered pursuant to Section 203 of the U.S. Investment Advisers Act of 1940, as amended, or registered pursuant to the laws of a state; or

 

 

_________		Category 5.   [Rule 501(a)(1)]	An investment adviser relying on the exemption from registering with the SEC under Section 203(l) or (m) of the U.S. Investment Advisers Act of 1940, as amended; or
_________		Category 6.   [Rule 501(a)(1)]	An insurance company as defined in Section 2(a)(13) of the Securities Act; or
_________		Category 7.   [Rule 501(a)(1)]	An investment company registered under the U.S. Investment Company Act of 1940, as amended; or
_________		Category 8.   [Rule 501(a)(1)]	A business development company as defined in Section 2(a)(48) of the U.S. Investment Company Act of 1940, as amended; or
_________		Category 9.   [Rule 501(a)(1)]	A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958, as amended; or
_________		Category 10.   [Rule 501(a)(1)]	A Rural Business Investment Company as defined in Section 384A of the U.S. Consolidated Farm and Rural Development Act of 1972, as amended; or
_________		Category 11.   [Rule 501(a)(1)]	A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of U.S. $5,000,000; or
_________		Category 12.   [Rule 501(a)(1)]	An employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974, as amended, in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or
_________		Category 13.    _________ [Rule 501(a)(2)]	A private business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940, as amended; or
_________		Category 14.   [Rule 501(a)(3)]	An organization described in Section 501(c)(3) of the U.S. Internal Revenue Code of 1986, as amended, a corporation, a Massachusetts or similar business trust, a partnership, or a limited liability company, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of U.S. $5,000,000; or
_________		Category 15.   [Rule 501(a)(7)]	A trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under Regulation D; or
_________		Category 16.   [Rule 501(a)(8)]	An entity in which each of the equity owners are accredited investors; or (Note: It is permissible to look through various forms of equity ownership to natural persons in determining the accredited investor status of entities under this category. If those natural persons are themselves accredited investors, and if all other equity owners of the entity seeking accredited investor status are accredited investors, then this category may be available.)
_________		Category 17.   [Rule 501(a)(9)]	An entity, of a type not listed above, not formed for the specific purpose of acquiring the securities offered, owning “investments” (as defined in Rule 2a51-1(b) under the U.S. Investment Company Act of 1940, as amended) in excess of U.S. $5,000,000; or

 

 

_________		Category 18.   [Rule 501(a)(12)]	A “family office” (as defined in Rule 202(a)(11)(G)-1 under the U.S. Investment Advisers Act of 1940, as amended): (i)           with assets under management in excess of U.S. $5,000,000, (ii)           that is not formed for the specific purpose of acquiring the securities offered, and (iii)          whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; or
_________		Category 19.   [Rule 501(a)(13)]	A “family client” (as defined in Rule 202(a)(11)(G)-1 under the U.S. Investment Advisers Act of 1940, as amended) of a family office meeting the requirements in Category 23 above and whose prospective investment in the issuer is directed by such family office pursuant to clause (iii) of Category 18.

 

Part B - General

 

In addition to the representations, warranties and covenants set out in Part A, each Subscriber, on its own behalf and on behalf of any Beneficial Purchaser, as applicable, hereby represents, warrants and covenants (which representations, warranties and covenants will survive the Closing Date) to and with the Corporation, the Agent and the U.S. Affiliates and acknowledges that the Corporation, the Agent and the U.S. Affiliates and their counsel are relying thereon that:

 

(a)

The Subscriber is authorized to consummate the purchase of the Purchased Units.

 

(b)

The Subscriber understands and acknowledges that the Unit Shares and the Warrants comprising the Purchased Units, and the underlying Warrant Shares (collectively, the “Securities”), have not been registered under the U.S. Securities Act, or the securities laws of any state of the United States, and that the offer and sale of the Purchased Units to it are being made in reliance upon Rule 506(b) of Regulation D and/or Section 4(a)(2) of the U.S. Securities Act and similar exemptions under applicable state securities laws and that it has a pre-existing substantive relationship with the Agent and/or the U.S. Affiliates.

 

(c)

The Subscriber has not purchased the Purchased Units as a result of any form of “general solicitation” or “general advertising” (as those terms are used in Regulation D), including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or the Internet or broadcast over radio, television, or the Internet or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

 

(d)

The Subscriber is acquiring the Purchased Units for itself for investment purposes only and not with a view to any resale, distribution or other disposition of the Purchased Units in violation of U.S. Securities Laws, and the Subscriber acknowledges that the exemption from registration under the U.S. Securities Act and applicable state securities laws depends, among other things, upon the bona fide nature of the investment intent expressed herein.

 

(e)

The Subscriber is aware that its ability to enforce civil liabilities under the United States federal securities laws may be affected adversely by, among other things: (i) the fact that the Corporation is organized under the laws of Quebec, Canada; (ii) some or all of the directors and officers may be residents of countries other than the United States; and (iii) all or a substantial portion of the assets of the Corporation and such persons may be located outside the United States.

 

(f)

The Subscriber understands and acknowledges that no offering document or prospectus has been, nor will be, prepared in connection with the offering of the Purchased Units and has conducted its own investigation. The Corporation has provided to it the opportunity to ask questions and receive answers concerning the terms and conditions of the Offering and it has had access to such information concerning the Corporation and the Securities as it has considered necessary or appropriate in connection with its investment decision to acquire the Purchased Units, and that any answers to questions and any request for information have been complied with to the Subscriber’s satisfaction.

 

 

(g)

The Subscriber is a sophisticated investor and has such knowledge and experience in financial and business matters as to be capable of evaluating independently the merits and risks of its investment and it, and any account for which it is acting, is able to hold the Securities for an indefinite period of time and bear the economic risk, and withstand a complete loss, of loss of its investment in the Securities.

 

(h)

The Subscriber understands and acknowledges that if in the future it decides to offer, sell, pledge or otherwise transfer any of the Securities, the Securities may be offered, sold, pledged or otherwise transferred only (a) outside the United States in compliance with Regulation S under the U.S. Securities Act, and in compliance with applicable local laws and regulations; (b) pursuant to a registration statement that has been declared effective under the U.S. Securities Act; or (c) in a transaction that is exempt from registration under the U.S. Securities Act, and, in each case, in compliance with all applicable U.S. state securities laws; after (i) in the case of proposed transfers pursuant to (a) above, providing evidence to the Corporation and to the registrar and transfer agent, in form and substance reasonably satisfactory to the Corporation (which may include an opinion of counsel of recognized standing reasonably satisfactory to the Corporation) to the effect that the proposed transfer may be effected without registration under the U.S. Securities Act, and (ii) in the case of proposed transfers pursuant to (c) above, providing a written certification or other evidence, which may include an opinion of counsel, satisfactory to the Corporation, acting reasonably, to the effect that the proposed transfer may be effected without registration under the U.S. Securities Act or applicable state securities laws.

 

(i)

The Subscriber acknowledges and agrees that upon the original issuance of the Securities and until such time as it is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, any certificates representing the Securities and any certificates issued in exchange therefor or in substitution thereof, shall bear a legend to the effect set forth in Sections 6.1(bb) and 6.1(cc) of the Subscription Agreement.

 

(j)

The Subscriber consents to the Corporation making a notation on its records or giving instruction to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer with respect to the Securities set forth and described herein.

 

(k)

The Subscriber understands and acknowledges that, pursuant to the Registration Rights Agreement entered into by the Subscriber and the Corporation on the date hereof, the Corporation is obligated to file with the SEC a registration statement under the U.S. Securities Act with respect to the resale of the Unit Shares and Warrants Shares, in accordance with the terms and conditions set forth therein; provided that, if the Subscriber does not provide the Corporation with the requested information to enable the Corporation to include the Subscriber in the resale registration statement, it acknowledges and agrees that this is a waiver of its rights to be included in the resale registration statement.

 

(l)

The Subscriber understands and agrees that there may be material tax consequences to the Subscriber of an acquisition, disposition or exercise, as applicable, of the Purchased Units, the Unit Shares, Warrants and Warrant Shares; the Corporation gives no opinion and makes no representation with respect to the tax status of the Corporation or the consequences to the Subscriber under United States, state, local or foreign tax law of the Subscriber’s acquisition or disposition or exercise, as applicable, of such securities, including whether the Corporation will at any given time be deemed a “passive foreign investment company” (“PFIC”) within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”); provided however that, it understands and acknowledges that the Corporation has agreed that, upon receipt of a written request from a Subscriber that is in the United States or a U.S. Person, the Corporation shall make a determination if the Corporation is a PFIC during any calendar year following the purchase of Securities by such Subscriber, and if the Corporation determines that it is a PFIC during such year, the Corporation will provide to such Subscriber, upon written request, all information that would be required to permit a United States shareholder to make an election to treat the Corporation as a “qualified electing fund” for the purposes of the Code.

 

 

(m)

The Subscriber acknowledges that it has had the opportunity to obtain independent legal, income tax and investment advice with respect to its subscription for the Purchased Units and accordingly, has had an opportunity to acquire an understanding of the meanings of all terms contained herein relevant to the Subscriber for purpose of giving the representations, warranties and covenants contained herein.

 

(n)

The Subscriber understands that if the Corporation is deemed to be an issuer that is, or that has been at any time previously, an issuer with no or nominal operations and no or nominal assets other than cash and cash equivalents (a “Shell Company”), Rule 144 under the U.S. Securities Act may not be available for resales of the Securities, and the Corporation is not obligated to make Rule 144 under the U.S. Securities Act available for resales of such Securities.

 

(o)

The office or other address of the Subscriber at which the Subscriber received and accepted the offer to purchase the Subscription Receipts is the address listed as the “Subscriber’s Address” on page 4 of the Subscription Agreement.

 

(p)

The Subscriber understands and acknowledges that no agency, governmental authority, regulatory body, stock exchange or other entity (including, without limitation, the SEC or any state securities commission) has made any finding or determination as to the merit of investment in, nor have any such agencies or governmental authorities made any recommendation or endorsement with respect, to the Securities.

 

(q)

If required by applicable securities legislation, regulatory policy or order or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver and file and otherwise assist the Corporation in filing reports, questionnaires, undertakings and other documents with respect to the issue of the Securities.

 

(r)

The Subscriber understands and acknowledges that it is making the representations and warranties and agreements contained herein with the intent that they may be relied upon by the Corporation, the Agent, and the U.S. Affiliates in determining its eligibility to acquire the Securities.

 

(s)

The Subscriber confirms that neither he, she or it, any of its predecessors, any affiliated issuer, any director, executive officer, or any other officer of it, any beneficial owner (as that term is defined in Rule 13d-3 under the Exchange Act) of its outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the issuer in any capacity is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (“Disqualification Events”), except for those Disqualification Events covered by Rule 506(d)(2) or (d)(3).

 

(t)

If the Subscriber is not an individual, it is not organized or formed under the laws of a country determined by the United States Secretary of State to have repeatedly provided support for acts of international terrorism or is included among the list of “covered countries” in Section 1502 of the federal “Dodd-Frank Wall Street Reform and Consumer Protection Act”, Pub.L. 111-203.

 

(u)

The provisions of this Certificate will be true and correct as of the date of execution of the Subscription Agreement, as of the Closing Date and will survive after the date of execution of the Subscription Agreement.

 

 

The Subscriber undertakes to notify the Corporation, the Agent and the U.S. Affiliates immediately of any change in any representation, warranty or other information relating to the Subscriber which takes place prior to the Closing Date.

 

DATED at __________________________      this _______ day of _______________, 2023.

 

If a Corporation, Partnership or Other Entity:		If an Individual:
		X
Name of Entity		Signature
Type of Entity		Print or Type Name
X
Signature of Person Signing
Print or Type Name and Title of Person Signing

 

 

SCHEDULE "D"
FOREIGN PURCHASER CERTIFICATE
(Residents of Jurisdictions other than Canada and the United States)

 

Reference is made to the subscription agreement between the Corporation (the “Corporation”) and the undersigned (referred to herein as the Subscriber) dated as of the date hereof (the “Subscription Agreement”). Terms not otherwise defined herein have the meanings ascribed to them in the Subscription Agreement to which the certificate forms a schedule. The undersigned Subscriber, a resident of a jurisdiction other than Canada or the United States and is not a U.S. Person, hereby represents and warrants as follows:

 

1.

The Subscriber is a resident of an International Jurisdiction and the decision to subscribe for Purchased Units was taken in such International Jurisdiction.

 

2.

The delivery of the Subscription Agreement, the acceptance of it by the Corporation and the issuance of the Purchased Units to the Subscriber complies with all laws applicable to the Subscriber, including the laws of such Subscriber’s jurisdiction of residence, and all other applicable laws, and will not cause the Corporation to become subject to, or require it to comply with, any disclosure, prospectus, filing or reporting requirements under any applicable laws of the International Jurisdiction.

 

3.

The Subscriber is knowledgeable of, or has been independently advised as to, the application or jurisdiction of the securities laws of the International Jurisdiction that would apply to the subscription (other than the securities laws of Canada and the United States).

 

4.

The Corporation is offering and selling the Purchased Units and the Subscriber is purchasing the Purchased Units pursuant to exemptions from the prospectus and registration requirements under the applicable securities laws of the International Jurisdiction or, if such is not applicable, the Corporation is permitted to offer and sell the Purchased Units and the Subscriber is permitted to purchase the Purchased Units under the applicable securities laws of such International Jurisdiction without the need to rely on exemptions.

 

5.

The applicable securities laws do not require the Corporation to register any of the Purchased Units, file a prospectus, registration statement, offering memorandum or similar document, or make any filings or disclosures or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the International Jurisdiction.

 

6.

The Subscriber will, if requested by the Corporation, deliver to the Corporation a certificate or opinion of local counsel from the International Jurisdiction that will confirm the matters referred to in subparagraphs 2, 4 and 5 above to the satisfaction of the Corporation, acting reasonably.

 

7.

The Subscriber will not sell, transfer or dispose of the Purchased Units except in accordance with all applicable laws, including applicable securities laws of Canada and the United States, and the Subscriber acknowledges that the Corporation shall have no obligation to register any such purported sale, transfer or disposition which violates applicable Canadian or United States securities laws.

 

Dated:  ____________________, 2023.
		Name of Subscriber
		X______________________________________
		Signature of Subscriber
		If the Subscriber is a corporation, print name and title of Authorized Signing Officer

 

 

SCHEDULE "E"
Contact Information for Canadian Securities Commissions

 

The contact information of the public official in the local jurisdiction who can answer questions about the security regulatory authority’s or regulator’s indirect collection of information is as follows:   Alberta Securities Commission Suite 600, 250 – 5th Street SW Calgary, Alberta T2P 0R4 Telephone: (403) 297-6454 Toll free in Canada: 1-877-355-0585 Facsimile: (403) 297-2082   British Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, British Columbia V7Y 1L2 Inquiries: (604) 899-6854 Toll free in Canada: 1-800-373-6393 Facsimile: (604) 899-6581 Email: inquiries@bcsc.bc.ca   The Manitoba Securities Commission 500 – 400 St. Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: (204) 945-2548 Toll free in Manitoba 1-800-655-5244 Facsimile: (204) 945-0330   Financial and Consumer Services Commission (New Brunswick) 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Telephone: (506) 658-3060 Toll free in Canada: 1-866-933-2222 Facsimile: (506) 658-3059 Email: info@fcnb.ca   Government of Newfoundland and Labrador Financial Services Regulation Division P.O. Box 8700 Confederation Building 2nd Floor, West Block Prince Philip Drive St. John’s, Newfoundland and Labrador A1B 4J6 Attention: Director of Securities Telephone: (709) 729-4189 Facsimile: (709) 729-6187		Government of the Northwest Territories Office of the Superintendent of Securities P.O. Box 1320 Yellowknife, Northwest Territories X1A 2L9 Attention: Deputy Superintendent, Legal & Enforcement Telephone: (867) 920-8984 Facsimile: (867) 873-0243   Nova Scotia Securities Commission Suite 400, 5251 Duke Street Duke Tower P.O. Box 458 Halifax, Nova Scotia B3J 2P8 Telephone: (902) 424-7768 Facsimile: (902) 424-4625   Government of Nunavut Department of Justice Legal Registries Division P.O. Box 1000, Station 570 1st Floor, Brown Building Iqaluit, Nunavut X0A 0H0 Telephone: (867) 975-6590 Facsimile: (867) 975-6594   Ontario Securities Commission 20 Queen Street West, 22nd Floor Toronto, Ontario M5H 3S8 Telephone: (416) 593- 8314 Toll free in Canada: 1-877-785-1555 Facsimile: (416) 593-8122 Email: exemptmarketfilings@osc.gov.on.ca Public official contact regarding indirect collection of information: Inquiries Officer
		Prince Edward Island Securities Office 95 Rochford Street, 4th Floor Shaw Building P.O. Box 2000 Charlottetown, Prince Edward Island C1A 7N8 Telephone: (902) 368-4569 Facsimile: (902) 368-5283
		Financial and Consumer Affairs Authority of Saskatchewan Suite 601 - 1919 Saskatchewan Drive Regina, Saskatchewan S4P 4H2 Telephone: (306) 787-5879 Facsimile: (306) 787-5899

 

 

Autorité des marchés financiers 

800, Square Victoria, 22e étage 

C.P. 246, Tour de la Bourse 

Montréal, Québec H4Z 1G3 

Telephone: (514) 395-0337 or 1-877-525-0337 

Facsimile: (514) 873-6155 (For filing purposes only) 

Facsimile: (514) 864-6381 (For privacy requests only) 

Email: financementdessocietes@lautorite.qc.ca 

(For corporate finance issuers); 

Email: fonds_dinvestissement@lautorite.qc.ca 

(For investment fund issuers)

 

Office of the Superintendent of Securities 

Government of Yukon 

Department of Community Services 

307 Black Street, 1st floor 

Box 2703, C-6 

Whitehorse, Yukon Y1A 2C6 

Telephone: (867) 667-5466 

Facsimile: (867) 393-6251 

Email: Securities@gov.yk.ca

 

 

SCHEDULE "F"
FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

Exhibit 99.2

 

THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT

 

THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE SECURITIES AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE CLOSING DATE (AS DEFINED IN THE SUBSCRIPTION AGREEMENT).

 

COMMON SHARE PURCHASE WARRANT

 

VISION MARINE TECHNOLOGIES INC.

 

Warrant Shares: _______

 

THIS COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after March 20, 2024 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on September 21, 2026 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Vision Marine Technologies Inc. (the “Company”), a corporation incorporated under the Business Corporations Act (Quebec), up to [●] (as subject to adjustment hereunder, the “Warrant Shares”) Common Shares in the capital of the Company (a “Common Share”). The purchase price of one Common Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

 

Section 1.          Definitions.

 

In addition to the terms defined elsewhere in this Warrant, for all purposes of this Warrant, the following terms have the meanings set forth in this Section 1:

 

(a)            “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act;

 

(b)            “Alternate Consideration” shall have the meaning ascribed to such term in Section 3(d);

 

(c)            “Attribution Parties” shall have the meaning ascribed to such term in Section 2(e);

 

(d)            “Beneficial Ownership Limitation” shall have the meaning ascribed to such term in Section 2(e);

 

(e)            “Bid Price” shall have the meaning ascribed to such term in Section 2(c);

 

(f)            “Bloomberg” shall have the meaning ascribed to such term in Section 2(c);

 

(g)            “Business Day” means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in Montréal, Québec are not open for business;

 

(h)            “Buy-In” shall have the meaning ascribed to such term in Section 2(d)(iv);

 

(i)            “Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares;

 

(j)            “Distribution” shall have the meaning ascribed to such term in Section 3(c);

 

(k)            “DWAC” shall have the meaning ascribed to such term in Section 2(d)(i);

 

(l)            “Exercise Price” shall have the meaning ascribed to such term in Section 2(b);

 

(m)            “Fundamental Transaction” shall have the meaning ascribed to such term in Section 3(d);

 

(n)            “Notice of Exercise” shall have the meaning ascribed to such term in Section 2(a);

 

(o)            “Person” shall mean any individual (whether acting as an executor, trustee administrator, legal representative or otherwise), corporation, firm, partnership, sole proprietorship, syndicate, joint venture, trustee, trust, unincorporated organization or association;

 

(p)            “Registration Rights Agreement” means the registration rights agreement entered into between the Company and each subscriber under a Subscription Agreement pursuant to which, among other things, the Company agreed to provide certain registration rights with respect to the Warrant Shares under the U.S. Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws, substantially in the form attached to the Subscription Agreement.

 

 

(q)            “Securities” means, collectively, the Warrants and the Warrant Shares;

 

(r)            “Standard Settlement Period” shall have the meaning ascribed to such term in Section 2(d)(i);

 

(s)            “Subscription Agreement” shall have the meaning ascribed to such term in Section 4(a);

 

(t)            “Subsidiary” means any subsidiary of the Company, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired thereafter;

 

(u)            “Successor Entity” shall have the meaning ascribed to such term in Section 3(d);

 

(v)            “Trading Days” means a day on which the principal Trading Market is open for trading;

 

(w)            “Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).;

 

(x)            “Transaction Documents” means the Subscription Agreement, the Warrant, the Registration Rights Agreement, and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated thereunder;

 

(y)            “Transfer Agent” means VStock Transfer LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place, Woodmere, New York 11598, and any successor transfer agent of the Company;

 

(z)            “VWAP” shall have the meaning ascribed to such term in Section 2(c);

 

(aa)          “Warrant Register” shall have the meaning ascribed to such term in Section 4(c);

 

(bb)          “Warrant Share Delivery Date” shall have the meaning ascribed to such term in Section 2(d)(i); and

 

(cc)          “Warrant Shares” shall have the meaning ascribed to such term in the preamble to this Warrant.

 

Section 2.          Exercise.

 

(a)            Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank or as otherwise agreed to between the Company and the Holder unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation as soon as reasonably practicable of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

(b)            Exercise Price. The exercise price per Warrant Share under this Warrant shall be US$4.05, subject to adjustment hereunder (the “Exercise Price”).

 

 

(c)            Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) =

as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Shares on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

	(B) =	the Exercise Price of this Warrant, as adjusted hereunder; and
	(X) =	the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant.  The Company agrees not to take any position contrary to this Section 2(c).

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Shares are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Shares are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

(d)            Mechanics of Exercise

 

(i)             Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each US$1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Shares on the date of the applicable Notice of Exercise), US$10 per Trading Day (increasing to US$20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of the Notice of Exercise.

 

 

(ii)            Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

(iii)            Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

(iv)           Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Warrant Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Shares having a total purchase price of US$11,000 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of US$10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder US$1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

 

(v)            No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

(vi)            Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. The Company shall (i) pay all reasonable attorneys fees required for the issuance of attorney legal opinions for removal of restrictive legends on Warrant Shares or (ii) provide an attorney legal opinion from counsel to the Company for removal of restrictive legends on Warrant Shares.

 

(vii)           Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

 

(e)            Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding.  In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be [9.99/4.99%] of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

Section 3.          Certain Adjustments.

 

(a)            Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or re-classification.

 

(b)            Subsequent Rights Offerings. If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Shares (and not to the Holder) entitling them to subscribe for or purchase Common Shares at a price per share less than the VWAP on the record date mentioned below, then the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of Common Shares outstanding on the date of issuance of such rights, options or warrants plus the number of additional Common Shares offered for subscription or purchase, and of which the numerator shall be the number of Common Shares outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants.

 

(c)            Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Warrant Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any Common Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

(d)            Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Warrant Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d) regardless of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.

 

 

(e)            Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100^th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

 

(f)            Notice to Holder.

 

(i)              Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

(ii)             Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice; and provided further that no notice shall be required if the information is made available in a widely disseminated press release or document filed with the Securities and Exchange Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report on Form 6-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

 

(g)            Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market on which the Common Shares are then listed and with the prior written consent of the Holder, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

Section 4.          Transfer of Warrant.

 

(a)            Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of the Subscription Agreement dated as of September 18, 2023 (the “Subscription Agreement”), this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

 

(b)            New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

(c)            Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

(d)            Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of the Subscription Agreement.

 

(e)            Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law.

 

Section 5.          Miscellaneous.

 

(a)            No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.

 

 

(b)            Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or share certificate.

 

(c)            Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken, or such right may be exercised on the next succeeding Business Day.

 

(d)            Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

 

Before taking any action, which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

(e)            Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Subscription Agreement.

 

(f)            Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state, provincial and federal securities laws.

 

(g)            Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, the Registration Rights Agreement or the Subscription Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h)            Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Subscription Agreement or such other information as may be delivered by the Holder after the Initial Exercise Date.

 

(i)             Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j)             Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

 

(k)            Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

(l)             Amendment. This Warrant may be modified or amended, or the provisions hereof waived with the written consent of the Company and the Holder.

 

(m)            Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n)            Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

 ********************

 

(Signature Page Follows)

 

 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

VISION MARINE TECHNOLOGIES INC.
By:
	Name:
	Title:

 

 

 EXHIBIT A

 

NOTICE OF EXERCISE

 

 TO:           VISION MARINE TECHNOLOGIES INC.

 

Section 1.          The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

Section 2.          Payment shall take the form of (check applicable box):

 

 [●] in lawful money of the United States; or

 

 [●] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 2(c).

 

Section 3.          Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

Section 4.           Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:

 

Signature of Authorized Signatory of Investing Entity:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Date:

 

 

EXHIBIT B

 

 ASSIGNMENT FORM

 

 (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

 FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:
Address:
	(Please Print)
Phone Number:
Email Address:
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:

 

Exhibit 99.3

 

Registration Rights Agreement

 

This Registration Rights Agreement (this “Agreement”) is made and entered into effective as of September 18, 2023 (the “Effective Date”) between Vision Marine Technologies Inc., a corporation incorporated under the Business Corporations Act (Québec) (the “Company”), and the persons who have executed the signature page(s) hereto (each, a “Subscriber” and collectively, the “Subscribers”).

 

RECITALS:

 

A.        Pursuant to a Subscription Agreement by and among the parties hereto of even date herewith (the “Subscription Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Subscription Agreement, to issue and sell to the Subscribers at the Closing (as defined in the Subscription Agreement) the number of common shares of the Company (the “Unit Shares”) and common share purchase warrants (“Warrants”) as set forth on the Schedule of Subscribers to the Subscription Agreement.

 

B.        To induce the Subscribers to purchase the Unit Shares and Warrants pursuant to the Subscription Agreement, the Company has agreed to provide certain registration rights under the Securities Act as set forth in this Agreement.

 

Now, Therefore, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein, the parties mutually agree as follows:

 

1.              Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

“Agreement” has the meaning given it in the preamble to this Agreement.

 

“Allowed Delay” has the meaning given it in Section 2(c)(2) of this Agreement.

 

“Approved Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Blackout Period” means, with respect to a registration, a period, in each case commencing on the day immediately after the Company notifies the Subscribers that they are required, because of the occurrence of an event of the kind described in Section 3(f) hereof, to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its board of directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company’s control of any required financial statements, disclosure of information which is in the Company’s best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such Registration Statement, if any, would be seriously detrimental to the Company or its shareholders and ending on the earlier of (1) the date upon which the MNPI commencing the Blackout Period is disclosed to the public or ceases to be material or non-public and (2) such time as the Company notifies the selling Holders that the Company will no longer delay such filing of the Registration Statement, will recommence taking steps to make such Registration Statement effective, or will allow sales pursuant to such Registration Statement to resume.

 

 

“Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York, New York or the City of Boisbriand, Québec, are authorized or required by law or executive order to close.

 

“Commission” or “SEC” means the U.S. Securities and Exchange Commission or any other applicable federal agency at the time administering the Securities Act.

 

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

 

“Company” has the meaning given it in the preamble to this Agreement.

 

“Effective Date” means the date the Registration Statement required to be filed hereunder is declared effective by the Commission.

 

“Effectiveness Deadline” means the date that is the earlier of (i) four months and a day following the closing of the Offering, and (ii) 15 calendar days following notification by the SEC to the Company that it does not intend to review the Registration Statement.

 

“Effectiveness Period” has the meaning given it in Section 2(a) of this Agreement

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

 

“Holder” means a Subscriber or any permitted transferee or assignee thereof to whom a Subscriber assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 6 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 6.

 

“Majority Holders” means at any time holders of at least a majority of the Registrable Securities.

 

“MNPI” means material non-public information within the meaning of Regulation FD promulgated under the Exchange Act, which shall, in any case, include the receipt of the notice pursuant to Section 2(c)(2) and the information contained in such notice.

 

“Offering” means the private placement offering being conducted by the Company pursuant to the terms of the Subscription Agreement.

 

“Placement Agent” means iA Capital Markets, a division of iA Private Wealth Inc.

 

 

The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

 

“Registrable Securities” means (i) the Unit Shares; (ii) the Warrant Shares and (iii) any shares of the Company (or any successor or assign of the Company, whether by merger, reorganization, consolidation, sale of assets or otherwise) which may be issued or issuable with respect to, the Unit Shares or Warrant Shares, as a result of any share split, share dividend, recapitalization, exchange or similar event or otherwise.

 

“Registration Default” means the occurrence of any of the following events:

 

(a)            the Company fails to file with the Commission the Registration Statement on or before the Registration Filing Deadline;

 

(b)            the Registration Statement is not declared effective by the Commission on or before the Effectiveness Deadline;

 

(c)            after the Effective Date, sales cannot be made pursuant to the Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement); or

 

(d)            after the Effective Date, the Common Shares generally or the Registrable Securities specifically are not listed or included for quotation on an Approved Market, or trading of the Common Shares is suspended or halted on the Approved Market, which at the time constitutes the principal market for the Common Shares, for more than two full, consecutive trading days;

 

provided, however, a Registration Default shall not be deemed to occur if: (1) all or substantially all trading in equity securities (including the Common Shares) is suspended or halted on the Approved Market for any length of time; (2) the Company declares a Blackout Period (provided however that the Company shall only be permitted to declare two (2) Blackout Periods not to exceed a total of 15 Business Days in any twelve (12) month period); or (3) there is an Allowed Delay.

 

“Registration Default Period” means the period following a Registration Default during which any Registration Default is continuing.

 

“Registration Filing Date” means the date on which the Registration Statement is filed with the SEC.

 

“Registration Filing Deadline” means the date that is fifteen (15) calendar days after the date of the closing of the Offering.

 

“Registration Statement” means the registration statement that the Company is required to file pursuant to this Agreement to register the Registrable Securities, including the prospectus included therein, and any amendment or supplement thereto, and any replacement thereof, as applicable.

 

 

“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such rule.

 

“Rule 415” means Rule 415 promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such rule.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.

 

“Unit Shares” means the Common Shares purchased by Subscribers pursuant to the Subscription Agreement and any and all shares of capital or other equity securities of: (i) the Company which are added to or exchanged or substituted for such Common Shares by reason of the declaration of any share dividend or share split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state, province or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the shareholders of      the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation.

 

“Warrant Shares” means the Common Shares issuable upon exercise of the Warrants issued under the Subscription Agreement.

 

2.              Registration.

 

(a)            Mandatory Registration. Not later than the Registration Filing Deadline, the Company shall file with the Commission a Registration Statement on Form F-3 or other appropriate form (including, if required, an effective and available amendment or supplement thereto), relating to the resale by the Holders of all of the Registrable Securities, and the Company shall use commercially reasonable efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter (if applicable), but in no event later than the Effectiveness Deadline and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 (the “Effectiveness Period”). The registration rights under this Section 2 shall not apply or be available with respect to securities of the Company held by affiliates (as defined in Rule 405 under the Securities Act) and related persons (as defined in Rule 404 under the Securities Act) of the Placement Agent or the officers and directors of the Company and their affiliates.

 

 

(b)            Allocation of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase in the number of Registrable Securities included therein shall be allocated pro rata among the Holders based on the number of Registrable Securities held by each Holder at the time the Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the SEC (or at the time of filing any supplement thereto). In the event that a Holder sells or otherwise transfers any of such Holder’s Registrable Securities in accordance with the Subscription Agreement, each transferee shall be allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor. Any Unit Shares included in a Registration Statement which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Holders, pro rata based on the number of Registrable Securities then held by such Holders which are covered by such Registration Statement. In no event shall the Company include any securities other than Registrable Securities on any Registration Statement (or supplement thereto) without the prior written consent of the Majority Holders. To the extent that any Registrable Securities are not able to be included in a Registration Statement and a pro rata allocation of Registrable Securities is required to be made, the Company agrees to file with the Commission an additional Registration Statement on the appropriate form (including, if required, an effective and available amendment or supplement thereto) relating to the resale by the Holders of the balance of the Registrable Securities, and the Company shall use commercially reasonable efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter (if applicable), but in no event later than the Effectiveness Deadline and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act for the Effectiveness Period.

 

(c)            (1) if the Commission allows the Registration Statement to be declared effective, subject to the withdrawal of certain Registrable Securities from the Registration Statement, and the reason is the Commission’s determination that (x) the offering of any of the Registrable Securities constitutes a primary offering of securities by the Company, (y) Rule 415 may not be relied upon for the registration of the resale of any or all of the Registrable Securities, and/or (z) a Holder of any Registrable Securities must be named as an underwriter, the Holders understand and agree the Company may reduce, on a pro rata basis, the total number of Registrable Securities to be registered on behalf of each such Holder. In any such pro rata reduction, the number of Registrable Securities to be registered on such Registration Statement will be reduced (i) first, by the Registrable Securities represented by the Warrant Shares (applied, in the case that some Warrant Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders on a fully diluted basis), and (ii) second, by the Registrable Securities represented by Unit Shares (applied, in the case that some Unit Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Unit Shares); and

 

(2)            For not more than ten (10) consecutive days in any twelve (12) month period, the Company may suspend the use of any prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of MNPI concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related prospectus so that (i) such Registration Statement shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) such prospectus shall not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading, including in connection with the filing of a post-effective amendment to such Registration Statement in connection with the Company’s filing of an Annual Report on Form 20-F for any fiscal year (an “Allowed Delay”); provided, that the Company shall promptly (a) notify each Holder in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of a Holder) disclose to such Holder any MNPI giving rise to an Allowed Delay, (b) advise the Holders in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

 

 

(d)            [Reserved.]

 

(e)            Liquidated Damages Following a Registration Default. If a Registration Default occurs, then the Company will make payments to each Holder of Registrable Securities, as liquidated damages for the amount of damages to such Holder by reason thereof, at a rate equal to 1.0% of the aggregate purchase price paid by such Holder in connection with its purchase of Units in the Offering for each full period of 15 days of the Registration Default Period. Notwithstanding the foregoing, the maximum amount of liquidated damages that may be paid to any Holder pursuant to this Section 2(e) shall be an amount equal to 5% of the aggregate purchase price paid by such Holder in the Offering for the Registrable Securities held by such Holder at the time of the first occurrence of a Registration Default. Each such payment shall be due and payable within five (5) Business Days after the end of each full 15-day period of the Registration Default Period until the termination of the Registration Default Period and within five (5) Business Days after such termination. Such payments shall constitute the Holder’s exclusive remedy for any damages resulting from a Registration Default. The Registration Default Period shall terminate upon the earlier of (i) the filing of the Registration Statement (if the Registration Default was triggered by clause (a) of the definition thereof), (ii) the Effective Date (if the Registration Default was triggered by clause (b) of the definition thereof), (iii) the ability of the Holder to effect sales pursuant to the Registration Statement (if the Registration Default was triggered by clause (c) of the definition thereof and not excused pursuant to the proviso in the definition thereof or pursuant to Section 2(c)), and (iv) the listing or inclusion and/or trading of the Common Shares on an Approved Market, as the case may be (if the Registration Default was triggered by clause (d) of the definition thereof). The amounts payable as liquidated damages pursuant to this Section 2(e) shall be payable in lawful money of the United States.

 

3.              Registration Procedures for Registrable Securities. The Company will keep each Holder reasonably advised as to the filing and effectiveness of the Registration Statement. At its expense with respect to the Registration Statement, the Company will:

 

(a)            prepare and file with the Commission with respect to the Registrable Securities, a Registration Statement on Form F-3 or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, which shall contain substantially the “Plan of Distribution” attached hereto as Annex A and substantially the “Selling Shareholder” section attached hereto as Annex B, and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective during the Effectiveness Period. Thereafter, the Company shall be entitled to withdraw such Registration Statement and the Holders shall have no further right to offer or sell any of the Registrable Securities registered for resale thereon pursuant to the Registration Statement (or any prospectus relating thereto);

 

 

(b)            if the Registration Statement is subject to review by the Commission, respond in a commercially reasonable manner to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission;

 

(c)            prepare and file with the Commission such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective during the Effectiveness Period;

 

(d)            furnish, upon request and without charge, to each Holder of Registrable Securities covered by such Registration Statement (i) a reasonable number of copies of such Registration Statement (including any exhibits thereto other than exhibits incorporated by reference), and each amendment and supplement thereto as such Holder may reasonably request, (ii) such number of copies of the prospectus included in such Registration Statement (including each preliminary prospectus and any other prospectus filed pursuant to Rule 424 under the Securities Act) as such Holders may reasonably request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may require to consummate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period; provided, that the Company shall have no obligation to provide any document pursuant to this Section 3(d) that is available on the SEC’s EDGAR system;

 

(e)            [reserved];

 

(f)            notify each Holder of Registrable Securities, the disposition of which requires delivery of a prospectus relating thereto under the Securities Act, of the happening of any event (as promptly as practicable after becoming aware of such event), which comes to the Company’s attention, that will after the occurrence of such event cause the prospectus included in such Registration Statement, if not amended or supplemented, to contain an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Company shall promptly thereafter prepare and furnish or make available to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a Blackout Period or an Allowed Delay, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or Blackout Period or Allowed Delay;

 

 

(g)            comply, and continue to comply during the Effectiveness Period, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all Registrable Securities covered by such Registration Statement;

 

(h)            as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement;

 

(i)              use its commercially reasonable efforts to cause all the Registrable Securities covered by the Registration Statement to be listed on such Approved Market on which securities of the same class or series issued by the Company are then listed;

 

(j)              provide a transfer agent and registrar, which may be a single entity, for the Common Shares registered hereunder;

 

(k)            cooperate with the Holders to facilitate the timely preparation and delivery of certificates, direct registration system account statements (“DRS Statements”), or electronic book entry positions representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates, DRS Statements or electronic book entry positions shall be free, if and to the extent permitted by applicable law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request;

 

(l)            use commercially reasonable efforts to (i) cause its legal counsel, at the Company’s expense, to issue to the transfer agent for the Common Shares, within a reasonable period of time after the Effective Date, a “blanket” legal opinion in customary form to the effect that the Registrable Securities covered by the Registration Statement have been registered for resale under the Securities Act and, may then be reissued without any legend or restriction relating to their status as “restricted securities” as defined in Rule 144 (“Legend Removal Shares”) upon resale pursuant to such Registration Statement, and (ii) cause the transfer agent for the Common Shares to issue such Registrable Securities without any such legend within three (3) trading days after the transfer agent’s receipt of such legal opinion with respect to Legend Removal Shares or otherwise within three (3) trading days after the transfer agent’s receipt of evidence in customary form that the Unit Shares and/or Warrant Shares have been sold pursuant to an effective resale registration statement under the Securities Act, as certificates, DRS Statements or electronic book entry positions, as requested by a Holder; and

 

(m)            take all other reasonable actions necessary to expedite and facilitate the disposition by the Holders of the Registrable Securities pursuant to the Registration Statement.

 

4.              Suspension of Offers and Sales. Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) hereof or of the commencement of a Blackout Period or an Allowed Delay, such Holder shall discontinue the disposition of Registrable Securities included in the Registration Statement until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) hereof or notice of the end of the Blackout Period or Allowed Delay, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

 

 

5.              Registration Expenses. The Company shall pay all expenses in connection with any registration obligation provided herein, including, without limitation, all registration, filing, stock exchange fees, printing expenses, all fees and expenses of complying with applicable securities laws, the reasonable fees and expenses, not to exceed $10,000 of one special counsel for the selling Holders and the fees and disbursements of counsel for the Company and of its independent accountants; provided, that, in any registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided in this Section 5 and Section 8, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder.

 

6.              Assignment of Rights. The rights under this Agreement shall be assignable by the Holders to any transferee of all or any portion of such Holder’s Registrable Securities if: (i) the transfer of the Registrable Securities is permitted under the terms of the Subscription Agreement and, if required under the terms of the Subscription Agreement, the Holder has furnished to the Company an opinion of counsel in a form reasonably satisfactory to the Company that such transfer is exempt from or not subject to registration under the Securities Act; (ii) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (iii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the Registrable Securities with respect to which such registration rights are being transferred or assigned and (iii) immediately following such transfer or assignment the further disposition of such Registrable Securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein.

 

7.              Information by Holder. Unless otherwise agreed to between the Company and the Holder, a Holder with Registrable Securities included in any registration shall furnish to the Company such information regarding itself, the Registrable Securities held by it, the intended method of disposition of such Registrable Securities, and such other information as shall be required in order to comply with any applicable law or regulation in connection with the registration of such Holder’s Registrable Securities or any qualification or compliance with respect to such Holder’s Registrable Securities and referred to in this Agreement. Unless otherwise agreed to between the Company and the Holder, each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex C (a “Selling Shareholder Questionnaire”) on a date that is not less than two Business Days prior to the Registration Filing Deadline.

 

 

8.              Indemnification.

 

(a)            In the event of the offer and sale of Registrable Securities under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the Securities Act, the Exchange Act, or any other federal or state law, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (1), in the case of any registration statement prepared and filed by the Company under which Registrable Securities were registered under the Securities Act, if such registration statement contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (2) in the case of any preliminary prospectus, final prospectus or prospectus supplement contained in such registration statement, or any amendment or supplement thereto, if such preliminary prospectus, final prospectus or prospectus supplement includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading, or any violation or alleged violation of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with this Agreement; and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any documented legal or any other documented expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided, that such indemnity agreement found in this Section 8(a) shall in no event exceed the net proceeds from the Offering received by the Company; and provided further, that the Company shall not be liable in any such case (i) to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement in or omission from such registration statement, any such preliminary prospectus, final prospectus, prospectus supplement, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Holder specifically for use in the preparation thereof or (ii) if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of the preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such preliminary or final prospectus and the untrue statement or omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder.

 

 

(b)            As a condition to including Registrable Securities in any registration statement filed pursuant to this Agreement, each Holder agrees to be bound by the terms of this Section 8 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the Securities Act, the Exchange Act, or any other federal or state law, to the extent arising out of or based solely upon: (x) in the case of any registration statement prepared and filed by the Company under which Registrable Securities were registered under the Securities Act, if such registration statement contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (y) in the case of any preliminary prospectus, final prospectus or prospectus supplement contained in such registration statement, or any amendment or supplement thereto, such preliminary prospectus, final prospectus or prospectus supplement includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading, (i) to the extent, but only to the extent, that such untrue statement or omission referred to in (x) or (y) above is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in the registration statement or such prospectus or (ii) to the extent that (1) such untrue statements or omissions referred to in (x) or (y) above are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder for use in the Registration Statement, such prospectus or such form of prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(f) hereof, the use by such Holder of an outdated or defective prospectus after the Company has notified such Holder in writing that the prospectus is outdated or defective and prior to the receipt by such Holder of the advice contemplated in Section 3(f). Each Holder’s obligation to indemnify shall be individual, not joint and several, and in no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

 

(c)            Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in this Section (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner. If, in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof, the indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable and documented fees and expenses to be paid by the indemnifying party. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), consent to entry of any judgment or enter into any settlement, unless such consent to entry of judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim.

  

(d)            If an indemnifying party does or is not permitted to assume the defense of an action pursuant to Section 8(c) or in the case of the expense reimbursement obligation set forth in Sections 8(a) and (b), the indemnification required by Sections 8(a) and 8(b) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred provided that the indemnifying party is provided appropriate and reasonably detailed documentation.

 

(e)            If the indemnification provided for in Section 8(a) or 8(b) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall (i) contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. For greater certainty, in no event shall the liability of any selling Holder under this Section 8(e) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

 

9.              Rule 144. If and when Rule 144 and any other rule or regulation of the SEC that may at any time permit the Holders to sell the Registrable Securities to the public without registration may become available, the Company agrees to use commercially reasonable efforts to: (i) to make and keep public information available as those terms are understood in Rule 144; (ii) to file with the SEC in a timely manner all reports and other documents required to be filed by an issuer of securities registered under the Securities Act or the Exchange Act pursuant to Rule 144; (iii) as long as any Holder owns any Registrable Securities, to furnish in writing upon such Holder’s request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (and, if applicable, of the Securities Act and the Exchange Act), and to furnish to such Holder a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as may be reasonably requested in availing such Holder of any rule or regulation of the SEC permitting the selling of any such Registrable Securities without registration; (iv) with respect to the sale of any Registrable Securities by a Holder pursuant to Rule 144 and subject to such Holder providing necessary documentation that meet the requirements of Rule 144, to promptly furnish, without any charge to such Holder, a written legal opinion of its counsel to facilitate such sale and, if necessary, instruct its transfer agent in writing that it may rely on said written legal opinion of counsel with respect to said sale and to cause the transfer agent to issue such Registrable Securities without any restrictive legends; and (v) undertake any additional actions reasonably necessary to maintain the availability of Rule 144.

 

10.            Independent Nature of Each Subscriber’s Obligations and Rights. The obligations of each Subscriber under this Agreement are several and not joint with the obligations of any other Subscriber, and each Subscriber shall not be responsible in any way for the performance of the obligations of any other Subscriber under this Agreement. Nothing contained herein and no action taken by any Subscriber pursuant hereto, shall be deemed to constitute such Subscribers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the Subscribers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Subscriber shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Subscriber to be joined as an additional party in any proceeding for such purpose.

 

11.            Miscellaneous.

 

(a)            Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the Province of Québec and the laws of Canada applicable therein. Any and all disputes arising under this Subscription Agreement, whether as to interpretation, performance or otherwise, shall be subject to the non-exclusive jurisdiction of the courts of the Province of Québec and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of such Province.

 

(b)            Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

 

(c)            Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted transferees and assignees, executors and administrators of the parties hereto.

 

(d)            No Inconsistent Agreements. The Company has not entered, as of the date hereof, and shall not enter, on or after the date of this Agreement, into any agreement with respect to its securities that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

 

(e)            Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof.

 

(f)             Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:

 

If to the Company to:

 

Vision Marine Technologies Inc. 

730 Boulevard du Curé-Boivin 

Boisbriand, Québec, J7G 2A7, Canada

 

Attention:          Kulwant Sandher, Chief Financial Officer 

E-mail:                ks@v-mti.com 

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

Dentons US LLP 

1221 Avenue of the Americas 

New York, NY 10020

 

Attention:          Rob Condon, Esq. 

E-mail:                rob.condon@dentons.com

 

To each Subscriber at the address set forth in the Subscription Agreement or at such other address as any party shall have furnished to the Company in writing.

 

(g)            Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

 

 

(h)            Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. In the event that any signature is delivered by facsimile transmission or electronic transmission via .PDF file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or electronic signature page were an original thereof.

 

(i)             Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(j)             Amendments. Subject to the exceptions set out herein, the provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and the Majority Holders, provided that (i) any such amendments or waivers relating to sections 2(e) and 8(a) of this Agreement shall require the consent of the Company and all Holders, and (ii) for any amendment or waiver that would disproportionately or adversely affect one or more Holders, the written consent of such Holders shall be required. The Subscribers acknowledge that by the operation of this Section, the Majority Holders may have the right and power to diminish or eliminate rights of the Holders under this Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

 

This Registration Rights Agreement is hereby executed as of the date first above written.

 

	COMPANY:
	VISION MARINE TECHNOLOGIES INC.
	By:
		Name:
		Title:

 

 

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first above written.

 

For Individuals:

 

Name of Individual Investor:

 

Signature of Individual Investor:

 

Notice Address:

 

Facsimile number:

 

Email:

 

For Entities

 

Name of Investing Entity:

 

Signature of Authorized Signatory of Investing entity:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Notice Address:

 

Facsimile number:

 

Email:

  

[Signature Page to Registration Rights Agreement]

 

 

Annex A

 

Plan of Distribution

 

Each Selling Shareholder (the “Selling Shareholder”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling securities:

 

	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	an exchange distribution in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	settlement of short sales;
	●	in transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security;
	●	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
	●	a combination of any such methods of sale; or
	●	any other method permitted pursuant to applicable law.

 

The Selling Shareholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

 

Broker-dealers engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.

 

In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

 

The Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the Common Shares for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the Common Shares by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

 

Annex B

 

SELLING SHAREHOLDERS

 

The Common Shares being offered by the selling shareholders are those previously issued to the selling shareholders, and those issuable to the selling shareholders, upon exercise of the warrants. For additional information regarding the issuances of those Common Shares and warrants, see “Private Placement of Common Shares and Warrants” above. We are registering the Common Shares in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the Common Shares and the warrants, the selling shareholders have not had any material relationship with us within the past three years.

 

The table below lists the selling shareholders and other information regarding the beneficial ownership of the Common Shares by each of the selling shareholders. The second column lists the number of Common Shares beneficially owned by each selling shareholder, based on its ownership of the Common Shares and warrants, as of ________, 2023, assuming exercise of the warrants held by the selling shareholders on that date, without regard to any limitations on exercises.

 

The third column lists the Common Shares being offered by this prospectus by the selling shareholders.

 

In accordance with the terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale of the sum of (i) the number of Common Shares issued to the selling shareholders in the “Private Placement of Common Shares and Warrants” described above and (ii) the maximum number of Common Shares issuable upon exercise of the related warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration right agreement, without regard to any limitations on the exercise of the warrants. The fourth column assumes the sale of all of the shares offered by the selling shareholders pursuant to this prospectus.

 

Under the terms of the warrants, a selling shareholder may not exercise warrants to the extent such exercise would cause such selling shareholder, together with its affiliates and attribution parties, to beneficially own a number of Common Shares which would exceed 4.99% or 9.99%, as applicable, of the Company’s then outstanding Common Shares following such exercise, excluding for purposes of such determination Common Shares issuable upon exercise of such warrants which have not been exercised. The number of shares in the second and fourth columns do not reflect this limitation. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

 

 

Name of Selling Shareholder		Number of Common Shares Owned Prior to Offering		Maximum Number of Common Shares to be Sold Pursuant to this Prospectus		Number of Common Shares Owned After Offering

 

 

Annex C

 

VISION MARINE TECHNOLOGIES INC.

 

Selling Shareholder Notice and Questionnaire

 

The undersigned beneficial owner of Common Shares (the “Registrable Securities”) of Vision Marine Technologies Inc. (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling shareholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling shareholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Shareholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.

Name.

 

	(a)	Full Legal Name of Selling Shareholder

 

	(b)	Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

 

	(c)	Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

 

2.	Address for Notices to Selling Shareholder:

 

Telephone:

Fax:

Contact Person:
E-Mail:

 

3.	Broker-Dealer Status:

 

	(a)	Are you a broker-dealer?
Yes   ¨              No   ¨

 

	(b)	If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?
Yes   ¨              No   ¨

 

	Note:	If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

	(c)	Are you an affiliate of a broker-dealer?
Yes   ¨              No   ¨

 

 

	(d)	If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?
Yes   ¨              No   ¨

 

Note:

If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4.	Beneficial Ownership of Securities of the Company Owned by the Selling Shareholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

 

	(a)	Type and Amount of other securities beneficially owned by the Selling Shareholder:

 

5.	Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

 

The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.

 

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

Date:

Beneficial Owner:

 

	By:
	Name:
	Title:

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:

 

 

Exhibit 99.4

 

AGENCY AGREEMENT

 

September 18, 2023

 

Vision Marine Technologies Inc.

730 Boulevard du Curé-Boivin

Boisbriand, Québec, J7G 2A7, Canada

 

Attention: Kulwant Sandher, Chief Financial Officer

 

Re:      Private Placement of Units

 

iA Capital Markets, a division of iA Private Wealth Inc. (the “Agent”) understands that Vision Marine Technologies Inc. (the “Corporation”) proposes to offer for sale and issue up to 372,870 units of the Corporation (each a “Unit” and collectively the “Units”) to be sold on a commercially reasonable best-efforts basis pursuant to applicable prospectus exemptions (the “Offering”) at an issue price of $4.05 per Unit (the “Purchase Price”) for aggregate gross proceeds of up to approximately $1.51 million (the “Offering”). Each Unit shall consist of one common share in the capital of the Corporation (each, a “Common Share” and collectively, the “Common Shares”) and one common share purchase warrant (each common share purchase warrant, a “Warrant” and collectively, the “Warrants”).

 

Each Warrant will be exercisable by the holder to purchase one Common Share (each a “Warrant Share”) at a price $4.05 from the date that is six months from the issuance date of the Warrant until the date that is three years after the Closing Date, as set out in the warrant certificates (the “Warrant Certificates”) to be delivered at the Closing Time (as defined herein).

 

The description of the Warrants in this Agreement is a summary only and is subject to the specific attributes and detailed provisions of the Warrants to be set forth in the Warrant Certificates. In case of any inconsistency between the description of the Warrants in this Agreement and the terms set forth in the Warrant Certificates, the provisions of the Warrant Certificates will govern.

 

Subject to the terms and conditions set out below, the Corporation hereby appoints the Agent to act as sole agent to the Corporation, and the Agent hereby agrees to act as the agent of the Corporation, to effect the sale of the Units on behalf of the Corporation on a “commercially reasonable best efforts” private placement basis to Purchasers (hereinafter defined) resident in the Offering Jurisdictions (hereinafter defined). Sales of Units on behalf of the Corporation will not be made to or for the account or benefit of, persons in the United States (hereinafter defined) or U.S. Persons (hereinafter defined). The Corporation agrees that the Agent is under no obligation to purchase any of the Offered Units (hereinafter defined). All subscription funds received by the Agent will be held in trust by the Agent until the Closing Time.

 

The Corporation agrees that the Agent will be permitted to appoint appropriately registered investment dealers to form a selling group to participate in the Offering. The Corporation grants all of the rights and benefits of this Agreement to any investment dealer who is a member of any Selling Group formed by the Agent and appoints the Agent as trustees of such rights and benefits for all such investment dealers, and the Agent hereby accepts such trust and agrees to hold such rights and benefits for and on behalf of all such investment dealers. The Agent shall ensure that any investment dealer who is a member of any Selling Group formed by the Agent pursuant to the provisions of this subsection or with whom the Agent has a contractual relationship with respect to the Offering, if any, shall comply with the covenants and obligations given by the Agent herein. The Agent shall, however, be under no obligation to engage any sub-agent or form any Selling Group. Such other brokers and dealers, together with the Agent, are collectively referred to herein as the “Selling Group Members”.

 

In consideration of the services to be rendered by the Agent in connection with the Offering, the Corporation shall, at the Closing Time, pay to the Agent the Agency Fee (as defined herein) in the amount set out in Section 6 hereof. The obligation of the Corporation to pay the Agency Fee shall arise at the Closing Time.

 

 

The terms and conditions of this Agreement are as follows:

 

1.

Definitions, Interpretation and Schedules

 

(a)

Definitions: Whenever used in this Agreement:

 

(i)

“Agency Fee” has the meaning given to such term in Section 6(a);

 

(ii)

“Agent” has the meaning given to such term in the recitals hereof;

 

(iii)

“Agreement” means this agreement, as amended or supplemented from time to time;

 

(iv)

“Anti-Bribery Acts” has the meaning given to such term in Section 7(uu);

 

(v)

“Applicable IP Laws” means all applicable foreign, federal, provincial, state and local laws, regulations, policies and guidelines applicable to Intellectual Property;

 

(vi)

“Business Day” means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in Montréal, Québec or New York, New York are not open for business;

 

(vii)

“CIPO” means the Canadian Intellectual Property Office;

 

(viii)

“Closing Date” means September 20, 2023, or such other date or dates as the Corporation and the Agent may mutually agree upon;

 

(ix)

“Closing” means the closing of the purchase and sale of the Offered Units subscribed for by the Purchasers pursuant to the Subscription Agreements;

 

(x)

“Closing Time” means 8:00 a.m. (Eastern time) on the Closing Date or such other time on the Closing Date as the Corporation and the Agent may mutually agree upon;

 

(xi)

“Common Shares” means the common shares which the Corporation is authorized to issue as constituted on the date hereof;

 

(xii)

“Confidential Information” has the meaning given to such term in Section 13(a);

 

(xiii)

“Contaminant” includes any pollutants, dangerous substances, liquid wastes, hazardous wastes, hazardous materials, hazardous substances or contaminants or any other matter including any of the foregoing, as defined or described as such pursuant to any Environmental Law;

 

(xiv)

“Corporation” has the meaning given to such term in the recitals hereof;

 

(xv)

“Corporation IP” means, collectively, the Owned IP and the Licensed IP;

 

(xvi)

“Corporation Parties” means the Corporation and the Subsidiaries;

 

(xvii)

[reserved];

 

(xviii)

“EDGAR” means the Electronic Data Gathering, Analysis, and Retrieval system of the SEC;

 

 

(xix)

“Environmental Activity” includes any past or present activity, event or circumstance in respect of a Contaminant, including, without limitation, the storage, use, holding, collection, purchase, accumulation, assessment, generation, manufacture, construction, processing, treatment, stabilization, disposition, handling or transportation thereof, or the release, escape, leaching, dispersal or migration thereof into the natural environment, including the movement through or in the air, soil, surface water or groundwater;

 

(xx)

“Evaluation Date” has the meaning given to such term in Section 7(x);

 

(xxi)

“Environmental Law” includes any and all applicable international, federal, provincial, territorial, state, municipal or local laws, statutes, regulations, treaties, orders, judgments, decrees, ordinances, official directives and all authorizations relating to the environment, occupational health and safety, or any Environmental Activity;

 

(xxii)

“Governmental Authority” means any federal, provincial, state, local, municipal, regional, territorial, aboriginal or other government, any governmental or public department, branch or ministry, or any court, domestic or foreign, including any district, agency, commission, board, arbitration panel or authority and any subdivision of any of them exercising or entitled to exercise any administrative, executive, judicial, ministerial, prerogative, legislative, regulatory or taxing authority or power of any nature, or any self-regulatory organization;

 

(xxiii)

“Indemnified Parties” has the meaning given to such term in Section 10;

 

(xxiv)

“Indemnitor” has the meaning given to such term in Section 10;

 

(xxv)

“IFRS” means the international financial reporting standards issued by the International Accounting Standards Board applied on a consistent basis during the periods involved;

 

(xxvi)

“Intellectual Property” means all of the following kinds of property: (i) trademarks, service marks, trade dresses, logos, designs and slogans whether in word, mark, stylized or design format, registered and unregistered, throughout the world; (ii) patents and patent applications (respectively issued or filed throughout the world), as well as any re-examinations, extensions, and reissues thereof and any divisionals, continuations, continuation-in-parts and any other applications or patents that claim priority from such patents and applications, (iii) copyrights, registered and unregistered, and all rights, claims and privileges pertaining thereto, software and documentation therefor, (iv) inventions (whether or not patentable), formulas, processes, invention disclosures, technology, technical data or information; (v) all rights, claims and privileges pertaining thereto, all industrial designs and variants of industrial designs, whether or not registered or the subject of an application for registration and whether or not registrable; and (vi) trade secrets, technical expertise, and research data, and other confidential information relating to goods and services; (vii) patterns, plans, designs, research data, other proprietary know-how, processes, drawings, technology, inventions, formulae, specifications, performance data, quality control information, unpatented blue prints, flow sheets, equipment and parts lists, instructions, manuals, records and procedures, and all licenses, agreements and other contracts and commitments relating to any of the foregoing; (viii) any reissues, divisions, continuations, continuations-in-part, renewals, improvements, translations, derivatives, modifications and extensions of any of the foregoing; (ix) proprietary computer software (including but not limited to data, data bases and documentation); and (x) all other intellectual and industrial property and other proprietary rights information not included in the foregoing;

 

(xxvii)

“Intellectual Property Rights” means any common law or equitable principle or statutory provision which may provide a right in Intellectual Property;

 

(xxviii)

“QBCA” means the Business Corporations Act (Québec);

 

 

(xxix)

“Letter Agreement” means the engagement letter agreement dated November 23, 2022, between the Agent and the Corporation relating to the Offering;

 

(xxx)

“Licensed IP” means the Intellectual Property and rights related to Intellectual Property owned by Persons other than the Corporation Parties and licensed to a Corporation Party for its use or for an intended use, including Intellectual Property owned by those Persons;

 

(xxxi)

“Material Adverse Effect” means, any change or effect (or any condition, event or development involving a prospective change or effect) in or on the business, operations, results of operations, affairs, assets, capitalization, financial condition, rights or liabilities, whether contractual or otherwise, of the Corporation or the Subsidiaries which is materially adverse to the business, operations or financial condition of the Corporation (on a consolidated basis) as currently conducted or as proposed to be conducted, or would, or would reasonably be expected to, materially impair the completion of the transactions contemplated by this Agreement;

 

(xxxii)

“Material Agreements” has the meaning given to such term in Section 7(ss);

 

(xxxiii)

“Money Laundering Laws” has the meaning given to that term in Section 7(vv) of this Agreement;

 

(xxxiv)

“Nasdaq” means the Nasdaq Capital Market;

 

(xxxv)

“NI 45-102” means National Instrument 45-102 – Resale of Securities;

 

(xxxvi)

“OFAC” has the meaning given to such term in Section 7(ww);

 

(xxxvii)

“Offered Units” means the Units offered and sold under the Offering;

 

(xxxviii)

“Offering” means the offering of Offered Units for sale by the Corporation on a pursuant to this Agreement;

 

(xxxix)

“Offering Jurisdictions” means all of the provinces and territories of Canada and such other jurisdictions as may be agreed in writing between the Corporation and the Agent;

 

(xl)

“Owned IP” means all Intellectual Property that has been developed by or for, is being developed by or for, or is otherwise owned by a Corporation Party, as well as all rights relating to Intellectual Property that are owned or enforceable by a Corporation Party;

 

(xli)

“Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of any nature or kind whatsoever;

 

(xlii)

“Public Record” means all information found under the Corporation’s profile on SEDAR and EDGAR from and including September 18, 2023.

 

(xliii)

“Purchase Price” has the meaning given to such term in the recitals hereto;

 

(xliv)

“Purchaser” means a Person subscribing for Offered Units;

 

(xlv)

“Registered Corporation IP” means the Owned IP that is the subject of registration with a national intellectual property office (including the CIPO and the USPTO) or applications for such registration with a national intellectual property office;

 

 

(xlvi)

“Registered Plan” has the meaning given to such term in Section Error! Reference source not found.;

 

(xlvii)

“Registration Rights Agreements” means the registration rights agreements entered into between the Corporation and each of the Purchasers contemporaneously with each of the Subscription Agreements pursuant to which, among other things, the Corporation will agree to provide to the Purchasers certain resale registration rights with respect to the Unit Shares and Warrant Shares, substantially in the form attached to the Subscription Agreement as Schedule “F”;

 

(xlviii)

“Reporting Jurisdiction” means the province of Québec;

 

(xlix)

“Sanctions” has the meaning given to such term in Section 7(ww);

 

(l)

“Sanction Country” has the meaning given to such term in Section 7(ww);

 

(li)

“SEC” means the United States Securities and Exchange Commission;

 

(lii)

“SEC Reports” shall have the meaning ascribed to such term in Section 7(bb);

 

(liii)

“SEDAR” means the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators;

 

(liv)

“Securities Commissions” means the securities regulatory authorities of the Offering Jurisdictions or Reporting Jurisdictions as applicable;

 

(lv)

“Securities Laws” means, the securities laws, regulations, rules, rulings and orders in the Offering Jurisdictions, as applicable, and the policy statements issued by the securities regulators in each of the Offering Jurisdictions, and the rules and policies of the Nasdaq, as applicable;

 

(lvi)

“Selling Group Member” has the meaning given to such term in the recitals hereof;

 

(lvii)

[reserved];

 

(lviii)

“Subscription Agreements” means the subscription agreements to be entered into between the Corporation and each of the Purchasers;

 

(lix)

“Subsidiary” means any subsidiary of the Corporation as set forth on Schedule B, and shall, where applicable, also include any direct or indirect subsidiary of the Corporation formed or acquired after the date hereof;

 

(lx)

“Tax Act” means the Income Tax Act (Canada), together with any and all regulations promulgated thereunder, as amended, re-enacted or replaced from time to time;

 

(lxi)

“Transaction Documents” means this Agreement, the Subscription Agreements, the side letter between the Corporation and [ ] dated as of the date hereof, the Warrant Certificates and the Registration Right Agreements;

 

(lxii)

“Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the Corporation, with a mailing address of 18 Lafayette Place, Woodmere, New York 11598, and any successor transfer agent of the Corporation;

 

 

(lxiii)

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

 

(lxiv)

“Units” has the meaning given to such term in the recitals hereof;

 

(lxv)

“U.S. Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

 

(lxvi)

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

 

(lxvii)

“U.S. Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;

 

(lxviii)

[reserved];

 

(lxix)

“USPTO” means the United States Patent and Trade mark Office;

 

(lxx)

“Warrant Certificate” means the certificate representing the Warrants;

 

(lxxi)

“Warrant Shares” has the meaning given to such term in the recitals to this Agreement; and

 

(lxxii)

“Warrants” has the meaning given to such term in the recitals to this Agreement.

 

(b)

Other Defined Terms: Whenever used in this Agreement, the words and terms “affiliate”, “associate”, “material fact”, “material change”, “misrepresentation”, and “subsidiary” shall have the meaning given to such word or term in the Securities Act (Ontario) unless specifically provided otherwise herein.

 

(c)

Extended Meanings: Whenever used in this Agreement, words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender and neuter. Every use of the words “including” or “includes” in this Agreement is to be construed as meaning “including, without limitation” or “includes, without limitation”, respectively.

 

(d)

References: References in this Agreement to a “Section” or “Schedule” are to be construed as references to a Section or Schedule of or to this Agreement unless otherwise specified.

 

(e)

Sections and Headings: The division of this Agreement into Sections and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement.

 

(f)

Statutory Instruments: Unless otherwise specified, any reference in this Agreement to any statute includes all regulations and subordinate legislation made under or in connection with that statute at any time, and is to be construed as a reference to that statute as amended, modified, restated, supplemented, extended, re-enacted, replaced or superseded at any time.

 

(g)

Knowledge: References to the “knowledge” of a party mean the actual knowledge of each of the Chief Executive Officer, Chief Financial Officer and Chief Technical Officer of the Corporation, in each case after reasonably informing himself as to the relevant matter, but without any requirement to make any inquiries of any Governmental Authority or to perform any search of any public registry office or database.

 

(h)

Currency: All references to monetary amounts in this Agreement are to United-States dollars.

 

 

2.

The Agent

 

(a)

Appointment: The Corporation appoints the Agent as the sole and exclusive agent of the Corporation to offer the Units for sale in the Offering Jurisdictions on a commercially reasonably best-efforts private placement basis at the Purchase Price, and the Agent accepts such appointment. The Corporation acknowledges and agrees that the Agent may, but is not obligated to, purchase the Offered Units as principal.

 

(b)

Sub-Agents: In connection with the Offering, the Agent shall be entitled to retain Selling Group Members and may receive (for delivery to the Corporation at the Closing Time) subscriptions for Units from Selling Group Members. In each case, the Agent shall ensure that any such sub-agent or registered dealer retained by the Agent complies with the Agent’s obligations with respect to the Offering and all applicable Securities Laws. Any fees payable to sub-agents shall be for the account of the Agent.

 

(c)

Sale on Exempt Basis in Canada: The Agent shall offer for sale on behalf of the Corporation and solicit orders for the Units in the Offering Jurisdictions in compliance with the Securities Laws of the Offering Jurisdictions and only to such Persons and in such manner such that, pursuant to the provisions of the Securities Laws of the Offering Jurisdictions, no prospectus or offering memorandum or other similar document need be filed with, or delivered to, any Securities Commission and no registration of the Offered Units is required in any Offering Jurisdiction in connection therewith.

 

(d)

No Sales in the U.S.: There shall be no offers and sales of the Units to, or for the account or benefit of, persons in the United States and U.S. Persons. The terms and conditions of Schedule A are hereby incorporated by reference in and shall form a part of this Agreement.

 

(e)

Covenants of the Agent: The Agent covenants with the Corporation that:

 

(i)

it will solicit or procure subscriptions for Offered Units only in the Offering Jurisdictions;

 

(ii)

it will comply, and shall instruct any Selling Group Member to comply, with the Securities Laws of the Offering Jurisdictions in which it solicits or procures subscriptions for Offered Units in connection with the Offering;

 

(iii)

it will solicit or procure subscriptions for Offered Units in a manner which will not trigger a requirement of the Corporation to prepare or file a prospectus, offering memorandum, or similar disclosure document, or comply with any continuous disclosure or reporting obligation in any jurisdiction outside Canada; and

 

(iv)

it will obtain from each Purchaser, and deliver to the Corporation prior to the Closing Time, a Subscription Agreement (including all applicable exhibits and schedules thereto and any other documents required to be delivered by the Purchaser under the Subscription Agreement) completed and executed by the Purchaser.

 

(f)

Representations and Warranties of the Agent: The Agent represents and warrants that it is, and, to the best of its knowledge after due inquiry, each Selling Group Member is, qualified to so act in the Offering Jurisdictions in which they solicited or procured subscriptions for Offered Units and that it, and to the best of its knowledge after due enquiry, each Selling Group Member is registered or exempt from registration under the securities legislation in any jurisdiction in which it solicited or procured subscriptions, as applicable, as a dealer in an appropriate category.

 

 

(g)

Filings: The Corporation undertakes to file or cause to be filed all forms and undertakings required to be filed by the Corporation pursuant to Securities Laws (including the rules and policies of the Nasdaq) in connection with the Offering, such that the distribution of the Offered Units may lawfully occur in the Offering Jurisdictions without the necessity of filing a prospectus or an offering memorandum and the Agent undertakes to use its commercially reasonable best-efforts to cause the Purchasers to complete (and it shall be a condition of Closing in favour of the Corporation that the Purchasers complete and deliver to the Corporation) any forms and undertakings and to provide such information as may be required by the Securities Laws of the Offering Jurisdictions and by the Nasdaq. All fees payable in connection with such filings shall be at the expense of the Corporation.

 

(h)

No Offering Memorandum: Neither the Corporation nor the Agent shall provide to prospective Purchasers any document or other material in connection with the Offering other than the Subscription Agreements (including the schedules thereto) and documents that form part of the Public Record.

 

(i)

Legends. For the Common Shares and Warrants, until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable Securities Laws or under the terms of the Registration Rights Agreement, certificates representing such securities, and all certificates issued in exchange therefor or in substitution thereof, shall bear the following legends:

 

“THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT.”

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE CLOSING DATE.”

 

(j)

For the Warrants, until such time as it is no longer required under applicable requirements of the U.S. Securities Act or applicable Securities Laws, any certificates representing the Warrants and any certificates issued in exchange therefor or in substitution thereof, shall bear the following legends:

 

“THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE SECURITIES AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE CLOSING DATE.”

 

 

3.

Due Diligence

 

(a)

Prior to the Closing Time, the Agent shall be permitted to conduct all due diligence that it may, in its sole discretion, require, including with respect to the business, properties, assets, affairs and financial condition of the Corporation and the Subsidiaries. The Corporation will make available to the Agent and its legal counsel, on a timely basis, all corporate and operating records, material agreements, reports, financial information, budgets, and other relevant information necessary in order to complete the due diligence investigation. Without limiting the scope of the due diligence inquiries the Agent may conduct, the Corporation will make available to the Agent and its legal counsel the directors, officers, key employees, advisors (including financial advisors and legal counsel), auditors or such other personnel of the Corporation and the Subsidiaries as the Agent may reasonably request to answer the questions of the Agent in one or more due diligence meetings to be conducted prior to the Closing Time.

 

(b)

The Agent will be entitled to rely on, and to assume, with no independent verification, the accuracy and completeness of all information furnished by the Corporation and its representatives as provided in this Section 3. The Agent will be under no obligation to verify the accuracy or completeness of such information and the Agent will not be liable to the Corporation under any circumstances for damages arising out of the inaccuracy or incompleteness of such information.

 

4.

Deliveries By Closing Time

 

At the Closing Time,

 

(a)

the Corporation will deliver to the Agent:

 

(i)

legal opinions dated the applicable Closing Date of legal counsel to the Corporation (or, in the case of an opinion with respect to the Subsidiaries, of legal counsel to any such Subsidiary) addressed to, among others, the Agent and the Purchasers satisfactory in form and substance to counsel to the Agent, acting reasonably.

 

(ii)

[reserved];

 

(iii)

a certificate dated the applicable Closing Date signed by the Chief Executive Officer or the Chief Financial Officer of the Corporation and addressed to, among others, the Agent, if applicable, with respect to the articles of the Corporation, the resolutions of the directors of the Corporation with respect to the Offering, and any other corporate action taken relating to this Agreement and the Transaction Documents, and with respect to such other matters as the Agent may reasonably request, and including specimen signatures of the signing officers of the Corporation;

 

(iv)

a certificate dated the applicable Closing Date signed by the Chief Executive Officer or the Chief Financial Officer of the Corporation and addressed to the Agent, certifying each of the facts described in Section 5(c)(i) through (iv) for and on behalf of the Corporation (without personal liability);

 

(v)

Subscription Agreements, accepted and executed by the Corporation in accordance with Section 5(b);

 

(vi)

Registration Rights Agreements, accepted and executed by the Corporation in accordance with Section 5(b);

 

(vii)

the Warrant Certificates, accepted and executed by the Corporation;

 

(viii)

certificates representing the Unit Shares from the Transfer Agent;

 

 

(ix)

a certificate of status or similar certificate from the jurisdictions in which the Corporation and each of the Subsidiaries are respectively incorporated (or continued, as the case may be);

 

(x)

a certificate from the Transfer Agent as to the number of issued and outstanding Common Shares as of a date not more than two Business Days prior to the Closing Date; and

 

(xi)

such further documents as may be contemplated by this Agreement or as the Agent may reasonably require,

 

all in form and substance reasonably satisfactory to the Agent;

 

(b)

the Agent shall have delivered or cause to be delivered to the Corporation:

 

(i)

payment of the aggregate Purchase Price for the Offered Units purchased by the Purchasers by wire transfer payable to the Corporation or as the Corporation may otherwise direct in writing; provided, however, the Agent may deduct and withhold for the account of the Agent (A) the Agency Fee and (B) any expenses (including legal expenses) of the Agent to be reimbursed by the Corporation as provided in Section 11;

 

(ii)

Subscription Agreements, executed by the Purchasers;

 

(iii)

Registration Rights Agreements, executed by the Purchasers (including the completed selling securityholder questionnaires requested therein);

 

(iv)

such further documents as may be contemplated by this Agreement or as the Corporation may reasonably require;

 

all in form and substance reasonably satisfactory to the Corporation.

 

5.

Closing

 

(a)

Closing: The Closing shall be completed via electronic means or at the offices of counsel for the Corporation at the Closing Time on the applicable Closing Date.

 

(b)

Subscription Agreements and Registration Rights Agreements: At the Closing, the Corporation will accept and execute any Subscription Agreement and Registration Rights Agreement which has been properly completed and executed by a Purchaser pursuant to the Offering and properly tendered by the Agent in compliance with this Agreement.

 

(c)

Conditions of Closing: The following are conditions precedent to the obligation of the Agent to complete the Closing and of the Purchasers to purchase the Offered Units, which conditions the Corporation hereby covenants and agrees to use commercially reasonable best-efforts thereof to fulfil within the time set out herein therefor, and which conditions may be waived in writing in whole or in part by the Agent:

 

(i)

the representations and warranties of the Corporation in this Agreement and any certificate of the Corporation delivered hereunder are true and correct, except where such representation or warranty makes reference to a certain date, then such representation or warranty is true and correct as of such date;

 

(ii)

the Corporation will have complied with all covenants, and satisfied all terms and conditions, contained in this Agreement, the Subscription Agreements and the Registration Rights Agreement on its part to be complied with or satisfied at or prior to the Closing Time;

 

 

(iii)

no order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of the Corporation, or prohibiting the issue and sale of the Offered Units or any of the Corporation’s issued securities, has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending or threatened by any Governmental Authority;

 

(iv)

since August 31, 2022, there has been no material adverse change (actual or proposed, whether financial or otherwise) in the business, affairs, condition, operations, assets, liabilities (contingent or otherwise) or capital of the Corporation;

 

(v)

the Corporation shall have received all necessary approvals and consents, including all necessary regulatory approvals and consents required for the completion of the transactions contemplated by this Agreement, all in a form satisfactory to the Agent;

 

(vi)

notification of the listing of the Common Shares and the Warrant Shares on the Nasdaq shall have been made to the Nasdaq, without objection by the Nasdaq;

 

(vii)

the Agent shall have received the opinions, certificates and documents set forth in Section 4(a) to be delivered to the Agent;

 

(viii)

the Agent shall, in its sole discretion, acting reasonably, be satisfied with its due diligence review and investigations with respect to the business, assets, financial condition, affairs and prospects of the Corporation;

 

(ix)

the Corporation will have entered into the Warrant Certificates in a form satisfactory to the Agent, acting reasonably;

 

(x)

the Agent shall have received the certificates evidencing the Common Shares comprised in the Units and the Warrant Certificates; and

 

(xi)

the Agent shall not have previously terminated this Agreement in accordance with the terms hereof.

 

(d)

Benefit of Conditions: The conditions in Section 5(c) are for the benefit of the Agent and may be waived in whole or in part by the Agent at any time. It is the intention of the parties that the obligations of the Purchasers to complete the transactions under the Subscription Agreements will be subject to the satisfaction (or waiver by the Agent) of the conditions in Section 5(c).

 

6.

Agent’s Compensation

 

(a)

In consideration of the Agent agreeing to act as agent of the Corporation in respect of the Offering, and in consideration of the services performed and to be performed by the Agent in connection therewith, the Corporation will, at the Closing Time pay the Agent a cash fee equal to 6.0% of the aggregate Purchase Price for the Offered Units issued to the Purchasers (the “Agency Fee”);

 

(b)

It is the understanding of the parties that the services provided by the Agent in connection with this Agreement will not be subject to HST and any taxable supplies provided will be incidental to the exempt financial services provided. However, if the Canada Revenue Agency determines that HST is exigible on the Agency Fee, the Corporation agrees to pay the amount of HST promptly upon the request of the Agent.

 

 

7.

Representations and Warranties

 

The Corporation hereby represents and warrants to the Agent and the Purchasers, and acknowledges that the Agent and the Purchasers are relying upon each of such representations and warranties in completing the Closing, as follows:

 

(a)

Incorporation and Organization: The Corporation is existing and in good standing under the laws of the Province of Québec and has not been dissolved.

 

(b)

Capacity and Power: The Corporation has all necessary corporate power, authority, and capacity to carry on its business as now conducted and to own or lease and operate the property and assets thereof.

 

(c)

Authority and Authorization: The Corporation has the corporate power and capacity to enter into each of the Transaction Documents and to do all acts and things and execute and deliver all documents as are required hereunder to be done, observed, performed or executed and delivered by it in accordance with the terms hereof and thereof.

 

(d)

Extra-provincial and Territorial Registrations: Each of the Corporation Parties are duly registered to do business and is in good standing in each jurisdiction in which the location or character of their assets or the nature of their activities make registration necessary.

 

(e)

Binding Obligations: The execution and delivery of the Transaction Documents by the Corporation and the completion by the Corporation of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate action on the part of the Corporation. This Agreement has been (and each of the other Transaction Documents will by the Closing Time be) duly executed and delivered by the Corporation. The Transaction Documents constitute valid and binding obligations of the Corporation, enforceable against the Corporation in accordance with their terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforcement of creditors’ rights generally and to the fact that equitable remedies, including specific performance, are discretionary and may not be ordered in respect of certain defaults.

 

(f)

Consents, Approvals and Conflicts: The offering and sale of the Offered Units, the execution and delivery of this Agreement and the other Transaction Documents, and the performance by the Corporation of its obligations under this Agreement and any of the other Transaction Documents and the consummation of the transactions contemplated herein and therein:

 

(i)

do not require the consent, approval, or authorization, order or agreement of, or registration or qualification with, any Governmental Authority, stock exchange, or other Person except (A) such as have been obtained, or (B) such as may be required under the Securities Laws of the Offering Jurisdictions (including the rules and policies of the Nasdaq) to be filed or obtained following the applicable Closing Date;

 

(ii)

do not (and will not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of, or conflict with, or result in a default under: (A) any applicable laws; (B) any agreement, indenture, mortgage, deed of trust, lease or other instrument to which the Corporation or each of the Subsidiaries is a party or by which any of them or any of the properties or assets thereof is bound; (C) the constating documents of the Corporation or any resolution passed by the board of directors (or any committee thereof) or shareholders of the Corporation; (D) to the knowledge of the Corporation, any judgment, decree, order or award of any Governmental Authority having jurisdiction over the Corporation or its assets; or (E) any permit or license held by the Corporation or any of the Subsidiaries, except in the case of clause (B) for any such breaches or violations that would not, individually or in the aggregate, result in a Material Adverse Effect; and

 

 

(iii)

will not result in: (A) the creation or imposition of any encumbrance or title defect on or with respect to the assets of the Corporation; or (B) the acceleration of or the maturity of any debt under any indenture, mortgage, lease, agreement or instrument binding or affecting the Corporation or any of its assets.

 

(g)

Authorized and Issued Capital of the Corporation: The authorized share structure of the Corporation consists of an unlimited number of Common Shares. As at the date of this Agreement, there are 11,178,234 Common Shares issued and outstanding as fully paid and non-assessable shares in the capital of the Corporation. All securities of the Corporation have been issued in compliance with applicable laws and have not been issued in violation of any pre-emptive rights or other contractual rights to purchase securities granted by the Corporation.

 

(h)

Rights to Acquire Securities: Except as set forth on Schedule 7(h), other than 2,639,571 warrants to purchase Common Shares and 1,167,608 options to purchase Common Shares existing as of the date hereof, no person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issue of any unissued shares or other securities of the Corporation.

 

(i)

Rights Plan: The directors of the Corporation have not adopted any shareholder rights plan or a similar plan.

 

(j)

No Pre-emptive Rights: Except as set forth on Schedule 7(j), the issue of the Offered Units is not subject to any pre-emptive right or other contractual right to purchase securities of the Corporation.

 

(k)

Offered Units: Subject to compliance by the Agent with the provisions of Section 2 hereof and subject to the representations and warranties of the Purchasers contained in the Subscription Agreements being true and correct at the Closing Time, the execution of this Agreement and the Subscription Agreements and the issue by the Corporation to the Purchasers of the Offered Units will be exempt from the prospectus and registration requirements of the Securities Laws of the Offering Jurisdictions.

 

(l)

Subsidiaries:

 

(i)

Other than the Subsidiaries, the Corporation has no direct or indirect subsidiaries or equity interests in other persons which are engaged in active business or which possess any assets or liabilities which are material to the business, business prospects or condition (financial or otherwise) of the Corporation or the Subsidiaries;

 

(ii)

each of the Subsidiaries exists and is in good standing under the laws of its jurisdiction of organization and has all requisite corporate power, capacity and authority to own, lease and operate, as applicable, its properties and assets and conduct its business as currently conducted, and has all requisite corporate power to conduct its business as presently proposed to be conducted by it, and the each of the Subsidiaries is current with all material filings required to be made under its jurisdiction of incorporation and all other jurisdictions in which it exists or carries on any material business;

 

(iii)

the Corporation beneficially owns, directly or indirectly, the percentage of the issued and outstanding securities of the Subsidiaries indicated at Schedule A hereto, free and clear of all mortgages, liens, charges, pledges, security interests, encumbrances, claims or demands of any kind whatsoever. All such securities have been duly authorized and validly issued and are outstanding as fully paid and non-assessable shares (or the equivalent legal concept in another jurisdiction);

 

 

(iv)

all securities of the Subsidiaries have been issued in compliance with applicable laws and have not been issued in violation of any pre-emptive rights or other contractual rights to purchase securities of any such Subsidiary; and

 

(v)

no person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issue of any of the unissued shares or other securities of the Subsidiaries.

 

(m)

Issue of Securities: The Offered Units, Common Shares, Warrants (and underlying securities) have been duly and validly authorized and:

 

(i)

upon receiving full payment of the Purchase Price for each Offered Unit, the Common Shares composing part of the Offered Units will be validly issued as fully paid and non-assessable shares of the Corporation, and the Warrants composing part of the Offered Units will be validly created and issued;

 

(ii)

the Warrant Shares underlying the Warrants have been reserved for issuance to the holders of Warrants, and upon due exercise of the Warrants in accordance with their terms, including full payment of the exercise price for each Warrant Share, the Warrant Shares will be validly issued as fully paid and non-assessable shares of the Corporation; and

 

(n)

Listing: The Common Shares are listed and posted for trading on the Nasdaq, and except as set forth on Schedule 7(n), the Corporation is in compliance in all material respects with the rules, regulations, and policies of the Nasdaq. At the Closing Time, all necessary steps will have been taken for the notification to the Nasdaq (without objection) of the listing of the Common Shares issuable in connection with the Offering (including the Warrant Shares) on the Nasdaq.

 

(o)

Certain Securities Law Matters: The Corporation is a reporting issuer in the Reporting Jurisdiction, and the Corporation is in compliance in all material respects with Securities Laws.

 

(p)

Insider Dispositions: The Corporation has not been advised by any insider (as that term is defined in the Securities Act (Ontario)) of the Corporation that the insider has a present intention to sell any securities of the Corporation held by it.

 

(q)

No Change in Law: The Corporation is not aware of any legislation, or proposed legislation published by a legislative body, which it anticipates will have a Material Adverse Effect on the Corporation and the Subsidiaries, taken as a whole.

 

(r)

Freedom to Compete: Neither the Corporation nor any of the Subsidiaries is a party to or bound or affected by any written commitment, agreement or document containing any covenant which expressly limits the freedom of the Corporation or any of the Subsidiaries to compete in any line of business, transfer or move any of its assets or operations or which materially or adversely affects the business practices, operations or condition of the Corporation and the Subsidiaries, taken as a whole.

 

(s)

Credit and Security Agreements: The Corporation Parties are in compliance in all material respects with, and are not in breach of, any financial covenants or otherwise in respect of any existing debt obligations, security agreements, and guarantees of the Corporation or the Subsidiaries, as applicable.

 

(t)

Public Disclosure: The Corporation has filed on SEDAR and EDGAR all documents required to be filed by the Corporation under Securities Laws. The documents filed by the Corporation constituting the Public Record did not contain a misrepresentation at the time of their filing on SEDAR and EDGAR, and, to the Corporation’s knowledge, do not, as of the date hereof, contain a misrepresentation. There is no fact known to the Corporation which the Corporation has not publicly disclosed which materially adversely affects, or so far as the Corporation can reasonably foresee, will materially adversely affect, the assets, liabilities (contingent or otherwise), capital, affairs, business, prospects, operations or condition (financial or otherwise) of the Corporation or the ability of the Corporation to perform its obligations under this Agreement, the Subscription Agreements and the Registration Rights Agreement. The Corporation conduct of the business as currently conducted or contemplated to be conducted is aligned with the disclosure made by it in the Public Records.

 

 

(u)

Timely Disclosure: The Corporation is in compliance in all material respects with all timely disclosure obligations under the Securities Laws, and has no confidential material change reports outstanding.

 

(v)

No Cease Trade Order: No order preventing, ceasing or suspending trading in any securities of the Corporation or prohibiting the issue and sale of securities by the Corporation is in effect and no proceedings for either of such purposes have been instituted or, to the knowledge of the Corporation, are pending, contemplated or threatened.

 

(w)

Accounting Controls: Excepts as disclosed in the SEC Reports, the Corporation maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are completed in accordance with the general or a specific authorization of management of the Corporation; (ii) transactions are recorded as necessary to permit the preparation of financial statements for the Corporation in conformity in all material respects with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets of the Corporation is permitted only in accordance with the general or a specific authorization of management of the Corporation; and (iv) the recorded accountability for assets of the Corporation is compared with the existing assets of the Corporation at reasonable intervals and appropriate action is taken with respect to any differences therein.

 

(x)

Sarbanes-Oxley; Internal Accounting Controls: Except as disclosed in the SEC Reports, the Corporation and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof and as of the Closing Date. Except as disclosed in the SEC Reports, the Corporation and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the SEC Reports, the Corporation and the Subsidiaries have established disclosure controls and procedures (as defined in U.S. Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Corporation and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Corporation in the reports it files or submits under the U.S. Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Corporation’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Corporation and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the U.S. Exchange Act (such date, the “Evaluation Date”). The Corporation presented in its most recently filed periodic report under the U.S. Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Except as disclosed in the SEC Reports, since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the U.S. Exchange Act) of the Corporation and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Corporation and its Subsidiaries.

 

 

(y)

Reportable Event: There has never been any “reportable event” (within the meaning of National Instrument 51-102 Continuous Disclosure Obligations) with the present auditor or any former auditor of the Corporation.

 

(z)

Financial Statements: The audited consolidated financial statements of the Corporation for the fiscal years ended August 31, 2022 and 2021, together with the auditors’ report thereon and the notes thereto, and the Unaudited condensed interim consolidated financial statements for the nine-month periods ended May 31, 2023 and May 31, 2022, and the notes thereto: (i) have been prepared in accordance with IFRS, applied on a basis consistent with prior periods, (ii) are, in all material respects, consistent with the books and records of the Corporation, (iii) contain and reflect all material adjustments for the fair presentation of the results of operations and the financial condition of the business of the Corporation for the periods covered thereby, (iv) present fairly, in all material respects, the financial position of the Corporation as at the date thereof and the results of its operations and the changes in its financial position for the periods then ended, (v) contain and reflect adequate provision or allowance for all reasonably anticipated liabilities, expenses and losses of the Corporation, and (vi) do not omit to state any material fact that is required by IFRS or by applicable law to be stated or reflected therein or which is necessary to make the statements contained therein not misleading, respectively.

 

(aa)

[Reserved].

 

(bb)

SEC Reports; Financial Statements: The Corporation has filed all reports, schedules, forms, statements and other documents required to be filed by the Corporation under the U.S. Securities Act and the U.S. Exchange Act, for the two years preceding the date hereof (or such shorter period as the Corporation was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the U.S. Securities Act and the U.S. Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Corporation has never been an issuer subject to Rule 144(i) under the U.S. Securities Act. The financial statements of the Corporation included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing.

 

(cc)

Off-Balance Sheet Items. There are no off-balance sheet transactions, arrangements, obligations (including contingent obligations) or other relationships of the Corporation or any of its affiliates with unconsolidated entities.

 

(dd)

Liabilities and Receivables. None of the Corporation Parties have any liabilities, obligations, indebtedness or commitments, whether accrued, absolute, contingent or otherwise, which (i) are not disclosed or referred to in the financial statements and related notes thereto included in the Public Record, other than liabilities, obligations, indebtedness or commitments incurred in the normal course of business since the date of the most recent interim period financial statements, and (ii) would, whether individually or in the aggregate, result in, or would reasonably be expected to result in, a Material Adverse Effect. All material receivables recorded on the books of the Corporation are bona fide and are good and collectible without set off or counterclaim, subject to any provision made in the financial statements.

 

(ee)

Auditors of the Corporation. The auditors of the Corporation who audited the annual consolidated financial statements and who provided their audit report thereon are independent chartered accountants as required under applicable Securities Laws.

 

 

(ff)

Leased Real Property. None of the Corporation Parties own any real property. With respect to the premises which any Corporation Party occupies as tenant, such entity occupies such leased premises and has the exclusive right to occupy and use the leased premises and the leases pursuant to such entity occupies the leased premises are in good standing in all material respects and in full force and effect.

 

(gg)

Insolvency: No Corporation Party has committed an act of bankruptcy or sought protection from the creditors thereof before any court or pursuant to any legislation, proposed a compromise or arrangement to the creditors thereof generally, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to be declared bankrupt or wound up, taken any proceeding to have a receiver appointed of any of the assets thereof, had any Person holding any encumbrance, lien, charge, hypothec, pledge, mortgage, title retention agreement or other security interest or receiver take possession of any of the property thereof, had an execution or distress become enforceable or levied upon any portion of the property thereof or had any petition for a receiving order in bankruptcy filed against it.

 

(hh)

No Contemplated Changes: None of the Corporation or any of the Subsidiaries has approved or entered into any agreement in respect of the change of control (by sale or transfer of shares or sale of all or substantially all of its property and assets or otherwise) of the Corporation or the Subsidiaries.

 

(ii)

Taxes and Tax Returns: The Corporation Parties have, in a timely manner, filed all required tax returns and notices and paid all applicable taxes of whatsoever nature for all tax years prior to the date hereof to the extent that such taxes have become due or have been determined by a Governmental Authority to be due or are not contested in good faith by the Corporation, and the Corporation is not aware of any material tax deficiencies or interest or penalties accrued or accruing, or which have been determined by a Governmental Authority to be accrued or accruing, thereon where, in any of the above cases, it might reasonably be expected to result in a Material Adverse Effect, and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return by the Corporation or the payment of any material tax, governmental charge, penalty, interest or fine against the Corporation. To the knowledge of the Corporation, there are no actions, suits, proceedings, investigations or claims now threatened or pending against the Corporation or any of the Subsidiaries which could result in a liability in respect of taxes, charges or levies of any Governmental Authority, penalties, interest, fines, assessments or reassessments that is material to the Corporation on a consolidated basis.

 

(jj)

Compliance with Laws, Licenses and Permits:

 

(i)

The Corporation Parties have conducted and are conducting the business thereof in compliance in all material respects with all applicable laws, rules, regulations, tariffs, orders and directives of each jurisdiction in which they carry on business and possesses all material approvals, consents, certificates, registrations, authorizations, permits and licenses issued by the appropriate provincial, territorial, state, municipal, federal or other regulatory agency or body necessary to carry on the business currently carried on by it, are in compliance in all material respects with the terms and conditions of all such approvals, consents, certificates, authorizations, permits and licenses and with all laws, regulations, tariffs, rules, orders and directives material to the operations thereof, the failure to comply with which would result in a Material Adverse Effect.

 

(ii)

None of the Corporation Parties have received any notice in writing of the modification, revocation or cancellation of any such approval, consent, certificate, authorization, permit or license which, singly or in the aggregate, the failure to comply with which would result in a Material Adverse Effect.

 

(kk)

Agreements and Actions: None of the Corporation Parties is in violation of any term of its respective constating documents, except where such violations would not have a Material Adverse Effect.

 

 

(ll)

Absence of Litigation: There is no action, suit, proceeding or investigation commenced, pending or, to the knowledge of the Corporation, threatened, against or affecting any Corporation Party or their respective businesses, or to which any Corporation Party is or may be a party or to which any asset of the Corporation Parties is or may be subject under applicable laws which, in any one case or in the aggregate, if determined adversely to the interest of the applicable Corporation Party, would result in a Material Adverse Effect.

 

(mm)

No Defaults: No Corporation Party is in default of any term, covenant or condition under or in respect of any judgment, order, or material agreement or instrument to which it is a party or to which it or any of its property or assets are bound, except where such default would not, individually or in the aggregate, result in a Material Adverse Effect, and, to the knowledge of the Corporation, other than as disclosed in the Public Record, no event has occurred and no circumstances exist which has not been waived, which after notice or lapse of time or both, would constitute a default under any material commitment, agreement, document or other instrument to which a Corporation Party is a party or by which it is otherwise bound.

 

(nn)

No Termination or Cancellation of Business: There exists no actual or, to the knowledge of the Corporation, threatened termination, cancellation or limitation of, or any material adverse modification or material change in, the business relationship of the Corporation or the Subsidiaries with any strategic partner, distributor, supplier or customer, or any group of strategic partners, distributors, suppliers or customers whose business or relationship with or whose purchases or inventories/components provided to the business of the Corporation or the Subsidiaries are individually or in the aggregate material to the assets, business, properties, operations or financial condition of the Corporation or the Subsidiaries. All such business relationships are materially intact and mutually cooperative, and there exists no conditions which would prevent the Corporation or the Subsidiaries from conducting such business with any such strategic partner, distributor, supplier or customer, or group of strategic partners, distributors, suppliers or customers in the same manner in all material respects as presently conducted or proposed to be conducted.

 

(oo)

Labour Disputes, Compliance with Employment Laws: None of the Corporation Parties is involved in any labour strike, dispute, slowdown, stoppage, complaint or grievance, and to the knowledge of the Corporation, none are threatened. None of the Corporation’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Corporation or such Subsidiary, and neither the Corporation nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Corporation and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Corporation, no executive officer of the Corporation or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Corporation or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Corporation Parties are in compliance with all laws and regulations respecting employment and employment practices, terms and conditions of employment, pay equity and wages, except where such non-compliance would not, individually or in the aggregate, have a Material Adverse Effect, and have not and is not engaged in any unfair labour practice.

 

(pp)

Employee Plans: Each material plan for retirement, bonus, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, pension, incentive or otherwise contributed to, or required to be contributed to, by the Corporation or for the benefit of any current or former officer, director, employee or consultant of the Corporation has been maintained in material compliance with the terms thereof and with the requirements prescribed by any and all statutes, orders, rules, policies and regulations that are applicable to any such plan.

 

 

(qq)

Environmental Compliance:

 

(i)

To the knowledge of the Corporation Parties, the property, assets and current operations of the Corporation Parties comply in all material respects with all applicable Environmental Laws;

 

(ii)

the Corporation does not have any knowledge of, and has not received any written notice of, any claim, judicial or administrative proceeding, pending or threatened against, or which may affect, the Corporation, any of the Subsidiaries, or any of the property, assets or operations thereof, relating to, or alleging any violation of any Environmental Laws which claim or proceeding would result in a Material Adverse Effect, and the Corporation is not aware of any facts which could give rise to any such claim or judicial or administrative proceeding; and

 

(iii)

to the knowledge of the Corporation, none of the assets or operations of the Corporation Parties is the subject of any investigation, evaluation, audit or review by any Governmental Authority to determine whether any violation of any Environmental Laws has occurred or is occurring or whether any remedial action is needed in connection with a release of any Contaminant into the environment.

 

(rr)

Intellectual Property:

 

A Corporation Party:

 

(A)

is the sole legal and beneficial owner of;

 

(B)

has the exclusive right to use;

 

(C)

has good and marketable title to; and

 

(D)

other than as disclosed in the Public Record, owns, free and clear of all, liens, charges, pledges, security interests, encumbrances, claims or demands of any kind whatsoever, all right, title and interest in and to, the Owned IP;

 

(ii)

no Intellectual Property owned by or in the name of any Person who is not a Corporation Party is incorporated in, forms a part of, or is otherwise included in the Owned IP;

 

(iii)

no Corporation Party has received notice of or has knowledge of any claim of adverse ownership in respect of the Owned IP or of any facts upon which such claim could be based;

 

(iv)

to the knowledge of the Corporation Parties, no consent or license of any Person is necessary to make, use, reproduce, license, sell, modify, update, enhance or otherwise exploit any Owned IP or operate the business as presently operated by the Corporation Parties;

 

(v)

to the knowledge of the Corporation Parties, the Owned IP is valid and subsisting; and

 

(vi)

to the knowledge of the Corporation Parties, none of the Owned IP comprises an improvement to Licensed IP that would give any Person other than a Corporation Party any right, title or interest or right to use the Owned IP.

 

Registered Corporation IP

 

(vii)

All applications for registration and registrations of any Registered Corporation IP:

 

(A)

are in good standing;

 

 

(B)

in the case of applications for registration, have been filed in a timely manner in the appropriate offices to preserve the rights thereto;

 

(C)

in the case of registrations, are recorded in the name of the Corporation or the Subsidiaries; and

 

(D)

in the case of a provisional application, all right, title and interest in and to the invention(s) disclosed in such application have been or as of the Closing Date will be assigned in writing (without any express right to revoke such assignment) to the Corporation or the Subsidiaries;

 

(viii)

there has been no public disclosure, sale or offer for sale of any Owned IP anywhere in the world that may prevent the valid issuance or registration of the Intellectual Property Rights in the Registered Corporation IP;

 

(ix)

all material prior art or other information has been or will be disclosed to the appropriate offices as required in accordance with Applicable IP Laws in the jurisdictions where the registration of or applications for the Registered Corporation IP have been issued, registered or are pending;

 

(x)

all registrations of or application for Registered Corporation IP have been filed, prosecuted and obtained in accordance with all Applicable IP Laws and are currently in effect and in compliance with all Applicable IP Laws; and

 

(xi)

no registration of or application for Registered Corporation IP has expired, become abandoned, been cancelled or expunged, or has lapsed for failure to be renewed or maintained.

 

Corporation IP

 

(xii)

No Corporation Party has received any notice or claim (whether written, oral or otherwise) challenging a Corporation Party’s ownership or right to use any of the Corporation IP or suggesting that any other Person has any claim of legal or beneficial ownership or other claim or interest with respect thereto, nor is there a reasonable basis for any claim that any Person other than the Corporation Parties has any claim of legal or beneficial ownership or other claim or interest in any of the Corporation IP;

 

(xiii)

no Corporation Party has received any notice or claim (whether written, oral or otherwise) challenging the validity or enforceability of any of the Corporation IP, nor are there any facts, to the knowledge of a Corporation Party, upon which such a notice or claim could be based;

 

(xiv)

the conduct of the Corporation Parties’ businesses (including the use or other exploitation of the Corporation IP by the Corporation Parties or other licensees) as currently conducted and as disclosed in the Public Record has not infringed, violated, misappropriated or otherwise conflicted with any Intellectual Property Right of any Person;

 

(xv)

no Corporation Party is a party to any action or proceeding, nor is or has any action or proceeding, to the knowledge of the Corporation Parties, been threatened that alleges that any current or proposed conduct of the Corporation Parties’ business (including the use or other exploitation of any Corporation IP by the Corporation Parties or any customers, distributors or other licensees) has or will infringe, violate or misappropriate or otherwise conflict with any Intellectual Property Right of any Person nor are there any facts, to the knowledge of a Corporation Party, upon which any such action or proceeding could be based; and

 

 

(xvi)

to the knowledge of the Corporation Parties, except as would not be material to a Corporation Party, no Person has interfered with, infringed upon, misappropriated, illegally exported, or violated any rights with respect to any Corporation IP.

 

Licensed IP

 

(xvii)

Except for off-the-shelf software, the Corporation Parties have no Licensed IP and the operation of the business as currently conducted does not require the use of Licensed IP; and

 

(xviii)

the Corporation Parties possess licenses (and documentation of payment for such licenses) for each installation of off-the-shelf software on computers or other devices used by the Corporation Parties.

 

Other IP Matters

 

(xix)

To the extent that any of the Corporation IP is licensed or disclosed to any Person or any Person has access to such Corporation IP (including any employee, director officer, shareholder or consultant of the Corporation), the Corporation or one of its Subsidiaries has entered into a valid and enforceable written agreement which contains terms and conditions prohibiting the unauthorized use, reproduction, disclosure, reverse engineering or transfer of such Corporation IP by such Person. All such agreements are in full force and effect and none of the Corporation, or any other Person, is in default of its obligations thereunder;

 

(xx)

the Corporation and the Subsidiaries have taken all actions that are contractually obligated to be taken and all actions that are customary and reasonable to protect the confidentiality of the Corporation IP;

 

(xxi)

it is not, and will not be, necessary for the Corporation or the Subsidiaries to utilize any Intellectual Property owned by or in possession of any of the employees (or people the Corporation currently intends to hire) made prior to their employment with the Corporation or the applicable Subsidiary, as the case may be, in violation of the rights of such employee or any of his or her prior employers;

 

(xxii)

except where the Corporation has decided not to pursue registration of any Corporation IP that can be registered since incorporation, the Corporation has not received any advice or any opinion that any of the Corporation IP is invalid or unregistrable or unenforceable, in whole or in part;

 

(xxiii)

the Corporation has not received any grant relating to research and development which is subject to repayment in whole or in part or to conversion to debt upon sale of any Common Shares or which may affect the right of ownership of the Corporation in the Corporation IP;

 

(xxiv)

the Corporation has and enforces a policy requiring each employee and consultant to execute non-disclosure and assignment agreements substantially in the forms provided to the Agent and its counsel and all current employees and consultants of the Corporation have executed such agreements and all past employees and consultants of the Corporation have executed such agreements;

 

 

(xxv)

all of the present and past employees of the Corporation and all of the present and past consultants, contractors and agents of the Corporation performing services relating to the development, creation, authorship, invention, modification or support of the Corporation IP, have entered into a written agreement assigning to the Corporation all right, title and interest in and to all such Intellectual Property including an explicit waiver of moral rights in favor of the Corporation and its successors and assigns, except as where the failure to enter into such an agreement would result in a Material Adverse Effect;

 

(xxvi)

except as would not result in a Material Adverse Effect or for the Registered Corporation IP that the Corporation has elected to abandon or allow to expire, any and all fees or payments required to keep the Corporation IP in force or in effect have been paid;

 

(xxvii)

there is no claim of infringement or breach by a Corporation Party of any industrial property rights or Intellectual Property Rights of any other Person, nor has a Corporation Party received any notice or threat from any such third party since August 31, 2022, nor is any Corporation Party otherwise aware that the use of the Corporation IP infringes upon or breaches any Intellectual Property Rights of any other Person; and

 

(xxviii)

none of the Intellectual Property Rights of any Corporation Party will be impaired or affected in any way by the transactions contemplated by this Agreement.

 

(ss)

Material Agreements: All agreements that are material to the Corporation on a consolidated basis (the “Material Agreements”) have been disclosed in the Public Record and filed on SEDAR and EDGAR as necessary. All necessary corporate action has been taken by the Corporation and the Subsidiaries to authorize the execution and delivery of each Material Agreement to which it is a party, and each such Material Agreement has been duly executed and delivered by the Corporation or the applicable Subsidiary, and constitutes a valid and binding obligation of each such entity, enforceable against such entity in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforcement of creditors’ rights generally and to the fact that equitable remedies, including specific performance, are discretionary and may not be ordered in respect of certain defaults.

 

(tt)

[Reserved].

 

(uu)

Foreign Corrupt Practices: Neither the Corporation, the Subsidiaries, nor any of their respective affiliates, directors, officers, agents, employees is aware of or has taken any action, directly or indirectly, that could result in a violation by such persons of the Corruption of Foreign Public Officials Act (Canada), the Bribery Act 2010 (United Kingdom), the Foreign Corrupt Practices Act of 1977 (United States), as amended, and the rules and regulations thereunder or any other anticorruption law to which the Corporation or the Subsidiaries may be subject (collectively, the “Anti-Bribery Acts”), including, without limitation, making any bribe, rebate, payoff, influence payment, kickback or other unlawful payment or making use of mail or any means or instrumentality of interstate commerce in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value or benefit to any “foreign official”, “foreign public official”, or “public official” (as such terms are defined in the applicable Anti-Bribery Acts) or any foreign political party or official thereof or any candidate for foreign political office, or any third party or any other person to the benefit of the foregoing, in contravention of the Anti-Bribery Acts, and the Corporation, the Subsidiaries and their affiliates have conducted their businesses in compliance with the Anti-Bribery Acts and will implement and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

 

(vv)

Money Laundering Laws. The operations of the Corporation and the Subsidiaries are, and have been conducted at all times, in compliance with all material applicable financial recordkeeping and reporting requirements, including those of the United States Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), and the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental authority (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental authority or any arbitrator involving the Corporation or the Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Corporation, threatened.

 

(ww)

United States Office of Foreign Assets Control: None of the Corporation, the Subsidiaries or, to the knowledge of the Corporation, any director, officer, agent, employee or affiliate of the Corporation or any of its Subsidiaries is a Person that is, or is owned or controlled by a Person that is, currently subject or target of any sanctions administered or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Department of State and including, without limitation, the designation as a “specially designated national” or “blocked person”), or other relevant sanctions authority (collectively, the “Sanctions”), nor is the Corporation or any of the Subsidiaries located, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”); and the Corporation will not, directly or indirectly, use the proceeds of the Offering, or lend, contribute or otherwise make available such proceeds to any of the Subsidiaries, joint venture partner or other Person: (i) to fund or facilitate any activities of or business with any Person that, at the time of such funding or facilitation, is the subject or the target of Sanctions; (ii) to fund or facilitate any activities of or business in any Sanctioned Country in violation of Sanctions; or (iii) in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as an agent, advisor, investor or otherwise) of Sanctions. Since August 31, 2022, neither the Corporation nor the Subsidiaries have engaged in or are now knowingly engaged in any dealings or transactions with any Person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country in violation of Sanctions.

 

(xx)

Minute Books: The minute books of the Corporation and the Subsidiaries which have been made available to the Agent or its representatives for the purposes of its due diligence investigations in connection with the Offering have been maintained in accordance with all applicable laws and are complete and accurate in all material respects.

 

(yy)

Candour. The Corporation has not withheld any material facts relating to the any Corporation Party or the Offering from the Agent.

 

(zz)

Insurance. The Corporation Parties maintain insurance policies with reputable insurers against risks of loss of or damage to their properties, assets and business, of such types as are customary in the case of entities engaged in the same or similar businesses as the Corporation. No Corporation Party is in material default with respect to any provisions of such policies and have not failed to give any notice or to present any claim under any such policy in a due and timely fashion.

 

(aaa)

Market Stabilization: The Corporation has not taken and will not take, except in accordance with applicable law, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in the stabilization or manipulation of the price of the Common Shares and is not aware of anyone taking any such actions.

 

(bbb)

No Order: No Securities Commission, stock exchange or comparable authority has issued any order preventing or suspending the distribution of the Offered Units or the trading of any of the securities of the Corporation generally and, to the knowledge of the Corporation, there is no investigation, inquiry or proceeding for this purpose that has been commenced or which is pending, contemplated or threatened.

 

 

(ccc)

No Change: Since August 31, 2022, there has been no change, event or occurrence which, individually or in the aggregate, would has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

 

(ddd)

Affiliate Transactions: The Corporation does not owe any amount to, and the Corporation has no present loans to, or borrowed any amount from or is otherwise indebted to, any officer, director, employee or securityholder of the Corporation or any Person who is a “related person” (within the meaning of the Tax Act) to any officer, director or employee except for usual employee, officer and director reimbursements and compensation paid in the ordinary and normal course of the business of the Corporation and except for reimbursements and compensation paid pursuant to the employment and consulting agreements with the senior management of the Corporation and disclosed to the Agent. Except for (i) usual employee or consulting arrangements made in the ordinary and normal course of business, (ii) the employment and consulting agreements with the senior management of the Corporation and disclosed to the Agent, and (iii) stock option agreements entered into by and between the Corporation and employees, consultants, directors and officers in accordance with incentive equity plans disclosed in the Public Record, the Corporation is not a party to any contract, agreement or understanding with any officer, director or employee of the Corporation or any other Person who is a “related person” of the Corporation. To the knowledge of the Corporation, no officer, director or employee of the Corporation has any cause of action or other claim whatsoever against, or owes any amount to, the Corporation except for claims in the ordinary and normal course of the business of the Corporation such as for accrued vacation pay or other amounts or matters which would not be material to the Corporation.

 

(eee)

No Redemption Obligations: The Corporation does not have any agreement or obligation to repurchase, redeem or otherwise acquire any of its outstanding securities.

 

(fff)

Absence of Shareholder Agreements: To the knowledge of the Corporation, there are no shareholder agreements, voting trusts or other agreements relating to the disposition or voting of any securities of the Corporation.

 

(ggg)

Absence of Rights of First Refusal. No Person has any rights of first refusal to provide agency or underwriting services in connection with any debt or equity financing or financial advisory services to the Corporation that are in effect.

 

(hhh)

No Shareholder Approval. The Corporation is not required by applicable laws, Nasdaq rules or policies, or its constating documents to obtain the approval of its shareholders in order to issue any of the Offered Units.

 

(iii)

Absence of Fees. Other than pursuant to this Agreement, the Corporation is not a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Corporation or the Agent for a brokerage commission, finder’s fee or like payment with respect to the transactions contemplated herein.

 

(jjj)

Entitlement to Proceeds. Other than the Corporation, there is no person that is or will be entitled to the proceeds of the Offering under the terms of any Material Agreement, debt instrument, other instrument or document, or otherwise.

 

8.

Covenants of the Corporation

 

(a)

Issuance of Securities: The Corporation covenants and agrees that, at the Closing Date, the Offered Units, Common Shares and Warrants (and underlying securities) will be duly and validly authorized and:

 

(i)

upon receiving full payment of the Purchase Price for each Offered Unit, the Common Shares underlying each Offered Unit will be validly issued as fully paid and non-assessable shares of the Corporation, and the Warrants will be validly created and issued; and

 

 

(ii)

upon due exercise of the Warrants in accordance with their terms, including full payment of the exercise price for each Warrant Share, the Warrant Shares will be validly issued as fully paid and non-assessable shares of the Corporation.

 

(b)

Consents and Approvals: The Corporation covenants and agrees that:

 

(i)

the Corporation will make the necessary notifications to the Nasdaq of the listing of the Common Shares and Warrant Shares and, to the extent necessary, obtain such consents and approvals from the Securities Commissions of the Offering Jurisdictions for the Offering on such terms as are mutually acceptable to the Agent and the Corporation, acting reasonably;

 

(ii)

the Corporation will comply in all material respects with all requirements of the Nasdaq in connection with the issuance of the Offered Units (and underlying securities), the Common Shares, the Warrants and the Warrant Shares (and underlying securities);

 

(iii)

the listing of the Common Shares and the Warrant Shares shall not have been objected to by the Nasdaq; and

 

(iv)

the Corporation will make all necessary filings and obtain all other necessary regulatory and other consents and approvals required in connection with the transactions contemplated by this Agreement.

 

(c)

General: The Corporation hereby covenants and agrees to:

 

(i)

comply with all of the Corporation’s covenants under the Subscription Agreements, the Registration Rights Agreement and the Warrant Certificates;

 

(ii)

fulfill all legal requirements to permit the issue, offering and sale of the Offered Units, including, without limitation, compliance with the Securities Laws of the Offering Jurisdictions to enable the Offered Units to be offered for sale and sold to the Purchasers without the necessity of filing a prospectus or a registration statement in the Offering Jurisdictions;

 

(iii)

use all commercially reasonable efforts to maintain the listing of the Common Shares on the Nasdaq for as long as any Warrants remain outstanding, provided that the Corporation shall not be required to comply with this Section following the completion of a merger, amalgamation, arrangement, business combination or take-over bid pursuant to which the Corporation ceases to be a “reporting issuer” (within the meaning of Securities Laws);

 

(iv)

make all commercially reasonable best-efforts to maintain its status as a reporting issuer not in default under Securities Laws for as long as any Warrants remain outstanding, provided that the Corporation shall not be required to comply with this Section following the completion of a merger, amalgamation, arrangement, business combination or take-over bid pursuant to which the Corporation ceases to be a “reporting issuer” (within the meaning of Securities Laws); and

 

(v)

file such documents as may be required under the Securities Laws of the Offering Jurisdictions relating issuance of the Offered Units, in the form and within the time periods prescribed by Securities Laws.

 

 

(d)

Use of Proceeds: The Corporation will use the net proceeds of the Offering for building up inventory for order fulfilment, development of the E-Motion electric powertrain technology, increasing brand awareness, and general corporate purposes.

 

(e)

Benefit of Covenants: The provisions of this Section 8 are intended for the benefit of, and will be enforceable by, the Agent and each Purchaser that purchases Offered Units, and the Agent is, for those purposes, acting as agent and trustee on behalf of the Purchasers.

 

9.

Termination

 

The Agent shall be entitled to terminate its obligations hereunder by written notice to that effect given to the Corporation at or prior to the Closing Time, without any liability on the part of the Agent or the Purchasers if:

 

(i)

Due Diligence Out – the Agent is not satisfied, in its sole discretion, acting reasonably, with the completion of its due diligence investigations of the Corporation;

 

(ii)

Disaster Out – there should develop, occur or come into effect or existence any event, action, state, condition or major financial occurrence or catastrophe, war or act of terrorism of national or international consequence, or any new or change in any law or regulation which, in the opinion of the Agent, acting reasonably, materially adversely affects or involves, or will materially adversely affect or involve, the financial markets or the business, operations or affairs of the Corporation or the Subsidiaries, taken as a whole or the market price or value of the securities of the Corporation (including the Offered Units);

 

(iii)

Market Out – the state of the Canadian, U.S. or international financial markets is such that, in the reasonable opinion of the Agent, the Offered Units cannot be profitably marketed;

 

(iv)

Material Change Out – there shall have occurred any material change or change in a material fact or a material adverse change or effect on the business or affairs of the Corporation, or the Agent discovers any previously undisclosed material fact which in the reasonable opinion of the Agent would be expected to have a material adverse effect on the market price or value of the securities of the Corporation (including the Offered Units to be issued pursuant to the terms of this Agreement);

 

(v)

Regulatory Out – (i) any inquiry, action, suit, investigation or other proceeding (whether formal or informal) is commenced, announced or threatened in relation to the Corporation, any of its Subsidiaries, or any of their respective officers or directors or any order is issued under or pursuant to any statute of Canada or any province thereof or any statute of the United States or any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality which would reasonably be expected to have a Material Adverse Effect on the Corporation if decided adversely to such party; or (ii) any order, action, proceeding or cease trading order which operates to prevent or restrict the trading of the Common Shares or any other securities of the Corporation is made or threatened by a securities regulatory authority;

 

(vi)

Breach Out – the Corporation is in breach of a material term, condition or covenant of this Agreement or any representation or warranty made by the Corporation herein becomes or is false in any material respect.

 

The Corporation will use commercially reasonable best-efforts to cause the conditions contained in this Section 9 to be satisfied and/or complied with insofar as the same relate to acts to be performed or caused to be performed by it, and the Corporation will use its commercially reasonable best-efforts to cause all such conditions to be complied with. Any breach of a material term or failure to comply with any of the conditions set out in Section 9 shall entitle the Agent to terminate its obligation under this Agreement by written notice to that effect given to the Corporation at or prior to the Closing Time. The Agent may waive, in whole or in part, or extend the time for compliance with, any of such terms and conditions without prejudice to the rights of the Agent in respect of any such terms and conditions or any other or subsequent breach or non compliance, provided that to be binding on the Agent any such waiver or extension must be in writing.

 

 

The rights of termination contained in Section 9 may be exercised by the Agent and are in addition to any other rights or remedies the Agent may have in respect of any of the matters contemplated by this Agreement or otherwise. Any such termination shall not discharge or otherwise affect any obligation or liability of the Corporation provided herein or prejudice any other rights or remedies any party may have as a result of any breach, default or non compliance by any other party. If the obligations of the Agent are terminated under this Agreement pursuant to the termination rights provided for in Section 9, the Corporation’s liabilities to that Agent shall be limited to the Corporation’s obligations under the indemnity, contribution and expense provisions of this Agreement.

 

10.

Indemnity and Contribution

 

(a)

The Corporation (the “Indemnitor”) hereby agrees to indemnify and hold the Agent, and its respective affiliates (hereinafter collectively referred to as the “Agents”) and officers, directors, employees, partners, agents and successors and assigns (hereinafter referred to as the “Indemnified Parties”) harmless from and against any and all expenses, losses (other than loss of profits), claims, actions, damages or liabilities, whether joint or several (including the aggregate amount paid in reasonable settlement of any actions, suits, proceedings or claims), and the reasonable fees and expenses of its counsel that may be incurred in advising with respect to and/or defending any claim that may be made against the Agents, to which the Agents and/or its Indemnified Parties may become subject or otherwise involved in any capacity under any statute or common law or otherwise, insofar as such expenses, losses, claims, damages, liabilities or actions arise out of or are based, directly or indirectly, upon the performance of professional services rendered pursuant to this Agreement to the Indemnitor by the Agents and their Indemnified Parties hereunder or otherwise in connection with the matters referred to in this Agreement, provided, however, that this indemnity shall not apply in respect of an Agent or its respective Indemnified Parties to the extent that a court of competent jurisdiction in a final judgment that has become non-appealable shall determine that:

 

(i)

an Agent or its respective Indemnified Parties have committed any fraudulent act or or wilful misconduct in the course of such performance; and

 

(ii)

the expenses, losses, claims, damages or liabilities, as to which indemnification is claimed, were directly or indirectly caused by the fraudulent act or wilful misconduct referred to in Section 10(a)(i) above.

 

(b)

If for any reason (other than the occurrence of any of the events itemized in Sections 10(a)(i) and 10(a)(ii) above), the foregoing indemnification is unavailable to the Agents or insufficient to hold it or them harmless as applicable, then the Indemnitor shall contribute to the amount paid or payable by the Agents as a result of such expense, loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnitor on the one hand and each of the Agents on the other hand but also the relative fault of the Indemnitor and each of the Agents, as well as any relevant equitable considerations; provided that the Indemnitor shall, in any event, contribute to the amount paid or payable by each Agent as a result of such expense, loss, claim, damage or liability, any excess of such amount over the amount of the Agency Fee.

 

(c)

The Indemnitor agrees that in case any legal proceeding shall be brought against the Indemnitor and/or one or more of the Agents by any governmental commission or regulatory authority or any stock exchange or other entity having regulatory authority, either domestic or foreign, or any such entity shall investigate the Indemnitor and/or one or more of the Agents and any Indemnified Parties shall be required to testify in connection therewith or shall be required to respond to procedures designed to discover information regarding, in connection with, or by reason of the performance of professional services rendered to the Indemnitor by the Agents, each of the Agents shall have the right to employ its own counsel, and the fees and expenses of such counsel as well as the documented costs (including an amount to reimburse the Agents for time spent by its Indemnified Parties in connection therewith at their normal per-diem rates) and reasonable out-of-pocket expenses incurred by its Indemnified Parties in connection therewith shall be paid by the Indemnitor as they occur.

 

 

(d)

Promptly after receipt of notice of the commencement of any legal proceeding against one or more of the Agents or any of their respective Indemnified Parties or after receipt of notice of the commencement of any investigation, which is based, directly or indirectly, upon any matter in respect of which indemnification may be sought from the Indemnitor, the Agents will notify the Indemnitor in writing of the commencement thereof and, throughout the course thereof, will provide copies of all relevant documentation to the Indemnitor, will keep the Indemnitor advised of the progress thereof and will discuss with the Indemnitor all significant actions proposed. The omission so to notify the Indemnitor shall not relieve the Indemnitor of any liability which the Indemnitor may have to the Agents except only to the extent that any such delay in giving or failure to give notice as herein required materially prejudices the defence of such action, suit, proceeding, claim or investigation or results in any material increase in the liability which the Indemnitor would otherwise have under this indemnity had the Agents not so delayed in giving or failed to give the notice required hereunder.

 

(e)

The Indemnitor shall be entitled, at its own expense, to participate in and, to the extent it may wish to do so, assume the defence of, any legal proceeding for which it is obligated to indemnify the Indemnified Parties,, provided such defence is conducted by experienced and competent counsel. Upon the Indemnitor notifying the Agents in writing of its election to assume the defence and retaining counsel, the Indemnitor shall not be liable to the Agents for any legal expenses subsequently incurred by them in connection with such defence. If such defence is assumed by the Indemnitor, the Indemnitor throughout the course thereof will provide copies of all relevant documentation to the Agents, will keep the Agents advised of the progress thereof and will discuss with the Agents all significant actions proposed.

 

(f)

Notwithstanding the foregoing paragraph, the Agents, or any one of them, shall have the right, at the Indemnitor’s expense, to employ counsel of the Agent’s choice in respect of the defence of any action, suit, proceeding, claim or investigation if: (i) the employment of such counsel has been authorized by the Indemnitor; or (ii) the Indemnitor has not assumed the defence and employed counsel therefor within a reasonable time after receiving notice of such action, suit, proceeding, claim or investigation; or (iii) counsel retained by the Indemnitor or the Agents have advised the Agents that representation of both parties by the same counsel would be inappropriate for any reason, including without limitation because there may be legal defences available to the Agents, or to any one of the Agents, which are different from or in addition to those available to the Indemnitor (in which event and to that extent, the Indemnitor shall not have the right to assume or direct the defence on the Agent’s behalf) or that there is an actual or potential conflict of interest between the Indemnitor and the Agents or between the Agents or the subject matter of the action, suit, proceeding, claim or investigation may not fall within the indemnity set forth herein (in either of which events the Indemnitor shall not have the right to assume or direct the defence on the Agent’s behalf).

 

(g)

No admission of liability and no settlement of any action, suit, proceeding, claim or investigation shall be made without the consent of the Agents. No admission of liability shall be made and the Indemnitor shall not be liable for any settlement of any action, suit, proceeding, claim or investigation made without its consent.

 

(h)

The indemnity and contribution obligations of the Indemnitor shall be in addition to any liability which the Indemnitor may otherwise have, shall extend upon the same terms and conditions to the Indemnified Parties of the Agents and shall be binding upon and enure to the benefit of any successors, assigns, heirs and personal representatives of the Indemnitor, the Agents and any of the Indemnified Parties of the Agents. The foregoing provisions shall survive the completion of professional services rendered under this Agreement or any termination of the authorization given by this Agreement.

 

 

(i)

The Indemnitor hereby constitutes the Agents as agent and trustee for each of the other Indemnified Parties of the Indemnitor’s covenants under this indemnity with respect to such persons and the Agents agree to accept such trust and to hold and enforce such covenants on behalf of such persons.

 

11.

Expenses

 

The Corporation will be responsible for all reasonable expenses related to the Offering, whether or not it is completed, including, but not limited to: fees and disbursements of the Corporation’s legal counsel; reasonable fees and disbursements of the Agent’s (i) Canadian legal counsels up to CDN$125,000; and (i) Agent’s U.S. legal counsels up to $60,000, which amount include $10,000 for the review of the registration statement required to be prepared by the Corporation pursuant to the Registration Rights Agreements; fees and disbursements of the Corporation’s accountants and auditors; fees and disbursements of other applicable experts of which the Agent has advised the Corporation prior to the execution of this Agreement; printing costs; filing fees; stock exchange fees; reasonable out-of-pocket expenses of the Agent; and applicable taxes on all of the foregoing. Expenses payable pursuant to this Agreement, at the option of the Agent, may be deducted from the gross proceeds of the Offering otherwise payable to the Corporation on the Closing Date and/or subsequent closing date(s).

 

12.

Conditions

 

All of the terms and conditions contained in this Agreement to be satisfied by the Corporation prior to the Closing Time shall be construed as conditions and any breach or failure by the Corporation to comply with any of such terms and conditions shall entitle the Agent to terminate the obligations thereof to complete the Closing by written notice to that effect given by the Agent to the Corporation prior to the Closing Time. It is understood and agreed that the Agent may waive in whole or in part, or extend the time for compliance with, any of such terms and conditions without prejudice to the rights thereof in respect of any other such term and condition or any other or subsequent breach or non-compliance; provided that to be binding on the Agent any such waiver or extension must be in writing and signed by or on behalf of the Agent. If the Agent shall elect to terminate the obligations thereof to complete the Closing as aforesaid, whether the reason for such termination is within or beyond the control of the Corporation, the liability of the Corporation hereunder shall be limited to the indemnity referred to in Section 10 hereof, the right to contribution referred to in Section 10 hereof and the payment of expenses referred to in Section 11 hereof.

 

13.

Confidentiality

 

(a)

The Agent shall keep strictly confidential and will only use for the purpose of performing its obligations hereunder, all information whether written or orally obtained by it from the Corporation, its affiliates and their respective agents, advisors, directors, officers or employees in connection with this engagement (“Confidential Information”). This confidentiality obligation shall not apply or extend to data or information now in the public domain, data or information which may subsequently become public other than through breach by the Agent of its obligations hereunder, data or information disclosed to the Agent by third parties in respect of which (to the Agent’s knowledge) such third parties are not under an obligation of confidentiality to the Corporation. The Agent shall ensure that each of its representatives, including employees and professional consultants, agents and other syndicate members, if any, shall be made aware of and be bound by this provision prior to receiving any such Confidential Information, shall be disclosed to the Corporation prior to being provided the Confidential Information by the Agent, and if required by the Corporation, acting reasonably, shall enter into confidentiality agreements confirming their obligations hereunder.

 

(b)

The Agent agrees that it, and its employees and service providers, will not reproduce the Confidential Information (except as reasonably required to perform the services contemplated by this Agreement), directly or indirectly disclose the Confidential Information, or make commercial use of the Confidential Information. If the Agent or any of its representatives are requested pursuant to or required by law, regulation, legal process or regulatory authority to disclose Confidential Information, the Agent must first advise the Corporation of the requested or required disclosure as soon as reasonably practical in order to permit the Corporation to seek a protective order from a court of competent jurisdiction or waive compliance with the provisions of this section. In the absence of a protective order or such a waiver in such circumstances, the Agent will only disclose that portion of the Confidential Information that the Agent is legally required to disclose, and for all other purposes the Confidential Information so disclosed shall remain Confidential Information and subject to the terms of this Agreement.

 

 

14.

Standstill

 

The Corporation shall not, for a period from the date of this Agreement ending 45 days from the Closing Date, issue or sell any Common Shares or securities or financial instruments convertible or exchangeable into Common Shares, other than in connection with (i) the exchange, transfer, conversion or exercise rights of existing outstanding securities; (ii) the grant and exercise of stock options issued under the Corporation’s equity stock option plan; or (iii) other commitments to issue securities existing as of the date hereof. Notwithstanding the foregoing, the Corporation may sell Common Shares or Common Share equivalents in a private placement during such 45 day period to a Canadian investor(s) and subsequently register them if such Canadian investors are prohibited from selling such securities for 4 months and it agrees that it will not sell Common Shares or set the conversion or exercise price of Common Share equivalents below a price of $4.05 per Common Share.

 

15.

[Reserved].

 

16.

Notices

 

Any notice, direction or other instrument required or permitted to be given to any party hereto shall be in writing and shall be sufficiently given if delivered personally, or transmitted by email to such party, as follows:

 

(a)

in the case of the Corporation:

 

Vision Marine Technologies Inc.
730 Boulevard du Curé-Boivin 

Boisbriand, Québec, J7G 2A7, Canada

 

Attention:	Kulwant Sandher, Chief Financial Officer
Email:	ks@v-mti.com

 

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

 

Dentons US LLP

1221 Avenue of the Americas

New York, NY 10020

 

Attention:	Rob Condon, Esq.
E-mail:	rob.condon@dentons.com

 

(b)

in the case of the Agent:

 

iA Capital Markets, a division of iA Private Wealth Inc.

26 Wellington Street East, Suite 700

Toronto, Ontario M5E 1S2, Canada

 

Attention:	Laura Cristello
E-mail:	ECMCanada@iacapitalmarkets.ca

 

 

and

 

Fasken Martineau DuMoulin LLP

800 Square-Victoria, Suite 3500

Montreal, Québec H4Z 1E9, Canada

 

Attention:	Sébastien Bellefleur, Partner
E-mail:	sbellefleur@fasken.com

 

A notice will, if personally delivered or sent by email before 4:00 p.m. (Montreal time at the place of delivery or receipt) on a Business Day, be deemed to be given and received on that day and will otherwise be deemed to be given and received on the next Business Day.

 

(c)

Any party hereto may change its address for service from time to time by notice given to each of the other parties hereto in accordance with the foregoing provisions.

 

17.

Miscellaneous

 

(a)

Governing Law: This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the province of Québec and the laws of Canada applicable therein. Any and all disputes arising under this Agreement, whether as to interpretation, performance or otherwise, shall be subject to the exclusive jurisdiction of the courts of the province of Québec and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of such province sitting in the City of Montréal.

 

(b)

Time of the Essence: Time shall be of the essence of this Agreement.

 

(c)

Survival: All representations, warranties, covenants, undertaking and indemnities set out in this Agreement or in any documents contemplated by, or delivered pursuant to, this Agreement or in connection with the purchase and sale of the Offered Units shall survive the purchase and sale of the Offered Units and the termination of this Agreement and shall continue in full force and effect for a period of three years following the Closing Date, regardless of any subsequent disposition of Offered Units or any investigation by or on behalf of the Agent with respect thereto.

 

(d)

Fiduciary Duty. The Corporation hereby acknowledges that (i) the transactions contemplated hereunder are arm’s-length commercial transactions between the Corporation, on the one hand, and the Agent and any affiliate through which it may be acting, on the other hand, (ii) the Agent is acting as agent but not as fiduciary of the Corporation and (iii) the Corporation’s engagement of the Agent in connection with the Offering and the process leading up to the Offering (irrespective of whether the Agent has advised or are currently advising the Corporation on related or other matters) is as agent and not in any other capacity. Furthermore, the Corporation agrees that it is solely responsible for making its own judgments in connection with the Offering. The Agent has not rendered advisory services beyond those, if any, required of an investment dealer by Securities Laws in respect of an offering of the nature contemplated by this Agreement and the Corporation agrees that it will not claim that the Agent have rendered advisory services beyond those, if any, required of an investment dealer by Securities Laws in respect of the Offering, or that the Agent owes a fiduciary or similar duty to the Corporation, in connection with such transaction or the process leading thereto.

 

(e)

Other Business: The Corporation acknowledges that the Agent and certain of its affiliates: (i) act as an investment fund manager and a trader of, and dealer in, securities both as principal and on behalf of their respective clients (including managed accounts and investment funds) and, as such, may have had, and may in the future have, long or short positions in the securities of the Corporation or related entities and, from time to time, may have executed or may execute transactions on behalf of such persons; (ii) may provide research or investment advice or portfolio management services to clients on investment matters, including the Corporation; (iii) may participate in securities transactions on a proprietary basis, including transactions in the Offered Units or other securities of the Corporation or related entities; and (iv) nothing herein shall restrict their ability to conduct business in the ordinary course and in compliance with applicable laws.

 

 

(f)

Press Releases: All press releases relating to the Offering or disclosing any material information (as defined by Securities Laws) to be issued by the Corporation during the period in which this Agreement is in effect shall be in a form mutually agreed upon by the Corporation and the Agent, each acting reasonably. The Agent confirms that the Corporation shall be entitled to disclose in its press releases in connection with the Offering the terms of this Agreement.

 

(g)

Amendment and Waiver: No amendment, discharge, modification, restatement, supplement, termination or waiver of this Agreement or any Section of this Agreement is binding unless it is in writing and executed by (or on behalf of) the party to be bound. No waiver of, failure to exercise, or delay in exercising, any Section of this Agreement constitutes a waiver of any other Section (whether or not similar) nor does any waiver constitute a continuing waiver unless otherwise expressly provided.

 

(h)

Further Assurances: Each party to this Agreement will, at that party’s own cost and expense, execute and deliver any further agreements and documents, take any further actions and provide any further assurances, undertakings and information as may be reasonably required by the requesting party to give effect to this Agreement.

 

(i)

Assignment and Enurement: Neither this Agreement nor any right or obligation under this Agreement may be assigned by any party without the prior written consent of the other parties. This Agreement enures to the benefit of and is binding upon the parties and their respective successors and permitted assigns.

 

(j)

Counterparts: This Agreement may be executed by any one or more of the parties to this Agreement by facsimile or other electronic communication or in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

 

(k)

Entire Agreement: This Agreement, together with any other agreements and other documents to be delivered under this Agreement, constitutes the entire agreement between the Corporation and the Agent in connection with the issue and sale of the Offered Units by the Corporation and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, including the Letter Agreement.

 

(l)

Severability: If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall be deemed not to affect or impair the validity of any other provision of this Agreement and such void or unenforceable provision shall be severed from this Agreement.

 

(m)

Language: The parties hereby acknowledge that they have expressly required this Agreement and all notices, statements of account and other documents required or permitted to be entered into pursuant hereto to be drawn up in the English language only. Les parties reconnaissent avoir expressément demandé que la présente Convention ainsi que tout avis, tout état de compte et tout autre document à être ou pouvant être conclu en vertu des dispositions des présentes, soient rédigés en langue anglaise seulement.

 

[Signature page follows.]

 

 

If this Agreement is in accordance with your understanding and is agreed to by you, please confirm your acceptance by signing this Agreement below and returning a signed copy to the Agent.

 

Yours truly,

 

IA CAPITAL MARKETS, A DIVISION OF IA PRIVATE WEALTH INC.
Per:	/s/ Pierre-Yves Terrisse
	Name: Pierre-Yves Terrisse Title: Managing Director, Investment Banking

 

The undersigned hereby accepts and agrees to the foregoing as of the 18th day of September, 2023.

 

	VISION MARINE TECHNOLOGIES INC.
	Per:	/s/ Kulwant Sandher
		Name: Kulwant Sandher Title: Chief Financial Officer

 

[Signature Page to the Agency Agreement]

 

 

 

SCHEDULE A

 

UNITED STATES OFFERS AND SALES

 

As used in this Schedule A and related exhibit, capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in this Agreement to which this Schedule “A” is annexed and to which it forms a part, and the following terms shall have the meanings indicated:

 

(a)

“Directed Selling Efforts” means “directed selling efforts” as that term is defined in Rule 902(c) of Regulation S; without limiting the foregoing, but for greater clarity in this Schedule, it means, subject to the exclusions from the definition of directed selling efforts contained in Regulation S, any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the Securities and includes the placement of any advertisement in a publication with a general circulation in the United States that refers to the offering of the Securities;

 

(b)

“Distribution Compliance Period” means the 40-day period that begins on the later of (i) the date the Securities are first offered to persons other than distributors in reliance on Regulation S or (ii) the Closing Date; provided that, all offers and sales by a distributor of an unsold allotment or subscription shall be deemed to be made during the Distribution Compliance Period;

 

(c)

“Foreign Private Issuer” means a “foreign private issuer” as that term is defined in Rule 405 of the U.S. Securities Act;

 

(d)

“Offshore Transaction” means an “offshore transaction” as defined in Rule 902(h) of Regulation S;

 

(e)

“Regulation S” means Regulation S promulgated by the SEC under the U.S. Securities Act;

 

(f)

“Securities” means the Units, and the Common Shares and Warrants comprising the Units;

 

(g)

“U.S. Investment Company Act” means the United States Investment Company Act of 1940; and

 

.

 

Representations, Warranties and Covenants of the Agent

 

The Agent acknowledges that the Securities have not been and will not be registered under the U.S. Securities Act or any applicable state securities laws, and may be offered and sold only in transactions exempt from or not subject to the registration requirements of the U.S. Securities Act and state securities laws. Accordingly, the Agent represents, warrants and covenants to the Corporation, as at the date hereof and as at the Closing Date, that:

 

1.

It has not offered or sold, and will not offer or sell any Securities to, or for the account or benefit of, any persons in the United States or any U.S. Persons. Accordingly, none of the Agent, any Selling Group Member appointed by it, or any persons acting on any of their behalf (i) has made or will make any offer to sell or any solicitation of an offer to buy, any Securities to, or for the account or benefit of, any person in the United States or any U.S. Person, (ii) has made or will make any sale of Securities to any Purchaser unless, at the time the buy order was or will have been originated, the Purchaser was outside the United States and not a U.S. Person, or the Agent, Selling Group Member or person acting on any of their behalf reasonably believed that such Purchaser was outside the United States and not a U.S. Person, or (iii) has engaged in or will engage in any Directed Selling Efforts in respect of the Securities. In connection with offers and sales of Securities outside the United States to a non-U.S. Person, the Agent, the Selling Group Member or any person acting on any of their behalf, have complied and will comply with the requirements for an Offshore Transaction in respect of such Securities.

 

2.

It agrees that, at or prior to confirmation of the sale of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the Distribution Compliance Period a confirmation or notice to substantially the following effect:

 

“The securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be offered or sold to, or for the account or benefit of, persons in the United States or U.S. Persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and closing date, except in either case in accordance with Regulation S under the U.S. Securities Act. Terms used herein have the meanings given to them in Regulation S under the U.S. Securities Act.”

 

 

In addition, prior to the expiration of the Distribution Compliance Period, all subsequent offers and sales of the Securities by the Agent or its affiliates shall be made only in accordance with the provisions of Rule 903 or 904 of Regulation S; pursuant to a registration of the Securities under the U.S. Securities Act; or pursuant to an available exemption from the registration requirements of the U.S. Securities Act.

 

The Agent agrees to obtain substantially identical undertakings from each member of any Selling Group formed in connection with the offer and sale of the Securities contemplated hereby and to comply with the offering restriction requirements of Regulation S.

 

3.

The Securities have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and may not be offered or sold except pursuant to an exclusion or exemption from the registration requirements of the U.S. Securities Act and any applicable U.S. state securities laws. It has offered and sold and will offer and sell the Securities only outside the United States in Offshore Transactions in accordance with Rule 903 of Regulation S.

 

4.

It acknowledges that it will not offer or sell the Securities, to, or for the account or benefit of, persons in the United States or U.S. Persons: (i) as part of its distribution at any time or (ii) otherwise during the Distribution Compliance Period. It further acknowledges, agrees and covenants that all offers and sales of the Securities during the Distribution Compliance Period will be made in compliance with Regulation S or in compliance with an exemption from registration thereunder, and that it, each “distributor” (as defined in Regulation S), “dealer” (as defined in Section 2(a)(12) of the U.S. Securities Act), or other person who is receiving a selling concession, fee or other remuneration in respect of the Securities (if any), to which it sells Securities during the Distribution Compliance Period, will send to the purchaser a confirmation or other notice setting forth the restrictions on offers and sales of the Securities to, or for the account or benefit of, persons in the United States or U.S. Persons.

 

5.

None of it, any of its affiliates or any person acting on any of their behalf has taken or will take, directly or indirectly, any action in violation of Regulation M under the U.S. Exchange Act in connection with the offer and sale of the Securities.

 

6.

It acknowledges that until 40 days after the commencement of the Offering, an offer or sale of the Securities within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an exemption from the registration requirements of the U.S. Securities Act.

 

Representations, Warranties and Covenants of the Corporation

 

The Corporation represents, warrants, covenants and agrees, to and with the Agent, as at the date hereof and as at the Closing Date, that:

 

1.

The Corporation is, and on the Closing Date will be a Foreign Private Issuer.

 

2.

The Corporation is not, and as a result of the sale of the Securities contemplated hereby and the application of the proceeds thereof will not be, an “investment company” as such term is defined in the U.S. Investment Company Act, registered or required to be registered under such Act.

 

3.

Neither the Corporation nor any of its affiliates, nor any person acting on any of their behalf (other than Agent, any Selling Group Member and any person acting on any of their behalf, as to whom no representation, warranty, covenant or agreement is made), has made or will make: (A) any offer to sell, or any solicitation of an offer to buy, any Securities to or, for the account or benefit of, a person in the United States or a U.S. Person; or (B) any sale of Securities unless, at the time the buy order was or will have been originated, the Purchaser is (i) outside the United States and not a U.S. Person, or (ii) the Corporation, its affiliates or any person acting on any of their behalf (other than the Agent, any Selling Group Member and any person acting on any of their behalf, as to whom no representation, warranty, covenant or agreement is made) reasonably believe that the Purchaser is outside the United States and not a U.S. Person.

 

 

4.

None of the Corporation, any of its affiliates, or any person acting on any of their behalf (other than the Agent, any Selling Group Member and any person acting on any of their behalf, as to whom no representation, warranty, covenant or agreement is made) has engaged or will engage in any Directed Selling Efforts in respect of the Securities, or has taken or will take any action that would cause the exclusion from registration afforded by Rule 903 of Regulation S to be unavailable for offers and sales of the Securities outside the United States to non-U.S. Persons in accordance with this Agreement, including this Schedule A.

 

5.

In connection with offers and sales of Securities outside the United States to non-U.S. Persons, the Corporation, its affiliates, and any person acting on any of their behalf (other than the Agent, any Selling Group Member and any person acting on any of their behalf, as to whom no representation, warranty, covenant or agreement is made) have complied and will comply with the requirements for an Offshore Transaction in respect of such Securities.

 

6.

None of the Corporation, its affiliates, or any person acting on any of their behalf (other than the Agent, any Selling Group Member and any person acting on any of their behalf, as to whom no representation, warranty or covenant is made) has engaged in or will engage in any action which would constitute a violation of Regulation M under the U.S. Exchange Act in connection with the offer and sale of the Securities.

 

7.

During the period beginning 30 days before the commencement of the Offering and ending 30 days after the Closing Date, the Corporation has not offered or sold and will not offer or sell any securities in a manner that would be integrated with the offer and sale of the Securities and would cause the exclusion from registration set forth in Rule 903 of Regulation S to become unavailable with respect to the offer and sale of the Securities.

 

 

SCHEDULE B

 

SUBSIDIARIES

 

Subsidiary Name		Jurisdiction of Incorporation				Outstanding Shares				Ownership Interest
7858078 Canada Inc.			Canada				300				100	%
EB Rental Ltd.			Delaware				100				100	%
EB Rental Ventura Corp.			Delaware				100				100	%
EB Rental FL Corp.			Delaware				100				100	%
Vision Marine Technologies Corp.			Delaware				100				100	%

 

 

Exhibit 99.5

 

Vision Marine Announces Pricing of $1.5 Million Private Placement

 

MONTREAL, Sept. 18, 2023 (GLOBE NEWSWIRE) – Vision Marine Technologies Inc. (NASDAQ: VMAR) (“Vision Marine” or the “Company”), a global leader and innovator within the performance electric recreational boating industry, today announced that it has entered into subscription agreements with investors to purchase an aggregate of 372,870 units, at a purchase price of $4.05 per unit. The gross proceeds to the Company from the private placement are expected to be approximately $1.5 million before deducting the placement agent's fees and other estimated offering expenses.

 

Each of the units issued pursuant to the private placement is comprised of one common share and one common share purchase warrant. Each full warrant will be exercisable six months from the date of issuance and entitle its holder to acquire one additional common share at a price of $4.05 per common share, subject to adjustments as set forth therein, and will expire three years from the date of issuance.

 

The closing of the private placement is expected to occur on or about September 20, 2023, subject to the satisfaction of certain customary closing conditions set forth in the subscription agreements and the agency agreement entered into with iA Capital Markets, a division of iA Private Wealth Inc., the exclusive placement agent for the offering.

 

The securities were offered in a private placement under the Securities Act of 1933, as amended (the "Act"), and Regulation S promulgated thereunder and have not been registered under the Act, or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws. Pursuant to a registration rights agreement with the investors, the Company has agreed to file one or more registration statements with the Securities and Exchange Commission (the “SEC”) covering the resale of the shares of common stock and the shares issuable upon exercise of the warrants.

 

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

 

About Vision Marine Technologies Inc.

 

Vision Marine Technologies Inc. (Nasdaq: VMAR), strives to be a guiding force for change and an ongoing driving factor in fighting the problems associated with waterway pollution by disrupting the traditional boating industry with electric power, in turn directly contributing to zero pollution, zero emission and a noiseless environment. Our Flagship E-Motion™ 180E electric marine powertrain is the first fully electric purpose-built outboard powertrain system that combines an advanced battery pack, inverter, and high efficiency motor with proprietary union assembly between the transmission and the electric motor design utilizing extensive control software. Our E-Motion™ and related technologies used in this powertrain system are uniquely designed to improve the efficiency of the outboard powertrain and, as a result, enhance both range and performance. Vision Marine continues to design, innovate, manufacture, and sell handcrafted, environmentally friendly, electric recreational boats to customers. The design and technology applied to our boats results in far greater enhanced performance in general, higher speeds, and longer range. Simply stated, a smoother ride than a traditional internal combustion engine (ICE) motorboat.

 

 

Forward-Looking Statements

 

Certain statements made in this press release are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. For example, when Vision Marine discusses the expected closing of the private placement; anticipated use of proceeds; and the Company's ability to obtain the requisite approvals and confirmations noted herein, it is using forward-looking statements. These forward-looking statements reflect the current analysis of existing information and are subject to various risks and uncertainties. As a result, actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory and other factors, many of which are outside of Vision Marine’s control. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Vision Marine’s Annual Report on Form 20-F, filed with the U.S. Securities and Exchange Commission (SEC) for the year ended August 31, 2022, as such factors may be updated from time to time in Vision Marine’s periodic filings with the SEC. Any forward-looking statement in this press release speaks only as of the date of this release. Vision Marine undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

 

https://visionmarinetechnologies.com.

 

Investor and Company Contact:

 

Bruce Nurse

Vision Marine Technologies Inc.

303-919-2913

bn@v-mti.com

www.visionmarinetechnologies.com

 

 

---