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 February 2024

 

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) ¨

 

 

 

INCORPORATION BY REFERENCE

 

This Current Report on Form 6-K, including the Exhibits hereto, shall be deemed to be incorporated by reference into the Company’s registration statements on Forms F-3 (File Nos. 333-267893 and 333-274882) and the Company’s registration statement on Form S-8 (File No. 333- 264089) and to be a part thereof from the date on which this s Current Report on Form 6-K is filed, and in each instance the related prospectus, as such registration statements and prospectuses may be amended or supplemented from time to time, and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Entry into a Material Definitive Agreement.

 

On January 17, 2024, Vision Marine Technologies Inc., a Quebec corporation (the “Company”), completed a closed a capital raise in which it grossed US$3,000,000 in proceeds. Pursuant to the capital raise, the Company entered into a subscription agreement and agency agreement (the “Placement Agency Agreement”) and issued shares of preferred stock and warrants, each of which is described in greater detail below.

 

Subscription Agreement

 

On December 13, 2023, the Company entered into a subscription agreement (the “Subscription Agreement”) with Investissement Québec on its own behalf and as agent of the Government of Quebec, Canada (the “Purchaser”), for the offering (the “Offering”) of (i) shares of the Company’s series B convertible preferred stock, no par value (the “Series B Preferred Stock”) at a price of one thousand dollars ($1,000.00) per share and (ii) warrants to purchase shares of the Company’s common shares (the “Warrants”), with an exercise price equal to $1.05, subject to adjustment therein, and which expire on the five (5)-year anniversary of the issue date.

 

The Subscription Agreement contains customary representations, warranties and agreements by the Company and the other party thereto, customary conditions to closing, indemnification obligations of the parties, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”) and other obligations of the parties.

 

The Company completed the Subscription Agreement whereby it issued 3,000 Shares of Series B Preferred Stock and 2,857,142 Warrants in exchange for US$3,000,000 of gross proceeds.

 

Registration Rights Agreement

 

On January 17, 2024, in connection with the Purchase Agreement, the Company and the Purchaser entered into a registration rights agreement (the “Rights Agreement”) pursuant to which the Company agreed to, within fifteen (15) calendar days of January 17, 2024, the date of execution of the Subscription Agreement, use its best efforts to have a registration statement or registration statements (as is necessary) covering the resale of all common shares of the Company underlying the Series B Preferred Stock and Warrants (the “Registration Deadline”) declared effective by the United States Securities and Exchange Commission (“SEC”). The Registration Deadline is subject to the registration of the common shares of the Company underlying the Company’s series A convertible preferred stock, no par value (the “Series A Preferred Stock”) the details of which was was disclosed on the Current Report on Form 6-K/A filed with the SEC on December 25, 202. The Right Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties.

 

Warrants

 

The Warrants are exercisable at $1.05 per share. The exercise price of the warrants may be adjusted in the event of, among other matters, stock splits, stock dividends and issuances of equity at a per common share price (or deemed price). If all of the Warrants are exercised at the current exercise price, we will receive an additional $3,000,000 in gross proceeds.

 

 

Material Modification to Rights of Security Holders

 

On January 15, 2024, the Company amended the certificate of incorporation of the Company (the “Certificate of Incorporation”) by filing as Schedule A-2024 to the Certificate of Incorporation as a modification of the Certificate of Incorporation of the Company (“Modification to Certificate”) with the Enterprise Registrar of the Province of Québec, which established the Series B Preferred Stock, having such designations, rights and preferences as set forth in Schedule A-2024, as determined by the Company’s Board of Directors in its sole discretion, in accordance with the Company’s Certificate of Incorporation and bylaws.

 

The shares of Series B Preferred Stock rank senior to the Common Stock but retain no voting rights.

 

The shares of Series B Preferred Stock have a stated value of $1,000 per share (the “Series B Stated Value”) and are convertible into shares of the Company’s common shares, no par value (the “Common Shares”) at the election of the holder of the Series B Preferred Stock at any time at a price of $1.05 per share, subject to adjustment (the “Set Price”). The Series B Preferred Stock is convertible at the election of a holder into that number of Common Shares determined by dividing the Series B Stated Value (plus any and all other amounts which may be owing in connection therewith) by the Set Price, subject to certain beneficial ownership limitations which prohibit any holder from converting into an amount of Common Shares that would cause such holder to beneficially own more than 4.99% of the then outstanding Common Shares). On the one-year anniversary of the original issuance date, the Series B Preferred Stock will automatically convert into Common Shares at the lesser of: (y) the then Set Price and (z) 80% of the average volume-weighted average price of our Common Shares during the five trading days ending on, and including, such date. In no event shall the conversion price for the Series B Preferred Stock be less than $0.30, subject to adjustment herein.

 

The foregoing descriptions of the Modification to Certificate and the Series B Preferred Stock designations do not purport to be complete and are subject to, and qualified in their entirety by, the Modification to Certificate, a copy of which is attached as an exhibit to this Current Report on Form 6-K and incorporated herein by reference.

 

The foregoing descriptions of the Subscription Agreement, the Agency Agreement, the Warrants, the Certificate of Modification, and the Rights Agreement, are qualified in their entirety by reference to the full text of such Subscription Agreement, Warrants, Agency Agreement, Certificate of Modification, and Rights Agreement.

 

This Form 6-K contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express the Company’s intentions, beliefs, expectations, strategies, predictions, or any other statements related to the Company’s future activities, or future events or conditions. These statements are based on current expectations, estimates and projections about the Company’s business based, in part, on assumptions made by its management. These statements are not guarantees of future performances and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in documents that the Company files from time to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 6-K, except as required not by law.

 

Unregistered Sales of Equity Securities.

 

The Securities and the shares of Common Stock underlying the Securities are not registered under the Securities Act, but they qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration under Section 4(a)(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered. The Company did not undertake an offering in which it sold a high number of securities to a high number of investors. In addition, the Purchaser had the necessary investment intent as required by Section 4(a)(2) of the Securities Act since the Purchaser agreed to, and received, the securities bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, the Company has met the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act.

 

 

Exhibit  No.		Exhibit
99.1		Certificate of Modification of the Series B Convertible Preferred Stock, dated January 15, 2024
99.2		Form of Warrant, dated as of January 17, 2024, by and among the Company and the Purchaser
99.3		Form of Subscription Agreement, dated as of January 17, 2024, by and among the Company and the Purchaser
99.4		Form of Registration Rights Agreement, dated as of January 17, 2024, by and among the Company and the Purchaser
99.5		Form of Agency Agreement

 

 

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: February 8, 2024	By:	/s/ Kulwant Sandher
	Name:	Kulwant Sandher
	Title:	Chief Financial Officer

 

 

Exhibit 99.1

 

 

Le 15 janvier 2024 

 

Technologies Marine Vision Inc.

Valerie Truchon

3900-l, Place Ville Marie

Montreal (Quebec)

H3B 4M7

 

Numero d'entreprise du Quebec (NEQ): 1168491927

Numero de reference de la demande: 020200108972900

 

Norn de l'entreprise: Technologies Marine Vision Inc.

 

Objet : Envoi des statuts et du certificat de modification

 

Yous trouverez ci-joints les statuts et le certificat de modification que nous avons deposes au registre des entreprises le 15 janvier 2024 pour la societe par actions Technologies Marine Vision Inc., dont le numero d'entreprise du Quebec (NEQ) est le 1168491927.

 

Notez que vous devez produire chaque annee, durant la periode determinee par reglement, une declaration de mise a jour annuelle. De plus, s'il survient un changement concemant la societe, vous devez mettre a jour les renseignements declares au registre en produisant, dans les 30 jours suivant la date de ce changement, une declaration de mise a jour courante ou annuelle, selon le cas. Si vous avez modifie le nom constitutif de la societe et que ce nom etait lie a un ou plusieurs etablissements, vous devez egalement modifier les renseignements relatifs a cet ou ces etablissements.

 

Yous pouvez utiliser les services en ligne a partir de l'espace securise Mon bureau, disponibles a Quebec.ca. En vous authentifiant a l'aide du code clicSEQUR express ou clicSEQUR - Entreprises, vous pouvez produire des declarations en ligne, effectuer des paiements, suivre le traitement de vos demandes et recevoir les messages que le Registraire transmet a l'entreprise. Un code d'acces clicSEQUR express lui a deja ete attribue et expedie. Si vous l'avez egare ou si vous ne l'avez jamais re9u, vous devez cliquer sur l'hyperlien Code d'acces perdu ou oublie. Si vous souhaitez obtenir un code d'utilisateur clicSEQUR - Entreprises, vous devez inscrire l'entreprise a ce service. Pour plus d'information, vous pouvez consulter www.clicsequr.entreprises.gouv.qc.ca.

 

Par ailleurs, vous devez verifier la legalite et l'exactitude du contenu du certificat que nous vous transmettons, ainsi que les renseignements publies au registre.

 

... verso

 

Registraire des entreprises
Services Quebec
C. P. 1153, succ. Terminus
Quebec (Quebec) G1K 7C3	REQ-4213 (2023-06)

 

 

2

 

Si vous desirez obtenir des renseignements supplementaires, nous vous invitons a consulter Quebec.ca. Vous pouvez aussi communiquer avec Services Quebec au 418 644-0075 si vous habitez la region de Quebec, au 1 800 644-0075 (sans frais) si vous habitez ailleurs au Canada ou aux Etats-Unis, ou au 1 418 644-0075 (des frais s'appliquent) si vous habitez ailleurs dans le monde. Notez que le personnel de Services Quebec peut donner des explications, mais devra s'en tenir a!'information qui figure dans cette communication. Si vous etes un intermediaire autorise par le Registraire des entreprises a transmettre electroniquement des documents pour le compte d'un tiers, nous vous invitons a communiquer avec nous en utilisant les coordonnees que vous trouverez dans la Docutheque.

 

Nous vous remercions de votre collaboration et de votre apport visant a maintenir la qualite de l'information presentee au registre des entreprises.

 

Nous vous prions de recevoir nos salutations distinguees.

 

	Maude Laflamme

 

p. j. Documents

 

REQ-4213 (2023-06)

 

 

REZ-128 (2017-08)

 

Certificat de modification

 

Loi sur les societes par actions (RLRQ, chapitre S-31.1)

 

J'atteste que la societe par actions

 

Technologies Marine Vision Inc.

 

et sa version

 

Vision Marine Technologies Inc.

 

a modifie ses statuts en vertu de la Loi sur les societes par actions pour y integrer les modifications mentionnees dans les statuts de modification ci-joints.

 

Le 15 janvier 2024

 

 

Services Quebec

 

 

REZ-909 (2017-04) Page 1 de 1

 

 

Statuts de modification

 

Numero d'entreprise                        

du Quebec (NEQ):      1168491927

 

Loi sur les societes par actions, RLRQ, chapitre S-31.1

 

1	Identification de la societe Nom de la societe par actions

 

Technologies Marine Vision Inc.

 

Version(s) du norn de la societe dans une autre langue que le frangais, s'il y a lieu

 

Vision Marine Technologies Inc.

 

2	Modification des statuts

 

2.1

Modification relative au nom

 

Norn de la societe par actions

 

2.2

Autres modifications

 

Refer to Schedule A-2024 attached hereto.

 

2.3

Date et heure a attribuer au certificat, s'il y a lieu

 

Date          Heure

 

3	Correction des statuts

 

4

Signature

 

Norn de l'adrninistrateur ou du dirigeant autorise

 

Kulwant Sandher

 

Signature electronique de

 

Kulwant Sandher

 

Reserve a !'administration

 

Nurnero de reference de la dernande : 020200108972900

Designation nurnerique :

 

Services Quebec

 

 

SCHEDULE A-2024

VISION MARINE TECHNOLOGIES INC.

TERMS OF THE

SERIES B CONVERTIBLE PREFERRED SHARES

 

Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

"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 of the Securities Act.

 

"Agency Agreement" means the Agency Agreement, dated as of January 15 , 2024, by and between the Corporation and iA Capital Markets, a division of iA Private Wealth Inc., as amended, modified or supplemented from time to time in accordance with its terms.

 

"Alternate Consideration" shall have the meaning set forth in Section 7(e).

 

"Attribution Parties" shall have the meaning set forth in Section 6(d).

 

"Bankruptcy Event" means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Corporation or any Significant Subsidiary thereof; (b) there is commenced against the Corporation or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Corporation or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment; (e) the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors; (f) the Corporation or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

"Base Set Price" shall have the meaning set forth in Section 7(b).

 

"Business Day" means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

 

"Buy-In" shall have the meaning set forth in Section 6(c)(iv).

 

"Change of Control Transaction" means the occurrence after the date hereof of any of: (a) an acquisition after the date hereof by an individual or legal entity or "group" (as described in Rule 13d-5(b)(l) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital shares of the Corporation, by contract or otherwise) of in excess of 50% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Shares and the other Securities); (b) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the shareholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the Corporation or the successor entity of such transaction; (c) the Corporation sells or transfers all or substantially all of its assets to another Person and the shareholders of the Corporation immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction; (d) a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the Original Issue Date); or (e) the execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

"Closing" means the closing of the purchase and sale of the Securities pursuant to the terms of the Subscription Agreement.

 

"Closing Date" means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto and all conditions precedent to (i) each purchaser's obligations to pay the purchase price under the Subscription Agreement, and (ii) the Corporation's obligations to deliver the Securities have been satisfied or waived.

 

"Commission" means the United States Securities and Exchange Commission.

 

"Common Shares" means the Corporation's common shares, no par value, and shares of any other class of securities into which such securities may hereafter be reclassified or changed.

 

"Common Share Equivalents" means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred shares, rights, options, warrants 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.

 

"Conversion Date" shall have the meaning set forth in Section 6(a).

 

 

"Conversion Price" shall have the meaning set forth in Section 6(b).

 

"Conversion Shares" means, collectively, the Common Shares issuable upon conversion of the Preferred Shares in accordance with the terms hereof.

 

"Dilutive Issuance" shall have the meaning set forth in Section 7(b).

 

"Dilutive Issuance Notice" shall have the meaning set forth in Section 7(b).

 

"Distribution" shall have the meaning set forth in Section 7(d).

 

"Equity Conditions" means, during the period in question: (a) the Corporation shall have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested or required, if any; (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable Holder in respect of the Preferred Shares; (c) (i) there is an effective registration statement pursuant to which either: (A) the Corporation may issue Conversion Shares; or (B) the Holders are permitted to utilize the prospectus thereunder to resell all of the Common Shares issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future); or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders; or (iii) all of the Conversion Shares may be issued to the Holder pursuant to Section 3(a)(9) of the Securities Act and immediately resold without restriction; (d) the Common Shares are trading on a Trading Market and all of the Common Shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common Shares on a Trading Market will continue uninterrupted for the foreseeable future); (e) there is a sufficient number of authorized, but unissued and otherwise unreserved, Common Shares for the issuance of all of the shares then issuable pursuant to the Transaction Documents; (f) the issuance of the Common Shares in question to the applicable Holder would not violate the limitations set forth in Section 6(d) herein; (g) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated; (h) the applicable Holder is not in possession of any information provided by the Corporation, any of its Subsidiaries, or any of their officers, directors, employees, agents or Affiliates, that constitutes, or may constitute, material non-public information.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

 

"Exempt Issuance" means the issuance of: (a) Common Shares or options to employees, officers or directors of the Corporation pursuant to any shares or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Corporation; (b) securities upon the exercise or exchange of or conversion of any securities issued pursuant to the Transaction Documents and/or other securities exercisable or exchangeable for or convertible into Common Shares issued and outstanding on the date of the Subscription Agreement, provided that such securities have not been amended since the date of the Subscription Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of any such securities (other than in connection with shares splits or combinations); and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an asset in a business synergistic with the business of the Corporation and shall provide to the Corporation additional benefits in addition to the investment of funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities and (d) securities issued to a Canadian sovereign entity in connection with a capital raise; and (e) securities issued to third-party service providers, provided that such issuances shall not exceed 60,000 Common Shares in the aggregate in any calendar month and provided, further, that such securities are issued as "restricted securities" (as defmed in Rule 144).

 

"Forced Conversion Amount" means the sum of (a) 100% of the aggregate Stated Value then outstanding and (b) all fees, liquidated damages and other amounts due in respect of the Preferred Shares.

 

"Forced Conversion Date" shall have the meaning set forth in Section 8.

 

"Forced Conversion Notice" shall have the meaning set forth in Section 8.

 

"Forced Conversion Notice Date" shall have the meaning set forth in Section 8.

 

"Fundamental Transaction" shall have the meaning set forth in Section 7(e).

 

"Holder" shall have the meaning given such term in Section 2.

 

"IFRS" means International Financial Reporting Standards.

 

"Junior Securities" means the Common Shares and all other Common Share Equivalents of the Corporation other than those securities which are explicitly senior or pari passu to the Preferred Shares in dividend rights or liquidation preference.

 

"Liquidation" shall have the meaning set forth in Section 5.

 

"Notice of Conversion" shall have the meaning set forth in Section 6(a).

 

 

"Original Issue Date" means the date of the first issuance of the Preferred Shares regardless of the number of transfers of any particular Preferred Shares and regardless of the number of certificates which may be issued to evidence such Preferred Shares.

 

"Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint Shares company, government (or an agency or subdivision thereof) or other entity of any kind.

 

"Preferred Shares" shall have the meaning set forth in Section 2.

 

"Purchase Right" shall have the meaning set forth in Section 7(c).

 

"Securities" means the Preferred Shares, the Warrants and the Underlying Shares.

 

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

"Set Price" shall have the meaning set forth in Section 6(b).

 

"Share Delivery Date" shall have the meaning set forth in Section 6(c).

 

"Stated Value" shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.

 

"Subscription Agreement" means the Contrat de Souscription (Actions Privilegiees et Bons de Souscription), dated as of January 16, 2024, by and between the Corporation and each purchaser identified on the signature pages thereto, as amended, modified or supplemented from time to time in accordance with its terms.

 

"Subsidiary" means any active material subsidiary of the Corporation and shall, where applicable, also include any direct or indirect active material subsidiary of the Corporation formed or acquired after the date of the Subscription Agreement.

 

"Successor Entity" shall have the meaning set forth in Section 7(e).

 

"Trading Day" means a day on which the principal Trading Market is open for business.

 

"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 MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTC Bulletin Board, OTCQB or OTCQX (or any successors to any of the foregoing).

 

"Transaction Documents" means this Schedule A-2024, the Subscription Agreement, the Agency Agreement, the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated pursuant to the Subscription Agreement.

 

 

"Transfer Agent" means VStock Transfer, 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.

 

"Underlying Shares" means the Common Shares issued and issuable upon conversion of the Preferred Shares and upon exercise of the Warrants.

 

"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 L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if 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 in the "Pink Sheets" published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Shares 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 Preferred Shares then outstanding and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation.

 

"Warrants" means, collectively, the Common Share Purchase Warrant delivered to the Holder at the Closing in accordance with the terms of the Subscription Agreement.

 

"Warrant Shares" means the Common Shares issuable upon exercise of the Warrants.

 

Section 2. Designation, Amount and Par Value. The series of preferred shares shall be designated as its Series B Convertible Preferred Shares (the "Preferred Shares") and the number of shares so designated shall be up to 3,000 (which shall not be subject to increase without the written consent of all of the holders of the Preferred Shares (each, a "Holder" and collectively, the "Holders")). Each Preferred Share shall have no par value and a stated value equal to $1,000, subject to increase set forth in Section 3 below (the "Stated Value").

 

Section 3. Dividends.

 

a) Dividends. The holders of the outstanding Preferred Shares shall not be entitled to receive any dividends.

 

 

b) Other Securities. So long as any Preferred Shares shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise acquire, directly or indirectly, any Junior Securities. So long as any Preferred Shares shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend or make any distribution upon (other than a dividend or distribution described in Section 6 or dividends due and paid in the ordinary course on Preferred Shares of the Corporation at such times when the Corporation is in compliance with its payment and other obligations hereunder), nor shall any distribution be made in respect of, any Junior Securities as long as any dividends due on the Preferred Shares remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Junior Securities or shares pari passu with the Preferred Shares.

 

Section 4. Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Shares shall have no voting rights. However, as long as any Preferred Shares are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding Preferred Shares voting separately as a single class with one vote per Preferred Share, in person or by proxy, either in writing without a meeting or at a meeting of such Holders: (a) alter or change adversely the powers, preferences or rights given to the Preferred Shares or alter or amend this Schedule A-2024; (b) authorize or create any class of shares ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Preferred Shares; (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders; (d) increase the number of authorized Preferred Shares; or (e) enter into any agreement with respect to any of the foregoing.

 

Section 5. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a "Liquidation"), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Schedule A-2024, for each Preferred Share before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

 

 

Section 6. Conversion.

 

a) Conversions at Option of Holder. Each Preferred Share shall be convertible, at any time and from time to time from and after the Original Issue Date, at the option of the Holder thereof, into that number of Common Shares (subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such Preferred Shares by the Conversion Price. Holders shall effect conversions by providing the Corporation or its agent appointed to administer conversion of the Preferred Shares with the form of conversion notice attached hereto as Annex A (a "Notice of Conversion"). Each Notice of Conversion shall specify the number of Preferred Shares to be converted and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Notice of Conversion is delivered to the Corporation or its agent appointed to administer conversion of the Preferred Shares (such date, the "Conversion Date"). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. Upon delivery of the Notice of Conversion by a Holder, such Holder shall be deemed for all corporate purposes to have become the holder of record of the Conversion Shares with respect to which the Preferred Shares have been converted, irrespective of the date such Conversion Shares are credited to the Holder's Depository Trust Company account or the date of delivery of the certificates evidencing such Conversion Shares, as the case may be. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. Further, the calculations made by the Corporation or its agent appointed to administer conversion of the Preferred Shares concerning information required in a Notice of Conversion in the form attached hereto as Annex A that is not actually provided in a Notice of Conversion, shall control in the absence of manifest or mathematical error. To effect conversions of Preferred Shares, a Holder shall not be required to surrender the certificate(s) representing the Preferred Shares to the Corporation unless all of the Preferred Shares represented thereby are so converted, in which case such Holder shall deliver the certificate representing such Preferred Shares promptly following the Conversion Date at issue. Preferred Shares converted into Common Shares or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.

 

b)

Conversion Price. The conversion price for the Preferred Shares shall be equal to $1.05, subject to adjustment herein (the "Set Price" or the "Conversion Price"); provided, however, the Conversion Price in connection with a forced conversion pursuant to Section 8 shall be the lesser of: (y) the then Set Price; and (z) 80% of the average VWAP during the five Trading Days ending on, and including, the Forced Conversion Date). Further, in no event shall the Conversion Price be less than $0.30, subject to adjustment herein (the "Floor Price").

 

c)

Mechanics of Conversion

 

i. Delivery of Conversion Shares Upon Conversion. Within the earlier of(i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following each Conversion Date (the "Share Delivery Date"), the Corporation shall deliver, or cause to be delivered, to the converting Holder the number of Conversion Shares being acquired upon the conversion of the Preferred Shares, which Conversion Shares, if applicable, shall be free of restrictive legends and trading restrictions. For purposes hereof, "Standard Settlement Period" means the standard settlement period, expressed in a number of Trading Days, on the Corporation's primary Trading Market with respect to the Common Shares as in effect on the date of delivery of the Notice of Exercise.

 

 

ii. Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall promptly return to the Holder any original Preferred Share certificate delivered to the Corporation (if applicable) and the Holder shall promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Notice of Conversion.

 

iii. Obligation Absolute; Partial Liquidated Damages. The Corporation's obligation to issue and deliver the Conversion Shares upon conversion of Preferred Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation oflaw by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Shares, the Corporation may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Preferred Shares of such Holder shall have been sought and obtained, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of the Preferred Shares which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails to deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) by the Share Delivery Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Preferred Shares being converted, $50 per Trading Day (increasing to $100 per Trading Day on the fifth Trading Day and increasing to $200 per Trading Day on the tenth Trading Day after such damages begin to accrue) for each Trading Day after the Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder's right to pursue actual damages for the Corporation's failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

 

iv. Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the Share Delivery Date pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm 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 such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a "Buy-In"), then the Corporation shall: (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such Holder's total purchase price (including any brokerage commissions) for the Common Shares so purchased exceeds (y) the product of (1) the aggregate number of Common Shares that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions): and (B) at the option of such Holder, either reissue (if surrendered) the Preferred Shares equal to the number of Preferred Shares submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such Holder the number of Common Shares that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6(c)(i). For example, if a Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Preferred Shares with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and, upon request of the Corporation, 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 Corporation's failure to timely deliver the Conversion Shares upon conversion of the Preferred Shares as required pursuant to the terms hereof.

 

v. Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued Common Shares for the sole purpose of issuance upon conversion of the Preferred Shares, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Shares), not less than such aggregate number of the Common Shares as shall (subject to the terms and conditions set forth in the Subscription Agreement) be issuable at the Floor Price (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding Preferred Shares. The Corporation covenants that all Common Shares that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

 

vi. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Shares. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation 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 then Conversion Price or round up to the next whole share.

 

vii. Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of the Preferred Shares shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such Preferred Shares and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

 

Section 7. Certain Adjustments.

 

a) Share Dividends and Share Splits. If the Corporation, at any time while Preferred Shares are outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions payable in Common Shares on the Common Shares or any other Common Share Equivalents; (ii) subdivides outstanding Common Shares into a larger number of shares; (iii) combines (including by way of a reverse share split) outstanding Common Shares into a smaller number of shares; or (iv) issues, in the event of a reclassification of its Common Shares, any shares of the Corporation, then the Set Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of Common Shares outstanding immediately after such event. Any adjustment made pursuant to this Section 7(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. If at any time and from time to time when the Preferred Shares are outstanding there occurs any share split, share dividend, share combination recapitalization or other similar transaction involving the Common Shares (each, a "Share Combination Event", and such date thereof, the "Share Combination Event Date") and the Event Market Price is less than the Conversion Price then in effect (after giving effect to the adjustment in this Section 7(a)), then on the sixth (6th) Trading Day immediately following such Share Combination Event Date, the Conversion Price then in effect on such sixth (6th) Trading Day (after giving effect to the adjustment in this Section 7(a)) shall be reduced (but in no event increased) to the greater of the (i) Event Market Price and (ii) Floor Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made. For purposes hereof, the "Event Market Price" means, with respect to any Share Combination Event Date, the quotient determined by dividing (x) the sum of the VWAP of the Common Shares for each of the five (5) Trading Days ending and including the Trading Day immediately preceding the sixth (6th) Trading Day after such Share Combination Event Date, divided by (y) five (5).

 

 

b) Subsequent Equity Sales. If, at any time while the Preferred Shares are outstanding, the Corporation or any Subsidiary, as applicable sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Shares or Common Share Equivalents entitling any Person to acquire Common Shares at an effective price per share that is lower than the then Set Price (such lower price, the "Base Set Price" and such issuances, collectively, a "Dilutive Issuance") (if the holder of the Common Shares or Common Share Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive Common Shares at an effective price per share that is lower than the Set Price, such issuance shall be deemed to have occurred for less than the Set Price on such date of the Dilutive Issuance), then the Set Price shall be reduced to equal the greater of the (i) Base Set Price and (ii) Floor Price. Such adjustment shall be made whenever a Dilutive Issuance occurs. Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance. The Corporation shall notify the Holders in writing, no later than the Trading Day following a Dilutive Issuance indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the "Dilutive Issuance Notice"). For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Set Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Set Price in the Notice of Conversion.

 

c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues or sells any Common Share Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of shares of Common Shares (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of Common Shares acquirable upon complete conversion of such Holder's Preferred Shares (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Purchase Rights.

 

 

d) Pro Rata Distributions. During such time as the Preferred Shares are outstanding, if the Corporation 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, shares 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 the Preferred Shares, 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 Common Shares acquirable upon complete conversion of the Preferred Shares (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, ifno 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.

 

e) Fundamental Transaction. If, at any time while the Preferred Shares are outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person; (ii) the Corporation, 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 Corporation 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; (iv) the Corporation, 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 Corporation, directly or indirectly, in one or more related transactions consummates a shares or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding Common Shares (not including any Common Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such shares or share purchase agreement or other business combination) (each a "Fundamental Transaction"), then, upon any subsequent conversion of the Preferred Shares, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of the Preferred Shares), the number of Common Shares of the successor or acquiring corporation or of the Corporation, 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 Common Shares for which the Preferred Shares are convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of the Preferred Shares). For purposes of any such conversion, the determination of the Conversion 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 Corporation shall apportion the Conversion 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 conversion of Preferred Shares following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Schedule A-2024 (or such similar document that may be required) with the same terms and conditions and issue to the Holders new preferred shares consistent with the foregoing provisions and evidencing the Holders' right to convert such preferred Shares into Alternate Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the "Successor Entity") to assume in writing all of the obligations of the Corporation under this Schedule A-2024 and the other Transaction Documents in accordance with the provisions of this Section 7(e) 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 of Preferred Shares, deliver to the Holder in exchange for the Preferred Shares a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Preferred Shares which are convertible for a corresponding number of shares of capital Shares of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable and receivable upon conversion of Preferred Shares (without regard to any limitations on the conversion of the Preferred Shares) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such shares, such number of shares and such conversion price being for the purpose of protecting the economic value of the Preferred Shares 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 succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Schedule A-2024 and the other Transaction Documents referring to the "Corporation" shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Schedule A-2024 and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

 

f) Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 11100th of a share, as the case may be. For purposes of this Section 7, 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 any treasury shares of the Corporation) issued and outstanding.

 

g)

Notice to the Holders.

 

i. Adjustment to Conversion Price. Whenever the Set Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder by email a notice setting forth the Set Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Conversion by Holder. If: (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Shares; (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares; (C) the Corporation shall authorize the granting to all holders of the Common Shares of rights or warrants to subscribe for or purchase any shares of any class or of any rights; (D) the approval of any shareholders of the Corporation shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property; or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of the Preferred Shares, and shall cause to be delivered by email to each Holder at its last email address as it shall appear in the share registers of the Corporation, 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 the 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 the 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. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K. The Holder shall remain entitled to convert the Preferred Shares (or any part hereof) during the 20- day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

 

Section 8. Forced Conversion. Notwithstanding anything herein to the contrary, on the one-year anniversary of the Original Issue Date, the Corporation shall deliver a written notice to all Holders (a "Forced Conversion Notice" and the date such notice is delivered to all Holders, the "Forced Conversion Notice Date") to cause each Holder to convert all or part of such Holder's Preferred Shares (as specified in such Forced Conversion Notice) plus all liquidated damages and other amounts due in respect of the Preferred Shares pursuant to Section 6, it being agreed that the "Conversion Date" for purposes of Section 6 shall be deemed to occur on the second Trading Day following the Forced Conversion Notice Date (such second Trading Day, the "Forced Conversion Date"). The Corporation may not deliver a Forced Conversion Notice, and any Forced Conversion Notice delivered by the Corporation shall not be effective, unless all of the Equity Conditions have been met on each Trading Day during the period beginning on the Forced Conversion Notice Date through and including the later of the Forced Conversion Date and the Trading Day after the date that the Conversion Shares issuable pursuant to such forced conversion are actually delivered to the Holders pursuant to the Forced Conversion Notice.

 

Section 9. Negative Covenants. As long as any Preferred Shares are outstanding, unless the Holders of at least 51% in Stated Value of the then outstanding Preferred Shares shall have otherwise given prior written consent, the Corporation shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a) amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

 

b) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of Common Shares, Common Share Equivalents or Junior Securities, other than as to (i) the Conversion Shares or Warrant Shares as permitted or required under the Transaction Documents and (ii) repurchase Common Shares or Common Share Equivalents of departing officers and directors of the Corporation, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors for so long as the Preferred Shares are outstanding;

 

c) pay cash dividends or distributions on Junior Securities of the Corporation;

 

d) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm's-length basis and expressly approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or

 

e) enter into any agreement with respect to any of the foregoing.

 

 

Section 10. Corporation Optional Redemption.

 

(a) Corporation Optional Redemption. At any time while the Preferred Shares are outstanding, the Corporation shall have the right to redeem all, but not less than all, of the Stated Value then outstanding (the "Corporation Optional Redemption Amount") on the Corporation Optional Redemption Date (each as defined below) (a "Corporation Optional Redemption"). The Preferred Shares subject to redemption pursuant to this Section lO(a) shall be redeemed by the Corporation in cash at a price (the "Corporation Optional Redemption Price") equal to 120% of the Stated Value being redeemed as of the Corporation Optional Redemption Date. The Corporation may exercise its right to require redemption under this Section l0(a) by delivering a written notice thereof by electronic mail and overnight courier to all, but not less than all, of the holders of Preferred Shares (the "Corporation Optional Redemption Notice" and the date all of the holders of Preferred Shares received such notice is referred to as the "Corporation Optional Redemption Notice Date"). The Corporation may deliver only one Corporation Optional Redemption Notice hereunder and such Corporation Optional Redemption Notice shall be irrevocable. The Corporation Optional Redemption Notice shall (x) state the date on which the Corporation Optional Redemption shall occur (the "Corporation Optional Redemption Date") which date shall not be less than ten (10) Trading Days nor more than twenty (20) Trading Days following the Corporation Optional Redemption Notice Date, and (y) state the aggregate Stated Value which is being redeemed in such Corporation Optional Redemption from the Holder and all of the other holders of Preferred Shares on the Corporation Optional Redemption Date. The Corporation may not deliver a Corporation Optional Redemption Notice, and any Corporation Optional Redemption Notice delivered by the Corporation shall not be effective, unless all of the Equity Conditions have been met on each Trading Day during the period beginning on the Corporation Optional Redemption Notice Date through and including the Corporation Optional Redemption Date; provided that in connection with Equity Condition (c)(i), for purposes of this Section lO(a) only, if all of the Conversions Shares are not eligible for resale pursuant to effective registration statement, such condition shall be deemed met if the Conversion Shares underlying that that portion of the Preferred Shares being redeemed by the Corporation Optional Redemption Notice are eligible for resale pursuant to effective registration statement. Notwithstanding anything herein to the contrary, at any time prior to the date the Corporation Optional Redemption Price is paid, in full, the Corporation Optional Redemption Amount may be converted, in whole or in part, by the Holder into Common Shares pursuant hereto. All conversion amounts converted by the Holder after the Corporation Optional Redemption Notice Date shall reduce the Corporation Optional Redemption Amount required to be redeemed on the Corporation Optional Redemption Date. In the event of the Corporation's redemption of any portion of the Preferred Shares under this Section 10(a), the Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section lO(a) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as a penalty.

 

(b) Pro Rata Redemption Requirement. If the Corporation elects to cause a Corporation Optional Redemption of the Preferred Shares, then it must simultaneously take the same action with respect to all Preferred Shares.

 

 

ANNEXA

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT PREFERRED SHARES)

 

The undersigned hereby elects to convert the number of Series B Convertible Preferred Shares indicated below into common shares, no par value (the "Common Shares"), of Vision Marine Technologies Inc. (the "Corporation"), a corporation organized under the laws of Quebec, Canada, according to the conditions hereof, as of the date written below. If Common Shares are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Subscription Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.

 

Conversion calculations:
Date to Effect Conversion:
Number of Preferred Shares owned prior to
Conversion: Number of Preferred Shares to be
Converted:
Stated Value of the Preferred Shares to be
Converted: Number of Common Shares to be
Issued:
Applicable Conversion Price:
Number of Preferred Shares subsequent to Conversion:
Address for Delivery:____________________________ or
DWAC Instructions:
Broker no:_____________Account no:  _____________
	HOLDER
	By:
		Name:
		Title:

 

 

Exhibit 99.2

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MUST NOT TRADE THE SECURITIES BEFORE MAY 18, 2024.

 

COMMON SHARE PURCHASE WARRANT

 

VISION MARINE TECHNOLOGIES INC.

 

Warrant Shares: 2,857,142

Initial Exercise Date: January 17, 2024

 

THIS COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Investissement Québec 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 January 15, 2024 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (Montreal time) on January 15, 2029 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Vision Marine Technologies Inc., a corporation incorporated under the Quebec Business Corporations Act (the “Company”), up to 2,857,142 Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). 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. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in Schedule A attached herein.

 

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 shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check 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 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 Common Share under this Warrant shall be US$1.05, subject to adjustment hereunder (the “Exercise Price”).

 

c)            Cashless Exercise. Following the Effectiveness Date [Date de prise d’effet] (as defined in the Registration Rights Agreement), 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 Investissement Québec 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 Investissement Québec 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 the 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 Common 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 Common 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 the 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 Common 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.

 

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)

[Reserved].

 

f)

[Reserved].

 

g)

[Reserved].

 

 

Section 3.

Certain Adjustments.

 

a)     Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share 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 Common 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 shares 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. If at any time and from time to time when this Warrant is outstanding there occurs any share split, share dividend, share combination recapitalization or other similar transaction involving the Common Share (each, a “Share Combination Event”, and such date thereof, the “Share Combination Event Date”) and the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in this Section 3), then on the sixth (6th) Trading Day immediately following such Share Combination Event Date, the Exercise Price then in effect on such sixth (6th) Trading Day (after giving effect to the adjustment in this Section 3(a)) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made. For purposes hereof, the “Event Market Price” means, with respect to any Share Combination Event Date, the quotient determined by dividing (x) the sum of the VWAP of the Common Share for each of the five (5) Trading Days ending and including the Trading Day immediately preceding the sixth (6th) Trading Day after such Share Combination Event Date, divided by (y) five (5).

 

b)      Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell, enter into an agreement to sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Share or Common Share Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Share or Common Share Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Share at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation (or, if earlier, the announcement) of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Share or Common Share Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to an adjustment of the Exercise Price to the Base Share Price. If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued Common Share or Common Share Equivalents at the lowest possible price, conversion price or exercise price at which such securities may be issued, converted or exercised.

 

 

c)            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.

 

d)            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, shares 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 Common 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).

 

 

e)         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 the holder of the number of Common 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(e) 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 shares of such Successor Entity (or its parent entity) equivalent to the Common 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 shares (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such shares of capital shares, such number of shares of capital shares 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(e) 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.

 

 

f)            Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th 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.

 

g)

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 shares 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. 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.

 

h)            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, 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)

[Reserved.].

 

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, except pursuant to sales registered or exempted under the Securities Act.

 

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 the 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 Purchase 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 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 or the Purchase 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 Purchase Agreement.

 

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:	/s/ Kulwant Sandher
		Name: Kulwant Sandher
		Title: Chief Financial Officer

 

 

NOTICE OF EXERCISE

 

TO:            VISION MARINE TECHNOLOGIES INC.

 

(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.

 

(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 subsection 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 subsection 2(c).

 

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

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

 

 

 

(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:
			(Please Print)
Address:
			(Please Print)
Phone Number:
Email Address:
Dated:                                                  ,
Holder’s Signature:
Holder’s Address:

 

 

SCHEDULE A

DEFINITIONS

 

“$” means the U.S. dollar.

 

“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.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the city of Montreal are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the city of Montreal are generally open for use by customers on such day.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Share” means the common shares of the Company, no par value, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Share, including, without limitation, any debt, preferred Share, 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 Share.

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Share, options, restricted Share units or other equity-based awards to employees, officers or directors of the Company or its subsidiaries pursuant to any compensation plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Share issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions (including, without limitation, joint venture, co-marketing, co-development or other collaboration agreements) approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.11(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) securities issued to third-party service providers, provided that such issuances shall not exceed 60,000 Common Shares in the aggregate in any calendar month and provided, further, that such securities are issued as “restricted securities” (as defined in Rule 144).

 

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Placement Agency Agreement” means the Agency Agreement dated January 15, 2024, among the Company and iA Capital Markets, a division of iA Private Wealth Inc.;

 

“Purchase Agreement” means the Contrat de souscription dated January 17, 2024, among the Company and Investissement Québec;

 

“Registration Rights Agreement” means the Convention de droits sur l’inscription dated January 17, 2024, among the Company and Investissement Québec;

 

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

 

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

 

“Series B Preferred Share” means Series B Convertible Preferred Share of the Company, no par value, issued and issuable pursuant to the terms of the Series B Preferred Shares to be attached as Schedule A-2024 to the Company’s Certificate of Incorporation as amended by its Articles of “Subsidiary” means any subsidiary of the Company as set forth in the SEC Reports, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

 

“Trading Market” means any of the following markets or exchanges on which the Common Share is 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).

 

“Transaction Documents” means the Purchase Agreement, the Registration Rights Agreement, this Warrant, the Placement Agency Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means VStock Transfer, 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.

 

“Warrant Shares” means the shares of Common Share issuable upon exercise of the Warrants.

 

 

 

 

Exhibit 99.3

 

THE SECURITIES DESCRIBED IN THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AS APPLICABLE (THE “1933 ACT”), OR THE SECURITIES LAWS SECURITIES OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE PLACED OR SOLD IN THE UNITED STATES, OR SOLD TO OR PLACED WITH, UNITED STATES PERSONS, OR SOLD OR PLACED FOR THE ACCOUNT OR BENEFIT OF SUCH PERSONS , UNLESS YOU ARE REGISTERED UNDER THESE LAWS OR ARE EXEMPTED FROM THE REGISTRATION OBLIGATIONS PROVIDED THEREIN.

 

MARINE VISION TECHNOLOGIES INC.

(the “Company")

 

SUBSCRIPTION AGREEMENT (PREGED SHARES AND SUBSCRIPTION WARRANTS)

(CANADIAN SUBSCRIBERS)

 

IMPORTANT INSTRUCTIONS
The following sections of this subscription agreement have been completed (the Subscriber must initial each applicable box):
Canadian qualified investors only:
		APPENDIX B –CANADIAN QUALIFIED INVESTOR CERTIFICATE – All accredited investors who are residents of a Canadian province or territory must complete and sign the ANNEX B. If you choose categories j), k) or l) of the ANNEX B, you will also need to complete the APPENDIX 1 of the ANNEX B, titled “Risk recognition certificate”.
All subscribers:
		APPENDIX D –MODEL AGREEMENT FOR GRANTING REGISTRATION RIGHTS All subscribers must complete, sign and submit a Registration Rights Granting Agreement established according to the model presented in the APPENDIX D.

  

Submission of the Subscription Agreement and payment of the overall Subscription Price:

A duly completed and signed copy of this Agreement, including the required sections, as indicated above, together with payment of the Aggregate Subscription Price (as that term is defined herein), must be received at the offices of iA Capital Markets, a division of iA Private Wealth Management Inc., at 26 Wellington Street East, Suite 700, Toronto, Ontario M5E 1S2 to the attention of Laura Cristello (email address:ECMCanada@iacapitalmarkets.ca), in accordance with the instructions given herein or in any other manner directed by the Agent (as that term is defined herein), no later than January 16, 2024 at 10:00 a.m. (Eastern Time).

Delivery of titles:

It is expected that the undersigned subscriber will receive certificates or book entry statements (DRS) representing the securities subscribed for hereunder from the Company.

 

 

PREFERRED SHARES AND SUBSCRIPTION WARRANTS SUBSCRIPTION AGREEMENT

 

ATTENTION: TECHNOLOGIES MARINE VISION INC. (the "Company”)

 

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

 

AND FROM: one or more U.S. registered broker-dealers affiliated with or appointed by the Agent (the “Affiliated U.S. Brokers”)

 

The undersigned (the “Subscriber”), on his own behalf and, if applicable, on behalf of those for whom he contracts hereunder as trustee or agent (the “Designated Principals”), hereby subscribed and agrees to purchase from the Company 3,000 Series B convertible preferred shares thereof (the “Preferred Shares”) indicated below at a price of $1,000 each (the “Subscription Price”) to which will be attached 2,857,142 ordinary share subscription warrants in the capital of the Company (each ordinary share subscription warrant being called a “Subscription Warrant” and with the Preferred Shares, the “Subscribed Securities”). Each Warrant gives its holder the right to acquire one common share in the capital of the Company (a “Share underlying a Warrant”) at the exercise price of $1.05, subject to certain adjustments, until the date being 60 months after the Closing Date (as defined herein). The aggregate Subscription Price (the “Aggregate Subscription Price”) of the Securities subscribed to will correspond to the number of Preferred Shares subscribed multiplied by the Subscription Price.

 

The Warrants will be governed by the terms set forth in the certificates representing them (each, a “Warrant Certificate”), which the Company will deliver upon Closing (as defined herein). . The Warrant Certificates will include, among other things, a provision providing for the appropriate adjustment of the class, number and exercise price of the Shares underlying the Warrants in the event of certain events, including the splitting, consolidation or reclassification of the common shares of the Company, the payment of stock dividends or the merger or restructuring of the Company. The description of the Warrants contained herein is subject in all respects to the terms set forth in the Warrant Certificates. In the event of any conflict or contradiction between the description of the Warrants contained herein, including the Summary of Terms (as defined below), and the Warrant Certificates, the Warrant Certificates subscription will take precedence.

 

This subscription agreement, which, for greater certainty, incorporates the attached annexes, if applicable, is referred to herein as the “Agreement”. The Subscriber agrees to be bound by the terms set out in this Agreement, including the “Conditions of Subscription for the Securities” attached hereto, and by the representations, warranties and covenants set out in the annexes attached thereto. The Subscriber also agrees, without limitation, that the Company and the Agent may rely on the representations it has made, the warranties it has given and the commitments it has made in these documents.

 

The Securities subscribed for will be available in accordance with and subject to the terms set forth herein, including the terms, representations, warranties, covenants and acknowledgments which are set out in this Agreement and its annexes.

 

 

SUBSCRIPTION AND SUBSCRIBER INFORMATION

 

Please provide all information, if applicable (except signatures) in printed letters in the space provided for this purpose below

 

 

 

 

TERMS OF SUBSCRIPTION OF SECURITIES ARTICLE 1 – INTERPRETATION

 

1.1	Definitions

 

When used in this Agreement, the following terms have the meanings given to them, unless the subject matter or context otherwise requires:

 

a)

“Preferred Shares” means Series B Convertible Preferred Shares;

 

b)

“Ordinary Shares” means ordinary shares in the capital of the Company;

 

c)

“Shares underlying the Warrants” and its variants have the meaning given to them on the page2of this Agreement;

 

d)

“Subscription Warrants” has the meaning given to it on page2 of this Agreement;

 

e)

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

 

f)

“Share Certificate” means the share certificate or direct registration notice (DRS) representing Common Stock or Preferred Stock;

 

g)

“Warrant Certificates” has the meaning given to it on page2 of this Agreement;

 

h)

“Closure” has the meaning given to it in paragraph4.1;

 

i)

“Commission” has the meaning given to it in paragraph9.1;

 

j)

“Contract” has the meaning given to it on page 3 of this Agreement;

 

k)

“Registration Rights Grant Agreement” means the registration rights grant agreement which will be entered into between the Company and the Subscriber at the same time as this Subscription Agreement, pursuant to which the Company will agree, between other things, to grant certain registration rights with respect to the Common Shares resulting from the conversion of the subscribed Shares and the Shares underlying the Warrants under the 1933 Act, the rules and regulations adopted under the Act of 1933 and applicable state securities laws; this agreement will be established essentially according to the model presented in APPENDIX D;

 

l)

“Agency Agreement” means the agency agreement which will be entered into on or about the Closing Date between the Agent and the Company in relation to the Offering;

 

m)

“Normal Course of Business” means the exercise by the Company or any of its group companies, as the case may be, of its business in accordance with its daily operating activities, customs, practices and procedures common;

 

n)

“Closing date” has the meaning given to it in paragraph4.1;

 

o)

“IQ Entity” means:

 

(i)

the Government of Quebec;

 

(ii)

any other person acting as an agent of the Government of Quebec;

 

(iii)

any Subsidiary of the Subscriber;

 

 

(iv)

any entity resulting from a reorganization or merger of the Subscriber or now owning the assets of the Subscriber following its liquidation or dissolution;

 

(v)

any entity of which the majority of members or administrators are appointed by the Government of Quebec or by one of its ministries;

 

(vi)

any entity controlled by the Government of Quebec or one of its ministries or by any person mentioned in clauses (ii), (iii), (iv) or (v) above;

 

p)

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

 

q)

“Subsidiary” a legal entity which is controlled directly or indirectly by the Company; as of the date of the Agreement, the Company has no subsidiaries other than 7858078 Canada Inc. and EB Rental, Ltd.;

 

r)

“Group” means, collectively, the Company and its Subsidiaries, and “Group Member” means any of them;

 

s)

“Closing Time” has the meaning given to it in paragraph 6.1;

 

t)

“IFRS” means the generally accepted accounting principles set out in the CPA Canada Handbook – Accounting for any entity that prepares its financial statements in accordance with International Financial Reporting Standards;

 

u)

“Insider” means a) a director or senior executive of the Company (or a Subsidiary of the Company), b) a director or senior manager of a person who is himself an Insider of the Company, c) a natural or legal person who, directly or indirectly, A) is the beneficial owner of securities of the Company ensuring him more than 10% of the voting rights attached to all of the outstanding voting securities of the Company or exercises control over such securities or B) is the beneficial owner of a portion of the securities of the Company providing it with more than 10% % of the voting rights attached to all of the Company's outstanding voting securities and exercises control over a portion of these securities, without taking into account, in either case, for the purposes of calculating the percentage, of the securities that the natural person or legal entity holds as underwriter in connection with an offering, (c) a natural person or legal entity designated as an insider in an order made under applicable securities laws or (d) a natural or legal person included in a designated category of natural or legal persons;

 

v)

“U.S. Institutional Qualified Investor” means an institutional accredited investor who falls into one or more of the categories described in paragraphs (1), (2), (3), (7), (8), ( 9), (12) or (13) of rule 501(a) of Regulation D;

 

w)

“Business Day” means a day that is not a Saturday, Sunday or a day on which the principal chartered banks located in Montreal, Quebec, or New York, New York, are not open for business ;

 

x)

“Letter of Intent” means the letter of intent between the Subscriber and the Company dated and signed on September 20, 2023;

 

y)

“Act” means the Securities Act (Quebec);

 

z)

“United States Counterterrorism Act” has the meaning given to it in paragraph6.1dd);

 

aa)

“Canadian Terrorist Financing Act” has the meaning given to it in paragraph 8.1(z);

 

bb)

“1933 Act” means the United States Securities Act of 1933, as amended, if applicable;

 

 

cc)

“United States Securities Laws” means the United States Securities Exchange Act of 1933, the United States Securities Exchange Act of 1934, as amended, from time to time, the rules and regulations adopted thereunder and the laws on the securities or blue sky laws of the American states;

 

dd)

“Securities Laws” means, collectively, the Canadian Securities Laws, the United States Securities Laws and applicable securities laws (including the rules and regulations adopted thereunder) in either of the International Territories;

 

ee)

“Canadian Securities Laws” means, collectively, the laws and regulations governing securities in each of the Canadian provinces and territories, as well as all standards, general instructions, rules and written orders having the force of law which have been published, adopted or made by the securities regulators or other regulatory bodies of each of the Canadian provinces and territories;

 

ff)

“Designated Principal” has the meaning given to it on page 3 of this Agreement;

 

gg)

“Nasdaq” means The Nasdaq Stock Market;

 

hh)

“Person” means an individual (whether acting as executor, trustee, administrator or personal representative or in any other capacity), corporation, firm, partnership, firm individual, consortium, joint venture, trustee, trust or unincorporated body or association, and the pronouns referring to them have a similar broad meaning;

 

ii)

“ American person» has the meaning given to the term US person in Rule 902(k) of Regulation S under the 1933 Act;

 

jj)

“Registered Person” has the meaning given to it on page 4 of this Agreement;

 

kk)

“Person who has control” has the meaning given to it in section 5.2 of the Act;

 

ll)

“Placement” means this subscription agreement entered into by the parties aimed at raising a total aggregate gross amount of $3,000,000;

 

mm)

“Distributor” means an underwriter, broker or other person who participates, under the terms of a contractual agreement, in the distribution of the Securities which are the subject of a distribution or sale in accordance with Regulation S;

 

nn)

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

 

oo)

“Subscription Price” has the meaning given to it on page 3 of this Agreement;

 

pp)

“Global Subscription Price” has the meaning given to it on page 3 of this Agreement;

 

qq)

“Project” means

 

(i)

the establishment of an E-motion system production line in Boisbriand, Quebec, which will help provide the Boisbriand Plant with semi-automated manufacturing capacity for advanced electric motor assembly which was scheduled to begin in October 2023 and will gradually increase to reach 20 E-motion systems per month starting in January 2025 (240 systems per year) for a total annualized value of more than $30 million (CAD), and

 

(ii)

the creation, by January 2025, of 18 new jobs at the Boisbriand Plant with an average salary of $85,000 (CAD) annually.

 

 

rr)

“Intellectual Property” means all intellectual property rights of the Group, whether registered or not, including those arising from or relating to the following: i) all national and foreign patents and national patent applications and foreign and all patent reexaminations, patent reissues, patent renewals, patent extensions, provisional patents, continuations and partial continuations thereof; (ii) all trademarks, trade names, service marks, service names, certification marks, marks, logos, social media handles, domain names, as well as the traffic associated with it; (iii) all data rights, integrated circuit topographies and protected plant varieties; iv) all industrial designs and CAD (computer-aided design) drawings and all works protected by copyright, including software, documentation, drawings, diagrams, specifications or registers; v) all inventions (patentable or not) and vi) all proprietary and confidential commercial and technical information, including technical data, trade secrets, ideas, formulas, algorithms, methods, techniques, processes, research and development and technological know-how, databases, data compilations and collections and technical data; and, in the case of each of clauses (i) to (v) inclusive, whether or not such rights are registered and, in the case of each of clauses (i) to (vi) exclusively, all registrations, applications, registrations , common law rights, regardless of their appellation, throughout the world and in all media now known and all rights to sue at law or in equity for infringement or other prior infringement of any of the foregoing intellectual property, including the right to receive any proceeds of sale or license, any damages in connection therewith, if any, under applicable laws;

 

ss)

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

 

tt)

“Regulation D” means Regulation D of the 1933 Act;

 

uu)

“Regulation S” means Regulation S of the 1933 Act;

 

(vv)

“ Commercial penalty» has the meaning given to it in paragraph6.1dd);

 

ww)

“ DRY» means the United States Securities and Exchange Commission;

 

xx)

“ Company» means the Company, including any company that could replace it;

 

yy)

“Terms Summary” means the terms summary that the Agent has provided to potential subscribers of the Securities, a copy of which is presented in the ANNEX A;

 

zz)

“Subscriber” means the person who purchases the Securities, whose name appears on the first signature page hereof and who has signed this Agreement or, if the person whose name appears on the first signature page hereof has signed this Agreement as agent on behalf of a Designated Principal and is not a trust company or portfolio manager deemed to purchase the Securities for its own account under Regulation 45-106, the person who is the designated Principal of the Securities subscribed indicated in the signature pages hereof;

 

aaa)

“ Securities» means, collectively, the Preferred Shares, the Warrants and the Shares underlying the Warrants;

 

bbb)

“ Boisbriand factory” designates the production plant of the Company located at 730 Boulevard du Curé-Boivin, Boisbriand, Québec, Canada, V7G 2A7;

 

ccc)

“ Securities subscribed” has the meaning given to it on page 3 of this Agreement.

 

 

1.2	Gender and number

 

The singular includes the plural, and vice versa, the masculine includes the feminine, and vice versa, and the term “persons” includes natural and legal persons.

 

1.3

Cash

 

Unless otherwise indicated, all amounts in this Agreement, including the symbol “$”, are expressed in U.S. dollars.

 

1.4	Subdivisions and titles

 

The division of this Agreement into articles, paragraphs, annexes and other subdivisions and the insertion of headings are intended solely for convenience of reference and have no impact on its interpretation. The headings appearing in this Agreement are not intended to fully or precisely describe the text to which they relate. Unless the subject or context requires a different interpretation, references to an article, paragraph, paragraph or annex refer to the article, paragraph, paragraph or in the applicable annex to this Agreement.

 

ARTICLE 2 – ANNEXES

 

2.1	Description of the annexes

 

The following schedules are attached to this Agreement, are incorporated herein by reference and are deemed to be an integral part thereof:

 

ANNEX A	SUMMARY OF TERMS AND CONDITIONS
APPENDIX B	CANADIAN QUALIFIED INVESTOR CERTIFICATE
APPENDIX C	CONTACT DETAILS OF THE COMMISSIONS OF THE VALUES FURNITURE CANADIAN
APPENDIX D	MODEL AGREEMENT FOR GRANTING REGISTRATION RIGHTS

 

ARTICLE 3 – SUBSCRIPTION AND PLACEMENT

 

3.1	Subscription of Securities

 

The Subscriber hereby confirms that it subscribes and offers to purchase Transferable Securities subscribed to the Company, in accordance with the terms set out in this Agreement and subject thereto, in consideration of the aggregate Subscription Price which is payable from the manner described in ARTICLE 4hereof. The Subscriber acknowledges (on its own behalf and, where applicable, on behalf of any designated Principal) that, upon acceptance of this Agreement by the Company, it will constitute an enforceable obligation of the Subscriber (including, if applicable, of any designated Principal), subject to the terms set out herein.

 

3.2	Acceptance and rejection of the subscription by the Company

 

The Subscriber acknowledges and agrees that the Company reserves the right, in its sole discretion, to reject the subscription for the subscribed Securities which are the subject hereof, in whole or in part, at any time before the Time of the fence. If this subscription is rejected in full, checks or other forms of payment of the aggregate Subscription Price which have been given to the Agent will be returned promptly to the Subscriber, without interest, deduction or penalty. If this subscription is accepted in part only, a check representing the reimbursement of the overall Subscription Price corresponding to the part which has not been accepted will be immediately given to the Subscriber, without interest, deduction or penalty.

 

3.3	Use of the Global Subscription Price

 

The Company undertakes that the Global Subscription Price will be used exclusively to cover (a) the development of batteries and chargers linked to the Project, (b) the development of rotomoulded products linked to the Project, (c) the working capital of the Company related to the Project; (d) salaries and recruitment related to the Project; and (e) operational costs related to the Project. Without limiting the generality of the foregoing, the aggregate Subscription Price shall not be used to prepay a debt, pay dividends, repurchase securities, make expenses or carry out projects outside the Normal Course of Business.

 

 

ARTICLE 4 – CLOSURE

 

4.1

Fence

 

The delivery and sale of the Securities subscribed for and payment of the aggregate Subscription Price will be effected (the “Closing”) at the offices of the Company's legal advisors on January 17, 2024 at 8:00 a.m. (Eastern Time) (the “Closing Time”), or such other location or date or time as the Company and the Agent may mutually agree to (the “Closing Date”). If, at the latest at the Closing Time, the terms of this Agreement and the Agency Agreement have been fulfilled to the satisfaction of the Agent and the Company or have been waived on the part of any of them, the Agent will deliver to the Company all completed Subscription Agreements and payment of the Aggregate Subscription Price for all Securities sold under the Agreement. placement upon delivery of a share certificate or book entry statement to the transfer agent of the Company representing the Preferred Shares (the “Share Certificate”) and the Warrant Certificates. subscription representing the Warrants, which together constitute the Securities subscribed for, as the Agent and the Company may agree, as well as all other documents which may be required under the terms of this Agreement and the Placement Agreement for account.

 

If, before the Closing Time, the terms of this Agreement (except for proof of issue of the Securities subscribed as the Agent and the Company may agree) and the Agency Agreement have not been fulfilled to the satisfaction of the Agent or the Company, or have not been waived by the relevant party (provided that such waiver does not affect prejudice to the rights of the Subscriber), the Agent, the Company and the Subscriber will have no other obligation under this Agreement.

 

It is intended that the Preferred Shares will be issued in the form of Share Certificates and that the Warrants will be issued in the form of Warrant Certificates, in either case registered in the name of the Subscriber.

 

4.2	Closing Conditions

 

The Subscriber acknowledges and agrees that the Company expects that the following additional conditions will be satisfied before the Closing Time:

 

a)

the Subscriber must have paid the overall Subscription Price in the manner which may have been accepted by the Agent upon delivery of the Subscribed Securities;

 

	b)	no later than January 16, 2024, the Subscriber must have duly completed and signed this Agreement (including all applicable annexes) and sent it to the following address:
		iA Capital Markets, division of iA Private Wealth Management Inc. 26
		Wellington Street East, suite 700
		Toronto, Ontario M5E 1S2 Canada
		Attention: Laura Cristello
		Email address :ECMCanada@iacapitalmarkets.ca

 

c)

no later than the Closing Date, the Subscriber must have duly completed, signed and submitted an agreement granting registration rights established according to the model presented in the APPENDIX D;

 

d)

the Subscriber must have executed and delivered to the Company, upon reasonable request by the Company, all other documents that the Securities Laws may require the Company to deliver on behalf of the Subscriber;

 

e)

the Company must have obtained all necessary approvals and consents, including regulatory approval of the Offering;

 

 

f)

the Company must have accepted the Subscriber's subscription, in whole or in part;

 

g)

the representations which the Subscriber has made and the warranties which it has given herein shall be true and accurate at the Closing Time as if they had been made or given at the Closing Time;

 

h)

all covenants set out in this Agreement which the Subscriber (including, where applicable, each named Principal) must fulfill on or before the Closing Time shall have been fulfilled in all material respects;

 

i)

the issue and sale of the Transferable Securities must have been exempted from the registration and prospectus requirements provided for by the Securities Laws applicable in the context of the sale of the Transferable Securities or the Company must have obtained the orders , consents or approvals which may be required to enable it to effect such sale without having to file a prospectus or deliver an offering memorandum (provided that the Company is required to file with the SEC a registration statement under the 1933 Act with respect to resales of Preferred Stock (and Common Stock resulting from the conversion of Preferred Stock) and Stock underlying the Warrants, as set forth in the Grant Agreement registration fees);

 

j)

the closing conditions set out in the Agency Agreement must have been satisfied or waived by the relevant party;

 

k)

the Company must have filed with Nasdaq an application for registration of the Common Shares resulting from the conversion of the Preferred Shares and the Shares underlying the Warrants.

 

The Company acknowledges and agrees that the Subscriber's obligation to purchase the subscribed Securities is subject, among other things, to the following conditions:

 

l)

no later than the Closing Date, the Company must have duly completed, signed and submitted an agreement granting registration rights established according to the model presented in APPENDIX D;

 

a)

the representations the Company has made and the warranties it has given in this Agreement and the Agency Agreement or in the documents incorporated by reference herein shall be true and correct at the time they were made or given and on the Closing Date and have the same effect as if they had been made or given on the Closing Date;

 

b)

all covenants and conditions set forth in this Agreement, the Agency Agreement or the documents incorporated by reference therein to be fulfilled by the Company on or before the Closing Date shall have been fulfilled in all respects material to the satisfaction of the Subscriber, acting reasonably;

 

c)

the closing conditions set out in the Agency Agreement in favor of the Agent and the Subscriber must have been satisfied; And

 

d)

the Subscriber must have obtained copies of the notices indicated in the Agency Agreement, which must be addressed to him.

 

ARTICLE 5 – DECLARATIONS, GUARANTEES AND COMMITMENTS OF THE COMPANY

 

5.1	Representations, Warranties and Commitments of the Company

 

The Subscriber will benefit from the declarations that the Company will make to the Agent, the guarantees that it will give him and the commitments that it will make towards him in the Placement Agreement that the Company intends to conclude before the Time of the closing, to the extent that the Agent does not modify these representations, warranties and commitments or does not waive their application and on the condition that no modification or waiver prejudices the rights of the Subscriber. These representations, warranties and covenants will form an integral part of this Agreement, will remain in effect after the Closing and will continue to have full force and effect as of benefit of the Subscriber in accordance with the Agency Investment Agreement. The Company acknowledges that, in making the decision to invest in the Company, the Subscriber is relying on this Agreement, the representations that the Company will make, the guarantees it will give or the commitments it will make in the Investment Agreement to account and information about the Company that has been filed by it on SEDAR+, atwww.sedarplus.ca, and with the SEC, atwww.sec.gov.

 

 

ARTICLE 6 – ACKNOWLEDGMENTS, DECLARATIONS, GUARANTEES AND COMMITMENTS OF THE SUBSCRIBER

 

6.1	Representations, warranties and commitments of the Subscriber

 

By signing this Agreement, the Subscriber, on its own behalf, makes the following representations, warranties, undertakings and acknowledgments in favor of the Company (and acknowledges that the Company, the Agent, the American Brokers affiliates and their respective legal advisors rely on it):

 

Authorization and effect

 

a)

if the Subscriber is a natural person, he has reached the age of majority in the territory where this Contract is signed and has the legal capacity required to sign and deliver this Contract, to be bound by it, to fulfill the obligations and the commitments it has entered into hereunder and take all measures it must take hereunder;

 

b)

if the Subscriber is not a natural person, he has the powers and legal capacity required to sign and deliver this Contract, to be bound by it, to fulfill the obligations and commitments he has entered into hereunder and take all actions which it is required to take hereunder, it has obtained all approvals of its directors, partners, shareholders, trustees or other persons which are necessary for these purposes and the person who signs this Agreement is duly authorized to do so;

 

c)

if the Subscriber is a corporation, it has been validly constituted and exists under the laws of its territory 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, once accepted by the Company, it will constitute a legal and valid obligation which is enforceable against it in accordance with the terms hereof (subject to bankruptcy and insolvency laws and other laws which restrict the enforceability of creditors' rights and provided that equitable relief may be granted only in the discretion of a court of competent jurisdiction);

 

e)

if the Subscriber is acting as an agent or trustee (including, for greater certainty, a portfolio manager or comparable advisor) of a principal, it is duly authorized to execute and deliver this Agreement and all other documents necessary in connection with the subscription on behalf of this principal, each of them subscribing for his own account and not for the account of another person, and this Agreement has been duly and validly authorized, signed and delivered by such principal, or on its behalf, and, when accepted by the Company, it will constitute a legal and valid obligation which is enforceable against it in accordance with the terms hereof (subject to the laws of bankruptcy and insolvency and the other laws which restrict the enforceability of creditors and provided that equitable relief may be granted only in the discretion of a court of competent jurisdiction);

 

f)

the signing and delivery of this Agreement, the execution of its terms and compliance therewith, the subscription of the Securities subscribed (and the subsequent exercise of the Subscription Warrants, if applicable) and the completion of the planned transactions hereby will not result in any material breach of any term or provision of the instruments of incorporation of the Subscriber (if the Subscriber is not an individual) or the Canadian Securities Laws, will not conflict with such term or provision in any material respect, nor shall constitute a material default under any such term or provision, nor create a state of affairs which, after giving notice or the passage of time, or both, would constitute a material default under any such term or provision;

 

 

g)

the Subscriber is not a person who has been created or is used by any person for the sole purpose of purchasing or holding securities in order to comply with the prospectus and registration requirements of the Securities Laws applicable or to take advantage of an exemption from these obligations and, except for what the Company may disclose in writing, the Subscriber does not act jointly or in concert with another natural or legal person in order to acquire securities of the Company;

 

Residence

 

h)

the Subscriber resides or, if he is not a natural person, has his registered office, in the territory indicated in the “Subscription and Subscriber Information” section of this Agreement and this address has not been created or is not used for the sole purpose of acquiring the subscribed Securities. The purchase of the Transferable Securities subscribed by the Subscriber, and the sale of the Transferable Securities subscribed to the Subscriber, as well as the actions, solicitations or negotiations aimed directly or indirectly at such purchases or sales being carried out, have taken place only in the jurisdiction in question and the Subscriber intends that the Securities Laws of that jurisdiction govern such purchases or sales;

 

All Subscribers

 

i)

the Subscriber is eligible to purchase the Securities subscribed for under an exemption from the prospectus preparation and registration requirements of the applicable Securities Laws;

 

j)

the Subscriber (i) is neither an Insider of the Company nor a Registered Person or (ii) has represented to the Company that he is an Insider or a Registered Person (as applicable) on page3hereof;

 

k)

the Subscriber does not purchase the Subscribed Securities with a view to reselling, placing or otherwise disposing of them in violation of applicable Securities Laws;

 

l)

unless the Subscriber is acting as agent or trustee under paragraph6.1e)above or has completed the “Information on the Designated Principal” field in the section

 

“Subscription and Subscriber Information”, the Subscriber (as designated in the “Subscriber Name” field of this section) purchases the Subscribed Securities for his own account and not for the benefit of any other person;

 

m)

if an incomplete copy of this Agreement is delivered to the Company, the Company and its advisors shall have the right to presume that the Subscriber accepts the entire terms set forth on the undelivered pages, without modification, and agrees to be bound by these terms;

 

Canadian underwriters

 

n)

if the Subscriber is a resident of Canada and is subject to the applicable securities laws of a province or territory of Canada, he is an accredited investor, as defined in subsection 73.3(1) of the Act or Regulation 45-106, as applicable, and has completed and signed the Canadian Qualified Investor Certificate using the form presented in APPENDIX B attached (as well as the APPENDIX 1 of ANNEX B, if applicable) and submitted it to the Company, which certificate indicates that the Subscriber belongs to one of the categories of persons eligible for exemption from the obligations to prepare a prospectus of the Laws on applicable Canadian securities, as described therein, and it confirms the truth and accuracy of the representations made, the guarantees given and the commitments made in this certificate as of the date of this Agreement and at the Closing Time;

 

 

Non-US subscribers

 

o)

The Subscriber acknowledges and agrees to the following:

 

(i)

the Securities subscribed for have not been placed with the Subscriber while the latter was in the United States, and the natural person who gives the order to purchase the Securities subscribed for and who executes and delivers this Agreement for the account or benefit of the Subscriber was not located in the United States at the time the order was given or at the time this Agreement was executed and delivered;

 

(ii)

the Subscriber is not located in the United States, is not a United States Person and is not purchasing the Subscribed Securities for the account or benefit of a person located in the United States or a United States Person;

 

(iii)

the Subscriber does not purchase the Securities subscribed as a result of market preparation efforts (within the meaning given to the term “directed selling efforts” in rule 902(c) of Regulation S, including the fact of disseminating to the States - United States or to make available press releases relating to the proposed Offering) made in the United States by the Company, an underwriter, any of the members of their respective groups or a person acting for the account of any of these persons;

 

(iv)

the current structure of this transaction and all transactions and activities contemplated herein does not constitute a scheme designed to evade the registration requirements of the 1933 Act or applicable state securities laws;

 

(v)

the Subscriber does not intend to distribute, directly or indirectly, any Securities whatsoever in the United States, or with or for the account or benefit of American Persons, unless it does so in compliance with the Law of 1933 and applicable state securities laws;

 

(vi)

the Securities have not been registered under the 1933 Act or any US state securities law and may not be offered, sold or transferred , transfer, pledge, charge or other disposition, unless the transaction is exempt from the registration requirements of the 1933 Act and the securities laws securities of the applicable states, or that it is not subject to them;

 

(vii)

during the period of 40 calendar days following the later of the two following dates to occur, being A) the date on which the Securities were initially distributed to persons other than Distributors in reliance on Regulation S and B) the Date of Closing (such 40 calendar day period being referred to as the “Offering Compliance Period”), a placement or sale of the Securities in the United States or to a U.S. Person may violate the registration requirements of the 1933 Act ;

 

(viii)

the Subscriber is neither an underwriter of the common shares of the Company nor a dealer in such shares, and does not participate, whether under contract or otherwise, in the distribution of the Securities;

 

(ix)

the Subscriber A) is not located in the United States or is a United States Person and acquires the Securities in the context of an offshore transaction (within the meaning given to the term “offshore transaction” in Regulation S) in under Regulation S, for its own account and not for the purpose of reselling or distributing them in violation of U.S. federal or state securities laws, any investor on whose behalf he has purchased Securities, not to place, sell or otherwise transfer them during the Placement Compliance Period except (x) to or from the Company, (y) to or with persons who are not US Persons and who are located outside the United States in accordance with Regulation S, or (z) in reliance on another applicable exemption or exemption from the registration requirements of the 1933 Act and C) undertakes, during this period, to give each person to whom the Securities are transferred a notice informing them of the substance of this provision;

 

 

Risks inherent to private placement

 

p)

the Subscriber acknowledges the following:

 

(i)

no regulatory body or any securities commission, governmental authority, stock exchange or similar authority has expressed an opinion on the quality of the Subscribed Securities, the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares) or the Warrants of the Securities subscribed for (or the Shares underlying the Warrants) nor has it made any recommendation or given any approval whatsoever in relation to the Securities;

 

(ii)

no government or other insurance covers the Securities subscribed;

 

(iii)

although the purchase of the Subscribed Securities involves considerable risks, the Subscriber understands these risks and can tolerate them;

 

(iv)

the extent to which the Subscriber may resell the subscribed Securities (including the Shares underlying the Warrants and the Ordinary Shares resulting from the conversion of the Preferred Shares) is subject to restrictions and it is the Subscriber's responsibility to inquire about these restrictions and to comply with them before selling the securities in question;

 

(v)

the Subscriber was recommended to consult its legal advisors regarding the signing, delivery and execution of this Agreement and the transactions contemplated therein, including transactions in the Preferred Shares, the Common Shares resulting from the conversion of the Preferred Shares, the Warrants and the Shares underlying the Warrants, as well as with respect to the holding periods imposed by the applicable securities Laws of the jurisdiction of residence of the Subscriber and other Laws of applicable securities, and the Subscriber acknowledges that neither the Company, the Agent nor the affiliated U.S. Dealers have made any representation regarding the applicable holding periods imposed by the applicable Securities Laws or with respect to other resale restrictions applicable to these securities which limit the extent to which the Subscriber (or other persons on whose behalf it contracts hereunder) may resell these securities, whether it is its sole responsibility (or other persons on whose behalf he contracts hereunder) to inquire about these restrictions, which is his sole responsibility (and neither the Company, nor the Agent, nor the affiliated American Brokers have any responsibility except whether in this regard) to comply with applicable resale restrictions imposed by applicable Securities Laws, and that he (or other persons on whose behalf he contracts hereunder) knows that he does not may resell these securities only in compliance with certain limited exemptions from the obligations provided for by the applicable Securities Laws;

 

(vi)

the Company has informed the Subscriber that it is availing itself of an exemption from the obligations to provide the Subscriber with a prospectus or a registration statement and to sell the Subscribed Securities through a registered person for the purposes of the sale of the Subscriber. securities under the applicable Securities Laws and that, as a result of the acquisition of the Securities subscribed for in reliance on these exemptions, the Subscriber may not be able to avail himself of certain of the rights, protections and remedies provided by applicable Securities Laws, including the right to seek rescission or damages.

 

Absence of prospectus or information

 

q)

the Subscriber understands that the Securities subscribed to are placed in the context of a private placement only and that their sale is therefore subject to the condition that this sale is exempt from the obligation to file a prospectus or a registration statement and obtain this document certified or deliver an offering memorandum, and the Company has not filed any prospectus or registration statement with any securities commission or similar regulatory body in any jurisdiction whether in the context of the issue of the subscribed Securities.

  

 

As a result of the acquisition of the Transferable Securities subscribed on the basis of these exemptions, the Subscriber acknowledges and confirms the following:

 

(i)

the Subscriber may not be able to avail himself of some of the rights, protections and remedies that he would normally have under the Securities Laws, including the right to seek rescission or damages in the event of false information or misleading;

 

(ii)

the Subscriber may not receive information to which it would normally be entitled under the Securities Laws or which should be included in a prospectus or registration statement prepared in accordance with the applicable Securities Laws;

 

(iii)

the Company is released from certain obligations that would normally apply under the Securities Laws;

 

(iv)

investors may not have adequate remedies at common law if they suffer investment losses after acquiring Securities subscribed for in a private placement;

 

r)

the Subscriber has not received any prospectus, registration statement or offering memorandum, within the meaning of the Securities Laws, nor any advertising or commercial document in connection with the Placement, nor any document intended to describe the company and the activities of the Company which would have been drawn up for the benefit of potential purchasers in order to help them make the decision whether or not to invest in the Securities subscribed, and none of these documents was provided to it, and it has not based its decision to subscribe for the Securities subscribed to on any verbal or written declaration whatsoever which may have been made concerning any fact whatsoever by the Company and its directors, officers, employees, agent and representatives, or on their behalf, and has not relied on any such representation except as described in this Agreement and its annexes. The Subscriber has based his decision to subscribe for the subscribed Securities solely on this Agreement and its annexes as well as on information about the Company which is in the public domain (i.e. information that the Subscriber has obtained without independent investigation);

 

s)

the Subscriber understands that the Company has given the Agent the mandate to place the Subscribed Securities in a private placement constituting a commercially reasonable placement and that neither the legal advisors of the Company nor those of the Agent assumes no responsibility of any nature whatsoever for the accuracy or adequacy of information concerning the Company which is in the public domain, and that the Agent, the affiliated American Brokers and their representatives assume no responsibility as to the information that the Company could give or the declarations that it could make to the Subscriber about itself or about the transaction provided for in this Contract;

 

t)

neither the legal advisors of the Company nor those of the Agent assume any responsibility whatsoever for the accuracy or adequacy of information concerning the Company which is in the public domain or for the fact that all information and disclosure documents relating to the Company that it must communicate or file under the Securities Acts have in fact been communicated or filed;

 

u)

the Subscriber does not purchase the subscribed Securities while he has material information about the Company which has not been communicated to the general public;

 

Adequacy of investment

 

v)

the Subscriber confirms the following:

 

(i)

his knowledge of financial and commercial affairs and his experience in this field enable him to be able to assess the merits of his investment in the Securities subscribed and the risks that this investment entails, including the possibility of losing the entire investment;

 

 

(ii)

he is able to evaluate the proposed investment in the Securities subscribed based on his own experience or on the advice he has obtained from a person registered under the applicable Securities Laws;

 

(iii)

he knows the characteristics of the Securities subscribed to and the risks inherent in an investment in them;

 

(iv)

he may assume the risk of losing his investment in the Securities subscribed to.

 

No declaration

 

w)

the Subscriber confirms that neither the Company, nor the Agent nor the affiliated American Brokers, nor any of their respective directors, employees, officers, representatives, agents or members of the group, have made to him any representation (written or verbal) that it is about the following:

 

(i)

the future price or value of the Preferred Shares (or the Ordinary Shares resulting from the conversion of the Preferred Shares) or the Warrants comprising the Securities subscribed for (or the Shares underlying the Warrants);

 

(ii)

whether any person will resell or repurchase the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares) and the Warrants (or the Shares underlying the Warrants);

 

(iii)

the fact that a person will reimburse the Subscription Price of the Securities subscribed.

 

Restrictions relating to the resale of Securities and the exercise of Warrants

 

x)

the Subscriber understands that it may not be able to resell the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares) and the Warrants (and the Shares underlying the Warrants), except in complying with certain exemptions which it may avail itself of under the applicable Securities Laws, and that it is its sole responsibility to ensure that it complies with the applicable resale restrictions (it being understood that neither the Company nor the Distributor nor the Affiliated U.S. Brokers assume any liability whatsoever in this regard). The Subscriber must comply with all applicable Securities Laws with respect to the subscription, purchase, holding and resale of the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares ) and the Warrants (and the Shares underlying the Warrants) and shall not resell any of these securities unless it does so in compliance with the provisions of the applicable Securities Laws;

 

y)

the Subscriber acknowledges that the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares) and the Warrants (and the Shares underlying the Warrants) may be transferred or assigned only in accordance with applicable laws ( including applicable Securities Laws) and are subject to resale restrictions imposed by the Securities Laws of the jurisdiction in which it resides or other applicable Securities Laws; the Subscriber undertakes not to resell these securities, unless he does so in compliance with these laws, and acknowledges that it is his sole responsibility to ensure compliance with them (it being understood that neither the Company, neither the Agent nor the affiliated American Brokers assume any responsibility whatsoever in this regard);

 

z)

upon the initial issuance of any of the Securities and until no longer required by the applicable provisions of the 1933 Act or applicable state securities laws or by the Registration Rights Agreement, the certificates (including the Share Certificates) representing such Securities, together with all certificates (including the Share Certificates) issued in exchange for or in replacement thereof , must bear the following mention:

 

“THE SECURITIES WHICH ARE THE SUBJECT OF THIS PRESENTATION [AND THE SECURITIES WHICH MAY BE ISSUED AT THE TIME OF THE EXERCISE THEREOF] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OF THE UNITED STATES, AS VERSION THEREFOR MODIFIED, IF APPLICABLE

 

 

(THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SECURITIES MAY NOT BE PLACED, SOLD, PLEDGE OR OTHERWISE TRANSFERRED, EXCEPT (1) IF THE TRANSACTION IS IN COMPLIANCE WITH REGULATION S OF THE ACT OF 1933, (2) IF SUCH SECURITIES ARE REGISTERED UNDER THE ACT OF 1933 OR (3) IF AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT HAS BEEN OBTAINED AND, IN EACH CASE, IF THE TRANSACTION IS IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER HAS SUBMISSIONED TO THE COMPANY THE OPINION OF RECOGNIZED LEGAL ADVISORS OR OTHER CERTIFICATION OF RELIEF OBTAINED, THE FORM AND SUBSTANCE OF WHICH ARE DEEMED REASONABLY SATISFACTORY BY THE COMPANY. »

 

aa)

the Subscriber acknowledges and agrees that the Warrants may not be exercised by a United States Person or a person located in the United States, nor on behalf of such a person, unless the latter can rely on an exemption from the registration requirements of the 1933 Act and the securities laws of all applicable states;

 

bb)

the Subscriber acknowledges and agrees that upon the initial issuance of the Warrants and until no longer required by the applicable provisions of the 1933 Act or applicable state securities laws, the certificates representing the Warrants, as well as the certificates issued in exchange or replacement thereof, must bear the following mention:

 

“THE SECURITIES WHICH ARE THE SUBJECT OF THIS PRESENT AND THE SECURITIES WHICH MAY BE ISSUED AT THE TIME THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933 OF THE UNITED STATES, IN AS AMENDED TO IT, IF ANY, (THE “1933 ACT”), OR TO THE SECURITIES LAWS OF ANY U.S. STATE. THESE SECURITIES MAY NOT BE EXERCISED IN THE UNITED STATES, EITHER BY ANY AMERICAN PERSON OR PERSON IN THE UNITED STATES, NOR FOR THEIR BEHALF OR FOR THE BENEFIT OF SUCH PERSON, UNLESS THESE SECURITIES AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR ELIGIBLE FOR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. TERMS “UNITED STATES” AND “AMERICAN PERSON” HAVE THE MEANINGS GIVEN TO THE TERMS “UNITED STATES” AND “US PERSON” IN REGULATIONS MADE UNDER THE 1933 ACT.”;

 

cc)

the extent to which the Subscriber may resell the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares) and the Warrants (and the Shares underlying the Warrants) is subject to restrictions and it is the responsibility of the Subscriber to inquire about these restrictions and comply with them before selling these securities; these securities cannot be resold under Canadian Securities Laws until the expiration of the “hold” or “restriction” to which they are subject, unless they are sold in reliance on an exemption from the obligations provided for by the Securities Acts. The Share Certificates evidencing the Preferred Shares (and the Share Certificates evidencing the Ordinary Shares resulting from the conversion of the Preferred Shares) and the Warrant Certificates representing the Warrants (and the Share Certificates evidencing the Shares underlying the Warrants) (as well as Share Certificates or Replacement Warrant Certificates, if any, issued before the expiration of the applicable holding periods), or any other registration in account (as the case may be), which it receives must bear a notice stating these resale restrictions and neither the Company nor any of its transfer agents may record transfers of these securities which are not made in accordance with these resale restrictions. For purposes of compliance with applicable Securities Laws and Regulation 45-102 respecting Resale of Securities, the Subscriber understands and acknowledges that the Share Certificates evidencing the Preferred Shares (and the Share Certificates evidencing the Common Shares arising from the conversion of the Preferred Shares) and the Warrant Certificates representing the Warrants (and the Share Certificates evidencing the Shares underlying the Warrants) (as well as the Share Certificates or Certificates replacement warrants, if applicable, issued before the expiration of the applicable holding periods), or any other account entry (as the case may be), that it receives must bear a note stating these resale restrictions, established substantially as follows (and the necessary information having been inserted therein), and neither the Company nor any of its transfer agents may record transfers of these securities which are not made in accordance with these resale restrictions:

 

 

“UNLESS OTHERWISE PROVIDED BY SECURITIES LEGISLATION,
THE HOLDER OF THE SECURITY MUST KEEP IT UNTIL [DATE
FALLING 4 MONTHS PLUS ONE DAY AFTER THE CLOSING DATE]. »

 

No proceeds of crime

 

dd)

the funds constituting the Aggregate Subscription Price which will be advanced by the Subscriber hereunder do not constitute proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), in as amended, if applicable (the “Canadian Terrorist Financing Act”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (United States), as amended, where applicable (the “U.S. Counterterrorism Act”) and Subscriber acknowledges that the Company may, in the future, be required by such laws to disclose, on a confidential basis, Subscriber's name and other information relating to this Contract and the subscription that the latter makes under the terms hereof. To the best of its knowledge, (i) no part of the funds constituting the Subscription Price to be paid by the Subscriber A) has come or will come from activities which are deemed to be criminal under the laws of Canada, the United States, an International Territory or another territory or B) is filed on behalf of a person whose identity the Subscriber does not know and (ii) the Subscriber must inform the Company without delay if he discovers that any of these statements ceases to be true and provide him with appropriate information in this regard;

 

ee)

The Subscriber is not a natural or legal person referred to in any regulation made under (i) the United Nations Act, including the Regulations Implementing the United Nations Resolutions on the Fight against Terrorism , the Regulations Implementing the United Nations Resolutions on the Taliban, ISIL (Daesh) and Al-Qaeda, the Regulations Implementing the United Nations Resolutions on the Democratic People's Republic of Korea, the Regulations Implementing the Resolutions of United Nations 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 Resolutions and special economic measures targeting Libya, the Regulations Implementing the United Nations Resolutions on Somalia, the Regulations Implementing the United Nations Resolutions on Côte d'Ivoire, the Regulations Implementing the United Nations Resolutions on Democratic Republic of the Congo, the Regulations Implementing the United Nations Resolutions on Liberia, the Regulations Implementing the United Nations Resolutions on Iraq, the Regulations Implementing the United Nations Resolutions on the Central African Republic and the Regulations Implementing the United Nations Resolutions on Sudan, (ii) the Special Economic Measures Act, including the Zimbabwe Special Economic Measures Regulations, the Burma Special Economic Measures Regulations, the Democratic People's Republic of Korea Special Economic Measures Regulations, Iran Special Economic Measures Regulations, Syria Special Economic Measures Regulations, Ukraine Special Economic Measures Regulations and Special Economic Measures Against Russia Regulations, (iii) the Freezing of Assets of Corrupt Foreign Officials Act or (iv) the Criminal Code (Canada), collectively the “Trade Sanctions”). The Subscriber acknowledges that the Company may, in the future, be required under Trade Sanctions or other applicable laws or regulations to disclose, on a confidential basis, the name and other information of the Subscriber relating to the acquisition shares placed hereunder.

 

No financial assistance

 

ff)

the Subscriber has not received and does not expect to receive from the Company, directly or indirectly, financial assistance with a view to purchasing the Securities subscribed and the Company has not taken into account the objectives, financial situation and particular needs of the Subscriber;

 

 

Future financing

 

gg)

the Subscriber acknowledges that the Company may undertake additional financing in the future in order to develop its planned activities and finance its ongoing expansion. It is not certain that such financing will be possible or that it will be possible on reasonable terms. Such future financing could have a dilutive effect on the security holders of the Company, including the Subscriber;

 

No advertising

 

hh)

the Subscriber is not aware of any advertising appearing in the paid and widely circulated written press or announced on radio or television or by any other means of telecommunications, nor of any other form of advertising (including those disseminated by electronic display or on the Internet, including the Company's website) or commercial documentation relating to the placement of the Securities subscribed, nor of any seminar or meeting whose participants have been invited by general solicitation or general advertising;

 

Costs

 

ii)

except the Agent and the affiliated American Brokers (and the members of their investment syndicates respective, and as the Company has otherwise agreed in the Summary of Terms), to the knowledge of the Subscriber, no person acting or purporting to act on behalf of the Subscriber in the context of the transactions provided for herein is entitled to brokerage fees or finder's fees;

 

Other documents

 

jj)

If required by the Securities Laws or a securities commission, stock exchange or other regulatory body, the Subscriber will execute, deliver and file reports, undertakings and other documents relating to the subscription and the issue the Preferred Shares (or the Ordinary Shares resulting from the conversion of the Preferred Shares) and the Warrants (and the Shares underlying the Warrants) and assist the Company in connection with any such filing;

 

Subscriber's Responsibility to Obtain Legal and Financial Advice

 

kk)

the Subscriber acknowledges that the fact of purchasing, holding and disposing of the Preferred Shares (or the Common Shares resulting from the conversion of the Preferred Shares) and the Warrants (and the Shares underlying the Warrants) could give rise to legal and tax consequences in any of the applicable jurisdictions and confirms that it is his sole responsibility to obtain legal, tax, investment and other professional advice in relation to signing, the delivery and execution of this Agreement and the transactions provided for herein, including with regard to the fact that these securities constitute an appropriate investment for him and with regard to the tax consequences of the purchase of the Securities subscribed to and the transactions thereon, as well as the resale restrictions and “holding periods” to which these securities are or may be subject under the Securities Acts. The Subscriber has not relied on any representation made by the Company or its legal advisors, or purportedly made on their behalf, in relation to these matters;

 

Absence of Person in Control

 

ll)

the Subscriber is not a Controlling Person of the Company and will not become such a person as a result of subscribing to the Securities subscribed hereunder and does not intend to act in concert with any other person whatsoever to form a group which would have control of the Company;

 

 

Personal information

 

mm)

the Subscriber acknowledges that he is required, under the terms of this Contract and the APPENDIX B attached, to provide certain personal information concerning him to the Company. The Company collects and uses this information for the purposes of completing the Offering, which includes establishing the eligibility of the Subscriber for the purposes of subscribing to the Securities subscribed for under the applicable Securities Laws, establishing and registering certificates, including Warrant Certificates or Share Certificates representing the Securities, or arranging for the delivery of the Securities, not evidenced by certificate, by electronic means, and filing documents required by a securities regulator or stock exchange. The Company may disclose such personal information (a) to securities regulators, commissions or stock exchanges, (b) to its registrar and transfer agent, (c) to an organization (including tax authority), a commission or other governmental authority and (d) any other party participating in the Offering, including the legal advisors of the Company and the Agent, and such information may be entered in the registers relating to the Placement. By signing this Agreement, the Subscriber consents to his personal information being collected, used and communicated in the manner described above;

 

nn)

the Subscriber acknowledges having been informed that if he resides in Canada or is otherwise subject to the securities laws of a province or territory of Canada, (i) the Company will deliver to the securities regulator securities relevant to certain personal information about him, including his full name, his residential address, his telephone number, his email address, the number of subscribed Transferable Securities that he has purchased, the total subscription price paid in consideration for the Securities subscribed, the exemption from the obligation to prepare a prospectus which he has availed himself of and the date of the placement of the Securities subscribed, (ii) this information is collected indirectly by the relevant securities regulator under powers conferred on it by the securities laws, (iii) such information is collected for the purposes of the administration and enforcement of the securities laws of the Canadian province or territory in question, and ( iv) the Subscriber may contact the officials listed in APPENDIX C regarding the indirect collection of this information by the securities regulator;

 

Resale Registration Statement

 

oo)

the Subscriber acknowledges that, in accordance with the Registration Rights Grant Agreement and subject to the precedence of the registration rights of the holders of Series A Convertible Preferred Stock (as provided for and detailed in the Registration Rights Agreement registration fees), the Company has agreed to use all necessary efforts to (i) file a resale registration statement in the United States with respect to the Common Shares resulting from the conversion of the Preferred Shares and the Shares under - underlying the Warrants which may be issued in connection with the Offering within 15 calendar days following the date of the closing of the Offering (the “Filing Date”) and (ii) causing the staff of the SEC to declare such valid registration statement with respect to such securities before the expiration of the holding period imposed by the Canadian Securities Laws (unless the staff of the SEC notifies the Company that it does not intend to review the registration statement, in which case it will be declared valid within 15 calendar days of such notice (the “Effective Date”). If this registration statement is not filed on or before the Filing Date, is not declared valid on or before the Effective Date, or is not valid for purposes of resale, according to its provisions, after having been declared valid by the staff of the SEC for a period exceeding 10 calendar days (a “Suspension”) and the Company cannot rely on rule 144 to resell the Common Shares resulting from the conversion of the Preferred Shares and the Shares underlying the Warrants without being subject to restrictions on the volume of sales or the method of sale, the Company will be subject to certain liquidated damages provisions pursuant to which it must pay to the Subscriber, with respect to these securities, an amount corresponding to 1% of the total amount invested by the latter for each period of 15 days which is subsequent to the Deposit Date, the Effective Date or the duration of the Suspension, but the total amount of these payments must in no case exceed 5% of the total amount invested by the Subscriber;

 

 

Legal advisors to the Company and the Agent

 

pp)

Dentons Canada ("Dentons") act solely as legal advisors to the Company and Fasken Martineau DuMoulin, SENCRL, SRL acts solely as legal advisor to the Agent and neither Dentons nor Fasken Martineau DuMoulin, SENCRL, SRL acts as legal advisors to the Subscriber nor assume any responsibility of any nature whatsoever for the accuracy or adequacy of the information provided to the Subscriber in connection with the Offering.

 

6.2	Reliance on representations, warranties, commitments and acknowledgments

 

The Subscriber acknowledges and agrees that it has made the representations, given warranties, undertakings and acknowledgments contained in this Agreement with the intention of enabling the Company, the Agent, the affiliated U.S. Brokers and their respective legal advisors to rely on it in order to establish the eligibility of the Subscriber (and, where applicable, the eligibility of the Designated Principal) to purchase the subscribed Securities. The Subscriber further agrees that by accepting the subscribed Securities, it represents and warrants that such representations, warranties, acknowledgments and undertakings are true at the Closing Time and have the same effect as if it had made, given, taken or formulated at the Closing Time.

 

ARTICLE 7 – CONTINUING EFFECT OF REPRESENTATIONS, WARRANTIES AND COMMITMENTS

 

7.1	Continuing Effect of Subscriber's Representations and Warranties

 

The representations, warranties and covenants of the Subscriber which are set forth in this Agreement shall continue to have effect and inure to the benefit of the Company for a period of one (1) year, the Agent and the Brokers American affiliates, notwithstanding any investigation which may be conducted by the Company, the Agent or the affiliated American Brokers, or on their behalf, in this regard and notwithstanding any subsequent alienation, by the Subscriber, of either of the Preferred Shares (or the Ordinary Shares resulting from the conversion of the Preferred Shares) or any of the Warrants (or any of the Shares underlying the Warrants).

 

ARTICLE 8 – POST-CLOSING COMMITMENTS OF THE COMPANY

 

8.1	Company Commitments

 

As long as the Subscriber or an IQ Entity holds Securities, the Company, unless it obtains the consent of the Subscriber, in its sole and absolute discretion, undertakes for itself and for each of its Subsidiaries to the following :

 

a)

maintain its head office, its principal establishment, the place where strategic decisions for the activities of the Company are made, as well as the majority of its operations, in the province of Quebec;

 

b)

remain a Canadian legal entity for business and tax purposes, including remaining a resident of Canada under the Income Tax Act (Canada);

 

c)

maintain control and ultimate ownership of all Intellectual Property, including any Intellectual Property registered in a territory other than Canada and any past, current and future Intellectual Property developed by the Group, including using its best efforts to ensure that each Person whose services are retained after the date of this Agreement by the Company or its Affiliates, either as an employee or consultant, and who will have access to, be responsible for or participate in the development of any Intellectual Property used, developed or marketed by the Company or its Subsidiaries, as the case may be, assigns in writing to the Company or a Subsidiary, as the case may be, all intellectual property rights of which it is the property and waives all non-transferable rights (including the rights moral) which relate to it;

 

d)

use its best efforts to carry out the Project in accordance with the budgetary forecasts and schedule indicated in the Letter of Intent;

 

 

e)

not use part or all of the Total Subscription Amount to prepay a debt, pay dividends, repurchase securities, make expenses or carry out projects outside the normal course of business of the Company;

 

f)

provide the Subscriber:

 

(i)

within 90 days following the end of any financial year, the audited annual consolidated financial statements of the Company, including a consolidated balance sheet of the Group, a statement of income and expenses, provisions and cash flows of the Company and its Subsidiaries, for this period, including a comparison with the previous period, all prepared in accordance with IFRS and according to the practices applied for the previous period, certified by the auditor and approved by the board of directors of the Company;

 

(ii)

within 30 days following the end of each quarter, unaudited quarterly financial statements, consolidated, if applicable, accompanied by a detailed report with comparison to the budget approved by the board of directors and explanations supporting the variations;

 

(iii)

before the end of each financial year of the Company, and immediately thereafter during any update thereof, its business plan, an operational dashboard, the Governance Report, an annual operating budget, of capital expenditures and research and development as well as a balance sheet, a report and a statement of projected cash flows, consolidated and non-consolidated, duly approved by the board of directors of the Company, including the statement of results, where applicable, for the coming financial year, all distributed monthly; And

 

g)

within 30 days following the Closing, implement procedures consistent with industry standards and best commercial practices regarding the conclusion of confidentiality agreements with its partners, employees, consultants, external collaborators and other advisors in order to protect Intellectual property.

 

8.2

Penalty

 

As long as the Subscriber beneficially owns or exercises control over at least 571,428 Common Shares (including Common Shares issuable upon conversion of convertible securities, including Common Shares resulting from the conversion of subscribed Shares and the underlying Shares to the Subscription Warrants), in the event of non-compliance by the Group with any of the commitments provided for in paragraphs8.1a)has8.1c)and, a fixed penalty equivalent to the amount of the overall Subscription Price may be imposed by the Subscriber. Payment of this penalty will be without prejudice to the rights and remedies of the Subscriber and will not affect the ownership of the Ordinary Shares already acquired under the terms of the Contract. Any penalty payable under this article is payable in cash on the expiration of five (5) days following receipt of written notice to this effect, and bears interest from said date at a rate of 7% interest, all calculated daily.

 

ARTICLE 9 – COMMISSION

 

9.1	Agent's Fee

 

The Subscriber understands that, in connection with the issue and sale of the Securities subscribed for in the Placing, the Agent will receive from the Company, at the Closing, a cash commission (the “Commission”) corresponding to 4.0% of the gross proceeds of the issue of the Securities subscribed. Except as set out in the Placement Agreement and this Agreement, no other fees or commissions are payable by the Company in connection with the completion of the Placement; provided, however, that the Company shall pay certain fees and expenses of the Agent (including the fees and expenses of the Agent's legal advisors), plus applicable taxes, incurred in connection with the Offering, in accordance with the Agent's Placement Agreement. account.

 

 

ARTICLE 10 – TERMINATION

 

10.1	Agent's Fee

 

The Subscriber may terminate this Agreement at any time before the Closing by written notice to the Company, without liability on the part of the Subscriber, in the following cases:

 

a)

one or other of the conditions precedent provided for in this Contract or in the Agency Agreement or in the documents incorporated therein by reference is not fulfilled in the manner and according to the terms that the Subscriber establishes, at its discretion. discretion, acting reasonably; Or

 

b)

the Agent would have the right to terminate the Agency Agreement pursuant to Article 9 thereof, whether or not the Agent exercises its right of termination.

 

ARTICLE 11 – GENERAL PROVISIONS

 

11.1	Other guarantees

 

Each party hereto, upon reasonable request of each other party hereto, whether before or after the Closing Time, agrees to perform, execute, acknowledge and deliver, or otherwise so that all other deeds, instruments, documents, assignments, transfers, deeds of transfer and guarantees that could reasonably be necessary to carry out the operations provided for herein are signed, acknowledged and delivered.

 

11.2	Most Favored Nation

 

The Company declares that the other subscription agreements entered into in connection with the Placing do not contain terms or conditions in favor of any other subscriber which are more favorable than the terms and conditions set forth in this Agreement, as amended from time to time. other, in favor of the Subscriber. The Company will not enter into any subscription agreement with one or more investors in connection with the Placing which contains terms or conditions in favor of other subscribers more favorable than the terms and conditions set forth in this Agreement, as amended from time to time. other, in favor of the Subscriber. In addition, the Company will not grant to any other subscriber any registration rights, board nomination rights, pre-emptive rights or similar rights relating to the governance of the Company. Without prejudice to any other remedy which the Investor may have following the violation of this paragraph11.2,if any such terms or conditions exist in any subscription agreement entered into with another subscriber, they shall be deemed incorporated into this Agreement in favor of the Subscriber, with appropriate modifications according to the context.

 

11.3

Notice

 

a)

Any notices, directions or other documents required or permitted to be given to either party hereto shall be in writing and shall be deemed to have been duly given if delivered in person or transmitted by email after performing a test transmission with the party in question, as follows:

 

	(i)	in the case of the Company, at the following address:
		Marine Vision Technologies inc.
		730, boulevard du Curé-Boivin
		Boisbriand (Quebec) J7G 2A7, Canada
		To the attention of Kulwant Sandher, Head
		offinances Email address:  ks@v-mti.com

 

 

With a copy (which does not constitute notice) to the following address:

 

Dentons Canada SENCRL 1

Place Ville Marie, Suite 3900

Montreal, QC, H3B 4M7, Canada

 

To the attention of Charles Spector.

Email address :          charles.spector@dentons.com

 

(ii)

in the case of the Subscriber, at the address indicated on page2of this Agreement, with a copy (which does not constitute notice) to the following address:

 

Blake, Cassels & Graydon, SENCRL/srl 1,

Place Ville Marie, bureau 3000

Montreal (Quebec) H3B 4N8, Canada

 

To the attention of Pascal de Guise, partner

Email address :          pascal.deguise@blakes.com

 

With a copy to the Agent, at the following address:

 

iA Capital Markets, division of iA Private Wealth Management Inc. 26

Wellington Street East, suite 700

Toronto, Ontario M5E 1S2, Canada

 

To the attention of Laura Cristello

Email address :          ECMCanada@iacapitalmarkets.ca

 

And

 

Fasken Martineau DuMoulin, SENCRL, SRL 800,

rue du Square-Victoria, bureau 3500 Montréal

(Québec) H4Z 1E9, Canada

 

To the attention of Sébastien Bellefleur, partner

Email address:           sbellefleur@fasken.com

 

b)

Notices, instructions or other documents delivered in person shall be deemed to have been given and received on the day they are delivered, if that is a Business Day, and, otherwise, on the next Business Day. If transmitted by electronic mail, they will be deemed to have been given and received on the day of transmission if it is a Business Day, but if transmitted or received after normal business hours, they will be deemed to have been given and received on the next Business Day.

 

c)

The parties hereto may change their address for service by giving notice to that effect to each of the other parties hereto, in accordance with the provisions mentioned above.

 

11.4	Rigor of deadlines

 

The deadlines stipulated in this Agreement and in each of its parts are mandatory.

 

11.5

Costs

 

Whether or not the issue and subscription of the Securities is carried out as provided for in this Agreement, all costs relating to the issue, sale and delivery of the Securities, as well as all matters relating to the transaction described in this Agreement, are the responsibility of the Company, including, without limitation, the reasonable fees of the Subscriber's legal advisors.

 

 

11.6	Applicable laws

 

This Agreement must be interpreted and applied in accordance with the laws of the province of Quebec and the laws of Canada applicable therein and the rights of the parties are governed by these laws. Disputes which may arise from this Agreement, whether relating to its interpretation, execution or any other matter, fall under the non-exclusive jurisdiction of the courts of the province of Quebec and each of the parties hereto irrevocably acknowledges the jurisdiction of the courts of this province.

 

11.7	Entire Agreement

 

This Agreement, including its annexes, constitutes the entire agreement concluded between the parties hereto relating to the operations provided for therein and cancels and replaces all prior agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions or collateral understandings or undertakings, express or implied, between the parties hereto, except those expressly set forth in this Agreement or in any other contract or certificate, attestation, affidavit, statutory declaration or other document, as noted above. This Agreement may not be modified in any respect except by a written document signed by each of the parties hereto.

 

11.8

Copies

 

This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and which together constitute one and the same Agreement. Copies may be delivered in their original form, in PDF format or by facsimile, and the parties accept signatures received in PDF format or by facsimile as if they were the original signature of the parties. If an incomplete copy of this Agreement is delivered to the Company, the Agent or an Affiliated U.S. Broker, the Company, the Agent, the Affiliated U.S. Brokers and their respective advisors will have the right to presume that the Subscriber accepts the entire terms and conditions set forth on the undelivered pages, without modification, and agrees to be bound by these terms.

 

11.9

Transfer

 

Neither party may assign this Agreement without the prior written consent of the other parties hereto.

 

11.10

Application

 

This Agreement shall be binding upon the parties hereto and their respective heirs, executors, administrators, successors (including successors following the merger or consolidation of either party) and permitted assigns and is carried out for the benefit of them.

 

THE REST OF THE PAGE IS LEFT INTENTIONALLY BLANK.

 

 

The Company hereby accepts the subscription of the Subscribed Securities, as described on page 2 of this Agreement, on the terms set out in this Agreement (including all applicable annexes) this 17th day of January 2024.

 

		For TECHNOLOGIES MARINE VISION INC.,
		/s/ Kulwant Sandher
		Authorized signatory

 

 

ANNEX A SUMMARY
OF TERMS AND CONDITIONS

Private placement of preferred shares by way of placement for account

January 8, 2024

 

(Amounts are in U.S. dollars unless otherwise noted.)

 

 

This summary of terms (the “Summary of Terms”) summarizes the principal terms of the proposed offering of preferred shares of Technologies Marine Vision Inc. by way of private placement for account, in an amount of up to $3.0 million , from certain qualified subscribers. This Summary of Terms is presented for discussion purposes only and does not constitute an offer or agreement binding under law and is, in all respects, conditional and subject to the completion of satisfactory due diligence. as well as negotiating and signing final documents and receiving all required approvals from regulatory bodies.

 

Issuer :	Marine Vision Technologies Inc. (the “Company”).
Placement (the placement ") :	Number of Preferred Shares of up to 3,000 and (the “Preferred Shares”) and number of warrants to purchase ordinary shares of the Company (“Warrants”) of up to 2,857,142. Each Warrant will entitle one to subscribe for one (1) Common Share of the Company (a “Warrant Share”) at the exercise price of $1.05 per Warrant Share during the period of five (5) years following its date of issue.
Issue price:	US$1,000 per Preferred Share (the “Issue Price”).
Amount of investment:	Up to $3,000,000.
Type of investment:	The Transferable Securities will be marketed on an agency basis on commercially reasonable terms and sold in reliance on exemptions from prospectus or registration requirements to investors who (i) reside or are located in a Canadian province or territory, (ii) are located in the “United States” or are “US Persons” (as defined in Regulation S of the United States Securities Act of 1933, as amended, as applicable) and (iii) are located in a country other than Canada and the United States as the Company and the Agents may agree, acting reasonably, in each case in accordance with applicable laws, provided that the Company has no obligation to file a prospectus, registration statement or similar document in the jurisdiction in question and, in the case of point (iii), does not subsequently become subject to continuous disclosure obligations in the jurisdiction in question.
Use of the product:	The net proceeds from the Placement will be used exclusively to cover (a) the development of batteries and chargers related to the Project, (b) the development of rotomolded materials related to the Project, (c) the working capital of the Company related to the Project; (d) salaries and recruitment related to the Project; and (e) operational costs related to the Project. Without limiting the generality of the foregoing, the net proceeds from the Placement must not be used to prepay a debt, pay dividends, repurchase securities, make expenses or carry out projects outside the Normal Course of Business.
Agent:	iA Capital Markets will act as the exclusive agent in Canada (the “Agent”).
Commission :	Commission of 4.0% of the gross proceeds of the Offering payable in cash.
Listing on the stock exchange:	The Company's common stock is listed on Nasdaq under the symbol "VMAR".

 

 

Holding period:	The securities issuable under this Offering (i) will be subject to a hold period of four months and one day under applicable Canadian securities laws (the “Canadian Hold Period”) and ( (ii) could be considered “restricted securities” under applicable United States federal and state securities laws and be subject to hold periods under such laws. The Company has undertaken to use all necessary efforts to (i) file a resale registration statement in the United States with respect to the Common Shares issuable in the Offering within 15 calendar days following the date of closing of the Offering (the "Filing Date") and (ii) causing the staff of the United States Securities and Exchange Commission (the "SEC") to declare this registration statement effective as of with respect to such securities before the expiration of the Canadian Hold Period (unless the staff of the SEC notifies the Company that it does not intend to review the registration statement, in which case it will be declared valid within 15 calendar days following this notice (the “Effective Date”). If this registration statement is not filed on or before the Filing Date, is not declared valid on or before the Effective Date, or is not valid for purposes of resale, according to its provisions, after having been declared valid by the staff of the SEC for a period exceeding 10 calendar days (a "Suspension") and the Company cannot rely on Rule 144 to resell the Common Shares without being subject to restrictions on the volume of sales or the method of sale, the Company will be subject to certain provisions providing for liquidated damages pursuant to which it will have to pay to the purchaser of the securities in question an amount corresponding to 1% of the amount total invested by the latter for each period of 15 days which is subsequent to the Deposit Date, the Effective Date or the duration of the Suspension, but the total amount of these payments must in no case exceed 5% of the total amount invested by the buyer.
Subscription warrants :	The Warrants may be exercised for cash or for cashless payment if the Shares underlying the Warrants are not the subject of a valid registration declaration. If the Warrants are exercised for cashless payment, the Shares subject to the Warrants issuable thereunder will be issued to the holder of the warrant in question without any restriction in the United States or Canada .
Investors qualified:	This Offering is being made only to (i) persons who are located in the United States or to US persons who are “accredited investors” (as defined in Rule 501(a) of Regulation D of the United States Securities Act of 1933, as amended, if applicable) or for the account or benefit of such persons and (ii) persons who are located outside the United States and who are not American persons and are “Accredited Investors” (as that term is defined under applicable Canadian securities laws).
Eligibility:	The Common Shares and the Shares underlying the Warrants are qualified investments under applicable Canadian laws for RRSPs, RRIFs, RDSPs, RESPs, TFSAs and DPSPs.
Closing date:	On or about January 17, 2024, or such other date as the Agent and the Company may mutually agree to.

 

 

APPENDIX B

CANADIAN QUALIFIED INVESTOR CERTIFICATE

 

HAS :	TECHNOLOGIES MARINE VISION MARINE INC. (the "Company")
AND TO:	Capital Markets, division of iA Private Wealth Management Inc. (the “Agent”)

 

The categories presented below contain expressly defined terms. If you are unsure of the meaning of these terms or are unable to determine whether any of these categories apply to you, please contact your broker or legal advisor before proceeding. complete this certificate.

 

Terms not expressly defined herein APPENDIX Bhave the meaning assigned to them in the Subscription Agreement to which this APPENDIX Bis attached.

 

In connection with the purchase of the Subscriber Securities which the undersigned Subscriber hereby makes, the Subscriber represents, warrants, confirms and attests to the Company as follows (and acknowledges that the Company and its legal advisors are relying on such representations , guarantees, confirmations and certificates):

 

a)

the Subscriber resides in one of the provinces or territories of Canada or is otherwise subject to the securities laws of that province or territory;

 

b)

the Subscriber purchases the subscribed Securities for his own account and not for the benefit of another person or is deemed to purchase them for his own account in accordance with Regulation 45-106;

 

c)

the Subscriber is, and will be on the Closing Date, an “accredited investor” within the meaning of Regulation 45-106 or section 73.3 of the Securities Act (Ontario), given that it is a member one of the categories of “qualified investor” reproduced below that he checked to indicate that he was part of it;

 

d)

the Subscriber has not been created or is used solely for the purpose of purchasing or holding securities as an accredited investor, as described in paragraph (m) below;

 

e)

if the Subscriber purchases Transferable Securities subscribed under categories j), k) or l) below, he has completed and signed the APPENDIX 1attached;

 

f)

at the time it is signed by the Subscriber, this ANNEX B, including, where applicable, itsAPPENDIX1, is incorporated into and forms part of the Subscription Agreement.

 

(PLEASE CHECK THE BOX THAT APPLIES TO THE APPLICABLE QUALIFIED INVESTOR CATEGORY)

 

NOTE: If you checked categories j), k) or l) below, you must complete and sign the APPENDIX 1 of this ANNEX B.

 

¨

a)

a Canadian financial institution or 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 a person referred to in paragraph a) or b), if the latter is the owner of all of the voting securities of the subsidiary, with the exception of those of which the directors of the subsidiary must be owners in under the law;

 

¨

d)

a person registered as an advisor or broker under the securities legislation of a jurisdiction of Canada;

 

¨

e)

an individual registered as a representative of a person referred to in paragraph (d) under the securities legislation of a jurisdiction of Canada;

 

x

e.1)

a natural person previously registered under the securities legislation of a territory of Canada, with the exception of a natural person previously registered only as a representative of a limited market dealer exempt securities) under the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador) or both;

 

¨

f)

the Government of Canada or a territory of Canada, or a Crown corporation, public body or entity wholly owned by the Government of Canada or a territory of Canada;

 

¨

g)

a municipality, a public office or commission in Canada and a metropolitan community, a school board, the School Tax Management Committee of the Island of Montreal or an intermunicipal board in Quebec;

 

¨

h)

a national, federal, state, provincial or territorial government or municipal government of or in a foreign country, or an agency of such a government or authority;

 

¨

i)

a pension fund that is regulated by the Office of the Superintendent of Financial Institutions Canada, a pension commission or a similar regulatory body of a territory of Canada;

 

¨

j)

a natural person who, alone or with his or her spouse, has the beneficial ownership of financial assets having an overall realizable value before tax of more than $1,000,000, less corresponding debts;

 

Refer to the definition of the term “financial assets” below and paragraph 3 of section 3.5 of the Policy Statement to Regulation 45-106 which provides guidance on the meaning of beneficial ownership of financial assets. If an accredited investor who is an individual wishes to subscribe for securities through wholly-owned portfolio companies or similar entities, these must fall into the category set out in paragraph (t) below or paragraph (w) if it is a family trust.

 

If you checked paragraph j) above, you must complete and sign the APPENDIX 1of this ANNEX B.

 

¨

j.1)

an individual who has beneficial ownership of financial assets having an aggregate pre-tax realizable value of more than $5,000,000, net of corresponding debts;

 

Refer to the definition of “financial assets” below and paragraph 3 of section 3.5 of the Policy Statement to Regulation 45-106 which provides guidance on the meaning of beneficial ownership of financial assets.

 

 

¨

k)

an individual whose net income before tax was greater than $200,000 in each of the last two calendar years or whose net income before tax, combined with that of his or her spouse, was greater than $300,000 in each of the last two calendar years calendar years and who, in in either case, reasonably expects to exceed this net income in the current calendar year;

 

If you checked paragraph k) above, you must complete and sign the APPENDIX 1of this ANNEX B.

 

¨

l)

a natural person who, alone or with their spouse, has net assets of at least $5,000,000;

 

Refer to the definition of the term “net assets” below and to paragraph 4 of section 3.5 of the General Instruction relating to Regulation 45-106 which gives information on the calculation of the net assets of the acquirer who is a natural person.

 

If you checked paragraph l) above, you must complete and sign the APPENDIX 1of this ANNEX B.

 

¨

m)

a person, except an individual or an investment fund, who has net assets of at least $5,000,000 according to his or her most recent financial statements;

 

See the definition of “net assets” below. Net assets of at least $5,000,000, in the case of an entity, are established according to "its most recent financial statements", which must be prepared in accordance with generally accepted accounting principles.

 

¨

n)

an investment fund that places or has placed its securities exclusively with the following persons: (i) a person who is or was an accredited investor at the time of the placement;

 

(ii) a person who subscribes or has subscribed for securities in accordance with the conditions set out in section 2.10 (Investment of a minimum amount) or 2.19 (Additional investment in an investment fund) of Regulation 45-106 or (iii) a person referred to in paragraph (i) or (ii) who subscribes or has subscribed for securities under section 2.18 (Reinvestment in an investment fund) of Regulation 45-106;

 

¨

o)

an investment fund that distributes or has distributed its securities by means of a prospectus certified, in a territory of Canada, by a responsible agent or, in Quebec, by the securities authority;

 

¨

p)

a trust company registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or a comparable law in a territory of Canada or in a foreign jurisdiction, and acting on behalf of 'she manages under discretionary mandate;

 

¨

q)

a person acting on an account that he or she manages under a discretionary mandate if he or she is registered or authorized to carry on the activities of an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a territory stranger;

 

¨

r)

a registered charity under the Income Tax Act (Canada) that, in respect of the transaction, has obtained advice from an eligibility advisor or advisor registered under the legislation of the territory of the acquirer to give advice on the securities which are the subject of the transaction in question;

 

¨

s)

an entity incorporated in a foreign jurisdiction that is similar in form and function to one of the entities referred to in paragraphs (a) to (d) or paragraph (i);

 

 

¨

t)

a person in respect of whom all those who have direct, indirect or beneficial ownership of rights, other than voting securities that directors are required to hold by law, are accredited investors;

 

If you checked paragraph t), please indicate the name of each owner and the category of qualified investor to which he belongs (indicating the letter corresponding to the category checked in this certificate):

 

	Name	Qualified Investor Category
Owner :
Owner :
Owner :

 

[if there are more than three owners, attach a separate sheet]

 

¨

u)

an investment fund that is advised by a registered advisor or a person exempt from such registration;

 

¨

v)

a person recognized or designated by the securities authority or, except in Ontario and Quebec, by the responsible agent as an accredited investor;

 

¨

w)

a trust created by an accredited investor for the benefit of parents, the majority of the trustees of which are accredited investors, and all of whose beneficiaries are the spouse, former spouse, father and mother, grandparents, brothers, sisters, children or grandchildren of the accredited investor, his or her spouse or former spouse.

 

If you checked paragraph (w), please indicate the name of the accredited investor who created the trust and applicable trustees and the category of accredited investor to which they belong (indicating the letter corresponding to the category checked in this certificate):

 

Name (indicate whether this is the person who created the trust or a trustee)	Qualified Investor Category

 

[if there are more than three people, attach a separate sheet]

 

For the purposes hereof, the following terms have the meaning given to them below:

 

A.

“financial assets” means (i) a sum of cash, (ii) securities or (iii) an insurance contract, a deposit or a security representing a deposit which does not constitute a form of investment subject to the securities legislation;

 

B.

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

 

 

C.

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

 

D.

“discretionary managed account” means the account of a client for which a person makes investment decisions, to the extent that he or she has the discretionary power to carry out transactions in securities without having to obtain the consent of the client to each operation;

 

E.

“spouse” means, in relation to a natural person, one of the following natural persons:

(i) a natural person with whom she is married and who does not live separately from her within the meaning of the Divorce Act (Canada), (ii) a natural person with whom she lives in a relationship similar to marriage, including a person of the same sex, or (iii) in Alberta, in addition to a person referred to in paragraph (i) or (ii), an adult interdependent partner of that person within the meaning of the Adult Interdependent Relationships Act ( Alberta);

 

F.

“corresponding debts” means (i) debts incurred or assumed for the purpose of financing the acquisition or ownership of financial assets or (ii) debts secured by financial assets;

 

G.

“entity” means a corporation, consortium, partnership, trust or unincorporated organization;

 

H.

“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and any subsidiary of that subsidiary;

 

I.

“founder” means, with regard to an issuer, a person who (i) acting alone, in collaboration or in concert with one or more other persons, takes the initiative, directly or indirectly, to found or constitute the issuer's business or materially reorganize it and (ii) at the time of the offering or transaction, actively participates in the issuer's business;

 

J.

“investment fund” means a collective investment scheme or closed-end investment fund and, for greater clarity, in British Columbia includes an employee venture capital corporation (EVCC) whose constituent assets are not restrictive, and which is registered under Part 2 of the Employee Investment Act (British Columbia) (RSBC 1996, c. 112) and whose purpose is to make multiple investments and a venture capital company registered in under Part 1 of the Small Business Venture Capital Act (British Columbia) (RSBC 1996, c. 429) which aims to make multiple investments;

 

K.

“Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central credit union for which an order has been issued in accordance with paragraph 1 of section 473 of that Act or (ii) a bank, loan company, trust company, insurance company, treasury branch, credit union, credit union, financial services cooperative or federation which, in each case, is authorized by a law of Canada or a Canadian territory to carry on its activities in Canada or a Canadian territory;

 

L.

“person” means (a) a natural person, (b) a legal person, (c) a partnership, trust, fund, association, consortium, body or any other organized group of persons, with or without legal personality , or (d) any natural person acting as trustee, executor, judicial or estate administrator or personal or legal representative;

 

M.

“natural person” means a natural person, other than a partnership, an unincorporated association, an unincorporated organization or a trust, or a natural person acting as a trustee , executor, judicial or estate administrator or personal or legal representative;

 

 

N.

“company” means a corporation, an incorporated association, an incorporated trade union or any other incorporated organization.

 

In Regulation 45-106, a natural or legal person is a company in the same group as another natural or legal person if one is the subsidiary of the other or if each is controlled by the same natural or legal person.

 

In Regulation 45-106, and with the exception of Section 4 of Part 2, a person is considered to exercise control over another person if: (a) the person beneficially owns securities of that person other person ensuring a sufficient number of votes to elect the majority of its directors or directly or indirectly exercises control over such securities, unless it holds them only as security for an obligation, b) in the case of a partnership other than a limited partnership, it holds more than 50% of the shares or (c) in the case of a limited partnership, it is the general partner.

 

In Regulation 45-106, a trust company referred to in paragraph (p) of the definition of "accredited investor" (unless it is a trust company registered under a law of the Island - of Prince Edward that is not registered or authorized under the Trust and Loan Companies Act (Canada) or an equivalent law in another territory of Canada) is deemed to subscribe or acquire the securities for his own account.

 

In Regulation 45-106, a person referred to in paragraph q) of the definition of “accredited investor” is deemed to subscribe or acquire the securities for his own account.

 

The statements made above in this certificate are true and correct as of the date hereof and will be true and correct as of the Closing Time. If any of these statements proves not to be true and accurate before the Closing Time, the undersigned must notify the Company in writing without delay before the Closing Time.

 

DATE :			SIGNATURE :
X			X
Witness (if the Subscriber is a natural person)
			QUEBEC INVESTMENT
Write the name of the witness in block letters			Register the name of the Subscriber in characters printing
			If the Subscriber is not a natural person, enter the name and title of the authorized signatory in block letters

 

 

APPENDIX 1 TO ANNEX B RISK
ACKNOWLEDGMENT CERTIFICATE

 

Form 45-106A9

Form for Qualified Investors who are individuals

 

CAUTION!  This investment is risky. Only invest if you can bear the loss of the entire amount you have invested.

  

PART 1 TO BE COMPLETED BY THE ISSUER OR SELLING HOLDER
1.     Your placement
Type of securities: Preferred shares common stock warrants	Issuer: Technologies Marine Vision Inc.
Securities subscribed to or acquired from: Technologies Marine Vision Inc.
PARTS 2 TO 4 TO BE COMPLETED BY THE SUBSCRIBER OR PURCHASER
2.     Acknowledgement of risk
This investment is risky. Initial each statement to confirm that you understand the following:		Your initials
Risk of loss –You could lose the entire amount of_______________________$ invested. [Instructions: Indicate the total amount invested.]
Liquidity risk –You may not be able to sell this investment or sell it quickly.
Lack of information– You may receive little or no information about your investment.
Lack of advice– You will not get advice from the representative as to whether this investment is suitable for you or not unless the representative is registered. The representative is the person you meet about the investment or who provides you with information about it. To check if the representative is registered, go towww.sontilsinscriptions.ca.
3.     Eligibility as a qualified investor
You must meet at least one of the following criteria to be authorized to make this investment. Initial the statement that applies to your situation (there may be more than one). The person named in Part 6 must ensure that you meet the definition of an accredited investor. You can contact her, or the representative indicated in part 5, to find out if you meet the criteria.		Your initials
·      Your net income before tax has been more than $200,000 in each of the last two calendar years and you expect to exceed this income in the current calendar year. (The amount of your net income before tax can be found on your tax return.)
·       Your combined net income before tax and that of your spouse was more than $300,000 in each of the last two calendar years and you expect your combined net income before tax to be higher in the current calendar year.
·       You own, alone or with your spouse, cash and securities whose value amounts to more than $1,000,000, after deducting the related debts.
·       You own, alone or with your spouse, net assets worth more than $5,000,000. (Your net assets are your total assets, including real estate, minus total debt.)

 

4.      Name and signature
By signing this form, you confirm that you have read it and that you understand the risks associated with the investment indicated therein.
First and last name (printed):
Signature:	Date :______________________________2024
PART 5 TO BE COMPLETED BY THE REPRESENTATIVE
5.     Information on the representative
[Instructions: The representative is the person you meet about the possible placement or who provides you with information about it. This may be a representative of the issuer or selling holder, a registered person or a person exempt from the registration requirement.]
First and last name of representative (print):
Phone :	Email address :
Company name (if registered):
PART 6 TO BE COMPLETED BY THE ISSUER OR SELLING HOLDER
6.     Information additional information on placement
iA Capital Markets, division of iA Private Wealth Management Inc. 26 Wellington Street East, suite 700 Toronto, Ontario M5E 1S2 Canada Attention: Laura Cristello Email address :ECMCanada@iacapitalmarkets.ca   For more information on prospectus exemptions, please contact your provincial or territorial securities regulator. You will find contact details atwww.securities-administrators.ca.

 

Instructions for this form:

 

1.

Parts 1, 5 and 6 must be completed before the Subscriber completes and signs the form.

 

2.

The Subscriber must sign this form. The Subscriber and the issuer or selling holder must both receive a signed copy. The issuer or selling holder is required to keep their copy for the period of eight years following the placement.

 

 

APPENDIX C

CONTACT INFORMATION FOR CANADIAN SECURITIES COMMISSIONS

 

 

Financial Markets Authority 800, rue du Square Victoria, 22nd floor CP 246, Tour de la Bourse Montreal (Quebec) H4Z 1G3 Telephone: 514 395-0337 or 1 877 525-0337 Fax: 514 873-6155 (deposits only) Fax: 514 864-6381 (confidential requests only) Email address :financingdessocietes@lautorite.qc.ca (for issuers that are corporations);funds_dinvestment@lautorite.qc.ca(for issuers that are investment funds)   Government of Yukon Ministry of Community Services Office of the Superintendent of Securities 307 Black Street, 1erfloor CP 2703, C-6 Whitehorse, Yukon Y1A 2C6 Telephone: 867 667-5466 Fax: 867 393-6251 Email address :securities@gov.yk.ca

 

 

APPENDIX D

MODEL AGREEMENT FOR GRANTING REGISTRATION RIGHTS

 

 

 

Exhibit 99.4

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into effective as of January 17, 2024 (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 Series B Convertible Preferred shares the “Preferred Shares”) at a price equal to $1,000 per Preferred share which are convertible into Common Shares (the “Conversion Shares”) and to which are attached common share purchase warrants (the “Common Share Warrants”) exercisable into Common Shares as indicated in the Subscription Agreement (the “Warrant Shares” which, together with the Conversion Shares, are collectively referred to as, the “Common Shares”, and, together with the Preferred Shares and the Common Share Warrants, are hereby collectively referred to as the “Securities”).

 

B.            To induce the Subscribers to purchase the Preferred 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 Montréal, 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.

 

“Conversion Shares” means the Common Shares acquired by Subscribers pursuant to (a) the conversion rights set out in the Preferred Shares, (b) the exercise of the Warrants and (c) 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.

 

“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 Conversion Shares; (ii) the Warrant Shares and (iii) the Warrants 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 Conversion Shares, the Warrant Shares, or the Warrants 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 or (4) the Company has not completed the registration procedures in accordance with the Series A Registration Rights notwithstanding the Company’s commercially reasonable efforts to do so.

 

 

“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 subject to the Series A Registration Rights 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 405” means Rule 405 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.

 

“Rule 424” means Rule 424 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.

 

“Series A Registration Rights” means the registration rights described in the Registration Rights Agreement dated December 22, 2023.

 

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

 

2.

Registration.

 

(a)            Mandatory Registration. Subject to the Series A Registration Rights, 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, (a) 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, if such counsel has requested and received a signed certificate (a “Legend Removal Certificate”) from a Holder of the Registrable Securities, 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 (b) promptly to amend such opinion to cause the Registrable Securities to be Legend Removal Shares after later receipt of a Legend Removal Certificate from the Holder, 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 $25,000 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) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y)(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, 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 (y)(1) or (y)(2) 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 (y)(1) or (y)(2) 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 Canada LLP
	1 Place Ville Marie, Suite 3900
	Montréal, Québec H3B 4M7
	Attention:	Charles R. Spector
	E-mail:	charles.spector@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:	/s/ Kulwant Sandher
		Name:	Kulwant Sandher
		Title:	CFO

 

 

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 January 17, 2024, 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 99.5

 

AGENCY AGREEMENT

 

January 15, 2024

 

Vision Marine Technologies Inc.

730 Boulevard du Curé-Boivin

Boisbriand, Québec, J7G 2A7, Canada

 

Attention: Kulwant Sandher, Chief Financial Officer

 

Re:      Private Placement of Securities

 

iA Capital Markets, a division of iA Private Wealth Inc. (the “Agent”) understands that Vision Marine Technologies Inc. (the “Corporation”) has agreed, upon the terms and subject to the conditions of the Subscription Agreements (as defined below), to issue and sell to certain subscribers, pursuant to applicable prospectus exemptions (the “Offering”): (i) up to 3,000 Series B Convertible Preferred Shares in the capital of the Corporation (the “Preferred Shares”) at a purchase price of $1,000 per Preferred Share, any such Preferred Share being convertible into common shares in the capital of the Corporation (the “Common Shares”) and (ii) up to 2,857,142 accompanying Common Share purchase warrants (the “Warrants”). Each Warrant will be exercisable by the holder to purchase one Common Share (each a “Warrant Share”) at a price $1.05 until the date that is five 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 Securities 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 Securities 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 Securities (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(ss);

 

(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 January 17, 2024, 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 Securities 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)

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

 

(xviii)

“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;

 

 

(xix)

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

 

(xx)

“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;

 

(xxi)

“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;

 

(xxii)

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

 

(xxiii)

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

 

(xxiv)

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

 

(xxv)

“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;

 

(xxvi)

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

 

(xxvii)

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

 

 

(xxviii)

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

 

(xxix)

“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;

 

(xxx)

“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;

 

(xxxi)

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

 

(xxxii)

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

 

(xxxiii)

“Nasdaq” means the Nasdaq Capital Market;

 

(xxxiv)

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

 

(xxxv)

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

 

(xxxvi)

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

 

(xxxvii)

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

 

(xxxviii)

“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;

 

(xxxix)

“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;

 

	(xl)	“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;
	(xli)	“ Preferred Shares” means the series B convertible preferred shares which the Corporation is authorized to issue as constituted on the date hereof;
	(xlii)	“Public Record” means all information found under the Corporation’s profile on SEDAR and EDGAR from September 1, 2020 up to and including January 15, 2024.
	(xliii)	“Purchase Price” has the meaning given to such term in the recitals hereto;
	(xliv)	“Purchaser” means a Person subscribing for Offered Securities;

 

 

	(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)	“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 Common Shares issuable upon conversion of the Preferred Shares and the Warrant Shares issuable upon due exercise of the Warrants in accordance with their terms, substantially in the form attached to the Subscription Agreement as Schedule “F”;
	(xlvii)	“Reporting Jurisdiction” means the province of Québec;
	(xlviii)	“ Sanctions” has the meaning given to such term in Section 7(uu);
	(xlix)	“Sanction Country” has the meaning given to such term in Section 7(uu);
	(l)	“SEC” means the United States Securities and Exchange Commission;
	(li)	“SEC Reports” shall have the meaning ascribed to such term in Section 7(aa);
	(lii)	“SEDAR” means the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators;
	(liii)	“Securities” means, collectively, the Preferred Shares and the Warrants;
	(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)	“Subscription Agreements” means the subscription agreements to be entered into between the Corporation and each of the Purchasers, including the French version to be entered into with Investissement Québec, titled contrat de souscription;
	(lviii)	“ 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;
	(lix)	“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;
	(lx)	“ Transaction Documents” means this Agreement, the Subscription Agreements, the Warrant Certificates and the Registration Right Agreements;
	(lxi)	“ 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;

 

 

(lxii)

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

 

(lxiii)

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

 

(lxiv)

“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;

 

(lxv)

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

 

	(lxvi)	“USPTO” means the United States Patent and Trade mark Office;
	(lxvii)	“Warrant Certificate” means the certificate representing the Warrants;
	(lxviii)	“ Warrant Shares” has the meaning given to such term in the recitals to this Agreement; and
	(lxix)	“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 Securities 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 Securities 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 Securities 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 Securities 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 Securities 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 Securities 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 Securities 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 Securities in connection with the Offering;

 

(iii)

it will solicit or procure subscriptions for Offered Securities 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 Securities 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 Securities 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 Preferred 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 and Investissement Québec:

 

(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 each of the Agent and Investissement Québec, acting reasonably;

 

(ii)

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 and Investissement Québec, 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 or Investissement Québec may reasonably request, and including specimen signatures of the signing officers of the Corporation;

 

(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 the Agent and to Investissement Québec, certifying each of the facts described in Section 5(c)(i) through

 

(iv)

for and on behalf of the Corporation (without personal liability);

 

(iv)

a certificate dated the applicable Closing Date signed by the Chief Executive Officer and the Chief Financial Officer of the Corporation and addressed to the Agent and to Investissement Québec, certifying that the Corporation has raised an aggregate amount of $14,400,000 in equity financing since January 1, 2023, which together with this Offering, will represent an aggregate amount of $17,400,000;

 

(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 Preferred 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 and Preferred Shares as of a date not more than two Business Days prior to the Closing Date;

 

(xi)

and

 

(xii)

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; and Investissement Québec

 

(b)

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

 

(i)

payment of the aggregate Purchase Price for the Offered Securities 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 Securities, 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 Securities 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 issuable upon conversion of the Preferred Shares and the Warrant Shares issuable upon due exercise of the Warrants in accordance with their terms 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 Preferred Shares comprised in the Securities 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 and Investissement Québec 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 4.0% of the aggregate Purchase Price for the Offered Securities issued to the Purchasers (the “Agency Fee”). In addition, the Agent shall be entitled to the above noted compensation in connection with any offering of securities or other financing or capital raising transaction of any kind involving Fidelity Investments Canada ULC or any of its affiliates (a “Tail Financing”) that the Corporation completes to the extent that: (i) the proceeds of such Tail Financing are to be used substantially for the same purposes as the Offering; and (ii) such Tail Financing is consummated at any time within 6 months of the latest of (a) the Closing Date and (b) the date of this Agreement;

 

 

(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 Securities, 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, up to 6,000 Series A convertible preferred shares and up to 3,000 Series B convertible preferred shares. As at the date of this Agreement, but prior to the completion of the Offering, there are 11,654,754 Common Shares and 3,000 Series A convertible preferred shares; all 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), and immediately prior to the completion of the Offering, 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 Securities is not subject to any pre-emptive right or other contractual right to purchase securities of the Corporation.

 

(k)

Offered Securities: 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 Securities 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 Securities, Preferred Shares, Warrants (and underlying securities, including the Common Shares issuable upon the conversion of Preferred Shares) have been duly and validly authorized and:

 

(i)

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

 

(ii)

any Common Share issuable upon the conversion of a Preferred Share, will be, upon any such conversion, validly issued as a fully paid and non-assessable Common Shares; and

 

(iii)

the Warrant Shares 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 Common Shares.

 

(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 potential listing of the Common Shares issuable upon conversion of the Preferred Shares and the Warrant Shares upon due exercise of the Warrants in accordance with their terms 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, 2023 and 2022, together with the auditors’ report thereon 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)

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.

 

 

(bb)

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.

 

(cc)

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.

 

(dd)

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.

 

(ee)

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.

 

(ff)

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.

 

(gg)

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.

 

(hh)

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.

 

 

(ii)

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.

 

(jj)

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.

 

(kk)

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.

 

(ll)

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.

 

(mm)

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.

 

(nn)

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.

 

 

(oo)

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.

 

(pp)

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.

 

(qq)

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 Preferred 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.

 

(rr)

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.

 

 

(ss)

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.

 

(tt)

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.

 

(uu)

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.

 

(vv)

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.

 

 

 

(ww)

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

 

(xx)

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.

 

(yy)

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.

 

(zz)

No Order: No Securities Commission, stock exchange or comparable authority has issued any order preventing or suspending the distribution of the Offered Securities 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.

 

(aaa)

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.

 

(bbb)

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.

 

(ccc)

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

 

(ddd)

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.

 

 

(eee)

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.

 

(fff)

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 Securities.

 

(ggg)

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.

 

(hhh)

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 Securities, Preferred Shares and Warrants (and underlying securities, including the Common Shares issuable upon the conversion of Preferred Shares) will be duly and validly authorized and:

 

(i)

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

 

(ii)

any Common Share issuable upon the conversion of a Preferred Share, will be, upon any such conversion, validly issued as a fully paid and non-assessable share of the Corporation; and

 

(iii)

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 issuable upon conversion of the Preferred 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 Securities (and underlying securities), the Preferred Shares, the Warrants and the Warrant Shares (and underlying securities);

 

(iii)

the listing of the Common Shares issuable upon conversion of the Preferred 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 Securities, including, without limitation, compliance with the Securities Laws of the Offering Jurisdictions to enable the Offered Securities 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 Securities, 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 Securities, 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 Securities);

 

(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 Securities 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 Securities 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$100,000; and (i) Agent’s U.S. legal counsels up to $3,000; 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 Preferred Shares or equivalents of both 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 Preferred Shares or set the conversion or exercise price of Common Share equivalents below a price of $1.05 per Common Share.

 

15.

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 Canada LLP

1 Place Ville Marie, Suite 3900

Montréal, Québec, H3B 4M7, Canada

 

	Attention:	Charles Spector
	E-mail:	charles.spector@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.

 

16.

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 Securities shall survive the purchase and sale of the Offered Securities 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 Securities 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 Securities 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 Securities 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/ Yanick Brochu
	Name:	Yanick Brochu
	Title:	Senior Managing Director, Head of Capital Markets

 

The undersigned hereby accepts and agrees to the foregoing as of the 15^th day of January, 2024.

 

	VISION MARINE TECHNOLOGIES INC.
	Per:	/s/ Kulwant Sandher
		Name:
		Title:

 

[Signature Page to the Agency Agreement]

 

 

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/ Yanick Brochu
	Name:	Yanick Brochu
	Title:	Senior Managing Director, Head of Capital Markets

 

The undersigned hereby accepts and agrees to the foregoing as of the 15^th day of January, 2024.

 

	VISION MARINE TECHNOLOGIES INC.
	Per:
		Name:
		Title:

 

 

[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 Preferred Shares and Warrants; and

 

(g)

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

 

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%

 

 

SCHEDULE 7(h)

 

RIGHTS TO ACQUIRE SECURITIES

 

Warrants

 

There are 3,012,441 warrants to acquire Common Shares of the Corporation.

 

Options

 

There are 1,099,541 options acquire Common Shares of the Corporation.

 

Series A Convertible preferred shares

 

There are options acquire an additional 3,000 Series A Convertible preferred shares of the Corporation.

 

Series A Warrants

 

There are 2,857,142 warrants attached to the 3,000 Series A Convertible preferred shares of the Corporation.

 

There will be 2,857,142 warrants attached to yet to be issued 3,000 Series A Convertible preferred shares of the Corporation.

 

Series A Convertible preferred shares

 

The 3,000 Series A Convertible preferred shares are convertible into 2,857,142 Common Shares of the Corporation, subject to adjustment.

 

The 3,000 to yet to be issued Series A Convertible preferred shares are convertible into 2,857,142 Common Shares of the Corporation, subject to adjustment.

 

 

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