Exhibit 10.1

 

Representative’s Warrant

 

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “Securities ACT”), OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES
UNDER THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.

 

This Warrant is subject to restrictions on transfer and may not be sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of this Warrant or the Shares acquirable upon
exercise hereof, other than in compliance with THE 180 DAY LOCK-UP PERIOD OF
Rule 5110(g) of the Financial Industry Regulatory Authority, Inc. and Section 7
hereof.

 

WARRANT

 

To Purchase
Common Shares of

 

DIAMEDICA THERAPEUTICS, INC.

 

Date: December 11, 2018

 

THIS CERTIFIES THAT, for value received, Craig-Hallum Capital Group LLC, or its
registered assigns (herein referred to as the “Purchaser” or “holder”), is
entitled to purchase from DiaMedica Therapeutics Inc., a company organized under
the laws of Canada (herein called the “Company”), 205,000 voting common shares
(the “Shares”), without par value (the “Common Shares”), of the Company (subject
to adjustment as noted below) at the exercise price of USD$4.80 per Share (the
“Warrant Purchase Price”) (subject to adjustment as noted below). This Warrant
may only be exercised during the Exercise Period specified herein. This Warrant
has been issued pursuant to the Underwriting Agreement, dated December 6, 2018,
between the Company and the Purchaser, as representative of the several
underwriters listed in Schedule I thereto, in connection with a public offering
(the “Offering”) of 4,100,000 Common Shares.

 

This Warrant is subject to the following provisions, terms and conditions:

 

1.        The Warrant exercise period (the “Exercise Period”) for this Warrant
shall begin on the effective date of the Offering and shall end on the fifth
(5th) anniversary of the effective date of the Offering. As used herein, the
“effective date of the Offering” means December 6, 2018.

 

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2.     The rights represented by this Warrant may be exercised, in whole or in
part, by the holder hereof as follows:

 

(a)      The holder hereof shall deliver to the Company written notice of
exercise of this Warrant and in connection therewith shall surrender this
Warrant (properly endorsed if required) at the principal office of the Company
and pay the Warrant Purchase Price for such Shares as provided for herein.

 

(b)       The holder hereof shall pay the Warrant Purchase Price (i) in
immediately available funds or (ii) by “cashless exercise,” in which event the
Company shall issue to the holder hereof a number of Shares determined as
follows:

 

X = Y * [(A-B)/A]

 

where:

 

X = the number of Shares to be issued to the holder.

 

Y = the total number of Shares with respect to which this Warrant is being
exercised.

 

A = the fair market value of one Share at the time the “cashless exercise”
election is made.

 

B = the Warrant Purchase Price then in effect for the Shares at the “cashless
exercise” election is made.

 

For purposes of this Warrant, the fair market value of one Share as of a
particular date shall be determined as follows: (i) if the Common Shares are
traded on a U.S. national securities exchange, the value shall be deemed to be
the average of the closing prices of the Common Shares on such exchange over the
10-Trading Day period ending on the Trading Day prior to the net exercise
election; (ii) if clause (i) is not applicable, the value shall be deemed to be
the average of the closing bid or sale prices (whichever is applicable) of the
Common Shares on the principal securities exchange or securities market on which
the Common Shares trade over the 10-Trading Day period ending on the Trading Day
prior to the net exercise election; and (iii) if none of the foregoing is
applicable, the value shall be the fair market value of one Common Share
mutually agreed upon by the holder and the Company; provided, that if the
Company and the holder are unable to agree upon the fair market value of a
Common Share, then the board of directors of the Company shall use its good
faith judgment to determine the fair market value, and such determination shall
be binding upon all parties absent demonstrable error.

 

For purposes of this Warrant, “Trading Day” means any day on which the Common
Shares are traded on a U.S. stock exchange or, if inapplicable, the principal
securities exchange or securities market on which the Common Shares are then
traded.

 

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(c)      Upon exercise of this Warrant, the Company shall promptly (but in no
event later than five Trading Days after the date this Warrant is exercised in
accordance with its terms) issue or cause to be issued and cause to be delivered
to or upon the written order of the holder and in such name or names as the
holder may designate (provided that, if the holder directs the Company to
deliver a certificate for the Shares in a name other than that of the holder or
an affiliate (as defined in Rule 405 under the Securities Act of 1933, as
amended (the “Securities Act”)) of the holder, it shall deliver to the Company
on the date of exercise an opinion of counsel reasonably satisfactory to the
Company to the effect that the issuance of such Shares in such other name may be
made pursuant to an available exemption from the registration requirements of
the Securities Act and all applicable state securities or blue sky laws), a
certificate for the Shares issuable upon such exercise or credit for such Shares
through the facilities of The Depository Trust Company (“DTC”) to the account
designated by the holder (with any restrictive legends required by applicable
securities laws). The form of delivery of the Shares acquired upon exercise will
be at the election of the holder, subject to the other terms of this Warrant.
The holder, or any person permissibly so designated by the holder to receive the
Shares acquired upon exercise hereof, shall be deemed to have become the holder
of record of such Shares as of the date notice of exercise and payment of the
applicable Warrant Purchase Price is made in accordance with the terms hereof.

 

(d)      If by the sixth Trading Day after the date this Warrant is exercised in
accordance with this Section 2 the Company fails to deliver the required number
of Shares in the manner required pursuant to Section 2(c), then, in addition to
any other remedy the holder may have at law or in equity (including a decree of
specific performance or injunctive relief), the holder hereof will have the
right to rescind such exercise.

 

(e)      In the event that this Warrant has not been exercised prior to the end
of the Exercise Period and the fair market value of one Share as determined in
accordance with the provisions hereof exceeds the Warrant Purchase Price on the
last day of the Exercise Period, on such date this Warrant will be automatically
exercised pursuant to the cashless exercise provisions set forth in Section
2(b); provided, that the holder hereof, upon the request of the Company, must
surrender to the Company this Warrant within 30 days of such request for
delivery thereof by the Company. If the holder hereof does not surrender this
Warrant within such time period, this Warrant will be deemed to not have been
exercised under this Section 2(e) and will terminate and no longer be
exercisable.

 

3.           The Company represents and warrants that this Warrant has been duly
authorized by all necessary corporate action, has been duly executed and
delivered and is a legal and binding obligation of the Company, enforceable
against the Company in accordance with the terms of this Warrant, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. The Company covenants and agrees that all Shares which may
be issued upon the exercise of the rights represented by this Warrant according
to the terms hereof have been duly authorized and will, upon issuance and
payment therefor, be validly issued and fully paid. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of its Common Shares to provide
for the exercise of the rights represented by this Warrant, free from preemptive
rights or other actual contingent purchase rights other than those held by a
holder of this Warrant (as a result of holding this Warrant).

 

4.           The Company will pay any documentary stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings attributable to the
issuance of Shares upon the exercise of this Warrant; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the registration of any certificates for Warrants,
or Shares issued upon exercise of this Warrant, in a name other than that of the
Purchaser. The Purchaser shall be responsible for all other tax liability that
may arise as a result of holding or transferring this Warrant or receiving
Shares upon exercise hereof.

 

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5.            The above provisions are, however, subject to the following:

 

(a)      The Warrant Purchase Price shall, from and after the date of issuance
of this Warrant, be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Warrant Purchase Price, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Purchase Price
resulting from such adjustment, the number of Shares obtained by multiplying the
Warrant Purchase Price in effect immediately prior to such adjustment by the
number of Shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Purchase Price
resulting from such adjustment.

 

(b)      In case the Company shall at any time subdivide its outstanding Common
Shares into a greater number of shares, the Warrant Purchase Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding Common Shares shall be combined into a
smaller number of shares, the Warrant Purchase Price in effect immediately prior
to such combination shall be proportionately increased.

 

(c)      If any capital reorganization or reclassification of the capital stock
of the Company, shall be effected in such a way that holders of Common Shares
shall be entitled to receive stock or securities with respect to or in exchange
for Common Shares, then, as a condition of such reorganization, reclassification
or consolidation, lawful and adequate provision shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive, upon the basis
and upon the terms and conditions specified in this Warrant and in lieu of the
Shares immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock or securities as may be
issued or payable with respect to or in exchange for a number of Shares equal to
the number of Shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby had such reorganization,
reclassification or consolidation not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
the holder of this Warrant to the end that the provisions hereof (including
without limitation provisions for adjustments of the warrant purchase price and
of the number of shares purchasable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock or securities thereafter deliverable upon the exercise hereof.

 

(d)      Upon any adjustment of the Warrant Purchase Price or any adjustment of
any material terms hereof, then and in each such case an officer of the Company
shall, as soon as practicable after the occurrence of any event that requires an
adjustment or readjustment, give signed written notice thereof, by first–class
mail, postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the Warrant Purchase Price resulting from such adjustment, any material
change in the terms of the Warrant, and the increase or decrease, if any, in the
number of Shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.

 

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(e)      If at any time during the Exercise Period:

 

(i)      there shall be any capital reorganization, or reclassification of the
capital stock of the Company; or

 

(ii)      there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

 

then, in any one or more of said cases, the Company shall give written notice,
by first–class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, of
the date on which (A) the books of the Company shall close or a record shall be
taken for such distribution or subscription rights, or (B) such reorganization,
reclassification or consolidation, dissolution, liquidation or winding up, or
conversion or redemption shall take place, as the case may be. Such notice shall
also specify the date as of which the holders of capital stock of record shall
participate in such distribution or subscription rights, or shall be entitled to
exchange their capital stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, dissolution, liquidation
or winding up, or conversion or redemption, as the case may be. Such written
notice shall be given at least 15 days prior to the action in question and not
less than 15 days prior to the record date or the date on which the Company’s
transfer books are closed in respect thereto.

 

(f)      If any event occurs as to which in the opinion of the Board of
Directors of the Company the other provisions of this Section 5 are not strictly
applicable or if strictly applicable would not fairly protect the purchase
rights of the holder of this Warrant or of the Common Shares in accordance with
the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
purchase rights as aforesaid.

 

6.           This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.

 

7.           This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the principal office of the Company, for new Warrants of like
tenor representing in the aggregate the right to purchase the number of Shares
which may be purchased hereunder, each of such new Warrants to represent the
right to purchase such number of Shares as shall be designated by said holder
hereof at the time of such surrender. Subject to compliance with applicable
securities laws and the other terms of this Warrant, if the Company’s Common
Shares are delisted from the TSX Venture Exchange this Warrant then may be
assigned or transferred by the holder and this Warrant shall be binding on and
inure to the benefit of the parties hereto and their respective transferees,
successors and assigns. Notwithstanding the foregoing, pursuant to Rule 5110(g)
of the Financial Industry Regulatory Authority, Inc. (“FINRA”), this Warrant
shall not be sold during the Offering, or sold, transferred, assigned, pledged,
or hypothecated, or be the subject of any hedging, short sale, derivative, put,
or call transaction that would result in the effective economic disposition of
this Warrant or the Shares acquirable upon exercise hereof, by any person for a
period of 180 days immediately following the effective date of the Offering,
except as provided in paragraph (g)(2) of Rule 5110(g) of the FINRA.

 

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8.           Each certificate for the securities purchased under this Warrant
shall bear a legend as follows unless such securities have been registered under
the Securities Act:

 

“The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or applicable
state law. Neither the securities nor any interest therein may be offered for
sale, sold or otherwise transferred except pursuant to an effective registration
statement under the Securities Act, or pursuant to an exemption from
registration under the Securities Act and applicable state law which, in the
opinion of counsel to the Company, is available.”

 

The securities evidenced by this Warrant shall not be transferred unless and
until: (i) the Company has received the opinion of counsel for the Holder that
the securities may be transferred pursuant to an exemption from registration
under the Securities Act and applicable state securities laws, the availability
of which is established to the reasonable satisfaction of the counsel of the
Company, or (ii) a registration statement relating to the offer and sale of such
securities has been filed by the Company and declared effective by the U.S.
Securities and Exchange Commission and compliance with applicable state
securities law has been established.

 

9.            The Company will not be required upon the exercise of this Warrant
to issue fractions of Shares, but may, at its option, either (a) purchase such
fraction for an amount in cash equal to the current value of such fraction
computed on the basis of the closing market price of the Common Shares as quoted
on the principal exchange or trading facility on which the Common Shares are
traded on the Trading Day immediately preceding the day upon which this Warrant
was surrendered for exercise in accordance with Section 2 hereof, or (b) issue
the required Share. By accepting this Warrant, the holder hereof expressly
waives any right to receive any fractional share upon exercise of a Warrant,
except as expressly provided in this Section 9.

 

10.          If this Warrant is exercised for less than all of the then-current
number of Shares purchasable hereunder, then the Company shall, concurrently
with the issue of the Shares purchased by the holder hereof upon such exercise
in accordance with Section 2, issue a new warrant exercisable for the remaining
number of Shares purchasable under this Warrant.

 

11.            Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and security
reasonably satisfactory to it, the Company shall execute and deliver a new
warrant of like tenor as the Warrant so lost, stolen, destroyed or mutilated.

 

12.           This Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without giving effect to
conflict of laws principles thereof. The Company and the holder agree that the
prevailing party(ies) in any action or proceeding arising out of or relating to
this Warrant shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses directly relating to such action or
proceeding and/or incurred in connection with the preparation therefor.

 

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13.           The Company hereby irrevocably submits to the non–exclusive
jurisdiction of the U.S. Federal and state courts in the Borough of Manhattan in
The City of New York (each, a “New York Court”) in any suit or proceeding
arising out of or relating to this Warrant. The Company irrevocably and
unconditionally waives any objection to the laying of venue of any suit or
proceeding arising out of or relating to this Warrant in a New York Court, and
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such suit or proceeding in any such court has been brought
in an inconvenient forum. The Company irrevocably appoints DiaMedica USA Inc.,
located at 2 Carlson Parkway, Suite 260, Minneapolis, Minnesota 55447,
Attention: President and Chief Executive Officer, as its authorized agent (the
“Authorized Agent”) upon which process may be served in any such suit or
proceeding, and agrees that service of process in any manner permitted by
applicable law upon such Authorized Agent shall be deemed in every respect
effective service of process in any manner permitted by applicable law upon the
Company in any such suit or proceeding. The Company further agrees to take any
and all action as may be necessary to maintain such designation and appointment
of such Authorized Agent in full force and effect for a period of five years
from the date of this Warrant. The Company irrevocably waives, to the fullest
extent permitted by law, any and all rights to trial by jury in any legal
proceeding arising out of or relating to this Warrant.

 

14.           To the extent that the Company or any of its respective
properties, assets or revenues may have or may hereafter become entitled to, or
have attributed to them, any right of immunity, on the grounds of sovereignty,
from any legal action, suit or proceeding, from set off or counterclaim, from
the jurisdiction of any Canadian, New York State or U.S. federal court, from
service of process, from attachment upon or prior to judgment, or from
attachment in aid of execution of judgment, or from execution of judgment, or
other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any such court in which proceedings may at any
time be commenced, with respect to their obligations, liabilities or any other
matter under or arising out of or in connection with this Warrant, the Company
hereby irrevocably and unconditionally, to the extent permitted by applicable
law, waives and agrees not to plead or claim any such immunity and consents to
such relief and enforcement.

 

15.            All modifications or amendments of this Warrant shall require the
written consent of and be signed by the party against whom enforcement of the
modification or amendment is sought.

 

16.           This Warrant (together with the other agreements and documents
being delivered pursuant to or in connection with this Warrant) constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.

 

17.           This Warrant shall inure solely to the benefit of and shall be
binding upon, the holder and the Company and their permitted assignees,
respective successors, legal representative and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Warrant or any provisions herein
contained.

 

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IN WITNESS WHEREOF, DiaMedica Therapeutics Inc. has caused this Warrant to be
signed by its duly authorized officer and this Warrant to be dated as of the
date set forth above.

 

 

 

DiaMedica Therapeutics Inc.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Scott Kellen

 

 

 

Name: Scott Kellen

 

 

 

Title: Chief Financial Officer and Secretary

 

 

 

 

 

Acknowledged and agreed:

 

Craig-Hallum Capital Group LLC

 

 

 

By:     /s/ Rick Hartfiel                                       

Name: Rick Hartfiel

Title: Managing Partner

 

[Signature Page to Representative’s Warrant]

 

 

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WARRANT EXERCISE FORM

 

To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part

 

To:     DiaMedica Therapeutics Inc. (the “Company”)

 

The undersigned ___________________________________

 

 

Please insert Social Security or other
identifying number of Holder:

 

_______________________________

 

hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, ___________ Common Shares (the
“Shares”) provided for therein.

 

Payment of the Warrant Purchase Price for the Shares shall take the form of
[Check the applicable box below]:

 

 

☐

Immediately available U.S. funds; or

 

 

☐

the cancellation of such number of Shares as is necessary to satisfy the Warrant
Purchase Price with respect to the exercise of the number of Shares set forth
above in accordance with the formula set forth in Section 2(b) of the Warrant.

 

The undersigned requests that such Shares be registered in the name of the
undersigned or in such other name specified below:

 

Name:    

 

The Shares shall be delivered as follows:

 

     

 

and, if such number of Shares does not constitute all shares purchasable under
the Warrant, that a new Warrant for the balance remaining of such shares be
registered in the name of, and delivered to, the undersigned at the address
stated above.

 

Unless the undersigned has selected the “cashless exercise” option provided for
in Section 2(b) of the Warrant, the undersigned hereby represents and warrants
that the undersigned is acquiring the Shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such shares
or any part thereof.

 

 

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Dated: __________________

 

Name of Holder:                                                                 
                 

 

Signature                                                                       
                      

 

Title