Document:

Exhibit 4.2

 

DESCRIPTION
OF OUR SECURITIES

 

As of December 31,
2020, FS Energy & Power Fund (“we,” “our,” or the “Company”) had one class of securities
registered under Section 12 of the Securities Exchange Act of 1934, as amended: our beneficial interest, par value $0.001
per share (“common shares”).

 

Common Shares,
par value $0.001 per share

 

Our declaration
of trust authorizes us to issue up to 750,000,000 shares of stock, of which 700,000,000 shares are classified as common shares
and 50,000,000 shares are classified as preferred shares, par value $0.001 per share. A majority of the board of trustees, including
a majority of the independent trustees, without any action by our stockholders, may amend our declaration of trust to increase
or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue. There
are no outstanding options or warrants to purchase our shares. No stock has been authorized for issuance under any equity compensation
plans.

 

Our declaration
of trust also contains a provision permitting the board of directors to classify or reclassify any unissued common shares or preferred
shares in one or more classes or series of common shares or preferred shares by setting or changing the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions
of redemption of shares. We believe that the power to classify or reclassify unissued shares of capital stock and thereafter issue
the classified or reclassified shares provides us with increased flexibility in structuring possible future financings and investments
and in meeting other needs that might arise.

 

Common Shares

 

Under the declaration
of trust, all our common shares will have equal rights as to voting and, when they are issued, will be duly authorized, validly
issued, fully paid and nonassessable. Distributions may be paid to the holders of our common shares if, as and when authorized
by our board of trustees and declared by us out of funds legally available therefor. Except as may be provided by our board of
trustees in setting the terms of classified or reclassified shares, common shares will have no preemptive, exchange, conversion
or redemption rights and will be freely transferable, except where their transfer is restricted by federal and state securities
laws or by contract. In addition, our common shares are not subject to any mandatory redemption obligations by us. In the event
of our liquidation, dissolution or winding up, each common share would be entitled to share ratably in all of our assets that are
legally available for distribution after we pay or make reasonable provision for the payment of all claims and obligations and
subject to any preferential rights of holders of our preferred shares, if any preferred shares are outstanding at such time. Each
common share will be entitled to one vote on all matters submitted to a vote of shareholders, including the election of trustees.
Except as may be provided by the Delaware General Corporation Law (“DGCL”), the Delaware Statutory Trust Act or by
our board of trustees in setting the terms of preferred shares or classified or reclassified shares, the holders of our common
shares will possess exclusive voting power.

 

Preferred Shares

 

Under the terms
of our declaration of trust, our board of trustees, with approval from a majority of our independent trustees, is authorized to
issue preferred shares in one or more classes or series without shareholder approval. Our board of trustees has discretion to determine
the rights, preferences, covenants, privileges and restrictions, including voting rights, distribution rights, conversion rights,
redemption privileges and liquidation preferences of each class or series of preferred shares.

 

    1

     

    

 

Preferred
shares could be issued with rights and preferences that would adversely affect the holders of common shares. Preferred shares
could also be used as an anti-takeover device. Every issuance of preferred shares will be required to comply with the requirements
of the Investment Company Act of 1940, as amended (the “1940 Act”).
The 1940 Act requires, among other things, that (1) immediately after issuance of preferred shares and before any distribution
is made with respect to our common shares and before any purchase of common shares is made, the aggregate involuntary liquidation
preference of such preferred shares together with the aggregate involuntary liquidation preference or aggregate value of all other
senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such distribution or
purchase price, as the case may be, and (2) the holders of preferred shares, if any are issued, must be entitled as a class
to elect two trustees at all times and to elect a majority of trustees if distributions on such preferred shares are in arrears
by two years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding
preferred shares. We believe that the availability for issuance of preferred shares will provide us with increased flexibility
in structuring future financings and acquisitions.

 

Limitation on Liability of Trustees
and Officers; Indemnification and Advancement of Expenses

 

Delaware law permits
a Delaware statutory trust to include in its governing instrument a provision to indemnify and hold harmless any trustee or
beneficial owner or other person from and against any and all claims and demands whatsoever. Despite this provision, and in accordance
with guidelines adopted by the North American Securities Administrators Association, our declaration of trust provides that we
will not indemnify (1) any individual who is a present or former trustee or officer of the Company and who is made or threatened
to be made a party to the proceeding by reason of his or her service in that capacity, (2) any individual who, while a trustee
or officer of the Company and at the request of the Company, serves or has served as a trustee, officer, partner or trustee of
any corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to
be made a party to the proceeding by reason of his or her service in that capacity or (3) FS/EIG Advisor, LLC (the “Advisor”)
or any of its affiliates acting as an agent of the Company (each such person an "Indemnitee") against any liability or
loss suffered by such Indemnitee unless (a) the Company determines in good faith that the course of conduct that caused the
loss or liability was in the best interest of the Company, (b) the Indemnitee was acting on behalf of or performing services
for the Company, (c) in the case that the Indemnitee is the Advisor or an affiliate of the Advisor, or an officer of the Company,
the Advisor or an affiliate of the Advisor, such liability or loss was not the result of negligence or misconduct, (d) in
the case that the Indemnitee is a trustee of the Company (and not also an officer of the Company, the Advisor or an affiliate of
the Advisor), such liability or loss was not the result of gross negligence or willful misconduct and (e) such indemnification
or agreement to hold harmless is recoverable only out of net assets of the Company and not from the shareholders.

 

In addition, the
investment advisory and administrative services agreement provides that the Advisor and its officers, managers, partners, members
(and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity
affiliated with it will not be entitled to indemnification (including reasonable attorneys' fees and amounts reasonably paid in
settlement) for any liability or loss suffered by the Advisor or such other person, nor will the Advisor or such other person be
held harmless for any loss or liability, unless (1) the Advisor or such other person has determined, in good faith, that the
course of conduct which caused the loss or liability was in the best interests of the Company, (2) the Advisor or such other
person was acting on behalf of or performing services for the Company, (3) the liability or loss suffered was not the result
of negligence or misconduct by the Advisor or such other person and (4) the indemnification or agreement to hold the Advisor
or such other person harmless for any loss or liability is recoverable only out of the Company's net assets and not from shareholders.
In accordance with the 1940 Act, the Company will not indemnify certain persons for any liability to which such persons would be
subject by reason of such person's willful misconduct, bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office.

 

Pursuant to our
declaration of trust and subject to certain exceptions described therein, we will indemnify and, without requiring a preliminary
determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition
of a proceeding to each Indemnitee, in each case to the fullest extent permitted by Delaware law. Notwithstanding the foregoing,
we will not provide indemnification for any loss, liability or expense arising from or out of an alleged violation of federal or
state securities laws by an Indemnitee unless (1) there has been a successful adjudication on the merits of each count involving
alleged securities law violations, (2) such claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction, or (3) a court of competent jurisdiction approves a settlement of the claims against the Indemnitee and finds
that indemnification of the settlement and the related costs should be made.

 

     

     

    

 

In
addition, Delaware law permits a trust to advance reasonable expenses to a trustee or officer, and we will do so in advance of
final disposition of a proceeding (1) if the proceeding relates to acts or omissions with respect to the performance of duties
or services on behalf of the Company, (2) the legal proceeding was initiated by a third party who is not a shareholder or,
if by a shareholder of the Company acting in his or her capacity as such, a court of competent jurisdiction approves such advancement
and (3) upon the Company's receipt of (a) a written affirmation by the trustee or officer of his or her good faith belief
that he or she has met the standard of conduct necessary for indemnification by the Company and (b) a undertaking by him or
her or on his or her behalf to repay the amount paid or reimbursed by the Company if it is ultimately determined that the standard
of conduct was not met.

 

Provisions of our Declaration of
Trust and Bylaws

 

Our declaration
of trust and bylaws contain provisions that could make it more difficult for a potential acquirer to acquire us by means of a tender
offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our board of trustees. We believe
that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because,
among other things, the negotiation of such proposals may improve their terms.

 

Election of Trustees

 

As set forth in
our bylaws, our trustees will be elected by a plurality of all votes cast at a meeting of shareholders at which a quorum is present.

 

Number of Trustees; Vacancies; Removal

 

Our declaration
of trust provides that the number of trustees will be set by our board of trustees in accordance with our bylaws. Our bylaws provide
that a majority of our entire board of trustees may at any time increase or decrease the number of trustees. Our declaration of
trust provides that the number of trustees generally may not be less than three. Except as otherwise required by applicable requirements
of the 1940 Act and as may be provided by our board of trustees in setting the terms of any class or series of preferred shares,
pursuant to an election under our declaration of trust, any and all vacancies on our board of trustees may be filled only by the
affirmative vote of a majority of the remaining trustees in office, even if the remaining trustees do not constitute a quorum,
and any trustee elected to fill a vacancy will serve for the remainder of the full term of the trustee for whom the vacancy occurred
and until a successor is elected and qualifies, subject to any applicable requirements of the 1940 Act. Independent trustees will
nominate replacements for any vacancies among the independent trustees' positions.

 

Pursuant to our
bylaws, our shareholders may remove a trustee for cause by the affirmative vote of at least two-thirds of the votes entitled to
be cast in the election of trustees. “Cause” is defined by our bylaws to mean, with respect to any particular trustee,
conviction of a felony or a final judgment of a court of competent jurisdiction holding that such trustee caused demonstrable,
material harm to the Company through bad faith or active and deliberate dishonesty.

 

We currently have
a total of eight members of our board of trustees, six of whom are independent trustees. Our declaration of trust provides that
a majority of our board of trustees must be independent trustees except for a period of up to 60 days after the death, removal
or resignation of an independent trustee pending the election of his or her successor.

 

Action by Shareholders

 

Our bylaws provide
that shareholder action can be taken at an annual or special meeting of shareholders. Pursuant to (and except as provided otherwise
in) our declaration of trust, provided that our trustees then in office have approved and declared the action advisable and submitted
such action to the shareholders, an action that requires shareholder approval, including a dissolution, merger, or a sale of all
or substantially all of our assets or a similar transaction outside the ordinary course of business, must be approved by the affirmative
vote of shareholders entitled to cast at least a majority of the votes entitled to be cast on the matter.

 

     

     

    

 

In addition, our
bylaws provide that any action which may be taken by shareholders by vote may be taken without a meeting upon unanimous written
consent of the shareholders.

 

These provisions,
combined with the other requirements of our bylaws regarding the calling of a shareholder-requested special meeting of shareholders
discussed below, may have the effect of delaying consideration of a shareholder proposal until the next annual meeting.

 

Advance Notice Provisions for Shareholder
Nominations and Shareholder Proposals

 

Our bylaws provide
that with respect to an annual meeting of shareholders, nominations of persons for election to our board of trustees and the proposal
of business to be considered by shareholders may be made only (1) pursuant to our notice of the meeting, (2) by or at
the direction of our board of trustees or (3) by a shareholder who was a shareholder of record both at the time of giving
of notice and at the time of the annual meeting, who is entitled to vote at the meeting and who has complied with the advance notice
procedures of the bylaws. With respect to special meetings of shareholders, only the business specified in our notice of the meeting
may be brought before the meeting. Nominations of individuals for election to our board of trustees at a special meeting may be
made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our board of trustees or (3) provided
that our board of trustees has determined that trustees will be elected at the meeting, by a shareholder who was a shareholder
of record both at the time of giving notice and at the time of the special meeting, who is entitled to vote at the meeting and
who has complied with the advance notice provisions of the bylaws.

 

The purpose of
requiring shareholders to give us advance notice of nominations and other business is to afford our board of trustees a meaningful
opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to
the extent deemed necessary or desirable by our board of trustees, to inform shareholders and make recommendations about such qualifications
or business, as well as to provide a more orderly procedure for conducting meetings of shareholders. Although our bylaws do not
give our board of trustees any power to disapprove shareholder nominations for the election of trustees or proposals recommending
certain action, they may have the effect of precluding a contest for the election of trustees or the consideration of shareholder
proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of
proxies to elect its own slate of trustees or to approve its own proposal without regard to whether consideration of such nominees
or proposals might be harmful or beneficial to us and our shareholders.

 

Calling of Special Meetings of Shareholders

 

Our bylaws provide that special
meetings of shareholders may be called by our board of trustees and certain of our officers. In addition, our bylaws provide that,
subject to the satisfaction of certain procedural and informational requirements by the shareholders requesting the meeting, a
special meeting of shareholders will be called by the secretary of the Company upon the written request of shareholders entitled
to cast a majority or more of the votes entitled to be cast at the meeting. Any special meeting called by such shareholders shall
be held not more than 60 days after the record date for such meeting.

 

Approval of Extraordinary Trust
Action; Amendment of Declaration of Trust and Bylaws

 

Our declaration
of trust provides that shareholders are entitled to vote upon a proposed amendment to the declaration of trust if the amendment
would alter or change the powers, preferences or special rights of the shares held by such shareholders so as to affect them adversely.
Approval of any such amendment shall require at least a majority of the votes cast by such shareholders at a meeting of shareholders
duly called and at which a quorum is present. Notwithstanding the foregoing, amendments to our declaration of trust to make our
common shares a "redeemable security" or to convert the Company, whether by merger or otherwise, from a closed-end company
to an open-end company each must be approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the
votes entitled to be cast on the matter.

 

     

     

    

 

Our declaration
of trust and bylaws provide that our board of trustees will have the exclusive power to make, alter, amend or repeal any provision
of our bylaws.

 

Our declaration
of trust provides that, subject to the applicable mandatory provisions of the DGCL and until our common shares are listed on a
national securities exchange, a majority of our shareholders may amend the declaration of trust without concurrence by our board
of trustees. In addition, subject to the applicable mandatory provisions of the DGCL, our declaration of trust provides that a
majority of our shareholders may, without the necessity of any concurrence by the Advisor, direct that the board of trustees cause
the Company to:

 

• remove the Advisor
and elect a new investment adviser;

• dissolve the Company;

• approve or disapprove
the sale of all or substantially all of our assets other than in the ordinary course of our business; or

• cause the merger
or other reorganization of the Company.

 

Without the approval
of a majority of our shareholders, the Advisor may not:

 

• amend the investment
advisory and administrative services agreement except for amendments that would not adversely affect the interests of our shareholders;

• voluntarily withdraw
as our investment adviser unless such withdrawal would not affect our tax status and would not materially adversely affect our
shareholders;

• appoint a new investment
adviser;

• sell all or substantially
all of our assets other than in the ordinary course of business; and

• cause the merger
or other reorganization of the Company.

 

Except as described
above, our declaration of trust provides that our board of trustees may amend our declaration of trust without any vote of our
shareholders.

 

No Appraisal Rights

 

In certain extraordinary
transactions, some jurisdictions provide the right to dissenting shareholders to demand and receive the fair value of their common
shares, subject to certain procedures and requirements set forth in such statute. Those rights are commonly referred to as appraisal
rights. Our declaration of trust provides that, except as may be provided by the board of trustees in setting the terms of any
class or series of preferred shares and except as contemplated by the DGCL, holders of our shares will not be entitled to exercise
appraisal rights.

 

Delaware Business Combination Statute

 

Pursuant to our
declaration of trust, we have elected to be governed by Section 203 of the DGCL, which, in general, prohibits a business combination
between a corporation and an interested stockholder within three years of the time such stockholder became an interested stockholder,
unless:

 

• prior to such time,
the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder
becoming an interested stockholder;

• upon consummation
of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the transaction commenced, exclusive (for the purposes of determining
the voting stock outstanding) of shares owned by directors who are also officers and by certain employee stock plans; or

 

     

     

    

 

• at or subsequent
to such time, the business combination is approved by the board of directors and authorized by the affirmative vote at a stockholders'
meeting (and not by written consent) of at least 66 2/3% of the outstanding voting stock that is not owned by the interested
stockholder.

 

The term "business
combination" is defined in Section 203 of the DGCL to include, among other transactions between an interested stockholder
and a corporation or any direct or indirect majority owned subsidiary thereof: a merger or consolidation; a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (including as part of a dissolution) of assets having an aggregate market value
equal to 10% or more of either the aggregate market value of all assets of the corporation on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation; certain transactions that result in the issuance or transfer by the
corporation or by any direct or indirect majority-owned subsidiary of the corporation of any stock of the corporation or any stock
of such subsidiary to the interested stockholder; certain transactions that would increase the interested stockholder's proportionate
share ownership of the stock of any class or series of the corporation or such subsidiary; and any receipt by the interested stockholder
of the benefit (except proportionally as a stockholder of the corporation) of any loans, advances, guarantees, pledges or other
financial benefits provided by or through the corporation or any such subsidiary. In general, and subject to certain exceptions,
pursuant to Section 203 of the DGCL, an "interested stockholder" is any person who is the owner of 15% or more of
the outstanding voting stock of the corporation or is an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the determination
date, and the affiliates and associates of such persons. The term "owner" is broadly defined to include any person that
individually or with or through such person's affiliates or associates, among other things, beneficially owns such stock, or has
the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of options or other convertible securities or otherwise or has the
right to vote such stock pursuant to any agreement, arrangement or understanding, or has an agreement, arrangement or understanding
with the beneficial owner of such stock for the purpose of acquiring, holding, voting or disposing of such stock.

 

Conflict with 1940 Act

 

Our declaration
of trust and bylaws provide that if and to the extent that any provision of the Delaware Statutory Trust Act, the DGCL or any provision
of our declaration of trust or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will
control.xene-ex41_326.htm

 

Exhibit 4.1

FORM OF PRE-FUNDED WARRANT TO PURCHASE COMMON SHARES

 

  Number of Shares: [            ]
(subject to adjustment)

 Original Issue Date: [    ], 2021

Warrant No.    

Xenon Pharmaceuticals Inc., a corporation continued under the federal laws of Canada  (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [    ] or its registered assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to a total of [    ] common shares (the “Common Shares”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price per share equal to $0.0001 per share (as adjusted from time to time as provided in Section 9 herein, the “Exercise Price”), upon surrender of this Warrant to Purchase Common Shares (including any Warrants to Purchase Common Shares issued in exchange, transfer or replacement hereof, the “Warrant”) at any time and from time to time on or after the date hereof (the “Original Issue Date”), subject to the following terms and conditions: 

1. Definitions. For purposes of this Warrant, the following terms shall have the following meanings: 

(a) “Affiliate” means any Person directly or indirectly controlled by, controlling or under common control with, a Holder, but only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) means, with respect to a Person, possession, direct or indirect, of (a) the power to direct or cause direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests. 

(b) “Commission” means the United States Securities and Exchange Commission. 

(c) “Closing Sale Price” means, for any security as of any date, the last trade price for such security on the Principal Trading Market for such security, as reported by Bloomberg Financial Markets, or, if such Principal Trading Market begins to operate on an extended hours basis and does not designate the last trade price, then the last trade price of such security prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg Financial Markets. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then the Board of Directors of the Company shall use its good faith judgment to determine the fair market value. The Board of Directors’ determination shall be binding upon all parties absent demonstrable error. All such determinations shall be appropriately adjusted for any share dividend, share split, share combination or other similar transaction during the applicable calculation period. 

(d) “Principal Trading Market” means the national securities exchange or other trading market on which the Common Shares are primarily listed on and quoted for trading, which, as of the Original Issue Date, shall be the Nasdaq Global Market. 

(e) “Registration Statement” means the Company’s Registration Statement on Form S-3 (File No. 333-238896), declared effective on June 12, 2020. 

(f) “Securities Act” means the Securities Act of 1933, as amended. 

(g) “Trading Day” means any weekday on which the Principal Trading Market is normally open for trading. 

1

 

(h) “Transfer Agent” means American Stock Transfer & Trust Co., the Company’s transfer agent and registrar for the Common Shares, and any successor appointed in such capacity. 

2. Issuance of Securities; Registration of Warrants. The Warrant, as initially issued by the Company, is offered and sold pursuant to the Registration Statement. As of the Original Issue Date, the Warrant Shares are issuable under the Registration Statement. Accordingly, the Warrant and, assuming issuance pursuant to the Registration Statement or an exchange meeting the requirements of Section 3(a)(9) of the Exchange Act as in effect on the Original Issue Date, the Warrant Shares, are not “restricted securities” under Rule 144 promulgated under the Securities Act. The Company shall register ownership of this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder (which shall include the initial Holder or, as the case may be, any assignee to which this Warrant is assigned hereunder) 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. 

3. Registration of Transfers. Subject to compliance with all applicable securities laws, the Company shall, or will cause its Transfer Agent to, register the transfer of all or any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, and payment for all applicable transfer taxes (if any). Upon any such registration or transfer, a new warrant to purchase Common Shares in substantially the form of this Warrant (any such new warrant, a “New Warrant”) evidencing the portion of this Warrant so transferred shall be issued to the transferee, and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Warrant that the Holder has in respect of this Warrant. The Company shall, or will cause its Transfer Agent to, prepare, issue and deliver at the Company’s own expense any New Warrant under this Section 3. Until due presentment for registration of transfer, the Company may treat the registered Holder hereof as the owner and holder for all purposes, and the Company shall not be affected by any notice to the contrary. 

4. Exercise and Duration of Warrants. 

(a) All or any part of this Warrant shall be exercisable by the registered Holder in any manner permitted by this Warrant at any time and from time to time on or after the Original Issue Date. 

(b) The Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached as Schedule 1 hereto (the “Exercise Notice”), completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice pursuant to Section 10 below), and the date on which the last of such items is delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares, if any.  The aggregate exercise price of this Warrant, except for the Exercise Price, was pre-funded to the Company on or before the Original Issue Date, and consequently no additional consideration (other than the Exercise Price) shall be required by to be paid by the Holder to effect any exercise of this Warrant.  The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-funded exercise price under any circumstance or for any reason whatsoever.

2

 

5. Delivery of Warrant Shares. 

(a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than three (3) Trading Days after the Exercise Date), upon the request of the Holder, credit such aggregate number of Common Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission system, or if the Transfer Agent is not participating in the Fast Automated Securities Transfer Program (the “FAST Program”) or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Common Shares to which the Holder is entitled pursuant to such exercise. The Holder, or any natural person or legal entity (each, a “Person”) so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be. 

(b) If by the close of the third (3rd) Trading Day after the Exercise Date, the Company fails to deliver to the Holder a certificate representing the required number of Warrant Shares in the manner required pursuant to Section 5(a) or fails to credit the Holder’s balance account with DTC for such number of Warrant Shares to which the Holder is entitled, and if after such third (3rd) Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise) 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, within three (3) Trading Days after the Holder’s request and in the Holder’s sole discretion, either (1) pay in cash to the Holder an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased, at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate or (2) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased in the Buy-In over the product of (A) the number of Common Shares purchased in the Buy-In, times (B) the Closing Sale Price of a Common Share on the Exercise Date. 

(c) To the extent permitted by law and subject to Section 5(b), the Company’s obligations to issue and deliver Warrant Shares in accordance with and subject to the terms hereof (including the limitations set forth in Section 11 below) are absolute and unconditional, irrespective of any action or inaction by the 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 the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Subject to Section 5(b), 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 certificates representing Common Shares upon exercise of the Warrant as required pursuant to the terms hereof. 

6. Charges, Taxes and Expenses. Issuance and delivery of certificates for Common Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, transfer agent fee or other incidental tax or expense (excluding any applicable stamp duties) in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or the Warrants in a name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof. 

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7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction (in such case) and, in each case, a customary and reasonable indemnity and surety bond, if requested by the Company. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant. 

8. Reservation of Warrant Shares. The Company covenants that it will, at all times while this Warrant is outstanding, reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Shares, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares that are initially issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and non-assessable. The Company will take all such action as may be reasonably necessary to assure that such Common Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Shares may be listed. 

9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9. 

(a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a share dividend on its Common Shares or otherwise makes a distribution on any class of capital issued and outstanding on the Original Issue Date and in accordance with the terms of such capital on the Original Issue Date or as amended, as described in the Registration Statement, that is payable in Common Shares, (ii) subdivides its outstanding Common Shares into a larger number of Common Shares, (iii) combines its outstanding Common Shares into a smaller number of Common Shares or (iv) issues by reclassification of Common Shares any additional Common Shares of the Company, then in each such case the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of Common Shares outstanding immediately before such event and the denominator of which shall be the number of Common Shares outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution, provided, however, that if such record date shall have been fixed and such dividend is not fully paid on the date fixed therefor, the Exercise Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Exercise Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends. Any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. 

(b) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, distributes to all holders of Common Shares for no consideration (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Shares covered by the preceding paragraph) or (iii) rights or warrants to subscribe for or purchase any security, or (iv) cash or any other asset (in each case, “Distributed Property”), then, upon any exercise of this Warrant that occurs after the record date fixed for determination of shareholders entitled to receive such distribution, the Holder shall be entitled to receive, in addition to the Warrant Shares otherwise issuable upon such exercise (if applicable), the Distributed Property that such Holder would have been entitled to receive in respect of such number of Warrant Shares had the Holder been the record holder of such Warrant Shares immediately prior to such record date without regard to any limitation on exercise contained therein. 

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(c) Fundamental Transactions. If, at any time while this Warrant is outstanding (i) the Company effects any merger or consolidation of the Company with or into another Person, in which the Company is not the surviving entity and in which the shareholders of the Company immediately prior to such merger or consolidation do not own, directly or indirectly, at least 50% of the voting power of the surviving entity immediately after such merger or consolidation, (ii) the Company effects any sale to another Person of all or substantially all of its assets in one transaction or a series of related transactions, (iii) pursuant to any tender offer or exchange offer (whether by the Company or another Person), holders of Common Shares tender shares representing more than 50% of the voting power of the Common Shares of the Company and the Company or such other Person, as applicable, accepts such tender for payment, (iv) the Company consummates a 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 the 50% of the voting power of the Common Shares of the Company (except for any such transaction in which the shareholders of the Company immediately prior to such transaction maintain, in substantially the same proportions, the voting power of such Person immediately after the transaction), provided, however, the foregoing shall not include transactions for which the primary purpose is raising capital or (v) the Company effects any reclassification 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 (other than as a result of a subdivision or combination of Common Shares covered by Section 9(a) above) (in any such case, a “Fundamental Transaction”), then following such Fundamental Transaction the Holder shall have the right to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the Holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant without regard to any limitations on exercise contained herein. In the event the Holder does not exercise this Warrant as contemplated by the foregoing sentence, this Warrant shall be deemed exercised in full without regard to any limitations on exercise contained herein pursuant to the “cashless exercise” provision in Section 10 hereof upon the effective date of the consummation of such Fundamental Transaction. 

(d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 9, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. 

(e) Calculations. All calculations under this Section 9 shall be made to the nearest one-tenth of one cent or the nearest share, as applicable. 

(f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will, at the written request of the Holder, promptly compute such adjustment, in good faith, in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent. 

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(g) Notice of Corporate Events. If, while this Warrant is outstanding, the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Shares, including, without limitation, any granting of rights or warrants to subscribe for or purchase any capital of the Company or any subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits shareholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then, except if such notice and the contents thereof shall be deemed to constitute material non-public information, the Company shall deliver to the Holder a notice of such transaction at least ten (10) days prior to the applicable record or effective date on which a Person would need to hold Common Shares in order to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. In addition, if while this Warrant is outstanding, the Company authorizes or approves, enters into any agreement contemplating or solicits shareholder approval for any Fundamental Transaction contemplated by Section 9(c), other than a Fundamental Transaction under clause (iii) of Section 9(c), the Company shall deliver to the Holder a notice of such Fundamental Transaction at least thirty (30) days prior to the date such Fundamental Transaction is consummated. Holder agrees to maintain any information disclosed pursuant to this Section 9(g) in confidence until such information is publicly available, and shall comply with applicable law with respect to trading in the Company’s securities following receipt any such information. 

10. Payment of Exercise Price. Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, satisfy its obligation to pay the Exercise Price through a “cashless exercise”, in which event the Company shall issue to the Holder the number of Warrant Shares in an exchange of securities effected pursuant to Section 3(a)(9) of the Securities Act, as determined as follows: 

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

where: 

“X” equals the number of Warrant Shares to be issued to the Holder; 

“Y” equals the total number of Warrant Shares with respect to which this Warrant is then being exercised; 

“A” equals the Closing Sale Price of the Common Shares (as reported by Bloomberg Financial Markets) as of the Trading Day on the date immediately preceding the Exercise Date; and 

“B” equals the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise. 

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a “cashless exercise” transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued (provided that the Commission continues to take the position that such treatment is proper at the time of such exercise). In the event that the Registration Statement or another registration statement registering the issuance of Warrant Shares is, for any reason, not effective at the time of exercise of this Warrant, then the Warrant may only be exercised through a cashless exercise, as set forth in this Section 10. Except as set forth in Section 5(b) (Buy-In remedy) and Section 12 (payment of cash in lieu of fractional shares), in no event will the exercise of this Warrant be settled in cash. 

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11. Limitations on Exercise. 

(a) Notwithstanding anything to the contrary herein, the Company shall not effect any exercise of this Warrant, and the Holder shall not be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect or immediately prior to such exercise, would cause (i) the aggregate number of Common Shares beneficially owned by the Holder, its Affiliates and any Persons who are members of a Section 13(d) group with such Holder or its Affiliates to exceed 4.99% (the “Maximum Percentage”) of the total number of issued and outstanding Common Shares of the Company following such exercise, or (ii) the combined voting power of the securities of the Company beneficially owned by the Holder and its Affiliates and any other Persons who are members of a Section 13(d) group with such Holder or its Affiliates to exceed the Maximum Percentage of the combined voting power of all of the securities of the Company then outstanding following such exercise. For purposes of this paragraph, beneficial ownership and whether a Holder is a member of a Section 13(d) group shall be calculated and determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder. For purposes of this Warrant, in determining the number of outstanding Common Shares, the Holder may rely on the number of outstanding Common Shares as reflected in (x) the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be, filed with the Commission prior to the date hereof, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written request of the Holder, the Company shall within three (3) Trading Days confirm in writing or by electronic mail to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder since the date as of which such number of outstanding Common Shares was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage specified not in excess of 19.99% specified in such notice; provided that any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. For purposes of this Section 11(a), the aggregate number of Common Shares or voting securities beneficially owned by the Holder and its Affiliates and any other Persons who are members of a Section 13(d) group with such Holder or its Affiliates shall include the Common Shares issuable upon (x) the exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable upon exercise of the remaining unexercised and non-cancelled portion of this Warrant by the Holder and (y) the exercise or conversion of the unexercised, non-converted or non-cancelled portion of any other securities of the Company that do not have voting power (including without limitation any securities of the Company which would entitle the Holder thereof to acquire at any time Common Shares, including without limitation any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the Holder thereof to receive, Common Shares), is subject to a limitation on conversion or exercise analogous to the limitation contained herein and is beneficially owned by the Holder or any of its Affiliates and other Persons who are members of a Section 13(d) group with such Holder or its Affiliates. 

 (b) This Section 11 shall not restrict the number of Common Shares which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9(c) of this Warrant. 

12. No Fractional Shares. No fractional Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the number of Warrant Shares to be issued shall be rounded down to the next whole number and the Company shall pay the Holder in cash the fair market value (based on the Closing Sale Price) for any such fractional shares. 

13. Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or confirmed e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer Agent prior to 5:30 P.M., New York City time, on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or confirmed e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer Agent on a day that is not a Trading Day or later than 5:30 P.M., New York City time, on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service specifying next business day delivery, or (iv) upon actual receipt by the Person to whom such notice is required to be given, if by hand delivery. 

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14. Warrant Agent. The Company shall initially serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register. 

15. Miscellaneous. 

(a) No Rights as a Shareholder. The Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of shares, reclassification of shares, consolidation, merger, amalgamation, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. 

(b) Authorized Shares. (i) 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 or articles 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 (a) 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, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant, and (c) 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. 

(ii) 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. 

(c) Successors and Assigns. Subject to compliance with applicable securities laws, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company without the written consent of the Holder, except to a successor in the event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of the Company and the Holder and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder, or their successors and assigns. 

(d) Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder or those registered holders of the Warrants representing no less than a majority of the Warrant Shares obtainable upon exercise of the Warrants then outstanding. 

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(e) Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. 

(f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES TO IT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY. 

(g) Headings. The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof. 

(h) Severability. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby, and the Company and the Holder will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

 

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

 

	
 
	
 
	
 

	
XENON PHARMACEUTICALS INC.

	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

 

 

10

 

 

SCHEDULE 1 

FORM OF EXERCISE NOTICE 

[To be executed by the Holder to purchase Common Shares under the Warrant] 

Ladies and Gentlemen: 

(1) The undersigned is the Holder of Warrant No. __ (the “Warrant”) issued by Xenon Pharmaceuticals Inc., a corporation continued under the federal laws of Canada (the “Company”). Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant. 

(2) The undersigned hereby exercises its right to purchase Warrant Shares pursuant to the Warrant. 

(3) The Holder intends that payment of the Exercise Price shall be made as (check one): 

 

	
 
	
☐
	
Cash Exercise 

 

	
 
	
☐
	
“Cashless Exercise” under Section 10 of the Warrant 

(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $ in immediately available funds to the Company in accordance with the terms of the Warrant. 

(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant. 

(6) By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of Common Shares (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended) permitted to be owned under Section 11(a) of the Warrant to which this notice relates. 

 

	
 
	
 
	
 

	
Dated:
	
 
	
 

	
 
	
 

	
Name of Holder:
	
 
	
 

	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

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