Document:

Exhibit 10.1 

 

EXCHANGE AGREEMENT

 

This Exchange Agreement
(the “Agreement”) is dated as of December 15, 2017 (the “Effective Date”), by and between
Inpixon, Inc., a Nevada corporation (the “Company”), and the holder(s) identified on the signature pages hereto
(each, a “Holder” and collectively, the “Holders”).

 

WHEREAS,
the Holder holds a warrant issued on December 15, 2016 as amended from time to time (the “Warrant”) to
purchase that number of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”)
as set forth on the Holder’s signature page hereto (collectively, the “Warrant Shares”);

 

WHEREAS, for
the mutual benefit of the Company and the Holder, the Company desires to exchange the Warrant owned by it for an aggregate of [            ]1 shares (the “Exchange Shares”) of Common Stock (subject to adjustment for forward and reverse
stock splits and the like) (the “Exchange”) issued in reliance on the exemption from registration provided by
Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”); and

 

WHEREAS, following
the Exchange, the Warrant shall be cancelled and the Holder shall have no further rights under such Warrant.

 

NOW, THEREFORE,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities Act, the Company
and the Holder have agreed as follows:

 

1.
Exchange. As of the Effective Date, the Holder hereby agrees to exchange the Warrant for the Exchange Shares. The
Exchange Shares issued in exchange for the Warrant will be issued without restrictive legends in accordance with
the exemption from registration provided by Section 3(a)(9) of the Securities Act and Rule 144(d)(3)(ii). Neither the Holder
nor the Company (nor any of their Affiliates (as defined herein) nor any person acting on behalf of or for the benefit of any of
the foregoing), has paid or given, or agreed to pay or give, directly or indirectly, any commission or other remuneration (within
the meaning of Section 3(a)(9) of the Securities Act and the rules and regulations of the Securities and Exchange Commission promulgated
thereunder) for soliciting the Exchange.

 

2. No Consideration.
The Exchange Shares shall be issued to the Holder in exchange for the Warrant without the payment of any other consideration by
the Holder that would not be consistent with the application of Section 3(a)(9) of the Securities Act to the issuance of the Exchange
Shares. The Holder hereby agrees that, upon and subject to the consummation of the Exchange pursuant to Section 3 below, including
delivery of the Exchange Shares, all of the Company’s obligations under the terms and conditions of the Warrant shall be
automatically terminated and cancelled in full without any further action required, and that this Section 3 shall constitute an
instrument of cancellation of such Warrant.

 

3.
Mechanics of Exchange.

 

i. Delivery of
Original Warrant and Exchange Shares. Within two (2) trading days following the execution of this Agreement by the
Company and the Holder, the Company shall deliver, or cause to be delivered, to the Holder, the Exchange Shares being
acquired upon the exchange of the Warrant by deposit/withdrawal at custodian in accordance with the instructions set forth on
the Holder’s signature page hereto and the Holder shall deliver the original Warrant to the Company for cancellation.
Notwithstanding the non-delivery of the original Warrant in accordance with this Section 3(i), the Warrant shall be deemed
terminated and cancelled in accordance with Section 2 of this Agreement.

 

 

1 Up to an aggregate of 2,000,000 shares of Common
Stock will be issued in exchange for all outstanding Warrants.

 

     

     

    

 

ii. Fractional
Shares. No fractional shares shall be issued upon the exchange of the Warrant. As to any fraction of a share which the Holder
would otherwise be entitled to acquire upon such exchange, the Company shall round up to the next whole share.

 

iii. Transfer
Taxes and Expenses. The issuance of the Exchange Shares on exchange of the Warrant shall be made without charge to the Holder
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Exchange Shares, provided
that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and
delivery of any such Exchange Shares upon exchange in a name other than that of the Holder and the Company shall not be required
to issue or deliver such Exchange Shares unless or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
The Company shall pay all transfer agent fees required for same-day processing of the delivery of any Exchange Shares.

 

4. Representations
and Undertakings of the Holders. The Holder hereby represents and warrants as of the date hereof to the Company as follows
(unless as of a specific date therein, in which case they shall be accurate as of such date):

 

(i) This
Agreement has been duly authorized, validly executed and delivered by the Holder and is a valid and binding agreement and obligation
of the Holder enforceable against the Holder in accordance with its terms, subject to limitations on enforcement by general principles
of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally, and the Holder has full
power and authority to execute and deliver this Agreement and to perform its obligations hereunder and thereunder.

 

(ii) The
Holder understands that the Exchange Shares are being offered, sold, issued and delivered to it in reliance upon specific provisions
of federal and applicable state securities laws, and that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Holder set forth herein for purposes of qualifying for exemptions
from registration under the Securities Act and applicable state securities laws.

 

(iii) The
Holder is not acquiring the Exchange Shares as a result of any advertisement, article, notice or other communication regarding
the Exchange Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general advertisement.

 

(iv) The
Holder, either alone or together with its representatives, has such knowledge, sophistication and experience in and financial matters
so as to be capable of evaluating the merits and risks of the prospective investment in the Exchange Shares, and has so evaluated
the merits and risks of such investment. The Holder is able to bear the economic risk of an investment in the Exchange Shares and,
at the present time, is able to afford a complete loss of such investment.

 

(v) The Holder
acknowledges that the offer, sale, issuance and delivery of the Exchange Shares to it is intended to be exempt from registration
under the Securities Act, by virtue of Section 3(a)(9) thereof. The Holder acknowledges and understands that the Exchange Shares
have not been registered under the Securities Act or under any state securities laws. The Exchange Shares are being acquired pursuant
to an exemption from registration under the Securities Act and may not be sold except in compliance with the registration requirements
or exemption provisions of the Securities Act and any applicable U.S. state securities laws.

 

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(vi) The
Holder owns and holds, beneficially and of record, the entire right, title, and interest in and to its Warrant free and clear of
all rights and Encumbrances (as defined below). The Holder has full power and authority to transfer and dispose of its Warrant
to the Company free and clear of any right or Encumbrances. Other than the transactions contemplated by this Agreement, there is
no outstanding vote, plan, pending proposal, or other right of any person to acquire the Holder’s Warrant. As used herein,
“Encumbrances” shall mean any security or other property interest or right, claim, lien, pledge, option, charge,
security interest, contingent or conditional sale, or other title claim or retention agreement, interest or other right or claim
of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation of law, and including any agreement
(other than this Agreement) to grant or submit to any of the foregoing in the future.

 

(vii)
The Holder is an accredited investor as such term is defined in Rule 501 of Regulation D.

 

(viii) From
the Effective Date through the date until which all Exchange Shares have been sold by the Holder, the Holder (together with its
affiliates) agrees to limit all sales of the Company’s common stock to no more than five percent (5%) of the average daily
trading volume as reported by the Nasdaq Stock Market for the five trading days immediately prior to such sale.

 

5.
Representations and Undertakings of the Company.

 

(i) The Exchange
Shares have been duly authorized by all necessary corporate action, and, when issued and delivered in accordance with the terms
hereof, the Exchange Shares shall be validly issued and outstanding, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of refusal of any kind.

 

(ii) This
Agreement has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding agreement
and obligation of the Company enforceable against the Company in accordance with its terms, subject to limitations on enforcement
by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally,
and the Company has full power and authority to execute and deliver this Agreement and the other agreements and documents contemplated
hereby and to perform its obligations hereunder and thereunder.

 

(iii) The
Company represents that it has not paid, and shall not pay, any commissions or other remuneration, directly or indirectly, to any
third party for the solicitation of the Exchange pursuant to this Agreement. Other than the exchange of the Warrant, the Company
has not received and will not receive any consideration from the Holder for the Exchange Shares.

 

(iv) Except
with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company confirms that
neither it nor any other person acting on its behalf has provided the Holder or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms
that the Holder will rely on the foregoing representations in effecting the transactions herein.

 

(v) The Company
represents that the holding period of the Exchange Shares for purposes of Rule 144 commenced on December 15, 2016, the issuance
date of the Warrant.

 

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(vi) The
Company undertakes to file a Current Report on Form 8-k (the "8-K Filing") describing the Exchange Agreement within
two business days of the Effective Date. From and after the filing of the 8-K Filing, the Holder shall not be in possession of
any material, nonpublic information received from the Company, any of its subsidiaries or any of their respective officers, directors,
employees, affiliates or agents, that is not disclosed in the 8-K Filing. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written
or oral, between the Company, any of its subsidiaries or any of their respective officers, directors, affiliates, employees or
agents, on the one hand, and the Holder or any of their affiliates, on the other hand, shall terminate. The Company shall not,
and shall cause each of its subsidiaries and its and each of their respective officers, directors, employees, affiliates and agents,
not to, provide the Holder with any material, nonpublic information regarding the Company or any of its subsidiaries from and after
the date hereof without the express prior written consent of the Holder.

 

(vii) The
Company undertakes to promptly provide, at its own cost and expense, to the transfer agent, with a copy to the Holder all legal
opinions necessary for the Exchange Shares to be transferred pursuant to Rule 144.

 

6. Release
by the Holder. The Holder, including its predecessors, successors, members, shareholders, officers, directors, employees, parents,
subsidiaries, affiliates, executors, administrators, attorneys, trustees, representatives, agents, assigns, insurers and any other
persons or entities that they represent or in which they have a beneficial interest or interest as a partner (the “Holder
Parties”) hereby release, remise, acquit and forever discharge any and all claims (including claims for costs and attorneys’
fees), demands, sums of money, actions, rights, causes of action, suits, debts, demands, dues, damages, losses, costs, judgments,
obligations and liabilities at law or in equity, of any kind or nature whatsoever, known or unknown, that they may have had or
claimed to have had, or now have or claim to have or hereafter may have or assert to have for, upon, or by reason of any matter,
cause or thing relating to or arising out of the Warrant or that certain Securities Purchase Agreement, dated December 12, 2016,
by and among the Company, the Holder and each other purchaser party thereo (the “Claims”), whether directly
or indirectly, from the beginning of the world to the date of this Agreement as against Inpixon, including its predecessors, successors,
members, shareholders, officers, directors, employees, parents, subsidiaries, affiliates, executors, administrators, attorneys,
trustees, representatives, agents, assigns, insurers and any other persons or entities that they represent, by which they are employed,
for which they are directors, or in which they have a beneficial interest or interest as a partner (the “Inpixon Parties”),
provided, however, that nothing in this release shall limit or affect the rights of the Holder to enforce this Agreement.
The Holder Parties acknowledge, understand, and agree that they may hereafter discover facts, injuries or damages in addition to
or different from those which itknows or believes to be true with respect to the subject matter of this instrument, but that it
is the Holder Parties’ intention hereby to fully, finally and forever settle and release any and all matters, disputes and
differences, known or unknown, suspected and unsuspected, with respect to the Claims which do now exist, may exist, or heretofore
have existed between the Holder Parties, on the one hand, and the Inpixon Parties on the other hand. The foregoing notwithstanding,
no release shall apply to, and terms “Claim(s)” shall not apply to any indemnification rights granted by the Company
to the Holder pursuant to the Warrant or any other agreement to which the Holder and Company are parties.

 

7. Miscellaneous.

 

(i)
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by
the sending party) or by electronic mail; or (iii) one business day after deposit with an overnight courier service, in each
case properly addressed to the party to receive the same. The addresses, facsimile numbers and email addresses for such
communications shall be:

 

If to the Company:

 

Inpixon

2479 E. Bayshore Road, Suite 195

Palo Alto, CA 94303

Attn: Nadir Ali, Chief Executive Officer

Fax No: (408) 824-1543

E-mail: nadir.ali@inpixon.com

 

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If to the Holder, to the Holder’s
address or e-mail address set forth on the signature page hereto, or to such other address, facsimile number and/or e-mail address
and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or
email containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided
by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(ii)
This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, letters and understandings relating to the subject matter hereof and are fully binding on
the parties hereto.

 

(iii)
This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same instrument. This Agreement may be executed and accepted
by facsimile or PDF signature and any such signature shall be of the same force and effect as an original signature.

 

(iv)
The terms of this Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their
respective successors and assigns.

 

(v)
This Agreement may not be amended or modified except in writing signed by each of the parties hereto.

 

(vi)
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.

 

(vii)
Neither the Company nor the Holder has paid or given, or will pay or give, to any person, any commission, fee or other
remuneration, directly or indirectly, in connection with the transactions contemplated by this Agreement.

 

(ix)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party 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, and hereby irrevocably
waives, and agrees not to assert in any action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such action or proceeding is improper or is an inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to process being served in any such action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement 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 other manner permitted by law. If any party hereto shall commence an action or proceeding to enforce any
provisions of this Agreement, then, the prevailing party in such action or proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 

[The remainder of the page is intentionally
left blank]

 

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IN WITNESS WHEREOF, the parties have
caused this Agreement to be duly executed and delivered as of the date provided above.

 

	 	THE COMPANY
	 	 	 
	 	INPIXON
	 	 	 
	 	By: 	 
	 	Name: 	Nadir Ali
	 	Title:	CEO

 

[COMPANY SIGNATURE PAGE TO EXCHANGE AGREEMENT]

 

     

     

    

 

HOLDER

 

	 	 
	Holder Name	 
	 	 
	 	 
	Authorized Person (signature)	 
	 	 
	 	 
	Authorized Person (print name), 	 
	 	 
	 	 
	Title	 
	 	 
	 	 
	Number of shares underlying Warrant	 
	 	 
	 	 
	Number of Exchange Shares	 
	 	 
	Address for Notice to Holder:	 

 

Instructions for delivery of Exchange Shares:

 

	DTC Participant:	 
	 	 
	DTC Number:	 
	 	 
	Account Number:	 

 

[HOLDER SIGNATURE PAGES TO EXCHANGE AGREEMENT]xene-ex41_23.htm

 

EXHIBIT 4.1

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY U.S. STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER ARE SUBJECT TO CERTAIN RESALE RESTRICTIONS PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT (BRITISH COLUMBIA) AND CERTAIN RESTRICTIONS UPON TRANSFER PURSUANT TO THE TERMS HEREOF AND ANY SHARES FOR WHICH THIS WARRANT IS EXERCISED ARE SUBJECT TO CERTAIN RESALE RESTRICTIONS PURSUANT TO THE SECURITIES ACT (BRITISH COLUMBIA).

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 18, 2018.

 

THIS WARRANT WILL BE VOID AND OF NO VALUE UNLESS EXERCISED WITHIN THE TIME LIMITS PROVIDED HEREIN.

 

 

WARRANT TO PURCHASE SHARES

 

Company: Xenon Pharmaceuticals Inc., a corporation existing under the federal laws of Canada

Number of Shares: As set forth in Paragraph A below

Type/Series of Shares: Common Shares, no par value per share

Warrant Price: $2.43 per Share, subject to adjustment

Issue Date: December 18, 2017

Expiration Date: December 18, 2027See also Section 5.1(b).

	
Credit Facility:
	
This Warrant to Purchase Shares (“Warrant”) is issued in connection with that certain Loan and Security Agreement of even date herewith among Silicon Valley Bank, the Company and Xenon Pharmaceuticals USA Inc. (as amended and/or modified and in effect from time to time, the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant or of any Shares issued upon exercise hereof, “Holder”) is entitled to purchase up to such number of fully paid and non-assessable capital shares of the above-stated Type/Series of Shares (the “Class”) of the above-named company (the “Company”) as determined pursuant to Paragraph A below, at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.  Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

 

 

 

A.Number of Shares.This Warrant shall be exercisable for the Initial Shares, plus the Additional Shares, if any (collectively, and as may be adjusted from time to time in accordance with the provisions hereof, the “Shares”).

 

(1)Initial Shares.As used herein, “Initial Shares” means 50,411 shares of the Class, subject to adjustment from time to time in accordance with the provisions of this Warrant.

 

(2)Additional Shares.Upon the making (if any) of each Tranche 2 Advance (as defined in the Loan Agreement) and each Tranche 3 Advance (as defined in the Loan Agreement) to the Company, this Warrant automatically shall become exercisable for such number of additional shares of the Class as shall equal (a)(i) 0.0175, multiplied by (ii) the amount of such Tranche 2 Advance or Tranche 3 Advance, as applicable, divided by (b) the Warrant Price in effect on and as of the date of such Tranche 2 Advance or Tranche 3 Advance, as applicable, subject to adjustment thereafter from time to time in accordance with the provisions of this Warrant.  All shares of the Class (if any) for which this Warrant shall become exercisable from time to time pursuant to this Paragraph A(2) and as may be adjusted from time to time thereafter in accordance with the provisions of this Warrant are referred to herein collectively and cumulatively as the “Additional Shares.”

 

SECTION 1. EXERCISE.

 

1.1Method of Exercise.  Holder may, at any time and from time to time on or before 6:00 PM, U.S. Pacific time, on the Expiration Date, exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 

1.2Cashless Exercise.  On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised.  Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula: 

 

	
 
	
X =
	
Y(A-B)/A

 

where:

	
 
	
X =
	
the number of Shares to be issued to the Holder;

 

	
 
	
Y =
	
the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

 

	
 
	
A =
	
the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

 

	
 
	
B =
	
the Warrant Price.

 

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1.3Fair Market Value.  If shares of the Class are then traded or quoted on a U.S. or Canadian nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of the Class reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company.  If shares of the Class are not then traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

 

1.4Delivery of Certificate and New Warrant.  Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise (which certificate may be in the form of an electronic certificate or DTC entry, to the extent used by the Company at the time of such exercise) and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

 

1.5Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

1.6Treatment of Warrant Upon Acquisition of Company.

 

(a)Acquisition.  For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition, in each case of all or substantially all of the assets of the Company; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the shareholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company shareholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the shareholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

 

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(b)Treatment of Warrant at Acquisition.  In the event of an Acquisition in which the consideration to be received by the Company’s shareholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition.  In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as of the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise.  In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.  

 

(c) Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant,

 

(d) As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or similar reporting requirements under applicable Canadian law, and is then current in its filing of all required reports and other information under the Act and the Exchange Act or such Canadian law; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under U.S. federal or state securities laws, rules or regulations and/or Canadian federal or provincial securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

 

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1Share Dividends, Splits, Etc.  If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in additional shares of the Class or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred.  If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased.  If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

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2.2Reclassification, Exchange, Combinations or Substitution.  Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and, if applicable, the Warrant Price shall be proportionately adjusted, in all cases subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events. 

 

2.3No Fractional Share.  No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

 

2.4Notice/Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based.  The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

 

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1Representations and Warranties.  The Company represents and warrants to, and agrees with, the Holder that (i) all Shares which may be issued upon the exercise of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable U.S. and Canadian federal, provincial and state securities laws; and (ii) the Company shall at all times cause to be reserved and kept available out of its authorized and unissued share capital such number of shares of the Class as will be sufficient to permit the exercise in full of this Warrant. 

 

3.2Notice of Certain Events.  If the Company proposes at any time to:

(a)declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, shares, or other securities and whether or not a regular cash dividend; 

(b)offer for subscription or sale pro rata to all holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s share capital (other than pursuant to contractual pre-emptive rights); 

(c)effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class; or 

(d)effect an Acquisition or to liquidate, dissolve or wind up;

5

 

 

then, in connection with each such event, the Company shall give Holder notice thereof at the same time and in the same manner as the Company notifies the holders of the outstanding shares of the Class; provided, that at all times, if any, when the Company shall not be subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act (or any corresponding reporting requirements under applicable Canadian securities law), then the Company shall give Holder written notice thereof as follows: 

(1)in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any; and

(2)in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice).

SECTION 4. REPRESENTATIONS AND COVENANTS OF THE HOLDER.

 

The Holder represents and warrants to, and agrees with, the Company as follows:

 

4.1Purchase for Own Account.  Except for the one-time transfer from Silicon Valley Bank to its parent holding company SVB Financial Group described in the first sentence of Section 5.4 below, this Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act and applicable Canadian securities law. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares. 

4.2Disclosure of Information.  Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

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4.3Investment Experience.  Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

4.4Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act and of National Instrument 45-106 Prospectus Exemptions (“NI 45-106”), and is purchasing the Warrant pursuant to an exemption from the prospectus requirements of applicable securities laws. 

4.5Registration Exemptions.  Holder understands that this Warrant and the Shares issued upon exercise of this Warrant and any securities such Shares may be convertible or exchangeable into have not been registered with the Securities and Exchange Commission of the United States or the securities commission of any state or any securities authority in any province or territory of Canada by reason of their issuance in a transaction either: (i) exempt from the registration requirements of the Act pursuant to Section 4(a)(2) thereof or Rule 506 promulgated thereunder; or (ii) not subject to the registration requirements of the Act pursuant to Regulation S, nor have they been qualified by a prospectus under the laws of any province or territory of Canada and, accordingly, are subject to resale restrictions and may not be offered or sold except pursuant to an effective registration statement under the Act or receipted final prospectus under applicable Canadian provincial or territorial laws unless offered or sold pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Act or the prospectus or other requirements of applicable Canadian securities law.  In addition, Holder represents that it is familiar with Rule 144 promulgated pursuant to the Act and understands the resale limitations imposed hereby and by the Act and applicable Canadian securities law.  

4.6No Shareholder Rights.  Without limiting any term or provision of this Warrant, Holder agrees that it will not have any rights as a shareholder of the Company (including, without limitation, voting rights) until the exercise of this Warrant and then only with respect to the Shares issued on such exercise.

 

SECTION 5. MISCELLANEOUS.

 

5.1Term; Automatic Cashless Exercise Upon Expiration.  

 

(a) Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, U.S. Pacific time, on the Expiration Date and shall be void thereafter.   

 

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(b)Automatic Cashless Exercise upon Expiration.  In the event that, upon the Expiration Date, the fair market value of one Share as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares issued upon such exercise to Holder (which certificate may be in the form of an electronic certificate or DTC entry, to the extent used by the Company at the time of such exercise). 

 

5.2Legends.Each certificate or book entry position evidencing Shares shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE SHARES ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED DECEMBER 18, 2017 (THE “WARRANT”), MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESALE RESTRICTIONS PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT (BRITISH COLUMBIA) AND CERTAIN RESTRICTIONS UPON TRANSFER PURSUANT TO THE TERMS OF THE WARRANT.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 18, 2018.

 

DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY", MAY BE OBTAINED FROM THE COMPANY UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN FORM SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED.

 

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5.3Compliance with Securities Laws on Transfer.  This Warrant and the Shares issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable U.S. federal and state securities laws and applicable Canadian securities law by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act and NI 45-106. 

 

5.4Transfer Procedure.  After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group.  By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof.  Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issued upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant and/or Shares being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant.  

 

5.5Notices.  All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5.  All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

SVB Financial Group

Attn:  Treasury Department

3003 Tasman Drive, HC 215

Santa Clara, CA 95054

Telephone: (408) 654-7400

Facsimile:  (408) 988-8317

Email address:  derivatives@svb.com

 

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Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

Xenon Pharmaceuticals Inc.

Attn: Chief Financial Officer

200 – 3650 Gilmore Way

Burnaby, British Columbia V5G 4W8

Canada

Telephone: (604) 484-3300

Facsimile: 

Email: 

 

 

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

Wilson Sonsini Goodrich & Rosati, Professional Corporation

Attn: Steven V. Bernard

650 Page Mill Road

Palo Alto, California 94304

Telephone: (650) 493-9300

Facsimile: (650) 493-6811

Email: sbernard@wsgr.com

 

 

5.6Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

5.7Attorneys’ Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8Counterparts; Facsimile/Electronic Signatures.  This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.  Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein, without giving effect to its principles regarding conflicts of law.

 

5.10Headings.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11Business Days.  “Business Day” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed or a statutory holiday in the Province of British Columbia.

 

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5.12Currency.As used herein, “$” and “dollars” shall refer to United States dollars.

 

[Remainder of page left blank intentionally]

[Signature page follows]

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IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Shares to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

	
“COMPANY”

	
 
	
 
	
 

	
XENON PHARMACEUTICALS INC.

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
 

	
 
	
 
	
(Print)

	
Title:
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
 

	
 
	
 
	
(Print)

	
Title:
	
 
	
 

 

	
“HOLDER”

	
 
	
 
	
 

	
SILICON VALLEY BANK

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
 

	
 
	
 
	
(Print)

	
Title:
	
 
	
 

 

 

 

12

 

 

APPENDIX 1

 

 

NOTICE OF EXERCISE

 

1.The undersigned Holder hereby exercises its right to purchase ___________ Common/Series ______ Preferred [circle one] Shares of __________________  (the “Company”) in accordance with the attached Warrant To Purchase Shares, and tenders payment of the aggregate Warrant Price for such shares as follows: 

 

	
 
	
[    ]
	
check in the amount of $________ payable to order of the Company enclosed herewith

	
 
	
[    ]
	
Wire transfer of immediately available funds to the Company’s account 

	
 
	
[    ]
	
Cashless Exercise pursuant to Section 1.2 of the Warrant

	
 
	
[    ]
	
Other [Describe] __________________________________________

2.Please issue a certificate or certificates representing the Shares in the name specified below:

___________________________________________

Holder’s Name

 

___________________________________________

 

___________________________________________

(Address)

3.By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Shares as of the date hereof.

 

	
HOLDER:

	
 
	
 
	
 

	
 

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
 

	
 
	
 
	
 

	
Title:
	
 
	
 

	
 
	
 
	
 

	
(Date):
	
 
	
 

 

 

31118764.7

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