Document:

Exhibit 10.1

 

EGALET CORPORATION
 EMPLOYEE  STOCK  PURCHASE PLAN

 

SECTION 1. Purpose Of The Plan.

 

The Egalet Corporation Employee Stock Purchase Plan (the “Plan”) is intended to provide Eligible Employees (as defined below) the opportunity to increase their proprietary interest in Egalet Corporation (the “Company”) by conveniently purchasing shares of the Company’s common stock, par value $0.001 per share (the “Stock”).  The Plan is composed of two components: a 423 Component and a Non-423 Component.  The 423 Component is intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).  Accordingly, the provisions of the 423 Component will be construed in a manner consistent with the requirements of Section 423 of the Code.  The Plan also authorizes participation in the Plan under the Non-423 Component under terms that do not meet the requirements of Section 423 of the Code.  The Company shall be permitted to grant rights to purchase Stock under separate offerings not having identical terms (provided that such terms are not inconsistent with the terms of the Plan and, with respect to an offering under the 423 Component, the requirements of Section 423 of the Code), and offerings may run concurrently (in whole or in part) with each other.  Each offering under the Non-423 Component shall be separate and distinct from (and shall not be included in or be part of) any offering under the 423 Component, and each offering to a Participating Company shall be treated as an offering that is separate from any other offering made to another Participating Company, in each case, even if such offerings are running concurrently (in whole or in part) and/or have common terms and conditions.

 

SECTION 2. Definitions.

 

(a) “423 Component” means the portion of the Plan under which the right to purchase Stock may be granted in a manner that is intended to satisfy the requirements of Section 423 of the Code.

 

(b) “Affiliate” means any branch or representative office or other disregarded entity of the Company or a Subsidiary, as determined by the Committee, whether now or hereafter existing.

 

(c) “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(d) “Change in Control” shall have the meaning set forth in the Company’s most recently adopted stock-based incentive plan, as in effect from time to time; provided, that until the Egalet Corporation 2013 Stock-Based Incentive Plan is replaced with a successor plan that includes a definition of Change in Control, Change in Control shall mean an event described in Sections 2.5(a) through 2.5(d) of the Egalet Corporation 2013 Stock-Based Incentive Plan.

 

(e) “Committee” means the duly constituted committee appointed by the Board to administer the Plan, as described in Section 3.  If no such committee is appointed, the Compensation Committee of the Board shall be the Committee.

 

(f) “Compensation” means all of an Eligible Employee’s base salary or wages.  “Compensation” shall exclude (i) overtime, commissions, bonuses and special incentive payments, (ii) equity compensation and income attributable to equity-based awards (including, without limitation, amounts realized from the exercise of any stock option and any dividends paid with respect to equity awards), (iii) all non-cash items, (iv) pre-tax contributions made by the Participant under Sections 401(k) or 125 of the Code or under any similar arrangements available under laws outside the United States and (v) allowances and other miscellaneous payments, including, without limitation, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, and benefits received under employee benefit plans.  The Committee shall determine whether a particular item not listed in this Section 2(f) is included in Compensation.

 

(g) “Effective Date” means January 1, 2016.

 

 

(h) “Eligible Employee” means any individual who is an Employee of a Participating Company and who does not own 5% or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary, including, for purposes of this provision, through application of the rules of Section 424(d) of the Code.  The foregoing notwithstanding, an individual who is a citizen or resident of a jurisdiction other than the United States (even if he or she is also a citizen of the United States or a resident alien) shall not be considered an Eligible Employee if, as determined in the sole discretion of the Committee, (i) his or her participation in the Plan is prohibited by the laws or regulations of any country which has jurisdiction over him or her or (ii) compliance with the laws and regulations of the foreign country that has jurisdiction over him or her would cause the Plan or an offering under the 423 Component to violate Section 423 of the Code.

 

(i) “Employee” means an individual who is a common-law employee of a Participating Company and, if such employee is employed in the United States, whose earnings are reported on a Form W-2.  For the avoidance of doubt, the term “Employee” shall not include any consultant, independent contractor or non-employee director of a Participating Company.

 

(j) “Fair Market Value”  means, on any given date (i) if the Stock is listed on any established U.S. stock exchange or a U.S. national market system, the closing sales price for such Stock (or, if no closing sales price was reported on that date, as applicable, on the last preceding trading date such closing sales price was reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; (ii) if (i) does not apply, then if the Stock is regularly quoted by a recognized U.S. securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for the Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last preceding trading date such bids and asks were reported); or (iii) if (i) and (ii) do not apply, such value as the Committee in its discretion may in good faith determine in accordance with Section 423 of the Code.

 

(k) “Non-423 Component” means the portion of the Plan under which the right to purchase Stock may be granted in a manner that is not intended to satisfy the requirements of Section 423 of the Code.

 

(l) “Offering Period” means a period with respect to which the right to purchase Stock may be granted under the Plan, as determined pursuant to Section 4(a).

 

(m) “Parent” has the meaning given to such term under U.S. Treasury Regulation 1.424-1(f).  As used in this Plan, “Parent” shall mean a Parent of the Company.

 

(n) “Participant” means an Eligible Employee who elects to participate in the Plan, as provided in Section 4(b).

 

(o) “Participating 423 Company” means any of the following that is designated by the Committee as participating in the 423 Component:  (i) the Company, (ii) any present or future Parent or (iii) any present or future Subsidiary.

 

(p) “Participating Company” means each Participating 423 Company and Participating Non-423 Company.

 

(q) “Participating Non-423 Company” means any of the following that is designated by the Committee as participating in the Non-423 Component:  (i) the Company, (ii) any present or future Parent, (iii) any present or future Subsidiary or (iv) any present or future Affiliate.  Unless determined otherwise by the Committee, only entities incorporated or formed outside of the United States shall be Participating Non-423 Companies.

 

(r) “Plan Account” means the account established for each Participant pursuant to Section 8(a).

 

(s) “Purchase Price” means the price at which Participants may purchase Stock under the Plan, as determined pursuant to Section 8(b).

 

(t) “Subsidiary” means a subsidiary corporation of the Company as that term is defined in section 424(f) 

 

 

of the Code.  As used in this Plan, “Subsidiary” shall mean a Subsidiary of the Company.

 

SECTION 3. Administration Of The Plan.

 

(a) General.  The Plan shall be administered by the Committee. To the extent permitted by applicable law, the Committee may delegate some or all of its authority with respect to the Plan to any executive officer of the Company or any other person or persons designated by the Committee, in each case, acting individually or as a committee.

 

(b) Committee Authorities.  The Committee shall have the exclusive power and authority to administer the Plan, including without limitation the right and power to interpret the provisions of the Plan and make all determinations deemed necessary or advisable for the administration of the Plan (including without limitation a determination as to whether a Change in Control has occurred, whether to designate the Company, a Parent or Subsidiary as a Participating 423 Company or as a Participating Non-423 Company and whether to establish separate offerings).  All such actions, interpretations and determinations which are done or made by the Committee shall be final, conclusive and binding on the Company, the Participating Companies, the Participants and all other parties and shall not subject the Committee (or its members) to any liability.

 

SECTION 4. Enrollment And Participation.

 

(a) Offering Periods.  Initially, two Offering Periods shall commence in each calendar year, provided, that the Board, in its discretion, may determine that a different number of Offering Periods shall commence in each calendar year.  Initially, the Offering Periods shall be the periods commencing on January 1 and ending on June 30 and commencing on July 1 and ending on December 31.

 

(b) Enrollment.  Any individual who, on the day preceding the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering Period by executing the enrollment form prescribed for this purpose by the Committee.  The enrollment form shall be filed with the Company or its designee according to procedures established by the Committee.

 

(c) Duration of Participation.  Once enrolled in the Plan, a Participant shall continue to participate in the Plan (according to the elections made on the Participant’s most recently-filed enrollment form) until he or she ceases to be an Eligible Employee, withdraws from the Plan under Section 6(a) or reaches the end of the Offering Period in which his or her contributions were discontinued under Section 5(c) or Section 9(b).  A Participant who discontinued his or her contributions under Section 5(c) or withdrew from the Plan under Section 6(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Section 4(b).  A Participant whose employee contributions were discontinued automatically under Section 9(b) shall automatically resume participation at the beginning of the next Offering Period in which such Participant’s participation would not be limited by Section 9(b), if he or she then is an Eligible Employee.

 

SECTION 5. Employee Contributions.

 

(a) Frequency of Employee Contributions.  A Participant may make contributions to the Plan for purchasing shares of Stock by means of payroll deductions (unless payroll deductions are not permitted under applicable laws or regulations or unless the Company determines that another means of making employee contributions is necessary or appropriate for legal or administrative reasons).

 

(b) Amount of Employee Contributions.  An Eligible Employee shall designate on the enrollment form the portion of his or her Compensation that he or she elects to contribute to the Plan with respect to the applicable Offering Period.  Such portion shall be a whole percentage of the Eligible Employee’s Compensation, on an after-tax basis, but not less than 1% nor more than 10% of the Eligible Employee’s Compensation with respect to the applicable Offering Period.  A Participant may not change the rate of his or her contributions during an Offering Period unless the Participant seeks (i) to discontinue contributions under Subsection (c) or (ii) to withdraw from the Plan under Section 6(a), and, in either such case, the Company will cease contributions on behalf of the Participant as soon as reasonably practicable (which shall not be until the payroll period following receipt of the applicable 

 

 

form or later).

 

(c) Discontinuing Employee Contributions.  A Participant may discontinue contributions by filing a new enrollment form.  Any contributions made from payroll shall cease as soon as reasonably practicable (which shall not be until the payroll period following receipt or later).  A Participant who has discontinued employee contributions may not resume such contributions until the next Offering Period.  If a Participant discontinues contributions, previously made contributions shall remain in the Participant’s Plan Account (and will be used to purchase shares) unless and until the Participant withdraws from the Plan in accordance with the provisions of Section 6.

 

SECTION 6. Withdrawal From The Plan.

 

(a) Withdrawal.  A Participant may elect to withdraw from the Plan by filing the prescribed form with the Company or its designee at any time before the last day of an Offering Period.  As soon as reasonably practicable thereafter, contributions shall cease and all employee contributions made by the Participant for the current Offering Period shall be refunded to the Participant in cash, without interest.  No partial withdrawals shall be permitted.

 

(b) Re-enrollment After Withdrawal.  A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 4(b).  Re-enrollment shall be effective only at the commencement of an Offering Period.

 

SECTION 7. Change In Employment Status.

 

(a) Termination of Employment.  Termination of employment with a Participating Company, or otherwise ceasing to be an Eligible Employee, for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 6(a), unless, with respect to an offering under the Non-423 Component, otherwise required by applicable laws or regulations.  A transfer from one Participating Company to another shall not be treated as a termination of employment.

 

(b) Leave of Absence.  For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by a Participating Company in writing or if such leave of absence is protected under applicable laws or regulations.  Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

 

(c) Death.  In the event of the Participant’s death, any amounts then held in the Participant’s Plan Account and any shares of Stock then held in the Participant’s name by the Company or the broker designated by the Company shall be paid or transferred to the Participant’s estate or as otherwise required by applicable laws of descent and distribution, or as may be otherwise provided pursuant to Section 8(e).

 

SECTION 8. Plan Accounts And Purchase Of Shares.

 

(a) Plan Accounts.  The Company shall maintain a Plan Account on its books in the name of each Participant.  Whenever an amount is contributed to the Plan, such amount shall be credited to the Participant’s Plan Account.  Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the general assets of the Company or any Parent or Subsidiary and applied to general corporate purposes, unless otherwise required by applicable law or regulation.  Unless required by applicable law or regulation, no interest will be paid or credited with respect to any amounts held in a Participant’s Plan Account.

 

(b) Purchase Price.  The Purchase Price for each share of Stock purchased at the close of an Offering Period shall be the lesser of:

 

(i) 85% of the Fair Market Value of such share on the last day of such Offering Period; or

 

 

(ii) 85% of the Fair Market Value of such share on the first day of such Offering Period.

 

The Committee may round the Purchase Price up (but not down) to a whole cent, and in no event shall the Purchase Price be less than the par value of the shares of Stock being purchased.

 

(c) Number of Shares Purchased.  As of the last day of each Offering Period, each Participant shall be deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection (c), unless the Participant has withdrawn from the Plan under Section 6(a) or Section 7.  The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased with the funds in the Participant’s Plan Account.  The foregoing notwithstanding, no Participant shall purchase more than 1,500 shares of Stock (subject to adjustment pursuant to Section 14(b)) with respect to any Offering Period (or, if the Board determines that a different number of Offering Periods shall commence in each calendar year in accordance with Section 4(a), a proportionate number of shares of Stock (subject to adjustment pursuant to Section 14(b)) with respect to any Offering Period) nor more than the amounts of Stock set forth in Sections 9(b) and 14(a).  The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection (c), shall be (i) rounded down to the next lower whole share (with the Purchase Price for such fractional share to be carried over to the next Offering Period as provided in Section 8(f)) or (ii) credited as a fractional share.  To the extent permitted by law, the Committee may adjust the individual share limit set forth in this Section 8(c) from time to time without shareholder approval, provided that any such change shall not apply until the Offering Period commencing after such change is made.

 

(d) Available Shares Insufficient.  In the event that the aggregate number of shares of Stock that all Participants elect to purchase during an Offering Period exceeds the maximum number of shares of Stock remaining available for issuance under Section 14(a), then the number of shares of Stock each Participant shall purchase shall be determined by multiplying the number of shares of Stock available for issuance by a fraction, the numerator of which is the number of shares of Stock that such Participant has elected to purchase and the denominator of which is the number of shares of Stock that all Participants have elected to purchase.

 

(e) Issuance of Shares.  Shares of Stock shall be issued either in book entry form or in certificates.  Certificates, if any, representing the shares of Stock purchased by a Participant under the Plan shall be issued to the Participant, or book entry in the Participant’s name shall be made, as soon as reasonably practicable after the close of the applicable Offering Period, except that the Committee may determine that such certificates shall be held for each Participant’s benefit by a broker designated by the Committee.  Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property or in such other manner of taking title as may be permitted under applicable law or regulation.

 

(f) Transfer of Shares.  A Participant may elect to transfer any number of shares of Stock  previously purchased under the Plan by providing notification and transfer instructions to Company or the broker designated by the Company, in accordance with procedures established under the Plan.  As soon as administratively practicable following receipt of a Participant’s election to transfer shares of Stock, the Company or the designated broker shall cause a transfer of the shares or a certificate representing the number of shares to be transferred to be delivered to the Participant or a broker designated by the Participant.

 

(g) Unused Cash Balances.  Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 9(b) or Section 14(a) or otherwise shall be refunded to the Participant in cash, without interest, promptly after the end of the applicable Offering Period.

 

SECTION 9. Limitations On Stock Ownership.

 

(a) Five Percent Limit.  Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing 5% or more of the total combined voting power or value of all classes of stock 

 

 

of the Company or any Parent or Subsidiary.  For purposes of this Subsection (a), the following rules shall apply:

 

(i) the attribution rules of Section 424(d) of the Code shall be applied in determining ownership of Stock;

 

(ii) each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this Plan or any other plan or arrangement; and

 

(iii) each Participant shall be deemed to have the right to purchase under this Plan with respect to each Offering Period 1,500 shares of Stock (as adjusted pursuant to Section 8(c)), subject to adjustment pursuant to Section 14(b).

 

(b) Dollar Limit.  Any other provision of the Plan notwithstanding, consistent with Treasury Regulation 1.423-2(i), no Participant shall purchase Stock under this Plan and all other employee stock purchase plans of the Company or any Parent or Subsidiary at a rate that exceeds $25,000 in fair market value of the Stock (determined at the time the option is granted) for each calendar year in which any option granted to the Participant is outstanding at any time.

 

For purposes of this Subsection (b), the Fair Market Value of Stock shall be determined as of the beginning of the Offering Period in which such Stock is purchased.  Employee stock purchase plans not described in Section 423 of the Code shall be disregarded.  If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued, and shall resume (in accordance with the Participant’s most recently-filed enrollment form) at the beginning of the earliest Offering Period in which this Section 9(b) would not prohibit such participation, provided that he or she then is an Eligible Employee.

 

SECTION 10. Rights Not Transferable.

 

The rights of any Participant under the Plan, or the interest in any Stock or moneys to which any Participant may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any manner other than by beneficiary designation or the laws of descent and distribution.  If a Participant attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than as permitted by this Section 10, such act shall be treated as an election by the Participant to withdraw from the Plan under Section 6(a).

 

SECTION 11. No Rights As An Employee.

 

Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause, to the fullest extent permitted by applicable laws or regulations.

 

SECTION 12. No Rights As A Stockholder.

 

A Participant shall have no rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the last day of the applicable Offering Period.

 

SECTION 13. Securities Law Requirements.

 

Shares of Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including, without limitation, the U.S. Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, all state securities laws and regulations, any

 

 

applicable non-U.S. securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities are then traded.

 

SECTION 14. Stock Offered Under The Plan.

 

(a) Authorized Shares.  The aggregate number of shares of Stock available for purchase under the Plan as of the Effective Date shall be 750,000, subject to adjustment as provided in this Section 14.  Shares of Stock issued under the Plan may be shares already outstanding or newly issued or treasury shares.

 

(b) Changes in Capitalization.  In the event of a reorganization, recapitalization, stock split, spin-off, split-off, split-up, stock or extraordinary cash dividend or other distribution, combination of shares, merger, amalgamation, consolidation or any other change in the corporate structure of the Company, or a sale by the Company of all or part of its assets, the Committee shall make such adjustments to the aggregate number of shares of Stock offered under the Plan, the maximum annual increase number in clause (x) of Section 14(a), the share limitation described in Section 8(c) and the price of shares that any Participant has elected to purchase under the Plan as may be necessary to prevent the dilution or enlargement of Participants’ rights.  The Plan shall in no event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, amalgamation, consolidation or other reorganization or corporate transaction of any kind or type.

 

(c) Change in Control.  Any other provision of the Plan notwithstanding, immediately prior to the effective time of a Change in Control, the Plan shall terminate and shares shall be purchased pursuant to Section 8 as if the Offering Period during which such Change in Control occurs was scheduled to end on the day immediately preceding such Change in Control, unless the Plan is expressly assumed by the surviving corporation, the buyer or an affiliate of the foregoing.  In addition, in anticipation of a Change in Control, the Committee may take any action under the Plan as it deems necessary or appropriate, including, without limitation, terminating the Plan and preventing Participants from continuing or increasing their contributions to the Plan.

 

SECTION 15. WITHHOLDING

 

To the extent any payments or distributions under the Plan are determined by any Participating Company to be subject to U.S. Federal, state or local taxes, or the taxes of a jurisdiction other than the United States, the Participating Company is authorized (but not obligated) to withhold any required taxes.  The Participating Company may satisfy any withholding obligation by (i) withholding shares of Stock purchased under the Plan; (ii) withholding from the proceeds from the sale of shares of Stock purchased under the Plan, either through a voluntary sale or through a mandatory sale arranged by the Company; (iii) deducting cash from a Participant’s Plan Account; (iv) deducting cash from a Participant’s other cash compensation payable to him or her by any Participating Company or (v) any other method deemed appropriate by the Participating Company, in each case, as approved by the Committee.  A Participant’s election to participate in the Plan authorizes any Participating Company to take any of the actions described in the preceding sentence.

 

SECTION 16. GOVERNING LAW

 

To the extent that U.S. Federal laws do not otherwise control, the validity and construction of the Plan shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.

 

SECTION 17. NON-423 COMPONENT AND Sub-Plans

 

The Board and/or the Committee may adopt procedures and sub-plans to this Plan that are necessary or appropriate to permit or facilitate participation in the Plan by Eligible Employees who are employed or located in a jurisdiction other than the United States or to generally operate the Plan in jurisdictions outside the United States (provided that such would not result in (i) the Plan failing to be eligible to qualify under Section 423 of the Code or (ii) any offering under the 423 Component not complying with Section 423 of the Code).  Without limiting the generality of, but consistent with, the foregoing, the Board and/or the Committee are expressly authorized to adopt rules, procedures, and sub-plans, which, for purposes of the Non-423 Component, may be beyond the scope of

 

 

Section 423 of the Code, regarding, without limitation, eligibility to participate in the Plan, excluding Employees in certain countries under the Non-423 Component (even if employed by a Participating Company), handling and making of employee contributions under the Plan, satisfying payroll taxes, determining beneficiaries, withholding procedures and issuances of Stock, any of which may vary from time to time and between jurisdictions, as determined by the Board and/or the Committee.

 

SECTION 18. Tax Qualification.

 

The 423 Component is intended to be exempt from the application of Section 409A of the Code under Section 1.409A-1(b)(5)(ii) of the U.S. Treasury Regulations.  Purchases of stock by Participants who are U.S. taxpayers participating in the Non-423 Component are intended to be exempt from the application of Section 409A of the Code under the short-term deferral exception and any ambiguities will be construed and interpreted in accordance with such intent.  Subject to the provisions of this Section 18, Participants who are U.S. taxpayers participating in the Non-423 Component shall be subject to such terms and conditions as shall permit his or her participation in the Plan to satisfy the requirements of the short-term deferral exception to Section 409A of the Code, including the requirement that the shares subject to the right to purchase Stock under the Plan be delivered within the short-term deferral period.  The foregoing notwithstanding, neither the Company nor any Parent or Subsidiary shall have any liability to a Participant or any other person if the right to purchase Stock under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee, the Board, the Company or any Parent or Subsidiary in relation thereto.  Although the Company may endeavor to (i) qualify the 423 Component or Non-423 Component for special tax treatment under the laws and regulations of the United States or of a jurisdiction other than the United States or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain special or to avoid unfavorable tax treatment, any other provision of the Plan notwithstanding, including this Section 18.  The Company and each Parent and Subsidiary shall be unconstrained in their corporate activities without regard to any potentially negative tax impact on any one or more Participants.

 

SECTION 19. SEVERABILITY.

 

If any particular provision of the Plan is found to be invalid or otherwise unenforceable, such provision shall not affect the other provisions of the Plan, but the Plan shall be construed in all respects as if such invalid provision were omitted.

 

SECTION 20. Amendment AND TERMINATION.

 

The Board shall have the right to amend, suspend or terminate the Plan, and to shorten an Offering Period (and refund Participant contributions in the event of any such shortening, suspension or termination) at any time and without notice.  Except as provided in Section 14, any increase in the aggregate number of shares of Stock to be issued under the Plan shall be subject to approval by a vote of the stockholders of the Company.  In addition, any other amendment of the Plan shall be subject to approval by a vote of the stockholders of the Company to the extent required by applicable law, rule or regulation, including, without limitation, Section 423 of the Code.Exhibit 4.1

 

EXERCISABLE ONLY DURING THE SPECIFIED PERIODS SET OUT HEREIN

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE ►

Void after 5:00 p.m. (Toronto time) on ►

	
Number of Warrants: ►

 

	
Warrant Certificate No.►

 

NUTRITIONAL HIGH INTERNATIONAL INC.

(Organized under the laws of the Canada)

This is to certify that, for value received, ► (the "Holder"), shall have the right to purchase from Nutritional High International Inc. (the "Corporation"), at any time and from time to time up to 5:00 p.m. (Toronto time) on ► (the "Expiry Time"), one fully paid and non-assessable common share in the capital of the Corporation (a "Common Share") for each Warrant (individually, a "Warrant") represented hereby at a price of $► per Common Share (the "Exercise Price"), upon and subject to the terms and conditions set forth herein.

1.            For the purposes of this Warrant Certificate, the term

		(a)	"Common Shares" means common shares without par value in the capital of the Corporation as constituted as of the date hereof, provided that in the event of a subdivision, redivision, reduction, combination or consolidation thereof or any other adjustment under item 8 hereof, or successive such subdivisions, redivisions, reductions, combinations, consolidations or other adjustments, then subject to the adjustments, if any, having been made in accordance with the provisions of this Warrant Certificate, "Common Shares" shall thereafter mean the shares, other securities or other property resulting from such subdivision, redivision, reduction, combination or consolidation or other adjustment.

2.            All Warrant Certificates shall be signed by an officer of the Corporation holding office at the time of signing, or any successor or replacement of such person and notwithstanding any change in any of the persons holding said offices between the time of actual signing and the delivery of the Warrant Certificate, the Warrant Certificate so signed shall be valid and binding upon the Corporation.

3.            All rights under any of the Warrants in respect of which the right of subscription and purchase therein provided for shall not theretofore have been exercised shall wholly cease and such Warrants shall be wholly void and of no valid or binding effect after the Expiry Time.

4.            The right to purchase Common Shares of the Corporation pursuant to the Warrants may only be exercised by the Holder at or before the Expiry Time by:

		(a)	duly completing and executing a subscription substantially in the form attached as Schedule "A" (the "Subscription Form"), in the manner therein indicated; and

-2- 

		(b)	surrendering this Warrant Certificate and the duly completed and executed Subscription Form to the Corporation prior to the Expiry Time at its principal office at Toronto, Ontario, together with payment of the purchase price for the Common Shares subscribed for in the form of cash or a certified cheque payable to the Corporation in an amount equal to the then applicable Exercise Price multiplied by the number of Common Shares subscribed for.

5.            Upon delivery and payment as set forth in item 4, the Corporation shall cause to be issued to the Holder the number of Common Shares subscribed for by the Holder and the Holder shall become a shareholder of the Corporation in respect of such Common Shares with effect from the date of such delivery and payment and shall be entitled to delivery of a certificate or certificates evidencing such shares.  The Corporation shall cause such certificate or certificates to be mailed to the Holder at the address or addresses specified in the Subscription Form within five (5) business days of such delivery and payment as set forth in item 4 or, if so instructed by the Holder, held for pick-up by the Holder at the principal office of the Corporation. Notwithstanding any adjustment provided for in item 8 hereof, the Corporation shall not be required upon the exercise of any Warrants to issue fractional Common Shares in satisfaction of its obligations hereunder and the Holder understands and agrees that it will not be entitled to any cash payment or other form of compensation in respect of a fractional Common Share that might otherwise have been issued.

6.            The holding of a Warrant shall not constitute the Holder a shareholder of the Corporation nor entitle him to any right or interest in respect thereof except as herein expressly provided.

7.            The Corporation covenants and agrees that until the Expiry Time while any of the Warrants shall be outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the right of purchase herein provided, as such right of purchase may be adjusted pursuant to items 8 and 9 hereof. The Corporation further covenants and agrees that while any of the Warrants shall be outstanding, the Corporation shall (a) comply with the securities legislation applicable to it in order that the Corporation not be in default of any requirements of such legislation; (b) use its commercially reasonable best efforts to do or cause to be done all things necessary to preserve and maintain its corporate existence; and (c) at its own expense expeditiously use its commercially reasonable best efforts to obtain the listing of such Common Shares (subject to issue or notice of issue) on each stock exchange or over-the-counter market on which the Corporation's Common Shares may be listed from time to time. All Common Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non‐assessable shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.

	8.            	(a)            	For the purpose of this item 8, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor:

"Current Market Price" of the Common Shares at any date means the price per share equal to the weighted average price at which the Common Shares have traded on the Canadian Stock Exchange (the "CSE") or, if the Common Shares are not then listed on the CSE, on such other Canadian stock exchange on which the shares trade as may be selected by the directors of the Corporation for such purpose or, if the Common Shares are not then listed on any Canadian stock exchange, in the over-the-counter market, during the period of any twenty consecutive trading days ending not more than five (5) business days before such date; provided that the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold on the said exchange or market, as the case may be, during the said twenty consecutive trading days by the total number of Common Shares so sold; and provided further that if the Common Shares are not then listed on any Canadian stock exchange or traded in the over-the counter market, then the Current Market Price shall be determined by such national firm of independent chartered accountants as may be selected by the directors of the Corporation;

-3- 

"director" means a director of the Corporation for the time being and, unless otherwise specified herein, a reference to action "by the directors" means action by the directors of the Corporation as a board or, whenever empowered, action by the executive committee of such board; and

"trading day" with respect to a stock exchange or over-the-counter market means a day on which such stock exchange or market is open for business.

		(b)	If at any time after the date hereof and prior to the Expiry Time, the Corporation shall (i) subdivide or redivide its then outstanding Common Shares into a greater number of Common Shares, (ii) reduce, combine or consolidate its then outstanding Common Shares into a lesser number of Common Shares or (iii) issue Common Shares (or securities exchangeable for or convertible into Common Shares) to the holders of all or substantially all of its then outstanding Common Shares by way of a stock dividend or other distribution (any of such events herein called a "Common Share Reorganization"), then the Exercise Price shall be adjusted effective immediately after the effective date of any such event in (i) or (ii) above or the record date at which the holders of Common Shares are determined for the purpose of any such dividend or distribution in (iii) above, as the case may be, by multiplying the Exercise Price in effect on such effective date or record date, as the case may be, by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date, as the case may be, before giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would be outstanding if such securities were exchanged for or converted into Common Shares.

		(c)	If at any time after the date hereof and prior to the Expiry Time, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Common Shares, of rights, options or warrants pursuant to which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue (such period being the "Rights Period"), to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share (or in the case of securities exchangeable for or convertible into Common Shares at an exchange or conversion price per share at the date of issue of such securities) of less than 95% of the Current Market Price of the Common Shares on such record date (any of such events being herein called a "Rights Offering"), the Exercise Price shall be adjusted effective immediately after the record date for the Rights Offering to the amount determined by multiplying the Exercise Price in effect on such record date by a fraction:

-4- 

		
(i)

	
the numerator of which shall be the aggregate of

 

		(A)	the number of Common Shares outstanding on the record date for the Rights Offering; and

		
(B)

	
the quotient determined by dividing

 

		(I)	either (a) the product of the number of Common Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Common Shares are offered, or, (b) the product of the exchange or conversion price of the securities so offered and the number of Common Shares for or into which the securities offered pursuant to the Rights Offering may be exchanged or converted, as the case may be, by

		(II)	the Current Market Price of the Common Shares as of the record date for the Rights Offering; and

		(ii)	the denominator of which shall be the aggregate of the number of Common Shares outstanding on such record date and the number of Common Shares offered pursuant to the Rights Offering (including in the case of the issue or distribution of securities exchangeable for or convertible into Common Shares the number of Common Shares for or into which such securities may be exchanged or converted).

If by the terms of the rights, options, or warrants referred to in this item 8(c), there is more than one purchase, conversion or exchange price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered, shall be calculated for purposes of the adjustment on the basis of the lowest purchase, conversion or exchange price per Common Share, as the case may be.  Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such calculation.  To the extent that any adjustment in the Exercise Price occurs pursuant to this item 8(c) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants referred to in this item 8(c), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, conversion or exercise right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

		(d)	If at any time after the date hereof and prior to the Expiry Time, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the Common Shares of:

		
(i)

	
shares of the Corporation of any class other than Common Shares;

-5- 

		(ii)	rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (other than rights, options or warrants pursuant to which holders of Common Shares are entitled, during a period expiring not more than 45 days after the record date for such issue, to subscribe for or purchase Common Shares at a price per share (or in the case of securities exchangeable for or convertible into Common Shares at an exchange or conversion price per share at the date of issue of such securities) of at least 95% of the Current Market Price of the Common Shares on such record date);

		
(iii)

	
evidences of indebtedness of the Corporation; or

 

		(iv)	any property or assets of the Corporation (for greater certainty, excluding a cash dividend in the ordinary course);

and if such issue or distribution does not constitute a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special Distribution"), the Exercise Price shall be adjusted effective immediately after the record date for the Special Distribution to the amount determined by multiplying the Exercise Price in effect on the record date for the Special Distribution by a fraction:

		
(A)

	
the numerator of which shall be the difference between

 

		(I)	the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date, and

		(II)	the fair value, as determined by the directors of the Corporation, to the holders of the Common Shares of the shares, rights, options, warrants, evidences of indebtedness or property or assets to be issued or distributed in the Special Distribution, and

		(B)	the denominator of which shall be the product obtained by multiplying the number of Common Shares outstanding on such record date by the Current Market Price of the Common Shares on such record date.

Any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of such calculation.  To the extent that any adjustment in the Exercise Price occurs pursuant to this item 8(d) as a result of the fixing by the Corporation of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this item 8(d), the Exercise Price shall be readjusted immediately after the expiry of any relevant exercise, exchange or conversion right to the amount which would then be in effect if the fair market value had been determined on the basis of the number of Common Shares issued and remaining issuable immediately after such expiry, and shall be further readjusted in such manner upon the expiry of any further such right.

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		(e)	If at any time after the date hereof and prior to the Expiry Time, there is a capital reorganization of the Corporation or a reclassification or other change in the Common Shares (other than a Common Share Reorganization) or a consolidation or merger or amalgamation of the Corporation with or into any other corporation or other entity (other than a consolidation, merger or amalgamation which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other securities), or a transfer of all or substantially all of the Corporation's undertaking and assets to another corporation or other entity in which the holders of Common Shares are entitled to receive shares, other securities or other property (any of such events being called a "Capital Reorganization"), after the effective date of the Capital Reorganization the Holder shall be entitled to receive, and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Common Shares to which the Holder was theretofore entitled upon the exercise of the Warrants, the kind and aggregate number of Common Shares and other securities or property resulting from the Capital Reorganization which the Holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Holder has been the registered holder of the number of Common Shares to which the Holder was theretofore entitled to purchase or receive upon the exercise of the Warrants.  If necessary, as a result of any Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Certificate with respect to the rights and interest thereafter of the Holder to the end that the provisions of this Warrant Certificate shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of this Warrant Certificate.

		(f)	If at any time after the date hereof and prior to the Expiry Time, any of the events set out in item 8(a), (b), (c), (d) or (e) shall occur and the occurrence of such event results in an adjustment of the Exercise Price pursuant to the provisions of this item 8, then the number of Common Shares purchasable pursuant to this Warrant shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Common Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

		(g)	If the Corporation takes any action affecting its Common Shares to which the foregoing provisions of this item 8, in the opinion of the board of directors of the Corporation, acting in good faith, are not strictly applicable, or if strictly applicable would not fairly adjust the rights of the Holder against dilution in accordance with the intent and purposes hereof, or would otherwise materially affect the rights of the Holder hereunder, then the Corporation shall, subject to the approval of the CSE (or such other stock exchange or quotation system on which the Common Shares are then listed and posted (or quoted) for trading, as applicable), execute and deliver to the Holder an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights as aforesaid in such manner as the board of directors of the Corporation may determine to be equitable in the circumstances, acting in good faith.  The failure of the taking of action by the board of directors of the Corporation to so provide for any adjustment on or prior to the effective date of any action or occurrence giving rise to such state of facts will be conclusive evidence that the board of directors has determined that it is equitable to make no adjustment in the circumstances.

-7- 

9.            The following rules and procedures shall be applicable to the adjustments made pursuant to item 8:

		(a)	any Common Shares owned or held by or for the account of the Corporation shall be deemed not be to outstanding except that, for the purposes of item 8, any Common Shares owned by a pension plan or profit sharing plan for employees of the Corporation or any of its subsidiaries shall not be considered to be owned or held by or for the account of the Corporation;

		(b)	no adjustment in the Exercise Price or the number of Common Shares purchasable pursuant to this Warrant shall be required unless a change of at least 1% of the prevailing Exercise Price or the number of Common Shares purchasable pursuant to this Warrant would result, provided, however, that any adjustment which, except for the provisions of this item 9(b), would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment;

		(c)	the adjustments provided for in item 8 are cumulative and shall apply to successive subdivisions, consolidations, dividends, distributions and other events resulting in any adjustment under the provisions of such item;

		(d)	in the absence of a resolution of the board of directors of the Corporation fixing a record date for any dividend or distribution referred to in item 8(a)(iii) above, the Corporation shall be deemed to have fixed as the record date therefor the date on which such dividend or distribution is effected;

		(e)	if the Corporation sets a record date to take any action and thereafter and before the taking of such action abandons its plan to take such action, then no adjustment to the Exercise Price will be required by reason of the setting of such record date;

		(f)	as a condition precedent to the taking of any action which would require any adjustment to the Warrants evidenced hereby, including the Exercise Price, the Corporation must take any corporate action which may be necessary in order that the Corporation shall have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all of the shares or other securities which the Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof;

		(g)	forthwith, but no later than fourteen (14) days, after any adjustment to the Exercise Price or the number of Common Shares purchasable pursuant to the Warrants, the Corporation shall provide to the Holder a certificate of an officer of the Corporation certifying as to the amount of such adjustment and, in reasonable detail, describing the event requiring and the manner of computing or determining such adjustment;

		(h)	any question that at any time or from time to time arises with respect to the amount of any adjustment to the Exercise Price or other adjustment pursuant to item 8 shall be conclusively determined by a firm of independent chartered accountants (who may be the Corporation's auditors) and shall be binding upon the Corporation and the Holder;

		(i)	any adjustment to the Exercise Price under the terms of this Warrant Certificate shall be subject to the prior approval of the CSE (or such other stock exchange or quotation system on which the Common Shares are then listed and posted (or quoted) for trading, as applicable); and

-8- 

		(j)	in case the Corporation, after the date of issue of this Warrant Certificate, takes any action affecting the Common Shares, other than an action described in Section 8, which in the opinion of the directors of the Corporation would materially affect the rights of the Holder, the Exercise Price will be adjusted in such manner, if any, and at such time, by action by the directors of the Corporation but subject in all cases to any necessary regulatory approval, including approval of the CSE (or such other stock exchange or quotation system on which the Common Shares are then listed and posted (or quoted) for trading, as applicable). Failure of the taking of action by the directors of the Corporation so as to provide for an adjustment on or prior to the effective date of any action by the Corporation affecting the Common Shares will be conclusive evidence that the board of directors of the Corporation has determined that it is equitable to make no adjustment in the circumstances.

10.            On the happening of each and every such event set out in item 8, the applicable provisions of this Warrant Certificate, including the Exercise Price, shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended.

11.            The Corporation shall not be required to deliver certificates for Common Shares while the share transfer books of the Corporation are properly closed, having regard to the provisions of items 8 and 9 hereof, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment for the Common Shares called for thereby during any such period, delivery of certificates for Common Shares may be postponed for not more than five (5) business days after the date of the re‐opening of said share transfer books; provided, however, that any such postponement of delivery of certificates shall be without prejudice to the right of the Holder so surrendering the same and making payment during such period to receive after the share transfer books shall have been re-opened such certificates for the Common Shares called for, as the same may be adjusted pursuant to items 8 and 9 hereof as a result of the completion of the event in respect of which the transfer books were closed.

12.            Subject as hereinafter provided, all or any of the rights conferred upon the Holder by the terms hereof may be enforced by the Holder by appropriate legal proceedings.  No recourse under or upon any obligation, covenant or agreement contained herein shall be had against any shareholder or officer of the Corporation either directly or through the Corporation, it being expressly agreed and declared that the obligations under the Warrants are solely corporate obligations and that no personal liability whatever shall attach to or be incurred by the shareholders or officers of the Corporation or any of them in respect thereof, any and all rights and claims against every such shareholder, officer or director being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants.

13.            The Holder may subscribe for and purchase any lesser number of Common Shares than the number of Common Shares expressed in any Warrant Certificate.  In the case of any subscription for a lesser number of Common Shares than expressed in any Warrant Certificate, the Holder hereof shall be entitled to receive, at no cost to the Holder, a new Warrant Certificate in respect of the balance of Warrants not then exercised.  Such new Warrant Certificate shall be mailed to the Holder by the Corporation or, at its direction, the transfer agent of the Corporation, contemporaneously with the mailing of the certificate or certificates representing the Common Shares issued pursuant to item 5.

14.            If any Warrant Certificate becomes stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it may in its discretion impose, acting reasonably, issue and sign a new Warrant Certificate of like denomination, tenor and date as the Warrant Certificate so stolen, lost, mutilated or destroyed for delivery to the Holder.  The applicant for the issue of a new Warrant Certificate pursuant to this section shall bear the cost of the issue thereof and in the case of mutilation shall as a condition precedent to the issue thereof, deliver to the Corporation the mutilated Warrant Certificate, and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation in its discretion and the applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation in its discretion and shall pay the reasonable charges of the Corporation in connection therewith.

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15.            Subject to compliance by the Holder with any applicable resale restrictions and any other applicable laws and regulatory requirements, the Corporation acknowledges and agrees that the Warrants evidenced hereby may be assigned or transferred by the Holder at the Holder's option. It is the sole responsibility of the Holder to ensure that all such restrictions, laws and regulatory requirements have been observed.  Upon any assignment or transfer, the Holder shall furnish the Corporation with this Warrant Certificate together with a Warrant Transfer Form (as attached hereto as Schedule "B") and such other documents and information regarding the transferee as the Corporation may reasonably require to register these Warrants in the name of the transferee and, upon satisfaction of such requirements, the Corporation shall execute and deliver a new Warrant certificate in the name of the transferee named in such Warrant Transfer Form for the number of unexercised Warrants and this Warrant Certificate shall be promptly cancelled.

16.            This Warrant and the Common Shares which may be acquired hereunder have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or applicable state securities laws, and this Warrant may not be exercised by or on behalf of any "U.S. person" as such term is defined in Regulation S under the U.S. Securities Act, or a Person within the United States and the Common Shares may not be delivered within the United States upon exercise of the Warrant nor may the Warrant or any Common Shares be offered, sold or otherwise transferred within the United States or to a U.S. person (other than in an "offshore transaction" as such term is defined in  Rule 902(h) of Regulation S under the U.S. Securities Act) unless the Warrants and Common Shares are registered under the U.S. Securities Act or pursuant to an applicable exemption from registration under the U.S. Securities Act and applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing to such effect in form and substance satisfactory to the Corporation; provided that an "accredited investor", as defined in Rule 501(a) of Regulation D under the U.S. Securities Act, that purchased Units in the Corporation's private placement of Units in the United States and who delivers to the Corporation and the Corporations registrar and transfer agent an Accredited Investor Certificate will not be required to deliver an opinion of counsel in connection with the exercise of this Warrant.

17.            Any notice, document or communication required or permitted by this Warrant certificate to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if sent by prepaid registered mail or if transmitted by fax, to such party addressed as follows:

		(a)	if to the Holder:

to the address on the face page hereof

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		(b)	if to the Corporation:

	Nutritional High International Inc. 
	
77 King Street West

	
Suite 2905

	
Toronto, ON M5K 1H1

	 
	Attention:	David Posner
	 	President and Chief Executive Officer
	
 

	Fax No.	
(416) 765-0029

                        

Notice so mailed shall be deemed to have been given on the third Business Day after deposit in a post office or public letter box.  Neither party shall mail any notice, request or other communication hereunder during any period in which applicable postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail.  Notices transmitted by a form of recorded telecommunication or delivered personally shall be deemed given on the day of transmission or personal delivery, as the case may be.  Any party may from time to time notify the other in the manner provided herein of any change of address which thereafter, until changed by like notice, shall be the address of such party for all purposes hereof.

18.            Time shall be of the essence hereof.

19.            The Holder acknowledges that the appropriate legend as follows will be placed upon certificates representing any Common Shares issued upon the exercise of the Warrants represented by this certificate prior to the date which is four months and one day after the date hereof:

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE ►."

The Holder understands that upon the original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the U.S. Securities Act or applicable U.S. state laws and regulations, the certificates representing the Common Shares will bear a legend in substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY: (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY STATE SECURITIES LAWS, OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, IF IN EACH CASE AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION HAS BEEN PROVIDED TO THE CORPORATION TO THAT EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON EXCHANGES IN CANADA.

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provided, that, if, at any time the Corporation is a "foreign issuer" as defined in Regulation S under the U.S. Securities Act and if any of the Securities are being sold in compliance with the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with local laws and regulations, the legend may be removed by providing a declaration, in the form of Schedule C attached hereto, to the Corporation, registrar and transfer agent for the Securities (or as the Corporation or transfer agent may prescribe from time to time) together with such additional evidence as the Corporation or transfer agent may reasonably require from time to time which may include, but is not limited to, an opinion of counsel of recognized standing reasonably satisfactory to the Corporation, to the effect that registration under the U.S. Securities Act is not required; and:

provided further, if any of the Common Shares are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation and the Corporation's transfer agent of an opinion of counsel satisfactory to the Corporation to the effect that such Underlying Securities are not "restricted securities" as defined in Rule 144 under the U.S. Securities Act and the legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws.

19.            The Corporation will maintain a register of holders of Warrants at its principal office.  The Corporation may deem and treat the registered holder of any Warrant Certificate as the absolute owner of the Warrants represented thereby for all purposes, and the Corporation shall not be affected by any notice or knowledge to the contrary except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.  A Holder shall be entitled to the rights evidenced by such Warrant free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt by any such Holder of the Common Shares purchasable pursuant to such Warrant shall be a good discharge to the Corporation for the same and the Corporation shall not be bound to inquire into the title of any such Holder except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

20.            The Corporation shall notify the Holder forthwith of any change of the Corporation's address.

21.            The registered holders of Warrants shall have the power from time to time by an extraordinary resolution (as hereinafter defined):

		(a)	to sanction any modification, abrogation, alteration or compromise of the rights of the registered holders of Warrants against the Corporation which shall be agreed to by the Corporation; and/or

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		(b)	to assent to any modification of or change in or omission from the provisions contained herein or in any instrument ancillary or supplemental hereto which shall be agreed to by the Corporation; and/or

		(c)	to restrain any registered holder of a Warrant from taking or instituting any suit or proceedings against the Corporation for the enforcement of any of the covenants on the part of the Corporation conferred upon the registered holders of Warrants by the terms of the Warrants.

Any such extraordinary resolution as aforesaid shall be binding upon all the registered holders of Warrants whether or not assenting in writing to any such extraordinary resolution, and each registered holder of any of the Warrants shall be bound to give effect thereto accordingly.  Such extraordinary resolution shall, where applicable, be binding on the Corporation which shall give effect thereto accordingly.

The Corporation shall forthwith upon receipt of an extraordinary resolution provide notice to all registered holders of Warrants of the date and text of such resolution.  The registered holders of Warrants assenting to an extraordinary resolution agree to provide the Corporation forthwith with a copy of any extraordinary resolution passed.

The expression "extraordinary resolution" when used herein shall mean a resolution assented to in writing, in one or more counterparts, by the registered holders of Warrants calling in the aggregate for not less than seventy-five per cent (75%) of the aggregate number of Common Shares called for by all of the Warrants which are, at the applicable time, outstanding.

22.            All notices to be sent hereunder shall be deemed to be validly given to the registered holders of the Warrants if delivered personally or if sent by registered letter through the post addressed to such holders at their post office addresses appearing in the register of Warrant holders caused to be maintained by the Corporation, and such notice shall be deemed to have been given, if delivered personally when so delivered, and if sent by post on the fifth business day next following the post thereof.

23.            If for any reason, other than the failure or default of the Holder, the Corporation is unable to issue and deliver the Common Shares or other securities as contemplated herein to the Holder upon the proper exercise by the Holder of the right to purchase any of the Common Shares purchasable upon exercise of the Warrants represented hereby, the Corporation may pay, at its option and in complete satisfaction of its obligations and the rights of the Holder hereunder, to the Holder, in cash, an amount equal to the difference between the Exercise Price and the Current Market Price of such Common Shares or other securities on the date of exercise by the Holder, and upon such payment the Corporation shall have no liability or other obligation to the Holder relating to or in respect of the Warrants or this Warrant Certificate.

24.            This Warrant Certificate shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable herein.

25.            All Warrants shall rank pari passu, whatever may be the actual date of issue of the same.

26.            This Warrant Certificate shall enure to the benefit of and shall be binding upon the Holder and the Corporation and their respective successors and assigns.

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IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer.

DATED as of the ► day of December, 2015.

	
 

NUTRITIONAL HIGH INTERNATIONAL INC.

 

	
 

Per:

	
/"Signed"/

	 	
 

Authorized Signatory:  Adam Szweras

	 	
Title: Director

 

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SCHEDULE "A" TO WARRANT CERTIFICATE

SUBSCRIPTION FORM

	TO:	Nutritional High International Inc.

 77 King St. W., Suite 2905, Toronto, Ontario M5K 1H1

The undersigned holder of the within Warrant certificate hereby irrevocably subscribes for ___________________________ common shares (the "Common Shares") of Nutritional High International Inc. (the "Corporation") pursuant to the within Warrant certificate at the Exercise Price per share specified in the said Warrant certificate and encloses herewith cash or a certified cheque, money order or bank draft payable to or to the order of the Corporation in the aggregate amount of Cdn $______________ in payment of the subscription price therefor.

The undersigned certifies as follows (check one):

	a)            	[     ]            	(a) The undersigned is not in the United States; (b) is not a "U.S. person" and is not exercising this Warrant on behalf of a "U.S. person" (as such term is defined in Regulation S of the Securities Act of 1933, as amended (the U.S. Securities Act") or a person in the United States; and (c) did not execute or deliver this exercise form in the United States.

	b)            	[     ]            	(a) The undersigned purchased Units directly from the Corporation for its own account or the account of another "accredited investor" (as such term is defined in Regulation D of the U.S. Securities Act) pursuant to a written subscription agreement for the purchase of the Units; (b) is exercising this Warrant solely for its own account or the account of such other accredited investor; (c) is attaching a U.S. Accredited Investor Status Certificate attached as Annex 1 to the Warrant certificate, with such changes as counsel to the Corporation may deem reasonably necessary to reflect changes in applicable law, and (d) if the Warrants are being exercised on behalf of another person, the undersigned is attaching, on behalf of such other person, a U.S. Accredited Investor Status Certificate attached as Annex 1 to the Warrant certificate, with such changes as counsel to the Corporation may deem reasonably necessary to reflect changes in applicable law; and (e) all the representations and warranties made pursuant to such written subscription agreement by the undersigned or on behalf of another person are still accurate and complete as of the date hereof with respect to the undersigned or such other person.

	c)            	[     ]            	The undersigned is attaching a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issue of the Common Shares.

By checking box B or C above, the undersigned represents that it has had access to such information concerning the Corporation as it considered necessary in connection with its investment decision and understands that the Common Shares have not been and will not be registered under the U.S. Securities Act and agrees that it will only resell the Common Shares issuable upon exercise hereof (A) to the Corporation, (B) outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations, (C)(1) in accordance with an exemption from registration under the U.S. Securities Act provided by Rule 144 or 144A, if available, and in compliance with applicable state securities laws and regulations or (C)(2) in a transaction that does not otherwise require registration under the U.S. Securities Act or any applicable state securities laws, and, in the case of (C)(1) or (C)(2) above, an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, has been provided to the Corporation to such effect.  If box B or C above is checked, the Common Shares issuable upon exercise hereof will bear a legend to the foregoing effect which may be removed if the Corporation is a "foreign issuer" as defined in Regulation S under the U.S. Securities Act and by providing a declaration to the registrar and transfer agent for the Common Shares to the effect that such Common Shares have been sold in accordance with Regulation S under the U.S. Securities Act.

-15- 

*  Unless box B or C above has been checked, Warrants may not be exercised within the United States or by or on behalf of any "U.S. person" within the meaning of Regulation S under the U.S. Securities Act and no Common Shares will be issued to any person who has set out an address in the United States nor shall any certificates representing Common Shares be delivered to any U.S. address.

DATED this ____ day of _____________________, ______.

The undersigned hereby directs that the said Common Shares be issued and registered as follows:

 

	
Name:

	
 

	
 

	
 

	
Address:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Signature: 

	
 

 

 

 

 

 

 

 

 

 

	 	
☐

	 	
Please check box if these Common Share certificates are to be delivered at the office where this Warrant certificate is surrendered, failing which the Common Share certificates will be mailed to the subscriber at the address set out above.

	 	
 

	 	
 

	 	
 

	 	
If any Warrants represented by this certificate are not being exercised, a new Warrant certificate will be issued and delivered to the holder with the Common Share certificate.

-16- 

SCHEDULE "B" TO WARRANT CERTIFICATE

WARRANT TRANSFER FORM

	TO:	Nutritional High International Inc.

 77 King St. W., Suite 2905, Toronto, Ontario M5K 1H1

Certificate of Transferor

The undersigned holder of the within Warrant certificate hereby sells, assigns and transfers to ______________________________ [name of Transferee], _______________ [number of Warrants] Warrants of Nutritional High International Inc. (the "Corporation") registered in the name of the undersigned on the records of the Corporation represented by the attached Warrant certificate and irrevocably appoints ____________________ , the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.

	
DATED the 

	
 

	
day of 

	
,

	
201

	. 

 

	
 

	
 

	
 

	Signature Guaranteed 	 	Signature of Transferor

Certificate of Transferee

In connection with this transfer (check one):

	☐ 	The undersigned hereby certifies that (1) (i) it is not a U.S. Person (as defined in Regulation S promulgated under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")), (ii) at the time of making or receiving the offer to purchase or otherwise acquire the attached Warrant certificate and at the time of transfer (including signature and delivery of this Warrant Transfer Form) it was and is not within the United States, and (iii) it is not receiving any of the Warrants represented by the attached Warrant certificate by or on behalf of any U.S. Person or Person within the United States; OR

	☐ 	The undersigned is delivering a written opinion of counsel to the effect that the Warrant to be transferred hereby and the Shares to be delivered upon exercise of such Warrant are exempt from registration under the U.S. Securities Act and the regulations promulgated thereunder and any applicable state securities laws.

	
DATED the

	
 

	
day of

	
 ,

	
 201

	. 

	
 

	
 

	
 

	
 

	
 

	Signature of Transferee

Instructions:

	a.	Signature of the Holder must be the signature of the person whose name appears on the face of this Warrant certificate.

	b.	If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.

	c.	Warrants shall only be transferable in accordance with applicable laws and are subject to the terms and conditions contained in the certificate to which this Warrant Transfer Form is scheduled.

	 

	d.	The signature of the Transferor on this Warrant Transfer Form must be guaranteed by a Canadian chartered bank, Canadian trust company, or a member of a recognized Medallion Guarantee program.  The guarantor, in the case of a bank or trust company, must affix a stamp bearing the actual words:  "SIGNATURE GUARANTEED".

-17- 

ANNEX 1 TO WARRANT CERTIFICATE

 U.S. ACCREDITED INVESTOR STATUS CERTIFICATE

Capitalized terms not otherwise defined herein shall have the meanings attributed thereto in the Warrant certificate to which this Annex was attached.

The undersigned exercising person, a resident of the United States or a U.S. Person, hereby represents and warrants to the Corporation, as an integral part of the attached Warrant Exercise Form, that he, she or it is correctly and in all respects described by the category or categories set forth directly next to which the exercising person has marked below.

[MARK BELOW THE CATEGORY OR CATEGORIES WHICH DESCRIBES YOU]

1.            The exercising person (or if the exercising person is acting on behalf of a principal, then the principal for whom the exercising person is acting) satisfies one or more of the Categories indicated below (please place an "X" on the appropriate category):

	A)	
☐

	
a bank as defined in Section 3(a)(2) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; or

 

	B)	
☐

	
a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or

 

	C)	
☐

	
a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

 

	D)	
☐

	
an insurance company as defined in Section 2(13) of the U.S. Securities Act; or

 

	E)	
☐

	
an investment company registered under the Investment Company Act of 1940;

 

	F)	
☐

	
a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940;

 

	G)	
☐

	
a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

 

	H)	
☐

	
an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are U.S. Accredited Investors;

 

	I)	
☐

	
a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

 

	J)	
☐

	
an organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or a partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of US$5,000,000; or

 

	K)	
☐

	
a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of US$5,000,000; or

 

-18- 

	L)	
☐

	a director, executive officer or general partner of the issuer of the securities being offered or sold, or any director, executive officer or general partner of a general partner of that issuer; or

	M)	
☐

	a natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his or her purchase exceeds US$1,000,000; or

	N)	
☐

	a natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person's spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

	
O)

	
☐

	a trust, with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; and

	P)	
☐

	
an entity, other than a trust, in which all of the equity owners meet one or more of the categories set forth above.

 2.            (a)            if the undersigned is the exercising person, he, she or it is making the above statement based on personal knowledge of his, her or its financial situation and has reviewed personal financial documentation with an accountant, financial advisor or other financial professional, if necessary, to determine that the above statement is true; or (b) if the undersigned is other than the exercising person, he, she or it is making the above statement based on a review, if necessary, of the financial statements of the exercising person for the most recently completed financial year and any interim financial statements prepared since the end of such financial year and has undertaken such other review and due diligence necessary to determine and certify that the exercising person is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D; and

3.            the exercising person understands that the Corporation is relying on this certificate as evidence of the exercising person's status as an "accredited investor" in accordance with Rule 501(a) of Regulation D and further understands that the Corporation may, in its sole discretion, require the exercising person to execute a new and separate certificate each time the exercises Warrants .

DATED  ____________________________________, 20__.

	 	 	 
	
Name of Exercising Person (please print)

 

	 	 
	
By:

 

	 	 	 
	 	
Authorized Signature

 

	 	 
	 	 	 
	
Official Capacity or Title, if any  (please print)

 

	 	 
	 	 	 
	 Name of Authorized Signing Authority	 	 

 

-19- 

SCHEDULE "C" TO WARRANT CERTIFICATE

FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO:                          CST TRUST COMPANY

AND TO:                          NUTRITIONAL HIGH INTERNATIONAL INC.

The undersigned:

	·	acknowledges that the sale of the securities of Nutritional High International Inc. to which this declaration relates is being made in reliance on Rule 904 of Regulation S ("Regulation S") under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and

	·	certifies that:

1.            it is not an affiliate of Nutritional High International Inc. (as defined in Rule 405 under the U.S. Securities Act);

2.            the offer of the securities was not made to a person in the United States or to a U.S. Person, as defined in Regulation S (a "U.S. Person"), and either (A) at the time the buy order was originated, the buyer was outside the United States and was not a U.S. Person, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States and was not a U.S. Person, or (B) the transaction was executed on or through the facilities of the TSX Venture Exchange or another Designated Offshore Securities Market, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States or a U.S. Person;

3.            neither the seller nor any affiliate of the seller nor any person acting on any of their behalves has engaged or will engage in any "directed selling efforts" (as such term is defined in Regulation S) in the United States in connection with the offer and sale of the securities;

4.            the sale is bona fide and not for the purpose of "washing off" the resale restrictions imposed because the securities are "restricted securities" (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act);

5.            the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S with fungible unrestricted securities; and

6.            the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act.

Unless otherwise indicated, terms used in this declaration have the meanings given to them in Regulation S.

Dated:  ______________

By:_____________________________

Name:

 Title:

Affirmation by Seller's Broker-Dealer

-20- 

We have read the foregoing representations of our customer, _________________________ (the "Seller") dated _______________________, with regard to the sale, for such Seller's account, of the _________________ represented by certificate number ______________ of the Corporation described therein, and we hereby affirm that, to the best of our knowledge and belief, the facts set forth therein are full, true and correct.

_____________________________________________

 Name of Firm

By: __________________________________________

 Authorized Officer

Date: _________________________________________

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