Document:

Exhibit 10.5 Q3 FY2014

Exhibit 10.5

Republic of Panama. Province of Tanama. Fifth Notary Office of the Circuit. Lawyer Diomedes Edgardo Cerrud, Notary. Corresponding modification. (Copy for informational purposes only).----------------------------------------------------------------------------------------

DEED NO. 8931 dated March 31, 2014.------------------------------------------------------------------------------
THROUGH WHICH, METROBANK hereby declares the cancellation of some mortgage encumbrance and antichresis established in its favor and, simultaneously, BANK OF NOVA SCOTIA and PRICESMART PANAMA, S.A. enter into three (3) Loan Agreements, all of which are guaranteed with a first mortgage and antichresis on various properties. 

(The stamp and handwritten information provided here are illegible).------------------------

PUBLIC DEED NUMBER: EIGHT THOUSAND, NINE HUNDRED AND EIGHTY-ONE. (8,981). THROUGH WITH METROBANK, S.A. states that all mortgage and antichresis liens established in its favor have been paid up and, at the same time, THE BANK OF NOVA SCOTIA and PRICESMART PANAMA, S.A. enter into three (3) Loan Agreements, all guaranteed with a first antichresis mortgage on various properties. ----------------------------

Panama, March 31, 2014.------------------------------------------------------------------------------------------------------

In Panama City, Capital of the Public and head of the Notary circuit of bearing the same name, on March thirty-one (31) two thousand and fourteen (2014), before mi, Lawyer DIOMEDES EDGARDO CERRUD, Public Notary of the Fifth Circuit of Panama, bearer of Personal identity card number eight-one hundred and seventy-one - three hundred and one (8-171-301), personally appeared Mr. ERNESTO ANTONIO BOYD SASSO, male, of legal age, Panamanian, married, banker, with Personnal Identity card number eight - one hundred and forty-seven- ninety-three (8-147-93), neighbor of this city, acting on behalf and in representation of METROBANK, S.A., a corporation duly registered under Card two hundred and forty-seven thousand one hundred and ninety three (247193), Role thirty-two thousand three hundred and thirty (32330), and Image seventy-two (72) of the Microfilm (Commercial) Section of the Public Registry, in his capacity as the General Proxy, duly authorized to celebrate this act as stated in the General Power of Attorney registered under Card number forty-seven thousand one hundred and ninety-three (47193), Redi Document one million, seventy-five thousand six hundred and fifty-seven (1065657), who from here on in shall be referred to as THE BANK, persons of my personal acquaintance and who requested that I proceed as I am hereby proceeding to do, as follows:--------------------------------------------------------------------------------------------------------------------------
FIRST: That through Public Deed number ten thousand one hundred and twenty-two (10,122), dated August twenty-seven (27), two thousand and ten (2010), issued by the Eleventh Notary Office of the Circuit of Panama, registered under Card four hundred and eighty-seven thousand and seventeen 8487017), Redi document number one million eight hundred and thirty-five thousand, three hundred and forty-two (1835342), Mortgage Section, Letter H, of the Public Registry, THE BANK and the company PRICESMART PANAMA, S.A. entered into a Commercial Mortgage Loan Agreement with a First Mortgage and Antichresis on property number two hundred and eighty-five thousand three hundred and fifty-one (285351), registered to Document one million four hundred and one thousand three hundred and sixty-three (1401363), of the Property Section, Public Registry of the Province of Panama.---------------------------------------------SECOND: That through this Public Deed, THE BANK, in its capacity as the Mortgage and Antichresis Creditor, hereby fully cancelled the First Mortgage and Antichresis established in its favor and by such virtue has repaid all encumbrances towards THE BANK,  pertaining to Property number two hundred and eighty-five thousand three hundred and fifty-one (285351) registered to Document one million four hundred and one thousand three hundred and sixty-three (1401363), of the Property Section, Public Registry pertaining to the Province of Panama, 

as well as the ownership limitation right on such property.------------------------------------------------------------------------------------------------------------------
THIRD: THE BANK proceeds with this cancellation by virtue of the fact that it has received Promissory Payment Letter dated (illegible) twenty-one (21), two thousand and thirteen (2013), issued by THE BANK OF NOVA SCOTIA. Ref: three zero zero zero zero zero zero zero zero six seven four (300000000674), signed by Iraiza Achón (documentary Service Manager) and Gicela de Vaca (Assistant Documentary Service Manager), modified by the note dated January ten 810), two thousand and fourteen (2014), through which it undertakes to pay THE BANK the amount of FOUR MILLION US DOLLARS AND 00/100 (us$4,000,000.00) in official currency of the United Sates of America, plus the general interests resulting to such date of cancellation, corresponding to the cancellation of the obligations held by PRICESMART PANAMA, S.A. with THE BANK.---------------------------------------------------------------------------------------------------------------
FOURTH: THE BANK states that this cancellation of (illegible) is conditioned to the simultanouse registration and certification in the Public Registry, in this Public Deed, of this cancellation of encumbrances and of the loan agreement that PRICESMART PANAMA, S.A. enters into with THE BANK OF NOVA SCOTIA, guaranteed with a First Mortgage and Antichresis on the before stated Property number two hundred and eighty-five thousand three hundred and fifty-one (285351), with an express assignment for the amount of FOUR MILLION DOLLARS (us$4,000,000.00) in official currency of the United States of America plus the interests generated to the cancellation date in favor of THE BANK and if the above indicated Registration in the registry before April ten (10), two thousand and fourteen (2014), this cancellation of lines and encumbrances shall not be valid and shall not be legally in effect.-------------------------------------
FIFTH: THE BANK states that all expenses relating to the legal preparation and endorsement of these Minutes concerning cancellation of encumbrances shall be borne by the company PRICESMART PANAMA, S.A.------------------------------------------------------------
In this same situation, the following personally appeared before me: MRS. BRITTANNIA AMAYA, female, Panamanian, of legal age, married, banker, neighbor of the city of Panama, with personally identity card number eight- three hundred and seventy-four - seven hundred and seventy 88-374-770), acting on behalf and in representation of THE BANK OF NOVA SCOTIA, a corporation organized and incorporated according to the laws of Canada, capable of doing business in the Republic of Panama, as stated under card number S.E. zero zero zero one hundred and twenty four (S.E. 000124) of the Microfilm (commercial) Section of the Public Registry, in her capacity as Legal Representative and General Proxy of such bank, authorized to celebrate this act as stated under card S.E. zero zero zero one hundred and twenty-four (S.E. 000124), document two million one hundred and three thousand two hundred and ten (2053210), on the one hand and, on the other hand, Mr. PABLO EDUARDO FRANCESCHI, male, Panamanian, of legal age, married, executive, neighbor of the city of Panama, with personal identity card number eight - four hundred and twenty-three - eight hundred and thirty-seven (8-423-837), acting on behalf and in representation of PRICESMART PANAMA, S.A., a corporation organized and incorporated according to the laws of the Republic of Panama, registered under card three hundred and eight thousand and seventy-one (308071), film role forty-seven thousand six hundred and seventy (47670), image sixty (60) of the Microfilm (commercial) Section of the Public Registry,  duly authorized to enter into this act by the General Board of Shareholders of such company, as stated in the act which certified copy is delivered to me to attach such to the public deed, and who from here on in shall be referred to as THE DEBTOR, persons of my acquaintance and who request that I sated the following, as I proceed to do, in this public deed:------------------------------------------------------------------------------------------------------------
STATEMENTS.--------------------------------------------------------------------------------------------------------------------------
One (1). Through public deed number fourteen thousand, two hundred and ninety-seven (14,297), dated August thirteen (3) two thousand and nine (2009) of the Second Notary Office of the Circuit of Panama, from here on in simbly referred to as “public deed number fourteen thousand two hundred and ninety-seven 

(14297)”, THE BANK and THE DEBTOR entered into a loan agreement for the amount of TEN MILLION US DOLLARS (US$10,000,000.00) in official currency of the United States of America (from here on in, “Loan A Agreement”).----------------------------------------------------------------------------------------
Two (2): That in order to guarantee the fulfillment of each and every one of the obligations to be fulfilled by the DEBTOR by virtue of this Loan A Agreement, THE DEBTOR, through public deed number fourteen thousand two hundred and ninety-seven (14297), has established a FIRST MORTGAGE AND ANTICHRESIS in favor of THE BANK on property number sixty-nine thousand nine hundred and seventy-one (69,971), registered under volume one thousand six hundred and ninety-one (1691), folio three hundred and one (301) of the Property Section, Province of Panama, of the Public Registry.-----------------------------------------------------------------------------------------------------------------------------------
Three (3) That the liens referred to in point two (2) above, were duly registered under card number four hundred and sixty-two thousand five hundred and nineteen (462519), document one million six hundred and thirty-three thousand one hundred and forty-one (1633141) of the Mortgage and Antichresis Section of the Public Registry.------------
Four (4). That through public deed number thirteen thousand three hundred and eight (13,308) dated September fourteen (14), two thousand and ten (2010), of the Second Notary Office of the Circuit of Panama, from hereon in simply referred to as “public deed number thirteen thousand three hundred and eight (13,308)”, registered under card number four hundred and sixty-two thousand five hundred and nineteen (462519), document one million eight hundred and forty-five thousand six hundred and twenty-five (1845625) of the Mortgage and Antichresis Section of the Public Registry, (a) THE BANK and THE DEBTOR agreed to keep THE FIRST MORTGAGE AND ANTICHRESIS providing access to the Loan A Agreement, in effect.---------------------------------------------------------
Five (5). That the parties also state and acknowledge that to December fifteen (15), two thousand and thirteen (2013), THE DEBTOR owes THE BANK, for the concept of the LOAN A AGREEMENT, the amount of FIVE MILLION SEVEN HUNDRED AND FIFTY THOUSAND US DOLLARS AND EIGHTEEN CENTS (US$5,750,000.18) in official currency of the United States of America, for the concept of capital.------------------------------------------------
Six (6): That in addition to the above statements and in order to enter into three (3) new loan agreements, which are identified in this public deed as Loan B Agreement, Loan C Agreement and Loan D Agreement, respectively, to add certain properties to the object of the before mentioned mortgage and antichresis liens and to state certain additional agreements regarding such, the parties have agreed to enter into and hereby actually enter into, the agreements contained in the following clauses:---------------
FIRST PART------------------------------------------------------------------------------------------------------------------------------Loan B Agreement.-----------------------------------------------------------------------------------------------------------------
FIRST: THE DEBTOR accepts to have received, to its full satisfaction, from THE BANK, under the concept of a loan, the amount of FOUR MILLION US DOLLARS (us$4,000,000.00) in official currency of the United States of America.-----------------------------
SECOND: The entire loan amount shall be destined by THE DEBTOR to cancel certain obligations undertaken by THE DEBTOR with METROBANK, S.A.--------------------------------------
THIRD: THE DEBTOR is required to pay THE BANK monthly interests on the amounts owed in this loan agreement at an annual rate resulting from adding three point five (3.5) percentage points to the London Interbank Offered Rate (LIBOR) quoted to THE BANK for thirty-day 830) periods. The rate received by THE BANK shall be held as full proof. THE BANK shall determine the rate according to the before stated, on a regular basis or according to the frequency that THE BANK, at its entire discretion, considers to be convenient. It is agreement that, exclusively regarding article one thousand five hundred and ninety-four 

(1594) of the Civil Code, the interest rate shall in no event be less than three point five percent (3.5%) a year.-----------------------------------------------------------------
The interest rate in effect, at the time of the signing of this agreement, is three point eighty-six percent (3.86%). The interest rate in effect equals the product of dividing the annualized nominal interest rate by the annual payment frequency, subject to the unit, all raised to the payment frequency, subtracted from the unit; and which multiplied by one hundred (100)  will produce the annual  real interest percentage. It is hereby understood that this rate in effect will vary in the event that any of the elements used to calculated such should vary.----------------------------------------------------------------------------------------
It is also likewise agreed that THE BANK may vary, as many times at it deems convenient, the differential or percentage of interests to be changed on the above stated LIBOR rate, either by increasing or decreasing such. In the event or an increase or decrease to the referred to differential, as previously indicated, THE BANK shall inform THE DEBTOR of the new differential and, if within a period of ten (10) calendar days following the date on which such notice was sent THE DEBTOR does not provide written notice of its inconformity, such differential shall be considered to be accepted and in effect as of the date indicated by THE BANK. If, on the contrary, THE DEBTOR, states its inconformity with such differential, then the entire debt shall be considered due and payable and THE DEBTOR shall be required to cancel the obligation within sixty (60) calendar days following such statement.----------------------------------------------------------------------
It is also likewise agreed that in the event of circumstances affecting the financial markets of Panama or London THE BANK is unable to obtain LIBOR rate quotes, or if economically damaging or impossible to THE BANK, at its entire discretion, to continue using such quote in determining the interest rate to be paid by THE DEBTOR on the sums owed to THE BANK, by virtue of this loan agreement, then THE BANK shall notify THE DEBTOR in writing and THE DEBTOR and THE BANK, as of the date of such notice and during a period of fifteen (15) calendar days, shall negotiate, in good faith, and seeking to find an alternative source mutually acceptable to both parties as a basis to determine the interest rate applicable to this loan. If THE DEBTOR and THE BANK reach an agreement regarding the use of an alternative source to use in order to determine the interest rate applicable to this loan, such rate shall apply  (illegible) the before stated fifteen (15) days. If, on the contrary, the parties are unable to reach an agreement regarding the referred to alternative source, then THE BANK shall indicate the new interest rate applicable to the loan,  which shall begin to govern as of the end of the referred to fifteen (15) day  period and, in the event that THE DEBTOR should states is inconformity with such new rate, then the entire debt shall be considered due and payable and THE DEBTOR shall be required to cancel the obligation within sixty (60) calendar days following its statement.------------------------------------------------------------------------
In order to calculate the interests, the number of calendar days that have elapsed shall be used and using one (1) three hundred and sixty (360) day year as a factor.-----------------
Interest payments shall be made each month and the first payment must be made thirty (30) days after the this loan is disbursed and in the same way, successively, each month on the corresponding dates. Along with these payments for the concept of interests, THE DEBTOR shall pay amounts to be destined to a Special Interest Compensation Fund (F.E.C.I for its initials in Spanish).---------------------------------------------------------
THE DEBTOR accepts that in the case of delay in any payment established in this agreement, THE BANK shall be authorized to charge THE DEBTOR, with no need of notice or intimation, a delinquent interest rate of two percent (2%) a year, in addition to the interest rate agreed on in the first clause, on the amounts due and pending payment, calculated as of the date of such default until the full payment of such.------------
THE DEBTOR agrees that, at the option of THE BANK, the interest in arrears and not paid on their regular and default dates) shall be capitalized and shall earn the same interests set for the payment of capital.--------------------------------------------------------------------------------
FOURTH: THE DEBTOR is required to pay THE BANK the full amount loaned, in other words FOUR MILLION US DOLLARS (US$4,000,000.00) in official currency of the United States of America, in a 

maximum term of five 85) years starting as of the date on which this public deed is duly registered in the Public Registry, through fifty-nine (59) monthly consecutive installments to capital  for the amount of no less than THIRTY-THREE THOUSAND THREE HUNDRED AND THIRTY-THREE US DOLLARS AND THIRTY-THREE CENTS (US$33,333.33) in official currency of the United States of America , each , and one (1) final installment for the remaining unpaid balance. The fist installment must be made thirty (30) days after the disbursement of this loan has been made and successively each month on the corresponding dates, except for the last installment, which shall be made on the expiration date of this loan.---------------------------------
Notwithstanding, the Parties agree that the original term of this loan shall be extended for an additional period of five (5) years, of so decided upon by THE BANK, at its entire discretion. If THE BANK decides to grant the mentioned extension, it shall inform THE DEBTOR of this in writing before the expiration of the original term. In the event that the stated extension should indeed come into effect, THE DEBTOR, instead of making the final installment set out in the previous paragraph, shall continue to pay the loan through monthly consecutive installments for an amount of no less than THIRTY-THREE THOUSAND, THREE HUNDRED AND THIRTY-THREE DOLLARS AND THIRTY-THREE CENTS (US$33,333.33) in official currency of the United Stats of America, each. ------------
Upon the expiration of the original term of five (5) years of the extension of such, THE DEBTOR shall pay any balance due established in the books of THE BANK in a single payment. ---------------------------------------------------------------------------------------------------------------------------------
FIFTH: THE DEBTOR hereby undertakes the obligation to pay THE BANK, in a single payment, for the concept of closing commission, a sum equal to zero point fifty percent (0.50%) of the amount of loan stated in the FIRST clause, above, which closing commission equals the amount of TWENTY THOUSAND DOLLARS (US$20,000.00) in the official currency of the United States of America, plus the Personal Property Transfer and Service Lending Tax (ITBMS for its initials in Spanish)  resulting from such commission.  This amount shall be paid by THE DEBTOR at the time of the signing of this public deed.---------------------------------------------------------------------------------------------------------------------
SIXTH: It is hereby understood and agreed that THE DEBTOR may make prepayments as long as (i) THE BANK is notified in writing about such pre-payment at least seven (7) days before hand, and ii) THE DEBTOR pays THE BANK any funding breakage costs incurred in by THE BANK.-------------------------------------------------------------------------------------------------------
SECOND PART-------------------------------------------------------------------------------------------------------------------------Loan Agreement C.----------------------------------------------------------------------------------------------------------------
SEVENTH: THE DEBTOR states that in addition to the amount stated in the FIRST clause, above, it accepts to have received, to its full satisfaction, from THE BANK,  under the concept of a loan, the amount of TWENTY MILLION US DOLLARS (US$20,000,000.00) in official currency of the United States of America.-------------------------------------------------------------
EIGHTH: The total amount of the loan shall be destined by THE DEBTOR to finance the expansion of its PriceSmart clubs.-----------------------------------------------------------------------------------------
NINTH: THE DEBTOR is required to make monthly interest payments to THE BANK on the amounts owed based on this loan agreement, for an annual rate produced upon adding three point five (3.5) percentage points to the London Interbank Offered Rate (LIBOR) quoted to THE BANK for thirty (30) day periods. The quote received by THE BANK shall be understood as full proof. THE BANK shall determine such according to the before stated, with the regularity or frequency that THE BANK considers convenient, at its entire discretion.----------------------------------------------------------------------------------

It is hereby agreed that, exclusively for the effects of article one thousand five hundred and ninety-four (1594) of the Civil Code, the interest rate shall in no event be less than three point five percent (3.5%) per year.--------------------------------------------------------------------------------
The interest in effect, at the time of the signing of this agreement, is three point eighty-six percent (3.86%) a year. The interest rate in effect equals the product of dividing the nominal annualized interest rate by the annual payment frequency, added to the unit (illegible) elevated to the payment frequency, subtracted from the unit; and which multiplied by one hundred (100) shall produce the annual percentage interest in effect. It is hereby understood that the rate in effect shall vary in the event that any of the elements used to calculate such should vary.-----------------------------------------------------------------------
It is likewise equally agreed that THE BANK may, as many times as it considers it convenient, vary the differential or percentage of interests charged on the above stated LIBOR rate, whether by increasing or decreasing such. In the event of an increase or decrease in the referred to differential, according to the before stated, THE BANK shall inform THE DEBTOR of the new differential. If within ten (10) calendar days following the date on which such notice was sent THE DEBTOR does not express its inconformity in writing, such differential shall be considered to be accepted and in effect as of the date on which it was indicated by THE BANK. If, on the contrary, THE DEBTOR states its inconformity with such differential, then the entire debt shall be considered due and payable and THE DEBTOR shall be required to cancel the obligation within  sixty (60) calendar days following its manifestation.-----------------------------------------------
It is hereby likewise agreed that due to circumstances affecting the financial markets of Panama or London, THE BANK is unable to obtain LIBOR quotes, or if it is economically detrimental or impossible for the BANK, THE BANK, at its entire discretion, shall continue using such quote in determining the interest rate to be paid by THE DEBTOR on the sums owed to THE BANK by virtue of this loan agreement, then THE BANK shall notify THE DEBTOR of such event, and THE DEBTOR and THE BANK, as of the date of such notice and during a fifteen (15) calendar day period, shall negotiate, in good faith, seeking to find an alternate source that is mutually acceptable as a basis to determine the interest rate applicable to this loan. If THE DEBTOR and THE BANK reach an agreement regarding the use of an alternate source as a basis to determine the interest rate applicable to this loan, such rate shall be applicable upon the conclusion of the before stated fifteen days. If, on the contrary, the parties do not reach an agreement regarding the referred to alternative source, then THE BANK shall indicate the new interest rate applicable to this loan, which shall enter into effect as of the conclusion of the referred to fifteen (15) day period, and, should THE DEBTOR states is inconformity regarding such new rate, then the full debt shall be considered due and payable and THE DEBTOR shall be required to cancel the obligation within sixty (60) calendar days following its manifestation.-------------------------------------------------------------------------------------------------
To calculate the interests, the number of calendar days that have elapsed shall be taken into account and a factor of one (1) three hundred and sixty (360) day year shall be used.--------------------------------------------------------------------------------------------------------------------------------------
Interest payments shall be made on a monthly basis, the first of which must be paid thirty (30) days after the disbursement of this loan has been made and onwards, successively, each month, on the corresponding dates. Along with the interest payments, THE DEBTOR shall pay the amounts destined for the Special Interest Compensation Fund (F.E.C.I. for its initials in Spanish). -------------------------------------------------
THE DEBTOR accepts that in the event of delay in any payment set out in this agreement, THE BANK shall be authorized to charge THE DEBTOR, without need of notice of intimation, a default interest rate of two percent (2%) a year, in addition to the interest rate agreed on in this clause, over the expired and pending payment amounts, calculated as of the date on which the default begins and until it is fully paid up.-------------
THE DEBTOR agrees that, at the option of THE BANK, interests in arrears and due on their dates (both regular and for defaults) shall be capitalized and shall earn the same interests set for capital.----------------------------------------------------------------------------------------------------------TENTH: THE DEBTOR is required to pay THE BANK the entire amount loaned, that is to say, TWENTY MILLION 

US DOLLARS (US$20,000,000.00), in official currency of the United States of America, within a maximum term of five (5) years starting as of the date on which this public deed is duly registered in the Public Registry, through fifty-nine (59) consecutive monthly installments for an amount of no less than ONE HUNDRED AND SIXTY-SIX THOUSAND SIX HUNDRED AND SIXTY-SIX DOLLARS AND SIXTY-SEVEN CENTS (US$ 166,666.67), in official currency of the United States of America, each and one (1) final installment for the remaining unpaid balance. The first installment must be paid thirty (30) days after the disbursement of this loan has been made, and thus, successively, each month, on the corresponding dates, except for the final installment, which shall be made upon the expiration of the term of this loan.--------
Notwithstanding, the parties agree that the original term of this loan shall be extended for an additional five (5) year period, if so decided upon by THE BANK, at its entire discretion. If THE BANK decides to grant the mentioned extension, it shall inform THE DEBTOR in writing of such before the expiration of the original term. In the event that the stated extension is actually granted, THE DEBTOR, instead of paying the final installment stated in the previous paragraph, will continue to pay the loan through consecutive monthly instalments to capital of no less than ONE HUNDRED AND SIXTY-SIX THOUSAND SIX HUNDRED AND SIXTY-SIX DOLLARS AND SIXTY-SEVEN CENTS (US$166,666.67), in official currency of the United States of America, each. Upon the expiration of the original five (5) year term or the extension of such,  if such is granted, THE DEBTOR shall pay the balance stated in the books of THE BANK in a single installment. -----------------------------------------------------------------------------------------------------------------------------
ELEVENTH: THE DEBTOR undertakes the obligation to pay THE BANK, one time only, for the concept of the closing commission, a sum equal to zero point fifty percent (0.50%)  of the amount of the loan stated in the SEVENTH clause above, that is to say, the closing commission equals the amount of ONE HUNDRED THOUSAND DOLLARS (us$100,000.00) in official currency of the United States of America, PLUS THE Personal Property Transfer and Service Lending Tax (ITBMS for its initials in Spanish) resulting from such commission. This amount shall be paid by THE DEBTOR upon the signing of this public deed.---------------------------------------------------------------------------------------------------------------------
TWELFTH: It is hereby understood and agreed that THE DEBTOR may make pre payments as long as (i) THE BANK is notified in writing of such pre-payment at least seven (7) days in advance and (ii) THE DEBTOR pays THE BANK any funding breakage costs incurred in by THE BANK.----------------------------------------------------------------------------------------------
THIRD PART-----------------------------------------------------------------------------------------------------------------------------
Loan D Agreement.-----------------------------------------------------------------------------------------------------------------
THIRTEENTH: THE BANK sates that, in addition to the loans mentioned in the above FIRST and SEVENTH clauses, on this date it has granted THE DEBTOR a monetary loan for the amount of TEN MILLION US DOLLARS (us$10,000,000.00) in official currency of the United States of America, amount that shall be paid by THE DEBTOR upon the expiration of a term of six (6) months starting as of the date that this public deed is duly registered in the Public Registry.---------------------------------------------------------------------------------
FOURTEENTH:   The total loan amount shall also be destined by THE DEBTOR to finance the expansion of its PriceSmart clubs.----------------------------------------------------------------------------------
FIFTEENTH: Notwithstanding that stated in the THIRTEENTH clause above, it is hereby understood and agreed that the disbursement of this loan shall depend and be subject to the fulfillment of all of the following conditions:-------------------------------------------------------------
		
	(a)
	That this public deed and the mortgage and antichresis liens constituted in such are duly definitely registered in the Public Registry.-------------------------------------------------

		
	(b)
	That all representations and guarantees in question in the THIRTY-FIRST clause of this public deed are correct and true on the date of the disbursement, as if such had been provided on such date.---------------------------------------------------------------------

		
	(c)
	That THE DEBTOR is faithfully fulfilling each and every one of the obligations set out in this public deed.------------------------------------------------------------------------------------------------

		
	(d)
	That none of the causes for early termination contemplated in the THIRTY-SIXTH clause of this public deed have occurred and continue in effect.----------------

		
	(e)
	 That no event that, by providing notice regarding such, or through the elapse of time or both reasons, constitutes a cause for early termination contemplated in the THIRTY-SIXTH clause of this public deed has not taken place or continue in effect.---------------------------------------------------------------------------------------------------------------------------

		
	(f)
	That no substantial adverse change in negotiations, in the financial condition, in the operations, in the expectations of THE DEBTOR, giving THE BANK reasonable basis to conclude that THE DEBTOR is unable, or will be unable to fulfill or observe its obligations towards THE BANK is produced.------------------------

		
	(g)
	That no circumstance of a financial, political, economic or other nature, whether national or international, giving THE BANK fundamental reasons to conclude that THE DEBTOR is or shall be unable to fulfill and observe its obligations towards THE BANK, has been produced.--------------------------------------------------------

		
	(h)
	That THE DEBTOR has delivered to THE BANK an updated appraisal of the mortgaged properties that is acceptable to THE BANK.-------------------------------------

		
	(i)
	That the total value of the mortgaged properties, according to the appraisal referred to in paragraph (h) above, represents a coverage of at least eighty-five point ten percent (85.10%) with regard to the total amount of the loan contained in this public deed................................................................

		
	(j)
	That THE DEBTOR has formalized a “Interest Rate Swap Hedging Transaction” with THE BANK for each of the loans contained in this public deed.---------------------

SIXTEENTH: THE DEBTOR is required to pay THE BANK, on a monthly basis, interests on the amounts owned in this loan agreement, based on the annual rate resulting from adding three point five (3.5) percentage points to the London Interbank Offered Rate (Libor), quoted to THE BANK for thirty (30) day periods. The quote received by THE BANK shall be held as full proof. THE BANK shall determine the rate according to that previously stated according to the regularity or frequency that THE BANK considers convenient at its entire discretion.-----------------------------------------------
It is hereby agreed that, exclusively for the effects of article one thousand five hundred and ninety-four (1594) of the Civil Code, the interest rate shall in no event be less than three point five percent (3.5%) a year.---------------------------------------------------------
The interest rate in effect at the time of the signing of this agreement is three point eighty-six percentage (3.86%) a year. The interest rate in effect is equal to the product of dividing the nominal annualized interest rate by the annual payment frequency, added to the unit, all elevated to the payment frequency  (illegible) o9f the unit; and which multiplied by one hundred (100) shall produce the annualized percentage rate in effect. It is hereby understood that this rate in effect shall vary in the event that any of the elements used to calculate such should vary.----------------------
It is likewise agreed that THE BANK may, as many times at it considers it convenient, vary the differential or the percentage of interests charged on the above mentioned LIBOR rate, whether by increasing or decreasing such. In the event of an increase or decrease to the referred to differential, according to the before stated, THE BANK shall inform THE DEBTOR of the new differential and, if within a term of ten (10) calendar days following the date on which such communication was sent to THE DEBTOR such debtor does not express its inconformity, such differential shall be understood to have been accepted and 

in effect as of the date indicated by THE BANK. If, on the contrary, THE DEBTOR should state its inconformity with such differential, then the entire debt shall be considered due and payable and THE DEBTOR shall be required to cancel the obligation within sixty (60) calendar days following such statement.----------------------
It is hereby likewise agreed that in the event that circumstances affecting the financial markets of Panama or London, THE BANK is unable to obtain LIBOR quotes, or if economically detrimental or impossible for THE BANK, at its entire discretion, to continue using such quote determined as the interest rate to be paid by THE DEBTOR on the amounts owed to THE BANK by virtue of this loan agreement, then THE BANK shall notify THE DEBTOR of such event and the DEBTOR and the BANK, as of the date of such notice and during a fifteen (15) calendar day period, shall, in good faith, negotiate seeking to find an alternative source that is mutual acceptable to both as a basis to determine the interest rate applicable to this loan. If THE DEBTOR and THE BANK reach an agreement regarding the use of an alternate source as a basis to determine the interest rate applicable to this loan, such rate shall be applied upon the conclusion of the before stated fifteen (15) day period. If, on the contrary, the parties are unable to reach an agreement regarding the referred to alternative sources, then THE BANK shall indicate the new interest rate applicable to this loan, which shall be in effect as of the conclusion of the referenced fifteen (15) day period and, in the event that THE DEBTOR should state its inconformity with such new rate, then the loan shall be considered due and payable and THE DEBTOR shall be required to cancel the obligation within sixty (60) calendar days following its manifestation.----------------------------------------------------------------------
To calculate interests, the number of calendar days that have elapsed shall be taken into account and one (1) year consisting of three hundred and sixty (360) days, shall be used as a factor.-----------------------------------------------------------------------------------------------------------
Interest payments shall be made each month, the first of which must be paid thirty (30) days after the disbursement of the loan has been made and, thereon, successively, each month, on the corresponding dates. Along with these payments for the concept of interests, THE DEBTOR shall pay amounts destined to the Special Compensation of Interest Fund (F.E.C.I. for its initials in Spanish) .----------------------------
THE DEBTOR accepts that in the event of delay in any of the payments set out in this agreement, THE BANK shall be authorized to charge THE DEBTOR, without requiring notice or intimation, A DEFAULT INTEREST RATE OF TWO PERCENT (2%) a year, in addition to the interest rate agreed on in this clause, on the sums owed and pending, calculated as of the date on which the default payment is produced and until such is fully paid up.------------------------------------------------------------------------------------------------
THE DEBTOR agrees, at the option of THE BANK, that the interest in arrears and unpaid on the corresponding dates 8both regular and in arrears) shall be capitalized and shall earn the same interests set for capital.  ----------------------------------------------------------
SEVENTEENTH: THE DEBTOR is required to pay THE BANK the entire loaned amount, that is to say TEN MILLION US DOLLARS (US$10,000,000.00) in official currency of the United States of America, within a maximum term of five (5) years, starting as of the date on which the disbursement of this loan is carried out, through fifty-nine (59) monthly consecutive installments of no less than EIGHTY-THREE THOUSAND THREE HUNDRED AND THIRTY-THREE DOLLARS AND THIRTY-THREE CENTS (US$83,333.33) in official currency of the United States of America, each, and one (1) final installment for the remaining balance. The first installment must be made thirty 830) days after this loan has been disbursed and successively, each month, on the corresponding dates.  --------------------------------------------------------------------
Nonetheless, the parties agree that the original term of this loan shall be extended for an additional five (5) year period, if so decided upon by THE BANK, at its entire discretion. If THE BANK should decide to grant the stated extension, it shall inform THE DEBTOR of such, in writing before the expiration of the original term. In the event that the stated extension should come to be, THE DEBTOR one the final 

installment stated in the previous paragraph has been paid, shall continue to pay the loan through consecutive monthly installments to capital of no less than EIGHTY-THREE THOUSAND THREE HUNDRED AND THIRTY-THREE POINT THIRTY-THREE DOLLARS (US$83,333.33), in official currency of the United States of America, each.---------------------------------------------------------------------------------------------------------------
Upon the expiration of the original five (5) year term or its extension, if such is granted, THE DEBTOR shall pay a single payment equal to the balance owed that is stated in the books of THE BANK.----------------------------------------------------------------------------------
EIGHTEENTH: THE DEBTOR undertakes the obligation to pay THE BANK, one time only, for the concept of closing commission, an amount equal to zero point fifty percent (0.50%) of the amount of the loan mentioned in the THIRTEENTH clause, above, in other words, this closing commission is for the amount of FIFTY THOUSAND US DOLLARS (US$50,000.00), in official currency of the United States of America, plus the Personal Property Transfer and Service Lending Tax (ITBMS for its initials in Spanish) produced by this commission. This sum shall be paid by THE DEBTOR at the time of the signing of the public deed.-------------------------------------------------
In addition to the before stated, THE DEBTOR undertakes the obligation to pay THE BANK, each month, for the concept of Promissory Commission, an amount equal to zero point fifty percent (0.50%) of the amount of the loan stated in the THIRTEENTH clause, above, until the date of the disbursement of such loan.-----------------------------------
NINETEENTH: It is hereby understood and agreed that THE DEBTOR may make prepayments as long as (i) THE BANK is notified of the prepayment in question at least seven (7) days in advance and (ii) THE DEBTOR pays THE BANK any funding breakage costs in which THE BANK incurs.-------------------------------------------------------------------
FOURTH PART----------------------------------------------------------------------------------------------------------------
MORTGAGE AND ANTICHRESIS.------------------------------------------------------------------------------------
TWENTIETH: THE DEBTOR states that in order to guarantee (a) the payment of the amounts owed by THE DEBTOR or that it may owe to THE BANK as a result of Loan Agreement A; (b) the payment of the amounts that THE DEBTOR owes or may owe THE BANK  as a result of Loan Agreement B; (c) the payment of the amounts that THE DEBTOR owes or may owe THE BANK as a result of Loan Agreement C, and (d) the payment of the amounts that THE DEBTOR owes or may owe THE BANK as a result of Loan Agreement D, in all these cases including the capital and interests agreed on, commission, costs, judicial or extrajudicial collection expenses and expenses of any other nature that may arise, throughout the course during which any of such obligations may subsist, THE DEBTOR hereby agrees to maintain in effect, extend and increase on the total amount of FORTY-FOUR MILLION US DOLLARS (us$44,000,000.00) in official currency of the United States of America, plus the agreed on interests, commissions (illegible), judicial or extrajudicial collection costs and expenses of any other nature that have arisen, THE FIRST MORTGAGE AND ANTICHRESIS constituted in favor of THE BANK through public deed number fourteen thousand two hundred and ninety-seven (14,297) according to its modifications contained in public deed number thirteen thousand three hundred and eight (13,308), on property number sixty-nine thousand, nine hundred and seventy-one (69,971), registered under volume one thousand six hundred and ninety-one (1691), folio three hundred and one (301) of the Property Section of the Public Registry of the Province of Panama.-------------------------------------------------------------------
To facilitate the reference of the parties and any interested party, let the record here show that such encumbrances where initially established through public deed number fourteen thousand two hundred and ninety-seven (14,297), for the amount of TEN MILLION US DOLLARS ($10,000,000.00) in official 

currency of the United States of America.-----------------------------------------------------------------------------------------------------------  
TWENTY-FIRST: THE DEBTOR hereby agrees to add to the object of the first mortgage and antichresis established in favor of THE BANK through public deed number fourteen thousand two hundred and ninety-seven (14297) as such was modified through public deed number thirteen thousand three hundred and eight (13,308), and as such was modified through this public deed, the following real property which it owns:-----------------------------------------------------------------------------------------------
		
	(a)
	Property number two hundred and eighty-five thousand three hundred and fifty-one (285,351), registered under document one million four hundred and twenty-one thousand and twenty-one (1421031) of the Property Section of the Public Registry, Province of Panama-----------------------------------------------------------------------

		
	(b)
	Property number forty-six thousand three hundred and ninety-six (46,396), registered under document ninety thousand two hundred and eighty-six (90286) of the Property Section of the Public Registry, Province of (Illegible).-----

TWENTY-SECOND: Consequently, the properties detailed in the TWENTY-FIRST clause, above, are successively encumbered with a first mortgage and antichresis in favor of THE BANK for a total amount of FORTY-FOUR MILLION US DOLLARS (US$44,000,000.00), in official currency of the United States of America, in the same terms and conditions agreed on with regard to public deed number fourteen thousand two hundred and ninety-seven (14,297), as such was modified through public deed number thirteen thousand three hundred and eight (13,308) and as such is modified through this public deed.--------------------------------------------------------------------------------------------------------
TWENTY-THIRD: For a better reference for the parties and for any interested party, it is hereby stated for the record that the first mortgage and antichresis initially established by THE DEBTOR in favor of THE BANK, through public deed number fourteen thousand two hundred and ninety-seven (14,297), as such was modified by public deed number thirteen thousand three hundred and eight (13,308) and as such has been broadened regarding its coverage, increasing its amount and added to with regard to its object through this deed, is currently established on the real properties detailed below:---------
		
	(a)
	Property number sixty-nine thousand, nine hundred and seventy-one (69,971), registered under volume one thousand six hundred and ninety-one (1691), folio three hundred and one (301) of the Property Section of the Public Registry of the Province of Panama.---------------------------------------------------------------------------------------------

		
	(b)
	Property number two hundred and eighty-five thousand three hundred and fifty-one (285,351), registered under document one million four hundred and twenty-one thousand and twenty-one (1421021) of the Property Section of the Public Registry of the Province of Chiriquí.-------------------------------------------------------------

TWENTY-FOURTH: For the effects of that provided in articles one thousand five hundred and ninety-one (1591) and one thousand five hundred and ninety-two (1592) of the Civil Code, THE DEBTOR states that THE BANK is expressly and irrevocably authorized, on its own account, on behalf of THE BANK and THE DEBTOR, at the expense of the latter, through the corresponding public deed, the marginal annotation in which it shall state the amount of the monitory disbursement that THE BANK has made to THE DEBTOR as a result of Loan Agreement D, plus judicial or extrajudicial expenses, interests, expenses and commissions of any nature that have come about. For such purposes, THE DEBTOR declares that it shall provide all collaboration that may be necessary.---------------------------------------------------------------------------------------------------------------------------
TWENTY-FIFTH: THE DEBTOR accepts that THE BANK may, when THE DEBTOR ceases to fulfill any of its obligations, judicially or extra-judicially request that the antichresis be executed delivering the possession of the mortgaged properties for their administration without having to resort to the courts and without needing to institute foreclosure  action, but without prejudice to subsequently executing such action. 

Likewise, after the action of foreclosure has been instituted, THE BANK may request the delivery of the administration of the mortgaged properties given in antichresis, asking for the possession of such, as may be the case, while  the 8illegible) is verified. In any of the situations contemplated in this clause, if judicially processed, (illegible) accede to such without a hearing by the executed party, since THE DEBTOR expressly waivers every judicial notice or notification to that respect. For the effects of the appraisal of the encumbered properties, when THE BANK requests their administration, the values established by THE BANK for such purpose shall be considered the fair values of such properties. It is hereby established that as long as THE BANK exercises the right to antichresis and the other rights referred to in this clause, THE BANK or the person designated by such to administrate the encumbered properties shall exercise all rights deriving through THE DEBTOR as the owner of the properties, without needing to render accounts regarding such administration given that THE DEBTOR hereby expressly relieves such from said obligation. THE BANK is not required, by virtue of the antichresis, to pay the contributions and charges pertaining to such properties, nor pay the necessary expenses for the conservation and repair of such, but may do so, in which event such payments, at the option of THE BANK, shall be charged to the Loan A Agreement, the Loan B Agreement, the Loan C Agreement or the Loan D Agreement, and shall be capitalized and shall earn the interest set in the corresponding contract, and the payment of such shall be guaranteed with the first mortgage and antichresis agreed on.  THE BANK may leave THE DEBTOR in charge of the (illegible) administration of the properties, and such DEBTOR is hereby compelled, given such case, to render accounts to the satisfaction of THE BANK.-------------------------------TWENTY-SIXTH: THE DEBTOR is hereby required to keep the mortgaged properties in good conditions so that their values do not decrease and THE BANK is entitled and expressly authorized to inspect such properties and request updated appraisals from THE DEBTOR (as long as THE BANK considers it convenient), so as to establish if the mortgaged properties suffice to guarantee the obligations established by THE DEBTOR towards THE BANK through Loan Agreement A, Loan Agreement B, Loan Agreement C and Loan Agreement D. In the event that THE DEBTOR ceases to provide the updated appraisal of the mortgaged properties when so requested by THE BANK, then THE BANK, if it so desires,  may directly carry out such appraisal and in this case the amount corresponding to such, invested in by THE BANK shall, at the option of THE BANK be charged to the Loan A Agreement, Loan B Agreement, Loan C Agreement or Loan D Agreement, and shall be capitalized and earn the interests set in the corresponding contract and its payment shall be guaranteed by the first mortgage and antichresis agreed on. If any of the properties provided do not satisfactorily guarantee the obligations of THE DEBTOR, THE BANK may declare the debts as due and payable, unless THE DEBTOR offers THE BANK, within a term of thirty (30) calendar days, additional guarantees that THE BANK considers sufficient.   ---------------------------------------
TWENTY-SEVENTH: THE DEBTOR is required not to sell, swap, lease, mortgage or in any way transfer or encumber the properties given as a guarantee, partially or fully, without the prior consent of THE BANK granted in such deed in which the operation in question is carried out. These prohibitions, through the agreement of the parties, constitute a limitation to the ownership right of the mortgaged properties; consequently, the parties (illegible) to the Public Registry the special corresponding marginal annotation, given that THE DEBTOR may only sell, swap, lease, mortgage or in any other way transfer or encumber the properties given in guarantee with the express consent of THE BANK.   ----------------------------------------------------------------------------------------------------------
TWENTY-EIGHTH: THE DEBTOR, while Loan Agreement A, Loan Agreement B, Loan Agreement C and Loan Agreement D are in effect and while a balance exists against the DEBTOR in favor of THE BANK as a result of any of the agreements, is required to maintain all those improvements that have been built or that will be built on the properties ensured against fire, lightening, earthquake, floods, with (illegible) extension of coverage (illegible) in first mortgage and antichresis, for a sum of no less than eighty percent (80%) of the value of the mortgaged properties or for an amount of no less than one hundred percent (100%) of the value of such improvements, as long as any of these alternatives cover the total amount of Loan Agreement A, Loan Agreement B, Loan Agreement C and Loan Agreement D.  The policies must be issued by insurance 

companies that are acceptable to THE BANK and THE DEBTOR (illegible) to assign or endorse the respective insurance policies in favor of THE BANK. THE DEBTOR is likewise required to renew the policies punctually. In the event that THE DEBTOR ceases to take out the insurance punctually or does not renew such in due time, THE BANK may, if it so desires, may undertake the expense on behalf of THE DEBTOR and in such event the sum or sums invested in such expense by THE BANK, shall, at the option of THE BANK, be charged to Loan Agreement A, Loan Agreement B, Loan Agreement C or Loan Agreement D, and such shall be capitalized and shall earn the interests set in the corresponding agreement and its payment shall be guaranteed with the first mortgage and antichresis agreed upon. In the event of a loss, THE BANK shall be entitled to receive the value of the insurance to (illegible) the payment of the amounts owed by THE DEBTOR on such date, hereby expressly establishing that if the insured amount does not suffice for such purpose, THE DEBTOR must pay the resulting balances. In the event of a surplus, such shall be delivered to THE DEBTOR.---------------------
TWENTY-NINTH: THE DEBTOR is required to punctually pay the State and its autonomous entities the taxes, duties, contributions,  levies, water consumption or charges falling upon the properties provided in guarantee. THE BANK may, at its exclusive criteria, and if THE DEBTOR ceases to do so, pay such taxes, duties, levies, (illegible) falling on the mortgaged properties and THE DEBTOR is required, in such event, to pay THE BANK the amount corresponding to such expense, in the manner determined by THE BANK. THE DEBTOR is also compelled to pay those duties, taxes, levies or contributions falling on it, including income taxes, as well as submitting to THE BANK, when THE BANK so requests, the proof of payment and, if it does not do so, THE BANK may declare all the debts due and payable.-------------------------------------------------------------
FIFTH PART----------------------------------------------------------------------------------------------------------------------------
Conditions Applicable to the Preceding Sections.------------------------------- --------------------------------
THIRTIETH: All payments for the concept of capital, interests or any other concept to be made by THE DEBTOR to THE BANK, according to this document, shall be made in official currency of the United States of America, at the head offices of THE BANK in the City of Panama, Republic of Panama (or at any other branch or office of THE BANK or the place indicated by THE BANK to THE DEBTOR, from time to time). In the event that the payment date of some of the payments to capital or interest should fall on a non-work day for banks, the payment shall be made on the first following workday.---
The before mentioned payments shall be made free of all taxes, duties, reserves, deductions, withholding, charge or compensation of any nature. Should some of these payments be subject now or in the future to any taxes, duties, reserves, deductions, withholdings, charges or compensations, THE DEBTOR shall pay THE BANK the additional amounts that are necessary so that THE BANK receives a net sum equal to the total amount that THE BANK would have received if such tax payments would not have been made.------------------------------------------------------------------------------------------------------------------
THIRTY-FIRST: THE DEBTOR, with the purpose of inducing THE BANK to grant these loans, hereby declares and guarantees the following to THE BANK:------------------------------
		
	(a)
	THE DEBTOR is a corporation duly established and organized in accordance with the laws of the Republic of Panama.-----------------------------------------------------------------------

		
	(b)
	THE DEBTOR is fully capable of entering into these agreements and fulfilling its obligations under such agreements.----------------------------------------------------------------------

		
	(c)
	The celebration and fulfillment of these agreements, by THE DEBTOR have been duly authorized by all the necessary corporate actions of THE DEBTOR and such authorizations are currently in effect.-----------------------------------------------------------------------

		
	(d)
	The celebration and fulfillment of these agreements, by THE DEBTOR, does not contravene or constitute an event of noncompliance under (i) the Corporate Charter of THE DEBTOR; (ii) any law, 

decree or regulation, or (iii) any important agreement to which THE DEBTOR is a party. ----------------------------------------------------------
		
	(e)
	No consent, approval, license, authorization or validation what so ever is required from any court, administrative agency, commission or other government or public entity of the Republic of Panama (or any of their political divisions) or from any other country, with regard to the execution and fulfillment of these agreements, by THE DEBTOR.---------------------------------------------------

		
	(f)
	The obligations of THE DEBTOR by virtue of these agreements are legal, valid and enforceable, in accordance with their respective terms and conditions.------

		
	(g)
	THE DEBTOR is duly authorized in accordance with all the applicable laws, decrees, regulations, agreements and provisions and has all authorizations, licenses, permits, consents, concessions, or similar resolutions from the respective authorities, national, state, provincial or municipal of the Republic of Panama or any other country that are required to carry out its business and operations.---------------------------------------------------------------------------------------------------------------

		
	(h)
	All archive information provided by THE DEBTOR to THE BANK with regard to these agreements, including financial statements of THE DEBTOR, is correct and true in all material aspects.----------------------------------------------------------------------------------------

		
	(i)
	As of August thirty-one (31), two thousand and thirteen 82013), there has been no adverse substantial change in the businesses (illegible) financial conditions or operations of THE DEBTOR.----------------------------------------------------------------------------------------

		
	(j)
	No administrative judicial process whatsoever exists in which THE DEBTOR is involved, that may adversely affect the financial condition of THE DEBTOR, or that may substantially and adversely affect the validity of these agreements or the capacity of THE DEBTOR to fulfill its obligations under these agreements.---

		
	(k)
	No confiscation, embargo or other precautionary measure exists against THE DEBTOR that may have an adverse substantial effect on the financial (illegible) of THE DEBTOR, or that may substantially or adversely affect the validity of these agreements or the capacity of THE DEBTOR to fulfill its obligations under these agreements.----------------------------------------------------------------------------------------------------

		
	(l)
	No (illegible) sentence, resolution, prohibition, fine or pending penalty exists against THE DEBTOR that may have an adverse substantial effect on the financial condition of THE DEBTOR, or that may substantially or adversely affect the validity of these agreements or the capacity of THE DEBTOR to fulfill its obligations under these agreements.---------------------------------------------------------------------

(ll) THE DEBTOR has not incurred in any material violation of any law, decree, regulation or regulation of the Republic of Panama or any other country.----------------
		
	(m)
	THE DEBTOR has accurately and completely submitted all the statements (illegible) referring to taxes, duties, levies and contributions, according to that required by the pertinent laws and regulations of the Republic of Panama, whether national, municipal or of any other nature, that fall upon THE DEBTOR and on its properties and assets.-----------------------------------------------------------------------------

		
	(n)
	THE DEBTOR is up to date on the payment of all taxes, duties, levies and other contributions of a similar nature, whether national, municipal or of any other nature, falling on THE DEBTOR, its properties or its assets or any other part of such, except for those taxes under dispute, in good faith, through the appropriate procedures and for which an appropriate reserve is kept.----------------

(ñ) THE DEBTOR is up to date with its obligations regarding Social Security, except for those obligations in dispute, in good faith, through the appropriate procedures and for which the appropriate reserves are kept.---------------------------------------------------------

THIRTY-SECOND: Except if otherwise expressly authorized in writing by THE BANK, and until THE DEBTOR has fully and faithfully fulfilled all the obligations it has undertaken or shall undertake through this means, THE DEBTOR is additionally required to do the following:-----------------------------------------------------------------------------------------
		
	(a)
	To notify THE BANK immediately and in writing of any event or situation that may affect the fulfillment of its obligations.--------------------------------------------------------

		
	(b)
	To provide THE BANK with any other financial information that it may require at any moment.---------------------------------------------------------------------------------------------------------------

		
	(c)
	To pay all insurance, taxes, (illegible) and other contributions or an analogous nature when such become due.-----------------------------------------------------------------------------

		
	(d)
	To pay all its obligations regarding Social Security.------------------------------------------------

		
	(e)
	To comply with all laws, decrees, rules, regulations or importance that are applicable.

		
	(f)
	To maintain all authorizations, licenses, permits, consents, concessions or similar resolutions issued in its favor by the respective Panamanian authorities, whether national, state, provincial or municipal, or of any other country, that are necessary or important in order for it to carry out its business and operations, in effect and to date. --------------------------------------------------------------------------

		
	(g)
	To uphold its commitments towards THE BANK and third parties, up to date.---

		
	(h)
	To cause any company that may in the future consolidate and/or (illegible) within the financial statements of THE DEBTOR and subsidiaries to grant a Performance Bond in favor of THE BANK, so as to guarantee the faithful fulfillment or each and every obligation of THE DEBTOR resulting from these loan agreements.----------------------------------------------------------------------------------------------------

		
	(i)
	Keep its checking account with THE BANK.----------------------------------------------------------

		
	(j)
	That at all times the receivables of these loans have at least the same degree of priority or preference (pari passu) held by all other loans that third parties have with THE DEBTOR, except those which are exclusively privileged by virtue of law. ------------------------------------------------------------------------------------------------------------------------------

		
	(k)
	Cause the payment of the accounts payable of THE DEBTOR to be subordinated in favor of PRICESMART, INC. (that are not related to current assets, including inventory, accounts receivable and other common assets), to the fulfillment of the obligations of THE DEBTOR by virtue of these loan agreements.---------------------

		
	(l)
	To employ its best efforts to keep its daily banking services with THE BANK.------

		
	(m)
	That the value of all the mortgaged properties represent a coverage of at least eighty-five point ten percent (85.10%) with regard to the total amount of the loans contained in this public deed.-------------------------------------------------------------------

		
	(n)
	To cede the credits corresponding or that may subsequently correspond to THE DEBTOR, by virtue of the lease agreements entered into or that may be entered into by THE DEBTOR on the mortgaged properties, in favor of THE BANK.------------

THIRTY-THIRD: Except (illegible) prior written authorization from THE BANK (that shall not be denied or unreasonably delayed) and until THE DEBTOR has fully and faithfully fulfilled all the obligations that (illegible) it may undertake through this document, THE DEBTOR is required not to carry out any of the following acts or (illegible):---------------------------------------------------------------------------------------------------------------------
		
	(a)
	Dissolve.------------------------------------------------------------------------------------------------------------------

		
	(b)
	Merge or consolidate--------------------------------------------------------------------------------------------

		
	(c)
	Acquire other companies  or businesses.-------------------------------------------------------------

		
	(d)
	Make alliances---------------------------------------------------------------------------------------------------------

		
	(e)
	Make changes or allow changes to be made in the shareholding structure of THE DEBTOR or of PRICESMART, INC. PRICESMART INC. must remain as the holder of all the issued and non-current shares of corporate capital of  THE DEBTOR.-------------------------------------------------------------------------------------------------------------

		
	(f)
	Sell, cede, lease, swap, pawn, mortgage or in any way convey or encumber its properties.-------------------------------------------------------------------------------------------------------------

		
	(g)
	Perform changes in the nature of its operations or its line of business.-------------

		
	(h)
	Incur and cause PRICESMART, INC also not to incur in debt additional to contingent liabilities.----------------------------------------------------------------------------------------------

		
	(i)
	Obtain loans or credit facilities with other bank or financial institutions (illegible) structure, guarantees, or other conditions that are more favorable to the creditor if compared to that provided by the structure, guarantees and conditions of these credit facilities to THE BANK.-----------------------------------------------------

		
	(j)
	Use the product of such loans for matters other than those than for the objects indicated in these agreements.----------------------------------------------------------------------------------

		
	(k)
	Pay dividends, provide loans to its directors, shareholders, affiliates or subordinates or carry out any other form of distribution of profits, except for the funds resulting from these credit facilities, unless THE DEBTOR has Debt Servicing Coverage referred to under paragraph © of the THIRTY-FIFTH clause of this public deed and that THE DEBTOR is also in compliance with each and every one of its obligations under these agreements.-------------------------------------------------------

		
	(l)
	Perform or allow changes that are adversely substantial to be performed in the businesses, in the financial condition, in the operations or the (illegible) of THE DEBTOR, giving THE BANK reasonable grounds to conclude that THE DEBTOR will not or is not capable of fulfilling or complying with its obligations under these agreements.----------------------------------------------------------------------------------------------------

THIRTY FOURTH: Except if otherwise expressly authorized in writing by THE BANK and until THE DEBTOR has fully and faithfully fulfilled all its obligations undertaken or that may be undertaken by this means, THE DEBTOR is required to:-----------------------------------------
		
	(a)
	Provide THE BANK, one hundred and twenty (120) days after the end of each fiscal year, at the latest, the consolidated financial statements corresponding to such period for THE DEBTOR and for PRICESMART, INC. duly audited by an independent audit firm acceptable to THE BANK. It is hereby understood that any company that is considered as an affiliate of THE DEBTOR, must be included in the consolidated financial statements in question.----------------------------------------------

		
	(b)
	Provide THE BANK, forty-five (45) days after the end of each quarter, at the latest, an audited (interine) copy of the quarterly financial statements and the consolidated, combined or individual statements, as requested by THE BANK, of THE DEBTOR and of PRICESMART INC.----------------------------------------------------------------------

		
	(c)
	Provide THE BANK, at least forty-five (45) days after the end of each quarter, a quarterly, duly signed certificate of compliance, regarding its obligations contained in the THIRTY-SECOND, THIRTY-THIRD, THIRTY-FOURTH and THIRTY-FIFTH of this public deed.----------------------------------------------------------------------------------------

THIRTY-FIFTH: Unless otherwise expressly authorized in writing by THE BANK, and until THE DEBTOR has fully and faithfully fulfilled al the obligations undertaken or that it will undertake hereunder, THE DEBTOR is required to:------------------------------------------------------------
		
	(a)
	Maintain a minimum Net Tangible Value of FORTY MILLION US DOLLARS (US$40,000,000.00) in official currency of the United States of America.  For the effects of this stipulation, “Net Tangible Value” shall be construed as the paid capital and subordinated funds plus the retained profits, minus (i) accounts payable to shareholders, affiliates and/or related companies, (ii) investments in affiliates and/or related companies and (iii) intangible assets, as defined by THE BANK.---------------------------------------------------------------------------------------------------------------------------

		
	(b)
	Maintain  a financial debt ratio between the EBITDA of no more than three point zero to one point zero (3.01:1.0). For the effects of this stipulation, the “Financial Debt” is understood as every short and long term debt generating interests, financial leases and other obligations as defined by THE BANK. Also, for the effects of this stipulation, “EBITDA” is understood as the net income before extraordinary or nonrecurring expenses plus interests, imposed on the rent, depreciation, amortization expenses during the period or any other expense originating from the head office that does not represent a cash outflow.----------------------------------------------------------------------------------------------------------------------

		
	(c)
	Maintain a minimum Debt Service Coverage of two point five to one point zero (2.5;1.0). For the effects of this stipulation, “Debt Service Coverage” is understood as the ration between the EBITDA and the interest expenses plus the Current Portion of the Long Term Debt and financial leases. Also, for the effects of this stipulation, “Current Portion of Long Term Debt” is understood as the portion of financial debt to be repaid within the current year.---------------

		
	(d)
	Cause PRICESMART, INC. to maintain a Net Financial Debt ratio between the EBITDA of no more than one point five to one point zero (1.5;1.0). For the effects of this stipulation, “Net Financial Debt” is understood as every short and long term debt generating interests, financial leases and other obligations as defined by THE BANK (illegible) of cash secured loan. Also for the effects of this stipulation, “EBITDA” is understood as the net income before extraordinary and nonrecurring expenses plus interests, income tax, depreciation and amortization expenses during the period.-----------------------------------------------------------------

Paragraph: The conditions stated in paragraphs (a) (b) and (c) of this clause shall be measured on a quarterly basis to the last four quarters of the financial statements of THE DEBTOR and the (illegible) mentioned in paragraph (d) of this clause shall be measured on a quarterly basis to the last four quarters of the financial statements of PRICESMART, INC.------------------------------------------------------------------------------------------------------------------
THIRTY-SIXTH: THE BANK may consider the sums owed by THE DEBTOR as a result of Loan Agreement B, Loan Agreement C and Loan Agreement D, as due and payable, in any of the following events:------------------------------------------------------------------------------------------------
		
	(a)
	The nonpayment of any of the consecutive installments to be made by THE DEBTOR in accordance with that stipulated in the THIRD, FOURTH, NINTH, TENTH, SIXTEENTH AND SEVENTEENTH clauses, above.--------------------------------

		
	(b)
	If one or various proceedings are initiated against THE DEBTOR, or seizures or embargos against its property for an amount of over TWO MILLION US DOLLARS (us$2,000,000.00), in official currency of the United States of America.------------------------------------------------------------------------------------------------------------

		
	(c)
	If THE DEBTOR should be in an arrangement with creditors or is declared bankrupt.---------------------------------------------------------------------------------------------------------

		
	(d)
	If any of the mortgaged properties is confiscated, embargoed or a suspension or suit is recorded against such in the Public Registry, or if such is in anyway sought after.----------------------------------------------------------------------------------------------------------------

		
	(e)
	Due to an omission in the payment of taxes, duties, levies, or contributions falling on any of the mortgaged properties and if such omission is not rectified within a term of fifteen (15) workdays.---------------------------------------------------------------------

		
	(f)
	If THE DEBTOR is in default regarding its Social Security obligations and such situation is not rectified within a term of fifteen (15) workdays. For these effects, THE BANK may also at any time demand a tax clearance certificate before the before mentioned official institution.---------------------------------------------------

		
	(g)
	If any of the mortgaged properties undergo depreciation, (illegible) or deterioration to such a degree that, in the opinion of THE BANK, they do not satisfyingly cover the obligations undertaken in this public deed, except in the event that THE DEBTOR should offer a satisfying guarantee to THE BANK.----------

		
	(h)
	If any adverse substantial change is produced in the business, financial condition, operations or expectations of THE DEBTOR, or if any financial, political economic or other circumstance of another nature should take place, whether national or international, giving THE BANK reasonable grounds to conclude that THE DEBTOR will not or will not be able to fulfill or observe its obligations under these loan agreements.----------------------------------------------------------

		
	(i)
	If THE DEBTOR destines the funds for matters other than those objects indicated in the SECOND, EIGHTH and FOURTEENTH clauses, above.--------------

		
	(j)
	If any of the representations and guarantees granted by THE DEBTOR in favor of THE BANK in the THIRTY-FIRST clause, above, or any other clause in such agreements is determined to be incorrect or false or un fulfilled. -------------------------

		
	(k)
	If THE DEBTOR does not fulfill any of the obligations mentioned in the THIRTY-SECOND clause, above, any of the affirmative obligations mentioned in the THIRTY-THIRD clause, above, any of the reporting conditions mentioned in the THIRTY-FOURTH clause, above, or any of the financial conditions stated in the THIRTY-FIFTH clause, above.------------------------------------------------------------------------------------

		
	(l)
	If THE DEBTOR should incur (illegible) in any way does not fulfill any other obligation undertaken with THE BANK or any other bank or financial institution, for any other concept, (illegible) that any of the causes allowing the creditor to declare the amounts owed by THE DEBTOR as due and payable, by virtue of such other obligation--------------------------------------------------------------------------------------------------

		
	(m)
	Upon the early expiration of the obligations that PRICESMART EL SALVADOR S.A. de C.V., PRICESMART HONDURAS, S.A. and PRICESMART INC. have with THE BANK.---------------------------------------------------------------------------------------------------

		
	(n)
	If any of the causes permitting THE BANK to declare the amounts owed by THE DEBTOR to be due and payable should arise by virtue of the Loan Agreement.---

(ñ) If THE DEBTOR does not fulfill any of the other obligations undertaken through these agreements.---------------------------------------------------------------------------------------------------------
THIRTY-SEVENTH: For the effects of issuing enforcement against THE DEBTOR, as well as for all other effects of these agreements, the parties hereby agree that those balances shown in the books of THE BANK shall be held to be correct and true regarding the loans guaranteed with the mortgage (illegible) and antichresis established, according to THE BANKS’s own statement, and therefore those certifications issued by THE BANK regarding the amount and enforceability of the owed balances, once the certificates have been reviewed by an Authorized Public Accountant, shall constitute conclusive evidence in a trial and provide validation, whereby the amounts stated in such certifications hall be considered clear, liquid 

and enforceable.-----------------------------------------------------------------------------------------------------------
THIRTY-EIGHTH: THE DEBTOR waives its domicile and the summary proceedings, in the event that THE BANK should need to resort to the courts of justice to collect this loan. Likewise, THE DEBTOR agrees that should the mortgaged properties be submitted to auction, such shall be carried out based on the amounts for which the respective request has been made to the courts.----------------------------------------------------------
THIRTY-NINTH: THE DEBTOR states that THE BANK is hereby authorized, at its option and at any time, whether before or after the expiration of the obligations, with or without notice to THE DEBTOR, and up to full amount of the amounts owed as a result of these agreements, to deduct from any amount that THE DEBTOR holds in deposit or in any other way with THE BANK, and to apply the deduced amount to the payment or reduction of the amounts owed to THE BANK by THE DEBTOR. This right recognized herein in favor of THE BANK does not imply the extinction of the obligation of THE DEBTOR to pay the unpaid balances that are still owed, nor the extinction of the guarantees granted in favor of THE BANK, through this public deed.----------------------------------------------------------------------------------------------------------------
FORTIETH: If due to any change in the Law issued or effected after the date of these loan agreements by any government authority any of the following should occur: (a) any increase in the cost of THE BANK to grant or maintain the loans under these agreements; (b) any increase in the capital amount required or maintained or expected to be maintained by THE BANK and the sum of such capital is increased by or based on the existence of the loans pending payment under these agreements; or (c) any reduction in the effective rate of return on capital of THE BANK in maintaining the loans (all of which precedes, excluding any such increased costs, increased calls for capital or reduced rates of return (each an “Event) and jointly the “Events”), resulting from (A) taxes or (B) changes to the tax base of the joint net income or joint gross income affecting THE BANK). (the determination of any or the preceding Event or Events depending on the entire and exclusive discretion of THE BANK) with regad to thee loan; B) Then, in such case, THE BANK shall provide notice (from here on in “Notice”) to THE DEBTOR who must: One(1) describe the Event in reasonable detail along with the approximate date of effect of such. Two (2) establish the costs of such Event to THE BANK and, three (3) calculate such amount as THE BANK deems necessary at its exclusive and entire discretion in order to be compensated for the cost of such Event. Such Notice (or Notices) may be issued from time to time by THE BANK with regard to an Event (or Events).---------------
THE DEBTOR, immediately after receiving such Notice, must directly pay THE BANK the amounts that are sufficient in order to compensate THE BANK for the cost of such Event. --------------------------------------------------------------------------------------------------------------------------------------
The Notice(es), including the certificates contained in such, in the event of the absence of a manifest error, shall be conclusive and binding for THE DEBTOR.----------------------------
For the effects of this clause, the following defined terms shall have the following meaning:----------------------------------------------------------------------------------------------------------------------------------
“Change to the Law”: means (a) the introduction, enactment, adoption or progressive implementation of any law, rule, instruction, guideline, decision or regulation (or any provision of such) or in the interpretation or reinterpretation or application of such by any Government Authority after the date of these loan agreements; or (c) the fulfillment, by THE BANK, of any request, guideline, decision or instruction (whether or not it has the (illegible) of any Government authority made or issued after the date of these loan agreements.---------------------------------------------------------------------------------------------------------
“Government Authority”: means the government of the Republic of Panama, or of any other nation, or any political subdivision of such, whether provincial state, territorial or local and of any agency, authority, 

instrumental entity, regulating entity, court, central bank or any other entity exercising executive, legislative, judicial, tax, regulating or administrative powers or authorities or pertaining to the government.------------------------
FORTY-FIRST: If THE BANK at any time (illegible) that:------------------------------------------------------
		
	(a)
	Deposits in Dollars for the relevant amount and for the relevant interest period are not available to such in its relevant market; or ----------------------------------------------

		
	(b)
	Due to circumstances affecting the relevant market, the (illegible) means to exactly state the interest rate applying to these loan agreements at the LIBOR rate do not exist.---------------------------------------------------------------------------------------------------------

		
	(c)
	The LIBOR rate does not adequately and justly reflect the cost, for THE BANK, to continue the loans based on a LIBOR rate for an applicable interest period. Then, with a simple notice, to THE DEBTOR (and without prejudice to the other rights corresponding to THE BANK according to these agreements), the obligations of THE BANK under these agreements to continue with the loans as, or to convert the loans into, LIBOR rate loans shall be immediately suspended until THE BANK notifies THE DEBTOR that the circumstances caused by such suspension or (en the case of paragraph (c)) the circumstances that have given way to such notice no longer exist, and (i) any request to turn the loans into, or continue with the loans as, LIBOR rate loans shall not be effective and (ii) the loans requested at LIBOR rate shall be granted as a base rate loan.--------------------

FORTY-SECOND. THE DEBTOR hereby states, confirms and guarantees the following to THE BANK:-------------------------------------------------------------------------------------------------------------------------------
		
	(a)
	That THE DEBTOR will not, directly or indirectly, use the funds provided in these credit facilities, in such manner that such results in, o gives rise to, a violation by any person (including, without any limitation whatsoever, THE DEBTOR or THE BANK) of the laws of any applicable jurisdiction including, without any limitation whatsoever, the laws and regulations sanctioned in the United States of America, Canada, the European Union, the United Nations or any other country or association of countries, that are applicable (the “sanctioned regulations”).-

		
	(b)
	That the funds or properties of THE DEBTOR that are or will be used to pay or prepay these credit facilities are not nor will be directly or indirectly owned by any person, individual, entity, vessel, group, government, country, state or other which name is included in any list issued with regard to any of the Sanctioned Regulations (a “Sanctioned Person”), including, without any limitation whatsoever, the Specially Designated National or SDN, appearing on a list regarding this matter published in the Office of Foreign Asset Control of the US Department of the Treasury or OFAC.-----------------------------------------------------------------

		
	(c)
	That THE DEBTOR is not violating any of the Sanctioned Regulations.-----------------

		
	(d)
	That neither THE DEBTOR nor any other person benefitting in any way with regard to these credit facilities and/or any instrument and/or any payment hereunder, is a Sanctioned Person or is directly or indirectly owned by or controlled by a Sanctioned Person.---------------------------------------------------------------------------

In addition to the before stated, THE DEBTOR hereby agrees to indemnify and hold THE BANK harmless, to the maximum extent permitted by the applicable law, of all losses, damage, detriment and responsibilities (including, without any limitation whatsoever, those due to claims by any third party), incurred in by THE BANK as a result of noncompliance or infringement, by THE DEBTOR, of its declarations, guarantees and/or commitments contained in this clause or any other clauses in these agreements and/or due to any measure or action taken by THE BANK to enforce its rights by virtue of that established herein.--------------------------------------------------
No measure or action adopted by THE BANK in accordance with these agreements, including the granting of the credit facilities, the issuance of any financial instrument by virtue of such or the processing of any payment or transaction, or any action by THE DEBTOR with regard to such, shall be considered as a 

waiver or exemption of any of the rights of THE BANK by virtue of the stipulations contained in these agreements or as a release of the obligations or responsibilities of THE DEBTOR regarding such.-------------------------------------------------------------------------------------------------
FORTY-THIRD: THE DEBTOR hereby expressly and irrevocably authorizes THE BANK, its representatives and/or agents, its subsidiaries and/or affiliates, assignees or successors, as well as any company that through assignment, administration or purchase of portfolio acquires the rights of the loans emanating from these agreements, to require, request, gather, investigate, exchange, transmit or consult with any data information agency, banks or financial agents, regarding its credit history, information relating to credit obligations or transactions it maintains or could maintain, at any time and at its entire discretion, without requiring the express authorization of THE DEBTOR every time that it is essential to obtain such references.  ----------------------------------------------------------------------------------------------------------------------
It is hereby understood that THE BANK, its representatives and/or agents, its subsidiaries and/or affiliates, assignees or successors as well as any company that through assignment, administration or purchase of portfolio acquires the rights to the loans emanating from these agreements may require, consult and gather information pertaining to THE DEBTOR, as well as provide such information to the data information agents or similar civic right entities, without needing to require any consent other than that freely expressed by THE DEBTOR in this document.-------
THE DEBTOR holds THE BANK harmless and at simultaneously renounces any civil, criminal and/or administrative action, present or future, against THE BANK, its affiliates, assignees and/or successors, its employees, executives, directors, officers or proxies, as well as any company that through assignment, administration or purchase of portfolio acquires the rights to these loans, by exercising the right conferred herein. THE DEBTOR states that all personal and credit information provided to THE BANK is true and complete. THE DEBTOR undertakes to rectify or broaden any information provided to THE BANK relating to these agreements, in a timely manner.-------------------------------------------------------------------------------------------------------------------
THE BANK is hereby required to make available to THE DEBTOR, and shall deliver to such upon its request, all information it receives, keeps or handles based on the authorization issued by such.-------------------------------------------------------------------------------------------
FORTY-FOURTH: THE DEBTOR expressly authorizes THE BANK to provide and share, through any means or procedure, information regarding THE DEBTOR or its operations relating to these loans, without THE DEBTOR being able to claim the existence of a violation by THE BANK relating to bank confidentiality in the following events: One (1) at the request or requirement of any supervisor, inspector or regulator of THE BANK, or any internal or external auditor of THE BANK. Two (2) with regard to any investigation, lawsuit or legal action to which THE BANK is a party. Three (3) to the parent company of THE BANK, its branches, subsidiaries, representation offices, affiliates, agents or third parties selected by any of the before mentioned entities, no matter what its location, for confidential use, including, by way of illustration and without limitations,  to provide any service and for data processing with technological, accounting, filing, statistical, marketing or risk analysis purposes. THE BANK, its parent company, and any of those branches, subsidiaries, representation offices, affiliates, agents or third parties shall be authorized to transfer and make such information known at the request of the law, a court, a regulator or a competent authority, and Four (4) to any current or potential assignee of THE BANK.-----------------------------------------------------------------------------------
FORTY-FIFTH: THE DEBTOR accepts that these agreements are the sole and exclusive responsibility of the Branch of THE BANK OF NOVA SCOTIA in the Republic of Panama, subject to the laws (including any act, order, decree and/or government regulation) of the Republic of Panama, and under the exclusive jurisdiction of the courts of the Republic of Panama. In such sense, THE DEBTOR acknowledges that neither the parent company of THE BANK OF NOVA SCOTIA nor any other branch, office, subsidiary 

or affiliate of THE BANK OF NOVA SCOTIA have or shall have any responsibility relating to these agreements.---------------------------------
FORTY-SIXTH: The parties agree that THE BANK, at its entire discretion and at the time it deems convenient, may sell, cede or transfer in any other way, whether fully or partially, all the loans and other rights of THE BANK consigned in this public deed, without THE BANK having to provide any type of notice, either prior or subsequent, to THE DEBTOR and without THE BANK having to require or receive any approval whatsoever from THE DEBTOR. Regarding the express objective, THE BANK is hereby authorized in advance by THE DEBTOR to provide any purchaser, assignee or person acquiring the loans and other rights of THE BANK emanating from this public deed, or any party eventually interested in the purchase, assignment or acquisition of the referred to loans and rights, all documents and information relating to the loans and rights, to the financial situation of THE DEBTOR and the status of the loans and other rights of THE BANK emanating from this public deed and all information that THE BANK deems convenient, in any other way, so as to facilitate the sale, assignment or transfer of the loans and other rights OF THE BANK emanating from this public deed, whereby THE DEBTOR expressly holds THE BANK harmless against any consequence resulting from the exercise, by THE BANK, of the right to provide the documents and information referred to in this clause.-------------------------------------------------------------------------------------------------------------------------
FORTY-SEVENTH: The fact that THE DEBTOR should not fulfill the obligations undertaken herein towards THE BANK by virtue of this document or that it fulfills such imperfectly or in a manner other than that agreed on, without THE BANK requiring the precise and faithful compliance of such obligations, whether judicially or extra-judicially, does not imply nor shall it be considered as a modification of the terms of these agreements, or as an acceptance, by THE BANK, of imperfect, late or fulfillments others than those agreed on and shall also not be considered as a relinquishment of the contractual or legal rights corresponding to THE BANK against THE DEBTOR and even though THE BANK, in the future and at any time, when it considers it to be relevant, requires THE DEBTOR, judicially or extra-judicially, to fulfill the obligations agreed on by THE DEBTOR towards THE BANK or exercises the contractual or legal rights held by THE BANK.---------------------------------------
FORTY-EIGHTH: It is hereby understood and agreed between the contracting parties that if any of the stipulations of these agreements should be annulled according to the laws of the Republic of Panama, such nullity shall not invalidate the agreements in their entirety, but that such shall be interpreted as if such stipulation(s) declared null where not included and the rights and obligations of the contracting parties shall be interpreted and observed according to law.------------------
FORTY-NINTH: All notices and notifications required according to these agreements shall be provided in writing and personally delivered or sent by mail to the party to which such notice is provided, to the following addresses:----------------------------------------
		
	(a)
	To THE BANK: Apartado Postal número cero ocho tres tres-cero cero uno siete cuatro (0833-00174) Panamá, República de Panamá.-----------------------------------------------

		
	(b)
	To THE DEBTOR: Esquina de Vía Brasil y Vía España, Panamá República de Panamá.-----------------------------------------------------------------------------------------------------------------------

It is hereby understood and agreed that in the event that notice or notification is sent by mail, such shall be deemed to have been delivered after three (3) calendar days have elapsed, starting as of the date on which such notice was deposited at the postal office. The receipt issued by the postal office shall constitute sufficient proof that the notice or notification was sent and of the date on which such was sent.-----------------------
FIFTIETH: All expenses relating to the celebration, execution and/or administration of these agreements, including Tax Stamps, Personal Property Transfer and Service Lending Tax (I.T.B.M.S.), notary expenses and fees, appraisal expenses, lawyer fees, funding breakage costs, judicial or extra judicial lawyer expenses 

or expenses of any other kind and the costs that are judicially or extra judicially caused due to delayed payment by THE DEBTOR shall be borne by THE DEBTOR.--------------------------------------------------
FIFTY-FIRST: These agreements shall be governed by and shall be construed in accordance with the laws of the Republic of Panama.------------------------------------------------------
FIFTY-SECOND: The parties state that Loan Agreement A and the guarantees providing access to such shall continue in full force and effect, as such can be understood to be modified through this public deed.-------------------------------------------------------------------------------------
FIFTY-THIRD: Likewise, the parties stated that the statements and agreements contained in this public deed do not constitute an innovation of the contractual obligations of THE DEBTOR towards THE BANK, through Loan Agreement A.---------------
FIFTY-FOURTH: THE BANK states that it accepts the obligations hereby undertaken by THE DEBTOR such as the first mortgage, antichresis and other rights constituted in its favor in the above described terms.-------------------------------------------------------------------------------------
The Notary hereby certifies that he shall add the following document to the official records of the notary--------------------------------------------------------------------------------------------------------------
MINUTES OF A SPECIAL MEETING OF THE GENERAL BOARD OF SHAREHOLDERS OF THE COMPANY PRICESMART PANAMA, S.A.------------------------------------------------------------------------
A special meeting of the General Board of Shareholders of the company PRICESMART PANAMA, S.A., a company established and organized in accordance with the laws of the Republic of Panama was held at the offices of the company located in the city of Panama, Republic of Panama, on March 25, 2014.--------------------------------------------------------------
Mr. PABLO EDUARDO FRANCHESCHI, acted as the Chairman of the meeting, given the absence of the chairman, and Mr. MICHAEL MCCLEARY, Secretary of the company, acted as the Secretary of the meeting.--------------------------------------------------------------------------------
The Chairman of the meeting immediately verified the presence of all the holders of all of the issued and outstanding shares of the company, with a voting right, who in this act relinquished the right to prior call, and the required quorum was established.------
The Chairman of the meeting stated that it was in the best interest of the company to authorize the taking out of a loan with THE BANK OF NOVA SCOTIA for the amount of FOUR MILLION US DOLLARS (US$4,000,000.00), in official currency of the United States of America.------------------------------------------------------------------------------------------------------------------
The Chairman of the meeting also stated that it was in the best interest of the company to authorize a loan to be taken out with THE BANK OF NOVA SCOTIA for the amount of TWENTY MILLION US DOLLARS (US$20,000,000.00) in official currency of the United States of America.------------------------------------------------------------------------------------------------------------------
The Chairman of the meeting also stated that it was for the best interest of the company to authorize the taking out of a loan with THE BANK OF NOVA SCOTIA for the amount of TEN MILLION US DOLLARS ($10,000,000.00), in official currency of the United States of America.-----------------------------------------------------------------------------------------------------
Additionally, the Chairman of the meeting stated the need that authorization be provided to maintain, extend and increase the total amount of FORTY-FOUR MILLION DOLLARS (US$44,000,000.00) in official currency of the United States of America, plus the agreed on interests, commissions, costs, judicial or extra judicial collection expenses and expenses of any nature that are admissible, regarding the first mortgage and antichresis that the company established in favor of THE BANK OF NOVA SCOTIA through public deed no. 14,297 dated August 13, 2009 of the Second Notary Office of the Circuit of Panama, according to the modifications made to such through public deed No. 13,308, dated September 14, 2010 pertaining to the Second Notary Office of the Circuit of Panama, regarding property No 69,971, registered under volume (illegible), folio 301 of the Property Section of the Public Registry, Province of Panama, so as to guarantee the faithful fulfillment of each and every one of the obligations (both primary and accessory) (illegible) of 

the company, as a result of a loan agreement for the amount of TEN MILLION US DOLLARS (US$10,000,000.00) in official currency of the United States of America, that the company entered into with THE BANK OF NOVA SCOTIA through the referred to public deed No. 14,297 on August 13, 2009 pertaining to the Second Notary Office of the Circuit of Panama, as such was modified through the referred to public deed No. 13,308, dated September 14, 2010 of the Second Notary Office of the Circuit of Panama, and also to guarantee the faithful fulfillment of each and every one of the obligations (both primary and accessory) of the company, as a result of the before mentioned loan agreements.-------------------------------------------------------------
Lastly, the Chairman of the meeting stated the need to add the properties No. 285,351, registered under document 1421021 of the Property Section of the Public Registry, Province of Panama, and No. 46,396, registered under document 90286 of the Property Section of the Public Registry of the Province of Chiriqui to the object of such first mortgage and antichresis.----------------------------------------------------------------------------------------------
The unanimous decision of the board was the following:---------------------------------------------------
FIRST: To authorize that a loan for the amount of FOUR MILLION US DOLLARS (us$4,000,000.00) in official currency of the United States of America, be taken out with THE BANK OF NOVA SCOTIA.----------------------------------------------------------------------------------------
SECOND: To authorize that a loan for the amount of TWENTY MILLION US DOLLARS (US$20,000,000.00) in official currency of the United States of America, be taken out with THE BANK OF NOVA SCOTIA.-----------------------------------------------------------------------------------------
THIRD: To authorize that a loan for the amount of TEN MILLION US DOLLARS ($10,000,000.00) in official currency of the United States of America be taken out with THE BANK OF NOVA SCOTIA.------------------------------------------------------------------------------------------------
FOURTH: To authorize the maintenance, extension and increase to the total amount of FORTY-FOUR MILLION US DOLLARS ($44,000,000.00), in official currency of the United States of America, plus the agreed on interests, commissions, costs, judicial or extra judicial collection expenses, and expenses of any nature that are admissible, pertaining to the first mortgage and antichresis that the company constituted in favor of THE BANK FO NOVA SCOTIA through public deed No. 14,297, dated August 13, 2009, pertaining to the Second Office of the Notary of the Circuit of Panama, as such was modified through public deed No. 13,308, dated September 14, 2010 pertaining to the Second Notary Office of the Circuit of Panama, on property no. 69,971, registered under volume 1691, folio 301 of the Property Section of the Public Registry, Province of Panama, so as to guarantee the faithful fulfillment of each and every one of the obligations (both primary and accessory) undertaken by the company, as a result of a loan agreement for the amount of TEN MILLION US DOLLARS (US$10,000,000.00), in official currency of the United States of America, that the company entered into with THE BANK OF NOVA SCOTIA, through public deed No. 14,297, dated August 13, 2009 pertaining to the Second Notary Office of the Circuit of Panama, as such was modified through the referred to public deed No. 13,308, dated September 14, 2010 pertaining to the Second Notary Office of the circuit of Panama and also to guarantee the faithful fulfillment of each and every one of the obligations (both primary and accessory) of the company, as a result of the loan agreements referred to under the FIRST, SECOND AND THIRD points, above.-------------------------------------------------------------------------------------------------------------
FIFTH: To authorize that properties No. 285,351, registered under document 1421021 of the Property Section of the Public Registry, province of Panama, and No. 46,396, registered under document 90286 of the Property Section of the Public Registry, province of Chiriquí be added to the object of the first mortgage and antichresis referred to in the FOURTH point, above.-----------------------------------------------------------------------------
SIXTH: To (illegible) Mr. PABLO EDUARDO FRANCESCHI so that, in acting on behalf and in representation of the company, he may sign all the public and private documents required under the terms and conditions he considers convenient, to formalize the before described operations and all that complementary or accessory to such.-----------

With nothing further to add, the meeting is adjourned.--------------------------------------------------
Signature (illegible)-----------------------------------Signature (illegible).------------------------------------------
PABLO EDUARDO FRANCESCHI-----------------------MICHAEL MACCLEARY._-----------------------------
Chairman of the board----------------------------------------Secretary.---------------------------------------------------
I, MICHAEL MCCLEARY, Secretary of PRICESMART PANAMA, S.A. hereby certify that the above stated is a true copy of the minutes of the special meeting of the General Board of Shareholders of the company, held in the City of Panama, Republic of Panama, on March 25, 2014. ---------------------------------------------------------------------------------------------------
Signature (illegible. MICHAEL MCCLEARY. Secretary.----------------------------------------------------------
The Notary certifies that this public deed was granted, with regard to the cancelation of liens, based on the minute drawn up and referred to, by Lawyer LEYDA VARGAS TAPIA, practicing lawyer, with personal identity card number eight-four hundred and fifty-one -six hundred and sixty (8-451-660), and, with regard to the loan agreements, based on the referred to minutes and the act drawn up by Licenciado ARTURO GERBAUD DE LA GUARDIA, practicing lawyer, with personal identity card number eight- two hundred and thirty- one thousand eight hundred and seventy-six) OF THE LAW FIRM (ILLEGIBLE) CORDER, GALINDO & LEE.---------------------------------------------------------------
The Notary has advised the appearing parties that a copy of this deed must be registered and having read such to the instrumental witnesses, Mrs. MAYLA CASTRELLON DE BOCANEGRA, with personal identity card number five-twelve-one thousand four hundred and sixty-six (5-12-1466) AND Mr. LUIS MORALES, with personal identity card number four-one hundred and forty-four - eight hundred and thirty-two (4-144-832), of legal age, Panamanians and neighbors of this city, persons of my personal acquaintance and that are capable of carrying out this act, found everything to be in accordance and proceeded to approve such and to sign in approval before me, the Notary, who attests.---------------------------------------------------------------------------------------------------------This deed in the official records of the notary corresponding to the current year is contained under number EIGHT THOUSAND NINE HUNDRED AND EIGHTY-ONE (8,981). Signatures (illegible). ERNESTO ANTONIO BOYD SASSO--- BRITTANNIA AMAYA---- PABLO EDUARDO FRANCESCHI-MAYLA CASTRELLON DE BOCANERA-LUIS MORALES--- DIOMEDES EDGARDO CERRUD, Fifth Public Notary of the Circuit of Panama.-----------------------------------------------------------------------------------------------------------------------------------
This copy, taken from its original, of Public Deed number EIGHT THOUSAND NINE HUNDRED AND EIGHTY-ONE (8,981) dated March thirty-one (31), two thousand and fourteen (2014)  THROUGH WHICH METROBANK, S.A. declares the cancellation of some mortgage liens and antichresis constituted in tis favor, and at the same time, THE BANK OF NOVA SCOTIA and PRICESMART PANAMA, S.A. enter into three (3) loan agreements all of which area guaranteed with a first mortgage and antichresis on various properties , which I issue, sign and seal in the city of Panama, Republic of Panama, on March thirty-one (31), two thousand and fourteen (2014).--------------------------
This deed is contained in a total of forty (40) pages.---------------------------------------------------------
Below are the certificates that the deed was entered into the PUBLIC REGISTRY OF PANAMA CONTAINING THE STAMPS OF SUCH Registry; Registered in the Technological System of Information of the Public Registry of Panama (hand written and with the official seal of the Registry).-------------------------------------------------------------------------------------------------
(Letter) ------------------------------------------------------------------------------------------------------------------------------------

Written on letterhead paper pertaining to the law form ALEMAN, CORDERO, GALINDO &LEE. Dated April 4, 2014, Panama.--------------------------------------------------------------------------------------
(Addressed to): MRS. María del Pilar Sánchez. THE BANK OF NOVA SCOTIA. Panama City.-----------------------------------------------------------------------------------------------------------------------------------------
Dear Mrs. Sánchez:
In reference to the loan agreements with a mortgage guarantee and antichresis entered into by THE BANK OF NOVA SCOTIA and the company PRICESMART PANAMA, S.A., through public deed No. 8,981, dated March 31, 2014 pertaining to the Fifth Notary Office of the Circuit of Panama. 
Regarding this matter, and attending to your request, we hereby inform you of the following:--------------------------------------------------------------------------------------------------------------------------
		
	1.
	As per the certificates of the Public Registry of the Republic of Panama, properties No. 69,971, registered under volume 1691, folio 301, of the Property Section of the public registry, province of Panama; No. 285,351, registered under document 1421021 of the Property Section of the public registry, province of Panama, and No. 46,396, registered under document 90286 of the Property Section of the Public Registry, Province of Chiriquí, are owned by the company PRICESMART PANAMA, S.A.------------------------------------

		
	2.
	Also in accordance with the registry certificated on the cited properties No. 69,971, No. 285,351 and No. 46,396, a first mortgage and antichresis is established on such by the company PRICESMART PANAMA, S.A. in favor of THE BANK OF NOVA SCOTIA, for the amount of FORTY-FOUR MILLION US DOLLARS (us$44,000,000.00), in official currency of the United States of America.------------

		
	3.
	In our opinion the mortgaged liens and antichresis mentioned in point 2, above, are legally valid. Also, such liens are, in our opinion, enforceable according to that agreed on in the referred to public deed No. 8,981 and that established by law.-----------------------------------------------------------------------------------------------------------------------------

With nothing further to add, I remain at your service for any clarification or broadening of information you may need.-----------------------------------------------------------------------------------------------
Sincerely,
ALEMAN, CORDERO, GALINDO & LEE.
(Signature illegible)
Arturo Gerbaud de la G.8K 071014 Ex 4

 

KINGSWAY FINANCIAL SERVICES INC.
AMENDED AND RESTATED COMMON STOCK SERIES B WARRANT AGREEMENT 
This Amended and Restated Common Stock Warrant Agreement (this “Agreement”), dated as of July 8, 2014, between Kingsway Financial Services Inc., a corporation incorporated under the Business Corporations Act (Ontario) (the “Company”) and Computershare Trust Company of Canada, a trust company licensed to carry on business in all Provinces of Canada (collectively in such capacity, together with any successor appointed pursuant to the terms of this Agreement, the “Warrant Agent”).
WHEREAS, the Company issued warrants (each a “Warrant” and collectively, the “Warrants”) initially exercisable to purchase one share of the common stock of the Company, no par value per share (each, a “Common Share”) pursuant to a common stock warrant agreement (the “Original Agreement”) dated as of September 16, 2013;  
WHEREAS, the Warrants were issued in connection with a rights offering by the Company (the “Offering”) in which the Company offered transferable subscription rights (the “Subscription Rights”) entitling the holders thereof to purchase units (“Units”), each consisting of one Common Share and one Series A Warrant (as defined below) and one Series B Warrant (as defined below), each to purchase one Common Share per each Warrant;
WHEREAS, the exercise price for one series of the Warrants (the “Series A Warrants”) is the greater of US$4.50 and 120% of the volume weighted average price of the Common Shares (“VWAP”) over the twenty trading day period on the NYSE ending on the trading day prior to the issuance date of the Series A Warrants, and the exercise price of the second series of Warrants (the “Series B Warrants”) is the greater of US$5.00 and 120% of the VWAP over the twenty trading day period on the NYSE ending on the trading day prior to the issuance date of the Series B Warrants (US$5.00); 
WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, registration, transfer, exchange, exercise and cancellation of the Series B Warrants and other matters as expressly provided herein; 
WHEREAS, the Company desires to amend and restate the Original Agreement;
The foregoing recitals are made as representations and statements of fact by the Company and not by the Warrant Agent;
NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: 
ARTICLE I.
DEFINITIONS
Section 1.1 Definition of Terms. As used in this Agreement, the following capitalized terms shall have the following respective meanings: 
(a) “Applicable Securities Laws” shall mean the Securities Act, the Exchange Act (as defined below), applicable U.S. state securities laws and the securities laws of applicable Canadian provinces and territories;
(b) “Authenticated” means (a) with respect to the issuance of a Warrant Certificate (as defined in this Agreement), one which has been duly signed by the Company and authenticated by manual signature of an authorized officer of the Warrant Agent, (b) with respect to the issuance of an Uncertificated Warrant (as defined below), one in respect of which the Warrant Agent has completed all Internal Procedures (as defined below) such that the 

1

 

particulars of such Uncertificated Warrant as required by Section 3.2 are entered in the register of holders of Series B Warrants, “Authenticate”, “Authenticating” and “Authentication” have the appropriate correlative meanings;
(c) “Beneficial Holder” shall mean any person or entity that holds beneficial interests in a Warrant Certificate (as defined in this Agreement) or an Uncertificated Warrant;
(d) “Business Day” shall mean day other than a Saturday, Sunday or other day on which banks in the State of New York or the Province of Ontario, Canada are authorized by law to remain closed;
(e) “Certificated Warrant” means a Series B Warrant evidenced by a writing or writings substantially in the form of Schedule “A” attached hereto;
(f) “Clearing Agency” means CDS Clearing and Depository Services Inc., its successors and permitted assigns (“CDS”), the Depository Trust Company or any other organization registered as a “clearing agency” pursuant to the securities legislation of any province or territory of Canada, as in effect from time to time, and any additional qualified clearing agency that carries on business within or outside Canada for Warrantholders resident in the relevant jurisdiction, or any of the foregoing, as the context may require, all as may be designated by the Company from time to time;
(g) “Co-Agent” means Computershare Inc., a Delaware corporation;
(h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended;
(i) “Expiration Date” shall mean 5:00 p.m., Eastern time, on September 15, 2023 or such earlier date as may be specified by the Company, or if such day is not a Business Day, the next succeeding day which is a Business Day; 
(j) “Internal Procedures” means procedures internal to the Warrant Agent necessary to carry out its duties as warrant agent under this Agreement;
 (k) “Issue Date” means, with respect to a Series B Warrant, the date that such Series B Warrant is issued by the Company;
(l) “Participant” means a broker, dealer, bank or other financial institution or other person who maintains an account for clearing and holding securities, including Series B Warrants, with a Clearing Agency and on whose behalf a Clearing Agency or its nominee holds Series B Warrant;
(m) “SEC” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act;
(n) “Uncertificated Warrant” means any Series B Warrant which is not a Certificated Warrant;
(o) “Warrant Shares” shall mean Common Shares and any other securities purchased or purchasable upon exercise of the Series B Warrants (and, if the context requires, securities which may thereafter be issued by the Company in respect of any such securities so purchased, by means of any subdivisions or combinations of its capital stock, or recapitalizations, reclassifications or the like); and
(p) “Warrantholders”, “Holders” or “holders” means the persons for the time being entered in a register of holders described in Section 3.3(f) hereof as holders of Series B Warrants.
ARTICLE II.
APPOINTMENT OF WARRANT AGENT
Section 2.1 Appointment. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Series B Warrants in accordance with the instructions hereinafter set forth in this Agreement, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement. 

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ARTICLE III.
WARRANTS
Section 3.1 Issuance of Warrants. The Series B Warrants will be issued on the terms and subject to the conditions of this Agreement in the amounts and to the Holders determined pursuant to the terms of the Offering. On such date, the Company will deliver a written order to the Warrant Agent, authorizing the issuance and delivery of Series B Warrants. The maximum number of Warrant Shares issuable pursuant to the Series B Warrants shall be 4,923,765 Common Shares, as such amount may be adjusted from time to time pursuant to this Agreement. All Series B Warrants will rank pari passu, whatever may be the actual dates of the issuance thereof.
Section 3.2 Form of Warrant. 
(a) The Series B Warrants may be issued in both certificated and uncertificated form. All Series B Warrants issued in certificated form shall be evidenced by a warrant certificate (including all replacements issued in accordance with this Agreement), substantially in the form attached hereto as Schedule “A” or in such other form as may be approved by the Company and the Warrant Agent (a “Warrant Certificate”), which shall be dated as of the Issue Date, shall bear such distinguishing letters, numbers and legends as the Company may, with the approval of the Warrant Agent, prescribe, and shall be issuable in any whole number denomination. Series B Warrants issued to the Clearing Agency may be in uncertificated form and shall be evidenced on the register of Warrantholders to be maintained by the Warrant Agent.
(b) Each Warrant Certificate may be engraved, lithographed or printed (the expression “printed” including for purposes hereof both original typewritten material as well as mimeographed, mechanically, photographically, photostatically or electronically reproduced, typewritten or other written material), or partly in one form and partly in another, as the Company may determine.
Section 3.3 Execution of Warrant Certificates. 
(a) The Warrant Certificates shall be signed on behalf of the Company by its Chief Executive Officer, its President or any Executive Vice President (each, an “Appropriate Officer”). Each such signature upon the Warrant Certificates may be in the form of a facsimile signature of any such Appropriate Officer and may be imprinted or otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use the facsimile signature of any Appropriate Officer. 
(b) If any Appropriate Officer who shall have signed any of the Warrant Certificates shall cease to be such Appropriate Officer before the Warrant Certificates so signed shall have been countersigned by the Warrant Agent or disposed of by the Company, such Warrant Certificates nevertheless may be countersigned and delivered or disposed of as though such Appropriate Officer had not ceased to be such Appropriate Officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper Appropriate Officer of the Company to sign such Warrant Certificate, although at the date of the execution of this Agreement any such person was not such Appropriate Officer. 
(c) Authentication of Warrant Certificates. No Warrant Certificate will be issued or, if issued, such Warrant Certificate will not be valid or entitle the holder to the benefits hereof until it has been Authenticated on behalf of the Warrant Agent substantially in the form of the certificate attached hereto as Schedule “A” or in such other form as may be approved by the Company and the Warrant Agent. Such Authentication shall be conclusive evidence that such Warrant Certificate has been duly issued hereunder and that the holder or holders are entitled to the benefits of this Agreement.
(d) The Warrant Agent shall Authenticate Uncertificated Warrants (whether upon original issuance, exchange, registration of transfer, or otherwise) by completing its Internal Procedures and the Company shall, and hereby acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Warrants under 

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this Agreement. Such Authentication shall be conclusive evidence that such Uncertificated Warrant has been duly issued hereunder and that the holder or holders are entitled to the benefits of this Agreement. The register shall be final and conclusive evidence as to all matters relating to Uncertificated Warrants with respect to which this Agreement requires the Warrant Agent to maintain records or accounts. In case of differences between the register at any time and any other time the register at the later time shall be controlling, absent manifest error.
(e) Authentication Not Representation. The Authentication by the Warrant Agent of any Warrant Certificate or Uncertificated Warrants issued hereunder will not be construed as a representation or warranty by the Warrant Agent as to the validity of this Agreement or such Warrant Certificate or Uncertificated Warrants (except with respect to the due Authentication thereof) or as to the performance by the Company of its obligations under this Agreement and the Warrant Agent will in no respect be liable or answerable for the use made of any Warrant Certificate or of the consideration therefor, except as otherwise specified herein.
(f) The Warrant Agent shall keep, at an office designated for such purpose in Ontario, Canada, or at any other place designated by the Company with the approval of the Warrant Agent, books (the “Warrant Register”) in which, subject to such reasonable regulations as it may prescribe, it shall register the Series B Warrants and exchanges and transfers of outstanding Series B Warrants in accordance with the procedures set forth in Section 6.1 of this Agreement, all in form satisfactory to the Company and the Warrant Agent. No service charge shall be made for any exchange or registration of transfer of the Series B Warrants, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed on the Registered Holder (as defined below) in connection with any such exchange or registration of transfer. The Warrant Agent shall have no obligation to effect an exchange or register a transfer unless and until any payments required by the immediately preceding sentence have been made. 
(g) Prior to due presentment for registration of transfer or exchange of any Series B Warrant in accordance with the procedures set forth in this Agreement, the Company and the Warrant Agent may deem and treat the person in whose name any Series B Warrant is registered upon the Warrant Register (the “Registered Holder” of such Series B Warrant) as the absolute owner of such Series B Warrant (notwithstanding any notation of ownership or other writing on a Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, any distribution to the holder thereof and for all other purposes, and neither the Warrant Agent nor the Company shall be affected by notice to the contrary. 
(h) Once an Uncertificated Warrant has been Authenticated, the information set forth in the Warrant Register with respect thereto at the time of Authentication may be altered, modified, amended, supplemented or otherwise changed only to reflect exercise or proper instructions to the Warrant Agent from the holder as provided herein, except that the Warrant Agent may act unilaterally to make purely administrative changes internal to the Warrant Agent and changes to correct errors. Each person who becomes a holder of an Uncertificated Warrant, by his, her or its acquisition thereof shall be deemed to have irrevocably (i) consented to the foregoing authority of the Warrant Agent to make such error corrections and (ii) agreed to pay to the Warrant Agent, promptly upon written demand, the full amount of all loss and expense including without limitation reasonable legal fees of the Company and the Warrant Agent plus interest, at an appropriate then prevailing rate of interest to the Warrant Agent, sustained by the Company or the Warrant Agent as a proximate result of such error if but only if and only to the extent that such present or former holder realized any benefit as a result of such error and could reasonably have prevented, forestalled or minimized such loss and expense by prompt reporting of the error or avoidance of accepting benefits thereof whether or not such error is or should have been detected in a timely fashion and corrected by the Warrant Agent; provided, that no person who is a bona fide purchaser shall have any such obligation to the Company or to the Warrant Agent.
Section 3.4 Uncertificated Warrants issued to Clearing Agency.
(a) No Warrant Certificate shall be issued in respect of Uncertificated Warrants held in the name of the Clearing Agency, except where physical certificates evidencing ownership in such securities are required or as set out herein 

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or as may be requested by the Clearing Agency, as determined by the Company, from time to time. Such Uncertificated Warrants will initially be registered on the Warrant Register maintained by the Warrant Agent in the name of the Clearing Agency.
(b) Re-registrations of interests in, and transfers of, Uncertificated Warrants by the beneficial owners thereof shall be made only through the Clearing Agency and any person transferring Series B Warrant in such manner shall be deemed to have transferred to the transferee all of such person’s rights and obligations in respect thereof; all transferees of such Series B Warrants shall be deemed to have received and accepted such transfer and be deemed to have agreed to be bound by the provisions of this Agreement.
(c) The Company may terminate the application of this Section 3.4 in its sole discretion in which case all Uncertificated Warrants shall as soon as reasonably practicable thereafter be evidenced in certificated form and registered in the name of a person other than a Clearing Agency.
(d) The Company and the Warrant Agent may deal with the Clearing Agency for all purposes (including the making of payments and the delivery of any notice, report or other communication) as the registered holder of the Uncertificated Warrants and as the authorized representative of the respective beneficial holders of such Warrants.
(e) To the extent that the provisions of this Section 3.4 conflict with any other provisions of this Agreement, the provisions of this Section 3.4 shall prevail.
(f) Transfers of beneficial ownership in any Uncertificated Warrant will be effected only (i) with respect to the interest of a Participant, through records maintained by the Clearing Agency or its nominee for such Uncertificated Warrants, and (ii) with respect to the interest of any person other than a Participant, through records maintained by Participants. Beneficial owners of Uncertificated Warrants who are not Participants but who desire to sell or otherwise transfer ownership of or any other interest in such Uncertificated Warrants may do so only through a Participant.
(g) The rights of beneficial owners of Uncertificated Warrants shall be limited to those established by applicable law and agreements between the Clearing Agency and Participants and between such Participants and such beneficial owners and must be exercised through a Participant in accordance with the rules and procedures of the Clearing Agency.
(h) Subject to Subsection 3.4(i), neither the Company nor the Warrant Agent shall be under any obligation to deliver to any Participant or beneficial owner of Uncertificated Warrants, nor shall any Participant or beneficial owner of Uncertificated Warrants have any right to require the delivery of, a certificate or other instrument evidencing any interest in Series B Warrants.
(i) If there are Uncertificated Warrants and any of the following events occur:
(i) the Clearing Agency or the Company has notified the Warrant Agent that (i) the Clearing Agency is unwilling or unable to continue as the depository or (ii) the Clearing Agency ceases to be a clearing agency in good standing under applicable laws and, in either case, the Company is unable to locate a qualified successor depository within 90 days of delivery of such notice; or
(ii) the Company or the Clearing Agency is required by applicable law, or otherwise determines, to take the action contemplated in this Subsection 3.4(i);
then one or more definitive fully registered Warrant Certificates shall be, in exchange for such Uncertificated Warrants, issued and delivered by the Warrant Agent in accordance with the instructions provided by the Clearing Agency pursuant to Subsection 3.4(j).
(j) Fully registered Warrant Certificates issued pursuant to Subsection 3.4(i), shall be registered in such names and in such denominations as the Clearing Agency shall instruct the Warrant Agent, provided that the aggregate number of Series B Warrants represented by such Warrant Certificates shall be equal to the aggregate number of 

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the Uncertificated Warrants exchanged. Neither the Company nor the Warrant Agent shall be liable for any delay in delivery of such instructions and may conclusively act and rely on, and shall be protected in acting and relying on, such instructions. Upon exchange of an Uncertificated Warrant for one or more Warrant Certificates in definitive form, such Uncertificated Warrant shall be cancelled by the Warrant Agent.
(k) If definitive Warrant Certificates have been issued and thereafter the Company advises the Warrant Agent of the availability of book-based entry or other electronic issuance with a Clearing Agency in regard to such Series B Warrants, the Warrant Agent and the Company may agree to allow for the re-registration of such definitive Warrant Certificates under such procedure. Upon surrender by any such Warrantholder of its definitive Warrant accompanied by instructions for re-registration of the Warrant under such procedure, such Warrant shall thereafter be re-registered under such procedure and be subject to the foregoing provisions of this Section 3.4 and Subsection 3.4(m), mutatis mutandis. The Company shall pay all expenses incurred by the Warrant Agent and the reasonable fees of the Warrant Agent associated with any termination of the use of such procedure and of any such re-registration of the definitive Series B Warrants under such procedure.
(l) Notwithstanding anything herein or in the terms of the Series B Warrants to the contrary, neither the Company nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for (i) the records maintained by the Clearing Agency or Participants relating to the Series B Warrants or the accounts maintained by them, (ii) maintaining, supervising or reviewing any records relating to such Series B Warrants, (iii) any advice or representation made or given by the Clearing Agency or Participants with respect to the rules and regulations of the Clearing Agency or the Participants, or (iv) any action to be taken by the Clearing Agency or the Participants or any failure by the Clearing Agency or the Participants to take any action.
(m) The provisions of Section 6.1 with respect to the transfer of Series B Warrants are subject to the provisions of this Section 3.4.
ARTICLE IV.
TERMS AND EXERCISE OF WARRANTS
Section 4.1 Exercise Period and Expiration. Subject to the provisions of the Series B Warrants and this Agreement and regardless of the Issue Date. Series B Warrants may be exercised by the Holder thereof at any time and from time to time during the period commencing on the first day of the thirty seventh month after the Issue Date and terminating at 5:00 p.m., Eastern time, on the Expiration Date. Any Series B Warrant not exercised prior to 5:00 p.m., Eastern time, on the Expiration Date, shall become permanently and irrevocably null and void at 5:00 p.m., Eastern time, on the Expiration Date, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at such time. 
Section 4.2 Exercise of Warrants.
(a) Exercise of Certificated Warrants. The holder of any Certificated Warrant may at any time and from time to time during the period commencing on the first day of the thirty seventh month after the Issue Date and terminating at 5:00 p.m., Eastern time, on the Expiration Date, exercise the right thereby conferred, to be issued Warrant Shares by surrendering to the Warrant Agent at its office in Toronto, Ontario, or at the Co-Agent’s office in Providence, Rhode Island or to any other person or at any other place designated by the Company with the approval of the Warrant Agent, during normal business hours on a Business Day, the Warrant Certificate evidencing such Series B Warrant and a duly completed and executed notice of exercise substantially in the form set out in such Warrant Certificate, together with a certified cheque, bank draft or money order in lawful money of the United States, payable to or to the order of the Company in an amount equal to the Exercise Price (as the same may be hereafter adjusted pursuant to Article V) multiplied by the number of Warrant Shares subscribed for.

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Any notice of exercise referred to in this section, shall be signed by the Warrantholder, or its executors or administrators or other legal representatives or an attorney of the Warrantholder, duly appointed by an instrument in writing satisfactory to the Warrant Agent.
(b) Exercise of Uncertificated Warrants. The beneficial owner of Uncertificated Warrants who desires to exercise Series B Warrants must do so by causing a Participant to deliver to the Clearing Agency on behalf of the entitlement holder, notice of the owner’s intention to exercise Series B Warrants in a manner acceptable to the Clearing Agency. Forthwith, upon receipt by the Clearing Agency of such notice, as well as payment for the Exercise Price multiplied by the number of Warrant Shares subscribed for, the Clearing Agency shall deliver to the Warrant Agent confirmation of its intention to exercise Series B Warrants (“Confirmation”) in a manner acceptable to the Warrant Agent, including by electronic means through the book entry registration system.
Payment representing the Exercise Price multiplied by the number of Warrant Shares subscribed for must be provided to the appropriate office of the Participant in a manner acceptable to it. A notice in the form acceptable to the Participant and payment for such beneficial holder should be provided to the Participant sufficiently in advance so as to permit the Participant to deliver notice and payment to the Clearing Agency and for the Clearing Agency in turn to deliver notice and payment to the Warrant Agent prior to the Expiration Date. The Clearing Agency will initiate the exercise by way of Confirmation and forward the Exercise Price multiplied by the number of Warrant Shares subscribed for electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to the Clearing Agent through the book entry registration system the Common Shares to which the exercising Warrantholder is entitled pursuant to the exercise. Any expense associated with the exercise process will be for the account of the entitlement holder exercising the Series B Warrants and/ or the Participant exercising the Series B Warrants on its behalf.
By causing a Participant to deliver notice to the Clearing Agency, a Warrantholder shall be deemed to have irrevocably surrendered his or her Series B Warrants so exercised and appointed such Participant to act as his or her exclusive settlement agent with respect to the exercise and the receipt of Warrant Shares in connection with the obligations arising from such exercise.
Any notice which the Clearing Agency determines to be incomplete, not in proper form or not duly executed shall for all purposes be void and of no effect and the exercise to which it relates shall be considered for all purposes not to have been exercised thereby. A failure by a Participant to exercise or to give effect to the settlement thereof in accordance with the Warrantholder’s instructions will not give rise to any obligations or liability on the part of the Company or Warrant Agent to the Participant or the Warrantholder.
(c) Any exercise referred to in this section, shall require that the entire Exercise Price for Warrant Shares subscribed must be paid at the time of subscription and such Exercise Price and original exercise notice executed by the Registered Holder the Confirmation from the Clearing Agency must be received by the Warrant Agent prior to the Expiration Date.
(d) Notwithstanding the foregoing in this Section 4.2, Series B Warrants may only be exercised pursuant to this Section 4.2 by or on behalf of a Registered Holder, except the Clearing Agency, as applicable, who makes the certifications set forth on the exercise notice.
Section 4.3 Intentionally Deleted. 
Section 4.4 Effect of Exercise.
(a) Effect of Exercise. Upon the exercise of any Certificated Warrants or Uncertificated Warrants in accordance with Section 4.2 hereof, the Warrant Shares thereby issuable shall be deemed to have been issued, and the person or persons to whom such Warrant Shares are to be issued shall be deemed to have become the holder or holders of record thereof, on the Business Day on which such Series B Warrant is validly exercised (or deemed to be validly exercised in accordance with Article IV hereof), unless the transfer registers for the Warrant Shares are closed on 

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that date, in which case such Warrant Shares shall be deemed to have been issued and such person or persons shall be deemed to have become the holder or holders of record thereof on the date on which such transfer registers are reopened, but such Warrant Shares shall be issued on the basis of the number of Warrant Shares to which such person or persons were entitled on such exercise date.
(b) Exercise of Certificated Warrants. As soon as reasonably practicable, and in any event not later than five (5) Business Days after the surrender to the Warrant Agent of Warrant Certificates and instructions received in good order in accordance with Section 4.2, the Warrant Agent shall mail by way of first class insured mail to the person or persons in whose name or names the Warrant Shares thereby issued have been issued, at his, her, its or their respective addresses, or, if so specified, cause to be delivered to such person or persons at the place where the Warrant Certificates evidencing such Series B Warrants were surrendered, certificates representing the Warrant Shares so issued.
(c) Exercise of Uncertificated Warrants. As soon as reasonably practicable, and in any event not later than five (5) Business Days after the Clearing Agency has initiated the exercise by way of Confirmation and has delivered the Exercise Price multiplied by the number of Warrant Shares subscribed for electronically to the Warrant Agent, the Warrant Agent will execute the exercise by issuing to the Clearing Agent through the book entry registration system the Common Shares to which the exercising Warrantholder is entitled pursuant to the exercise, the Warrant Agent shall cause the share position of the Clearing Agency on the register of Common Shares to be increased by the number of Warrant Shares issued in connection with the exercise of such Uncertificated Warrants.
(d) Issue to Other than Holder. If any Warrant Shares issuable pursuant to any Series B Warrants are to be issued to a person or persons other than the Warrantholder, the Warrantholder must pay to the Company or to the Warrant Agent on its behalf an amount equal to all exigible transfer taxes or other government charges, and neither the Company nor the Warrant Agent will be required to issue or deliver any such Warrant Shares unless or until such amount has been so paid or the Warrantholder has established to the satisfaction of the Company that such taxes and charges have been paid or that no such taxes or charges are owing.
Section 4.5 Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of Series B Warrants such number of Warrant Shares as may be from time to time issuable upon exercise in full of the Series B Warrants, such that the Company may validly and legally issue all Warrant Shares in compliance with this Section. All Warrant Shares shall be duly authorized, and when issued upon such exercise, shall be validly issued, fully paid and non-assessable. If at any time prior to the Expiration Date the number and kind of authorized but unissued shares of the Company’s capital stock shall not be sufficient to permit exercise in full of the Series B Warrants, the Company will promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares to such number of shares as shall be sufficient for such purposes. The Company agrees that its issuance of Series B Warrants shall constitute full authority to its officers who are charged with the issuance of Warrant Shares to issue Common Shares upon the exercise of the Series B Warrants. Without limiting the generality of the foregoing, the Company will not increase the stated or par value per share, if any, of the Common Shares above the Exercise Price in effect immediately prior to such increase in stated or par value. 
Section 4.6 Listing. Prior to the issuance of any Warrant Shares upon exercise of the Series B Warrants, the Company shall use reasonable best efforts to secure the listing of such Common Shares or other Warrant Shares upon each national securities exchange, stock market or automated quotation system, if any, upon which Common Shares (or securities of the same class as such other Warrant Shares, if applicable) are then listed (subject to official notice of issuance upon exercise of the Series B Warrants) and shall use reasonable best efforts to maintain, so long as any other Common Shares (or, as applicable, other securities) shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of the Series B Warrants. 

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Section 4.7 Compliance with Law. 
(a) If any Warrant Shares are required under any federal, provincial or state law or applicable governing rule or regulation of any national securities exchange, to be registered with or approved by any governmental authority or listed on any such national securities exchange before such shares may be issued upon exercise, the Company will use its reasonable best efforts to cause such shares to be duly registered or approved by such governmental authority or listed on the relevant national securities exchange, as the case may be. 
(b) The Series B Warrants shall not be exercisable and the Company shall not be obligated to issue Warrant Shares unless, at the time a holder seeks to exercise the Series B Warrants, a prospectus relating to Warrant Shares is current and a registration statement for the Warrant Shares is effective or qualified or the issuance of Warrant Shares is deemed to be exempt under the securities laws of the jurisdiction of residence of the holder of the Series B Warrants.
Section 4.8 Partial Exercise of Warrants; Fractions.
(a) Partial Exercise. The holder of any Series B Warrants may exercise his or her right to acquire a number of whole Common Shares less than the aggregate number which the holder is entitled to acquire. In the event of any exercise of a number of Series B Warrants less than the number which the holder is entitled to exercise, the holder of Series B Warrants upon such exercise shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate evidence of Series B Warrants, in respect of the balance of the Series B Warrants held by such holder and which were not then exercised.
(b) Fractions. The Company shall not be required to issue fractional Warrant Shares in satisfaction of its obligations hereunder and no cash or other consideration will be paid in lieu of fractional Warrant Shares. Any subscription for fractional Warrant Shares will be deemed to be a subscription for the next lowest whole number of Warrant Shares.

ARTICLE V.
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be subject to adjustment from time to time upon the happening of certain events as provided in this Article V. 
Section 5.1 Adjustment of Exercise Price and Warrant Shares. The Exercise Price and number of Warrant Shares purchasable under the Series B Warrants are subject to adjustment from time to time as set forth in this Section 5.1. 
(a) In case the Company shall at any time: 
	
			
	 
	(i)
	subdivide the outstanding Common Shares into a larger number of shares other than pursuant to Section 5.1 (b), the Exercise Price in effect immediately prior to such subdivision shall be proportionately decreased, effective from and after the record date of such subdivision; and 

Upon any adjustment in the Exercise Price pursuant to this Section 5.1(a), the holder of any Series B Warrant shall thereafter be entitled to purchase, at the adjusted Exercise Price, the number of Warrant Shares, rounded down to the nearest whole share, obtained by multiplying the number of Warrant Shares purchasable hereunder immediately prior to such adjustment by the Exercise Price in effect immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment. 
	
			
	 
	(ii)
	combine the outstanding Common Shares into a smaller number of shares by a reverse split or otherwise, the Exercise Price in effect immediately prior to such combination shall be proportionately increased, effective from and after the record date of such combination.

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(b) In case the Company shall issue additional Common Shares as a special dividend on the Common Shares (a “Special Dividend”), from and after the day which is the record date for the determination of shareholders entitled to such Special Dividend, the holder of any Series B Warrant shall, until a further adjustment, be entitled to purchase the number of Warrant Shares, rounded down to the nearest whole share, obtained by multiplying the number of Warrant Shares purchasable hereunder immediately prior to said record date by a fraction, the numerator of which is the total number of Common Shares outstanding after the issuance of the Special Dividend, calculated on a fully diluted basis assuming the conversion of all outstanding convertible securities and the exercise of all outstanding options, warrants or other rights (including those with respect to convertible securities), and the denominator of which is the number of Common Shares outstanding immediately prior to said record date, calculated on a fully diluted basis assuming the conversion of all outstanding convertible securities and the exercise of all outstanding options, warrants, or other rights (including those with respect to convertible securities). Upon each adjustment pursuant to this Section 5.1(b), the Exercise Price in effect immediately prior to such adjustment shall be reduced to an amount determined by dividing the product obtained by multiplying such Exercise Price by the number of Warrant Shares purchasable hereunder immediately prior to such adjustment by the number of Warrant Shares purchasable hereunder immediately following such adjustment. 
Section 5.2 Reorganization or Reclassification. If at any time while there are Series B Warrants outstanding there shall be any reorganization or reclassification of the Common Shares of the Company (other than a subdivision or combination of shares provided for in Section 5.1, or a Fundamental Transaction (as defined below)), the Holder shall thereafter be entitled to receive, upon exercise of its Series B Warrant(s) prior to the Expiration Date and upon payment of the Exercise Price, the number of shares of stock or other securities or property of the Company resulting from such reorganization or reclassification, as the case may be, to which a holder of the Common Shares, deliverable upon the exercise of a Series B Warrant, would have been entitled upon such reorganization or reclassification if such Series B Warrant had been exercised immediately prior to such reorganization or reclassification, and in any such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company) shall be made in the application of the provisions with respect to the rights and interest thereafter of the Holder to the end that the provisions set forth herein (including the adjustment of the Exercise Price and the number of shares issuable upon the exercise of a Series B Warrant) shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon exercise. The provisions of this Section 5.2 shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers, other dispositions or similar transactions. 
Section 5.3 Form of Warrant After Adjustments. The form of the Warrant Certificate need not be changed because of any adjustments in the Exercise Price or the number or kind of the Warrant Shares, and Series B Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the Series B Warrants, as initially issued. The Company, however, may at any time in its sole discretion make any change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Warrant Certificate (including the rights, duties or obligations of the Warrant Agent), and any Warrant Certificate thereafter issued, whether in exchange or substitution for an outstanding Warrant Certificate, may be in the form so changed. 
Section 5.4 Fundamental Transactions. If any (i) capital reorganization, reclassification of the Company Securities, consolidation, amalgamation or merger of the Company with another entity in which the issued and outstanding stock of the Company (excluding treasury shares) immediately prior to such transaction represents less than 50% of the voting power of the surviving entity immediately after such transaction, (ii) sale, transfer or other disposition of all or substantially all of the Company’s assets to another entity, or (iii) similar transaction requiring shareholder approval shall be effected (any such transaction being hereinafter referred to as a “Fundamental Transaction”), then the holders shall be permitted to exercise any Series B Warrants with the provisions of Section 4.2 immediately prior to the consummation of such Fundamental Transaction. If a holder does not exercise a Series B Warrant prior to the consummation of a Fundamental Transaction, then such Series B Warrant shall not at any 

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time be, or become, exercisable and shall expire (and become null and void) automatically with no further action required on behalf of the Company upon consummation of the Fundamental Transaction. 
Section 5.5 Notice to Warrant Holders. 
(a) Notice of Adjustment. Whenever the number and/or kind of Warrant Shares or the Exercise Price is adjusted as herein provided, the Company shall (i) prepare and deliver, or cause to be prepared and delivered, forthwith to the Warrant Agent a statement setting forth the adjusted number and/or kind of Common Shares purchasable upon the exercise of the Series B Warrants and the Exercise Price of such Common Shares after such adjustment, the facts requiring such adjustment and the computation by which adjustment was made, and (ii) cause the Warrant Agent to give written notice to each Holder in the manner provided in Section 9.2 below, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event. 
(b) Notice of Fundamental Transactions. In the event that the Company shall propose to effect a Fundamental Transaction, then the Company shall send to the Warrant Agent a notice and the shall cause the Warrant Agent within five days after receipt by the Warrant Agent to give written notice (in such form as shall be furnished to the Warrant Agent by the Company) to each Holder in the manner provided in Section 9.2 of such Fundamental Transaction. Such notice shall specify (i) the record date, if any, for the Fundamental Transaction, (ii) the date such Fundamental Transaction is expected to take place, and (iii) the effect, if any, of such action on the Common Shares, if any. Such notice shall be given to Holders at least 15 days prior to the date of the consummation of the Fundamental Transaction, but in no event shall the Company be required to give notice prior to public announcement if the Company has in good faith determined that the matters relating to such notice constitute material, nonpublic information relating to the Company or its Subsidiaries. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event. 
Section 5.6 No Adjustment. No adjustment in the number of Warrant Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least one percent in the number of Warrant Shares purchasable upon the exercise of each Series B Warrant; provided, however, that any adjustments that by reason of this Section 5.6 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest cent and to the nearest one-hundredth of a Common Share, as the case may be. 
ARTICLE VI. TRANSFER AND EXCHANGE OF WARRANTS AND
WARRANT SHARES
Section 6.1 Registration of Transfers and Exchanges. 
(a) Transfer. No transfer of any Series B Warrant by a Warrantholder will be valid unless entered on the register of transfers referred to in Subsection 3.3(f) hereof upon surrender to the Warrant Agent of the Warrant Certificate evidencing such Series B Warrant, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Warrant Agent executed by the registered holder or his, her or its executors, administrators or other legal representatives or his, her or its or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Warrant Agent, and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent and the Company may prescribe, such transfer will be duly noted on one of such registers of transfers by the Warrant Agent.
(b) Register of Transfers. The transferee of any Series B Warrant pursuant to Subsection 6.1(a) hereof will, after surrender to the Warrant Agent of the Warrant Certificate evidencing such Series B Warrant as required by Subsection 6.1(a) hereof and upon compliance with all other conditions in respect thereof required by this Agreement or by law, be entitled to be entered on the register of holders referred to in Subsection 3.3(f) hereof as the owner of such Series B Warrant free from all equities or rights of set-off or counterclaim between the Company and the 

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transferor or any previous holder of such Series B Warrant, except in respect of equities of which the Company is required to take notice by statute or by order of a court of competent jurisdiction.
(c) Refusal of Registration. The Company will be entitled, and may direct the Warrant Agent, to refuse to recognize any transfer, or enter the name of any transferee, of any Series B Warrant on the registers referred to in Subsection 3.3(f) hereof, if such transfer would constitute a violation of the securities laws of any jurisdiction or the rules, regulations or policies of any regulatory authority having jurisdiction. The Warrant Agent is entitled to assume compliance with all applicable securities legislation unless otherwise notified in writing by the Company. No duty will rest with the Warrant Agent to determine compliance of the transferee or transferor of any Series B Warrant with applicable securities legislation. The Warrant Agent may, when deemed necessary, acting reasonably, contact the Company or counsel to confirm the validity of any transfer of Series B Warrants prior to completing same.
(d) No Notice of Trusts. Subject to applicable law, neither the Company nor the Warrant Agent will be bound to take notice of or see to the execution of any trust, whether express, implied or constructive, in respect of any Series B Warrant, and may transfer any Series B Warrant on the direction of the person registered as the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.
(e) Inspection. The register of Warrantholders shall be available for inspection by the Company and or any Warrantholder during the Warrant Agent’s regular business hours on a Business Day and upon payment to the Warrant Agent of its reasonable fees. Any Warrantholder exercising such right of inspection shall first provide an affidavit in form satisfactory to the Company and the Warrant Agent stating the name and address of the Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders or to influence the voting of Warrantholders at any meeting of Warrantholders.
(f) Restrictions on Transfer. No Series B Warrant or Warrant Shares shall be sold, exchanged or otherwise transferred in violation of Applicable Securities Laws. 

Section 6.2 Exchange of Warrants Certificates. 
(a) Exchange. One or more Warrant Certificates may, on compliance with the reasonable requirements of the Warrant Agent, be exchanged for one or more Warrant Certificates of different denominations evidencing in the aggregate an equal number of Series B Warrants as the Warrant Certificate or Warrant Certificates being exchanged. 
(b) Place of Exchange. Warrant Certificates may be exchanged only at the Warrant Agent’s office in Toronto, Ontario or at the Co-Agent’s office in Providence, Rhode Island or at any other place designated by the Company with the approval of the Warrant Agent.
(c) Cancellation. Any Warrant Certificate tendered for exchange pursuant to this Section 6.2 shall be surrendered to the Warrant Agent and cancelled.
(d) Authentication of Exchanged Warrant Certificates. The Warrant Agent shall Authenticate all Warrant Certificates necessary to carry out exchanges pursuant to this Section 6.2.
(e) Charges. The Warrant Agent may charge Warrantholders requesting an exchange of Warrant Certificates a reasonable sum for each Warrant Certificate issued; and payment of such charges and reimbursement of the Warrant Agent or the Company for any and all taxes or governmental or other charges required to be paid shall be made by the party requesting such exchange as a condition precedent to such exchange.
ARTICLE VII.
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS
Section 7.1 No Rights or Liability as Shareholder; Notice to Registered Holders. Nothing contained in the Series B Warrants shall be construed as conferring upon the Holder or his, her or its transferees the right to vote 

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or to receive dividends or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Company or of any other matter, or any rights whatsoever as shareholders of the Company. No provision thereof and no mere enumeration therein of the rights or privileges of the Holder shall give rise to any liability of such holder for the Exercise Price hereunder or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 
Section 7.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates. If any Warrant Certificate is lost, stolen, mutilated or destroyed, the Company shall issue, and the Warrant Agent shall countersign and deliver, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent number of Series B Warrants, but only upon receipt of evidence and an affidavit reasonably satisfactory to the Company and the Warrant Agent of the loss, theft or destruction of such Warrant Certificate, and an indemnity of the Company and Warrant Agent for any losses in connection therewith, if requested by either the Company or the Warrant Agent, also satisfactory to them. Applicants for such substitute Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe and as required by applicable law.  
Section 7.3 Restrictive Legends. Any legends which are stamped or imprinted on certificates of Common Shares shall also be stamped or imprinted on any stock certificate for Warrant Shares issued upon the exercise of any Series B Warrant and or stock certificate issued upon the direct or indirect transfer of any such Warrant Shares. 
Section 7.4 Cancellation of Warrants. If the Company shall purchase or otherwise acquire Series B Warrants, the Warrant Certificates and any Uncertificated Warrants representing such Series B Warrants shall thereupon be delivered to the Warrant Agent, if applicable, and be cancelled by it and retired. The Warrant Agent shall cancel all Warrant Certificates surrendered for exchange, substitution, transfer or exercise in whole or in part. Such cancelled Warrant Certificates shall thereafter be disposed of in a manner satisfactory to the Company provided in writing to the Warrant Agent. 
Section 7.5 Mutilated or Missing Warrant Certificates. If any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue, and the Warrant Agent shall countersign and deliver, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent number of Series B Warrants, but only upon receipt of evidence reasonably satisfactory to the Company and the Warrant Agent of the loss, theft or destruction of such Warrant Certificate and an affidavit or the posting of an indemnity or bond, if requested by either the Company or the Warrant Agent, also satisfactory to them. Applicants for such substitute Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe. 
Section 7.6 Right to Convene Meetings.
(a) Convening of Meeting. The Warrant Agent at any time and from time to time will convene a meeting of the Warrantholders upon receipt of a written request of the Company, and on being funded and indemnified to its reasonable satisfaction by the Company, against the costs which it may incur in connection with calling and holding such meeting.
(b) Failure to Convene. If the Warrant Agent fails, within fifteen (15) Business Days after receipt of such written request of the Company, funding and indemnification, to give notice convening a meeting, the Company may convene such meeting.
(c) Location of Meeting. Every such meeting shall be held in the City of Toronto, Ontario or such other location as is approved or determined by the Warrant Agent and the Company.

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(d) Notice. At least twenty-one (21) Business Days’ prior written notice of any meeting must be given to the Warrantholders and to the Warrant Agent.
(e) Contents. The notice of the meeting must state the time, date and location of the meeting and must state briefly the general nature of the business to be transacted thereat, but it shall not be necessary for the notice to set out the terms of any resolution to be proposed or any of the provisions of this Section 7.6.
(f) Chairman. Some person (who need not be a Warrantholder) designated in writing by the Warrant Agent shall be chairman of the meeting or, if no person is so designated or the person so designated is not present within 30 minutes after the time fixed for the holding of the meeting, the Warrantholders present in person or by proxy may choose some person present to be chairman.
(g) Quorum. Subject to the provisions of Section 7.6(s) hereof, at any meeting of Warrantholders a quorum shall consist of Warrantholders present either in person or by proxy at the commencement of the meeting holding in the aggregate not less than 10% of the total number of Series B Warrants then outstanding.
(h) No Quorum. If a quorum of Warrantholders is not present within 30 minutes after the time fixed for holding a meeting, the meeting, subject to Section 7.6(s) hereof, shall be adjourned to the date that is the fifth Business Day following the initial meeting date and shall be at the same time and location and no notice of the adjournment need be given.
(i) Adjourned Meeting. At the adjourned meeting, two Warrantholders present in person or by proxy shall form a quorum and may transact any business for which the meeting was originally convened notwithstanding the number of Series B Warrants that they hold.
(j) Power to Adjourn. The chairman of a meeting at which a quorum of the Warrantholders is present may, with the consent of the meeting, adjourn the meeting, and no notice of such adjournment need be given except as the meeting prescribes.
(k) Show of Hands. Every question submitted to a meeting, other than an Extraordinary Resolution (as defined below), shall be decided in the first place by a majority of the votes given on a show of hands and, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact. In the case of an equality of votes on a show of hands, the chairman shall not have a casting vote.
(l) Extraordinary Resolution. On every Extraordinary Resolution (as defined below), and on every other question submitted to a meeting on which a poll is directed by the chairman or requested by one or more Warrantholders acting in person or by proxy, a poll shall be taken in such manner as the chairman directs.
(m) Poll. Questions other than those required to be determined by Extraordinary Resolution (as defined below) shall be decided by a majority of the votes cast on the poll.
(n) Voting. On a show of hands each person present and entitled to vote, whether as a Warrantholder or as proxy for one or more absent Warrantholders, or both, shall have one vote, and on a poll each Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote, in respect of each Series B Warrant held by such holder. A proxy need not be a Warrantholder. The chairman of any meeting shall be entitled to vote in respect of any Series B Warrants and proxies held by him or her.
(o) Ability to Make Regulations. The Warrant Agent, or the Company with the approval of the Warrant Agent, may from time to time make or vary such regulations not contrary to the provisions of this Agreement, as it thinks fit:
(i) for the form of instrument appointing a proxy, the manner in which it must be executed and verification of the authority of a person who executes it on behalf of a Warrantholder;

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(ii) governing the locations at which and the times by which voting certificates or instruments appointing proxies must be deposited;
(iii) generally for the calling of meetings of Warrantholders and the conduct of business thereat; and
(iv) for the deposit of instruments appointing proxies at some approved location or locations other than the location at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be sent by mail, facsimile or other means of prepaid, transmitted or recorded communication before the meeting to the Company or to the Warrant Agent at the location where the meeting is to be held and for voting pursuant to instruments appointing proxies so deposited as though the instruments themselves were produced at the meeting.
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted.
(p) Recognition. Except as such regulations provide, the only persons who shall be recognized at a meeting as the holders of any Series B Warrants, or as entitled to vote or, subject to Subsection 7.6(q) hereof, to be present at the meeting in respect thereof, shall be the registered holders of such Series B Warrants or persons holding proxies on their behalf.
(q) The Company and Warrant Agent may be Represented. The Company and the Warrant Agent by their respective employees, officers or directors, and the counsel of the Company and the Warrant Agent, may attend any meeting of Warrantholders, but shall have no vote as such.
(r) Powers Exercisable by Extraordinary Resolution. Subject to any required stock exchange approval, in addition to all other powers conferred on them by the other provisions of this Agreement or by law, the Warrantholders at a meeting shall have the power, exercisable from time to time by Extraordinary Resolution (as defined below):
(i) to approve or sanction any amendment, modification, abrogation, alteration, compromise or arrangement of any right of the Warrantholders or, with the reasonable consent of the Warrant Agent, of the Warrant Agent in its capacity as Warrant Agent hereunder or on behalf of the Warrantholders against the Company, whether such right arises under this Agreement or otherwise, which may be agreed to by the Company, and to authorize the Warrant Agent to concur in and execute any agreement supplemental hereto in connection therewith;
(ii) to amend, alter or repeal any Extraordinary Resolution (as defined below) previously passed;
(iii) subject to arrangements as to financing and indemnity satisfactory to the Warrant Agent, to direct or authorize the Warrant Agent to enforce any obligation of the Company under this Agreement or to enforce any right of the Warrantholders in any manner specified in the Extraordinary Resolution (as defined below);
(iv) to direct or authorize the Warrant Agent to refrain from enforcing any obligation or right referred to in clause (c) of this Section 7.6;
(v) to waive and direct the Warrant Agent to waive any default by the Company in complying with any provision of this Agreement, either unconditionally or on any condition specified in the Extraordinary Resolution (as defined below);
(vi) to appoint a committee with power and authority to exercise, and to direct the Warrant Agent to exercise, on behalf of the Warrantholders, such of the powers of the Warrantholders as are exercisable by Extraordinary Resolution (as defined below);
(vii) to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Company for the enforcement of any obligation of the Company under this Agreement or to enforce any right of the Warrantholders; 

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(viii) to direct any Warrantholder who, as such, has brought any suit, action or proceeding, to stay or discontinue or otherwise deal therewith on payment of the costs, charges and expenses reasonably and properly incurred by him, her or it in connection therewith;
(ix) to approve any change in or omission from the provisions contained in the Warrant Certificates and this Agreement or any ancillary or supplemental instrument which may be agreed to by the Company, and to authorize the Warrant Agent to concur in and execute any ancillary or supplemental agreement embodying the change or omission;
(x) to approve any compromise or arrangement made by the Company with all or substantially all of its creditors or any class or classes of creditors, whether secured or otherwise, and with all or substantially all of the holders of any shares or other securities of the Company; and 
(xi) with the consent of the Company, not to be unreasonably withheld, from time to time and at any time to remove the Warrant Agent and appoint a successor Warrant Agent.
(s) Meaning of “Extraordinary Resolution” . The expression “Extraordinary Resolution” when used in this Agreement means, subject to the provisions of this Section 7.6 and of Subsections 7.6(aa) and 7.6(bb) hereof, a motion proposed at a meeting of Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article VII at which there are present in person or by proxy Warrantholders holding in the aggregate more than 25% of the total number of Series B Warrants then outstanding and passed by the affirmative votes of Warrantholders who hold in the aggregate not less than 66 2/3% of the total number of Series B Warrants represented at the meeting and voted on the motion.
(t) Quorum for “Extraordinary Resolution”. If, at a meeting called for the purpose of passing an Extraordinary Resolution, the quorum required by Subsection 7.6(s) hereof is not present within 30 minutes after the time appointed for the meeting, the meeting shall stand adjourned to such day, being not less than five (5) Business Days or more than ten (10) Business Days later, and to such location and time, as is appointed by the chairman.
(u) Notice. Not less than three (3) Business Days’ notice must be given to the Warrantholders of the time, date and location of such adjourned meeting.
(v) Form of Notice. The notice must state that at the adjourned meeting two Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars.
(w) Quorum at Adjourned Meeting. At the adjourned meeting, two Warrantholders present in person or by proxy shall form a quorum and may transact any business for which the meeting was originally convened, and a motion proposed at such adjourned meeting and passed by the requisite vote as provided in Subsection 7.6(s) hereof shall be an Extraordinary Resolution within the meaning of this Agreement.
(x) Poll. Votes on an Extraordinary Resolution must always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary.
(y) Powers Cumulative. Any one or more of the powers, and any combination of the powers, in this Agreement stated to be exercisable by the Warrantholders by Extraordinary Resolution or otherwise, may be exercised from time to time, and the exercise of any one or more of such powers or any combination of such powers from time to time shall not prevent the Warrantholders from exercising such power or powers or combination of powers thereafter from time to time.
(z) Minutes. Minutes of all resolutions passed and proceedings taken at every meeting of the Warrantholders shall be made and duly entered in books from time to time provided for such purpose by the Company, and any such minutes, if signed by the chairman of the meeting at which such resolutions were passed or such proceedings were taken, shall be prima facie evidence of the matters therein stated, and, until the contrary is proved, every such 

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meeting in respect of the proceedings of which minutes have been so made, entered and signed shall be deemed to have been duly convened and held, and all resolutions passed and proceedings taken thereat to have been duly passed and taken.
(aa) Instruments in Writing. Any action that may be taken and any power that may be exercised by Warrantholders at a meeting held as provided in this Article VII may also be taken and exercised by Warrantholders who hold in the aggregate not less than 50% of the total number of Series B Warrants at the time outstanding or in the case of an Extraordinary Resolution, Warrantholders who hold in the aggregate not less than 66 2/3% of the total number of Series B Warrants at the time outstanding, by their signing, each in person or by attorney duly appointed in writing, an instrument in writing in one or more counterparts, and the expression “Extraordinary Resolution” when used in this Agreement includes a resolution embodied in an instrument so signed.
(bb) Binding Effect of Resolutions. Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article VII at a meeting of Warrantholders shall be binding on all Warrantholders, whether present at or absent from the meeting and whether voting for or against the resolution or abstaining, and every instrument in writing signed by Warrantholders in accordance with Subsection 7.6(aa) hereof shall be binding on all Warrantholders, whether signatories thereto or not, and every Warrantholder and the Warrant Agent (subject to the provisions for its indemnity herein contained) shall be bound to give effect accordingly to every such resolution and instrument in writing.
(cc) Holdings by the Company and Subsidiaries Disregarded. In determining whether Warrantholders holding the required total number of Series B Warrants are present in person or by proxy for the purpose of constituting a quorum, or have voted or consented to a resolution, Extraordinary Resolution, consent, waiver, Warrantholders’ Request or other action under this Agreement, a Series B Warrant held by the Company or by a Subsidiary of the Company shall be deemed to be not outstanding. The Company shall provide the Warrant Agent with a Certificate of the Company providing details of any Series B Warrants held by the Company or by a Subsidiary of the Company upon the written request of the Warrant Agent.
ARTICLE VIII.
CONCERNING THE WARRANT AGENT AND OTHER MATTERS
Section 8.1 Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of the Warrant Shares upon the exercise of Series B Warrants, but any taxes or charges in connection with the issuance of Series B Warrants or Warrant Shares in any name other than that of the Holder of the Series B Warrants shall be paid by such Holder; and in any such case, the Company shall not be required to issue or deliver any Series B Warrants or Warrant Shares until such taxes or charges shall have been paid or it is established to the Company’s satisfaction that no tax or charge is due. 
Section 8.2 Resignation, Consolidation or Merger of Warrant Agent. 
(a) Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of sixty (60) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the Registered Holder of a Series B Warrant (who shall, with such notice, submit his Series B Warrant for inspection by the Company), then the Warrant Agent shall appoint a successor Warrant Agent or shall petition a court to approve a successor Warrant Agent at the Company’s cost. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, 

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the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, rights, immunities, duties and obligations of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent, the Company shall make, execute, acknowledge and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties and obligations. 
(b) Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall (i) give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Shares not later than the effective date of any such appointment, and (ii) cause written notice thereof to be delivered to each Registered Holder at such holder’s address appearing on the Warrant Register. Failure to give any notice provided for in this Section 8.2(b) or any defect therein shall not affect the legality or validity of the removal of the Warrant Agent or the appointment of a successor Warrant Agent, as the case may be. 
(c) Merger, Consolidation or Name Change of Warrant Agent. 

	
			
	 
	(i)
	Any corporation into which the Warrant Agent may be merged or with which it may be converted, consolidated or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement, without any further act or deed, if such person would be eligible for appointment as a successor Warrant Agent under the provisions of Section 8.2(a). If any of the Warrant Certificates have been countersigned but not delivered at the time such successor to the Warrant Agent succeeds under this Agreement, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent; and if at that time any of the Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement. 

Section 8.3 Fees and Expenses of Warrant Agent. 
	
			
	 
	(ii)
	If at any time the name of the Warrant Agent is changed and at such time any of the Warrant Certificates have been countersigned but not delivered, the Warrant Agent whose name has changed may adopt the countersignature under its prior name; and if at that time any of the Warrant Certificates have not been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement.

	 

(a) Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder. Any amount owing under this Section 8.3 and unpaid thirty (30) days after request for such payment will bear interest from the expiration of such thirty (30) days at a rate per annum equal to the then current rate charged by the Warrant Agent. 
(b) Further Assurances. The Company agrees to perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement. 
Section 8.4 Liability of Warrant Agent. 
(a) Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by 

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the Chief Executive Officer or Executive Vice President and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement. 
(b) Indemnity. The Company covenants and agrees to indemnify and to hold the Warrant Agent and its officers, directors, employees, agents, successors and assigns harmless against any costs, expenses (including reasonable fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions as Warrant Agent pursuant hereto; provided, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses, losses and damages incurred or suffered by the Warrant Agent and its officers, directors, employees, agents, successors and assigns as a result of, or arising out of, its gross negligence, bad faith, or willful misconduct.  Notwithstanding the foregoing, the Company shall not be responsible for any settlement made without its prior written consent. No provision in this Agreement shall be construed to relieve the Warrant Agent from liability for its own gross negligence, willful misconduct or bad faith. 
(c) Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Series B Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Series B Warrant; nor shall it be responsible to make any adjustments required under the provisions of Article V hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Warrant Shares to be issued pursuant to this Agreement or any Series B Warrant or as to whether any Warrant Shares will, when issued, be valid and fully paid and non-assessable. 
(d) Experts. The Warrant Agent may employ such counsel, accountants, engineers, appraisers, other experts, agents, agencies and advisors as it may reasonably require for the purpose of discharging its duties under this Agreement, and the Warrant Agent may act and shall be protected in acting in good faith on the opinion or advice or on information obtained from any such parties and shall not be responsible for any misconduct on the part of any of them.  The reasonable costs of such services shall be added to and be part of the Warrant Agent’s fee hereunder.
(e) Funding. No provision of this Agreement shall require the Warrant Agent to expend or risk its own funds or otherwise incur financial liability in the performance of its duties or the exercise of any of its rights or powers unless indemnified as provided for herein, other than as a result of its own gross negligence or bad faith. 
Section 8.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and, among other things, shall account promptly to the Company with respect to Series B Warrants exercised and concurrently account for and pay to the Company all moneys received by the Warrant Agent for the purchase of Warrant Shares through the exercise of Series B Warrants. 
Section 8.6 Limitation on Liability.  Notwithstanding anything contained herein to the contrary, except in the case of fraud, willful misconduct or gross negligence, the Warrant Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursable expenses.

19

 

ARTICLE IX.
SUPPLEMENTAL WARRANT AGREEMENTS
Section 9.1 Provision for Supplemental Warrant Agreements for Certain Purposes. From time to time the Company (when authorized by action of the directors) and the Warrant Agent may, subject to the provisions of this Agreement, and they shall, when so directed in accordance with the provisions of this Agreement, execute and deliver by their proper officers, agreements or instruments supplemental hereto, which hereafter shall form part hereof, for any one or more or all of the following purposes: 
(a) setting forth any adjustments resulting from the application of the provisions of Article 4; 
(b) adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of counsel, are necessary or advisable in the circumstances, provided that the same are not in the opinion of the Warrant Agent prejudicial to the interests of the Warrantholders; 
(c) giving effect to any extraordinary resolution passed as provided in Section 7.6; 
(d) making such provisions not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining a listing or quotation of the Series B Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Warrant Agent, prejudicial to the interests of the Warrantholders;  
(e) adding to or altering the provisions hereof in respect of the transfer of Series B Warrants, making provision for the exchange of Warrant Certificates, and making any modification in the form of the Warrant Certificates which does not affect the substance thereof; 
(f) modifying any of the provisions of this Agreement, including relieving the Company from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Warrant Agent, such modification or relief in no way prejudices any of the rights of the Warrantholders or of the Warrant Agent, and provided further that the Warrant Agent may in its sole discretion decline to enter into any such supplemental agreement which in its opinion may not afford adequate protection to the Warrant Agent when the same shall become operative; and
(g) for any other purpose not inconsistent with the terms of this Agreement, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Warrant Agent the rights of the Warrant Agent and of the Warrantholders are in no way prejudiced thereby.

ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.1 Binding Effects; Benefits. This Agreement shall inure to the benefit of and shall be binding upon the Company, the Warrant Agent and the Holders and their respective heirs, legal representatives, successors and assigns. Nothing in this Agreement, expressed or implied, is intended to or shall confer on any person other than the Company, the Warrant Agent and the Holders, or their respective heirs, legal representatives, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 

20

 

Section 10.2 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and shall be sent by certified or registered mail, by overnight courier service (return receipt requested, postage prepaid), by personal delivery or by facsimile transmission. Such notice or communication shall be deemed given when sent, in each case as follows: 
if to the Warrant Agent, to: 

Computershare Trust Company of Canada
100 University Avenue
11th Floor, South Tower
Toronto, ON M5J 2Y1
Attention: General Manager, Corporate Trust Department 

if to the Company, to: 

Kingsway Financial Services Inc.
150 Pierce Road, 6th Floor
Itasca, IL  60143
if to Registered Holders, at their addresses as they appear in the Warrant Register. 
Section 10.3 Persons Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the Holders, any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns and the Holders. 
Section 10.4 Examination of this Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent at 100 University Avenue, 11th Floor, South Tower, Toronto, Ontario, M5J 2Y1, for examination by the Holder of any Series B Warrant. Prior to such examination, the Warrant Agent may require any such holder to submit his Series B Warrant for inspection by it. 
Section 10.5 Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.  A signature to this Agreement transmitted electronically shall have the same authority, effect, and enforceability as an original signature. 
Section 10.6 Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation hereof. 

21

 

Section 10.7 Amendments. All and any provisions of this Agreement and the Warrant Certificates may from time to time be amended by agreement between the Company and the Warrant Agent on its own behalf and on behalf of the Warrantholders in any respect which they deem necessary or desirable, without the need for any additional consent by or on behalf of the Warrantholders, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions contained herein or in any manner which the Company and the Warrant Agent on its own behalf or on behalf of the Warrantholders may deem necessary or expedient and which does not in the opinion of the Warrant Agent materially prejudice the rights exercisable by extraordinary resolution of the Warrantholders within the meaning of and in accordance with the procedures set forth in Section 7.6 and any amendments are binding on all Warrantholders from and after the effective date thereof. If this Agreement is so amended, reference herein to this Agreement is, unless the context otherwise requires, construed, as and from the date from which such amendment is expressed to be made, as references to this Agreement as so amended.
Section 10.8 No Inconsistent Agreements; No Impairment. The Company will not, on or after the date hereof, enter into any agreement with respect to its securities which conflicts with the rights granted to the Holders in the Series B Warrants or the provisions hereof. The Company represents and warrants to the Holders that the rights granted hereunder do not in any way conflict with the rights granted to holders of the Company’s securities under any other agreements. The Company will not, by amendment of its organizational documents or through any reorganization, transfer of assets, consolidation, amalgamation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of the Series B Warrants and in the taking of all such action as may be necessary in order to preserve the exercise rights of the Holders against impairment. 
Section 10.9 Integration/Entire Agreement. This Agreement, together with the Series B Warrants, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the Company, the Warrant Agent and the Holders in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the Series B Warrants. This Agreement and the Series B Warrants supersede all prior agreements and understandings between the parties with respect to such subject matter. 
Section 10.10 Governing Law, Etc. This Agreement and each Series B Warrant issued hereunder shall be deemed to be a contract made under the laws of the Province of Ontario. Each party hereto consents and submits to the jurisdiction of the courts of the Province of Ontario in connection with any action or proceeding brought against it that arises out of or in connection with, that is based upon, or that relates to this Agreement or the transactions contemplated hereby. In connection with any such action or proceeding in any such court, each party hereto hereby waives personal service of any summons, complaint or other process and hereby agrees that service thereof may be made in accordance with the procedures for giving notice set forth in Section 9.2 hereof. Each party hereto hereby waives any objection to jurisdiction or venue in any such court in any such action or proceeding and agrees not to assert any defense based on forum non conveniens or lack of jurisdiction or venue in any such court in any such action or proceeding. 
Section 10.11 Termination. Subject to Section 4.1(a), this Agreement shall terminate on the Expiration Date. Notwithstanding the foregoing, this Agreement will terminate on any earlier date when all Series B Warrants have been exercised. The provisions of Section 8.4 and this Article IX shall survive such termination and the resignation or removal of the Warrant Agent. 
Section 10.12 Severability. In the event that any one or more of the provisions contained herein or in the Series B Warrants, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein and therein shall not be affected or impaired thereby. 

22

 

Section 10.13 Attorneys’ Fees. In any action or proceeding brought to enforce any provisions of this Agreement or any Series B Warrant, or where any provision hereof or thereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys’ fees and disbursements in addition to its costs and expenses and any other available remedy. 
Section 10.14 Force Majeure.  Notwithstanding anything to the contrary contained herein, neither party hereto will be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.
Section 10.15 Confidentiality.  The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public Holder information, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement, including the fees for services provided hereunder shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, rule or regulation.
Section 10.16 Further Assurances. Each party hereto shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the other party for the carrying out or performing by such party of the provisions of this Agreement.
Section 10.17 Consequential Damages.  Neither party to this Agreement shall be liable to the other party for any consequential, indirect, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, penal, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
[Signature Page Follows]

23

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed all as of the day and year first above written. 

	
					
	 
	 
	KINGSWAY FINANCIAL SERVICES INC., as Company

	 
	 
	Per:
	 

	 
	 
	 
	Name:

	 
	 
	 
	Title:

	 
	 
	 
	 
	 

	 
	 
	 
	Per:
	 

	 
	 
	 
	 
	Name:

	 
	 
	 
	 
	Title:

             
	
					
	 
	 
	COMPUTERSHARE TRUST COMPANY OF CANADA, as Warrant Agent

	 
	 
	Per:
	 

	 
	 
	 
	Name:

	 
	 
	 
	Title:

24

 

SCHEDULE “A” 
Form of Warrant Certificate 
SERIES B WARRANT

to acquire Common Shares of

KINGSWAY FINANCIAL SERVICES INC.

   CUSIP: 496904137
ISIN: CA4969041371

Warrant                        Certificate for _________________________ Series B
		
	Certificate No. [2013/2014] – Bl
	Warrants, each entitling the holder to acquire one Common Share (subject to adjustment as provided for in the Series B Warrant Agreement (as defined below))

THIS IS TO CERTIFY THAT, for value received,______________________________________ (the “Warrantholder”) is the registered holder of the number of Series B common share purchase warrants (the “Series B Warrants”) of Kingsway Financial Services Inc. (the “Corporation”) specified above, and is entitled, on exercise of these Series B Warrants upon and subject to the terms and conditions set forth herein and in the Series B Warrant Agreement, to purchase at any time starting on the first day of the thirty-seventh month after the date of the issuance of the Series B Warrants and terminating until any time before 5:00 p.m. (Eastern time) (the “Expiry Time”) on September 15, 2023 (the “Expiry Date”), one common share in the capital of the Corporation (a “Common Share”) for each Series B Warrant, subject to adjustment in accordance with the terms of the Series B Warrant Agreement. 
The right to purchase Common Shares may only be exercised by the Warrantholder within the time set forth above by:
		
	(a)
	duly completing and executing the exercise form (the “Exercise Form”) attached hereto; and

		
	(a)
	surrendering this warrant certificate (the “Warrant Certificate”), with the Exercise Form to Computershare Trust Company of Canada (the “Warrant Agent”) at the principal office of the Warrant Agent, in the city of Toronto, Province of Ontario, or to Computershare Inc. (the “Co-Agent”) at its office in Providence, Rhode Island, together with a certified cheque drawn against a U.S. or Canadian bank, U.S. or Canadian bank draft or U.S. or Canadian postal money order in the lawful money of the United States payable to the order of the Company in an amount equal to the aggregate Exercise Price (as defined below) for the Common Shares so subscribed for.

The surrender of this Warrant Certificate, the duly completed Exercise Form and payment as provided above will be deemed to have been effected only on personal delivery thereof to the Warrant Agent at its principal office in the city of Toronto, Province of Ontario. 
Subject to adjustment thereof in the events and in the manner set forth in the Series B Warrant Agreement, the exercise price payable for each Common Share upon the exercise of each Series B Warrant is US$ 5.00 per Common Share (the “Exercise Price”).
Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein or, if so specified in the Exercise Form, delivered to 

 

 

such persons at the office of the Warrant Agent where this Warrant Certificate is surrendered. If fewer Common Shares are purchased than the number that can be purchased pursuant to this Warrant Certificate, the holder hereof will be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Series B Warrants not so exercised. No fractional Common Shares will be issued upon exercise of any Warrant.
This Warrant Certificate evidences Series B Warrants issued or issuable under the provisions of a warrant agreement (which agreement together with all other instruments supplemental or ancillary thereto is herein referred to as the “Series B Warrant Agreement”) dated as of l, 2013 between the Corporation and Computershare Trust Company of Canada, as Warrant Agent, to which Series B Warrant Agreement reference is hereby made for particulars of the rights of the holders of Series B Warrants, the Corporation and the Warrant Agent in respect thereof and the terms and conditions on which the Series B Warrants are issued and held, all to the same effect as if the provisions of the Series B Warrant Agreement were herein set forth, to all of which the Warrantholder, by acceptance hereof, assents. The Corporation will furnish to the Warrantholder, on request and without charge, a copy of the Series B Warrant Agreement.
On presentation at the principal office of the Warrant Agent as set out above, subject to the provisions of the Series B Warrant Agreement and on compliance with the reasonable requirements of the Warrant Agent, one or more Warrant Certificates may be exchanged for one or more Warrant Certificates entitling the holder thereof to purchase in the aggregate an equal number of Common Shares as are purchasable under the Warrant Certificates so exchanged.
The Series B Warrant Agreement contains provisions for the adjustment of the Exercise Price and the number of Common Shares issuable upon the exercise of Series B Warrants, in the events and in the manner set forth therein.
The Series B Warrant Agreement also contains provisions making binding on all holders of Series B Warrants outstanding thereunder resolutions passed at meetings of holders of Series B Warrants held in accordance with the provisions of the Series B Warrant Agreement and instruments in writing signed by holders of Series B Warrants representing a specific majority of the then outstanding Series B Warrants. 
Nothing contained in this Warrant Certificate, the Series B Warrant Agreement or elsewhere shall be construed as conferring upon the holder hereof any right or interest whatsoever as a holder of Common Shares or any other right or interest except as herein and in the Series B Warrant Agreement expressly provided.  In the event of any discrepancy between anything contained in this Warrant Certificate and the terms and conditions of the Series B Warrant Agreement, the terms and conditions of the Series B Warrant Agreement shall govern. 
Series B Warrants may only be transferred in compliance with the conditions of the Series B Warrant Agreement on the register to be kept by the Warrant Agent in the City of Toronto, Province of Ontario, or such other registrar as the Corporation, with the approval of the Warrant Agent, may appoint at such place or places, if any, as may be designated, upon surrender of this Warrant Certificate to the Warrant Agent or other registrar accompanied by a written instrument of transfer in form and execution satisfactory to the Warrant Agent or other registrar and upon compliance with the conditions prescribed in the Series B Warrant Agreement and with such reasonable requirements as the Warrant Agent or other registrar may prescribe and upon the transfer being duly noted thereon by the Warrant Agent or other registrar.  Time is of the essence hereof. 
This Warrant Certificate will not be valid for any purpose until it has been countersigned by or on behalf of the Warrant Agent from time to time under the Series B Warrant Agreement.
The parties hereto have declared that they have required that this Series B Warrant Agreement and all other documents related hereto be in the English language only. Les parties aux présentes déclarent qu’elles ont exigé que la présente convention, de même que tous les documents s’y rapportant, soient rédigés en anglais seulement.

 

 

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be duly executed as of ________________, 2014.

	
					
	 
	 
	KINGSWAY FINANCIAL SERVICES INC.

	 
	 
	Per:
	 

	 
	 
	 
	Name:

	 
	 
	 
	Title:

	 
	 
	 
	 
	 

	 
	 
	 
	Per:
	 

	 
	 
	 
	 
	Name:

	 
	 
	 
	 
	Title:

Countersigned and Registered by:

	
					
	COMPUTERSHARE TRUST COMPANY OF CANADA
	 
	 

	Per:
	 
	 
	 

	 
	Name:
	 
	 

	 
	Title:
	 
	 

 

 

FORM OF TRANSFER

TO: Computershare Trust Company of Canada

OR TO: Computershare Inc.

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to

(print name and address)

______________ (number) Series B Warrants represented by this Warrant Certificate and hereby irrevocably constitutes and appoints ____________________ as its attorney with full power of substitution to transfer the said securities on the appropriate register of the Warrant Agent.
In the case of a Warrant Certificate that contains a U.S. restrictive legend, the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
□    (A) the transfer is being made only to the Corporation;
		
	□
	(B) the transfer is being made outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act, and in compliance with any applicable local securities laws and regulations and the holder has provided herewith the Declaration for Removal of Legend attached as Schedule “C” to the Series B Warrant Agreement;

		
	□
	(C) the transfer is being made within the United States or to, or for the account or benefit of, a U.S. Person or a person in the United States, in accordance with Rule 144A under the U.S. Securities Act; or

		
	□
	(D) the transfer is being made within the United States or to, or for the account or benefit of, a U.S. Person or a person in the United States, in accordance with another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws and the undersigned has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing or such other documentation in form and substance reasonably satisfactory to the Corporation and the Warrant Agent to such effect.

In the case of a Warrant Certificate that does not contain a U.S. restrictive legend, if the proposed transfer is to, or for the account or benefit of, a U.S. Person or a person in the United States, the undersigned hereby represents, warrants and certifies that the transfer of the Series B Warrants is being completed pursuant to an exemption from the registration requirements of the U.S. Securities Act and any applicable state securities laws, in which case the undersigned has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing or such other documentation in form and substance reasonably satisfactory to the Corporation and the Warrant Agent to such effect. The undersigned further acknowledges and agrees that the Warrant Certificate to be issued to the transferee will contain a U.S. restrictive legend in the manner required by the Series B Warrant Agreement.

 

 

		
	□ 
	If the Warrant Certificate does not contain a U.S. restrictive legend and the transfer is to, or for the account or benefit of, a U.S. Person or a person in the United States, check this box.

DATED this _______day of_______________________ , 20____.

SPACE FOR GUARANTEES OF     )
SIGNATURES (BELOW)         )
)_________________________
) Signature of Transferor
)
)
_________________________    )_________________________
Guarantor’s Signature/Stamp     ) Name of Transferor

CERTAIN REQUIREMENTS RELATING TO TRANSFERS – READ CAREFULLY

The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of the Warrant Certificate(s), in every particular, without alteration or enlargement, or any change whatsoever. The signature(s) on this form must be guaranteed in accordance with the Warrant Agent’s then current guidelines and requirements at the time of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of transfer, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):
		
	•
	Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct prefix covering the face value of the certificate.

		
	·
	Canada: A Signature Guarantee obtained from the Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature & Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guarantee” Stamp) obtained from an authorized officer of a major Canadian Schedule 1 chartered bank.

		
	·
	Outside North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed.

 

 

SCHEDULE “B”
EXERCISE FORM

TO:         Kingsway Financial Services Inc.
AND TO:     Computershare Trust Company of Canada
100 University Ave., 8th Floor
Toronto, ON M5J 2Y1
Attention: General Manager, Corporate Trust Department
AND TO:    Computershare Inc.
C/O Voluntary Corporation Actions
P.O. Box 43011
Providence, RI 0294-3011    

The undersigned holder of the Series B Warrants evidenced by this Warrant Certificate hereby exercises the right to acquire ______________________ (A) Common Shares of Kingsway Financial Services Inc.
Aggregate Exercise Price Payable: _______________________________________________________
((A) multiplied by US$ l, subject to adjustment)
The undersigned hereby exercises the right of such holder to be issued, and hereby subscribes for, Common Shares that are issuable pursuant to the exercise of such Series B Warrants on the terms specified in such Warrant Certificate and in the Series B Warrant Agreement.
The undersigned hereby acknowledges that the undersigned is aware that the Common Shares received on exercise may be subject to restrictions on resale under applicable securities legislation.
Any capitalized term in this Warrant Certificate that is not otherwise defined herein, shall have the meaning ascribed thereto in the Series B Warrant Agreement.
The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):
		
	□
	(A) the undersigned holder at the time of exercise of the Series B Warrants (i) is not in the United States, (ii) is not a U.S. Person, (iii) is not exercising the Series B Warrants for the account or benefit of a U.S. Person or a person in the United States, (iv) did not execute or deliver this exercise form in the United States, and (v) delivery of the underlying Common Shares will not be to an address in the United States; OR

		
	□
	(B) the undersigned holder (a) is the original U.S. purchaser who purchased the Series B Warrants pursuant to the Corporation’s Unit Offering, (b) is exercising the Series B Warrants for its own account or for the account of a disclosed principal that was named in the agreement pursuant to which it purchased such Units, (c) is, and such disclosed principal, if any, is either (i) an “accredited investor” as defined in Rule 501(a) of Regulation D under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or (ii) a “qualified institutional buyer” within the meaning of Rule 144A under the U.S. Securities Act, at the time of exercise of these Series B Warrants, and (d) the undersigned holder has delivered to the Corporation and the Warrant Agent a completed and executed U.S. Purchaser Certification in substantially the form attached to the Series B Warrant Agreement as Schedule “D”; OR

		
	□
	(C) the undersigned holder is not an original U.S. purchaser who purchased the Series B Warrants pursuant to the Company’s Unit Offering, is either (i) a holder in the United States, (ii) a U.S. Person, 

 

 

(iii) a person exercising for the account or benefit of a U.S. Person or a person in the United States, (iv) executing or delivering this exercise form in the United States or (v) requesting delivery of the underlying Common Shares in the United States, and the undersigned holder has delivered to the Corporation and the Warrant Agent (a) a completed and executed U.S. Purchaser Certification in substantially the form attached to the Series B Warrant Agreement as Schedule “D”, or (b) an opinion of counsel of recognised standing in form and substance reasonably satisfactory to the Corporation and the Warrant Agent that the exercise is exempt from the registration requirements of applicable securities laws of any state of the United States and the U.S. Securities Act. 
It is understood that the Corporation and Computershare Trust Company of Canada may require evidence to verify the foregoing representations.
Notes:   (1)     Certificates will not be registered or delivered to an address in the United States unless 
either Box B or C above is checked.
		
	(2) 
	If Box C above is checked, holders are encouraged to consult with the Corporation and the Warrant Agent in advance to determine that U.S. Purchaser Certification or the legal opinion tendered in connection with the exercise will be satisfactory in form and substance to the Corporation and the Warrant Agent.

“United States” and “U.S. Person” are as defined in Rule 902 of Regulation S under the U.S. Securities Act.
The undersigned hereby irrevocably directs that the said Common Shares be issued, registered and delivered as follows:
Name(s) in Full and        Address(es) (including Postal        Number of Common Shares
Social Insurance        Code/ZIP Code)        
                    
________________        _______________________    _____________________

________________        _______________________    _____________________

________________        _______________________    _____________________

________________        _______________________    _____________________

Please print full name in which certificates representing the Common Shares are to be issued. If any Common Shares are to be issued to a person or persons other than the registered holder, the registered holder must pay to the Warrant Agent all eligible transfer taxes or other government charges, if any, and the Form of Transfer must be duly executed.
Once completed and executed, this Exercise Form must be mailed or delivered to Computershare Trust Company of Canada, 100 University Ave., 8th Floor, Toronto, ON, M5J 2Y1, Attention: General Manager, Corporate Trust Department.

 

 

DATED this _______ day of ________________ , 20___ .

)
)
_____________________________    )    _______________________________________
(Witness )                    (Signature of Warrantholder, to be the same as
appears on the face of this Warrant Certificate)
)
)
)    _______________________________________
)     Name of Registered Warrantholder

		
	□
	Please check if the certificates representing the Common Shares are to be delivered at the office where this Warrant Certificate is surrendered, failing which such certificates will be mailed to the address set out above. Certificates will be delivered or mailed as soon as practicable after the surrender of this Warrant Certificate to the Warrant Agent.

 

SCHEDULE “C”

DECLARATION FOR REMOVAL OF LEGEND

TO: Computershare Trust Company of Canada
100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1
Attn: General Manager, Corporate Trust Department

The undersigned (A) acknowledges that the sale of the Series B Warrants of the Kingsway Financial Services Inc. (the “Issuer”)  represented by certificate number(s) _______________________, to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and (B) certifies that (1) it is not an “affiliate” (as defined in Rule 405 under the U.S. Securities Act) of the Issuer (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed on or through the facilities of an applicable Canadian stock exchange designated in Regulation S or any other 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, (3) neither the seller nor any affiliate of the seller nor any person acting on its behalf engaged or will be engaged in any directed selling efforts in the United States in connection with the offer and sale of such 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 such term is defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the seller does not intend to replace such securities 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. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

	
			
	Dated: ________________________
	 
	 

	 
	 
	(Name of Holder – please print)

	 
	 
	 

	 
	 
	(Authorized Signature) 

	 
	 
	 

	 
	 
	(Official Capacity – please print)

	 
	 
	 

	 
	 
	(please print here the name of the individual whose signature appears above, if different from the name of holder printed above)

 

 

SCHEDULE “D”

U.S. PURCHASER CERTIFICATE
TO: KINGSWAY FINANCIAL SERVICES INC. (the “Company”)
TO: COMPUTERSHARE TRUST COMPANY OF CANADA (the “Warrant Agent”)
All capitalized terms used herein, unless otherwise defined, have the meanings ascribed thereto in the Amended and Restated Series B Warrant Agreement, dated July 8, 2014, between the Company and Computershare Trust Company of Canada (the “Agreement”) to which this U.S. Purchaser Certificate is attached. 
The undersigned Purchaser covenants, represents and warrants to the Company and the Warrant Agent that the Purchaser: 
(a) is an “accredited investor”, as defined in Rule 501(a) of Regulation D under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”);  Securities Act, or a “qualified institutional buyer” within the meaning of Rule 144A under the U.S. Securities Act;
(b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment and it is able to bear the economic risk of loss of the investment; 
(c) has had the opportunity to receive adequate information concerning the legal, business and financial conditions of the Company to make an informed decision regarding an investment in the Warrant Shares;
(d) is purchasing the Warrant Shares for investment only and not with a view to resale or distribution and in particular, the Purchaser will not distribute either directly or indirectly any of the Warrant Shares in the United States or to a “U.S. Person” (as that term is defined in Regulation S under the U.S. Securities Act) unless such Warrant Shares are registered under the U.S. Securities Act and any applicable state securities laws, including, without limitation, any regulation under the U.S. Securities Act, or in reliance on and pursuant to an exemption from such requirements.
(e) understands that [the Warrant Shares have not been registered under the U.S. Securities Act, or the applicable securities laws of any state, and that] the purchase and sale contemplated hereby is being made in reliance on an exemption from registration contained in Section 4(2) of the U.S. Securities Act and/or Regulation D promulgated under the U.S. Securities Act, based in part upon the Purchaser’s representations contained herein, including without limitation that the Purchaser is an “accredited investor” within the meaning or Rule 501 of Regulation D promulgated under the U.S. Securities Act; 
(f) has not purchased the Warrant Shares as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media (including any press release of the Company) or broadcast over the internet, radio, or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; 
(g) understands and acknowledges that upon the 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 state securities laws and regulations, in addition to any legend that may be required by the Toronto Stock Exchange, the certificates representing the Warrant Shares may bear a legend in substantially the following form: 

 

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE SECURITIES LAWS, UNLESS THE HOLDER SHALL HAVE OBTAINED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”
and that any certificate representing any securities issuable in exchange for any of the Warrant Shares or in substitution thereof may bear the same legend. 
(h) consents to the Company making a notation on its records or giving instructions to the registrar and transfer agent of the Company in order to implement the restrictions on transfer set forth and described herein; 
(i) certifies that the offer, sale and issuance of the Warrant Shares is not a transaction, or part of a chain of transactions that is part of a plan or scheme to evade the registration requirements of the U.S. Securities Act; and 
(j) certifies that, if the Purchaser is an entity or organization, the Purchaser was not formed for the specific purpose of acquiring the Warrant Shares. 
IN WITNESS WHEREOF, the undersigned has executed this U.S. Purchaser Certificate as of the ______ day of ______________, 20__. 

If a Corporation, Partnership or Other Entity: 
NAME OF ENTITY: _________________

By:_________________________________
Name:  
Title:

If an Individual:  

By:_________________________________
Name:

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