Document:

ex101_waiverfor8k

28249475.10.BUSINESS   WAIVER AGREEMENT  This Waiver Agreement, dated as of September 30, 2021 (this “Agreement”), with respect to that  certain Indenture, dated as of July 15, 2019 (as such indenture has been supplemented and amended by the First  Supplemental Indenture, dated as of November 3, 2020, the Second Supplemental Indenture, dated as of November  19, 2020 and the Third Supplemental Indenture, dated as of August 6, 2021 (the “Existing Indenture” and the  Existing Indenture, as it may from time to time be supplemented or amended by one or more additional indentures  supplemental thereto entered into pursuant to the applicable provisions thereof, being hereinafter called the  “Indenture”), by and among Aquestive Therapeutics, Inc. a Delaware corporation with an address at 30 Technology  Drive, Warren, New Jersey 07059 (the “Company”), any Guarantor that becomes party thereto pursuant to Section  4.10 of the Existing Indenture, and U.S. Bank National Association, as trustee (the “Trustee”) and as collateral agent  (the “Collateral Agent”), providing for the issuance of an aggregate principal amount of up to $104.0 million of  12.5% Senior Secured Notes due 2025 (the “Notes” or the “Securities”, and the holders thereof, the “Holders”) is  entered into by and among (i) the Company, (ii) each of the undersigned beneficial owners of Notes representing all  of the principal amount of outstanding Notes (the “Initial Consenting Holders” and, together with any subsequent  Holder or beneficial owner that becomes a party hereto in accordance with the terms hereof by executing a Joinder  Agreement in the form of Exhibit A attached hereto, each, a “Consenting Holder” and, collectively, the “Consenting  Holders”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them  in the Indenture.  W I T N E S S E T H:  WHEREAS, the Company is required to pay certain amounts of Principal pursuant to Section 4.01(b)  of the Indenture and paragraph 1(d) of the Global Securities representing the Securities (the “Upcoming Payment”)  due under the Notes on September 30, 2021 (the “Payment Date”);   WHEREAS, the Company and the Holders intend to enter into and to cause the Trustee and the  Collateral Agent to enter into a supplemental indenture (the “Future Supplemental Indenture”) to the Indenture in  order to, among other things, restructure the timing of the Principal payments due under the Notes, including,  without limitation, the Upcoming Payment;  WHEREAS, in order to provide for sufficient time to negotiate the Future Supplemental Indenture, the  Company and the Consenting Holders wish to waive the payment of the Upcoming Payment during the Waiver  Period (as defined below);      WHEREAS, the Consenting Holders have agreed to waive the payment of the Upcoming Payment  during the Waiver Period and the consequences under the Indenture and the Securities of not making such  Upcoming Payment on the Payment Date on the terms and conditions set forth herein.   NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration  (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows:  Section 1. Waiver  (a) Waiver. The Consenting Holders hereby agree to waive the payment of the Upcoming Payment,  and the consequences under the Indenture and the Securities of not making such Upcoming Payment on the Payment  Date including, without limitation, the occurrence of a Default or Event of Default related thereto and the imposition  of default interest, in each case, solely during the Waiver Period, and subject to the terms, limitations, conditions,  representations and warranties set forth in this Agreement. The Company and the Consenting Holders hereby agree  that, unless this Agreement has been signed by the Holders or the beneficial onwers of Notes representing all of the  principal amount of outstanding Notes, this Agreement will be null and void and be of no force or effect.   

 

28249475.10.BUSINESS   (b) Waiver Period. As used in this Agreement, the term “Waiver Period” means the period beginning  on the date hereof (the “Effective Date”) and ending upon the occurrence of the earliest to occur of (such earliest  event, the “Waiver Termination Event”):  (i) December 31, 2021 (or such later date as may be consented to in writing (including via e-mail) by  all of the Consenting Holders in their sole discretion (or by the legal counsel on their behalf));  (ii) the execution of the Future Supplemental Indenture by the Company and the Trustee and Collateral  Agent (at the direction of all of the outstanding Holders or the beneficial owners);  (iii) any representation or warranty made by the Company in this Agreement shall prove to have been  untrue or incorrect in any material respect as of the Effective Date;  (iv) the full payment of the Upcoming Payment by the Company to the Holders; and   (v) any Event of Default under the Indenture or the Securities (other than any potential Default or  Event of Default waived by this Agreement).  For the avoidance of doubt, in the event the Waiver Period is terminated, including as a result of a  Waiver Termination Event, but other than a termination pursuant to Section 1(b)(ii) or (iv) hereof, the non-payment  of the Upcoming Payment shall be deemed an Event of Default under the Indenture and Securities.   (c) Joinder.  Each Consenting Holder agrees not to transfer, assign, sell, convey, pledge or otherwise  dispose of (each, a “Transfer”) the Notes it holds during the Waiver Period; provided, however, that such  Consenting Holder may Transfer such Notes during the Waiver Period if the transferee executes a Joinder  Agreement in the form of Exhibit A hereto and delivers such executed Joinder Agreement to the Company, such that  the transferee becomes a party to this Agreement by operation of the Joinder Agreement.     Section 2. Representations and Warranties of the Company   On and as of the Effective Date, the Company hereby represents and warrants to each Consenting  Holder as follows:  (a) this Agreement has been duly authorized, executed and delivered by the Company and constitutes  the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to  bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights  generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and  an implied covenant of good faith and fair dealing;  (b) no approval, consent, exemption, authorization or other action by, or notice to, or filing with, any  governmental authority or any other Person is necessary or required in connection with the execution, delivery or  performance by the Company of this Agreement;  (c) the execution, delivery and performance by the Company of this Agreement do not (i) contravene  the terms of the Company’s certificate of incorporation; (ii) violate or result in any breach or contravention of, or the  creation of any Lien under, (A) any material indenture, mortgage, deed of trust, credit agreement or loan agreement,  or any other agreement, contract or instrument to which the Company is a party or by which it or any of its  properties or assets is bound or to which it may be subject or (B) any order, injunction, writ or decree of any  governmental authority or any arbitral award to which such entity or any of its properties or assets is subject; or  (iii) violate any applicable law in any material respect;   (d) the Consenting Holders comprise the Holders or the beneficial owners of Notes representing all of  the principal amount of outstanding Notes; and  (e) no Defaults or Events of Default exist on the Effective Date.     Section 3. Reference to and Effect on the Indenture and the Securities  (a) All of the terms and provisions of the Indenture and the Securities are and shall remain in full force  and effect and are hereby ratified and confirmed. Except as modified pursuant to the other documents, instruments  and agreements executed and delivered in connection herewith, no other changes or modifications to the Indenture  or the Securities are intended or implied, and in all other respects the Indenture, the Securities and the obligations  thereunder are hereby specifically ratified, restated and confirmed by the Company as of the Effective Date. The  

 

28249475.10.BUSINESS   Company hereby agrees that this Agreement shall in no manner affect or impair the obligations securing the  payment and performance thereof. The Company hereby ratifies and confirms all of its obligations and liabilities  under the Indenture and the Securities,.  (b) Except as expressly set forth herein, the execution, delivery and effectiveness of this Agreement  shall not operate as a waiver of any right, power or remedy of the Holders or the Trustee under the Indenture or the  Securities, nor constitute a waiver or amendment of any other provision of the Indenture or the Securities or for any  purpose.  (c) The Company and the Consenting Holders hereby acknowledge and agree that nothing contained in  this Agreement or any other documents amended and/or executed and delivered in connection herewith shall  constitute a novation of the Indenture or the Securities as in effect prior to the Effective Date.  (d) Solely as between the Company and the Consenting Holders, to the extent of conflict between the  terms of this Agreement and the Indenture or the Securities, the terms of this Agreement shall control.  Section 4. Execution in Counterparts  The parties may sign any number of copies of this Agreement.  Each signed copy shall be an original,  but all of them together represent the same agreement.  The exchange of copies of this Agreement and of signature  pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as to the  parties hereto and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties hereto  transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.  Section 5. Consenting Holder Authorization, Signatures  On and as of the Effective Date, each Consenting Holder represents to the Company, as to itself, that:  (a) this Agreement has been duly authorized, executed and delivered by each of the Consenting  Holders and constitutes the legal, valid and binding obligation of such party enforceable against such party in  accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting  the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by  proceedings in equity or at law) and an implied covenant of good faith and fair dealing; and  (b) it beneficially owns the principal amount of the Notes set forth opposite the undersigned’s name  under the column heading “Principal Amount of Notes” in Schedule 1 attached hereto and, if such Notes are owned  through the book-entry system of The Depository Trust Company, then such Notes are held through The Depository  Trust Company participant set forth opposite the undersigned’s name under the column heading “Depository Trust  Company Participant Name and Number” in Schedule 1 attached hereto (and if nothing is set forth opposite the  undersigned’s name under the column heading “Depository Trust Company Participant Name and Number” in  Schedule 1 attached hereto then the undersigned does not hold such Notes through the book-entry system of The  Depository Trust Company) and (ii) each of the Trustee, the Collateral Agent, and the Company shall be entitled to  rely on the foregoing representation and warranty.    Section 6. Governing Law  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH  THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF  LAW (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS  LAW).  Section 7. Effect of Headings  The Section headings herein are for convenience of reference only and shall not affect the construction  thereof.  Section 8. Notices  

 

28249475.10.BUSINESS   All communications and notices hereunder shall be given as provided in the Indenture.  Section 9. Further Assurances  Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts  and shall execute and deliver all such other agreements, certificates, instruments and documents as either party  hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and  the consummation of the transactions contemplated thereunder, including, without limitation, to take any actions as  may be required by The Depository Trust Company in connection with this Agreement.     Section 10. Concerning the Trustee and the Collateral Agent  It is expressly acknowledged and agreed that the Trustee and the Collateral Agent are express third  party beneficiaries of this Agreement and entitled to rely on the representations, warranties, covenants and  agreements contained hereunder.  Notwithstanding the foregoing, in no event shall the Trustee nor the Collateral  Agent be obligated to monitor any party’s compliance with the terms of this Agreement, and shall be entitled to  conclusively rely on certificates, opinions and letters of direction delivered to it in accordance with the Indenture.    [Signature pages follow.] 

 

  28249475.10.BUSINESS   IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective, duly  authorized officers as of the date first above written.            AQUESTIVE THERAPEUTICS, INC.          By:   /s/ Keith Kendall    Name: Keith Kendall   Title: Chief Executive Officer                                                   [Signature Page to Waiver Agreement]    

 

28249475.10.BUSINESS   MADRYN HEALTH PARTNERS (CAYMAN MASTER),  LP  By: MADRYN HEALTH ADVISORS, LP,  its General Partner  By: MADRYN HEALTH ADVISORS GP, LLC,  its General Partner        By:   /s/ Avinash Amin            Name: Avinash Amin         Title: Member      MADRYN HEALTH PARTNERS, LP  By: MADRYN HEALTH ADVISORS, LP,  its General Partner  By: MADRYN HEALTH ADVISORS GP, LLC,  its General Partner        By:   /s/ Avinash Amin            Name: Avinash Amin         Title: Member    FFI FUND LTD.        By:   /s/ John N. Spinney, Jr.            Name: John N. Spinney, Jr.         Title: Authorized Signatory    FYI LTD.        By:   /s/ John N. Spinney, Jr.            Name: John N. Spinney, Jr.         Title: Authorized Signatory    OLIFANT FUND LTD.        By:   /s/ John N. Spinney, Jr.            Name: John N. Spinney, Jr.         Title: Authorized Signatory        [Signature Page to Waiver Agreement]  

 

28249475.10.BUSINESS       MORGAN STANLEY & CO, LLC        By:   /s/ John N. Spinney, Jr.            Name: Brian McGowan         Title: Managing Director                                                             [Signature Page to Waiver Agreement]  

 

28249475.10.BUSINESS   EXHIBIT A  (Form of Joinder to Waiver Agreement)  JOINDER TO WAIVER AGREEMENT  THIS JOINDER to the Waiver Agreement (this “Joinder”) dated as of [______], 2021 by and among  Aquestive Therapeutics, Inc., the Guarantors from time to time party thereto, and the institutions from time to time  party thereto as Holders (the “Agreement”), is made and entered into as of [______], 2021, by  [__________________] (the “Transferee”).  Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the  Agreement.  WHEREAS, on the date hereof, Transferee has acquired $[__________] in aggregate principal amount  of Notes from [__________________], and the Agreement requires Transferee to execute a joinder to the  Agreement.  NOW, THEREFORE, the Transferee hereby (i) acknowledges that it has received and reviewed a  complete copy of the Agreement and (ii) agrees that, by executing this Joinder, it becomes a party to the Agreement  and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement as though an  original party thereto and shall be deemed, and is hereby admitted as, a Consenting Holder for all purposes thereof  and entitled to all the rights incidental thereto.  IN WITNESS WHEREOF, the Transferee has executed this Joinder as of the date first above written.        [TRANSFEREE]     By:                         Name:     Title:xene-ex41_6.htm

 

Exhibit 4.1

FORM OF PRE-FUNDED WARRANT TO PURCHASE COMMON SHARES

 

  Number of Shares: [            ]
(subject to adjustment)

 Original Issue Date: [    ], 2021

Warrant No.    

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

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

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

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

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

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

(e) “Registration Statement” means the Company’s automatically effective shelf Registration Statement on Form S-3 (File No. 333-260010). 

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

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

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

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

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

4. Exercise and Duration of Warrants. 

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

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

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5. Delivery of Warrant Shares. 

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

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

(c) To the extent permitted by law and subject to Section 5(b), the Company’s obligations to issue and deliver Warrant Shares in accordance with and subject to the terms hereof (including the limitations set forth in Section 11 below) are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Subject to Section 5(b), nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Common Shares upon exercise of the Warrant as required pursuant to the terms hereof. 

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

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

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

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

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

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

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

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

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

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

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

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

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

where: 

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

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

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

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

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

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11. Limitations on Exercise. 

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

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

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

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

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

15. Miscellaneous. 

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

(b) Authorized Shares. (i) Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate or articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. 

(ii) Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 

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

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

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

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

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

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

 

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

 

	
 
	
 
	
 

	
XENON PHARMACEUTICALS INC.

	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

 

 

10

 

 

SCHEDULE 1 

FORM OF EXERCISE NOTICE 

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

Ladies and Gentlemen: 

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

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

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

 

	
 
	
☐
	
Cash Exercise 

 

	
 
	
☐
	
“Cashless Exercise” under Section 10 of the Warrant 

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

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

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

 

	
 
	
 
	
 

	
Dated:
	
 
	
 

	
 
	
 

	
Name of Holder:
	
 
	
 

	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

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

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