Document:

glch_ex101.htm

Exhibit 10.1

AMENDMENT OF LEASE

 

THIS AMENDMENT OF LEASE (this "Amendment"), made as of the 26th day of August, 2010, by and between HWA 1290 III LLC, HWA 1290 IV LLC, HWA 1290 V LLC, a Delaware limited liability company, having an office c/o Vornado Office Management LLC, 888 Seventh Avenue, New York, New York 10019 (collectively, "Landlord"), and GLEACHER & COMPANY, INC., a Delaware corporation, having an office at 1290 Avenue of the Americas, New York, New York 10104 ("Tenant").

 

W I T N E S S E T H:

 

WHEREAS, by Lease, dated as of September 30, 2009 (the “Lease”), between Landlord and Broadpoint Gleacher Securities Group, Inc. (“Broadpoint”) as predecessor-in-interest to Tenant, Landlord did demise and let unto Broadpoint and Broadpoint did hire and take from Landlord, a portion of the fourth (4th) floor, as more particularly described therein (the “Original Premises”) and a portion of the sub-basement, as more particularly described in the herein (the “Supplemental Space”), of the building known as and by the street address of 1290 Avenue of the Americas, New York, New York (the "Building");

 

WHEREAS, Tenant succeeded to the interest of Broadpoint under the Lease;

 

WHEREAS, pursuant to the Lease, Landlord gave Tenant an option to lease an additional portion of the fourth (4th) floor of the Building which portion is referred to in the Lease and as more particularly described in the Lease (“Expansion Space A”);

 

WHEREAS, Landlord desires to let unto Tenant, and Tenant desires to hire and take from Landlord, Expansion Space A (Expansion Space A, together with the Original Premises, the "Premises") and Landlord and Tenant desire otherwise to modify the Lease as set forth herein.

 

  

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NOW, THEREFORE, in consideration of the mutual covenants contained herein, and of the sum of Ten and 00/100 Dollars ($10.00) paid by Tenant to Landlord, and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their legal representatives, successors and assigns, hereby agree as follows:

 

1.           Definitions.  All capitalized terms used herein shall have the meanings ascribed to them in the Lease, unless otherwise defined herein.

 

2.           Expansion of Premises.  From and after the date on which Landlord’s Expansion Space A Work (as hereinafter defined) is Substantially Complete (the "Effective Date"), Landlord leases to Tenant, and Tenant hires from Landlord, Expansion Space A upon all of the same terms, covenants and conditions set forth in the Lease, except as modified and amended herein.  Accordingly, from and after the Effective Date, the term “Premises” shall mean collectively, the Original Premises and the Expansion Space A for all purposes of the Lease.

 

3.           Modification of Lease:  Expansion Space A.  With respect to the Expansion Space A only (except as otherwise expressly hereinafter set forth), from and after the Effective Date, the Lease is modified and amended as follows:

 

(A)        The Fixed Rent shall be an amount equal to:

 

(i)           Four Hundred Seventy-Five Thousand Six Hundred Fifty Dollars and No Cents ($475,650.00) per annum, for the period commencing on the Effective Date and ending on the last day of the month in which occurs the day immediately preceding the fifth (5th) anniversary of the Expansion Space A Rent Commencement Date (as such term is hereinafter defined) (such last day of the month, the “First Step Up Date”) ($39,637.50 per month), payable in advance in equal monthly installments at the times and in the manner provided in the Lease; provided, however, that if no Event of Default has occurred and is then continuing, Tenant shall be entitled to an abatement of Fixed Rent with respect to Expansion Space A for the period commencing on the Effective Date and ending on the three hundred fifteenth (315th) day following the Effective Date (the day immediately following such three hundred fifteenth (315th) day, the “Expansion Space A Rent Commencement Date”); provided, however, upon the cure of any such Event of Default Tenant shall be entitled to such abatement or the balance thereof not previously credited to Tenant;

 

  

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(ii)           Five Hundred Eight Thousand Nine Hundred Forty-Five Dollars and Fifty Cents ($508,945.50) per annum, for the period commencing on the day immediately following the First Step Up Date and ending on last day of the month in which occurs the day immediately preceding the tenth (10th) anniversary of the Expansion A Rent Commencement Date (the “Second Step Up Date”) ($42,412.13 per month), payable in advance in equal monthly installments at the times and in the manner provided in the Lease; and

 

(iii)           Five Hundred Fifty-One Thousand Seven Hundred Fifty-Four Dollars and No Cents ($551,754.00) per annum for the period commencing on the day immediately following the Second Step Up Date and ending on the Fixed Expiration Date ($45,979.50 per month).

 

(B)         The term “Rentable Area” (as such term is defined in Section 1.6(K) of the Lease) shall mean (i) seventy-three thousand nine hundred thirty-nine (73,939) square feet with respect to the Original Premises and (ii) nine thousand five hundred thirteen (9,513) square feet with respect to Expansion Space A.

 

(C)         The term “Office Premises Base Operating Expense Year” (as such term is defined in Section 2.1(F) of the Lease) shall mean the 2010 calendar year.

 

(D)         The term “Tenant's Office Premises Operating Expense Share” (as such term is defined in Section 2.1(I) of the Lease) shall mean Four Thousand Nine Hundred Nineteen Ten-Thousandths Percent (.4919%), as the same may be increased or decreased pursuant to the terms of the Lease, as amended hereby.

 

(E)         The term “Office Premises Base Tax Period” (as such term is defined in Section 2.5(E) of the Lease) shall mean the fiscal year commencing on July 1, 2010 and ending on June 30, 2011.

 

(F)         The term “Tenant’s Office Premises Tax Share” (as such term is defined in Section 2.5(Q) of the Lease) shall mean Four Thousand Five Hundred Thirteen Ten-Thousandths Percent (.4513%).

 

  

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(G)         The provisions of Sections 5.3(E) and (F) of the Lease shall be deemed applicable to Expansion Space A (it being agreed that the term “Initial Alterations” as used therein shall be deemed to mean the Alterations that Tenant makes to prepare Expansion Space A for Tenant’s initial occupancy thereof).

 

(H)         Article 26(A) of the Lease, with respect to the entire Premises, shall be deemed modified and amended as follows:

 

(i)   In the approximate sixteenth (16th) and seventeenth (17th) lines of Section 26.1(A) of the Lease the amount “Three Million Seven Hundred Thousand Dollars and No Cents ($3,700,00.00)” shall be deemed deleted and the amount “Three Million Nine Hundred Thirty-Seven Thousand Eight Hundred Twenty-Five Dollars and No Cents ($3,937,825.00)” shall be deemed inserted in lieu thereof;

 

(ii)           In the approximate third (3rd) and fourth (4th) lines of Section 26.6(A) of the Lease the amount “Three Million One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($3,166,667.00)” shall be deemed deleted and the amount “Three Million Four Hundred Four Thousand Four Hundred Ninety-Two Dollars and No Cents ($3,404,492.00)” shall be deemed inserted in lieu thereof;

 

(iii)           In the approximate fifth (5th) and sixth (6th) lines of Section 26.6(A) of the Lease the amount “Two Million Six Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars and No Cents ($2,633,333.00)” shall be deemed deleted and the amount “Two Million Eight Hundred Seventy-One Thousand One Hundred Fifty-Eight Dollars and No Cents ($2,871,158.00)” shall be deemed inserted in lieu thereof; and

 

(iv)           In the approximate eighth (8th) line of Section 26.6(A) of the Lease the amount “Two Million One Hundred Thousand Dollars and No Cents ($2,100,000.00)” shall be deemed deleted and the amount “Two Million Three Hundred Thirty-Seven Thousand Eight Hundred Twenty-Five Dollars and No Cents ($2,337,825.00)” shall be deemed inserted in lieu thereof.

  

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4.           Modification of Lease:   With respect to the entire Premises, from and after the date hereof, the Lease is modified and amended as follows:

 

(A)           Section 7.9 of the Lease shall be deemed modified and amended to add the following as a new Section (C) thereto:

"(C) If Tenant requests that Landlord act as Tenant’s general contractor during the Term that Landlord coordinate and supervise any Alterations then Landlord shall do so for an arm’s length fee agreed to by Landlord and Tenant; provided, nothing herein shall require Tenant to engage Landlord as Tenant’s general contractor with respect to any Alterations."

(B)           Article 19 of the Lease shall be deemed modified and amended to delete all references to “Expansion Space A” therein.  It being the intent and purpose of this Paragraph 4(B) that the provisions of Article 19 relating to Expansion Space A shall not be applicable to Landlord and Tenant, Landlord and Tenant shall not be obligated to comply therewith and the provisions of this Amendment shall govern the leasing of Expansion Space A.

 

(C)           Section 21.1(A) of the Lease shall be deemed modified and amended to insert the following at the end thereof before the period:

 

“of the Applicable Area on the Applicable Date”

 

  

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5.           Condition of Expansion Space A.  Tenant represents that it has made a thorough inspection of Expansion Space A and agrees to take the same "as is" in the condition existing on the Effective Date and that, notwithstanding anything to the contrary contained in the Lease, as amended hereby, Landlord shall have no obligation perform any work, alter, improve, decorate, or otherwise prepare the Expansion Space A for Tenant’s occupancy, except (i) as expressly set forth in Paragraph 6 hereof and (ii) for any latent defects in Landlord’s Expansion Space A Work which Landlord shall correct promptly following receipt of Tenant’s notice thereof.

 

6.           Landlord's Expansion Space A Work.

 

(A)        Landlord shall, at Landlord's expense, (i) create an opening adjoining Expansion Space A to the Original Premises in the location shown on Exhibit “A” attached hereto an made a part hereof and (ii) provide and install one full height Building standard wooden door with hardware and a glass side light (such work collectively, "Landlord's Expansion Space A Work").

 

(B)         Landlord shall perform Landlord’s Expansion Space A Work in accordance with all applicable Requirements. Landlord shall perform Landlord's Expansion Space A Work in a timely and good and workmanlike manner.   Tenant hereby acknowledges and agrees that prior to the date hereof Landlord has performed the work referred to in Section 19.3 of the Lease.

 

7.           Freight Elevator.  Tenant shall be permitted to use the freight elevator of the Building without charge for one weekend for Tenant’s initial move into Expansion Space A.

 

8.           Security Deposit. On the Effective Date, in accordance with Article 26 of the Lease, as amended hereby, Tenant shall deliver to Landlord an amendment to the Letter of Credit increasing the amount thereof by Two Hundred Thirty-Seven Thousand Eight Hundred Twenty-Five Dollars and No Cents ($237,825.00) which Letter of Credit as so amended shall be held and/or applied subject to and in accordance with Article 26 of the Lease.

  

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9.           Liability of Landlord.  The provisions of Section 34.4 of the Lease are hereby incorporated by reference into this Amendment in their entirety as if set forth herein and shall be deemed applicable with respect to this Amendment.

 

10.         Brokerage.  Tenant represents and warrants to Landlord that it has not dealt with any broker, finder or like agent in connection with this Amendment other than Cushman & Wakefield, Inc. ("Broker").  Tenant does hereby indemnify and hold Landlord harmless of and from any and all loss, costs, damage or expense (including, without limitation, reasonable attorneys' fees and disbursements) incurred by Landlord by reason of any claim of or liability to any broker, finder or like agent (other than Broker) who shall claim to have dealt with Tenant in connection herewith.  Landlord represents and warrants to Tenant that it has not dealt with any broker, finder or like agent in connection with this Amendment other than Broker.  Landlord does hereby indemnify and hold Tenant harmless of and from any and all loss, costs, damage or expense (including, without limitation, reasonable attorneys' fees and disbursements) incurred by Tenant by reason of any claim of or liability to any broker, finder or like agent (including Broker) who shall claim to have dealt with Landlord in connection herewith.  The provisions of this Paragraph 10 shall survive the expiration or termination of the Lease, as amended by this Amendment.

 

11.         Authorization.  Tenant represents and warrants to Landlord that its execution and delivery of this Amendment has been duly authorized and that the person executing this Amendment on behalf of Tenant has been duly authorized to do so, and that no other action or approval is required with respect to this transaction.

 

  

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12.         Full Force and Effect of Lease.  Except as modified by this Amendment, the Lease and all covenants, agreements, terms and conditions thereof shall remain in full force and effect and are hereby in all respects ratified and confirmed.

 

13.         Entire Agreement.  The Lease, as amended by this Amendment, constitutes the entire understanding between the parties hereto with respect to the Premises thereunder and may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

 

14.         Enforceability.  This Amendment shall not be binding upon or enforceable against either Landlord or Tenant unless, and until, Landlord and Tenant, each in its sole discretion, shall have executed and unconditionally delivered to the other an executed counterpart of this Amendment.

 

15.         Counterparts.  This Amendment may be executed in one or more counterparts each of which when taken together shall constitute but one original.

 

[Signatures to follow on the next page]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment of Lease as of the date first above written.

HWA 1290 III LLC, a Delaware limited liability company, Landlord

	
By:

	
Hudson Waterfront Associates III, L.P., a Delaware limited partnership, its sole equity member

 

	
By:

	
Hudson Waterfront III Corporation, a Delaware corporation, its sole general partner

 

 

	
 

	
By: 

	 /s/ David Greenbaum	 
	 	 	Name:  David Greenbaum	 
	 	 	Title:  President NYC Office Division	 

 

HWA 1290 IV LLC, a Delaware limited liability company, Landlord

	
By:

	
Hudson Waterfront Associates IV, L.P., a Delaware limited partnership, its sole equity member

 

	
By:

	
Hudson Waterfront IV Corporation, a Delaware corporation, its sole general partner

 

 

	
 

	
By: 

	 /s/ David Greenbaum	 
	 	 	Name:  David Greenbaum	 
	 	 	Title:  President NYC Office Division	 

 

HWA 1290 V LLC, a Delaware limited liability company, Landlord

	
By:

	
Hudson Waterfront Associates V, L.P., a Delaware limited partnership, its sole equity member

 

	
By:

	
Hudson Waterfront V Corporation, a Delaware corporation, its sole general partner

 

 

	
 

	
By: 

	 /s/ David Greenbaum	 
	 	 	Name:  David Greenbaum	 
	 	 	Title:  President NYC Office Division	 

 

GLEACHER & COMPANY, INC., Tenant

 

	
 

	
By: 

	/s/ Peter McNierney	 
	 	 	Name:  Peter McNierney	 
	 	 	Title:  President and Chief Operating Officer	 

 

  

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UNIFORM FORM CERTIFICATE OF ACKNOWLEDGMENT

 

(Within New York State)

 

	 STATE OF ____New York__________    	)
	 	: ss.:
	 COUNTY OF __New York__________	)
	 	 

 

On the __26th___ day of __August__________, in the year 2010, before me, the undersigned personally appeared _Peter McNierney_________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

	
 

	
By: 

	/s/ Patricia Arciero-Craig	 
	 	 	Notary Public	 

 

 

UNIFORM FORM CERTIFICATE OF ACKNOWLEDGMENT

 

(Outside of New York State)

 

	 STATE OF ______________________    	)
	 	: ss.:
	 COUNTY OF ____________________	)
	 	 

 

On the _____ day of _________________, in the year 2010, before me, the undersigned, personally appeared ____________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument, and that such individual made such appearance before the undersigned in the _______________.  (Insert the city or other political subdivision and the state or country or other place the acknowledgement was taken.)

	
 

	 	 
	 	
(Signature and office of individual

taking acknowledgement)

 

  

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Exhibit "A"

 

Landlord's Expansion Space A Work

 

 

  

11slxcf_ex46.htm

 

EXHIBIT 4.6

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 9, 2011.

 

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

 

THIS WARRANT AND THE SECURITIES DELIVERABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THE WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE.  "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

 

 

WARRANT

 

for the purchase of Common Shares of

 

STELLAR PHARMACEUTICALS INC.

(Organized under the laws of Ontario)

 

	
Number of Warrants:  ·

	
Series 1 Warrant Certificate No. WA-10/01/··

 

This is to certify that, for value received, · (the "Holder"), shall have the right to purchase from STELLAR PHARMACEUTICALS INC. (the "Corporation"), at any time and from time to time up to 5:00 p.m. (Toronto time) on April 8, 2012 (the "Expiry Time"), one fully paid and non-assessable common share in the capital of the Corporation (a "Common Share") for each warrant (individually, a "Warrant") represented hereby at a price of U.S.$1.50 per Common Share (the "Exercise Price"), upon and subject to the terms and conditions set forth herein.

 

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

 

  

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

 

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

 

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

 

	
(a)  

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

 

	
(b)  

	
surrendering this Warrant Certificate and the duly completed and executed Subscription Form to the Corporation prior to the Expiry Time at its head office at 544 Egerton Street, London, Ontario N5W 3Z8, together with payment of the purchase price for the Common Shares subscribed for in the form of cash or a certified cheque payable to the Corporation in an amount equal to the then applicable Exercise Price multiplied by the number of Common Shares subscribed for.

 

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

 

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

 

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

 

  

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8.                      (a)

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

 

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

 

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

 

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

 

	
(b)   

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

 

	
(c)   

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

 

  

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(i)           the numerator of which shall be the aggregate of

 

	
  

	
(A)

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

 

(B)           the quotient determined by dividing

 

	
  

	
(I)

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

 

	
  

	
(II)

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

 

	
  

	
(ii)

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

 

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

 

	
(d)   

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

 

  

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(i)           shares of the Corporation of any class other than Common Shares;

 

	
  

	
(ii)

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

 

(iii)           evidences of indebtedness of the Corporation; or

 

	
  

	
(iv)

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

 

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

 

(A)           the numerator of which shall be the difference between

 

	
  

	
(I)

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

 

	
  

	
(II)

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

 

	
  

	
(B)

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

 

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

 

  

5

  

 

	
(e)   

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

 

	
(f)   

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

 

	
(g)   

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

 

	
(h)   

	
In the event that the Corporation shall at any time prior to the Expiry Date issue any Common Shares or securities convertible into Common Shares to a person other than the Holder (except (i) pursuant to options, warrants, or other obligations to issue shares outstanding on the date hereof as disclosed in the Corporation’s SEC filings; (ii) pursuant to options that may be issued under any management incentive stock option and/or any qualified stock option plan adopted by the Corporation, or (iii) pursuant to an acquisition by the Corporation, whether structured as an asset purchase, stock purchase or merger) for a consideration per share (the "Offer Price") less than the Exercise Price in effect at the time of such issuance, then the Exercise Price shall be immediately reset, pro rata to reflect such lower Offer Price, at the time of issuance of such securities.

 

  

6

  

 

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

 

	
(a)  

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

 

	
(b)  

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

 

	
(c)  

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

 

	
(d)  

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

 

	
(e)  

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

 

	
(f)  

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

 

	
(g)  

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

 

	
(h)  

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

 

  

7

  

 

	
(i)  

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

 

	
(j)  

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

 

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

 

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

 

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

 

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

 

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

 

  

8

  

 

15. The Holder may transfer the Warrants represented hereby by:

 

	
(a)   

	
duly completing and executing the transfer form attached as Schedule "B" ("Transfer Form"); and

 

	
(b)   

	
surrendering this Warrant Certificate and the completed Transfer Form, together with such other documents as the Corporation may reasonably request, to the Corporation at the address set forth on the Transfer Form or such other office as may be specified by the Corporation, in a written notice to the Holder, from time to time,

 

provided that all such transfers shall be effected in accordance with all applicable securities laws, and provided that, after such transfer, the term "Holder" shall mean and include any transferee or assignee of the current or any future Holder. If only part of the Warrants evidenced hereby is transferred, the Corporation will deliver to the Holder and the transferee replacement Warrant Certificates substantially in the form of this Warrant Certificate..

 

16. This Warrant may only be exercised by a person that: (a) certifies that it is not a U.S. Person and that such Warrant is not being exercised within the United States or on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States; or (b) furnishes a written opinion of counsel satisfactory to the Company to the effect that the Common Shares issuable upon exercise of the Warrants have been registered under the U.S. Securities Act and applicable state securities laws or are exempt from registration thereunder; or (c) purchased the Warrants directly from the Company pursuant to a duly completed subscription agreement (including all applicable schedules thereto) for its own account or for the account of a beneficial purchaser, is exercising the Warrants for its own account or for the account of such original beneficial purchaser (if any), and is (and such beneficial purchaser, if any, also is) an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the U.S. Securities Act  of 1933 (the "U.S. Securities Act") on the date of exercise..  The Holder acknowledges that a legend to that effect may be placed on any certificates representing the Common Shares issued on exercise of the rights represented by this Warrant Certificate. Terms used in this paragraph have the meanings given to them in Regulation S under the 1933 Act.

 

17. Any certificate representing Common Shares issued upon the exercise of this Warrant prior to the date which is four months and one day after the date hereof will bear the following legends:

 

	 	

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 9, 2011."

 

	 	

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

 

provided that at any time subsequent to the date which is four months and one day after the date hereof any certificate representing such Common Shares may be exchanged for a certificate bearing no such legends.  The Corporation hereby covenants and agrees that it will use the best efforts thereof to deliver or to cause to be delivered a certificate or certificates representing such Common Shares bearing no such legends within five business days after receipt of the legended certificate.

 

  

9

  

 

	
18.                 (a)   

	
On or before 5:30 P.M. (EDT) on a date which shall be not more than thirty (30) days following the issuance date of this Warrant (the "Demand Registration Filing Date"), the Corporation shall file with the Securities and Exchange Commission (the "SEC") a registration statement on Form F-3, Form S-3 or any other applicable form for registering securities (the "Demand Registration Statement") registering all of the Common Shares issued or issuable (i) pursuant to that certain Subscription Agreement (the “Subscription Agreement”) entered into by the Corporation and the Subscriber (as defined in the Suscription Agreeement) and dated as of October 4, 2010), pursuant to  which the Subscriber subscribed for the purchase of the Units (as defined in the Suscription Agreeement)  (such shares being, the “Initial Common Shares”) and (ii) upon an exercise of this Warrant (such Initial Shares and such Common Shares collectively being,.the "Registrable Securities").  The Corporation shall use its best efforts to obtain effectiveness of the Registration Statement with respect to all Registrable Securities as soon thereafter as is practicable, and shall respond to all oral and written comments from the staff of the SEC.

 

	
(b)   

	
The parties shall endeavor to take all actions to obtain effectiveness of such Demand Registration Statement or, if and to the extent such rule becomes available, utilize the re-sale exemptions provided under Rule 144 in order to provide liquidity for these shares.

 

	
(c)   

	
In the event that, for any reason:

 

	
  

	
(i)

	
the Demand Registration Statement shall not be filed with the SEC by the Demand Registration Filing Date, or

 

	
  

	
(ii)

	
the Demand Registration Statement shall not be declared effective by the SEC by 5:00 p.m. (Eastern Standard Time) on a date which shall be ninety (90) days following the Demand Registration Filing Date, or

 

	
  

	
(iii)

	
the Corporation fails to request acceleration of effectiveness of the Demand Registration Statement within five business days of a notice of no further review by the SEC, or (iv) after it has been declared effective, the Demand Registration Statement ceases to be effective or available or if the Corporation suspends the use of the prospectus forming a part of the Demand Registration Statement (A) for more than 30 days in a period of 365 consecutive days if the Corporation suspends in reliance on its ability to do so due to the existence of a development that, in the good faith discretion of its Board of Directors, makes it appropriate to so suspend or which renders the Corporation unable to comply with SEC requirements, or (B) for more than 60 days in any period of 365 consecutive days for any reason;

 

(all of the foregoing, a "Registration Default"), the Corporation shall issue to the Holder and all other holders of the Registrable Securities additional Common Shares (the "Registration Default Issuance") that shall be equal to 0.5% of the total number of Registrable Securities.  Such Registration Default Issuance shall be made to the Holder and the other holders of Registrable Securities on the last business day of each month following the month in which any Registration Default shall occur and shall continue until such time as such Registration Default shall be cured or all of the Registrable Securities may be sold in one three-month period pursuant to the provisions of Rule 144, up to a maximum of 2.5% of the total number of Registrable Securities.  For greater certainty in no case shall a Registration Default be deemed to have occurred where the reason for such default is solely or primarily related to the Holder.

 

	
(d)   

	
All expenses incurred in connection with any registration pursuant to this Section, including without limitation all registration, filing and qualification fees, printing expenses, and all fees and disbursements of counsel for the Corporation and any reasonable fees for legal counsel to the Holder and all other holders of Registrable Securities, and expenses of any special audits of the Corporation’s financial statements incidental to or required by such registration, shall be borne by the Corporation, except that the Corporation shall not be required to pay fees of a separate legal counsel of a Holder other than the counsel described above.

 

	
(e)   

	
In the case of each registration affected by the Corporation pursuant to this Agreement, the Corporation will keep each Holder participating therein advised in writing as to the initiation of each registration and as to the completion thereof. In addition, at its expense the Corporation will:

 

  

10

  

 

	
  

	
(i)

	
keep such registration continuously effective until all of the Registrable Securities covered by such registration statement have been sold pursuant to such registration statement or all of the Registrable Securities covered by such registration statement may be sold without registration under Rule 144 of the Securities Act;

 

	
  

	
(ii)

	
promptly prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified above;

 

	
  

	
(iii)

	
furnish such number of prospectuses and other documents incident thereto as a Holder from time to time may reasonably request;

 

	
  

	
(iv)

	
use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment;

 

	
  

	
(v)

	
register or qualify such Registrable Securities for offer and sale under the securities laws of such jurisdictions as Holder reasonably requires, and keep such registration or qualification effective during the period set forth in above;

 

	
  

	
(vi)

	
cause all Registrable Securities covered by such registrations to be listed or quoted on each securities exchange on which similar securities issued by the Corporation are then listed or quoted; and

 

	
  

	
(vii)

	
notify each Holder, at any time a prospectus covered by such registration statement is required to be delivered under the Securities Act, of the happening of any event of which it has knowledge as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

 

	
(f)   

	
In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Corporation will indemnify and hold harmless each Holder of such Registrable Securities thereunder and each other person, if any, who controls such Holder within the meaning of the Securities Act, against any losses (other than loss of profits), claims, damages or liabilities, joint or several, to which such Holder or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case by the Corporation, or any violation by the Corporation of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Corporation and relating to action or inaction required of the Corporation in connection with any such registration, and will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, provided that the Corporation will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Corporation by an instrument duly executed by a Holder specifically for use therein.

 

	
(g)   

	
Each Holder will, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration is being effected, indemnify and hold harmless the Corporation, each of its directors and officers, each person who controls the Corporation within the meaning of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Corporation, such Holders, such directors, officers, partners or persons for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Corporation by an instrument duly executed by such Holder specifically for use therein; provided, however, the total amount for which any Holder, its officers, directors and partners, and any person controlling such Holder, shall be liable under this Section shall not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities sold by such Holder in such registration.

 

  

11

  

 

The indemnification provided by this Section shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any Person entitled to indemnification hereunder and the expiration or termination of this Agreement.

 

	
(h)   

	
The Holder or Holders of Registrable Securities included in any registration shall promptly furnish to the Corporation such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Corporation may request in writing and as shall be required in connection with any registration referred to herein.

 

	
(i)   

	
With a view to making available to Holders of Registrable Securities the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Corporation agrees at all times to file with the SEC all reports and other documents required of the Corporation under the Securities Act and the Exchange Act.

 

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

 

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

 

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

 

	
(a)  

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

 

	
(b)  

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

 

	
(c)  

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

 

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

 

  

12

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

DATED as of the 8th day of October, 2010.

 

	 	STELLAR PHARMACEUTICALS INC.	 
	 	 	 	 
	
 

	
Per: 

	 	 
	 	 	Authorized Signing Officer	 

 

  

13

  

 

Schedule "A"

 

SUBSCRIPTION FORM

 

(TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED)

 

 

	
  

	
TO:

	
STELLAR PHARMACEUTICALS INC.

	
  

	
544 Egerton Street, London, Ontario N5W 3Z8

The undersigned hereby subscribes for ____________________ Common Shares of Stellar Pharmaceuticals Inc. according to the terms and conditions set forth in the annexed Warrant Certificate (or such number of other securities or property to which such Warrant Certificate entitles the undersigned to acquire under the terms and conditions set forth in such Warrant Certificate).

 

By checking the applicable line below, the undersigned certifies that either:

 

	
_____

	
it (and any person named hereunder to which common shares are to be issued) is not a U.S. person or a person within the United States and the Warrants are not being exercised within the United States or on behalf of or for the account or benefit of, a U.S. person or a person within the United States.

 

	 	
(For purposes hereof, "United States" and "U.S. Person" shall have the meanings given to such terms in Regulation S under the United States Securities Act of 1933 (the "U.S. Securities Act"));

 

	
_____

	
it purchased the Warrants directly from the Company and it is exercising the Warrants for its own account or for the account of such original beneficial purchase (if any), and is (and such beneficial purchase, if any, also is) an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the U.S. Securities Act

 

or

 

	
_____

	
it is furnishing herewith a written opinion of counsel (which must be satisfactory to the Company) to the effect that the common shares issuable upon exercise of the Warrants have been registered under the U.S. Securities Act and applicable state securities laws or are exempt from registration requirements thereunder.

 

	Address for Delivery of Common Shares:	
_____________________________________

	 	 
	 	
_____________________________________

	 	 
	 	_____________________________________
	 	 
	 	Attention : ____________________________
	 	 
	
Exercise Price Tendered (U.S.$1.50 per Common Share or as adjusted) $ ____________________

 

  

A-1

  

 

Dated at ____________________ this _____ day of _______________ , 20__.

 

	  	
)

)

)

)

)

)

)

)

)

	  
	
Witness:

	
Holder's Name

 

	
Authorized Signature

 

	
Title (if applicable)

 

Signature guaranteed1:

___________________________________________________________________________________________________________________________________________________________________________________________ 

1.   If the Common Shares are to be registered in a name other than the name of the registered Warrant Holder, the signature of the Warrant Holder must be medallion guaranteed by a bank, trust company or a member of a stock exchange in Canada.

 

  

A-2

  

 

Schedule "B"

 

WARRANT TRANSFER FORM

 

FOR VALUE RECEIVED, subject to receipt of prior written approval of STELLAR PHARMACEUTICALS INC. (the "Company"), the undersigned (the "Transferor") hereby sells, assigns and transfers unto (name) ________________________________________ (the "Transferee") of (residential address) ________________________________________________________________________________ a total of ____________________ Warrants of the Company registered in the name of the undersigned represented by the within certificate, and irrevocably appoints the Company as the attorney of the undersigned to transfer the said securities on the register of transfers for the said Warrants, with full power of substitution.

 

The undersigned hereby certifies for the benefit of the Company that either (check one):

 

	
____

	
the transfer of these securities is being made outside the United States in an offshore transaction and the offer of these securities was not made to, and the person named above is not, a person in the United States or a U.S. person (as such terms are defined in Regulation S under the U.S. Securities Act of 1933, as amended).

 

or

 

	
____

	
it has otherwise complied with the transfer restrictions and limitations noted on any legend appearing on the Warrant Certificate and, if required by the legend, has provided the Company with an opinion of counsel to such effect.

 

	
NOTICE:

	
The signature of this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a bank, trust company or a member of a recognized stock exchange.  The guarantor must affix a stamp bearing the actual words "Signature Guaranteed".

 

Dated at ____________________ this _____ day of _______________ , 20__.

  

 

	____________________	________________________________________
	Signature Guaranteed	
(Signature of transferring Warrantholder)

 

	 	________________________________________
	 	
Name (please print)

 

	 	________________________________________
	 	
Address

 

	 	________________________________________

 

 

B-1

 

 

TRANSFEREE ACKNOWLEDGMENT

 

In connection with this transfer (check one):

 

	
o

	
The undersigned transferee hereby certifies that (i) it was not offered the Warrants while in the United States and did not execute this certificate while within the United States; (ii) it is not acquiring any of the Warrants represented by this Warrant Certificate by or on behalf of any person within the United States; and (iii) it has in all other respects complied with the terms of Regulation S of United States Securities Act of 1933, as amended (the "1933 Act"), or any successor rule or regulation of the United States Securities and Exchange Commission as presently in effect.

 

	
o

	
The undersigned transferee is delivering a written opinion of U.S. Counsel acceptable to the Company to the effect that this transfer of Warrants has been registered under the 1933 Act or is exempt from registration thereunder.

 

	______________________________	 
	
(Signature of Transferee)

	 
	 	 
	______________________________	______________________________
	Date	Name of Transferee (please print)

                                                                          

The Warrants and the common shares issuable upon exercise of the Warrants shall only be transferable in accordance with applicable laws.  The Warrants may only be exercised in the manner required by the certificate representing the Warrants and the Warrant Exercise Form attached thereto.  Any common shares acquired pursuant to this Warrant shall be subject to applicable hold periods and any certificate representing such common shares will bear restrictive legends.

 

 

B-2

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