Warrant Purchase Agreement for Canada

Warrant Purchase Agreement Template for Canada

A Canadian Warrant Purchase Agreement is a legally binding document that establishes the terms and conditions under which an investor may purchase warrants from a company. The agreement, governed by Canadian federal and provincial securities laws, details the number of warrants being purchased, their exercise price, exercise period, and the conditions under which they can be converted into equity shares. It includes crucial provisions for regulatory compliance, representations and warranties, transfer restrictions, and registration rights, while addressing specific requirements under Canadian securities regulations and corporate law.

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What is a Warrant Purchase Agreement?

The Warrant Purchase Agreement is a crucial document used in Canadian corporate financing transactions where companies issue warrants to investors as part of their capital raising strategy or strategic partnerships. It serves as the primary agreement governing the purchase of warrants, which give holders the right to purchase company shares at a predetermined price within a specified period. The document must comply with Canadian securities laws, including provincial securities regulations and federal corporate law requirements. It typically includes detailed terms about warrant exercise mechanics, representations about regulatory compliance, transfer restrictions, and rights of the warrant holders. This agreement is particularly important in contexts where companies are looking to provide additional investment incentives or structure complex financing arrangements with delayed equity components.

What sections should be included in a Warrant Purchase Agreement?

1. Parties: Identification of the issuing company and the warrant purchaser(s)

2. Background: Context of the warrant issuance and relationship between the parties

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale of Warrants: Core terms of the warrant purchase including number of warrants, purchase price, and payment terms

5. Exercise of Warrants: Terms and conditions for exercising the warrants, including exercise price, exercise period, and mechanics

6. Representations and Warranties of the Company: Company's confirmations regarding authority, valid issuance, no conflicts, etc.

7. Representations and Warranties of the Purchaser: Purchaser's confirmations regarding investment intent, sophistication, and regulatory compliance

8. Covenants: Ongoing obligations of both parties

9. Registration Rights: Rights regarding registration of underlying shares for public trading

10. Transfer Restrictions: Limitations on transfer of warrants and compliance with securities laws

11. Events of Default: Circumstances constituting default and consequences

12. Termination: Conditions and process for terminating the agreement

13. General Provisions: Standard legal provisions including notices, amendments, governing law, etc.

What sections are optional to include in a Warrant Purchase Agreement?

1. Multiple Closings: Include when the warrant purchase will occur in tranches or multiple closings

2. Conditions Precedent: Include when there are specific conditions that must be met before closing

3. Board Observer Rights: Include when purchaser is granted rights to observe board meetings

4. Information Rights: Include when purchaser is granted specific rights to company information

5. Right of First Refusal: Include when purchaser is granted ROFR on future security issuances

6. Tag-Along Rights: Include when purchaser is granted co-sale rights

7. Put/Call Rights: Include when either party has rights to force a sale/purchase

8. Anti-Dilution Protection: Include when warrant holders are protected against dilution

9. Voting Rights: Include when warrants carry specific voting rights

What schedules should be included in a Warrant Purchase Agreement?

1. Form of Warrant Certificate: The formal certificate representing the warrants

2. Exercise Notice: Form to be completed when exercising warrants

3. Capitalization Table: Current and pro forma capitalization of the company

4. Disclosure Schedule: Exceptions to representations and warranties

5. Registration Rights Agreement: Detailed terms of registration rights if applicable

6. Shareholders Agreement: Agreement governing rights of shareholders post-exercise

7. Legal Opinion: Form of legal opinion to be delivered at closing

8. Compliance Certificate: Form of certificate confirming compliance with conditions

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Free to use

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What is a Warrant Purchase Agreement?

What sections should be included in a Warrant Purchase Agreement?

What sections are optional to include in a Warrant Purchase Agreement?

What schedules should be included in a Warrant Purchase Agreement?

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