DanCann Pharma A/S: NOTICE OF EXTRAORDINARY GENERAL MEETING IN DANCANN PHARMA A/S

Fri, Jun 02, 2023 18:00 CET

The Board of Directors hereby convenes an extraordinary general meeting of DanCann Pharma A/S, CVR-no. 39 42 60 05 (“Company”), to be held on

Tuesday, 20 June 2023 at 09:00 am (CET)

at DanCann Pharma A/S’ address, Rugvænget 5, 6823 Ansager, Denmark

The agenda for the extraordinary general meeting is as follows:

1. 1. 1. 1. Proposed resolution to authorise the Board of Directors to increase the share capital without pre-emption rights for the Company’s shareholders. (proposed by the board of directors)
        
        Proposed resolution to authorise the Board of Directors to issue warrants without pre-emption rights for the Company’s shareholders and to increase the Company’s share capital in this connection. (proposed by the board of directors)
        
        Proposed resolution to authorise the Board of Directors to issue convertible debt instruments without pre-emption rights for the Company’s shareholders and to increase the Company’s share capital in this connection. (proposed by the board of directors)
        
        Proposed resolution to issue warrants to five employees without pre-emption rights for the Company’s shareholders. (proposed by the board of directors)
        
        Proposed resolution to issue warrants to four board members of the Company without pre-emption rights for the Company’s shareholders. (proposed by Jeppe Krog Rasmussen)

Pursuant to art. 12.20 of the Company’s articles of association, the Board of Directors appoints Lawyer Michael Kristensen as chairman of the meeting.

Complete agenda:

Re 1: Proposed resolution to authorise the Board of Directors to increase the share capital without pre-emption rights for the Company’s shareholders

It is proposed that the board of directors, pursuant to clause 155 of the Danish Companies Act, in the period until 1 May 2028 is authorised to issue shares in the Company and thereby increase the share capital in one or more issues of new shares without pre-emption rights for the Company’s shareholders by up to a nominal amount of DKK 2,517,946.6875. The capital increase can be by way of cash contribution, contribution in kind and/or conversion of debt (to be decided by the Board of Directors).

The capital increase can be below market price.

Shares issued pursuant to this authorisation shall be issued in the name of the holder and registered in the Company’s register of shareholders, be fully paid up, be negotiable instruments, there shall be no restrictions on the negotiability of the shares, and the shares shall in every respect carry the same rights as the existing shares.

The board of directors is authorised to lay down the terms and conditions for the capital increases pursuant to the above authorisation and to make such amendments to the Company’s articles of association as may be required as a result of the Board of Directors’ exercise of said authorisation.

Adoption of the proposal will imply that a new clause 5.6 is inserted in the articles of association and clause 5.7 (previously clause 5.6) shall be amended as set out in the draft articles of association enclosed as Schedule 1 (where the amendments following from adoption of the proposals on the agenda are marked up).

Re 2: Proposed resolution to authorise the Board of Directors to issue warrants without pre-emption rights for the Company’s shareholders and to increase the Company’s share capital in this connection

It is proposed to authorise the Board of Directors in one or more tranches and in the period until 1 May 2028 to issue warrants granting the right to subscribe for up to 80,000,000 shares of nominally DKK 0.0375, i.e. up to a total of nominally DKK 3,000,000 shares in the Company, and to authorise the Board of Directors to resolve the related capital increase.

The warrants can be issued without pre-emption rights for the Company’s shareholders. The warrants can be issued below market price.

Warrants, which lapse unexercised or are returned to the Company, can be reissued pursuant to and on the terms in this authorisation.

Shares that are subscribed for on the basis of warrants issued pursuant to this autorisation shall be issued in the name of the holder and registered in the Company’s register of shareholders, be fully paid up, be negotiable instruments, there shall be no restrictions on the negotiability of the shares, and the shares shall in every respect carry the same rights as the existing shares.

It is further proposed to authorise the Board of Directors to lay down the more specific conditions for the distribution and issuance of the said warrants.

Adoption of the proposal will imply that a new clause 6.8 is inserted in the articles of association and that clause 6.10 (previously clause 6.8) is amended as set out in draft of the articles of association of the Company enclosed as Schedule 1.

Re 3: Proposed resolution to authorise the Board of Directors to issue convertible debt instruments without pre-emption rights for the Company’s shareholders and to increase the Company’s share capital in this connection

It is proposed to authorise the Board of Directors in one or more tranches and in the period until 1 May 2028 to issue of convertible debt instruments, giving the lender the right to convert its claim into shares in the Company, and to authorise the Board of Directors to resolve the related capital increase(s). The maximum amount, by which the share capital of the Company can be increased based on the convertible debt instruments, is nominally DKK 18,900,000.

The convertible debt instruments can be issued without pre-emption rights for the Company’s shareholders. The convertible debt instruments can be issued below market price, and the conversion price can be below market price.

Shares that are subscribed for on the basis of convertible debt instruments issued pursuant to this autorisation shall be issued in the name of the holder and registered in the Company’s register of shareholders, be fully paid up, be negotiable instruments, there shall be no restrictions on the negotiability of the shares, and the shares shall in every respect carry the same rights as the existing shares.

It is further proposed to authorise the Board of Directors to lay down the more specific conditions for the distribution and issuance and other terms of the convertible debt instruments.

Adoption of the proposal will imply that a new clause 6.9 is inserted in the articles of association and that clause 6.10 (previously clause 6.8) is amended as set out in draft of the articles of association of the Company enclosed as Schedule 1.

Re 4: Proposed resolution to issue warrants to five employees without pre-emption rights for the Company’s shareholders

The board of directors proposes to issue up to 7,500,000 warrants, each granting the right to subscribe for one (1) share of nominally DKK 0.0375 and to resolve the related capital increase.

The full set of terms of the proposed issue of warrants and the related capital increase are set out in new clause 7.4(a) of the articles of association (see Schedule 1) and draft new Schedule 7.4 to the Company’s articles of association (enclosed as Schedule 2 to this notice).

The most essential terms of the proposed issue and the related capital increase are as follows:

1. 1. The warrants are issued without payment.
  2. The warrants are offered without pre-emption rights for the shareholders, as the warrants are offered to the following employees of the Company and the Company’s subsidiary:
    - Peter Hauberg Søndergaard (intends to subscribe for 1,500,000 warrants)
    - Jeppe Krog Rasmussen (intends to subscribe for 1,500,000 warrants)
    - Louise Conradsen (intends to subscribe for 1,500,000 warrants)
    - Sarah Mai Holm (intends to subscribe for 1,500,000 warrants)
    - Morten Martinsen (intends to subscribe for 1,500,000 warrants)
  3. Subscription for the warrants is for the employee conditioned that the employee is still in employment (Danish: være i uopsagt stilling) with the Company or its subsidiary, as applicable, as at the date of subscription.
  4. Exercise of these warrants is for each warrant holder conditioned that the warrant holder – neither in part nor in full – exercises any other warrants that it holds as part of the existing incentive programs in the Company as at the date of this extraordinary general meeting.
  5. Subscription for the warrants must be completed no later than five (5) days after the general meeting, i.e. on 25 June 2023.
  6. Each warrant gives the right to subscribe for one (1) share of nominally DKK 0.0375 at an exercise price in DKK equivalent to the market price of the Company’s shares as at this extraordinary general meeting. The market price is calculated as the volume-weighted average price of the Company’s shares for the ten (10) latest trading days up to the date of the extraordinary general meeting (i.e. not including the date of the general meeting).
  7. The warrants can be exercised during an 8-year period as described in clause 7.4(a) and draft new Schedule 7.4.
  8. By exercise of the warrants, the share capital of the Company can increase by minimum nominally DKK 0.0375 and maximum nominally DKK 281,250.
  9. The new shares (subscribed for by exercise of the warrants) will be offered in denominations of nominally DKK 0.0375.
  10. The new shares (subscribed for by exercise of the warrants) will carry a right of dividend and other rights in the Company from the date of registration of the shares with the Danish Business Authority.
  11. The new shares (subscribed for by exercise of the warrants) will be registered shares and will be registered in the Company's register of shareholders.
  12. The new shares (subscribed for by exercise of the warrants) will be negotiable instruments.
  13. Part payment of the new shares (subscribed for by exercise of the warrants) is not permitted.
  14. The new shares (subscribed for by exercise of the warrants) carry the same rights as the existing shares.
  15. The shareholders will not have pre-emptions rights to the shares subscribed for by exercise of the warrants.
  16. The new shares (subscribed for by exercise of the warrants) will belong to the same share class as the other shares in the Company. If a resolution is made to introduce different share classes in the Company before the issued warrants are exercised, shares subscribed for by exercise of the warrants will belong to the share class which will place the holders in the position as if the issued warrants had been exercised immediately before the introduction of the new share class(es).
  17. The Company shall pay the costs relating to the related capital increase, which are estimated at DKK 25,000 exclusive of VAT.

The value of each warrant as at the date of this notice is estimated at DKK 0.348 based on The Black Scholes formula, equivalent to a total value of DKK 2,610,000 for 7,500,000 warrants. The board of directors assesses that the proposed issue of warrants is on fair market terms. The value of each warrant as at the date of the general meeting might differ from the above depending on the development of the share price. The Board of Directors has proposed to issue warrants to the employees and to derogate from the shareholders’ pre-emption rights in this regard in order to create an incentive for the employees to take part in and work for a positive development of the Company and its subsidiary.

The costs of this incentive programme are expected to have a limited effect on the Company’s key ratios. The Company’s costs of this incentive programme consist of usual fees to advisers, which are expected to amount to approx. DKK 70,000 (including the amount set out in point xvii) above). Any financial benefit to the employees pursuant to this incentive programme does not impose any tax payment on the Company. Based on the current number of shares in the Company, full exercise of the 7,500,000 warrants will entail a 10.05% dilution of the Company’s share capital (without calculating any dilution resulting from the warrants proposed under item 5 on the agenda).

Apart from this incentive programme (and the incentive programme proposed under item 5), the Company has two other ongoing incentive programmes, both of which are on materially the same terms as this programme. For more information, see Schedules 6.1.1, 6.3.1, 7.2 and 7.3 of the Company’s articles of association.

The terms of the issue are prepared by the current board of directors, and the employees subject to this incentive programme have not participated in the preparation hereof.

Adoption of the proposal will imply that a new clause 7.4(a) is inserted in the articles of association (as set out in Schedule 1 to this notice) and that a draft new Schedule 7.4 (Schedule 2 to this notice) is enclosed to the articles of association.

Re 5: Proposed resolution to issue warrants to four board members of the Company without pre-emption rights for the Company’s existing shareholders

It is proposed to issue up to 1,800,000 warrants, each granting the right to subscribe for one (1) share of nominally DKK 0.0375 and to resolve the related capital increase.

The full set of terms of the proposed issue of warrants and the related capital increase are set out in new clause 7.4(b) of the articles of association (see Schedule 1) and draft new Schedule 7.4 to the Company’s articles of association (enclosed as Schedule 2 to this notice).

The most essential terms of the proposed issue and the related capital increase are as follows:

1. 1. The warrants are issued without payment.
  2. The warrants are offered without pre-emption rights for the shareholders, as the warrants are offered to the following board members of the Company:
    - Carsten Trads (intends to subscribe for 450,000 warrants)
    - Christian Carlsen (intends to subscribe for 450,000 warrants)
    - Alexander Schoeneck (intends to subscribe for 450,000 warrants)
    - Louise Bertelsen Forman (intends to subscribe for 450,000 warrants)
  3. Subscription for the warrants is for each recipient conditioned that he/she has not resigned as a board member of the Company as at the date of subscription.
  4. Exercise of these warrants is for each warrant holder conditioned that the warrant holder – neither in part nor in full – exercises any other warrants that it holds as part of the existing incentive programs in the Company as at the date of this extraordinary general meeting.
  5. Subscription for the warrants must be completed no later than five (5) days after the general meeting, i.e. on 25 June 2023.
  6. Each warrant gives the right to subscribe for 1 share of nominally DKK 0.0375 at an exercise price in DKK equivalent to the market price of the Company’s shares as at this extraordinary general meeting. The market price is calculated as the volume-weighted average price of the Company’s shares for the ten (10) latest trading days up to the date of the extraordinary general meeting (i.e. not including the date of the general meeting).
  7. The warrants can be exercised during an 8-year period as described in clause 7.4(b) and draft new Schedule 7.4.
  8. By exercise of the warrants, the share capital of the Company can increase by minimum nominally DKK 0.0375 and maximum nominally DKK 67,500.
  9. The new shares (subscribed for by exercise of the warrants) will be offered in denominations of nominally DKK 0.0375.
  10. The new shares (subscribed for by exercise of the warrants) will carry a right of dividend and other rights in the Company from the date of registration of the shares with the Danish Business Authority.
  11. The new shares (subscribed for by exercise of the warrants) will be registered shares and will be registered in the Company's register of shareholders.
  12. The new shares (subscribed for by exercise of the warrants) will be negotiable instruments.
  13. Part payment of the new shares (subscribed for by exercise of the warrants) is not permitted.
  14. The new shares (subscribed for by exercise of the warrants) carry the same rights as the existing shares.
  15. The existing shareholders will not have pre-emptions rights to the shares subscribed for by exercise of the warrants.
  16. The new shares (subscribed for by exercise of the warrants) will belong to the same share class as the other shares in the Company. If a resolution is made to introduce different share classes in the Company before the issued warrants are exercised, shares subscribed for by exercise of the warrants will belong to the share class which will place the holders in the position as if the issued warrants had been exercised immediately before the introduction of the new share class(es).
  17. The Company shall pay the costs relating to the related capital increase, which are estimated at DKK 25,000 exclusive of VAT.

The value of each warrant as at the date of this notice is estimated at DKK 0.348 based on The Black Scholes formula, equivalent to a total value of DKK 626,400 for 1,800,000 warrants. Jeppe Krog Rasmussen assesses that the proposed issue of warrants is on fair market terms. The value of each warrant as at the date of the general meeting might differ from the above depending on the development of the share price.

It is proposed to issue warrants to the board members and to derogate from the shareholders’ pre-emption rights in this regard in order to create an incentive for the board members to take part in and work for a positive development of the Company.

The costs of this incentive programme are expected to have a limited effect on the Company’s key ratios. The Company’s costs of this incentive programme consist of usual fees to advisers, which are expected to amount to approx. DKK 70,000 (including the amount set out in point xvii) above). Any financial benefit to the board member pursuant to this incentive programme does not impose any tax payment on the Company. Based on the current number of shares in the Company, full exercise of the 1,800,000 warrants will entail a 2.41% dilution of the Company’s share capital (without calculating any delution resulting from the warrants proposed under item 4 on the agenda).

Apart from this incentive programme (and the incentive programme proposed under item 4), the Company has two other ongoing incentive programmes, both of which are on materially the same terms as this programme. For more information, see Schedules 6.1.1, 6.3.1, 7.2 and 7.3 of the Company’s articles of association.

The terms of the issue are prepared by Jeppe Krog Rasmussen, and the terms are essentially identical to the terms of the warrants under item 4 on the agenda. The new board members subject to this incentive programme have not participated in the preparation hereof.

Adoption of the proposal will imply that a new clause 7.4(b) is inserted in the articles of association (as set out in Schedule 1 to this notice) and that a draft new Schedule 7.4 (Schedule 2 to this notice) is enclosed to the articles of association.

Majority requirements
Adoption of the proposals set out in items 1-5 require that the proposal is passed by at least 9/10 of the votes cast as well as 9/10 of the share capital represented at the general meeting.

Attendance, proxy and postal vote

Attendance
All shareholders holding shares in the Company on the date of registration at 23:59 pm (CET) have right to attend and vote at the extraordinary general meeting if having requested an admission card in accordance with the instructions below. The shareholding of each shareholder is determined at the date of registration at 23:59 pm (CET), based on the number of shares held by the shareholder as registered in the register of shareholders and on any notice of ownership received by the Company or EURONEXT SECURITIES for the purpose of registration in the register of shareholders, but not yet registered. Hence, shareholders who are not registered by name in the register of shareholders cannot vote and attend the extraordinary general meeting.

The date of registration is 13 June 2023.

In order for a shareholder to attend the extraordinary general meeting, the shareholder must submit a request for an admission card, and such request must be received by the Company no later than 16 June 2023 at 23:59 pm (CET).

The request must be submitted to the Company by e-mail: info@dancann.com or by physical post to the Company’s address, Rugvænget 5, 6823 Ansager, Denmark and shall identify (i) the shareholder’s name, (ii) address, (iii) Company reg. no. (if relevant), (iv) e-mail address, and (v) VP account no. A form for a request of an admission card is enclosed as Schedule 3 and is available at the Company’s website: www.dancann.com/investor-relations#General-Meetings.

Proxy
Shareholders may exercise their right to vote by proxy. Proxy form is enclosed as Schedule 3 and is available at the Company’s website: www.dancann.com/investor-relations#General-Meetings. Proxies can be revoked by the shareholder at any time. Proxy to the Board of Directors must be submitted to the Company by e-mail: info@dancann.com or by physical post to the Company’s address, Rugvænget 5, DK-6823 Ansager, Denmark, and must be received by the Company no later than 19 June 2023 at 10:00 am (CET).

If a shareholder has provided a third party with a proxy, the third party must show an admission card and a written and dated instrument of proxy to be granted physical access to the extraordinary general meeting. Alternatively, the proxy to third party must be sent to the Company, in which case it must be received no later than 19 June 2023 at 10:00 am (CET).

All shareholders and proxies may attend the extraordinary general meeting with an adviser, if indicated in the request for an admission card submitted in accordance with the instructions above.

Postal vote
Shareholders may vote by post for the items on the agenda. Postal voting form is enclosed as Schedule 3 and is available at the Company’s website: www.dancann.com/investor-relations#General-Meetings, and must be submitted to the Company by email: info@dancann.com or by physical post to the Company’s address, Rugvænget 5, 6823 Ansager, Denmark.

Postal votes must be received by the Company no later than 19 June 2023 at 10:00 am (CET). Postal votes cannot be revoked.

Share capital and voting rights
As of the date of this notice, the share capital of the Company is nominally DKK 2,517,946.6875. The share capital is divided into 67,145,245 shares of a nominal value of DKK 0.0375 per share. Each share of a nominal value of 0.0375 carries the right to one (1) vote at the extraordinary general meeting (67,145,245 votes in total).

Shareholders’ right to ask questions
Prior to the general meeting shareholders may submit questions relating to the Company’s position and other items on the agenda. Such questions may be submitted by e-mail: info@dancann.com or by physical post to the Company’s address, Rugvænget 5, 6823 Ansager, Denmark.

Further, shareholders may ask questions at the general meeting.

Questions will be answered at the extraordinary general meeting.

Language
The extraordinary general meeting will be conducted in English.

Information at the Company’s website
This notice to convene the extraordinary general meeting, including the agenda, schedules, the complete proposed resolutions, and the form for a request of an admission card and proxy and postal voting form are available at the Company’s website: www.dancann.com/investor-relations#General-Meetings.

The address of the Company’s website is www.dancann.com.

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The Board of Directors
2 June 2023

DanCann Pharma A/S: NOTICE OF EXTRAORDINARY GENERAL MEETING IN DANCANN PHARMA A/S

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