EXHIBIT 10.1

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION THAT
WAS OMITTED IN THE EDGAR VERSION HAS BEEN NOTED IN THIS DOCUMENT WITH A
PLACEHOLDER IDENTIFIED BY THE MARK “[***]”.

 

MATERIAL AND DATA TRANSFER, OPTION AND LICENSE AGREEMENT

 

THIS MATERIAL AND DATA TRANSFER, OPTION AND LICENSE AGREEMENT (this “Agreement”)
entered into on this December 20, 2017 (the “Signature Date”) by and between
NEOMED Institute, a not-for-profit corporation established under the
Not-for-Profit Corporations Act (Canada), having an address at 7171
Frederick-Banting, Saint-Laurent, Quebec H4S 1Z9, Canada (“NEOMED”), and Artelo
Biosciences, Inc., a Nevada corporation, having an address at 888 Prospect
Street, Suite 210, La Jolla, California 92037, U.S.A. (“Artelo”) shall be
effective as of the Effective Date (as defined in Section 1.9 below). Each of
NEOMED and Artelo may be referred to herein as a “Party”, or jointly as the
“Parties”.

 

WHEREAS, NEOMED owns or controls rights in and to its proprietary therapeutic
compound NEO1940 (formally known as [***]);

 

WHEREAS, Artelo desires to obtain from NEOMED an exclusive option for an
exclusive worldwide license to develop and commercialize products comprising or
containing the NEO1940 compound;

 

WHEREAS, Artelo desires to obtain from NEOMED certain materials, data and
information relating to the NEO1940 compound for evaluation, research and
development use in order to assist Artelo in making the determination whether to
exercise such exclusive option; and

 

WHEREAS, the Parties agree that in the event that Artelo exercises such
exclusive option, NEOMED shall grant to Artelo such exclusive worldwide license,
subject to and in accordance with the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties agree as follows:

 

1. DEFINITIONS

 

1.1 “Affiliate” shall mean, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of another Person if
it owns, or directly or indirectly controls, more than fifty percent (50%) of
the voting stock or other ownership interest of the other Person, or if it
directly or indirectly possesses the power to direct or cause the direction of
the management and policies of the other Person by any means whatsoever.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

1.2 “Commercially Reasonable Efforts” shall mean, with respect to the efforts
and resources to be expended by a Party, efforts and resources commensurate with
the efforts and resources commonly used in the pharmaceutical or biotechnology
industry by a company of comparable size in connection with the development or
commercialization of pharmaceutical or biotechnology products that are of
similar status, taking into account the proprietary position of the product
(including intellectual property scope, subject matter and coverage), safety and
efficacy, product profile, competitiveness of the marketplace, the regulatory
status and approval process, anticipated or approved labeling, present and
future market potential, the probable profitability of the applicable product
(including pricing and reimbursement status achieved or likely to be achieved)
and other relevant factors such as technical, legal, scientific or medical
factors.

 

1.3 “Compound” shall mean NEOMED’s proprietary therapeutic compound NEO1940
(formerly known as [***]).

 

1.4 “Compound-Related Improvements” shall mean any and all IP Improvements
relating solely to the Compound.

 

1.5 “Confidential Information” shall mean, with respect to a Party
(“Discloser”), all information of any kind whatsoever, and all tangible and
intangible embodiments thereof of any kind whatsoever, which is or was disclosed
by or on behalf of such Party to the other Party (“Recipient”) in connection
with this Agreement or the Confidentiality Agreement. Notwithstanding the
foregoing, Confidential Information of a Party shall not include information
which Recipient can establish by written documentation: (a) to have been
publicly known prior to disclosure of such information by Discloser to
Recipient, (b) to have become publicly known, without fault on the part of
Recipient, subsequent to disclosure of such information by Discloser to
Recipient, (c) to have been received by Recipient at any time from a source,
other than Discloser, rightfully having possession of and the right to disclose
such information without restriction, (d) to have been otherwise known by
Recipient prior to disclosure of such information by Discloser to Recipient or
(e) to have been independently developed by employees or agents of Recipient
without access to or use of such information disclosed by Discloser to
Recipient.

 

1.6 “Confidentiality Agreement” shall mean the Confidentiality Agreement between
the Parties dated September 13, 2017.

 

1.7 “Control”, “Controls” or “Controlled” shall mean, with respect to any
know-how, patents, copyrights, proprietary information or trade secrets, or
other intellectual property rights (collectively, “Rights”), the legal authority
or right (whether by ownership, license or otherwise) of a Party to grant a
license or a sublicense of or under such Rights to the other Party, or to
otherwise disclose such proprietary information or trade secrets to the other
Party, without breaching the terms of any agreement with a Third Party, or
misappropriating the proprietary information or trade secrets of a Third Party.

 

1.8 “Data” means all data, including, and not limited to, clinical study
reports, clinical study protocols, clinical data, and historical clinical safety
data that is necessary or useful to seek regulatory approval to market the
Product, as well as all regulatory reports, regulatory communications and other
regulatory information developed, received or prepared by or for Artelo for the
Product, except for any and all patient information;

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 2 -

   

 

1.9 “Effective Date” shall mean January 2, 2018.

 

1.10 “FDA” shall mean the United States Food and Drug Administration or any
successor agency thereto.

 

1.11 “FD&C Act” shall mean the United States Federal Food, Drug, and Cosmetic
Act (21 U.S.C. § 301 et seq.), as amended, and the rules and regulations
promulgated thereunder.

 

1.12 “Field” shall mean all fields of use.

 

1.13 “First Commercial Sale” shall mean, with respect to a Product in any
country, the first sale of such Product in such country to a Third Party for
consideration. First Commercial Sale excludes any sale or other distribution of
a Product for use in a clinical trial or other development activity, reasonable
promotional use (including samples) prior to marketing approval or for
reasonable compassionate use or on a named patient basis.

 

1.14 “Indication” shall mean each separate disease, disorder, illness, health
condition, or interruption, cessation or disruption of a bodily function,
system, tissue type or organ and all of its associated signs, symptoms, stages
or progression (including precursor conditions) (“Condition”) for which a
separate Regulatory Approval is required. Notwithstanding the foregoing,
subpopulations or patients with a primary Condition, however stratified
(including stratification by stages of progression, particular combinations of
symptoms associated with the primary disease or condition, prior treatment
courses, response to prior treatment, family history, clinical history,
genotype, phenotype or other stratification) shall not be deemed to be separate
Indications for the purposes of this Agreement. For clarity, different cancer
types (breast, colon, lung, etc.) are each considered an Indication while stages
of progression within a single cancer type are not considered an Indication
under this definition.

 

1.15 “Improvement” shall mean, with respect to any intellectual property, any
revision, modification, translation, abridgment, condensation, expansion,
adaptation, addition, improvement, derivative work, update or upgrade to or from
such intellectual property.

 

1.16 “IND” shall mean an Investigational New Drug Application, as defined in the
FD&C Act, that is required to be filed with the FDA before beginning clinical
testing of a Product in human subjects, or a comparable foreign filing.

 

1.17 “IP Improvement” shall mean any Improvement to any intellectual property
covered by the Licensed IP Rights made by Artelo, its Affiliates or sublicensees
after the date of the Option Exercise Notice.

 

1.18 “Know-How” shall mean all information and data that is not generally known
(including, but not limited to, information and data regarding formulae,
procedures, protocols, techniques, pharmacological, toxicological and clinical
data and results and other results of experimentation and testing).

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 3 -

   

 

1.19 “Licensed IP Rights” shall mean, collectively, the Licensed Patent Rights,
the Licensed Copyrights and the Licensed Know-How Rights.

 

1.20 “Licensed Copyrights” shall mean rights in works of authorship, including
without limitation copyrights, whether registered or unregistered, arising under
the laws of any jurisdiction anywhere in the world, including moral rights and
mask work rights, and all registrations and applications for registration with
respect thereto which are Controlled by NEOMED as of the Effective Date or at
any time during the term of this Agreement and which are necessary or useful for
Artelo and its Affiliates and sublicensees to use, develop, sell, or seek
regulatory approval to market or otherwise exploit the Compound.

 

1.21 “Licensed Know-How” shall mean all Know-How which is Controlled by NEOMED
as of the Effective Date or at any time during the term of this Agreement and
which is necessary or useful for Artelo and its Affiliates and sublicensees to
use, develop, sell, or seek regulatory approval to market or otherwise exploit
the Compound.

 

1.22 “Licensed Know-How Rights” shall mean all trade secret, know-how and other
intellectual property rights (other than Licensed Copyrights and Licensed Patent
Rights) in the Licensed Know-How.

 

1.23 “Licensed Patent Rights” shall mean (a) all patent applications heretofore
or hereafter filed or having legal force in any country within the Territory
which claim any discovery or inventions relating to the Compound, or the process
of manufacture or use thereof Controlled by NEOMED as of the Effective Date or
at any times during the term of this Agreement, including without limitation
those listed on Exhibit A attached hereto; (b) all patents that have issued or
in the future issue from such patent applications, including utility, model and
design patents and certificates of invention Controlled by NEOMED as of the
Effective Date or at any times during the term of this Agreement, including
without limitation those listed on Exhibit A attached hereto; and (c) all
divisionals, continuations, continuations‑in‑part, reissues, renewals,
extensions or additions to any such patent applications and patents.

 

1.24 “Major Market Countries” shall mean the United States, Canada, the United
Kingdom, Germany, France, Spain, Italy and Japan.

 

1.25 “NDA” shall mean a new drug application or product license application or
its equivalent filed with and accepted by the FDA after completion of human
clinical trials to obtain marketing approval for any Product, or any comparable
application filed with and accepted by the Regulatory Authority of a country
other than the United States.

 

1.26 “Net Sales” shall mean, with respect to any Product, the invoiced sales
price of such Product billed by Artelo, its Affiliates and sublicensees to Third
Party customers, less reasonable and customary (a) credits, allowances,
discounts and rebates to, and chargebacks from the account of, such independent
customers for spoiled, damaged, out‑dated, rejected or returned Product; (b)
prepaid actual freight and insurance costs incurred in transporting such Product
to such customers separately invoiced and stated; (c) cash, quantity and trade
discounts and other price reductions in amounts customary in the trade for
quantity purchases; (d) sales, use, value‑added and other direct taxes incurred
separately invoiced and borne by Artelo, its Affiliates and sublicensees; and
(e) customs duties, surcharges and other governmental charges incurred in
connection with the exportation or importation of such Product separately
invoiced and borne by Artelo, its Affiliates and sublicensees. Product
reasonably provided without charge in connection with research and development,
clinical trials, compassionate use, humanitarian and charitable donations,
indigent programs or for use as samples will be excluded from the computation of
Net Sales.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 4 -

   

 

1.27 “Option” shall have the meaning set forth in Section 3.1.

 

1.28 “Option Exercise Notice” shall have the meaning set forth in Section 3.2.

 

1.29 “Option Period” shall have the meaning set forth in Section 3.1.

 

1.30 “Person” shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.

 

1.31 “Phase II Clinical Study” shall mean a study of a Product in human patients
to determine initial efficacy and dose range finding before embarking on Phase
III Clinical Studies.

 

1.32 “Phase III Clinical Study” shall mean a study in human patients with a
defined dose or a set of defined doses of a Product which study, if the defined
end-points are met, is designed to ascertain or establish efficacy and safety of
such Product in patients for the indication being studied for the purpose of
preparing and submitting a Regulatory Approval Application to the competent
Regulatory Authority in a country of the world.

 

1.33 “Product” shall mean any product containing or comprising the Compound
and/or containing, prepared with, using or covered by Licensed IP Rights or any
part thereof.

 

1.34 “Product-Related Improvements” shall mean any and all IP Improvements
(other than Compound-Related Improvements) that are reasonably necessary to
develop, make or sell Compound or Product.

 

1.35 “Regulatory Approval” shall mean any technical, medical and scientific
license, registration, authorization or approval (including, without limitation,
any approval of an NDA, supplement or amendment, pre- and post- approval,
pricing approval, or labeling approval) of any national, supra-national,
regional, state or local regulatory agency, department, bureau, commission,
council or other governmental entity, necessary for the commercial manufacture,
distribution, marketing, promotion, offer for sale, use, import, export and sale
of a Product in a regulatory jurisdiction.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 5 -

   

 

1.36 “Regulatory Approval Application” shall mean an application submitted to
the appropriate Regulatory Authority seeking Regulatory Approval of a Product
for use in one or more therapeutic indications in a regulatory jurisdiction
within the Territory.

 

1.37 “Regulatory Authority” shall mean any national, regional, state or local
regulatory agency, department, bureau, commission, council or other governmental
entity in each country of the world involved in the granting of Regulatory
Approval for the Product.

 

1.38 “Research Plan” shall mean the research plan attached hereto as Exhibit B
attached hereto.

 

1.39 “Royalty Term” shall mean, with respect to each Product in each country,
the period until the [***] of the expiration of the last to expire Valid Claim
in such country that would be infringed, or if such Valid Claim is a pending
patent application, would be infringed if such application were to issue with
the claims as then being prosecuted, as applicable to such Product in such
country, but for the license granted by this Agreement. For the absence of
doubt, as an example, [***].

 

1.40 “Technology Transfer Materials” means all information, materials, and
documentation Controlled by NEOMED relating to the Compound which is reasonably
necessary or useful (a) for Artelo’s evaluation, research and development use in
order to assist Artelo in making the determination whether to exercise the
Option, and (b) if Artelo exercises the Option, for Artelo’s use to research,
develop and commercialize the Products, including (i) the quantity of Compound
specified in the Research Plan; and (ii) any other data, information and
documents Controlled by NEOMED relating to the Compound and known to NEOMED to
be necessary or reasonably useful for Artelo to exercise its rights to perform
any authorized activities under this Agreement.

 

1.41 “Territory” shall mean the entire world.

 

1.42 “Third Party” shall mean any Person other than NEOMED, Artelo and their
respective Affiliates.

 

1.43 “Valid Claim” shall mean either (a) a claim of an issued and unexpired
patent within the Licensed Patent Rights, which has not been held permanently
revoked, unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise; or (b) a claim of a
pending patent application within the Licensed Patent Rights.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 6 -

   

 

2. MATERIAL AND DATA TRANSFER

 

2.1 Supply of Technology Transfer Materials.

 

2.1.1 Within [***] after the Effective Date, NEOMED, without additional
consideration and at NEOMED’s sole cost, shall deliver to Artelo the Technology
Transfer Materials set forth on Exhibit C in its possession and such quantity of
Compound substance as mutually agreed to by the parties (“Required Compound
Supply”).

 

2.1.2 If Artelo exercises the Option, promptly following the receipt of the
Option Exercise Notice, NEOMED shall without additional consideration and at
NEOMED’s sole cost, deliver to Artelo, without limitation, all Technology
Transfer Materials and all remaining quantities of Compound substance in
NEOMED’s possession. For the avoidance of doubt, NEOMED shall have no further
obligation to provide Compound substance in addition to the quantity in NEOMED’s
possession as of the Effective Date, and if Artelo requires additional supply of
the Compound substance in addition to the such quantity of Compound substance in
NEOMED’s possession, ARTELO will be responsible at its own cost for its
sourcing, synthesis, and supply of such additional Compound substance.

 

2.1.3 If at any time during the term of this Agreement either Party discovers
any additional Technology Transfer Materials (other than the Compound substance)
which are Controlled by NEOMED but which were not provided by NEOMED to Artelo ,
or (ii) any updates to or new versions of any Technology Transfer Materials
provided by NEOMED to Artelo pursuant to this Section 2.1 become available,
NEOMED shall provide requested, updates to, or new versions of, as applicable,
Technology Transfer Materials to Artelo, without additional consideration,
promptly following the discovery thereof or as any such update or new version of
such Technology Transfer Materials become available, as applicable.

 

2.2 Use of Technology Transfer Materials.

 

2.2.1 Unless and until Artelo exercises the Option, Artelo (a) shall use the
Technology Transfer Materials solely to conduct the activities set forth in the
Research Plan for evaluation, research and development purposes in order to
assist Artelo in making the determination whether to exercise the Option, and
(b) shall not file or prosecute in any country any patent application which
claims or uses or purports to claim or use the Technology Transfer Materials or
their use or anything resulting from their use.

 

2.2.2 Unless and until Artelo exercises the Option, promptly upon the expiration
of the Option Period or earlier termination of this Agreement, Artelo shall
return all remaining Technology Transfer Materials to NEOMED.

 

2.2.3 If Artelo’s activities conducted pursuant to the Research Plan prior to
the exercise of the Option by Artelo result in any invention or discovery that
constitutes an Improvement to the Technology Transfer Materials, such invention
or discovery and all intellectual property rights therein shall be owned solely
by NEOMED. Artelo shall promptly disclose each such invention or discovery to
NEOMED. Artelo hereby assigns to NEOMED all right, title and interest in all
such inventions and discoveries and all intellectual property rights therein
(“Research Program IP”). Artelo shall perform such acts and sign and cause to be
signed such documents (including assignments) necessary or useful to ensure that
all rights in the Research Program IP vest with NEOMED at all times. For
clarity, if Artelo exercises the Option, the Research Program IP shall be
included in the Licensed IP Rights.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 7 -

   

 

2.2.4 Artelo hereby acknowledges that the Technology Transfer Materials are
experimental in nature and that they are provided “AS IS.” NEOMED MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
TECHNOLOGY TRANSFER MATERIALS OR THE USE THEREOF. Artelo shall comply with all
laws and governmental rules, regulations and guidelines which are applicable to
the Technology Transfer Materials or the use thereof, including without
limitation biosafety procedures, and with any safety precautions accompanying
the Technology Transfer Materials.

 

3. OPTION

 

3.1 Option Grant. For a period commencing on the Effective Date and subject to
early termination, ending on [***] NEOMED delivers the Required Compound Supply
to Artelo (“Option Period”), Artelo shall have the sole and exclusive right, but
not the obligation to receive an exclusive license under the Licensed IP Rights
to research, develop, make, have made, use, offer for sale, sell, have sold and
import Products and otherwise exploit the Licensed IP Rights in the Territory in
the Field, subject to the terms and conditions of this Agreement (the “Option”).
During the Option Period, NEOMED shall not, without Artelo’s prior written
consent, directly or indirectly: (i) negotiate or enter into any agreement,
arrangement or commitment according to which a Third Party is granted any right
in the Territory under the Licensed IP Rights, (ii) take any action which may
derogate from or conflict with, or refrain from taking any action which is
necessary to preserve, the Option, or (iii) enter into any agreement,
arrangement or commitment that would derogate from or conflict with the rights
granted to Artelo under this Agreement.

 

3.2 Option Exercise. In order to exercise the Option, Artelo shall provide a
written option exercise notice to NEOMED prior to the expiration of the Option
Period (the “Option Exercise Notice”), and as of the date of the receipt of the
Option Exercise Notice by NEOMED, the license grant to Artelo set forth in
Section 4.1 shall automatically become effective. For the abundance of clarity,
Artelo shall have the right to exercise the Option by providing the Option
Exercise Notice to NEOMED at any point in time during the Option Period.

 

4. LICENSE GRANT

 

4.1 Licensed IP Rights. Conditional only upon Artelo serving the Option Exercise
Notice and receipt of such Option Exercise Notice by NEOMED in accordance with
Section 3.2, and subject to the terms and conditions of this Agreement, NEOMED
hereby grants to Artelo an exclusive license under the Licensed IP Rights to
research, develop, make, have made, use, offer for sale, sell, have sold and
import Products and otherwise exploit the Licensed IP Rights in the Territory in
the Field. During the term of this Agreement, NEOMED shall not enter into any
agreement or otherwise license, grant, assign, transfer, convey or otherwise
encumber or dispose any right, title or interest in, to or under any of the
Licensed IP Rights, which agreement, license, grant, assignment, transfer,
conveyance, encumbrance or disposition would conflict with the rights granted to
Artelo hereunder.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 8 -

   

 

4.2 Sublicenses. Artelo may grant sublicenses under the license in Section 4.1
to Third Parties, provided that each such sublicense agreement is consistent
with the terms and conditions of this Agreement. Artelo shall remain directly
jointly and severally responsible for each of its sublicensees’ compliance with
this Agreement and shall promptly provide a copy of each such sublicense
agreement to NEOMED, which sublicense agreement copy may be redacted, provided
that no information necessary for NEOMED to verify the compliance of such
sublicense agreement with this Agreement or to ascertain NEOMED’s rights with
respect thereto may be redacted.

 

4.3 Extension to Affiliates. Artelo shall have the right to extend the rights
and obligations granted in this Agreement to one or more of its Affiliates. All
applicable terms and provisions of this Agreement shall apply to any such
Affiliate to which this Agreement has been extended to the same extent as such
terms and provisions apply to Artelo. Artelo shall remain directly, jointly and
severally liable for any acts or omissions of its Affiliates, and Artelo hereby
expressly waives any requirement that NEOMED exhaust any right, power or remedy,
or proceed directly against such Affiliate, for any obligation or performance
hereunder prior to proceeding directly against Artelo.

 

4.4 Rights Reserved. This Agreement shall not be interpreted or construed as
granting Artelo any rights, expressed or implied, to any of the Licensed IP
Rights, or other form of rights other than the rights specifically and expressly
granted herein and in accordance with this Agreement.

 

4.5 Restriction. In consideration for the rights granted herein by NEOMED,
Artelo undertakes not to license, acquire or develop any rights relating to a
compound of the same chemical class as the Compound (other than the Compound)
during the Royalty Term.

 

4.6 IP Improvements. Subject to Sections 12.6.2 and 12.6.3, Artelo shall retain
all rights, titles and interests in and to the IP Improvements.

 

5. CONSIDERATION

 

5.1 Option Consideration.

 

5.1.1 Equity Grant. On the Effective Date, as partial consideration for the
grant of the Option by NEOMED to Artelo and the supply of the Technology
Transfer Materials, Artelo shall grant NEOMED 120,000 fully paid and
non-assessable shares of Artelo’s common stock, subject to Artelo and NEOMED
then executing a Common Stock Purchase Agreement in substantially the form
attached hereto as Exhibit D (the “Purchase Agreement”). To the extent of any
conflict between the terms of this Section 5.1.1 and the Purchase Agreement, the
terms and conditions of the Purchase Agreement shall control and be
determinative.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 9 -

   

 

5.1.2 Cash Consideration. As partial consideration for the grant of the Option
by NEOMED to Artelo and the supply of the Technology Transfer Materials, Artelo
shall make the following payments to NEOMED: (a) [***] due on the Effective
Date, (b) [***], (c) [***], and (d) [***]; provided that if any of the foregoing
payments have not accrued and become due prior to the earlier to occur of (i)
the exercise of the Option by Artelo, and (ii) termination of this Agreement by
Artelo pursuant to Section 12.2 hereof, then Artelo’s payment obligations with
respect to such payments that have not accrued and become due shall be
extinguished and become null and void. If Artelo is unable to receive the
Required Compound Supply within [***] after the Effective Date, then the due
date for the payments owing under clauses (c) and (d) of this Section 5.1.2
shall be extended by the length of the period required for Artelo to receive the
Required Compound Supply. Notwithstanding the foregoing, the due date for the
payments owing under clauses (c) and (d) of this Section 5.1.2 will not be
extended by more than [***].

 

5.2 License Consideration.

 

5.2.1 Equity Grant. Conditional upon Artelo’s exercise of the Option, as partial
consideration for the license granted to Artelo by NEOMED under Section 4.1,
within ten (10) business days after the delivery of the Option Exercise Notice
by Artelo to NEOMED, Artelo shall grant NEOMED a number of fully paid and
non-assessable shares of Artelo’s common stock equal to [***] of Artelo’s
Fully-Diluted Shares then outstanding, subject to Artelo and NEOMED then
executing a Common Stock Purchase Agreement in substantially the form attached
hereto as Exhibit E. For purposes of this Section 5.2.1, “Fully-Diluted Shares”
shall mean, as of immediately prior to Artelo’s exercise of the Option, the sum
of (a) the outstanding shares of common stock of Artelo; (b) the shares of
common stock of Artelo directly or indirectly issuable upon conversion or
exchange of all outstanding securities directly or indirectly convertible into
or exchangeable for common stock of Artelo and the exercise of all outstanding
options and warrants; and (c) the shares of common stock of Artelo reserved, but
neither issued nor the subject of outstanding awards, under any equity incentive
or similar plan of Artelo.

 

5.2.2 License Issuance Fee. Conditional upon Artelo’s exercise of the Option, as
partial consideration for the license granted to Artelo by NEOMED under Section
4.1, within ten (10) business days after the delivery of the Option Exercise
Notice by Artelo to NEOMED, Artelo shall pay to NEOMED a license issuance fee of
[***].

 

5.2.3 Royalties.

 

(a) Royalty Rates. Conditional upon Artelo’s exercise of the Option, as partial
consideration for the license granted to Artelo by NEOMED under Section 4.1,
during the Royalty Term, Artelo shall pay royalties to NEOMED on Net Sales of
Products by Artelo, its Affiliates and sublicensees in the Territory as follows:

 

Cumulative Net Sales1 in a Calendar Year (“Annual Net Sales”)

Rate

Portion of Annual Net Sales under or equal to $500,000,000

[***]

Portion of Annual Net Sales greater than $500,000,000

[***]

 

1. In calculating the Annual Net Sales for the purposes of determining the
applicable royalty rate, Annual Net Sales shall include the cumulative Net Sales
of Artelo, its Affiliates and sublicensees in a Calendar Year for all Products.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 10 -

   

 

(b) Royalty Payments. Royalties will be payable on a calendar quarter basis.
Within sixty (60) days after the end of each calendar quarter following the
First Commercial Sale of the first Product, Artelo shall deliver to NEOMED a
report containing the following information for the prior calendar quarter on a
Product-by-Product and country-by-country basis: (i) the gross sales associated
with each Product sold by Artelo and its Affiliates; (ii) a calculation of Net
Sales of each Products that are sold by Artelo and its Affiliates; and (iii) a
calculation of payments due to NEOMED with respect to the foregoing.
Concurrently with these reports, Artelo shall remit to NEOMED any payment due
for the applicable calendar quarter on Net Sales of Artelo and its Affiliates.
Within seventy-five (75) days after the end of each calendar quarter following
the First Commercial Sale of the first Product, Artelo shall deliver to NEOMED a
report containing the following information for the prior calendar quarter on a
Product-by-Product and country-by-country basis: (i) the gross sales associated
with each Product sold by Artelo’s sublicensees; (ii) a calculation of Net Sales
of each Product that are sold by Artelo’s sublicensees; and (iii) a calculation
of payments due to NEOMED with respect to the foregoing. Concurrently with these
reports, Artelo shall remit to NEOMED any payment due for the applicable
calendar quarter on Net Sales of Artelo’s sublicensees. If no royalties are due
to NEOMED for such reporting period, the report shall so state.

 

(c) Royalty Adjustment. In the event that the Royalty Rates payable to NEOMED
negatively impacts the ability of Artelo, its Affiliates and sublicensees to
maximize the Net Sales or earn reasonable profit thereon during the Royalty
Term, but after the expiration of the last to expire Valid Claim in the
applicable country, then the Parties agree to negotiate in good faith an
adjustment to the royalty rates applicable to such country.

 

(d) Combination Product. If a Product is sold in a combination product with
other pharmaceutically active components, Net Sales, for purposes of royalty
payments on the combination product in a country, shall be calculated by
multiplying the Net Sales of that combination product by the fraction A/A+B,
where A is the invoice price of the Product sold separately in such country and
B is the invoice price of the other active components in such combination
product in such country. If no such separate sales are made by Artelo, its
Affiliates or sublicensees, Net Sales for royalty determination shall be
calculated by multiplying Net Sales of the combination by the fraction C/(C+D),
where C is the fully allocated cost of the Product in such country and D is the
fully allocated cost of such other active components in such country.
Notwithstanding the above, Artelo shall in all cases notify and provide
supporting data to NEOMED and NEOMED shall have the right to review any
Combination Product calculations.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 11 -

   

 

(e) Third Party Royalties. If Artelo, its Affiliates or sublicensees are
required to pay royalties to any Third Party in order to exercise its rights
hereunder to develop, make, use, offer for sale, sell or import any Product,
then Artelo shall have the right to credit up to [***] of such Third Party
royalty actually paid against the royalties owing to NEOMED under Section
5.2.3(a) above with respect to sales of such Product; provided, however, that
Artelo shall first inform NEOMED and not reduce the amount of the royalties paid
to NEOMED under Section 5.2.3(a) above, with respect to sales of such Product,
by more than [***].

 

5.2.4 Milestone Payments. Conditional upon Artelo’s exercise of the Option, as
partial consideration for the license granted to Artelo by NEOMED under Section
4.1, Artelo shall pay to NEOMED the following milestone payments:

 

[***]

 

Milestone payments owing by Artelo to NEOMED pursuant to Section 5.2.4(a)
through (c) shall be payable by Artelo within [***] following the achievement of
the corresponding milestone event. Milestone payments owing by Artelo to NEOMED
pursuant to Section 5.2.4(d) through (g) shall be payable by Artelo within [***]
following the achievement of the corresponding milestone event. For the
avoidance of doubt, each milestone payment is only payable once, regardless of
the number of times such milestone may be achieved by Artelo, its Affiliates and
sublicensees, except that with respect to the milestone event set forth in
Section 5.2.4(c), a corresponding milestone payment shall be due each time such
milestone event is achieved. For the abundance of clarity, no milestone payment
shall be due upon the Regulatory Approval of a Product for the first Indication
in any country. For further clarity, all Annual Net Sales made by Artelo, its
Affiliates and sublicensees prior to the expiration of the Royalty Term shall be
considered in determining whether the milestone payments owing by Artelo to
NEOMED pursuant to Section 5.2.4(d) through (g) become due.

 

Solely with respect to the milestone payment due under Section 5.2.4(a), payment
shall be by any of the following, or a combination thereof, at the election of
Artelo: (x) cash; or (y) issuance of shares of Artelo’s common stock which shall
be valued at its Fair Market Value on the date of exercise. For purposes of this
Section 5.2.4, “Fair Market Value” shall mean (i) if Artelo’s common stock is
listed on any established stock exchange or a national market system, including
without limitation the New York Stock Exchange, the NASDAQ Global Select Market,
the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock
Market, its Fair Market Value will be based on the five (5) day volume-weighted
average price immediately preceding the milestone as quoted on such exchange or
system on the day of determination, as reported in The Wall Street Journal or
such other source as Artelo deems reliable; or (ii) in the absence of an
established market for Artelo’s common stock, the Fair Market Value will be
determined in good faith by Artelo’s board of directors provided that, the Fair
Market Value will in no circumstances be greater than the price paid by a third
party investor in the last private financing round in excess of $1,000,000
completed by Artelo.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 12 -

   

 

5.2.5 Strategic Transaction Consideration. Conditional upon Artelo’s exercise of
the Option, as partial consideration for the license granted to Artelo by NEOMED
under Section 4.1, Artelo shall pay to NEOMED a percentage of the Strategic
Transaction Consideration in addition to the consideration due under Sections
5.2.1, 5.2.2, 5.2.3 and 5.2.4 as follows:

 

(a) [***] of the Strategic Transaction Consideration resulting from a Strategic
Transaction consummated during the period from the date of [***];

 

(b) [***] of the Strategic Transaction Consideration resulting from a Strategic
Transaction consummated during the period from [***]; and

 

(c) [***] of the Strategic Transaction Consideration resulting from a Strategic
Transaction consummated during the period from [***].

 

Each Strategic Transaction Consideration payment owing by Artelo to NEOMED
pursuant to this Section 5.2.5 shall be payable by Artelo within [***] following
the receipt by Artelo of the corresponding Strategic Transaction Consideration.
For clarity, no portion of any Strategic Transaction Consideration resulting
from a Strategic Transaction consummated after [***] of the date of the Option
Exercise Notice shall be due to NEOMED.

 

As used herein, “Strategic Transaction” means either (x) a grant by Artelo of a
sublicense under the Licensed IP Rights to a Third Party (“Sublicense”), or (y)
a transaction or a series of related transactions that results in an acquisition
of Artelo by a Third Party, including by way of merger, purchase of capital
stock or purchase of assets or change of control or otherwise (“Acquisition”);
and “Strategic Transaction Consideration” means any cash consideration and the
fair market value of any non-cash consideration paid to Artelo by (x) any
sublicensee in consideration for a grant of a Sublicense under the Licensed IP
Rights, including, without limitation upfront payments and milestone payments,
but expressly excluding (i) royalties for sales of products or services, (ii)
payments for the performance of or reimbursement for research or development
activities performed by or on behalf of Artelo, (iii) payments as reimbursement
for patent-related costs, (iv) payments for grants of rights to technology other
than Licensed IP Rights, (v) payments for the supply of products, services or
materials to a sublicensee, or (y) any acquirer as consideration for the
assignment of this Agreement pursuant to an Acquisition, provided, however, that
if contemporaneously with an assignment of this Agreement pursuant to an
Acquisition, Artelo also assigns or licenses to the assignee other intellectual
property or any other assets of Artelo, then the Strategic Transaction
Consideration shall be determined pro rata based on the fair market value of the
Licensed IP Rights relative to the fair market value of such other intellectual
property and assets. No payment shall be due to NEOMED on any Strategic
Transaction Consideration received by Artelo from any of its Affiliates in
consideration for a Sublicense (but excluding any Third Party that becomes an
Affiliate of Artelo pursuant to the Acquisition).

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 13 -

   

 

6. ROYALTY REPORTS AND ACCOUNTING

 

6.1 Royalty Reports. During the term of this Agreement following the First
Commercial Sale of a Product, Artelo shall furnish to NEOMED quarterly written
reports showing in reasonably specific detail the calculation of royalties owing
for the reporting period in accordance with Section 5.2.3(b). With respect to
sales of Products invoiced in United States dollars, all amounts shall be
expressed in United States dollars. With respect to sales of Products invoiced
in a currency other than United States dollars, all amounts shall be expressed
in the domestic currency of the party making the sale together with the United
States dollar equivalent. The United States dollar equivalent shall be
calculated using the average of the exchange rate (local currency per US$1)
published in The Wall Street Journal, Western Edition, under the heading
“Currency Trading” on the last business day of each month during the applicable
calendar year. Artelo shall keep complete and accurate records in sufficient
detail to enable the royalties and other payments payable hereunder to be
determined.

 

6.2 Audits.

 

6.2.1 Upon the written request of NEOMED and not more than once in each calendar
year, Artelo shall permit an independent certified public accounting firm of
nationally recognized standing selected by NEOMED and reasonably acceptable to
Artelo, at NEOMED’s expense, to have access during normal business hours to such
of the records of Artelo as may be reasonably necessary to verify the accuracy
of the royalty reports for any year ending not more than three (3) years prior
to the date of such request. The accounting firm shall disclose to NEOMED only
whether or not the reports are correct and the amount of any discrepancies. No
other information shall be shared.

 

6.2.2 If such accounting firm concludes that additional payments were owed
during such period, Artelo shall make such additional payments including a
yearly interest rate of [***] to be computed daily, within thirty (30) days of
the date NEOMED delivers to Artelo such accounting firm’s written report so
concluding the fees and expenses charged by such accounting firm shall be paid
by NEOMED; provided, if the audit correctly discloses that the amounts payable
by Artelo for the audited period are [***] or more than the amounts actually
paid by Artelo for such period, then Artelo shall pay the additional payments
owed and the fees and expenses charged by such accounting firm.

 

6.2.3 NEOMED shall treat all financial information subject to review under this
Section 6.2 as confidential, and shall cause its accounting firm to retain all
such financial information in confidence under Section 10 below.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 14 -

   

 

7. PAYMENTS

 

7.1 Payment Terms. Royalties shown to have accrued by each royalty report
provided for under Section 6.1 shall be due on the date such royalty report is
due. The method of payment shall be by check or wire transfer to an address or
account specified in writing by NEOMED. Payment in whole or in part may be made
in advance of such due date.

 

7.2 Exchange Control. If at any time legal restrictions prevent the prompt
remittance of part or all royalties with respect to any country in the Territory
where the Product is sold, Artelo shall have the right, in its sole discretion,
to make such payments by depositing the amount thereof in local currency to
NEOMED’s account in a bank or other depository institution in such country. If
the royalty rate specified in this Agreement should exceed the permissible rate
established in any country, the royalty rate for sales in such country shall be
adjusted to the highest legally permissible or government-approved rate.

 

7.3 Withholding Taxes. Artelo shall be entitled to deduct the amount of any
withholding taxes, value-added taxes or other taxes, levies or charges with
respect to such amounts, other than United States taxes, payable by Artelo, its
Affiliates or sublicensees, or any taxes required to be withheld by Artelo, its
Affiliates or sublicensees, to the extent Artelo, its Affiliates or sublicensees
pay to the appropriate governmental authority on behalf of NEOMED such taxes,
levies or charges. Artelo shall use reasonable efforts to minimize any such
taxes, levies or charges required to be withheld on behalf of NEOMED by Artelo,
its Affiliates or sublicensees. Artelo promptly shall deliver to NEOMED proof of
payment of all such taxes, levies and other charges, together with copies of all
communications from or with such governmental authority with respect thereto.

 

8. DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS

 

8.1 Option Period. During the Option Period, prior to the exercise of the Option
by Artelo, Artelo shall use Commercially Reasonable Efforts to conduct the
activities set forth in the Research Plan at Artelo’s sole expense. Artelo shall
further provide NEOMED with updates on the progress of the Research Plan for
each quarterly period during the Option Period in the form of an update phone
call promptly following the conclusion of each of the first two (2) months of
each quarterly period, and a summary written report provided promptly following
the conclusion of each quarterly period.

 

8.2 Following Option Exercise. Following the exercise of the Option by Artelo,
Artelo shall use Commercially Reasonable Efforts to research, develop and
commercialize Products in the Territory in accordance with this Section 8.2. The
efforts of Artelo’s Affiliates and sublicensees shall be treated as the efforts
of Artelo when evaluating Artelo’s compliance with the foregoing diligence
obligations. Without limiting the generality of the foregoing, Artelo will be
responsible for conducting all necessary studies, including safety studies and
clinical trials that are necessary in connection with seeking Regulatory
Approvals to market the Product in the Territory, at Artelo’s own cost and
discretion.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 15 -

   

 

8.2.1 Commercialization Efforts. Artelo shall use Commercially Reasonable
Efforts to obtain Regulatory Approval of at least one Product in each of the
Major Market Countries. Promptly following the Regulatory Approval of a Product
in a country in the Territory, Artelo shall use Commercially Reasonable Efforts
to launch the Product in such country. Marketing, distribution and sale of the
Products in the Territory shall be the sole responsibility of Artelo, which
shall have the sole right and discretion to make all decisions relating thereto.
Following launch of a Product in a country, Artelo shall use Commercially
Reasonable Efforts to market and sell such Product in such country. The efforts
of Artelo’s Affiliates and sublicensees shall be treated as the efforts of
Artelo when evaluating Artelo’s compliance with the foregoing diligence
obligations.

 

8.2.2 Reporting. Artelo shall provide NEOMED with written reports detailing the
activities of Artelo, its Affiliates and sublicensees with respect to the
research and development of and pre-commercial launch activities for Products in
the Field in the Territory, both as to activities conducted during the prior
period and planned activities for the Compound and Products, in sufficient depth
to enable NEOMED to reasonably assess Artelo’s compliance with its diligence
obligations hereunder. Artelo shall present such report to NEOMED in conjunction
with a meeting (either in person or by videoconference, as the Parties may
agree) with Artelo’s personnel responsible for the conduct of such development
(and, if applicable, pre-commercial launch activities) which personnel shall
include at least one Artelo representative responsible for such development
(and, if applicable, pre-commercial launch activities) at a level of vice
president or higher. Such reports shall be made on a semi-annual basis (within
sixty (60) days following the end of each six (6) month period ending June 30
and December 31) until the First Commercial Sale occurs. In addition to such
reports, upon reasonable request of NEOMED, Artelo will provide written summary
updates of its progress since the close of the period covered by the last report
provided.

 

8.2.3 Specific Diligence Obligations. Without limiting the generality of
Sections 8.1 and 8.2, Artelo shall:

 

(a) Submit to NEOMED, within [***] following the delivery of the Option Exercise
Notice, a certification supported by reasonable documentation, that Artelo, its
Affiliates and sublicensees (or any combination thereof) control sufficient
resources to maintain the performance of the obligations under this Section 8.2;

 

(b) Use Commercially Reasonable Efforts to initiate, directly or through its
Affiliates or sublicensees, a Phase II Clinical Study for a Product within [***]
following the delivery of the Option Exercise Notice; and

 

(c) Use Commercially Reasonable Efforts to initiate, directly or through its
Affiliates or sublicensees, a Phase III Clinical Study for a Product within
[***] following the delivery of the Option Exercise Notice.

 

8.2.4 Regulatory Approvals and Regulatory Reporting. Artelo will be responsible
for the preparation and filing of the Regulatory Approvals for the Products with
the applicable Regulatory Authorities in the Territory. Artelo shall prepare and
file the Regulatory Approval Applications for the Products with the Regulatory
Authorities in its name and at its cost. Artelo shall file, in its own name and
at its own expense, all other applications for any approvals required for any
clinical study or other study or action necessary or desirable to obtain such
Regulatory Approval. Artelo shall have the sole responsibility for communicating
with any Regulatory Authority regarding any Regulatory Approval Application or
any Regulatory Approval for the Products once granted or any such other
applications. Artelo shall be responsible for filing, at its own expense, all
reports required to be filed in order to maintain any Regulatory Approvals
granted for the Products.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 16 -

   

 

8.2.5 Product Labeling. Artelo shall be solely responsible for the preparing,
updating and maintaining product labeling in connection with commercialization
of the Products and in compliance with all applicable laws and regulations. Such
labeling may include but is not limited to text and graphical contents of
printed labels and labeling components, including but not necessarily limited to
healthcare professional leaflets or inserts, patient leaflets or inserts, and
cartons.

 

9. REPRESENTATIONS AND WARRANTIES

 

9.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party as follows as of the Effective Date:

 

9.1.1 Corporate Existence. Such Party is a not-for-profit corporation or a
corporation, as applicable, duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized.

 

9.1.2 Authorization and Enforcement of Obligations. Such Party (a) has the
organizational power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary organizational action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered on behalf of such Party, and
constitutes a legal, valid, binding obligation, enforceable against such Party
in accordance with its terms.

 

9.1.3 No Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained by such Party
in connection with this Agreement have been obtained.

 

9.1.4 No Conflict. The execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.

 

9.2 Additional NEOMED Representations and Warranties. In addition, NEOMED hereby
represents and warrants to Artelo that:

 

9.2.1 Each item of the Licensed Patent Rights set forth in Exhibit A (a) is
subsisting and in full force and effect, (b) has not been abandoned or passed
into the public domain and (c) is free and clear of any liens or encumbrances
(other than payment obligations to one or more Third Party).

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 17 -

   

 

9.2.2 NEOMED has not transferred ownership of, or granted any license of or
right to use, or authorized the retention of any rights to use or joint
ownership of, any Licensed IP Rights to any Person in any manner that would
conflict with the license granted to Artelo in Section 4.1.

 

9.2.3 NEOMED exclusively Controls the Licensed IP Rights and has all rights
necessary to grant the licenses to Artelo hereunder.

 

9.2.4 No patent application or registration within the Licensed Patent Rights is
the subject of any pending interference, opposition, cancellation or patent
protest.

 

9.2.5 No Person has made any claim or allegation to NEOMED or its Affiliates in
writing that such Person has any right or interest in, to or under the Licensed
IP Rights.

 

9.2.6 Except as disclosed by NEOMED to Artelo prior to the Effective Date and
summarized on Schedule 9.2.6 attached hereto, NEOMED has no knowledge of any
facts, circumstances or information that (a) would render any Licensed Patent
Right invalid or unenforceable or (b) would adversely affect any pending
application for any Licensed Patent Right.

 

9.2.7 NEOMED has not misrepresented, or failed to disclose, and has no knowledge
of any misrepresentation or failure to disclose, any material fact or
circumstances in any application for any Licensed Patent Right that would
constitute fraud or a misrepresentation with respect to such application or that
would otherwise affect the validity or enforceability of any Licensed Patent
Right.

 

9.2.8 All necessary registration, maintenance and renewal fees in connection
with each item of the Licensed Patent Rights have been paid and to NEOMED’s
knowledge all necessary documents and certificates in connection with such
Licensed Patent Rights have been filed with the relevant patent or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Licensed Patent Rights.

 

9.2.9 No claim or litigation has been brought against it or to its knowledge
threatened by any Third Party alleging that (a) the Licensed Patent Rights are
invalid or unenforceable or (b) the manufacture, sale, offer for sale,
importation or exploitation of the Compound and/or any subject matter covered by
the Licensed IP Rights infringe or misappropriate or would infringe or
misappropriate any right of any Third Party.

 

9.3 Disclaimers and Limitations

 

9.3.1 SUBJECT TO THE WARRANTIES SET FORTH IN SECTION 9.2, THE RIGHTS TO THE
LICENSED IP RIGHTS GRANTED HEREUNDER ARE PROVIDED TO ARTELO ON AN “AS IS” BASIS
IN ALL OTHER RESPECTS.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 18 -

   

 

9.3.2 EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS ARTICLE 9, NEOMED DISCLAIMS ANY
AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE,
NON-INFRINGEMENT AND ANY WARRANTY ARISING OUT OF PRIOR COURSE OF DEALING AND/OR
USAGE OF TRADE.

 

9.3.3 WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NEOMED SPECIFICALLY DOES
NOT MAKE ANY WARRANTIES OR REPRESENTATIONS EXPRESS OR IMPLIED, CONCERNING THE
LICENSED IP RIGHTS OR OF THE COMPOUND OR PRODUCT OR THE SCOPE OF THE LICENSED
PATENT RIGHTS. NEOMED MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES, EXPRESS
OR IMPLIED, AND ASSUMES NO LIABILITIES OR RESPONSIBILITIES WITH RESPECT TO THE
USE, SALE OR OTHER DISPOSITION BY ARTELO, ITS AFFILIATES, ITS SUB-LICENSEES,
ASSIGNEES OR END USERS OF THE COMPOUND OR THE PRODUCT MANUFACTURED OR DEVELOPED
USING THE LICENSED IP RIGHTS. IN NO EVENT SHALL NEOMED BE LIABLE FOR ANY DIRECT,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF
PROFITS, REVENUE, DATA OR USE, INCURRED BY ARTELO, ITS AFFILAITES, OR THE
SUBLICENSEES OR BY ANY OTHER PERSON, WHETHER IN AN ACTION IN CONTRACT OR TORT,
ARISING UNDER THIS AGREEMENT OR IN RELATION WITH THE LICENSED IP RIGHTS, THE
COMPOUND OR THE PRODUCT, EVEN IF NEOMED OR ANY THIRD PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.

 

10. CONFIDENTIALITY

 

10.1 Confidentiality Obligations. Recipient shall keep and hold Confidential
Information of Discloser in strictest confidence, and shall not use such
Confidential Information for any purpose, other than as may be reasonably
necessary for the performance of its duties under this Agreement, without
Discloser’s prior written consent. Recipient shall not disclose any such
Confidential Information to any person or entity without Discloser’s prior
written consent, except to its and its Affiliates’ employees, consultants and
agents, as necessary for the sole purpose of performing Recipient’s duties
hereunder, under written terms and conditions no less protective of the
Confidential Information than the terms and conditions of this Section 10. The
obligations of confidentiality under this Section 10 shall last until the
applicable Confidential Information is no longer secret and confidential,
through no fault of Recipient or any of its Affiliates or sublicensees, or until
one of the exceptions in Section 1.5 applies to such Confidential Information,
whichever occurs first.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 19 -

   

 

10.2 Permitted Disclosures. Notwithstanding anything herein to the contrary,
Recipient may disclose Confidential Information of Discloser to the extent
necessary to: (a) comply with an applicable law, regulation of a governmental
agency or order of a court of competent jurisdiction, (b) to disclose
information to any governmental agency for purposes of obtaining approval to
test or market a Product or (c) prosecute or defend litigation; provided that if
Recipient is required by law or regulation to make any such disclosure of
Discloser’s Confidential Information, it will give reasonable advance notice to
Discloser of such disclosure requirement and will use commercially reasonable
efforts to assist such Discloser to secure a protective order or confidential
treatment of the Confidential Information required to be disclosed and will
limit disclosure to such Confidential information required to be disclosed. In
addition, notwithstanding anything herein to the contrary, Recipient may
disclose Discloser’s Confidential Information to the extent (and only to the
extent) such disclosure is reasonably necessary in the following instances: (i)
in order for it to reasonably fulfill its obligations herein and to conduct its
ordinary course of business, to its subcontractors, vendors, outside legal
counsel, accountants and auditors under written obligations of confidentiality
and non-use no less protective of the of the Confidential Information than the
terms and conditions of this Section 10; (ii) in connection with prosecuting and
enforcing intellectual property rights in connection with Recipient’s rights and
obligations pursuant to this Agreement; and (iii) in connection with exercising
its rights hereunder, to its Affiliates, potential and future bona fide
collaborators (including sublicensees, potential and permitted acquirers or
assignees and potential investment bankers, investors and lenders) under written
obligations of confidentiality and non-use no less protective of the
Confidential Information than the terms and conditions of this Section 10.

 

10.3 Confidential Terms. Each of the Parties agrees not to disclose to any Third
Party the terms and conditions of this Agreement without the prior approval of
the other party, except to advisors (including financial advisors, attorneys and
accountants), under written obligations of confidentiality and non-use no less
protective of the Confidential Information than the terms and conditions of this
Section 10, to potential and existing bona fide investors, financing sources,
merger or other business partners and acquirers, on a need to know basis.
Notwithstanding the foregoing, the Parties agree to issue, on such date as
reasonably requested by Artelo, a joint press release to announce the execution
of this Agreement, in the form mutually agreed to by the parties; thereafter,
each party may each disclose to third parties the information contained in such
press release without the need for further approval by the other party.

 

10.4 SEC or Similar Filings. Either Party may disclose the terms of this
Agreement and events related to the development or commercialization of Products
(including the receipt of milestone payments) to the extent reasonably required
to comply with applicable laws, rules and regulations, including, without
limitation, the rules and regulations promulgated by the United States
Securities and Exchange Commission comparable foreign regulator and
self-regulatory organizations (such as securities exchanges).

 

10.5 Injunctive Relief Authorized. Each Party as a Recipient acknowledges and
agrees that (a) the Confidential Information of Discloser is of a special,
unique, unusual, extraordinary and intellectual character; (b) the unauthorized
use or disclosure of any Confidential Information of Discloser would constitute
a material breach of this Agreement; (c) the interests of Discloser in and to
the Confidential Information would be irreparably injured by the unauthorized
use or disclosure of such information; and (d) money damages would not be
sufficient to compensate Discloser for any such unauthorized use or disclosure.
Accordingly, Recipient agrees that, in addition to any other remedies available
to Discloser at law, in equity or under this Agreement, Discloser shall be
entitled to seek specific performance, injunctive relief and other equitable
relief to prevent any actual or threatened use or disclosure of the Confidential
Information of Discloser without obligation to post any bond.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 20 -

   

 

11. PATENTS

 

11.1 Prosecution and Maintenance of Licensed Patent Rights.

 

11.1.1 Option Period.

 

(a) Unless and until Artelo provides NEOMED with the Option Exercise Notice
pursuant to Section 3.2, NEOMED shall be responsible for the preparation,
filing, prosecution and maintenance of the Licensed Patent Rights in accordance
with the provisions of this Section 11.1.1.

 

(b) NEOMED will diligently prosecute and maintain the United States and foreign
patent applications and patents within the Licensed Patent Rights, subject to
Artelo’s reimbursement of all NEOMED’s costs under Section 11.1.1(d). NEOMED
will have sole responsibility for retaining and instructing patent counsel.
NEOMED will provide Artelo with copies of all proposed patent office filings and
correspondence, sufficiently in advance of submitting same to the patent office,
so that Artelo may comment upon such documentation. NEOMED will promptly provide
Artelo with copies of all official patent office correspondence so that Artelo
may be informed of the continuing prosecution, and Artelo agrees to keep this
documentation confidential in accordance with Section 10. Artelo may comment
upon such documentation, provided that, if Artelo has not commented upon such
documentation in reasonable time for NEOMED to sufficiently consider Artelo’s
comments prior to the deadline for filing a response with the relevant
government patent office, NEOMED will be free to respond appropriately without
consideration of Artelo’s comments.

 

(c) NEOMED will cooperate with Artelo in good faith to prepare or amend any
patent application within Licensed Patent Rights to include claims reasonably
requested by Artelo to protect the Products contemplated to be developed by
Artelo under this Agreement.

 

(d) Artelo shall reimburse NEOMED for all its costs for preparing, filing,
prosecuting, and maintaining all United States and foreign patent applications
and patents under Licensed Patent Rights that are incurred during the period
from the Effective Date until either the patent prosecution and maintenance
responsibilities are transitioned to Artelo pursuant to Section 11.1.2 or this
Agreement is terminated. Patent cost reimbursement payments are due within
thirty (30) days after receipt of invoice from NEOMED.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 21 -

   

 

11.1.2 Following Option Exercise. At such time as Artelo provides NEOMED with
the Option Exercise Notice pursuant to Section 3.2, Artelo shall assume and
shall be responsible for the preparation, filing, prosecution and maintenance of
the Licensed Patent Rights, at Artelo’s sole expense. Promptly following
NEOMED’s receipt of the Option Exercise Notice, and in any event within thirty
(30) days thereafter, the Parties shall cooperate in good faith to execute a
transition of the patent prosecution and maintenance responsibilities from
NEOMED to Artelo. NEOMED shall cause its patent prosecution counsel to cooperate
with Artelo’s patent prosecution counsel to ensure a smooth transition. Artelo
will provide NEOMED with copies of all proposed patent office filings and
correspondence, sufficiently in advance of submitting same to the patent office,
so that NEOMED may comment upon such documentation. Artelo will promptly provide
NEOMED with copies of all official patent office correspondence so that Artelo
may be informed of the continuing prosecution. If Artelo elects not to file any
patent application claiming any Licensed Patent Rights or otherwise abandon the
prosecution and maintenance of any patent application or patent claiming any
Licensed Patent Rights, then (a) Artelo shall provide NEOMED with reasonable
notice of such decision so as to permit NEOMED to decide whether to assume such
responsibilities (such notice shall be given no later than thirty (30) days
prior to the next deadline to take any necessary action with the relevant patent
office); and (b) NEOMED shall have the right but not the obligation to control
the filing, prosecution and maintenance of such patent application or patent on
such Licensed Patent Rights, at NEOMED’s sole cost.

 

11.2 Enforcement of Licensed Patent Rights.

 

11.2.1 Each Party shall notify the other Party of any infringement known to such
Party of any Licensed Patent Rights by a Third Party and shall provide the other
Party with the available evidence, if any, of such infringement.

 

11.2.2 Artelo, at its sole expense, shall have the first right to determine the
appropriate course of action to enforce the Licensed Patent Rights or otherwise
abate such infringement, to take (or refrain from taking) appropriate action to
enforce the Licensed Patent Rights, to control any litigation or other
enforcement action and, subject to NEOMED’s written consent, not to be
unreasonably withheld, delayed or conditioned, to enter into, or permit, the
settlement of any such litigation or other enforcement action with respect to
the Licensed Patent Rights, and shall endeavor, in good faith, that the
interests of NEOMED are protected in so doing. NEOMED agrees to cooperate
reasonably with Artelo in any action to enforce the Licensed Patent Rights under
this Section 11.2.2, provided that Artelo reimburses NEOMED promptly for any
costs and expenses incurred by NEOMED in providing such assistance. Without
limiting the generality of the foregoing, should Artelo elect to bring suit
against an infringer of Licensed Patent Rights, NEOMED agrees to be joined as
party plaintiff in any such suit, if deemed a necessary party, subject to
Artelo’s reimbursement of NEOMED’s costs and expenses as set forth above.

 

11.2.3 If Artelo does not, within [***] of receipt of notice from NEOMED under
Section 11.2.1 , abate the infringement or file suit to enforce the Licensed
Patent Rights , NEOMED shall have the right to take whatever action it deems
appropriate to enforce the Licensed Patent Rights. The Party controlling any
such enforcement action shall not settle the action or otherwise consent to an
adverse judgment in such action that adversely affects the rights or interests
of the non-controlling Party without the prior written consent of the other
Party.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 22 -

   

 

11.2.4 All monies recovered upon the final judgment or settlement of any such
suit to enforce the Licensed Patent Rights pursuant to this Section 11.2 shall
be first used to reimburse each Party for its costs and expenses incurred in
connection with such suit pro rata, and the remainder, if any, shall be
allocated as follows: (a) for any suit initiated and prosecuted by Artelo, the
remainder shall be deemed Net Sales and allocated in accordance with Section
5.2.3, and (b) for any suit initiated and prosecuted by NEOMED, the remainder
shall be remitted to NEOMED.

 

11.3 IP Improvements. Artelo shall be responsible for the preparation, filing,
prosecution, maintenance and enforcement of the patent rights within the IP
Improvements, at Artelo’s sole expense

 

11.4 Undertakings.

 

11.4.1 Artelo hereby undertakes not to challenge the validity of any of the
Licensed IP Rights, nor institute any legal proceeding of any nature and kind
against NEOMED, its Affiliates or sublicensees in respect of the Compounds, the
Licensed IP Rights and/or Products relating to this Agreement, other than with
respect to any uncured breach of this Agreement by NEOMED.

 

11.4.2 Artelo hereby agrees to comply with the patent marking laws and
regulations in each country of the Territory in which any Product is sold by
Artelo, its Affiliates or its sublicensees.

 

12. TERMINATION

 

12.1 Expiration. Subject to early termination pursuant to the provisions of
Sections 5.2.3 above. If this Agreement expires pursuant to clause (b) of this
Section 12.1, then upon expiration of the Royalty Term, on a country-by-country
basis, the licenses granted to Artelo by NEOMED under this Agreement shall be
fully paid-up and irrevocable in the countries in which the Royalty Term has
expired.

 

12.2 Termination by Artelo. Artelo may terminate this Agreement in its entirety,
in its sole discretion, at any time effective (a) [***], during the Option
Period, or (b) [***] after NEOMED’s receipt of a written notice of termination
provided by Artelo to NEOMED, following the date of the Option Exercise Notice.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 23 -

   

 

12.3 Termination by NEOMED. NEOMED shall have the right to terminate this
Agreement if Artelo does not exercise Commercially Reasonable Efforts to meet
its obligations under Section 8.2.3(a), (b) or (c) in accordance with the
following procedure:

 

(a) If Artelo fails to meet its obligations under Section 8.2.3(a), (b) or (c),
the Parties shall promptly review the underlying reasons and agree on
appropriate measures to enable Artelo to meet such obligations. Artelo shall use
Commercially Reasonable Efforts to pursue implementation of such measures in
good faith during a cure period of [***]. Should Artelo (i) fail to use
Commercially Reasonable Efforts to pursue implementation of such agreed
appropriate measures in good faith and (ii) as a result fails to meet its
obligations under Section 8.2.3(b) or (c) prior to the expiration of the [***]
cure period, NEOMED shall have the right to terminate this Agreement upon [***]
written notice.

 

(b) Notwithstanding the above, if any such failure by Artelo was due to a
material adverse event or any factors which could have not been reasonably
foreseen by Artelo or which were outside the control of Artelo (including
without limitation any action or failure to act by any Regulatory Authority or
any other governmental authority, including without limitation the FDA or the
U.S. Drug Enforcement Administration), then (i) Artelo shall notify NEOMED of
such event or factors promptly upon becoming aware thereof and (ii) a new
planning process will be triggered to determine revised targets taking into
account the estimated impact of such events and/or factors promptly following
such notice.

 

12.4 Termination for Cause. Either Party will have the right to terminate this
Agreement in full upon delivery of written notice to the other Party in the
event of any material breach by the other Party of any terms and conditions of
this Agreement, provided, that such termination will not be effective if such
breach has been cured within [***] after written notice thereof is given by the
non-breaching Party to the breaching Party specifying in reasonable detail the
nature of the alleged breach; provided further, however, that if the material
breach is not reasonably capable of being cured within the [***] cure period,
and if the breaching party (a) proposes within such [***] a written plan to cure
such breach that is reasonably acceptable to the non-breaching Party, and (b)
makes good faith efforts to cure such default and to implement such written cure
plan and reports at least monthly to the non-breaching Party in writing as to
the status of such efforts and cure, then the non-breaching Party may not
terminate this Agreement for so long as the breaching Party is diligently
pursuing such cure in accordance with such plan. Further, if the material breach
is disputed, then no termination pursuant to this Section 12.4 shall be
effective prior to the resolution of such dispute in accordance with Section
14.3. All of the terms and conditions of this Agreement shall remain in full
force and effect during the pendency of such dispute resolution process.

 

12.5 Termination for Business Failure. Either Party will have the right to
terminate this Agreement immediately upon written notice to the other Party in
the event that (i) the other Party becomes insolvent, or (ii) a receiver,
trustee, or custodian is appointed for the other Party, or (iii) the other Party
makes an assignment for the benefit of creditors, or is involuntary liquidated
or dissolved, and (iv) in the event of the occurrence of any action or event
which is, comparable in law of one or more of the events described in this
Section 12.5.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 24 -

   

 

12.6 Effect of Expiration or Termination. Upon expiration of this Agreement
pursuant to Section 12.1(a) (but not expiration of this Agreement pursuant to
Section 12.1(b)) or any termination of this Agreement pursuant to Section 12.2
or 12.3 or any termination of this Agreement by NEOMED pursuant to 12.4 or 12.5:

 

12.6.1 Termination of Licenses. All rights and licenses granted to Artelo
hereunder shall terminate.

 

12.6.2 Transfer of Data and Compound-Related Improvements. Artelo further agrees
to transfer all Data and Compound-Related Improvements in its possession and
control to NEOMED as soon as reasonably practicable.

 

12.6.3 Product-Related Improvements. To the extent requested in writing by
NEOMED within [***] after the effective date of termination, the Parties shall
negotiate, in good faith, an agreement on commercially reasonable terms,
pursuant to which Artelo would grant to NEOMED a license under Artelo’s
intellectual property rights in the Product-Related Improvements to develop,
make, use, sell, offer for sale and import the Compound or a Product. Such
negotiation shall take into consideration amounts invested by Artelo in the
clinical development of the Compound and Products.

 

12.6.4 Confidential Information. Recipient shall, within thirty (30) days after
the effective date of termination and at Recipient’s expense, return or destroy,
at Discloser’s election, all Discloser Know-How and other Confidential
Information of Discloser (provided that Recipient may keep one copy of such
Confidential Information for archival purposes only and such additional copies
of or any computer records or files containing such Confidential Information
that have been created solely by Recipient’s automatic or routine archiving and
back-up procedures, to the extent created and retained in a manner consistent
with Recipient’s standard archiving and back-up procedures, but not for any
other use or purpose, subject to an ongoing obligation of confidentiality in
accordance with Section 10).

 

12.6.5 Sublicenses. If this Agreement is terminated pursuant to Section 12.2,
12.3, 12.4 or 12.5, all sublicenses that are granted by Artelo pursuant to this
Agreement and in accordance with Section 4.2 where the sublicensee is in
compliance with its sublicense agreement and this Agreement as of the date of
such termination will remain in effect and will be assigned to NEOMED, provided
that [***].

 

12.7 Survival. Expiration or termination of this Agreement shall not relieve the
parties of any obligation accruing prior to such expiration or termination, and
the provisions of Sections 2.2.3, 2.2.4, 4.4, 4.6, 5.2.3, 6, 9.3, 10, 12.6,
12.7, 13 and 14, and such other Sections of this Agreement that are required to
give effect to such Sections, shall survive the expiration or termination of
this Agreement.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 25 -

   

 

13. INDEMNIFICATION

 

13.1 Indemnification by Artelo. Artelo shall defend, indemnify and hold NEOMED
and its (and its Affiliates’) members, directors, officers, employees and agents
harmless from all losses, liabilities, damages and expenses (including
reasonable attorneys’ fees and costs) (collectively, “Losses”) resulting from
any claims, demands, actions and other proceedings including without limitation,
for bodily injury (including death), to the extent resulting from Artelo’s or
its Affiliates’ or sublicensees’ use of the Licensed IP Rights, any use or
handling of the Compound substance or research, development or commercialization
of the Compound or any Product under this Agreement except to the extent such
Losses are subject to NEOMED’s indemnification obligations under Section 13.2
below.

 

13.2 Indemnification by NEOMED. NEOMED shall defend, indemnify and hold Artelo
and its (and its’ Affiliates’) directors, officers, employees and agents
harmless from all Losses resulting from any claims, demands, actions and other
proceedings to the extent resulting from (a) the material breach of the
representations and warranties made hereunder by NEOMED or its Affiliates or (b)
any governmental charges, fines, penalties or similar amounts arising from any
use or handling of the Compound substance by or on behalf of NEOMED or its
Affiliates, except to the extent such Losses are subject to Artelo’s
indemnification obligations under Section 13.1 above.

 

13.3 Procedure. The Party seeking indemnification (the “Indemnified Party”)
promptly shall notify the other party (the “Indemnifying Party”) of any claim,
demand, action or other proceeding for which the Indemnified Party intends to
claim indemnification. The Indemnifying Party shall have the right to
participate in, and to the extent the Indemnifying Party so desires jointly with
any other indemnitor similarly noticed, to assume the defense thereof with
counsel selected by the Indemnifying Party; provided, however, that the
Indemnified Party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the Indemnified Party. The indemnity obligations
under this Section 13 shall not apply to amounts paid in settlement of any
claim, demand, action or other proceeding if such settlement is effected without
the prior express written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. The failure to deliver notice to the
Indemnifying Party within a reasonable time after notice of any such claim or
demand, or the commencement of any such action or other proceeding, if
prejudicial to its ability to defend such claim, demand, action or other
proceeding, shall relieve such Indemnifying Party of any liability to the
Indemnified Party under this Section 13 with respect thereto, but the omission
so to deliver notice to the Indemnifying Party shall not relieve it of any
liability that it may have to the Indemnified Party other than under this
Section 13 . The Indemnifying Party may not settle or otherwise consent to an
adverse judgment in any such claim, demand, action or other proceeding, that
diminishes the rights or interests of, or places any obligations upon, the
Indemnified Party without the prior express written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed. The
Indemnified Party, its employees and agents, shall reasonably cooperate with the
Indemnifying Party and its legal representatives in the investigation of any
claim, demand, action or other proceeding covered by this Section 13 .

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 26 -

   

 

13.4 LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE HEREUNDER
TO THE OTHER PARTY FOR ANY PUNITIVE, INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST REVENUE, LOST PROFITS OR LOST SAVINGS)
HOWEVER CAUSED AND UNDER ANY THEORY, EVEN IF IT HAS NOTICE OF THE POSSIBILITY OF
SUCH DAMAGES. THE LIMITATIONS SET FORTH IN THIS SECTION 13.4 SHALL NOT APPLY
WITH RESPECT TO (I) ANY BREACH OF SECTION 10 OR (II) THE INTENTIONAL MISCONDUCT
OR GROSS NEGLIGENCE OF A PARTY. NOTHING IN THIS SECTION 13.4 IS INTENDED TO
LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF A PARTY UNDER
THIS SECTION 13 WITH RESPECT TO ANY DAMAGES OWED OR PAID TO A THIRD PARTY IN
CONNECTION WITH A THIRD PARTY CLAIM.

 

13.5 Insurance.

 

13.5.1 Artelo shall maintain at its own cost and at all times during the term of
this Agreement policies of insurance consistent with normal business practices
of prudent pharmaceutical companies similarly situated. Such insurance policies
shall include, without limitation, commercial general liability insurance,
including, without limitation, product liability, covering claims for damages
because of bodily injury (including, without limitation, death), personal injury
and property damage arising out of Artelo’s acts or omissions and including
coverage for contractual liabilities. Without limiting the foregoing, no later
than Artelo’s commencement of clinical trials in respect of any Product, Artelo
shall obtain, and maintain in full force and effect, adequate clinical trials
insurance, for claims arising out of or in connection with such clinical trials.
In addition, no later than the commencement of commercial distribution of any
Product by or on behalf of Artelo, Artelo shall obtain, and maintain in full
force and effect, adequate general and product liability insurance for bodily
injury and property damage claims.

 

13.5.2 The policies described in Section 13.5.1 above will be in such amounts
and cover such risks as are reasonable and prudent for those types of policies,
but shall in no event be less than, in the aggregate: (a) [***] as of the
Effective Date, (b) [***] as of the date of the commencement of any clinical
trial, and (c) [***] as of the date of the First Commercial Sale. Such policies
will be written by insurance companies with an A.M. Best’s rating of A:VIII or
higher (or if such policies are not subject to the Best rating, then by carriers
who are reasonably acceptable to NEOMED). The foregoing policies will: (i) cover
claims arising out of the performance of this Agreement that are made within a
period of not less than six (6) years after the expiration or earlier
termination of this Agreement; and (ii) be primary and non-contributory to any
liability insurance carried by NEOMED, which insurance will be excess for claims
and losses arising out of the performance of this Agreement. The policies
described above will be specifically endorsed to list NEOMED as an additional
insured (as long as such endorsement is allowed by Applicable Law), and Artelo
will notify NEOMED at least thirty (30) days in advance of any cancellation or
non-renewal of or material changes in of such insurance coverage. Artelo shall
provide NEOMED with a valid, current certificate of insurance as evidence of the
insurance required herein upon request. Maintenance of such insurance coverage
will not relieve Artelo of any responsibility under this Agreement for damages
in excess of insurance limits or otherwise.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 27 -

   

 

14. MISCELLANEOUS

 

14.1 Notices. Any consent, notice or report required or permitted to be given or
made under this Agreement by one of the parties to the other shall be in writing
and addressed to such other party at its address indicated below, or to such
other address as the addressee shall have last furnished in writing to the
addressor for purposes of this Section 14.1, and shall be effective upon receipt
by the addressee.

 

 

If to NEOMED:

 

The NEOMED Institute

7171 Frederick-Banting

Saint-Laurent, Quebec H4S 1Z9, Canada

Attention: Daniel Böck, VP Business Development

 

 

 

 

 

If to Artelo:

 

Artelo Biosciences, Inc.

888 Prospect Street, Suite 210

La Jolla, CA 92037 USA

Attention : Gregory D. Gorgas, President & CEO

 

14.2 Assignment. Except as otherwise expressly provided under this Agreement
neither this Agreement nor any right or obligation hereunder may be assigned or
otherwise transferred (whether voluntarily, by operation of law or otherwise),
without the prior express written consent of the other party; provided, however,
that either party may, without such consent, assign this Agreement and its
rights and obligations hereunder (i) to an Affiliate or (ii) in connection with
the transfer or sale of all or substantially all of its business relating to
this Agreement, or in the event of its merger, consolidation, change in control
or similar transaction. In addition, NEOMED shall have the right to hypothecate,
pledge, assign in warranty or otherwise charge its payment rights hereunder in
favour of a financial institution as security. This Agreement shall be binding
upon and inure to the benefit of each party and its successors and permitted
assigns. Any purported assignment or transfer in violation of this Section REF
_Ref486176120 \r \h \* MERGEFORMAT 14.2 shall be void.

 

14.3 Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflicts of law principles thereof. For any legal action arising from or
related to this Agreement, the Parties hereby irrevocably: (a) consent solely to
personal jurisdiction of and exclusive venue in the state and federal courts
located in New York County, New York, USA; (b) agree that such courts will be
the sole courts utilized; and (c) hereby waive any jurisdictional or venue
objections to such courts, including without limitation, forum non conveniens.
If any dispute arises between the Parties in connection with this Agreement
which leads to a proceeding to resolve such dispute, the prevailing Party in
such proceeding will be entitled to receive its reasonable attorneys’ fees,
expert witness fees and out-of-pocket costs incurred in connection with such
proceeding, in addition to any other relief it may be awarded.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 28 -

   

 

14.4 Entire Agreement. This Agreement contains the entire understanding of the
Parties with respect to the subject matter hereof. There are no agreements,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein. All express
or implied representations, agreements and understandings relating to such
subject matter, either oral or written, heretofore made are expressly superseded
by this Agreement, including, without limitation the Confidentiality Agreement.

 

14.5 Independent Contractors. Each Party hereby acknowledges that the Parties
shall be independent contractors and that the relationship between the Parties
shall not constitute a partnership, joint venture or agency. Neither Party shall
have the authority to make any statements, representations or commitments of any
kind, or to take any action, which shall be binding on the other Party, without
the prior consent of the other Party to do so.

 

14.6 Remedies. All remedies, either under this Agreement, by law, or otherwise
afforded to any Party, shall be cumulative and not alternative.

 

14.7 Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement solely
to the extent, and for so long as, such failure or delay is caused by or results
from causes beyond the reasonable control of the affected Party including but
not limited to fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, acts of God or acts, omissions or delays in acting by
any governmental authority or the other Party. If any such event continues for
more than ninety (90) days, then such other Party shall have the right to
terminate this Agreement upon thirty (30) days prior written notice to the
affected Party.

 

14.8 Fees and Expenses. Each Party shall pay its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby
(including the fees and expenses of its advisers, accountants and legal
counsel).

 

14.9 Section 365(n) of the Bankruptcy Code. All rights and licenses granted
under or pursuant to any section of this Agreement are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
licenses of rights to “intellectual property” as defined under Section 101(35A)
of the U.S. Bankruptcy Code to the extent permitted thereunder. Artelo shall
retain and may fully exercise all of its rights and elections under the U.S.
Bankruptcy Code. Upon the bankruptcy of NEOMED, Artelo shall further be entitled
to a complete duplicate of (or complete access to, as appropriate) any such
intellectual property (solely to the extent that such license in effect at such
time), and such, if not already in its possession, shall be promptly delivered
to Artelo, unless NEOMED elects to continue, and continues, to perform all of
its obligations under this Agreement.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 29 -

   

 

14.10 Further Assurances. At any time or from time to time after the date
hereof, the Parties agree to cooperate with each other, and at the request of
any other party, to execute and deliver any further instruments or documents and
to take all such further action as the other Party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.

 

14.11 Interpretation. The captions to the Sections of this Agreement are not a
part of this Agreement, but are included for convenience of reference and shall
not affect its meaning or interpretation. In this Agreement: (i) the word
“including,” “includes,” “included,” and “include” shall be deemed to be
followed by the phrase “without limitation” or like expression; (ii) the
singular shall include the plural and vice versa; (iii) masculine, feminine, and
neuter pronouns and expressions shall be interchangeable; (iv) the words
“hereof,” “herein,” “hereto,” “hereby,” “hereunder,” and derivative or similar
words refer to this Agreement as an entirety and not solely to any particular
provision of this Agreement; (v) each reference in this Agreement to a
particular Section, appendix, schedule, or exhibit means a Section, appendix,
schedule, or exhibit of or to this Agreement, unless another agreement is
specified; (vi) “the word “will” shall be construed to have the same meaning and
effect as the word “shall”; (vii) “or” is not disjunctive (i.e., it means
“and/or”) unless the context clearly requires otherwise; (viii) references to
any party or Person shall include its permitted successors or assigns; and (ix)
whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless business days are specified; and business days means any
day, except Saturday and Sunday, on which commercial banking institutions in New
York, New York and Montreal, Quebec are open for business. This Agreement has
been prepared jointly and shall not be strictly construed against either Party.

 

14.12 Waivers. It is agreed that no delay or omission to exercise any right,
power or remedy accruing to any Party, upon any breach, default or noncompliance
by the other Party under this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on the part of any
party hereto of any breach, default or noncompliance under this Agreement or any
waiver on such party’s part of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent specifically set
forth in such writing. The waiver by a Party of any right hereunder, or of any
failure to perform or breach by the other Party hereunder, shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by the
other Party hereunder whether of a similar nature or otherwise.

 

14.13 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 30 -

   

 

14.14 Enforcement. Each Party hereto acknowledges that money damages would not
be an adequate remedy in the event that any of the covenants or agreements in
this Agreement are not performed by the Parties in accordance with its terms,
and it is therefore agreed that in addition to and without limiting any other
remedy or right each party may have, each party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.

 

14.15 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be delivered via
facsimile, electronic mail (including pdf) or other transmission method and any
counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.

 

[Signature Page Follows.]

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

  - 31 -

   

 

Confidential

 

IN WITNESS WHEREOF, the parties have executed this Material and Data Transfer,
Option and License Agreement as of the Effective Date.

 

  NEOMED Institute         By: (signed) Donald Olds

 

 

Donald Olds, President & CEO           Artelo Biosciences, Inc.  

 

 

 

 

 

By:

(signed) Gregory D. Gorgas

 

 

 

Gregory D. Gorgas, President & CEO

 

 

[Signature Page to Material and Data Transfer, Option and License Agreement]

 

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

   

 

EXHIBIT A

 

LICENSED PATENT RIGHTS

 

[***]

 

 

 

 

 

 

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

EXHIBIT B

 

RESEARCH PLAN

 

[***]

 

 

 

 

 

 

 

 

 

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

EXHIBIT C

 

TECHNOLOGY TRANSFER MATERIALS

 

[***]

 

 

 

 

 

 

 

 

 

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

EXHIBIT D

 

PURCHASE AGREEMENT

 

ARTELO BIOSCIENCES, INC.

COMMON STOCK PURCHASE AGREEMENT

 

This Common Stock Purchase Agreement (this “Agreement”) is made as of January 2,
2018, by and between Artelo Biosciences, Inc., a Nevada corporation (the
“Company”), and NEOMED Institute, a not-for-profit corporation established under
the Not-for-Profit Corporations Act (Canada) (the “Purchaser”).

 

Reference is hereby made to the Material and Data Transfer, Option and License
Agreement dated as of the date hereof by and between the Company and the
Purchaser (the “Development Agreement”). Capitalized terms used in this
Agreement that are not otherwise defined herein shall have the respective
meanings assigned to them in the Development Agreement.

 

In consideration of the mutual covenants and representations set forth below,
the Company and Purchaser agree as follows:

 

1. Issuance of the Shares. Subject to the terms and conditions of this
Agreement, as partial consideration for the grant of the Option (as defined in
the Development Agreement) by NEOMED to Artelo and the supply of the Technology
Transfer Materials (as defined in the Development Agreement) and pursuant to the
terms of Section 5.1.1 of the Development Agreement, the Company hereby issues
to the Purchaser on the Closing (as defined below) One Hundred and Twenty
Thousand (120,000) shares of the Company’s common stock (the “Shares”).

 

2. Closing. The purchase and sale of the Shares shall occur at a closing (the
“Closing”) to be held on the date hereof.

 

3. Restrictions on Transfer.

 

A. Investment Representations and Legend Requirements. The Purchaser hereby
makes the investment representations listed on Exhibit A to the Company as of
the date of this Agreement, and agrees that such representations are
incorporated into this Agreement by this reference, such that the Company may
rely on them in issuing the Shares. Purchaser understands and agrees that the
Company shall cause the legends set forth below, or substantially equivalent
legends, to be placed upon any certificate(s) evidencing ownership of the
Shares, together with any other legends that may be required by the Company or
by applicable state or federal securities laws:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER IN THE EVENT OF A PUBLIC OFFERING AS SET FORTH IN THE COMMON STOCK
PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

B. Stop-Transfer Notices. Purchaser agrees that to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

 

C. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of
any of the provisions of this Agreement or (ii) to treat as owner of such Shares
or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.

 

D. Limitation on restriction: Notwithstanding anything contained in this
Agreement (including Exhibit A), the Company acknowledges and agrees that the
Purchaser has the right to transfer [***] at any time, provided that the terms
and conditions of this Agreement (including Exhibit A) equally apply to [***].

 

4. Tax Consequences. The Purchaser has reviewed with the Purchaser’s own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the Purchaser
(and not the Company) shall be responsible for any tax liability that may arise
as a result of the transactions contemplated by this Agreement.

 

5. Representations and Warranties of the Company

 

The Company hereby makes the following representations and warranties to the
Purchaser as of the date of this Agreement and acknowledges that the Purchaser
is relying on such representations and warranties in entering into this
Agreement:

 

A. the Company is a corporation duly formed and validly existing under the laws
of Nevada and has all necessary corporate power and authority to execute this
Agreement and any certificate evidencing ownership of the Shares (the
“Certificate”) and to offer, sell and issue the Shares, and to perform its
obligations under this Agreement and the Certificate;

 

B. the authorized capital of the Company consists of 150,000,000 shares of
common stock, of which 11,352,302 are currently issued and outstanding;

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

C. the Company has complied and will comply with all applicable corporate and
securities laws and regulations in connection with the offer, sale and issuance
of the Shares, and the execution, delivery and performance of this Agreement and
the transactions contemplated by this Agreement will not result in any violation
of or constitute either a default under any provision of its organizational
documents or of any material agreement or instrument to which the Company is a
party or by which the Company is bound, or any judgment, decree, order, law,
statute, rule or regulation applicable to the Company;

 

D. this Agreement has been duly and validly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms;

 

E. the issuance of the Shares has been duly authorized and approved by all
requisite corporate, regulatory and other action and upon Closing the Shares
will be validly issued as fully paid and non-assessable, and shall be free and
clear of any liens, mortgages, charges, security interests, burdens,
encumbrances and other restrictions or limitations of any kind whatsoever;

 

F. the Company is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties (both owned and leased)
requires;

 

G. the Company has been conducting its business in the ordinary course in
compliance with all applicable laws, rules and regulations, including but not
limited to federal, state, municipal and local laws, rules and regulations of
each jurisdiction in which it carries on business and is not in breach of any
such laws, rules or regulations;

 

H. the Company does not have any information or knowledge of any fact not
communicated to the Purchaser and relating to the business of the Company which,
if known to the Purchaser, might reasonably be expected to have a materially
adverse effect on the Company’s business or deter the Purchaser from entering
into this Agreement or from completing the transactions contemplated hereby;

 

I. the corporate records of the Company are complete and accurate in all
material respects and all corporate proceedings and actions reflected therein
have been conducted or taken in compliance with all applicable laws and with the
constating documents of the Company, and all transactions, reorganisations or
other actions of the Company have been duly authorized by all necessary
corporate action;

 

J. no other consents or approvals are required from any person whatsoever in
connection with the transactions contemplated hereby nor are necessary on the
part of the Company to authorise the execution and delivery of this Agreement or
the consummation by the Company of the transactions contemplated hereby.

 

The Company agrees that the Purchaser is entitled to rely on the representations
and warranties of the Company contained in this section 5 and the Company will
indemnify and hold harmless the Purchaser for any loss, cost, expense, damage or
any other liability the Purchaser may suffer as a result of a misrepresentation
by the Company

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

6. General Provisions.

 

A. Choice of Law. This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules, of New York.

 

B. Integration. The Development Agreement and this Agreement, including all
exhibits hereto, represent the entire agreement between the parties with respect
to the issuance of the Shares to the Purchaser and supersedes and replaces any
and all prior written or oral agreements regarding the subject matter of this
Agreement including, but not limited to, any representations made during any
interviews, relocation discussions or negotiations whether written or oral.

 

C. Notices. Any notice, demand, offer, request or other communication required
or permitted to be given by either the Company or the Purchaser pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one business day after being delivered by facsimile (with receipt of appropriate
confirmation), (iv) one business day after being deposited with an overnight
courier service or (v) four days after being deposited in the U.S. mail, First
Class with postage prepaid and return receipt requested, and addressed to the
parties at the addresses provided to the Company (which the Company agrees to
disclose to the other parties upon request) or such other address as a party may
request by notifying the other in writing.

 

D. Successors. Any successor to the Company (whether direct or indirect and
whether by purchase, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall assume the
obligations under this Agreement and agree expressly to perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
For all purposes under this Agreement, the term “Company” shall include any
successor to the Company’s business and/or assets which executes and delivers
the assumption agreement described in this section or which becomes bound by the
terms of this Agreement by operation of law. Subject to the restrictions on
transfer set forth in this Agreement, this Agreement shall be binding upon
Purchaser and its executors, administrators, successors and assigns.

 

E. Assignment; Transfers. Except as set forth in this Agreement and subject to
Section 3D above, this Agreement, and any and all rights, duties and obligations
hereunder, shall not be assigned, transferred, delegated or sublicensed by the
Purchaser without the prior written consent of the Company. Any attempt by the
Purchaser without such consent to assign, transfer, delegate or sublicense any
rights, duties or obligations that arise under this Agreement shall be void.
Except as set forth in this Agreement, any transfers in violation of any
restriction upon transfer contained in any section of this Agreement shall be
void, unless such restriction is waived in accordance with the terms of this
Agreement.

 

F. Amendment and Waiver. Any term of the Agreement may be amended and the
observance of any term of the Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser. Any amendment or waiver
effected in accordance with this Section 5.F shall be binding upon each holder
of any Shares at the time outstanding, each future holder of all such securities
and the Company

 

G. Either party’s failure to enforce any provision of this Agreement shall not
in any way be construed as a waiver of any such provision, nor prevent that
party from thereafter enforcing any other provision of this Agreement. The
rights granted both parties hereunder are cumulative and shall not constitute a
waiver of either party’s right to assert any other legal remedy available to it.

 

H. Purchaser Investment Representations and Further Documents. Each Party agrees
upon request to execute any further documents or instruments necessary or
reasonably desirable to carry out the purposes or intent of this Agreement,
including (but not limited to) the applicable exhibits and attachments to this
Agreement.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

I. Severability. Should any provision of this Agreement be found to be illegal
or unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable to the greatest extent permitted by law.

 

J. Rights as Stockholder. Subject to the terms and conditions of this Agreement,
Purchaser shall have all of the rights of a stockholder of the Company with
respect to the Shares from and after the date that Purchaser delivers a fully
executed copy of this Agreement (including the applicable exhibits and
attachments to this Agreement) to the Company, and until such time as Purchaser
disposes of the Shares in accordance with this Agreement. Upon such transfer,
Purchaser shall have no further rights as a holder of the Shares so purchased
except (in the case of a transfer to the Company) the right to receive payment
for the Shares so purchased in accordance with the provisions of this Agreement,
and Purchaser shall forthwith cause the certificate(s) evidencing the Shares so
purchased to be surrendered to the Company for transfer or cancellation.

 

K. Adjustment for Stock Split. All references to the number of Shares in this
Agreement shall be adjusted to reflect any stock split, stock dividend or other
change in the Shares which may be made after the date of this Agreement.

 

L. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same agreement. Facsimile copies of signed signature
pages shall be binding originals.

 

M. Reliance on Counsel and Advisors. The parties acknowledge that Wilson Sonsini
Goodrich & Rosati, Professional Corporation, is representing only the Company in
this transaction. The parties acknowledge that they have had the opportunity to
review this Agreement, including all attachments hereto, and the transactions
contemplated by this Agreement with their own legal counsel, tax advisors and
other advisors. The parties are relying solely on their own counsel and advisors
and not on any statements or representations of the Company or its agents for
legal or other advice with respect to the transactions contemplated by this
Agreement.

 

(signature page follows)

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

The parties represent that they have read this Agreement in its entirety, have
had an opportunity to obtain the advice of counsel prior to executing this
Agreement and fully understand this Agreement. The Purchaser agrees to notify
the Company of any change in his or her address below.

 

NEOMED INSTITUTE   ARTELO BIOSCIENCES, INC.  

 

 

 

 

(Signed) Donald Olds   (Signed) Gregory D. Gorgas   Signature   Signature      

Donald Olds

 

Gregory D. Gorgas

 

Print Name

 

Print Name

 

 

 

 

 

President and Chief Executive Officer

 

President and Chief Executive Officer

 

Print Title

 

Print Title

 

 

Address:

 

7171 Frederick-Banting

Saint-Laurent, Quebec, Canada

H4S 1Z9

 

 

Artelo Biosciences, Inc.

(Signature Page to Common Stock Purchase Agreement)

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

  

EXHIBIT A

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER

:

NEOMED Institute

COMPANY

:

Artelo Biosciences, Inc.

 

 

 

SECURITY

:

Common Stock

AMOUNT

:

120,000 shares

DATE

:

January 2, 2018

 

 

 

 

 

In connection with the purchase of the above-listed shares, the undersigned
Purchaser represents to the Company as follows:

 

1. The Company may rely on these representations. It understands that the
Company’s sale of the shares to it has not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), because the Company believes,
relying in part on my representations in this document, that an exemption from
such registration requirement is available for such sale. It understands that
the availability of this exemption depends upon the representations it is making
to the Company in this document being true and correct.

 

2. It is purchasing for investment. It is purchasing the shares solely for
investment purposes, and not for further distribution. Its entire legal and
beneficial ownership interest in the shares is being purchased and shall be held
solely for its account. Subject to Section 3D it is not a party to, and does not
presently intend to enter into, any contract or other arrangement with any other
person or entity involving the resale, transfer, grant of participation with
respect to or other distribution of any of the shares. Its investment intent is
not limited to their present intention to hold the shares for the minimum
capital gains period specified under any applicable tax law, for a deferred
sale, for a specified increase or decrease in the market price of the shares, or
for any other fixed period in the future.

 

3. It can protect their own interests. It can properly evaluate the merits and
risks of an investment in the shares and can protect its own interests in this
regard, whether by reason of its own business and financial expertise, the
business and financial expertise of certain professional advisors unaffiliated
with the Company with whom it has consulted, or its preexisting business or
personal relationship with the Company or any of its officers, directors or
controlling persons.

 

4. It is informed about the Company. It is sufficiently aware of the Company’s
business affairs and financial condition to reach an informed and knowledgeable
decision to acquire the shares. It has had opportunity to discuss the plans,
operations and financial condition of the Company with its officers, directors
or controlling persons, and have received all information they deem appropriate
for assessing the risk of an investment in the shares.

 

5. It recognizes the economic risk. It realizes that the purchase of the shares
involves a high degree of risk, and that the Company’s future prospects are
uncertain. It is able to hold the shares indefinitely if required, and is able
to bear the loss of their entire investment in the shares.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

6. It knows that the shares are restricted securities. It understands that the
shares are “restricted securities” in that the Company’s sale of the shares to
them has not been registered under the Securities Act in reliance upon an
exemption for non-public offerings. In this regard, it also understands and
agrees that:

 

A. It must hold the shares indefinitely, unless any subsequent proposed resale
by them is registered under the Securities Act, or unless an exemption from
registration is otherwise available (such as Rule 144);

 

B. the Company is under no obligation to register any subsequent proposed resale
of the shares by it; and

 

C. the certificate evidencing the shares will be imprinted with a legend which
prohibits the transfer of the shares unless such transfer is registered or such
registration is not required in the opinion of counsel for the Company.

 

7. It is familiar with Rule 144. It is familiar with Rule 144 adopted under the
Securities Act, which in some circumstances permits limited public resales of
“restricted securities” like the shares acquired from an issuer in a non-public
offering. It understands that its ability to sell the shares under Rule 144 in
the future is uncertain, and may depend upon, among other things: (i) the
availability of certain current public information about the Company; and (ii)
the resale occurring more than a specified period after their purchase and full
payment (within the meaning of Rule 144) for the shares; and (iii) the Company’s
former or current status as a “shell company”.

 

8. It knows that Rule 144 may never be available. It understands that the
requirements of Rule 144 may never be met, and that the shares may never be
saleable under the rule. It further understands that at the time it wishes to
sell the shares, there may be no public market for the Company’s stock upon
which to make such a sale, or the current public information requirements of
Rule 144 may not be satisfied, either of which may preclude them from selling
the shares under Rule 144 even if the relevant holding period had been
satisfied.

 

9. It knows that it is subject to further restrictions on resale. It understands
that in the event Rule 144 is not available to it, any future proposed sale of
any of the shares by it will not be possible without prior registration under
the Securities Act, compliance with some other registration exemption (which may
or may not be available), or each of the following: (i) their written notice to
the Company containing detailed information regarding the proposed sale, (ii)
their providing an opinion of its counsel to the effect that such sale will not
require registration, and (iii) the Company notifying them in writing that its
counsel concurs in such opinion or that the Company otherwise consents to the
proposed sale or consent. It understands that neither the Company nor its
counsel is obligated to provide it with any such opinion. It understands that
although Rule 144 is not exclusive, the Staff of the SEC has stated that persons
proposing to sell private placement securities other than in a registered
offering or pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

10. It knows that it may have tax liability due to the uncertain value of the
shares. It understands that the Internal Revenue Service may successfully assert
that the value of the shares on the date of their purchase is substantially
greater than the appraisal of the Board of Directors. It understands that any
additional value ascribed to the shares by such an IRS determination will
constitute ordinary income to it as of the purchase date, and that any
additional taxes and interest due as a result will be their sole responsibility
payable only by it, and that the Company need not and will not reimburse it for
that tax liability. It understands that if such additional value represents more
than 25% of their gross income for the year in which the value of the shares is
taxable, the IRS will have 6 years from the due date for filing the return (or
the actual filing date of the return if filed thereafter) within which to assess
them the additional tax and interest due.

 

11. Principal Place of Business. The address of their principal place of
business is set forth on the signature page below.

 

12. No “bad actor” disqualification events. Neither it nor any person that would
be deemed a beneficial owner of the shares (in accordance with Rule 506(d) of
the Securities Act) is subject to any of the “bad actor” disqualifications
described in Rule 506(d)(1)(i) through (viii) under the Securities Act, except
as set forth in Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act
and disclosed, reasonably in advance of the purchase or acquisition of the
shares, in writing in reasonable detail to the Company.

 

By signing below, it acknowledges its agreement with each of the statements
contained in this Investment Representation Statement as of the date first set
forth above, and its intent for the Company to rely on such statements in
issuing the shares to it.

 

  NEOMED INSTITUTE       (signed) Donald Olds

 

Purchaser’s Signature         Donald Olds  

 

Print Name

 

 

 

 

 

President and Chief Executive Officer

 

 

Print Title

 

 

Address:

7171 Frederick-Banting

Saint-Laurent, Quebec, Canada

H4S 1Z9

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

EXHIBIT E

 

COMMON STOCK PURCHASE AGREEMENT

 

ARTELO BIOSCIENCES, INC.

COMMON STOCK PURCHASE AGREEMENT

 

This Common Stock Purchase Agreement (this “Agreement”) is made as of [____], by
and between Artelo Biosciences, Inc., a Nevada corporation (the “Company”), and
NEOMED Institute, a not-for-profit corporation established under the
Not-for-Profit Corporations Act (Canada) (the “Purchaser”).

 

Reference is hereby made to the Material and Data Transfer, Option and License
Agreement dated as of the date hereof by and between the Company and the
Purchaser (the “Development Agreement”). Capitalized terms used in this
Agreement that are not otherwise defined herein shall have the respective
meanings assigned to them in the Development Agreement.

 

In consideration of the mutual covenants and representations set forth below,
the Company and Purchaser agree as follows:

 

1. Issuance of the Shares. Subject to the terms and conditions of this
Agreement, partial consideration for the license granted to the Company by
Purchaser under Section 4.1 of the Development Agreement and pursuant to the
terms of Section 5.2.1 of the Development Agreement, the Company hereby issues
to the Purchaser on the Closing (as defined below) [___][1] shares of the
Company’s common stock (the “Shares”).

 

2. Closing. The purchase and sale of the Shares shall occur at a closing (the
“Closing”) to be held on the date hereof.

 

3. Restrictions on Transfer.

 

A. Investment Representations and Legend Requirements. The Purchaser hereby
makes the investment representations listed on Exhibit A to the Company as of
the date of this Agreement, and agrees that such representations are
incorporated into this Agreement by this reference, such that the Company may
rely on them in issuing the Shares. Purchaser understands and agrees that the
Company shall cause the legends set forth below, or substantially equivalent
legends, to be placed upon any certificate(s) evidencing ownership of the
Shares, together with any other legends that may be required by the Company or
by applicable state or federal securities laws:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.

______________

1 Equal to 2% of Artelo’s Fully Diluted Shares. “Fully-Diluted Shares” shall
mean, as of immediately prior to Artelo’s exercise of the Option, the sum of
(a) the outstanding shares of common stock of Artelo; (b) the shares of common
stock of Artelo directly or indirectly issuable upon conversion or exchange of
all outstanding securities directly or indirectly convertible into or
exchangeable for common stock of Artelo and the exercise of all outstanding
options and warrants; and (c) the shares of common stock of Artelo reserved, but
neither issued nor the subject of outstanding awards, under any equity incentive
or similar plan of Artelo.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER IN THE EVENT OF A PUBLIC OFFERING AS SET FORTH IN THE COMMON STOCK
PURCHASE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

B. Stop-Transfer Notices. Purchaser agrees that to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

 

C. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of
any of the provisions of this Agreement or (ii) to treat as owner of such Shares
or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.

 

D. Limitation on restriction: Notwithstanding anything contained in this
Agreement (including Exhibit A), the Company acknowledges and agrees that the
Purchaser has the right to transfer [***] at any time provided that the terms
and conditions of this Agreement (including Exhibit A) equally apply to [***].

 

4. Tax Consequences. The Purchaser has reviewed with the Purchaser’s own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the Purchaser
(and not the Company) shall be responsible for any tax liability that may arise
as a result of the transactions contemplated by this Agreement.

 

5. Representations and Warranties of the Company

 

The Company hereby makes the following representations and warranties to the
Purchaser as of the date of this Agreement and acknowledges that the Purchaser
is relying on such representations and warranties in entering into this
Agreement:

 

A. the Company is a corporation duly formed and validly existing under the laws
of Nevada and has all necessary corporate power and authority to execute this
Agreement and any certificate evidencing ownership of the Shares (the
“Certificate”) and to offer, sell and issue the Shares, and to perform its
obligations under this Agreement and the Certificate;

 

B. the authorized capital of the Company consists of 150,000,000 shares of
common stock, of which 11,352,302 are currently issued and outstanding;

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

C. the Company has complied and will comply with all applicable corporate and
securities laws and regulations in connection with the offer, sale and issuance
of the Shares, and the execution, delivery and performance of this Agreement and
the transactions contemplated by this Agreement will not result in any violation
of or constitute either a default under any provision of its organizational
documents or of any material agreement or instrument to which the Company is a
party or by which the Company is bound, or any judgment, decree, order, law,
statute, rule or regulation applicable to the Company;

 

D. this Agreement has been duly and validly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms;

 

E. the issuance of the Shares has been duly authorized and approved by all
requisite corporate, regulatory and other action and upon Closing the Shares
will be validly issued as fully paid and non-assessable, and shall be free and
clear of any liens, mortgages, charges, security interests, burdens,
encumbrances and other restrictions or limitations of any kind whatsoever;

 

F. the Company is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties (both owned and leased)
requires;

 

G. the Company has been conducting its business in the ordinary course in
compliance with all applicable laws, rules and regulations, including but not
limited to federal, state, municipal and local laws, rules and regulations of
each jurisdiction in which it carries on business and is not in breach of any
such laws, rules or regulations;

 

H. the Company does not have any information or knowledge of any fact not
communicated to the Purchaser and relating to the business of the Company which,
if known to the Purchaser, might reasonably be expected to have a materially
adverse effect on the Company’s business or deter the Purchaser from entering
into this Agreement or from completing the transactions contemplated hereby;

 

I. the corporate records of the Company are complete and accurate in all
material respects and all corporate proceedings and actions reflected therein
have been conducted or taken in compliance with all applicable laws and with the
constating documents of the Company, and all transactions, reorganisations or
other actions of the Company have been duly authorized by all necessary
corporate action;

 

J. no other consents or approvals are required from any person whatsoever in
connection with the transactions contemplated hereby nor are necessary on the
part of the Company to authorise the execution and delivery of this Agreement or
the consummation by the Company of the transactions contemplated hereby.

 

The Company agrees that the Purchaser is entitled to rely on the representations
and warranties of the Company contained in this section 5 and the Company will
indemnify and hold harmless the Purchaser for any loss, cost, expense, damage or
any other liability the Purchaser may suffer as a result of a misrepresentation
by the Company

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

6. General Provisions.

 

A. Choice of Law. This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules, of New York.

 

B. Integration. The Development Agreement and this Agreement, including all
exhibits hereto, represent the entire agreement between the parties with respect
to the issuance of the Shares to the Purchaser and supersedes and replaces any
and all prior written or oral agreements regarding the subject matter of this
Agreement including, but not limited to, any representations made during any
interviews, relocation discussions or negotiations whether written or oral.

 

C. Notices. Any notice, demand, offer, request or other communication required
or permitted to be given by either the Company or the Purchaser pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one business day after being delivered by facsimile (with receipt of appropriate
confirmation), (iv) one business day after being deposited with an overnight
courier service or (v) four days after being deposited in the U.S. mail, First
Class with postage prepaid and return receipt requested, and addressed to the
parties at the addresses provided to the Company (which the Company agrees to
disclose to the other parties upon request) or such other address as a party may
request by notifying the other in writing.

 

D. Successors. Any successor to the Company (whether direct or indirect and
whether by purchase, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall assume the
obligations under this Agreement and agree expressly to perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
For all purposes under this Agreement, the term “Company” shall include any
successor to the Company’s business and/or assets which executes and delivers
the assumption agreement described in this section or which becomes bound by the
terms of this Agreement by operation of law. Subject to the restrictions on
transfer set forth in this Agreement, this Agreement shall be binding upon
Purchaser and its heirs, executors, administrators, successors and assigns.

 

E. Assignment; Transfers. Except as set forth in this Agreement and subject to
Section 3D above, this Agreement, and any and all rights, duties and obligations
hereunder, shall not be assigned, transferred, delegated or sublicensed by the
Purchaser without the prior written consent of the Company. Any attempt by the
Purchaser without such consent to assign, transfer, delegate or sublicense any
rights, duties or obligations that arise under this Agreement shall be void.
Except as set forth in this Agreement, any transfers in violation of any
restriction upon transfer contained in any section of this Agreement shall be
void, unless such restriction is waived in accordance with the terms of this
Agreement.

 

F. Amendment and Waiver. Any term of the Agreement may be amended and the
observance of any term of the Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser. Any amendment or waiver
effected in accordance with this Section 5.F shall be binding upon each holder
of any Shares at the time outstanding, each future holder of all such securities
and the Company

 

G. Either party’s failure to enforce any provision of this Agreement shall not
in any way be construed as a waiver of any such provision, nor prevent that
party from thereafter enforcing any other provision of this Agreement. The
rights granted both parties hereunder are cumulative and shall not constitute a
waiver of either party’s right to assert any other legal remedy available to it.

 

H. Purchaser Investment Representations and Further Documents. Each Party agrees
upon request to execute any further documents or instruments necessary or
reasonably desirable to carry out the purposes or intent of this Agreement,
including (but not limited to) the applicable exhibits and attachments to this
Agreement.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

 

I. Severability. Should any provision of this Agreement be found to be illegal
or unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable to the greatest extent permitted by law.

 

J. Rights as Stockholder. Subject to the terms and conditions of this Agreement,
Purchaser shall have all of the rights of a stockholder of the Company with
respect to the Shares from and after the date that Purchaser delivers a fully
executed copy of this Agreement (including the applicable exhibits and
attachments to this Agreement) to the Company, and until such time as Purchaser
disposes of the Shares in accordance with this Agreement. Upon such transfer,
Purchaser shall have no further rights as a holder of the Shares so purchased
except (in the case of a transfer to the Company) the right to receive payment
for the Shares so purchased in accordance with the provisions of this Agreement,
and Purchaser shall forthwith cause the certificate(s) evidencing the Shares so
purchased to be surrendered to the Company for transfer or cancellation.

 

K. Adjustment for Stock Split. All references to the number of Shares in this
Agreement shall be adjusted to reflect any stock split, stock dividend or other
change in the Shares which may be made after the date of this Agreement.

 

L. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same agreement. Facsimile copies of signed signature
pages shall be binding originals.

 

M. Reliance on Counsel and Advisors. The parties acknowledge that Wilson Sonsini
Goodrich & Rosati, Professional Corporation, is representing only the Company in
this transaction. The parties acknowledge that they have had the opportunity to
review this Agreement, including all attachments hereto, and the transactions
contemplated by this Agreement with their own legal counsel, tax advisors and
other advisors. The parties are relying solely on their own counsel and advisors
and not on any statements or representations of the Company or its agents for
legal or other advice with respect to the transactions contemplated by this
Agreement.

 

(signature page follows)

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

The parties represent that they have read this Agreement in its entirety, have
had an opportunity to obtain the advice of counsel prior to executing this
Agreement and fully understand this Agreement. The Purchaser agrees to notify
the Company of any change in his or her address below.

 

NEOMED INSTITUTE   ARTELO BIOSCIENCES, INC.  

 

 

 

 

    Signature   Signature      

Donald Olds

 

Gregory D. Gorgas

 

Print Name

 

Print Name

 

 

 

 

 

President and Chief Executive Officer

 

President and Chief Executive Officer

 

Print Title

 

Print Title

 

 

Address:

 

7171 Frederick-Banting

Saint-Laurent, Quebec, Canada

H4S 1Z9

 

 

Artelo Biosciences, Inc.

(Signature Page to Common Stock Purchase Agreement)

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

  

EXHIBIT A

 

INVESTMENT REPRESENTATION STATEMENT

 

 

PURCHASER

:

NEOMED Institute

COMPANY

:

Artelo Biosciences, Inc.

 

 

 

SECURITY

:

Common Stock

AMOUNT

:

[______] shares

DATE :

:

[______]

 

 

 

 

 

In connection with the purchase of the above-listed shares, the undersigned
purchaser represents to the Company as follows:

 

1. The Company may rely on these representations. It understands that the
Company’s sale of the shares to it has not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), because the Company believes,
relying in part on my representations in this document, that an exemption from
such registration requirement is available for such sale. It understands that
the availability of this exemption depends upon the representations it is making
to the Company in this document being true and correct.

 

2. It is purchasing for investment. It is purchasing the shares solely for
investment purposes, and not for further distribution. Its entire legal and
beneficial ownership interest in the shares is being purchased and shall be held
solely for its account. Subject to Section 3D it is not a party to, and do not
presently intend to enter into, any contract or other arrangement with any other
person or entity involving the resale, transfer, grant of participation with
respect to or other distribution of any of the shares. Its investment intent is
not limited to their present intention to hold the shares for the minimum
capital gains period specified under any applicable tax law, for a deferred
sale, for a specified increase or decrease in the market price of the shares, or
for any other fixed period in the future.

 

3. It can protect their own interests. It can properly evaluate the merits and
risks of an investment in the shares and can protect its own interests in this
regard, whether by reason of its own business and financial expertise, the
business and financial expertise of certain professional advisors unaffiliated
with the Company with whom it has consulted, or its preexisting business or
personal relationship with the Company or any of its officers, directors or
controlling persons.

 

4. It is informed about the Company. It is sufficiently aware of the Company’s
business affairs and financial condition to reach an informed and knowledgeable
decision to acquire the shares. It has had opportunity to discuss the plans,
operations and financial condition of the Company with its officers, directors
or controlling persons, and have received all information they deem appropriate
for assessing the risk of an investment in the shares.

 

5. It recognizes the economic risk. It realizes that the purchase of the shares
involves a high degree of risk, and that the Company’s future prospects are
uncertain. It is able to hold the shares indefinitely if required, and is able
to bear the loss of their entire investment in the shares.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

6. It knows that the shares are restricted securities. It understands that the
shares are “restricted securities” in that the Company’s sale of the shares to
them has not been registered under the Securities Act in reliance upon an
exemption for non-public offerings. In this regard, it also understands and
agrees that:

 

A. It must hold the shares indefinitely, unless any subsequent proposed resale
by them is registered under the Securities Act, or unless an exemption from
registration is otherwise available (such as Rule 144);

 

B. the Company is under no obligation to register any subsequent proposed resale
of the shares by it; and

 

C. the certificate evidencing the shares will be imprinted with a legend which
prohibits the transfer of the shares unless such transfer is registered or such
registration is not required in the opinion of counsel for the Company.

 

7. It is familiar with Rule 144. It is familiar with Rule 144 adopted under the
Securities Act, which in some circumstances permits limited public resales of
“restricted securities” like the shares acquired from an issuer in a non-public
offering. It understands that its ability to sell the shares under Rule 144 in
the future is uncertain, and may depend upon, among other things: (i) the
availability of certain current public information about the Company; and (ii)
the resale occurring more than a specified period after their purchase and full
payment (within the meaning of Rule 144) for the shares; and (iii) the Company’s
former or current status as a “shell company”.

 

8. It knows that Rule 144 may never be available. It understands that the
requirements of Rule 144 may never be met, and that the shares may never be
saleable under the rule. It further understands that at the time it wishes to
sell the shares, there may be no public market for the Company’s stock upon
which to make such a sale, or the current public information requirements of
Rule 144 may not be satisfied, either of which may preclude them from selling
the shares under Rule 144 even if the relevant holding period had been
satisfied.

 

9. It knows that it is subject to further restrictions on resale. It understands
that in the event Rule 144 is not available to it, any future proposed sale of
any of the shares by it will not be possible without prior registration under
the Securities Act, compliance with some other registration exemption (which may
or may not be available), or each of the following: (i) their written notice to
the Company containing detailed information regarding the proposed sale, (ii)
their providing an opinion of its counsel to the effect that such sale will not
require registration, and (iii) the Company notifying them in writing that its
counsel concurs in such opinion or that the Company otherwise consents to the
proposed sale or consent. It understands that neither the Company nor its
counsel is obligated to provide them with any such opinion. They understand that
although Rule 144 is not exclusive, the Staff of the SEC has stated that persons
proposing to sell private placement securities other than in a registered
offering or pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

10. It knows that it may have tax liability due to the uncertain value of the
shares. It understands that the Internal Revenue Service may successfully assert
that the value of the shares on the date of their purchase is substantially
greater than appraisal of the Board of Directors. It understands that any
additional value ascribed to the shares by such an IRS determination will
constitute ordinary income to it as of the purchase date, and that any
additional taxes and interest due as a result will be their sole responsibility
payable only by it, and that the Company need not and will not reimburse it for
that tax liability. It understands that if such additional value represents more
than 25% of their gross income for the year in which the value of the shares is
taxable, the IRS will have 6 years from the due date for filing the return (or
the actual filing date of the return if filed thereafter) within which to assess
them the additional tax and interest due.

 

11. Principal Place of Business. The address of their principal place of
business is set forth on the signature page below.

 

12. No “bad actor” disqualification events. Neither it nor any person that would
be deemed a beneficial owner of the shares (in accordance with Rule 506(d) of
the Securities Act) is subject to any of the “bad actor” disqualifications
described in Rule 506(d)(1)(i) through (viii) under the Securities Act, except
as set forth in Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act
and disclosed, reasonably in advance of the purchase or acquisition of the
shares, in writing in reasonable detail to the Company.

 

By signing below, it acknowledges its agreement with each of the statements
contained in this Investment Representation Statement as of the date first set
forth above, and its intent for the Company to rely on such statements in
issuing the shares to it.

 

  NEOMED INSTITUTE      

 

Purchaser’s Signature         Donald Olds  

 

Print Name 

 

 

 

 

 

President and Chief Executive Officer

 

 

Print Title

 

 

Address:

7171 Frederick-Banting

Saint-Laurent, Quebec, Canada
H4S 1Z9

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

   

   

 

SCHEDULE 9.2.6

 

WARRANTY DISCLOSURE

 

1. With respect to priority right assignment of application US 60/3640,306:
NEOMED has the following documents:

 

 

a) [***] (Assignment A); and

 

 

 

 

b) [***] (Assignment B).

 

 

 

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.