EXHIBIT 10.1

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”) is entered into by and between
Artelo Biosciences, Inc., a corporation organized under the laws of the State of
Nevada (the “Company”) and the subscriber whose name is set forth on the
signature pages affixed hereto (the “Subscriber”).

 

R E C I T A L S

 

WHEREAS, the Company is offering (the “Offering”) for sale up to a maximum of
1,500,000 units of equity securities (each a “Unit” and collectively, the
“Units”) at a purchase price of $0.75 per Unit ($1,125,000 in the aggregate), on
a “best efforts,” no minimum basis;

 

WHEREAS, each Unit consists of one (1) share (each a “Share” and collectively,
the “Shares”) of the Company’s common stock, par value $0.001 and one (1) Series
C Common Stock Purchase Warrant (each a “Warrant” and collectively, the
“Warrants”) to purchase one share of the Company’s common stock for a period of
five years from the date of issuance at a price of $1.75 per share;

 

WHEREAS, the Offering is being conducted without the use of a private placement
or offering memorandum;

 

WHEREAS, the Company and the Subscriber are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded
by, but not limited to, the provisions of Regulation D (“Regulation D”) and
Regulation S (“Regulation S”) each as promulgated by the United States
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “1933 Act”);

 

WHEREAS, the Units will only be offered and sold to subscribers who are either
(i) “accredited investors,” as defined in Regulation D and reasonably verify
their status as such, or (ii) not “US Persons” as such term is defined in
Regulation S and in the case of such non-US Persons who are residents of
Alberta, British Columbia and Ontario, Canada, who also satisfy the criteria of
one or more of the applicable prospectus delivery exemptions set forth in
National Instrument 45-106 Prospectus and Registration Exemptions (“NI-45-106”);

 

WHEREAS, the Subscriber acknowledges that in connection with the Offering, the
Company will be entering into subscription agreements identical to this
Agreement with other investors (along with the Subscriber, the “Investors”);

 

WHEREAS, the undersigned Subscriber hereby subscribes to purchase the aggregate
principal amount of Units set forth on the signature page attached hereto (the
“Subscribed for Units”), at an aggregate price as set forth on such signature
page hereto (the “Subscription Amount”), subject to the terms and conditions of
this Agreement and on the basis of the representations, warranties, covenants
and agreements contained herein; and

 

WHEREAS, the Company desires to enter into this Agreement to issue and sell the
Subscribed for Units to the Subscriber and the Subscriber desires to purchase
the number of Subscribed for Units from the Company all on the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Subscriber hereby agree as
follows:

 

 

   

 

ARTL SUBSCRIPTION AGREEMENT

 

1. Subscription for Units; Subscription Procedures; Closing.

 

1.1 Jurisdictional Legends.

 

(a) FOR CALIFORNIA RESIDENTS: THE STATE COMMISSIONER MAY IMPOSE THE FOLLOWING
TRANSFER RESTRICTION: “IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.”

 

(b) FOR FLORIDA RESIDENTS: THE UNITS REFERRED TO HEREIN WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE
FLORIDA SECURITIES ACT. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING A PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF
CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER. AN AGENT OF THE ISSUER OR
AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS
COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. THE SECURITIES BEING
OFFERED HAVE NOT BEEN REGISTERED WITH THE FLORIDA OFFICE OF FINANCIAL
REGULATION.

 

(c) FOR NEW YORK RESIDENTS: THIS SUBSCRIPTION AGREEMENT HAS NOT BEEN REVIEWED BY
THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE
STATE OF NEW YORK HAS NOT PASSED ON, OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

(d) FOR WASHINGTON RESIDENTS: THE UNITS HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND THE SECURITIES ACT OF WASHINGTON CHAPTER 21.20 RCW.
THE UNITS, INCLUDING ALL SHARES ISSUABLE UPON EXERCISE THEREOF, HAVE
RESTRICTIONS ON THE TRANSFERABILITY AND SALE AS FURTHER SET FORTH IN THE
SUBSCRIPTION AGREEMENT.

 

(e) FOR RESIDENTS OF THE EUROPEAN ECONOMIC AREA. Directive 2003/71/EC as amended
by Directive 2010/73/EU (the “Prospectus Directive”) requires that a Prospectus
must be published whenever securities (debt or equity) are offered to the public
in the European Union member states (each a “Member State”) unless such
securities are offered pursuant to applicable exemption, including, but not
necessarily limited to, the following:

 

(i) an offering in which the securities included in the offer where the total
consideration for the offer in the Union is less than € 5,000,000, which shall
be calculated over a period of 12 months;

 

(ii) an offering in which the securities are sold to “qualified investors; and

 

(iii) an offering in which the securities are issued to fewer than 150 natural
or legal persons per Member State

 

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ARTL SUBSCRIPTION AGREEMENT

 

1.2 Subscription. Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby irrevocably subscribes for and agrees to purchase from the
Company the Subscribed for Units and simultaneously with the Subscriber’s
execution and delivery of this Agreement, herewith has transmitted the
Subscription Amount (a) if by check, to the Company, Artelo Biosciences, Inc.,
c/o Wilson Sonsini Goodrich & Rosati, P.C., 12235 El Camino Real, San Diego, CA
92130 or (b) if by wire, using such wiring instructions as the Company has
forwarded to Subscriber.

 

1.3 Subscription Procedure. To complete a subscription for the Subscribed for
Units, the Subscriber must fully comply with the subscription procedure provided
in this Section 1.3 on or before the Closing Date (as defined below):

 

(a) Subscription Agreement. On or before the Closing Date, the Subscriber shall
review, complete and execute the Signature Page to this Agreement and shall
return this Agreement as executed, and all documents required hereby, to the
Company at: Artelo Biosciences, Inc., c/o Wilson Sonsini Goodrich & Rosati,
P.C., 12235 El Camino Real, San Diego, CA 92130. Executed documents may be
delivered by facsimile or email, provided that the Subscriber delivers the
original copies of the documents as soon as practicable thereafter.

 

(b) Subscription Amount. Simultaneously with the delivery of this Agreement, as
provided herein, the Subscriber shall deliver the Subscription Amount to the
Company as set forth in Section 1.1 above.

 

(c) Registration Rights Agreement. As part of the Offering the Company
undertakes to register for resale on behalf of the Investors the Shares and the
shares of common stock underlying the Warrants pursuant to the terms of the
Registration Rights Agreement attached as Exhibit A hereto.

 

1.4 Closings; Closing Date.

 

(a) Date and Place of Closing. The consummation of the transactions contemplated
herein (the “Closing”) shall take place at the offices of Wilson Sonsini
Goodrich & Rosati, P.C., 12235 El Camino Real, San Diego, CA 92130, upon the
satisfaction or waiver of all conditions to closing set forth in Sections 4 and
5 hereof (the “Closing Conditions”) but, subject to Section 1.6, no later than
the Offering Termination Date. The date on which the Closing occurs is herein
sometimes referred to as the “Closing Date.”

 

(b) Subscriber’s Closing Deliveries. At the Closing, the Subscriber shall have
delivered to the Company (i) each of this Agreement; (ii) for individual
investors, a copy of one form of government issued picture identification (e.g.
state issued driver’s license or passport); (iii) the Purchase Price; and (iv)
such other information as the Company may reasonably request.

 

(c) Company’s Closing Deliveries. At the Closing, the Company shall have
delivered to the Subscriber, if accepted by the Company, a duly countersigned
copy of this Agreement and the Registration Rights Agreement dated as of the
Closing Date, (ii) a share certificate, evidence of delivery of uncertificated
shares, and/or other evidence of the transfer of the Shares underlying the
Subscribed for Units; and (iii) a duly executed Warrant. Each Warrant will be
substantially in the form of Exhibit B attached hereto, evidencing the Warrants
underlying the Subscribed for Units.

 

1.5 Company Discretion to Accept or Reject Subscriptions. The Subscriber
understands and agrees that the Company in its sole discretion reserves the
right to accept or reject this or any other subscription for the Subscribed for
Units, in whole or in part, notwithstanding prior receipt by the Subscriber of
notice of acceptance of this subscription. The minimum individual investment is
Twenty Five Thousand Dollars ($25,000 for 33,333 Units), subject to the
Company’s right, in its sole and absolute discretion, to accept subscriptions
for lesser amounts.

 

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ARTL SUBSCRIPTION AGREEMENT

 

1.6 Purchase Price Protection.

 

(a) Following the Closing Date until the earlier of: (i) the date that a
registration statement covering the Shares and the Warrant Shares is declared
effective by the SEC, or (ii) the date the Shares (other than the Shares held by
Affiliated Purchaser) become freely tradable under Rule 144, if the Company
shall issue any common stock or Common Stock Equivalents (the “Discounted
Offering”) entitling any person or entity to acquire shares of common stock at
an effective price per share less than $0.75, subject to adjustment for any
split or other reorganization or reclassification (the “Discounted Purchase
Price”), as soon as practicable thereafter, subject to the further provisions of
Section 1.5(b) below, the Company shall issue to the Subscriber that number of
additional Units equal to the difference between the number of Units issued to
the Subscriber at the Closing (the “Original Units”) and the number of Units the
Company would have issued to the Subscriber had the Offering been completed at
the Discounted Purchase Price (the “Additional Units”).

 

(b) Notwithstanding anything herein to the contrary, the purchase price
protection set forth above shall apply only to the Original Shares (as defined
below) owned by the Subscriber as of the date the Company completes the
Discounted Offering, as evidenced by a share certificate, brokerage statement,
or other documentation as may be reasonably requested by the Company (“Evidence
of Ownership”). If a Subscriber does not deliver Evidence of Ownership within 15
calendar days of the consummation of the Discounted Offering, such Subscriber
will not be entitled to any adjustments pursuant to this Section 1.5. In the
event the Subscriber holds less than all of the Original Shares underlying the
Subscribed for Units as of such date, then the number of Additional Units to be
issued shall be reduced proportionately. Accordingly, the number of Additional
Units to be issued to the Subscriber shall be equal to the product of (A) the
quotient obtained by dividing (i) the original Subscription Amount by (ii) the
Discounted Purchase Price less (iii) the Original Units and (B) a fraction,(i)
the numerator of which is the number of Shares issued to the Investor at the
Closing as part of the Original Units (not including any shares issued pursuant
to an exercise of Warrants) owned by the Subscriber as of the date the Company
completes the Discounted Offering (the “Original Shares”) and (ii) the
denominator of which is the number of Original Units.

 

Solely for illustrative purposes, if the Subscriber invested $100,000 in the
Offering for which Subscriber received 250,000 Units and if in a Discounted
Offering (other than an Exempt Issuance as defined below) the Company issues
shares at $0.20 per share, the Company will be required to issue an additional
250,000 Units, assuming the Investor still owns 100% of the Original Shares, to
the Subscriber based on the Discounted Purchase Price, calculated as follows
(where Y = Additional Shares):

 

(A) [(100,000 ÷ 0.20) –250,000] x (B) [(250,000 ÷ 250,000)] = Y

(A) [500,000 –250,000] x (B) [1] = Y

250,000 = Y

 

In the foregoing example if, as of the closing date of the Discounted Offering,
the Subscriber had disposed of 100,000 of the 250,000 Original Shares purchased,
then the Subscriber would be entitled to receive 150,000 Additional Units
calculated as follows.

 

(A) [(100,000 ÷ 0.20) – 250,000] x (B) [(150,000 ÷ 250,000)] = Y

(A) [500,000 – 250,000] x (B) [.60] = Y

(A) [250,000] x (B) [.60] = Y

150,000 =Y

 

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ARTL SUBSCRIPTION AGREEMENT

 

(c) Notwithstanding anything herein to the contrary, (A) (i) if the registration
statement referenced in clause (a) above ceases to be effective prior to the
sale of the Shares and Warrant Shares thereunder, or (ii) the Shares are no
longer freely tradable under Rule 144 (i.e., the Company ceases to be compliant
with its filing obligations with the SEC, or otherwise), then the purchase price
protection provisions of this Section 1.5 shall be reinstated; provided however,
that this purchase price protection provision will not apply at any time after
June 5, 2020, and (B) this Section 1.5 shall not apply to an Exempt Issuance (as
defined below).

 

(d) As used herein, the term “Common Stock Equivalents” shall mean any
securities of the Company which would entitle the holder thereof to acquire at
any time common stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, common stock. As used herein, the term “Exempt Issuance”
shall mean and include the issuance of any of the following: (i) shares of
common stock or Common Stock Equivalents to employees, consultants, officers or
directors of the Company pursuant to any stock or option plan or other
arrangement duly adopted by the Board of Directors of the Company, (ii)
securities upon the exercise of or conversion of any securities issued at the
Closing, or convertible securities, options or warrants issued and outstanding
on the Closing Date (iii) securities upon the exercise or exchange of or
conversion of any securities issued hereunder, (iv) securities issued in
connection with licensing, marketing or distribution arrangements or similar
strategic transactions approved by the Board; (v) any equity securities issued
as consideration in connection with a bona fide acquisition, merger or
consolidation by the Company provided such acquisition, merger or consolidation
has been approved by the Board; and (vi) any securities issued as dividends to
the Company’s securities holders.

 

1.7 Forced Exercise. At the option of the Company, at any time beginning on the
date that is three (3) months following the effective date of this agreement,
the Company may force the holder to exercise the Warrant at the Exercise Price
provided that (i) the VWAP for the Company’s Common Stock is higher than $3.50
for a period of ten (10) consecutive Trading Days immediately prior to such
exercise, (ii) the Warrant Shares are registered and the registration statement
is declared effective and (iii) such forced exercise by the Company shall not
cause the aggregate number of shares of Common Stock beneficially owned (as
defined in Rule 13d-3 promulgated under the Exchange Act) by the Holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise. The Company may exercise its right to require exercise
of this Warrant under this Section 1.7 by delivering a written notice thereof by
facsimile, email or overnight courier to the holder and the transfer agent (the
“Forced Exercise Notice” no later than two (2) Trading Days after the conditions
above have been met. The Forced Exercise Notice delivered shall be irrevocable
and shall state (A) the date on which the Forced Exercise shall occur (the
“Forced Exercise Date”) which date shall be the thirtieth (30th) Trading Day
after the date Forced Exercise Notice, (B) the aggregate number of Warrant
Shares of which the Company has elected to be subject to Forced Exercise from
all of the holders of Warrants pursuant to this 1.7, and (C) the number of
shares of Common Stock to be issued to the holder on the Forced Exercise Date.

 

1.8 Termination of the Offering. If not sooner fully consummated, the Offering
will terminate at 5:00 pm on June 29, 2018 (Pacific time), subject to the
Company, in its sole discretion and without notice, extending the Offering for
an additional thirty (30) calendar days, or terminating the Offering at any time
prior to the sale of all of the Units offered. Any early termination by the
Company of the Offering will not affect or otherwise invalidate previously
accepted subscriptions for Units. The date on which the Offering is terminated
is herein referred to as the “Offering Termination Date.” Incomplete
subscriptions or subscriptions for Units received after the Offering Termination
Date will not be accepted.

 

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ARTL SUBSCRIPTION AGREEMENT

 

2. Subscriber Representations and Warranties. The Subscriber hereby represents
and warrants to and agrees with the Company that:

 

2.1 Authorization; Power and Enforceability.

 

(a) Authorization. The Subscriber has the requisite power and authority to enter
into and perform this Agreement and the other Transaction Documents, as that
term is defined in Section 3.3 hereof, and to purchase the Subscribed for Units
being sold to it hereunder.

 

(b) Corporate and Other Entities. If Subscriber is a corporation or other
entity, Subscriber is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and it is authorized and
qualified to purchase the Subscribed for Units and the Person signing this
Agreement on behalf of such entity has been duly authorized by such entity to do
so. The execution, delivery and performance of this Agreement and the other
Transaction Documents by the Subscriber and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Subscriber or its Board of Directors or stockholders, if applicable, is
required.

 

(c) Enforceability. This Agreement and the other Transaction Documents when
executed and delivered by Subscriber constitute a valid and binding obligation
of the Subscriber, enforceable against the Subscriber in accordance with the
terms thereof.

 

2.2 No Conflicts. The execution, delivery and performance of this Agreement and
the other Transaction Documents and the consummation by the Subscriber of the
transactions contemplated hereby and thereby or relating hereto or thereto do
not and will not: (i) result in a violation of the Subscriber’s charter
documents, bylaws or other organizational documents, if applicable, (ii)
conflict with nor constitute a default (or an event which with notice or lapse
of time or both would become a default) under any agreement to which the
Subscriber is a party, nor (iii) result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to the Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
material adverse effect on Subscriber). The Subscriber is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement and the other Transaction Documents
nor to purchase the Units in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, the Subscriber is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Company herein.

 

2.3 Company Information. The Subscriber hereby acknowledges and hereby
represents that the Subscriber has been furnished by the Company during the
course of the Offering with all information regarding the Company, the terms and
conditions of the Offering and any additional information that the Subscriber,
its purchaser representative, attorney and/or accountant has requested or
desired to know, and has been afforded the opportunity to ask question of and
receive answers from duly authorized officers or other representatives of the
Company concerning the Company and the terms and conditions of the Offering.

 

2.4 Risk Acknowledgement/ Company Status. The Subscriber recognizes that the
purchase of the Subscribed for Units involves a high degree of risk including,
without limitation, the following:

 

(a) the Company is a “shell company” within the meaning of Rule 144(i)(1) of the
1933 Act with limited operating history and requires and will require
substantial funds in addition to the proceeds of the Offering;

 

(b) a purchase of the Subscribed for Units is highly speculative and only
investors who can afford the loss of their entire investment should consider
purchasing Subscribed for Units;

 

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ARTL SUBSCRIPTION AGREEMENT

 

(c) the Units are “restricted securities” and the Subscriber may not be able to
liquidate its investment in the Subscribed for Units;

 

(d) transferability of the Subscribed for Units is limited; and

 

(e) the Company has not paid a dividend on its capital stock since inception and
does not anticipate paying any dividends in the foreseeable future.

 

2.5 No General Solicitation. If the Subscriber is a US Person, Subscriber
acknowledges that neither the Company nor any other person offered to sell the
Units to it by means of any form of general solicitation or advertising,
including but not limited to: (A) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or (B) any seminar or meeting whose attendees were
invited by any general solicitation or general advertising.

 

US PERSONS PLEASE INITIAL _______________

 

2.6 Accredited Investor Status and Ability to Bear Economic Risk.

 

(a) If the Subscriber is a US Person, Subscriber has reviewed the definition of
“accredited investor” in Rule 501(a) of Regulation D and Subscriber is, and will
be on the Closing Date, an “accredited investor,” as such term is defined in
Rule 501(a) of Regulation D. The information provided by Subscriber in the US
Residents Accredited Investor Questionnaire, a copy of which is attached as
Exhibit C hereto, is truthful, accurate and complete.

 

(b) If the Subscriber is a resident of Alberta, British Columbia or Ontario,
Canada, the term “accredited investor” is defined in NI-45-106, or Subscriber is
a family member, business associate or friend of a director or officer of the
Company as contemplated by Section 2.3 of NI-45-106. The information provided by
Subscriber in the Canadian Accredited Investor Questionnaire, a copy of which is
attached as Exhibit D hereto, is truthful, accurate and complete.

 

(c) If the Subscriber is a natural Person, the Subscriber has reached the age of
majority in the state or other jurisdiction in which the Subscriber resides, has
adequate means of providing for the Subscriber’s current financial needs and
contingencies, is able to bear the substantial economic risks associated with
the purchase of the Subscribed for Units, has no need for liquidity with respect
to such purchase, and, at the present time, can afford a complete loss of such
investment.

 

2.7 Experience of the Subscriber. The Subscriber, its advisers (who are not
compensated by or affiliated with the Company, (directly or indirectly), if any,
and designated representatives, if any, have the knowledge and experience in
financial and business matters necessary to evaluate the merits and risks of its
prospective investment in the Company, and have carefully reviewed and
understand the risks of, and other considerations relating to, the purchase of
the Subscribed for Units and the tax consequences of the investment, and have
the ability to bear the economic risks of the investment and protect the
Subscriber’s interests in connection with the transaction contemplated hereby.

 

2.8 No Governmental Review. The Subscriber acknowledges and understands that no
United States federal or state agency, including the Commission has passed on or
made recommendations or endorsement of the Units or the suitability of the
investment contemplated hereby; nor, have such authorities passed upon or
endorsed the merits of the offering of the Units.

 

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2.9 Compliance with Securities Act. The Subscriber understands and agrees that
none of the Securities have been registered under the 1933 Act or any applicable
state securities laws, by reason of their issuance in a transaction that does
not require registration under the 1933 Act (based in part on the accuracy of
the representations and warranties of the Subscriber contained herein), and that
the Units must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.

 

2.10 Purchase of Units for the Subscriber’s Account. On the Closing Date, the
Subscriber will purchase the Subscribed for Units as principal for its own
account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof.

 

2.11 Restricted Securities. Subscriber understands that the Units, the Shares
and the shares underlying the Warrants, have not been registered under the 1933
Act and Subscriber will not sell, offer to sell, assign, pledge, hypothecate or
otherwise transfer any of the Securities unless pursuant to an effective
registration statement under the 1933 Act, or unless an exemption from
registration is available. Notwithstanding anything to the contrary contained in
this Agreement, Subscriber may transfer (without restriction and without the
need for an opinion of counsel) the Securities to its Affiliates (as defined
below) provided that each such Affiliate is an “accredited investor” under
Regulation D and such Affiliate agrees to be bound by the terms and conditions
of this Agreement. For the purposes of this Agreement, an “Affiliate” of any
person or entity means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such
person or entity. Affiliate includes each Subsidiary of the Company. For
purposes of this definition, “control” means the power to direct the management
and policies of such person or firm, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise. The Subscriber
understands and hereby acknowledges that the Company has no obligation to
register the Units under the 1933 Act or any state securities or “Blue Sky”
laws.

 

2.12 Acknowledgement of and Consent to Restrictive Legend. If the Company issues
share certificates, then the certificates representing the Shares included as
part of the Units, and any shares underlying the Warrants that are issued, shall
bear the following or similar legend:

 

FOR US PERSONS:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE 1933 ACT, OR (B) AN OPINION OF COUNSEL (REASONABLY SATISFACTORY TO THE
COMPANY), THAT REGISTRATION IS NOT REQUIRED UNDER SAID 1933 ACT.”

 

FOR NON-US PERSONS:

 

“THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
US PERSONS (AS DEFINED IN REGULATION S) PURSUANT TO REGULATION S UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY,
NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED
UNDER THE 1933 ACT, OR ANY US STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED,
NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO
US PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.”

 

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If no share certificates are issued the Company shall direct the transfer agent
to include a stop or such other restriction as the Company deems appropriate on
the Company’s transfer books for the Shares and any shares issued upon exercise
of the Warrants.

 

2.13 Non-US Persons. None of the Units, the Shares, the Warrants or the shares
underlying the Warrants have been registered for sale in any jurisdiction.
Subscriber further represents and warrants to the Company that: (a) it is
acquiring the Units in an offshore transaction pursuant to Regulation S and the
Subscriber was outside the United States when receiving and executing this
Agreement; (b) the Subscriber has not acquired the Units as a result of, and
will not itself engage in, any “directed selling efforts” (as defined in
Regulation S) in the United States in respect of the Units which would include
any activities undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States for
the resale of the Units; provided, however, that the Subscriber may sell or
otherwise dispose of the Units pursuant to registration of the Units under the
1933 Act and any applicable state and provincial securities laws or under an
exemption from such registration requirements and as otherwise provided herein;
(c) the Subscriber understands and agrees that offers and sales of any of the
Units prior to the expiration of a period of one year after the date of transfer
of the Securities under this Agreement (the “Distribution Compliance Period”),
shall only be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the Distribution
Compliance Period shall be made only in compliance with the registration
provisions of the 1933 Act or an exemption therefrom, and in each case only in
accordance with all applicable securities laws; (d) the Subscriber understands
and agrees not to engage in any hedging transactions involving the Securities
prior to the end of the Distribution Compliance Period unless such transactions
are in compliance with the 1933 Act; and (e) the Subscriber hereby represents
that it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Units or any
use of this Agreement, including: (i) the legal requirements within its
jurisdiction for the purchase of the Units without the use by the Company of an
offering memorandum; (ii) any foreign exchange restrictions applicable to such
purchase; (iii) any governmental or other consents that may need to be obtained;
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Units. The
Subscriber’s subscription and payment for, and its continued beneficial
ownership of the Units, will not violate any applicable securities or other laws
of the Subscriber’s jurisdiction.

 

NON-US PERSONS PLEASE INITIAL _______________

 

2.14 Address. The Subscriber represents that the address of the Subscriber
furnished by the Subscriber on the signature page hereof is the Subscriber’s
principal residence if the Subscriber is an individual or its principal business
address if it is a corporation or other entity.

 

  9

   

 

ARTL SUBSCRIPTION AGREEMENT

 

2.15 The Warrants. The Subscriber acknowledges that as part of the Offering the
Company will issue two different Warrants depending on the status of the
Investor. The Warrants will be exactly the same, except that if the Investor is
an Affiliated Purchaser (as defined below) as of the Closing Date, the Warrants
issued to such Affiliated Investor, if any, will provide that the Affiliated
Purchaser may exercise the Warrant on a cashless basis using the formula
contained therein. If an Investor is not an Affiliate Purchaser the Warrant
issued to such Investor of the Company will be exercisable only through the
payment of cash for the Shares purchased. For purposes hereof, the term
“Affiliated Purchaser” means any person who is an officer, director or holder of
10% or more of the Company’s issued and outstanding securities as of the Closing
Date.

 

ALL INVESTORS PLEASE INITIAL _______________

 

2.16 Other Offerings. The Subscriber acknowledges that the Company will, from
time to time, offer and sell additional shares of common stock and/or securities
convertible into common stock on such terms and conditions as its Board of
Directors, in its sole discretion, may determine. The terms and conditions of
the offer and sale of any such additional shares of common stock may be
different from and on terms better than the terms of this Offering and may
result in substantial dilution to the existing shareholders.

 

2.17 Reliance. The Subscriber understands and acknowledges that (i) the
Securities are being offered and sold to the Subscriber without registration
under the 1933 Act in a private placement that is intended to be exempt from the
registration provisions of the 1933 Act and (ii) the availability of such
exemption, depends in part on, and the Company will rely upon, the accuracy and
truthfulness of, the foregoing representations and warranties and the Subscriber
hereby consents to such reliance. The Subscriber agrees that the
representations, warranties and covenants of the Subscriber contained herein (or
in any representation letter or questionnaire executed and delivered by the
Subscriber pursuant to the provisions hereof) shall be true and correct both as
of the execution of this Agreement and as of the Closing Date, and shall survive
the completion of the distribution of the Securities. The Subscriber hereby
agrees to notify the Company immediately of any change in any representation,
warranty, covenant or other information relating to the Subscriber contained in
this Agreement, or any exhibit hereto, which takes place prior to Closing.

 

2.18 Correctness of Representations. The Subscriber represents that the
foregoing representations and warranties, to the extent applicable, are true and
correct as of the date hereof and, unless Subscriber otherwise notifies the
Company prior to the Closing Date, shall be true and correct as of the Closing
Date.

 

3. The Company Representations and Warranties. The Company represents and
warrants to and agrees with the Subscriber that:

 

3.1 Due Incorporation. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and to
carry on its business as presently conducted.

 

3.2 Authority; Enforceability. This Agreement, the Registration Rights Agreement
and any other agreements delivered together herewith or therewith or in
connection herewith (collectively, the “Transaction Documents”) have been duly
authorized, executed and delivered by the Company and are valid and binding
agreements of the Company enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The Company has full corporate
power and authority necessary to enter into and deliver this Agreement and to
perform its obligations thereunder.

 

3.3 Capitalization and Additional Issuances. The Company is authorized to issue
up to 200,000,000 shares of common stock comprised of 150,000,000 shares of
common stock, par value $0.001 and 50,000 shares of preferred stock, par value
$0.001 of which 12,781,195 shares of common stock and zero (0) shares of
preferred stock were issued and outstanding as of June 5, 2018.

 

  10

   

 

ARTL SUBSCRIPTION AGREEMENT

 

3.4 Consents. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority, is required by the Company or any Affiliate of the Company in
connection with the consummation of the transactions contemplated by this
Agreement, except as may be required in connection with filings pursuant to
Regulation D. Any such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of filings, be
made within the time prescribed by law.

 

3.5 No Violation or Conflict. If the representations and warranties of the
Subscriber in Section 2 are true and correct, then neither the issuance nor the
sale of the Units (and the securities underlying the Units) nor the performance
of the Company’s obligations under this Agreement by the Company will: (a)
violate, conflict with, result in a breach of, or constitute a default (or an
event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A) the articles or certificate
of incorporation, charter or bylaws of the Company, (B) to the Company’s
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates, or (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject.

 

3.6 The Units. The Company has reserved from its duly authorized capital stock
the maximum number of shares of common stock issuable pursuant to this Agreement
and the Warrants.

 

(a) Upon issuance in accordance with the terms of this Agreement, the Shares (a)
will be duly and validly authorized, validly issued and non-assessable; (b) will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company; and (c) will not subject the holders thereof to
personal liability by reason of being such holders.

 

(b) When executed and delivered in accordance with the terms of this Agreement,
the Warrants will represent a binding obligation of the Company to sell to the
Subscriber the shares underlying the Warrants pursuant to the terms thereof.
Upon issuance in accordance with the terms of the Warrant, the shares underlying
the Warrants (a) will be duly and validly authorized, validly issued and
non-assessable; (b) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of the
Company or rights to acquire securities of the Company; and (c) will not subject
the holders thereof to personal liability by reason of being such holders.

 

3.7 Litigation. There is no litigation, arbitration, mediation, action, suit,
claim, proceeding or investigation, whether legal or administrative, pending
against the Company or any of its Subsidiaries or, to the Company’s knowledge,
threatened against the Company or any of its Subsidiaries or any of their
respective assets, properties or operations, at applicable law or in equity,
before or by any governmental authority or any order of any governmental
authority that, individually or in the aggregate, has had or caused or would
reasonably be expected to have or cause a material adverse effect on the
Company’s operations.

 

  11

   

 

ARTL SUBSCRIPTION AGREEMENT

 

3.8 No Integrated Offering. Neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security of the Company nor solicited any offers to buy
any security of the Company under circumstances that would cause the offer of
the Securities pursuant to this Agreement to be integrated with prior offerings
by the Company for purposes of the 1933 Act. No prior offering will impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder. Neither the Company nor any of its
Affiliates will take any action or steps that would cause the offer or issuance
of the Securities to be integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder. The Company will not conduct any offering
other than the transactions contemplated hereby that may be integrated with the
offer or issuance of the Securities that would impair the exemptions relied upon
in this Offering or the Company’s ability to timely comply with its obligations
hereunder.

 

3.9 Use of Proceeds. The Company intends to use the net proceeds from the
Offering for working capital and general corporate purposes.

 

3.10 Correctness of Representations. The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscriber
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be
true as of such date.

 

4. Subscriber’s Conditions of Closing. The Subscriber’s obligation to purchase
the Units is subject to the satisfaction or waiver, on or before the Closing
Date, of the conditions contained in this Section 4.

 

4.1 Representations, Warranties and Covenants. The representations, warranties
and covenants of the Company set forth in Section 3 hereof shall be true in all
material respects on and as of the Closing Date.

 

4.2 Closing Deliveries. The conditions in Section 1.3(d) hereof shall have been
satisfied or waived in writing by the Subscriber.

 

4.3 Company’s Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the date of such
Closing shall have been performed, complied with in all material respects, or
waived in writing by the Subscriber.

 

4.4 No Adverse Action or Decision. There shall be no action, suit, investigation
or proceeding pending, or to the Company’s knowledge, threatened, against or
affecting the Company or any of its properties or rights, or any of its
affiliates, associates, officers or directors, before any court, arbitrator, or
administrative or governmental body that (i) seeks to restrain, enjoin, prevent
the consummation of or otherwise adversely affect the transactions contemplated
by this Agreement, or (ii) questions the validity or legality of any such
transaction or seeks to recover damages or to obtain other relief in connection
with any such transaction.

 

5. Company’s Conditions of Closing. The Company’s obligation to sell the Units
is subject to the satisfaction or waiver, on or before the Closing Date, of the
conditions contained in this Section 5.

 

5.1 Representations, Warranties and Covenants. The representations, warranties
and covenants of the Subscriber set forth in Section 2 hereof shall be true in
all material respects on and as of the Closing Date.

 

5.2 Closing Deliveries. The conditions in Section 1.3(c) hereof shall have been
satisfied or waived in writing by the Company.

 

  12

   

 

ARTL SUBSCRIPTION AGREEMENT

 

5.3 Subscriber’s Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Subscriber on or prior to the date of
such Closing shall have been performed, complied with in all material respects,
or waived in writing by the Company.

 

5.4 No Adverse Action or Decision. There shall be no action, suit, investigation
or proceeding pending, or to the Company’s knowledge, threatened, against or
affecting the Company or any of its properties or rights, or any of its
affiliates, associates, officers or directors, before any court, arbitrator, or
administrative or governmental body that (i) seeks to restrain, enjoin, prevent
the consummation of or otherwise adversely affect the transactions contemplated
by this Agreement, or (ii) questions the validity or legality of any such
transaction or seeks to recover damages or to obtain other relief in connection
with any such transaction.

 

5.5 Return of Subscription Amount. If the Closing Conditions have not been
satisfied on or prior to the Offering Termination Date, the Company will return
the Subscription Amount to the Subscriber.

 

6. Miscellaneous.

 

6.1 Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, email or facsimile, addressed as set
forth below or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by email or facsimile, with a confirmation of receipt of email or
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be: (i)
if to the Company, to: Artelo Biosciences, Inc., c/o Wilson Sonsini Goodrich &
Rosati, P.C., 12235 El Camino Real, San Diego, CA 92130; and (ii) if to the
Subscriber, to: the address and email address and/or fax number indicated on the
signature page hereto.

 

6.2 Entire Agreement; Assignment. This Agreement and other Transaction Documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof. Neither the Company
nor the Subscribers has relied on any representations not contained or referred
to in this Agreement and the documents delivered herewith. No right or
obligation of the Company shall be assigned without prior notice to and the
written consent of the Subscriber. The Subscriber may not assign this Agreement
without the prior written consent of the Company.

 

6.3 Indemnification. The Subscriber agrees to indemnify and hold harmless the
Company, and its officers, directors, employees, agents, control Persons and
affiliates from and against all losses, liabilities, claims, damages, costs,
fees and expenses whatsoever (including, but not limited to, any and all
expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of (i) any sale or
distribution of the Securities by the Subscriber in violation of the 1933 Act or
any applicable state securities or “Blue Sky” laws or (ii) any actual or alleged
false acknowledgment, representation or warranty, or misrepresentation or
omission to state a material fact, or breach by the Subscriber of any covenant
or agreement made by the Subscriber herein, in any Transaction Document, or in
any other document delivered in connection with this Agreement or any
Transaction Document.

 

  13

   

 

ARTL SUBSCRIPTION AGREEMENT

 

6.4 Counterparts/Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile or email transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile or email signature page were an original thereof.

 

6.5 Calendar Days. All references to “days” in the Transaction Documents shall
mean calendar days unless otherwise stated. The terms “business days” and
“trading days” shall mean days that the New York Stock Exchange is open for
trading for three or more hours. Time periods shall be determined as if the
relevant action, calculation or time period were occurring in New York City. Any
deadline that falls on a non-business day in any of the Transaction Documents
shall be automatically extended to the next business day and interest, if any,
shall be calculated and payable through such extended period.

 

6.6 Captions; Certain Definitions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement. As used in this Agreement the term “Person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof. All pronouns and any variations
thereof used herein shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons referred to may
require.

 

6.7 Severability. In the event that any term or provision of this Agreement
shall be finally determined to be superseded, invalid, illegal or otherwise
unenforceable pursuant to applicable law by an authority having jurisdiction and
venue, that determination shall not impair or otherwise affect the validity,
legality or enforceability: (i) by or before that authority of the remaining
terms and provisions of this Agreement, which shall be enforced as if the
unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.

 

6.8 Successor Laws. References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms. A successor
rule to Rule 144 shall include any rule that would be available to a
non-Affiliate of the Company for the sale of common stock not subject to volume
restrictions and after a six month holding period.

 

6.9 Irrevocability; Binding Effect. The Subscriber hereby acknowledges and
agrees that the subscription hereunder is irrevocable by the Subscriber, except
as required by applicable law, and that this Agreement shall survive the death
or disability of the Subscriber and shall be binding upon and inure to the
benefit of the parties and their heirs, executors, administrators, successors,
legal representatives and permitted assigns. If the Subscriber is more than one
Person, the obligations of the Subscriber hereunder shall be joint and several
and the agreements, representations, warranties and acknowledgments herein shall
be deemed to be made by and be binding upon each such Person and such Person’s
heirs, executors, administrators, successors, legal representatives and
permitted assigns.

 

  14

   

 

ARTL SUBSCRIPTION AGREEMENT

 

6.10 Modification. Except as otherwise expressly provided herein, any term of
this Agreement may be amended and observance of any term of this Agreement may
be waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely) with
the written consent of the Company and the Subscriber.

 

6.11 Fees. Unless otherwise specifically provided, each of the parties hereto
shall pay its own fees and expenses (including the fees of any attorneys,
accountants, appraisers or others engaged by such party) in connection with this
Agreement and the transactions contemplated hereby, whether or not the
transactions contemplated hereby are consummated.

 

6.12 Survival of Representations. All representations, warranties and agreements
contained herein or made in writing by or on behalf of any party to this
Agreement in connection herewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.

 

6.13 Confidentiality. The Subscriber acknowledges and agrees that any
information or data the Subscriber has acquired from or about the Company or may
acquire in the future, not otherwise properly in the public domain was received
in confidence. The Subscriber agrees not to divulge, communicate or disclose,
except as may be required by law or for the performance of this Agreement, or
use to the detriment of the Company or for the benefit of any other Person, or
misuse in any way, any confidential information of the Company.

 

6.14 Binding Obligation. Upon the execution and delivery of this Agreement by
the Subscriber, this Agreement shall become a binding obligation of the
Subscriber with respect to the purchase of the Subscribed for Units as herein
provided, subject, however to the right reserved by the Company to enter into
the same agreement with or other subscribers and to unilaterally reject any
subscriber.

 

6.15 Further Assurances. The parties hereto agree to execute and deliver all
such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.

 

6.16 No Third Party Rights. Nothing in this Agreement shall create or be deemed
to create any rights in any Person or entity not a party to this Agreement.

 

6.17 Reference and Effective Date. The reference and effective date of this
Agreement shall be the date on which this Agreement is signed by the Company as
reflected on the signature page hereto, regardless of the date on which it is
signed by the Subscriber.

 

6.18 Additional Requirements.

 

CERTAIN STATES HAVE IMPOSED SPECIAL FINANCIAL SUITABILITY STANDARDS FOR
SUBSCRIBERS WHO PURCHASE THE UNITS. In addition to the suitability requirements
set forth herein, certain states may have imposed special financial suitability
standards for subscribers who purchase the Units. To the extent Subscriber’s
state has imposed such special financial suitability standards, the Subscriber
hereby agrees to provide the Company with such additional information as may be
required to ensure that Subscriber meets its respective state’s suitability
requirements. WE INTEND TO ASSERT THE FOREGOING REPRESENTATIONS AS A DEFENSE IN
ANY SUBSEQUENT LITIGATION WHERE SUCH ASSERTION WOULD BE RELEVANT. WE HAVE THE
RIGHT TO ACCEPT OR REJECT THIS SUBSCRIPTION IN WHOLE OR IN PART, SO LONG AS SUCH
PARTIAL ACCEPTANCE OR REJECTION DOES NOT RESULT IN AN INVESTMENT OF LESS THAN
THE MINIMUM AMOUNT. BY EXECUTING THIS SUBSCRIPTION AGREEMENT, THE SUBSCRIBER IS
NOT WAIVING ANY RIGHTS UNDER FEDERAL OR STATE LAW.

 

  15

   

 

ARTL SUBSCRIPTION AGREEMENT

 

6.19 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in New York County, New York for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery). Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of the documents contemplated herein, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorney’s fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

[COMPANY’S SIGNATURE PAGE FOLLOWS]

 

  16

   

 

ARTL SUBSCRIPTION AGREEMENT

 

COMPANY SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Company has duly executed this Subscription Agreement.

 

Dated: _______ , 2018

 

 

 

 

Artelo Biosciences, Inc.

 

        By:

 

 

 

 

 

Name:

Gregory Gorgas     Title: President and Chief Executive Officer  

 

[SUBSCRIBER’S SIGNATURE PAGE FOLLOWS]

 

  17

   

 

ARTL SUBSCRIPTION AGREEMENT

 

SUBSCRIBER SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Subscriber hereby executes this Subscription Agreement.

 

Dated: ______ , 2018        

=

$

Number of Units

 

Aggregate Purchase Price         SUBSCRIBER (individual)   SUBSCRIBER (entity)  

 

 

 

 

 

 

 

 

Signature

 

Name of Entity

 

 

 

 

 

 

 

 

 

Print Name

 

Signature

 

 

 

 

 

 

 

 

 

Signature (if Joint Tenants or Tenants in Common)

 

Print Name

 

 

 

 

 

 

 

Title: _____________

 

 

 

 

 

Address of Principal Residence:

 

Address of Executive Offices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Social Security Number(s):

 

IRS Tax Identification Number:

 

 

 

 

 

 

 

 

 

Telephone Number:

 

Telephone Number:

 

 

 

 

 

 

 

 

 

Facsimile Number:

 

Facsimile Number:

 

 

 

 

 

 

 

 

 

E-mail Address:

 

E-mail Address:

 

 

 

 

 

 

 

 

 

 

  18

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

EXHIBIT A

 

Registration Rights Agreement

 

 

 

Exhibit A

  

 

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of [●], 2018, between Artelo Biosciences, Inc., a Nevada corporation (the
“Company”), and each of the several purchasers signatory hereto (each such
purchaser, a “Purchaser” and, collectively, the “Purchasers”).

 

This Agreement is made pursuant to the Subscription Agreement, dated as of the
date hereof, between the Company and each Purchaser (the “Subscription
Agreement”).

 

The Company and each Purchaser hereby agrees as follows:

 

1. Definitions.

 

Capitalized terms used and not otherwise defined herein that are defined in the
Subscription Agreement shall have the meanings given such terms in the
Subscription Agreement. As used in this Agreement, the following terms shall
have the following meanings:

 

“Advice” shall have the meaning set forth in Section 6(c).

 

“Effectiveness Date” means, with respect to the Initial Registration Statement
required to be filed hereunder, the 120th calendar day following the Filing Date
and with respect to any additional Registration Statements which may be required
pursuant to Section 2(c) or Section 3(c), the 75th calendar day following the
date on which an additional Registration Statement is required to be filed
hereunder (or, in the event of a “full review” by the Commission, the 110th
calendar day following the date such additional Registration Statement is
required to be filed hereunder).

 

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

 

“Event” shall have the meaning set forth in Section 2(d).

 

“Filing Date” means, with respect to the Initial Registration Statement required
hereunder, October 31, 2018 and, with respect to any additional Registration
Statements which may be required pursuant to Section 2(c) or Section 3(c), the
earliest practical date on which the Company is permitted by SEC Guidance to
file such additional Registration Statement related to the Registrable
Securities; provided, however, that if the Filing Date falls on a day that is
not a Trading Day, then the Filing Date shall be extended to the next succeeding
Trading Day.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

 

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

“Initial Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement.

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

 

“Registrable Securities” means, as of any date of determination, (a) all Shares,
(b) all shares of common stock then issued and issuable upon exercise of the
Warrants (the “Warrant Shares”) (assuming on such date the Warrants are
exercised in full), (c) any and all shares of common stock then issued or
issuable as partial liquidated damages pursuant to Section 2(d) and (d) any
securities issued or then issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing;
provided, however, that any such Registrable Securities shall cease to be
Registrable Securities (and the Company shall not be required to maintain the
effectiveness of any, or file another, Registration Statement hereunder with
respect thereto) for so long as (a) a Registration Statement with respect to the
sale of such Registrable Securities is declared effective by the Commission
under the Securities Act and such Registrable Securities have been disposed of
by the Holder in accordance with such effective Registration Statement, (b) such
Registrable Securities have been previously sold in accordance with Rule 144, or
(c) such securities become eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144 as set
forth in a written opinion letter to such effect, addressed, delivered and
acceptable to the Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or exchange of
which, or as a dividend upon which, such securities were issued or are issuable,
were at no time held by any Affiliate of the Company), as reasonably determined
by the Company, upon the advice of counsel to the Company.

 

“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Section 2(a) and any additional registration statements
contemplated by Section 2(c) or Section 3(c), including (in each case) the
Prospectus, amendments and supplements to any such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in any such registration statement.

 

  A-2

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section
3(a).

 

“SEC Guidance” means (i) any publicly-available written or oral guidance of the
Commission staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.

 

“Transfer Agent” shall mean the Company’s transfer agent at the time of the
action to be taken.

 

2. Registration.

 

(a) On or prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all of the
Registrable Securities that are not then registered on an effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415.
Each Registration Statement filed hereunder shall be on Form S-1. Subject to the
terms of this Agreement, the Company shall use its reasonable best efforts to
cause a Registration Statement filed under this Agreement (including, without
limitation, under Section 3(c)) to be declared effective under the Securities
Act as promptly as reasonably practicable after the filing thereof, but in any
event no later than the applicable Effectiveness Date, and shall use its
reasonable best efforts to keep such Registration Statement continuously
effective under the Securities Act until the date that all Registrable
Securities covered by such Registration Statement (i) have been sold, thereunder
or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for the Company to
be in compliance with the current public information requirement under Rule 144,
as determined by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Transfer Agent and the affected
Holders (the “Effectiveness Period”). The Company shall telephonically request
effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a
Trading Day. The Company shall immediately notify the Holders via facsimile or
by email of the effectiveness of a Registration Statement on the same Trading
Day that the Company telephonically confirms effectiveness with the Commission,
which shall be the date requested for effectiveness of such Registration
Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after
the effective date of such Registration Statement, if required, file a final
Prospectus with the Commission as required by Rule 424.

 

(b) Notwithstanding the registration obligations set forth in Section 2(a), if
the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale as
a secondary offering on a single registration statement, the Company agrees to
promptly inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by
the Commission, covering the maximum number of Registrable Securities permitted
to be registered by the Commission, on Form S-1 or such other form available to
register for resale the Registrable Securities as a secondary offering;
provided, however, that prior to filing such amendment, the Company shall be
obligated to use diligent efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with the SEC
Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09.

 

  A-3

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(c) Notwithstanding any other provision of this Agreement and subject to the
payment of liquidated damages pursuant to Section 2(d), if the Commission or any
SEC Guidance sets forth a limitation on the number of Registrable Securities
permitted to be registered on a particular Registration Statement as a secondary
offering (and notwithstanding that the Company used diligent efforts to advocate
with the Commission for the registration of all or a greater portion of
Registrable Securities), unless otherwise directed in writing by a Holder as to
its Registrable Securities, the number of Registrable Securities to be
registered on such Registration Statement will be reduced as follows:

 

i. first, the Company shall reduce or eliminate any securities to be included
other than Registrable Securities;

 

ii. second, the Company shall reduce Registrable Securities represented by
Warrant Shares (applied, in the case that some Warrant Shares may be registered,
to the Holders on a pro rata basis based on the total number of unregistered
Warrant Shares held by such Holders); and

 

iii. third, the Company shall reduce Registrable Securities represented by
Shares (applied, in the case that some Shares may be registered, to the Holders
on a pro rata basis based on the total number of unregistered Shares held by
such Holders).

 

In the event of a cutback hereunder, the Company shall give the Holder at least
five (5) Trading Days prior written notice along with the calculations as to
such Holder’s allotment. In the event the Company amends the Initial
Registration Statement in accordance with the foregoing, the Company will use
its reasonable best efforts to file with the Commission, as promptly as allowed
by Commission or SEC Guidance provided to the Company or to registrants of
securities in general, one or more registration statements on Form S-1 or such
other form available to register for resale those Registrable Securities that
were not registered for resale on the Initial Registration Statement, as
amended.

 

  A-4

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(d) If: (i) the Initial Registration Statement is not filed on or prior to its
Filing Date (if the Company files the Initial Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a) herein, the Company shall be deemed to have not
satisfied this clause (i)), or (ii) prior to the effective date of a
Registration Statement, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of
such Registration Statement within fifteen (15) Trading Days after the receipt
of comments by or notice from the Commission that such amendment is required in
order for such Registration Statement to be declared effective, or (iii) a
Registration Statement registering for resale all of the Registrable Securities
is not declared effective by the Commission by the Effectiveness Date (any such
failure or breach being referred to as an “Event”), then, in addition to any
other rights the Holders may have hereunder or under applicable law, on each
such Event date and on each monthly anniversary of each such Event date (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall issue to each Holder an amount in shares of
the Company’s common stock, as partial liquidated damages and not as a penalty,
equal to the product of 2% multiplied by the number of Shares purchased by the
Holder pursuant to the Subscription Agreement (for avoidance of confusion, the
Warrant Shares shall not be taken into account for calculation of liquidated
damages under this Section 2(d)). The parties agree that the maximum aggregate
liquidated damages payable to a Holder under this Agreement shall be 12% of the
aggregate Shares purchased by such Holder pursuant to the Subscription
Agreement. The partial liquidated damages pursuant to the terms hereof shall
apply on a daily pro rata basis for any portion of a month prior to the cure of
an Event.

 

(e) Notwithstanding anything to the contrary contained herein, in no event shall
the Company be permitted to name any Holder or affiliate of a Holder as an
“Underwriter” without the prior written consent of such Holder.

 

3. Registration Procedures.

 

In connection with the Company’s registration obligations hereunder, the Company
shall:

 

(a) Not less than five (5) Trading Days prior to the filing of each Registration
Statement and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference, but not including (i) any Exchange Act filing or (ii) any supplement
or post-effective amendment to a registration statement that is not related to
such Holder’s Registrable Securities), the Company shall (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders, and (ii) cause its officers and
directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to each Holder, to conduct a reasonable investigation within the meaning
of the Securities Act. Notwithstanding the above, the Company shall not be
obligated to provide the Holders advance copies of any universal shelf
registration statement registering securities in addition to those required
hereunder, or any Prospectus prepared thereto. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable Securities shall
reasonably object in good faith, provided that, the Company is notified of such
objection in writing no later than five (5) Trading Days after the Holders have
been so furnished copies of a Registration Statement or one (1) Trading Day
after the Holders have been so furnished copies of any related Prospectus or
amendments or supplements thereto. Each Holder agrees to furnish to the Company
a completed questionnaire in the form attached to this Agreement as Annex B (a
“Selling Stockholder Questionnaire”) on a date that is not less than fifteen
(15) Trading Days prior to the Filing Date or by the end of the fourth (4th)
Trading Day following the date on which such Holder receives draft materials in
accordance with this Section.

 

  A-5

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith (subject to any requirement that a post-effective
amendment be declared effective by the Commission) as may be necessary to keep a
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities subject to any SEC Guidance
that sets forth a limitation on the number of Registrable Securities permitted
to be registered on a particular Registration Statement, (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and, as so supplemented or amended, to
be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible
to any comments received from the Commission with respect to a Registration
Statement or any amendment thereto and provide as promptly as reasonably
possible to the Holders true and complete copies of all correspondence from and
to the Commission relating to a Registration Statement (provided that, the
Company shall excise any information contained therein which would constitute
material non-public information regarding the Company or any of its
Subsidiaries), and (iv) comply in all material respects with the applicable
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.

 

(c) If during the Effectiveness Period, the number of Registrable Securities at
any time exceeds 100% of the number of shares of common stock then registered in
a Registration Statement, then the Company shall file as soon as reasonably
practicable, but in any case prior to the applicable Filing Date, an additional
Registration Statement covering the resale by the Holders of not less than the
number of such Registrable Securities.

 

(d) Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than one (1) Trading Day prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1) Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed
(but not including (i) any Exchange Act filing or (ii) any supplement or
post-effective amendment to a registration statement that is not related to such
Holder’s Registrable Securities), (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement, and (C) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or any other
federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information, (iii) of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose, (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a
Registration Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(vi) of the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus, provided, however, in no event shall any such notice contain any
information which would constitute material, non-public information regarding
the Company or any of its Subsidiaries.

 

  A-6

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(e) Use its reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order stopping or suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

 

(f) Furnish to each Holder, without charge, at least one conformed copy of each
such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical
form.

 

(g) Subject to the terms of this Agreement, the Company hereby consents to the
use of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 3(d).

 

(h) Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

 

  A-7

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(i) If requested by a Holder, cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by the Subscription
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holder may
request.

 

(j) Upon the occurrence of any event contemplated by Section 3(d), as promptly
as reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its reasonable best
efforts to ensure that the use of the Prospectus may be resumed as promptly as
is practicable.

 

(k) Otherwise use commercially reasonable efforts to comply with all applicable
rules and regulations of the Commission under the Securities Act and the
Exchange Act, including, without limitation, Rule 172 under the Securities Act,
file any final Prospectus, including any supplement or amendment thereof, with
the Commission pursuant to Rule 424 under the Securities Act, promptly inform
the Holders in writing if, at any time during the Effectiveness Period, the
Company does not satisfy the conditions specified in Rule 172 and, as a result
thereof, the Holders are required to deliver a Prospectus in connection with any
disposition of Registrable Securities and take such other actions as may be
reasonably necessary to facilitate the registration of the Registrable
Securities hereunder.

 

(l) The Company may require each selling Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares. During any
periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any
Holder fails to furnish such information within three Trading Days of the
Company’s request, any liquidated damages that are accruing at such time as to
such Holder only shall be tolled and any Event that may otherwise occur solely
because of such delay shall be suspended as to such Holder only, until such
information is delivered to the Company.

 

  A-8

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

4. Registration Expenses.

 

All fees and expenses incident to the performance of or compliance with, this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public
accountants) (A) with respect to filings made with the Commission, (B) with
respect to filings required to be made with any Trading Market on which the
Common Stock is then listed for trading, and (C) in compliance with applicable
state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder, any fee payable
to the Transfer Agent for the issuance of new share certificates or any legal
fees or other costs of the Holders.

 

5. Indemnification.

 

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of common stock), investment advisors
and employees (and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of such title or any other
title) of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, stockholders, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A and Annex B hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use
by such Holder of an outdated, defective or otherwise unavailable Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated, defective or otherwise unavailable for use by such Holder and prior to
the receipt by such Holder of the Advice contemplated in Section 6(c). The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified person and shall survive the transfer of any
Registrable Securities by any of the Holders in accordance with Section 6(h).

 

  A-9

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based solely upon: any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading (i) to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company expressly for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent, but only to the extent, that such information
relates to such Holder’s information provided in the Selling Stockholder
Questionnaire or the proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Holder expressly for
use in a Registration Statement (it being understood that the Holder has
approved Annex A and Annex B hereto for this purpose), such Prospectus or in any
amendment or supplement thereto. In no event shall the liability of a selling
Holder be greater in amount than the dollar amount of the proceeds (net of all
expenses paid by such Holder in connection with any claim relating to this
Section 5 and the amount of any damages such Holder has otherwise been required
to pay by reason of such untrue statement or omission) received by such Holder
upon the sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that, the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have materially and
adversely prejudiced the Indemnifying Party.

 

  A-10

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses, (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding, or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) not to be entitled to indemnification
hereunder.

 

(d) Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party
in accordance with its terms.

 

  A-11

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. In no event
shall the contribution obligation of a Holder of Registrable Securities be
greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such Holder in connection with any claim relating to this Section 5 and
the amount of any damages such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities giving rise
to such contribution obligation.

 

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

 

6. Miscellaneous.

 

(a) Remedies. In the event of a breach by the Company or by a Holder of any of
their respective obligations under this Agreement, each Holder or the Company,
as the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, shall be
entitled to specific performance of its rights under this Agreement. Each of the
Company and each Holder agrees that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.

 

(b) No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statements other than the
Registrable Securities.

 

(c) Discontinued Disposition. By its acquisition of Registrable Securities, each
Holder agrees that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(d)(iii) through (vi), such
Holder will forthwith discontinue disposition of such Registrable Securities
under a Registration Statement until it is advised in writing (the “Advice”) by
the Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its reasonable
best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable. The Company agrees and acknowledges that any periods during
which the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section 2(d).

 

  A-12

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(d) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
75% or more of the then outstanding Registrable Securities (for purposes of
clarification, this includes any Registrable Securities issuable upon exercise
or conversion of any Security), provided that, if any amendment, modification or
waiver disproportionately and adversely impacts a Holder (or group of Holders),
the consent of such disproportionately impacted Holder (or group of Holders)
shall be required. If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in compliance with
the previous sentence, then the number of Registrable Securities to be
registered for each Holder shall be reduced pro rata among all Holders and each
Holder shall have the right to designate which of its Registrable Securities
shall be omitted from such Registration Statement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of a Holder or some Holders
and that does not directly or indirectly affect the rights of other Holders may
be given only by such Holder or Holders of all of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the first sentence of this Section 6(e). No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of this Agreement unless the same consideration
also is offered to all of the parties to this Agreement.

 

(e) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be delivered as set forth in the
Subscription Agreement.

 

(f) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign (except by
merger) its rights or obligations hereunder without the prior written consent of
all of the Holders of the then outstanding Registrable Securities. Each Holder
may assign their respective rights hereunder in the manner and to the Persons as
permitted in the Subscription Agreement.

 

(g) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by email delivery of a “.pdf” or other
format data file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf” signature page were an
original thereof.

 

(h) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Subscription Agreement.

 

(i) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

 

  A-13

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

(j) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

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

 

(l) Independent Nature of Holders’ Obligations and Rights. The obligations of
each Holder hereunder are several and not joint with the obligations of any
other Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Holders are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Holders are not acting in concert
or as a group, and the Company shall not assert any such claim, with respect to
such obligations or transactions. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained was solely in
the control of the Company, not the action or decision of any Holder, and was
done solely for the convenience of the Company and not because it was required
or requested to do so by any Holder. It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder,
solely, and not between the Company and the Holders collectively and not between
and among Holders.

 

[SIGNATURE PAGE FOLLOWS]

 

  A-14

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

 

 

COMPANY:

 

 

 

 

ARTELO BIOSCIENCES, INC.

 

        By:

 

Name:

Gregory Gorgas     Title: President & CEO  

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

  A-15

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

[SIGNATURE PAGE OF HOLDERS TO ARTL REGISTRATION RIGHTS AGREEMENT]

 

Name of Holder:

 

 

 

 

Signature of Authorized Signatory of Holder:

 

 

 

 

 

Name of Authorized Signatory:  

 

 

 

 

Title of Authorized Signatory:  

 

 

[SIGNATURE PAGES CONTINUE]

 

  A-16

   

   

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

Annex A

 

PLAN OF DISTRIBUTION

 

The section of the Registration Statement titled “Plan of Distribution” shall be
substantially as follows:

 

Each Selling Stockholder (the “Selling Stockholders”) of the securities and any
of their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their securities covered hereby on the principal Trading
Market or any other stock exchange, market or trading facility on which the
securities are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling securities:

 

 

· ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

 

 

 

· block trades in which the broker-dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

 

 

 

· purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

 

 

 

· an exchange distribution in accordance with the rules of the applicable
exchange;

 

 

 

 

· privately negotiated transactions;

 

 

 

 

· settlement of short sales;

 

 

 

 

· in transactions through broker-dealers that agree with the Selling
Stockholders to sell a specified number of such securities at a stipulated price
per security;

 

 

 

 

· through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 

 

 

 

· a combination of any such methods of sale; or

 

 

 

 

· any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell securities under Rule 144 or any other
exemption from registration under the Securities Act of 1933, as amended (the
“Securities Act”), if available, rather than under this prospectus.

 

Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of securities, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.

 

  A-17

   

  

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

In connection with the sale of the securities or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the
securities in the course of hedging the positions they assume. The Selling
Stockholders may also sell securities short and deliver these securities to
close out their short positions, or loan or pledge the securities to
broker-dealers that in turn may sell these securities. The Selling Stockholders
may also enter into option or other transactions with broker-dealers or other
financial institutions or create one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of securities
offered by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).

 

The Selling Stockholders and any broker-dealers or agents that are involved in
selling the securities may be deemed to be “underwriters” within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the securities.

 

The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the securities. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on
which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations by
reason of Rule 144, without the requirement for the Company to be in compliance
with the current public information under Rule 144 under the Securities Act or
any other rule of similar effect or (ii) all of the securities have been sold
pursuant to this prospectus or Rule 144 under the Securities Act or any other
rule of similar effect. The resale securities will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale securities covered
hereby may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the
applicable restricted period, as defined in Regulation M, prior to the
commencement of the distribution. In addition, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).

 

  A-18

   

  

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

Annex B

 

SELLING STOCKHOLDERS

 

The section of the Registration Statement titled “Selling Stockholders” shall be
substantially as follows:

 

The common stock being offered by the Selling Stockholders are those previously
issued to the Selling Stockholders and those issuable to the Selling
Stockholders, upon exercise of the Warrants. For additional information
regarding the issuances of those shares of common stock and warrants, see
“Private Placement of Common Stock and Warrants” above. We are registering the
shares of common stock in order to permit the Selling Stockholders to offer the
shares for resale from time to time. Except as otherwise disclosed herein, the
Selling Stockholders have not had any material relationship with us within the
past three years.

 

The table below lists the Selling Stockholders and other information regarding
the beneficial ownership of the shares of common stock by each of the Selling
Stockholders. The second column lists the number of shares of common stock
beneficially owned by each Selling Stockholders, based on its ownership of the
shares of common stock and warrants, as of __________, 201__, assuming exercise
of the warrants held by the Selling Stockholders on that date, without regard to
any limitations on exercises.

 

The third column lists the shares of common stock being offered by this
prospectus by the Selling Stockholders .

 

In accordance with the terms of a registration rights agreement with the Selling
Stockholders, this prospectus generally covers the resale of the sum of (i) the
number of shares of common stock issued to the Selling Stockholders as part of a
private placement conducted by us and, in the case of one of the Selling
Stockholders, shares of common stock purchased by such Selling Stockholder from
an affiliate of ours and (ii) the maximum number of shares of common stock
issuable upon exercise of the related warrants, determined as if the outstanding
warrants were exercised in full as of the trading day immediately preceding the
date this registration statement was initially filed with the SEC, each as of
the trading day immediately preceding the applicable date of determination and
all subject to adjustment as provided in the registration right agreement,
without regard to any limitations on the exercise of the warrants. The fourth
column assumes the sale of all of the shares offered by the Selling Stockholders
pursuant to this prospectus.

 

The Selling Stockholders may sell all, some or none of their shares in this
offering. See “Plan of Distribution.”

 

Name of Selling Stockholder

 

Number of shares of Common

Stock Owned Prior to Offering

 

Maximum Number of shares

of Common Stock to be Sold

Pursuant to this Prospectus

 

Number of shares of

Common Stock Owned

After Offering

 

  A-19

   

  

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

Annex C

 

ARTELO BIOSCIENCES, INC.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”)
of Artelo Biosciences, Inc., a Nevada corporation (the “Company”), understands
that the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the “Securities Act”), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement (the
“Registration Rights Agreement”), dated as of [_], 2018, by and among the
Company, the undersigned, and the other parties party thereto. A copy of the
Registration Rights Agreement is available from the Company upon request at
Artelo Biosciences, Inc., 888 Prospect Street, Suite 210, La Jolla, CA 92037.
All capitalized terms used herein but not otherwise defined herein shall have
the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling stockholder in
the Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling stockholder in the Registration Statement and the related
prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it in
the Registration Statement.

 

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.

Name.

 

 

(a) Full Legal Name of Selling Stockholder

 

 

 

 

 

 

 

 

 

 

(b) Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities are held:

 

 

 

 

 

 

 

 

 

 

(c) Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by this Questionnaire):

 

 

 

 

 

 

 

  A-20

   

 

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

2. Address for Notices to Selling Stockholder:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone:

 

 

 

Fax:

 

 

 

Contact Person:

 

 

 

 

 

 

3.

Broker-Dealer Status:

 

 

(a)

Are you a broker-dealer?

 

Yes o No o

 

 

(b)

If “yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

 

Yes o No o

 

 

Note: If “no” to Section 3(b), the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

 

 

 

(c)

Are you an affiliate of a broker-dealer?

 

Yes o No o

 

 

  A-21

   

  

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

 

(d)

If you are an affiliate of a broker-dealer, do you certify that you purchased
the Registrable Securities in the ordinary course of business, and at the time
of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?

 

Yes o No o

 

 

 

 

Note: If “no” to Section 3(d), the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

4. Beneficial Ownership of Securities of the Company Owned by the Selling
Stockholder.

 

 

Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the Subscription Agreement.

 

 

(a) Type and Amount of other securities beneficially owned by the Selling
Stockholder:

 

5. Relationships with the Company

 

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

State any exceptions here:

 

 

 

 

The undersigned agrees to promptly notify the Company of any material
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective; provided, that the undersigned shall not be required to
notify the Company of any changes to the number of securities held or owned by
the undersigned or its affiliates.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus and any amendments or supplements thereto.

 

  A-22

   

  

EXHIBIT A TO ARTL SUBSCRIPTION AGREEMENT

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

 

Date: __________ Beneficial Owner: _________         By:

 

Name:

    Title:  

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE
AND QUESTIONNAIRE TO:

 

Soo Hwang

Wilson Sonsini Goodrich & Rosati P.C.

633 W. 5th Street, Suite 1550

Los Angeles, CA 90071

 

  A-23

   

  

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

EXHIBIT B

 

Form of Series C Common Stock Warrant

 

Exhibit B

 

 

   

  

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

NEITHER THIS SECURITY NOR ANY SECURITIES WHICH MAY BE ISSUED UPON EXERCISE OF
THIS SECURITY HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR OTHER
JURISDICTION OR ANY EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND SUCH OTHER LAWS AND REQUIREMENTS, AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
LISTING OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, SUCH REGISTRATION AND/OR LISTING REQUIREMENTS AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF
WHICH WILL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

ARTELO BIOSCIENCES, INC.

 

SERIES C COMMON STOCK PURCHASE WARRANT

 

No. C-000[●]

 

Issuance Date:[●], 2018

 

Artelo Biosciences, Inc., a Nevada corporation (the “Company”), hereby certifies
that [NAME], its permissible transferees, designees, successors and assigns
(collectively, the “Holder”), for value received, is entitled to purchase from
the Company at any time and from time to time commencing on the date first
appearing above (the “Issuance Date”), up to and through 12:01 a.m. (EST) on the
date five (5) years from the Issuance Date (the “Termination Date”) up to [●●●]
shares (each, a “Share” and collectively the “Shares”) of the Company’s common
stock, par value $0.001 (the “Common Stock”), at an exercise price per Share of
$1.75 (the “Exercise Price”). The number of Shares purchasable hereunder and the
Exercise Price are subject to adjustment as provided in Section 4 hereof.

 

This Series C Common Stock Purchase Warrant (this “Warrant”) is issued pursuant
to the Subscription Agreement between the Holder and the Company (the
“Subscription Agreement”). Capitalized terms used herein, but not otherwise
defined, shall have the meanings ascribed to such terms in the Subscription
Agreement.

 

1. Method of Exercise; Payment.

 

(a) Exercise. The purchase rights represented by this Warrant may be exercised
for cash, by the Holder, in whole or in part, at any time, or from time to time,
by the surrender of this Warrant (with the notice of exercise form (the “Notice
of Exercise”) attached hereto as Exhibit A duly executed) at the principal
office of the Company, and by payment to the Company of an amount equal to the
Exercise Price multiplied by the number of the Shares being purchased, which
amount may be paid, at the election of the Holder, by wire transfer or check
payable to the order of the Company. The person or persons in whose name(s) any
certificate(s) representing Shares shall be issuable upon exercise of this
Warrant shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the Shares represented
thereby (and such Shares shall be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised.

 

 

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

(b) FOR AFFILIATED PURCHASERS ONLY.

 

In the event Holder is an Affiliated Purchaser and wishes to exercise this
Warrant by means of a “cashless exercise” in which Holder shall be entitled to
receive a certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:

 

(A) equals the closing price of the Company’s Common Stock, as reported on the
Trading Market on which the Company’s Common Stock is then listed or quoted for
trading on the Trading Date preceding the date of the election to exercise; or,
if the Company’s Common Stock is not then listed or traded on a Trading Market,
then the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Recipient and the Company,
the fees and expenses of which shall be paid by the Company;

 

(B) equals the Exercise Price of the Warrant, as adjusted from time to time in
accordance herewith; and

 

(X) equals the number of Warrant Shares Holder wishes to exercise in accordance
with the terms of this Warrant by means of a cashless exercise.

 

(c) Stock Certificates. In the event of any exercise of the rights represented
by this Warrant, as promptly as practicable after this Warrant is surrendered
and delivered to the Company along with all other appropriate documentation on
or after the date of exercise and in any event within ten (10) days thereafter,
the Company at its expense shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
Shares issuable upon such exercise. In the event this Warrant is exercised in
part, the Company at its expense will execute and deliver a new Warrant of like
tenor exercisable for the number of Shares for which this Warrant may then be
exercised.

 

(d) Taxes. The issuance of the Shares upon the exercise of this Warrant, and the
delivery of certificates or other instruments representing such Shares, shall be
made without charge to the Holder for any tax or other charge in respect of such
issuance.

 

(e) Acknowledgment. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this Section 1,
following the purchase of a portion of the Shares hereunder, the number of
Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

 

  B-2

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

2. Warrant.

 

(a) Transfer and Replacement. Subject to compliance with applicable securities
laws, this Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto as Exhibit B duly executed by the Holder or its agent or
attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant
issued. The Holder consents that the Company may, if it desires, permit the
transfer of this Warrant out of the Holder’s name only when the Holder’s request
for transfer is accompanied by an opinion of counsel reasonably satisfactory to
the Company that neither the sale nor the proposed transfer results in a
violation of the Securities Act of 1933, as amended (the “Securities Act”), or
any applicable state “blue sky” laws. At any time prior to the exercise hereof,
this Warrant may be exchanged upon presentation and surrender to the Company,
alone or with other warrants of like tenor of different denominations registered
in the name of the same Holder, for another warrant or warrants of like tenor in
the name of such Holder exercisable for the aggregate number of Shares as the
warrant or warrants surrendered.

 

(b) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of any such loss, theft, or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver in lieu thereof,
a new Warrant of like tenor.

 

(c) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any transfer, exchange or replacement as provided in this
Section 2, this Warrant shall be promptly canceled by the Company. The Holder
shall pay all taxes and all other expenses (including legal expenses, if any,
incurred by the Holder or transferees) and charges payable in connection with
the preparation, execution and delivery of Warrants pursuant to this Section 2.

 

(d) Warrant Register. The Company shall maintain, at its principal executive
offices (or at the offices of the transfer agent for the Warrant or such other
office or agency of the Company as it may designate by notice to the holder
hereof), a register for this Warrant (the “Warrant Register”), in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

 

3. Rights and Obligations of Holders of this Warrant.

 

The Holder of this Warrant shall not, by virtue hereof, be entitled to any
rights of a shareholder in the Company, either at law or in equity; provided,
however, that in the event any certificate representing shares of Common Stock
or other securities is issued to the holder hereof upon exercise of this
Warrant, such holder shall, for all purposes, be deemed to have become the
holder of record of such Common Stock on the date on which this Warrant,
together with a duly executed Notice of Exercise, was surrendered and payment of
the aggregate Exercise Price was made, irrespective of the date of delivery of
such Common Stock certificate.

 

4. Adjustments.

 

During the Exercise Period, the Exercise Price and the number of Warrant Shares
shall be subject to adjustment from time to time as provided in this Section 4.

 

(a) Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.

 

  B-3

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

(b) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 4, the number of shares of Common
Stock issuable upon exercise of this Warrant shall be adjusted by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.

 

(c) Consolidation, Merger or Sale. In case of any consolidation of the Company
with, or merger of the Company into any other corporation, or in case of any
sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company,
then as a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant will have the
right to acquire and receive upon exercise of this Warrant in lieu of the shares
of Common Stock immediately theretofore acquirable upon the exercise of this
Warrant, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this Warrant
had such consolidation, merger or sale or conveyance not taken place. In any
such case, the Company will make appropriate provision to insure that the
provisions of this Section 4 hereof will thereafter be applicable as nearly as
may be in relation to any shares of stock or securities thereafter deliverable
upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Section 4 and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.

 

(d) Distribution of Assets. In case the Company shall declare or make any
distribution of its assets (including cash) to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, then,
after the date of record for determining shareholders entitled to such
distribution, but prior to the date of distribution, the holder of this Warrant
shall be entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such distribution.

 

(e) Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment of the Exercise Price, then, and in each such case, the Company shall
give notice thereof to the holder of this Warrant, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease in
the number of Warrant Shares purchasable at such price upon exercise, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the Chief
Financial Officer of the Company.

 

(f) Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price
shall be made in an amount of less than 1% of the Exercise Price in effect at
the time such adjustment is otherwise required to be made, but any such lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to not less than 1% of such Exercise Price.

 

(g) No Fractional Shares. No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but the Company shall round up the number of
shares to the issued.

 

  B-4

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

(h) Other Notices. In case at any time:

 

 

(i) the Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (including dividends
or distributions payable in cash out of retained earnings) to the holders of the
Common Stock;

 

 

 

 

(ii) the Company shall offer for subscription pro rata to the holders of the
Common Stock any additional shares of stock of any class or other rights;

 

 

 

 

(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all its assets to, another
corporation or entity; or

 

 

 

 

(iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

  

then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company’s books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.

 

(i) Certain Events. If any event occurs of the type contemplated by the
adjustment provisions of this Section 4 but not expressly provided for by such
provisions, the Company will give notice of such event as provided in Section 8
hereof, and the Company’s Board of Directors will make an appropriate adjustment
in the Exercise Price and the number of shares of Common Stock acquirable upon
exercise of this Warrant so that the rights of the holder shall be neither
enhanced nor diminished by such event.

 

5. Legends.

 

All certificates representing shares of Common Stock underlying this Warrant
shall bear a restrictive legend to the effect that the Shares represented by
such certificate have not been registered under the Securities Act, and that the
Shares may not be sold or transferred in the absence of such registration or an
exemption therefrom, such legend to be substantially in the form of the
bold-face language appearing at the top of Page 1 of this Warrant.

 

6. Disposition of Warrants or Shares.

 

The Holder of this Warrant, each transferee hereof and any holder and transferee
of any Shares, by his or its acceptance thereof, agrees that no public
distribution of Warrants or Shares will be made in violation of the provisions
of the Securities Act. Furthermore, it shall be a condition to the transfer of
this Warrant that any transferee thereof deliver to the Company his or its
written agreement to accept and be bound by all of the terms and conditions
contained in this Warrant.

 

  B-5

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

7. Merger or Consolidation.

 

The Company will not merge or consolidate with or into any other corporation, or
sell or otherwise transfer its property, assets and business substantially as an
entirety to another corporation, unless the corporation resulting from such
merger or consolidation (if not the Company), or such transferee corporation, as
the case may be, shall expressly assume, by supplemental agreement reasonably
satisfactory in form and substance to the Holder, the due and punctual
performance and observance of each and every covenant and condition of this
Warrant to be performed and observed by the Company.

 

8. Notices.

 

Except as otherwise specified herein to the contrary, all notices, requests,
demands and other communications required or desired to be given hereunder shall
only be effective if given in writing by certified or registered U.S. mail with
return receipt requested and postage prepaid; by private overnight delivery
service (e.g. Federal Express); by facsimile transmission (if no original
documents or instruments must accompany the notice); or by personal delivery.
Any such notice shall be deemed to have been given (a) on the business day
immediately following the mailing thereof, if mailed by certified or registered
U.S. mail as specified above; (b) on the business day immediately following
deposit with a private overnight delivery service if sent by said service; (c)
upon receipt of confirmation of transmission if sent by facsimile transmission;
or (d) upon personal delivery of the notice. All such notices shall be sent to
the following addresses (or to such other address or addresses as a party may
have advised the other in the manner provided in this Section 8):

 

If to the Company:

 

Aretelo Biosciences, Inc.

888 Prospect Street, Suite 210

La Jolla, CA. 92037 USA

President and Chief Executive Officer

 

If to the Holder, at the address set forth on the signature page of the
Subscription Agreement.

 

Notwithstanding the time of effectiveness of notices set forth in this Section
8, a Notice of Exercise shall not be deemed effectively given until it has been
duly completed and submitted to the Company together with this original Warrant
and payment of the Exercise Price in a manner set forth in this Section 8.

 

9. Governing Law.

 

This Agreement shall be governed by and construed solely and exclusively in
accordance with and pursuant to the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The parties hereto
hereby expressly and irrevocably agree that any suit or proceeding arising
directly and/or indirectly pursuant to or under this Agreement shall be brought
solely in a federal or state court located in the City of New York. By its
execution hereof, the parties hereby covenant and irrevocably submit to the in
personam jurisdiction of the federal and state courts located in the City of New
York, New York and agree that any process in any such action may be served upon
any of them personally, or by certified mail or registered mail upon them or
their agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York. The parties hereto expressly and
irrevocably waive any claim that any such jurisdiction is not a convenient forum
for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other party hereto of all of its reasonable counsel fees and disbursements.

 

  B-6

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

10. Successors and Assigns.

 

This Warrant shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.

 

11. Headings.

 

The headings of various sections of this Warrant have been inserted for
reference only and shall not affect the meaning or construction of any of the
provisions hereof.

 

12. Severability.

 

If any provision of this Warrant is held to be unenforceable under applicable
law, such provision shall be excluded from this Warrant, and the balance hereof
shall be interpreted as if such provision were so excluded.

 

13. Modification and Waiver.

 

This Warrant and any provision hereof may be amended, waived, discharged or
terminated only by an instrument in writing signed by the Company and the
Holder.

 

14. Specific Enforcement.

 

The Company and the Holder acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Warrant were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Warrant and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which either of them may be entitled by law or equity.

 

15. Assignment.

 

This Warrant may be transferred or assigned, in whole or in part, at any time
and from time to time by the then Holder by submitting this Warrant to the
Company together with a duly executed Assignment in substantially the form and
substance of the Form of Assignment which accompanies this Warrant as Exhibit B
hereto, and, upon the Company’s receipt thereof, and in any event, within five
(5) business days thereafter, the Company shall issue a Warrant to the Holder to
evidence that portion of this Warrant, if any as shall not have been so
transferred or assigned.

 

[SIGNATURE PAGE FOLLOWS]

 

  B-7

   

  

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
one of its officers thereunto duly authorized.

 

ARTELO BIOSCIENCES, INC.

      By:

Name:

Gregory Gorgas   Title: President & Chief Executive Officer  

 

  B-8

   

 

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

To Be Executed by the Holder in Order to Exercise the Series C Common Stock
Purchase Warrant

 

The undersigned Holder hereby elects to purchase ________ Shares pursuant to the
attached Series C Common Stock Purchase Warrant, and requests that certificates
for securities be issued in the name of:

 

__________________________________

 

__________________________________

 

_________________________________

(Please type or print name and address)

 

____________________________________

 

(Social Security or Tax Identification Number)

 

and to be delivered to: ________________________.

 

__________________________________________

 

(Please type or print name and address if different from above)

 

If such number of Shares being purchased hereby shall not be all the Shares that
may be purchased pursuant to the attached Warrant, a new Warrant for the balance
of such Shares shall be registered in the name of, and delivered to, the Holder
at the address set forth below.

 

In full payment of the purchase price with respect to the Shares purchased and
transfer taxes, if any, the undersigned hereby tenders payment of $__________ by
check, money order or wire transfer payable in United States currency to the
order of [________________].

 

OR

 

If permitted, the cancellation of such number of Shares as is necessary, in
accordance with the formula set forth in Section 1(a) of the Warrant with
respect to the maximum number of Shares purchasable pursuant to the cashless
exercise procedure set forth Section 1(a).

 

HOLDER:       By:

Name:

  Title:   Address:   

 

 

 

Dated:

 

 

  

  B-9

   

  

EXHIBIT B TO ARTL SUBSCRIPTION AGREEMENT

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)

 

TO:

Artelo Biosciences, Inc.

 

[ADDRESS]

 

FOR VALUE RECEIVED, ____________ shares of the foregoing Series C Common Stock
Purchase Warrant of Artelo Biosciences, Inc. and all rights evidenced thereby
are hereby assigned to:

 

 

  whose address is:

(Print Name)

 

 

 

 

 

(Address)

 

 

 

 

 

(City, State, Zip)

 

 

 

 

Dated:___, 20______

 

 

 

 

 

 

Holder’s Signature:

 

 

 

 

 

 

 

Holder’s Address:

 

 

 

 

 

 

 

 

 

 

Signature Guaranteed: _________________

 

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Series C Common Stock Purchase Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company. Officers of corporations and those acting in a fiduciary
or other representative capacity should file proper evidence of authority to
assign the foregoing Series C Common Stock Purchase Warrant.

 

  B-10

   

 

EXHIBIT C TO ARTL SUBSCRIPTION AGREEMENT

 

EXHIBIT C

 

US RESIDENTS ACCREDITED INVESTOR QUESTIONNAIRE

 

 

Name:

 

 

Signature:

 

 

 

 

 

 

 

 

 

Please initial the applicable category:

 

 

 

 

 

Categories of Individual Accredited Investors

 

INDIVIDUAL INVESTORS:

 

[______] Category 1: A natural person who had an individual income in excess of
$200,000 in each of the two most recent years, or joint income with my spouse in
excess of $300,000 in each of those years, and I reasonably expect reaching the
same income level in the current year.

 

[______] Category 2: A natural person whose individual net worth, or joint net
worth with my spouse, presently exceeds $1,000,000 (excluding the value of my
primary residence).

 

(In calculating net worth, include all of your assets (other than your primary
residence) whether liquid or illiquid, such as cash, stock, securities, personal
property and real estate based on the fair market value of such property, MINUS
your debts and liabilities. A mortgage or other indebtedness secured by your
primary residence should not be included in the liabilities used to calculate
net worth except to the extent such indebtedness exceeds the value of the
residence.)

 

Other Categories of Accredited Investors

 

INDIVIDUAL RETIREMENT ACCOUNTS (to be initialed by participant, not the IRA
custodian):

 

[______] An individual retirement account administered in accordance with the
Code, the participant of which meets at least one of the suitability
requirements for individual investors above.

 

CORPORATIONS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES, BUSINESS TRUSTS OR
OTHER ENTITIES:

 

[______] A corporation, partnership, limited liability company, or any other
entity in which all of the equity owners are “accredited investors” (meeting at
least one of the suitability requirements for individual investors above).

 

[______] A corporation, partnership, limited liability company, tax-exempt
organization (under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended (the “Code”)) or “Massachusetts” or similar business trust with total
assets in excess of $5,000,000 and was not formed for the specific purpose of
acquiring the Securities.

 

GRANTOR OR FAMILY TRUSTS (NOTE: Please provide a copy of the trust agreement):

 

[______] A revocable or family trust, the settler (s) or grantor(s) of which (i)
may revoke the trust at any time and regain title to the trust assets and (ii)
meet(s) at least one of the suitability requirements for individual investors
above.

 

  C-1

   

 

EXHIBIT D TO ARTL SUBSCRIPTION AGREEMENT

 

EXHIBIT D

 

REPRESENTATION LETTER

FOR

RESIDENTS OF ALBERTA, BRITISH COLUMBIA, AND ONTARIO CANADA

 

 

TO:

Artelo Biosciences, Inc.

Wilson Sonsini Goodrich & Rosati, P.C.,

12235 El Camino Real,

San Diego, CA 92130

 

 

In connection with the purchase by the undersigned of Units of the Company, the
undersigned is delivering this representation letter to the Subscription
Agreement between the undersigned and the Company, the undersigned hereby
represents, warrants and certifies to the Company that the undersigned is
resident in British Columbia or is otherwise subject to the securities laws of
British Columbia, and is either (A) an “accredited investor” within the meaning
National Instrument 45-106 (Prospectus and Registration Exemptions) on the basis
that the undersigned fits within that category of “accredited investor”
identified on the attached Schedule to this Representation Letter beside which
the undersigned has marked its initials; or (B) is purchasing the Units as a
principal, and is (please initial all applicable descriptions):

 

_____ (i) a director, senior officer or control person of the Company, or of an
affiliate of the Company,

 

_____ (ii) a spouse, parent, grandparent, brother, sister or child of a
director, senior officer or control person of the Company, or of an affiliate of
the Company,

 

_____ (iii) a parent, grandparent, brother, sister or child of the spouse of a
director, senior officer or control person of the Company or of an affiliate of
the Company,

 

_____ (iv) a close personal friend of a director, senior officer or control
person of the Company, or of an affiliate of the Company,

 

_____ (v) a close business associate of a director, senior officer or control
person of the Company, or of an affiliate of the Company,

 

_____ (vi) a founder of the issuer or a spouse, parent, grandparent, brother,
sister, child, close personal friend or close business associate of a founder of
the Company,

 

_____ (vii) a parent, grandparent, brother, sister or child of the spouse of a
founder of the Company,

 

_____ (viii) a person or company of which a majority of the voting securities
are beneficially owned by, or a majority of the directors are, persons or
companies described in paragraphs (i) to (vii), or

 

_____ (ix) a trust or estate of which all of the beneficiaries or a majority of
the trustees are persons or companies described in paragraphs (i) to (vii).

 

[SIGNATURE PAGE FOLLOWS]

 

  D-1

   

 

EXHIBIT D TO ARTL SUBSCRIPTION AGREEMENT

 

DATED: ______ , 2018

 

    (Name of Subscriber – please print)     

 

(Authorized Signature)

           (Official Capacity – please print)  

    

 

 

 

(please print name of individual whose signature appears above)

 

  

IMPORTANT:

IF APPLICABLE, PLEASE COMPLETE THE SCHEDULE TO THIS REPRESENTATION LETTER BY
MARKING YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU BELONG.

 

  D-2

   

 

EXHIBIT D TO ARTL SUBSCRIPTION AGREEMENT

 

SCHEDULE A TO EXHIBIT D

 

ALBERTA, BRITISH COLUMBIA AND ONTARIO CANADA RESIDENTS

 

PLEASE COMPLETE THIS SCHEDULE BY MARKING YOUR INITIALS BESIDE THE CATEGORY OF
“ACCREDITED INVESTOR” TO WHICH YOU BELONG.

 

Name:

 

 

  Signature:    

 

 

 

Date:    

 

Meaning of “Accredited Investor”

 

The term “accredited investor” is defined in National Instrument 45-106
(Prospectus and Registration Exemptions) to mean:

 

___

(1)

a Canadian financial institution, or an authorized foreign bank listed in
Schedule III of the Bank Act (Canada);

 

 

 

___

(2)

the Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada);

 

 

 

___

(3)

a subsidiary of any person referred to in paragraphs (a) to (b), if the person
owns all of the voting securities of the subsidiary, except the voting
securities required by law to be owned by directors of that subsidiary;

 

 

 

___

(4)

a person registered under the securities legislation of a jurisdiction of
Canada, or as an adviser or dealer, other than a person registered solely as a
limited market dealer under one or both of the Securities Act (Ontario) or
Securities Act (Newfoundland and Labrador);

 

 

 

___

(5)

an individual registered or formerly registered under the securities legislation
of a jurisdiction of Canada, as a representative of a person referred to in
paragraph (d);

 

 

 

___

(6)

the Government of Canada or a jurisdiction of Canada, or any crown corporation,
agency or wholly owned entity of the Government of Canada or a jurisdiction of
Canada;

 

 

 

___

(7)

a municipality, public board or commission in Canada and a metropolitan
community, school board, the Comite’de gestion de la taxe scolaire de l’ile de
Montreal or an intermunicipal management board in Quebec;

 

 

 

___

(8)

any national, federal, state, provincial, territorial or municipal government of
or in any foreign jurisdiction, or any agency of that government;

 

 

 

___

(9)

a pension fund that is regulated by either the Office of the Superintendent of
Financial Institutions (Canada) or a pension commission or similar regulatory
authority of a jurisdiction of Canada;

 

 

 

___

(10)

an individual who, either alone or with a spouse, beneficially owns, directly or
indirectly, financial assets having an aggregate realizable value that before
taxes, but net of any related liabilities, exceeds $1,000,000;

 

 

 

___

(11)

an individual whose net income before taxes exceeded $200,000 in each of the two
most recent calendar years or whose net income before taxes combined with that
of a spouse exceeded $300,000 in each of the two most recent calendar years and
who, in either case, reasonably expects to exceed that net income level in the
current calendar year;

 

 

 

___

(12)

an individual who, either alone or with a spouse, has net assets of at least
$5,000,000;

 

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EXHIBIT D TO ARTL SUBSCRIPTION AGREEMENT

 

___

(13)

a person, other than an individual or investment fund, that has net assets of at
least $5,000,000 as shown on its most recently prepared financial statements;

 

 

 

___

(14)

an investment fund that distributes or has distributed its securities only to
(i) a person that is or was an accredited investor at the time of the
distribution, (ii) a person that acquires or acquired securities in the
circumstances referred to in sections 2.10 (of NI-106) [Minimum amount
investment], and 2.19 (of NI-106) [Additional investment in investment funds],
or (iii) a person described in paragraph (i) or (ii) that acquires or acquired
securities under section 2.18 (of NI-106) [Investment fund reinvestment];

 

 

 

___

(15)

an investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Quebec,
the securities regulatory authority, has issued a receipt;

 

 

 

___

(16)

a trust company or trust corporation registered or authorized to carry on
business under the Trust and Loan Companies Act (Canada) comparable legislation
in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a
fully managed account managed by the trust company or trust corporation, as the
case may be;

 

 

 

___

(17)

a person acting on behalf of a fully managed account managed by that person, if
that person (i) is registered or authorized to carry on business as an adviser
or the equivalent under the securities legislation of a jurisdiction of Canada
or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is
not a security of an investment fund;

 

 

 

___

(18)

a registered charity under the Income Tax Act (Canada) that, in regard to the
trade, has obtained advice from an eligibility adviser or an adviser registered
under the securities legislation of the jurisdiction or the registered charity
to give advice on the securities being traded;

 

 

 

___

(19)

an entity organized in a foreign jurisdiction that is analogous to any of the
entities referred to in paragraphs (a) to (d) or paragraph (i) above in form and
function;

 

 

 

___

(20)

a person in respect of which all of the owners of interests, direct or indirect
or beneficial, except the voting securities required by law to be owned by
directors, are persons that are accredited investors;

 

 

 

___

(21)

an investment fund that is advised by a person registered as an adviser or a
person that is exempt from registration as an adviser; or

 

 

 

___

(22)

a person that is recognized or designated by the securities regulatory or,
except in Ontario and Quebec, the regulator as (i) an accredited investor, or
(ii) an exempt purchaser in British Columbia after NI-106 comes into force

 

The following definitions relate to certain of the categories of “accredited
investor” set forth above:

 

“Adviser” means a person or company engaging in or holding itself out as
engaging in the business of advising others with respect to investing in or the
buying or selling of securities or exchange contracts.

 

“Canadian financial institution” means (a) an association governed by the
Cooperative Credit Associations Act (Canada) or a central cooperative credit
society for which an order has been made under section 473(1) of that Act or (b)
a bank, loan Company, trust company, insurance company, treasury branch, credit
union or caisse populaire that, in each case, is authorized by an enactment of
Canada or a jurisdiction of Canada to carry on business in Canada or a
jurisdiction of Canada.

 

“Financial assets” means cash, securities or a contract of insurance, a deposit
or an evidence of a deposit that is not a security for the purposes of
securities legislation.

 

“Foreign jurisdiction” means a country other than Canada or a political
subdivision of a country other than Canada.

 

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EXHIBIT D TO ARTL SUBSCRIPTION AGREEMENT

 

“Fully managed account” means an account of a client for which a person makes
investment decisions if that person has full discretion to trade in securities
for the account without requiring the client’s express consent to a transaction.

 

“Issuer” means a person or company who: (i) has a security outstanding; (ii) is
issuing a security; or (iii) proposes to issue a security.

 

“Investment fund” has the same meaning as in National Instrument 81-106
Investment Fund Continuous Disclosure.

 

“Jurisdiction” means a province or territory of Canada, except when used in the
term foreign jurisdiction.

 

“Person” includes, an individual, a corporation, a partnership, trust, fund and
an association, syndicate, organization or other organized group of persons,
whether incorporated or not, and an individual or other person in that person’s
capacity as a trustee, executor, administrator or personal or other legal
representative.

 

“Spouse” means, an individual who, (a) is married to another individual and is
not living separate and apart with the meaning of the Divorce Act (Canada), from
the other individual, (b) is living with another individual in a marriage-like
relationship, including a marriage-like relationship between individuals of the
same gender.

 

“Subsidiary” means an issuer that is controlled directly or indirectly by
another issuer and includes a subsidiary of that subsidiary.

 

Affiliated Issuers

 

An issuer is affiliated with another issuer if one of them is the subsidiary of
the other or if each of them is controlled by the same person.

 

Control

 

A person is considered to control another person (second person) if (a) the
first person, directly or indirectly, beneficially owns or exercises control or
direction over securities of the second person carrying votes which, if
exercised, would entitle the first person to elect a majority of the directors
of the second person, unless that first person holds the voting securities only
to secure an obligation, (b) the second person is a partnership, other than a
limited partnership, and the first person holds more than 50% of the interest of
the partnership, or (c) the second person is a limited partnership and the
general partner of the limited partnership is the first person.

 

All monetary references in this Schedule A are in Canadian Dollars.

 

 

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