Exhibit 10.1

 

Execution Version

 

UNIT SUBSCRIPTION AGREEMENT

 

by and among

 

QLT INC.

 

and

 

THE INVESTORS IDENTIFIED
ON SCHEDULE I HERETO

 

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Dated as of June 14, 2016

 

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TABLE OF CONTENTS

 

 

 

 

Page

ARTICLE I

DEFINITIONS

 

1

1.1

CERTAIN DEFINITIONS

 

1

1.2

TERMS DEFINED ELSEWHERE IN THIS AGREEMENT

 

3

1.3

OTHER DEFINITIONAL AND INTERPRETIVE MATTERS

 

3

ARTICLE II

SUBSCRIPTION FOR UNITS; SUBSCRIPTION PRICE; INVESTMENT CLOSING

 

4

2.1

SUBSCRIPTION FOR UNITS

 

4

2.2

PAYMENT OF SUBSCRIPTION PRICE; ALLOTMENT OF UNITS

 

4

2.3

INVESTMENT CLOSING

 

5

2.4

COMPANY DELIVERIES

 

5

2.5

INVESTOR DELIVERIES

 

5

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

6

3.1

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

6

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

 

9

4.1

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

 

9

ARTICLE V

COVENANTSAND AGREEMENTS

 

11

5.1

FURNISHING INFORMATION

 

11

5.2

FILINGS; COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION

 

11

5.3

NASDAQ AND TSX LISTING

 

12

5.4

REPORTING ISSUER STATUS

 

12

5.5

FURTHER ASSURANCES

 

12

5.6

ADVICE OF CHANGES

 

12

5.7

INVESTORS’ REGISTRATION RIGHTS

 

12

5.8

INVESTOR AGREEMENT

 

12

5.9

ADDITIONAL COMPANY AGREEMENTS

 

13

ARTICLE VI

CONDITIONS TO INVESTMENT CLOSING

 

15

6.1

MUTUAL CONDITIONS

 

15

6.2

INVESTOR’S CONDITIONS

 

15

6.3

COMPANY CONDITIONS

 

16

ARTICLE VII

TERMINATION

 

17

7.1

TERMINATION

 

17

7.2

PROCEDURE UPON TERMINATION

 

17

7.3

EFFECTS OF TERMINATION

 

17

ARTICLE VIII

MISCELLANEOUS

 

18

 

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TABLE OF CONTENTS
(continued)

 

 

 

 

Page

8.1

SURVIVAL

 

18

8.2

EXPENSES

 

18

8.3

COUNTERPARTS; EFFECTIVENESS

 

18

8.4

GOVERNING LAW

 

18

8.5

JURISDICTION; SPECIFIC ENFORCEMENT

 

18

8.6

WAIVER OF JURY TRIAL

 

19

8.7

NOTICES

 

19

8.8

ASSIGNMENT; BINDING EFFECT

 

20

8.9

SEVERABILITY

 

20

8.10

INDEPENDENT LEGAL AND INVESTMENT ADVICE

 

20

8.11

ENTIRE AGREEMENT

 

20

8.12

AMENDMENTS; WAIVERS

 

20

8.13

HEADINGS

 

21

8.14

NO THIRD-PARTY BENEFICIARIES

 

21

8.15

OBLIGATIONS OF THE INVESTORS AND THE COMPANY

 

21

 

SCHEDULE I

Schedule of Investors

 

ANNEX A

Investors’ Registration Rights

 

ANNEX B

Form of Warrant Agreement

 

 

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UNIT SUBSCRIPTION AGREEMENT

 

This UNIT SUBSCRIPTION AGREEMENT, dated as of June 14, 2016 (this “Agreement”),
is by and among QLT Inc., a corporation formed under the laws of the Province of
British Columbia, Canada (the “Company”) and the Persons identified on Schedule
I hereto (each an “Investor” and together, the “Investors”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and Aegerion Pharmaceuticals, Inc., a Delaware corporation
(“Aegerion”), wish to enter into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which a wholly-owned subsidiary of the Company would
merge with and into Aegerion (the “Merger”), with Aegerion surviving as a
wholly-owned indirect subsidiary of the Company;

 

WHEREAS, the Investors have agreed to provide capital to the Company in support
of the Merger;

 

WHEREAS, in furtherance of the foregoing, the Company desires to allot and issue
to the Investors, and the Investors desire to subscribe for, up to a maximum of
12,363,636 common shares of the Company (the “Shares”) and an equal number of
Warrants (together with the Shares, the “Units”) for the Subscription Price (as
hereinafter defined) as set forth in, and in accordance with the other
provisions of, this Agreement;

 

WHEREAS, the Company has agreed to grant the Investors the registration rights
provided for herein; and

 

WHEREAS, certain terms used in this Agreement are defined in Section 1.1.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1                               Certain Definitions.  Capitalized terms used
but not defined in this Agreement shall have the meanings set forth in the
Merger Agreement.

 

In addition, for purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1.1:

 

“Canadian Securities Laws” means all applicable Canadian securities laws, rules,
regulations, notices, instruments, blanket orders and policies in each Province
of Canada in which the Company is a reporting issuer or equivalent.

 

“Commission” means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.

 

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“Deerfield” means Deerfield Partners, L.P., a Delaware limited partnership, and
Deerfield International Master Fund, L.P., a limited partnership formed under
the laws of the British Virgin Islands.

 

“Governmental Authority” means any international, multinational, federal,
provincial, territorial, state, regional, municipal, local or other government
or governmental body and any ministry, department, division, bureau, agent,
official, agency, commission, board or authority of any government, governmental
body, quasi-governmental or private body (including the TSX, the NASDAQ or any
other applicable stock exchange), domestic or foreign, exercising any statutory,
regulatory, expropriation or taxing authority under the authority of any of the
foregoing and any domestic, foreign or international judicial, quasi-judicial or
administrative court, tribunal, commission, board, panel, arbitrator or arbitral
body acting under the authority of any of the foregoing.

 

“Investor Shares” with respect to each Investor means the number of Shares to be
issued to such Investor pursuant to this Agreement at the Investor Closing,
equal to the quotient obtained by dividing the Subscription Price of such
Investor by the Per Share Subscription Price.

 

“Investor Units” with respect to each Investor means, together, such Investor’s
Investor Shares and such Investor’s Investor Warrants.

 

“Investor Warrants” with respect to each Investor means the number of Warrants
to be issued to such Investor pursuant to this Agreement at the Investor
Closing, equal to the number of such Investor’s Investor Shares.

 

“Law” any and all laws, statutes, codes, ordinances (including zoning),
approvals, rules, regulations, instruments, by-laws, notices, policies,
protocols, guidelines, guidance, manuals, treaties or other requirements of any
Governmental Authority having the force of law and any legal requirements
arising under the common law or principles of law or equity.

 

“NASDAQ” means the NASDAQ Global Select Market.

 

“Per Share Subscription Price” means $1.76.

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor
Law thereto, and the rules and regulations issued pursuant to that statute or
any successor Law.

 

“TSX” means the Toronto Stock Exchange.

 

“Warrants” means the warrants to be issued in accordance with the provisions of
a warrant agreement, substantially in the form attached hereto as Annex B (the
“Warrant Agreement”).

 

“Warrant Shares” means the common shares of the Company to be issued upon
exercise of the Warrants.

 

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1.2                               Terms Defined Elsewhere in this Agreement. 
For purposes of this Agreement, the following terms have meanings set forth in
the sections indicated:

 

Term

 

Section

Agreement

 

Preamble

Company

 

Preamble

Company SEC Documents

 

3.1(f)

Confidentiality Agreement

 

5.1

Consents

 

5.2(a)

Investment Closing

 

2.3

Investment Closing Date

 

2.3

Investors

 

Preamble

Investors’ Disclosure Schedule

 

ARTICLE IV

Investor Registration Expenses

 

Annex A

Investor Registration

 

Annex A

Investor Registration Statement

 

Annex A

Losses

 

1.2(f)

Merger

 

Recitals

Merger Agreement

 

Recitals

register, registered, registration

 

Annex A

Registrable Securities

 

Annex A

Selling Expenses

 

Annex A

Shares

 

Recitals

Subscription Price

 

2.1(d)

Transfer Agent

 

2.2(b)

 

1.3                               Other Definitional and Interpretive Matters.

 

(a)                                 Unless otherwise expressly provided, for
purposes of this Agreement, the following rules of interpretation shall apply:

 

Calculation of Time Period.  When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded.  If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

 

Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.

 

Schedules and Annexes.  The Schedules and Annexes to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement. 
All Schedules and Annexes annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.  Any capitalized terms used in any Schedule or Annex but not otherwise
defined therein shall be defined as set forth in this Agreement.

 

Gender and Number.  Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

 

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Headings.  The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement.  All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

 

Herein.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

 

Including.  The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

 

(b)                                 The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and, in the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as jointly drafted by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.

 

ARTICLE II

 

SUBSCRIPTION FOR UNITS; SUBSCRIPTION PRICE; INVESTMENT CLOSING

 

2.1                               Subscription for Units.

 

(a)                                 Subject to the terms and conditions hereof,
at the Investment Closing, each Investor hereby agrees to subscribe for such
Investor’s Investor Units.

 

(b)                                 Subject to the terms and conditions hereof,
at the Investment Closing, the Board of Directors (the “Board”) of the Company
will approve the allotment and issue to each Investor of such Investor’s
Investor Units, consisting of such Investor’s Investor Shares and Investor
Warrants and procure that the Company’s shareholder register reflects the
allotment and issue and that share certificates and warrant certificates (or
evidence of book entry) are delivered to the Investors.

 

(c)                                  The aggregate amount that each Investor
will pay to the Company for the Units it subscribes for hereunder shall be set
forth opposite such Investor’s name under the heading “Subscription Price” on
Schedule I hereto (with respect to each Investor, the “Subscription Price”).

 

2.2                               Payment of Subscription Price; Allotment of
Units.

 

(a)                                 At the Investment Closing, each Investor
shall pay its respective Subscription Price to the Company by wire transfer of
immediately available funds into an account designated in writing by the
Company.  The Company shall provide written notice to the Investors of such
account not less than three (3) Business Days prior to the Investment Closing
Date.

 

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(b)                                 At the Investment Closing, the Company will
(i) irrevocably instruct its transfer agent (the “Transfer Agent”) to deliver to
each Investor, such Investor’s Investor Shares, in certificate or book entry
form, in each case registered in the name of such Investor and (ii) deliver to
each Investor such Investor’s Investor Warrants.

 

2.3                               Investment Closing.  Subject to the
satisfaction or waiver of the conditions set forth in ARTICLE VI (other than
conditions that by their nature are to be satisfied at the Investment Closing,
but subject to the satisfaction or waiver of those conditions at such time), the
consummation of the allotment and issue of the Units provided for in Section 2.1
hereof (the “Investment Closing”) shall occur immediately prior to and at the
same location as the Closing under the Merger Agreement.  The date the
Investment Closing occurs is referred to as the “Investment Closing Date”.

 

2.4                               Company Deliveries.  At the Investment
Closing, subject to the terms and conditions hereof, the Company shall deliver,
or cause to be delivered, to each Investor:

 

(a)                                 copies of resolutions, certified by an
officer of the Company, as to the authorization by the board of directors and
shareholders of the Company of this Agreement and all of the transactions
contemplated hereby, including, but not limited to, the Company’s issuance and
sale of the Shares and the Warrants;

 

(b)                                 a certificate in form and substance
reasonably satisfactory to each Investor, dated the Investment Closing Date and
signed by an executive officer of the Company, stating that the conditions set
forth in Sections 6.2(a) and 6.2(b) hereof are satisfied;

 

(c)                                  the Shares as set forth in
Section 2.2(b) hereof, in certificate or book entry form (except in the case of
Deerfield, who will receive certificated Units), in each case registered in the
name of such Investor, which Shares shall be free and clear of any Liens, and
evidence that a book entry representing the issuance of such Investor’s Investor
Shares has been established on the books and records of the Company at the
Transfer Agent;

 

(d)                                 the Warrants, represented by the Warrant
Agreement, as set forth in Section 2.2(b) hereof, duly executed on behalf of the
Company and registered in the name of such Investor, which Warrants shall be
free and clear of any Liens; and

 

(e)                                  the Units as set forth in
Section 2.2(b) hereof, in certificate or book entry form (except in the case of
Deerfield, who will receive certificated Units), in each case registered in the
name of such Investor, which Units shall be free and clear of any Liens; and

 

(f)                                   following the Investor’s receipt of the
Investor Units, a cross-receipt, executed by the Company and delivered to each
Investor certifying that it has received the Subscription Price from such
Investor as of the Investment Closing Date.

 

2.5                               Investor Deliveries.  At the Investment
Closing, subject to the terms and conditions hereof, each Investor will deliver,
or cause to be delivered, to the Company:

 

(a)                                 payment to the Company of such Investor’s
respective Subscription Price by wire transfer of immediately available funds to
the account designated by the Company;

 

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(b)                                 a cross-receipt executed by each Investor
and delivered to the Company certifying that, as of the Investment Closing Date,
it has received, in the case of each Investor, such Investor’s Investor Units;
and

 

(c)                                  a certificate in form and substance
reasonably satisfactory to the Company, dated the Investment Closing Date and
signed by an authorized signatory of such Investor, stating that the conditions
in Sections 6.3(a)and 6.3(b) hereof have been satisfied and/or complied with by
each Investor.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

3.1                               Representations and Warranties of the
Company.  In order to induce the Investors to enter into this Agreement, the
Company represents and warrants to each Investor as follows:

 

(a)                                 Corporate Existence; Authority.

 

(i)                                     The Company is a corporation duly
incorporated and validly existing under the Laws of British Columbia, Canada. 
The Company has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted.

 

(ii)                                  The Company has the corporate power and
authority to enter into, execute and deliver this Agreement, to perform its
obligations under this Agreement, and to consummate the transactions
contemplated hereby (including, without limitation, the issuance of the Shares
and the Warrants, and the reservation for issuance and issuance of the Warrant
Shares).  The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized and validly
approved by the Board of the Company.  The Board of the Company has determined
that this Agreement is advisable to and is in the best interests of the Company
and its shareholders and, other than requisite shareholder approval, no other
corporate proceedings on the part of the Company are necessary to approve this
Agreement and to consummate the transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery by each of the
Investors) constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting creditors’ rights generally and to general
principles of equity).

 

(b)                                 Conflicts; Consents and Approvals.  Neither
the execution and delivery of this Agreement by the Company nor the consummation
of the transactions contemplated by this Agreement will:

 

(i)                                     conflict with, or result in a breach of,
any provision of the Notice of Articles and Articles of the Company;

 

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(ii)                                  violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a default)
under, or entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, adversely modify or call a default under,
or result in the creation of any Liens upon any of the properties or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking, agreement, lease or other instrument or obligation to
which the Company or any of its Subsidiaries is a party;

 

(iii)                               violate any Laws applicable to the Company
or any of its Subsidiaries or any of their respective properties or assets; or

 

(iv)                              require any action or consent or approval of,
or review by, other than registrations or other actions required under federal
and state securities Laws and the Canadian Securities Laws as are contemplated
by this Agreement or any post-closing notice filings required under applicable
United States federal or state securities laws.

 

(c)                                  Capitalization.  As of the date of this
Agreement, the authorized capital of the Company consists of 500,000,000 common
shares and 5,000,000 preferred shares, without par value, of which 52,829,398
common shares are issued and outstanding as of June 7, 2016, all of which have
been duly authorized and validly issued and are fully paid and non-assessable. 
As of the date of this Agreement, (i) 3,432,194 common shares are reserved for
issuance pursuant to the Company’s stock option plan (including nil common
shares reserved for issuance upon settlement of outstanding Company restricted
stock units and 425,152 common shares reserved for issuance upon exercise of
outstanding Company stock options) and (ii) 69,734,288 common shares are
reserved for issuance pursuant to the Warrant Agreement.  Except as set forth in
the Company SEC Documents (as defined below), there are no stockholders
agreements, voting agreements (except for those Voting Agreements to be entered
between the Investors and Aegerion) or other similar agreements with respect to
the Company’s capital stock to which the Company is a party.

 

(d)                                 Merger Agreement.  The Company has provided
the Investors with true, correct and complete copies of the Merger Agreement and
any annexes, exhibits, schedules (excluding disclosure schedules) thereto.

 

(e)                                  Investor Registration Statement.  None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Investor Registration Statement to be filed
with the Commission by the Company under the Securities Act at the time the
Investor Registration Statement becomes effective will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (it being
understood that no representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein based on written
information supplied by the Investors expressly for inclusion or incorporation
by reference in the Investor Registration Statement). The Investor Registration
Statement, except for such portions thereof that relate only to Investors, will
comply as to form in all material respects with the provisions of the Securities
Act.

 

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(f)                                   Valid Issuance.  The Shares and the
Warrants to be issued pursuant to this Agreement will be duly authorized and
validly issued and, at the Investment Closing, all such Shares will be fully
paid, non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and will be free and clear of all Liens
(other than restrictions on transfer imposed by U.S. federal and state
securities laws and Canadian Securities Laws), and all such Warrants will
constitute valid and legally binding obligations of the Company in accordance
with their terms and will be free of preemptive rights or similar rights, with
no personal liability attaching to the ownership thereof, and will be free and
clear of all Liens (other than restrictions on transfer imposed by U.S. federal
and state securities laws and Canadian Securities Laws).  The Warrant Shares to
be issued upon exercise of the Warrants will be duly authorized and validly
issued and, at the time of such issuance, all such Shares will be fully paid,
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and will be free and clear of all liens
(other than restrictions on transfer imposed by U.S. federal and state
securities laws and Canadian Securities Laws).

 

(g)                                  SEC Filings.  The Company has timely filed
or received the appropriate extension of time within which to file with the
Commission all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 2016 under the Exchange Act or the
Securities Act (such documents, as supplemented and amended since the time of
filing, collectively, the “Company SEC Documents”).  The Company SEC Documents,
including any financial statements or schedules included therein, at the time
filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively) (i) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be. 
The financial statements of the Company included in the Company SEC Documents at
the time filed complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with GAAP during
the periods involved (except as may be indicated in the notes thereto, auditor’s
report thereon or, in the case of unaudited statements, as permitted by
Form 10-Q of the Commission), and fairly present in all material respects
(subject in the case of unaudited statements to normal audit adjustments and
subject to restatements filed with the Commission prior to the date of this
Agreement) the consolidated financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.  No Subsidiary of
the Company is subject to the periodic reporting requirements of the Exchange
Act other than as part of the Company’s consolidated group or required to file
any form, report or other document with the Commission, NASDAQ, the TSX, any
other stock exchange or comparable Governmental Authority.

 

(h)                                 Private Placement.  Assuming that the
representations of each Investor set forth in Section 4.1(c) are true and
correct, the initial allotment and issuance of the Units in conformity with the
terms of this Agreement are exempt from both (i) the registration requirements
of Section 5 of the Securities Act and (ii) the prospectus requirements of the
Canadian Securities Laws.  Neither the Company nor, to the Company’s knowledge,
any person acting on behalf of the Company has offered or sold any of the Units
by any form of “general

 

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solicitation” or “general advertising”, as such terms are used in Rule 502(c) of
Regulation D under the Securities Act.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

 

4.1                               Representations and Warranties of the
Investors.  In order to induce the Company to enter into this Agreement, each
Investor severally for itself and not jointly with any one or more of the other
Investors represents and warrants to the Company as follows:

 

(a)                                 Corporate Existence; Authority; No
Violation.

 

(i)                                     Investor is a legal entity validly
existing under the Laws of the jurisdiction of its organization.  Investor has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted.

 

(ii)                                  Investor has the corporate power and
authority to enter into, execute and deliver this Agreement, to perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.  The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized and validly
approved by all necessary corporate action on the part of Investor.  No other
corporate proceedings on the part of Investor are necessary to approve this
Agreement and to consummate the subscription for such Investor’s Investor
Units.  This Agreement has been duly and validly executed and delivered by
Investor and (assuming the due authorization, execution and delivery by the
Company and the other Investors) constitutes the valid and binding obligation of
Investor, enforceable against Investor in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting creditors’ rights generally and to general
principles of equity).

 

(b)                                 Conflicts; Consents and Approvals.  Neither
the execution and delivery of this Agreement by Investor nor the consummation of
the subscription for such Investor’s Investor Units, will:

 

(i)                                     conflict with, or result in a breach of,
any provision of the organizational documents of Investor;

 

(ii)                                  violate any Laws applicable to Investor or
any of its Subsidiaries or any of their respective properties or assets; or

 

(iii)                               require any action or consent or approval
of, or review by, or registration or filing by Investor or any of its Affiliates
with, any third party or any Governmental Authority, other than registrations,
beneficial ownership filings or other actions required under federal and state
securities Laws as are contemplated by this Agreement.

 

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(c)                                  Certain Securities Law Matters.

 

(i)                                     Investor is acquiring its Units as
principal for its own account, or for one or more investor accounts for which it
is acting as a fiduciary or agent, and, in each case, not with a view to the
distribution thereof within the meaning of the Securities Act and Canadian
Securities Law.

 

(ii)                                  Investor is resident in the jurisdiction
stated in Schedule I applicable thereto.

 

(iii)                               Investor understands that the Units issued
to it will not be transferable except (a) pursuant to an effective registration
statement under the Securities Act and compliance with Canadian Securities Laws
as applicable (b) pursuant to an available exemption from, or in a transaction
not subject to, the Securities Act or applicable Canadian Securities Laws as
evidenced by receipt by the Company of a written opinion of counsel for Investor
reasonably satisfactory to the Company to the effect that the proposed transfer
is exempt from the registration requirements of the Securities Act and relevant
state securities laws and exempt from the prospectus requirements of applicable
Canadian Securities Laws, as applicable, or (c) pursuant to Rule 144 under the
Securities Act (“Rule 144”) and after expiry of all “hold periods” or “seasoning
periods” in Canada.  A restrictive legend shall be placed on certificates
representing the Units to be delivered to Investor at the Investment Closing,
substantially as follows:

 

“NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, (B) PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
SECURITIES ACT AS EVIDENCED BY THE CORPORATION BEING FURNISHED WITH AN OPINION
OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT, OR (C) PURSUANT TO RULE 144 UNDER
THE SECURITIES ACT.”

 

(d)                                 Investor Status.

 

(i)                                     At the time Investor was offered the
Units, it was, and at the date hereof it is, either (a) a “qualified
institutional buyer”, as defined in Rule 144A under the Securities Act, or
(b) an “accredited investor”, as defined in Rule 501(a) of Regulation D.

 

(ii)                                  Investor is an “accredited investor” as
defined in National Instrument 45-106 - Prospectus Exemptions promulgated under
applicable Canadian Securities Laws.

 

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(e)                                  Sufficiency of Funds.  The Investor has
sufficient cash on hand or other sources of immediately available funds to
enable it to make payment of the Subscription Price and consummate the
transactions contemplated by this Agreement.

 

(f)                                   No Bad Actor.  No “bad actor”
disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act
is applicable to the Investor.

 

(g)                                  No General Solicitation.  Neither the
Investor, nor any of its officers, directors, employees, agents, stockholders or
partners has either directly or indirectly, including, through a broker or
finder (a) engaged in any general solicitation, or (b) published any
advertisement in connection with the offer, sale or contemplated distribution of
the Units.

 

(h)                                 Investors Acknowledgement.  Each Investor
represents that it has such knowledge in financial and business affairs as to be
capable of evaluating the merits and risks of its investment in the Company
pursuant to this Agreement and is able to bear the economic risk of loss of its
investment in the Company pursuant to this Agreement.  Each Investor
acknowledges that it is not relying upon any Person, other than the Company and
their officers and directors, in making its investment or decision to invest in
the Company pursuant to this Agreement.

 

ARTICLE V

 

COVENANTS AND AGREEMENTS

 

5.1                               Furnishing Information.  The parties hereto
hereby agree that all information received by them or their respective officers,
directors, employees or representatives in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be governed in
accordance with the respective confidentiality agreement entered into by such
receiving party and any of the other parties hereto (collectively, the
“Confidentiality Agreements”), each of which shall continue in full force and
effect in accordance with its terms.

 

5.2                               Filings; Commercially Reasonable Efforts;
Notification.

 

(a)                                 Upon the terms and subject to the conditions
of this Agreement, each of the parties shall use its respective commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, as
soon as practicable, the transactions contemplated by this Agreement, including
(i) obtaining and maintaining all necessary actions or nonactions, waivers,
consents, licenses, permits, authorizations, orders and approvals (collectively,
“Consents”) from applicable Governmental Authorities and the making of all other
necessary registrations and filings, (ii) obtaining all Consents from third
parties that are reasonably necessary in connection with the transactions
contemplated by this Agreement, (iii) obtaining all required Consents from third
parties, including required Consents from the Company’s shareholders, and
(iii) the execution and delivery of any additional instruments reasonably
necessary to consummate any of the transactions contemplated by, and to fully
carry out the purposes of, this Agreement.

 

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(b)                                 The Company shall (i) use commercially
reasonable efforts to make or cause to be made such filings with applicable
Governmental Authorities as are required in connection with the transactions
contemplated by this Agreement as soon as reasonably practicable after the date
of this Agreement and (ii) cooperate in good faith with the other parties in
obtaining any Consents from Governmental Authorities and in connection with
resolving any investigation or other inquiry of any Governmental Authority with
respect to such filings.

 

(c)                                  The Company shall use commercially
reasonable efforts to ensure that none of the information supplied or to be
supplied for inclusion or incorporation by reference in the Investor
Registration Statement to be filed with the Commission by the Company under the
Securities Act at the time the Investor Registration Statement becomes effective
will contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that no representation or warranty is made by
the Company or the Investors with respect to statements made or incorporated by
reference therein based on written information supplied by the other parties
hereto expressly for inclusion or incorporation by reference in the Investor
Registration Statement).

 

5.3                               NASDAQ and TSX Listing.  The Company shall use
commercially reasonable efforts to cause the Shares and the Warrant Shares to be
approved for listing on NASDAQ and conditionally approved for listing on the TSX
prior to the Investment Closing, as mutually agreed by the parties, subject to
official notice of issuance in respect of NASDAQ and subject to compliance with
all of the customary requirements of the TSX, including receipt of all
documentation required by the TSX.

 

5.4                               Reporting Issuer Status.  The Company shall
have the status of a reporting issuer not in default immediately preceding the
Investment Closing.

 

5.5                               Further Assurances.  Subject to, and not in
limitation of, Section 5.2, the Company shall use its commercially reasonable
efforts to (i) take, or cause to be taken, all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.

 

5.6                               Advice of Changes.  The Company shall promptly
advise the Investors of any fact, change, event or circumstance that the Company
believes would cause any condition to the Investment Closing not to be
satisfied; provided that any failure to give notice in accordance with the
foregoing shall not be deemed to constitute a violation of this Section 5.6 or
the failure of the condition set forth in Section 6.2(b) hereof to be satisfied.

 

5.7                               Investors’ Registration Rights.  The Investors
shall have the registration rights set forth on Annex A hereto.

 

5.8                               Investor Agreement.  Each of the Investors
agrees that, it will not acquire securities of the Company which result in, or
following conversion would result in, such Investor holding thirty-five (35%)
percent or greater of the total issued and outstanding voting securities of the
Company after giving effect to the Merger and the issuance of the Shares to the
Investors

 

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contemplated hereby; provided that the voting securities held by such Investor
shall include for purposes of this Section 5.8 any shares beneficially owned (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) by all other persons who together with such
Investor constitute a “group” within the meaning of Section 13(d)(3) of the
Exchange Act.

 

5.9                               Additional Company Agreements.

 

(a)                                 The Company acknowledges and agrees that an
Investor may from time to time make a bona fide pledge pursuant to an effective
margin agreement with a registered broker-dealer or grant a security interest in
some or all of the Investor Shares to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who
agrees to be bound by the provisions of this Agreement and, if required under
the terms of such arrangement, such Investor may transfer pledged or secured
securities to the pledgees or secured parties.  Such a pledge or transfer would
not be subject to the approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be required of such pledge.  At the
applicable Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of securities may
reasonably request in connection with a pledge or transfer of the securities,
including, if the securities are subject to registration pursuant to this
Agreement, the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of selling stockholders
thereunder.

 

(b)                                 Legends (including the legend set forth in
Section 4.1(c) hereof) shall be removable from certificates evidencing the
Units, Shares, Warrants and the Warrant Shares in the following circumstances:
(i) while a registration statement (including the Investor Registration
Statement) covering the resale of such security is effective under the
Securities Act (provided that, if the Investor is selling pursuant to the
effective registration statement registering the securities for resale, the
Investor agrees to only sell such securities during such time that such
registration statement is effective and not withdrawn or suspended, and only as
permitted by such registration statement), (ii) following any sale of such
securities pursuant to Rule 144, (iii) if such securities are eligible for sale
under Rule 144 without the requirement for the Company to be in compliance with
the current public information required under Rule 144 as to such securities and
without volume or manner-of-sale restrictions or (iv) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). 
Promptly following a request by the Investor, which must be directed to the
Company’s chief financial officer and general counsel, the Company shall cause
its counsel to issue a legal opinion to the Transfer Agent promptly if required
by the Transfer Agent to effect the removal of the legend hereunder, provided
that, upon reasonable request and upon delivery of a form of certificate,
customary in form and substance, by the Company to the Investors, the Investors
shall deliver a back-up certificate to the Company in connection with the
removal of such legend. If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the resale of
the Warrant Shares, or if such Warrant Shares may be sold under Rule 144 and the
Company is then in compliance with the current public information required under
Rule 144, or if the Warrant Shares may be sold under Rule 144 without the
requirement for the Company to be in compliance with the

 

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current public information required under Rule 144 as to such Warrant Shares and
without volume or manner-of-sale restrictions or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then
such Warrant Shares shall be issued free of all legends.  The Company agrees
that following the effective date of the initial registration statement covering
the resale of any of such securities or at such time as such legend is no longer
required under Section 4.1(c) of this Section 5.9 and subject to the conditions
set forth above, it will, no later than three trading days following the
delivery by an Investor to the Company or the Transfer Agent of a certificate
representing the Shares or Warrant Shares, as applicable, issued with a
restrictive legend (such third trading day, the “Legend Removal Date”), deliver
or cause to be delivered to such Investor a certificate representing such shares
that is free from all restrictive and other legends.  The Company may not make
any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in Section 4.1 and this
Section 5.9.  Certificates for Shares and Warrant Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to an Investor by
crediting the account of the Investor’s prime broker with the Depository Trust
Company System as directed by such Investor, provided that, upon notice by the
Company to an Investor of transmission of Shares or Warrant Shares through the
Depository Trust Company System, such Investor shall instruct its prime broker
to receive such Shares or Warrant Shares through the Depository Trust Company
System.

 

(c)                                  In addition to such Investor’s other
available remedies, the Company shall pay to an Investor, in cash, the greater
of (i) as partial liquidated damages and not as a penalty, for each $1,000 of
Units, Shares, Warrants or Warrant Shares, as the case may be, (based on the
VWAP of the Shares on the date such securities are submitted to the Transfer
Agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $10 per trading day for each trading day after the fifth trading
day after the Legend Removal Date until such certificate is delivered without a
legend.  Nothing herein shall limit such Investor’s right to pursue actual
damages for the Company’s failure to deliver certificates representing any such
securities as required by this Agreement, and such Investor shall have the right
to pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief.

 

(d)                                 Each Investor, severally and not jointly
with the other Investors, agrees with the Company that such Investor will sell
any Units, Shares, Warrants or Warrant Shares pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if Shares
are sold pursuant to an Investor Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing Shares
as set forth in this Section 5.9 is predicated upon the Company’s reliance upon
this understanding.

 

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ARTICLE VI

 

CONDITIONS TO INVESTMENT CLOSING

 

6.1                               Mutual Conditions.  The respective obligations
of each Investor and the Company to consummate the subscription and issuance of
the Units shall be subject to the satisfaction on or prior to the Investment
Closing Date of each of the following conditions (any or all of which may be
waived by a party on behalf of itself in writing, in whole or in part, to the
extent permitted by applicable Law):

 

(a)                                 No Law shall have been enacted or
promulgated, and no action shall have been taken, by any Governmental Authority
of competent jurisdiction that remains in effect and temporarily, preliminarily
or permanently restrains, precludes, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby or makes the transactions
contemplated hereby illegal;

 

(b)                                 No outstanding judgment, injunction, order
or decree of a competent Governmental Authority shall have been entered and
shall continue to be in effect, and no Law shall have been adopted or be
effective, in each case that prohibits, enjoins or makes illegal the
consummation of the transactions contemplated by this Agreement;

 

(c)                                  No material amendment, modification or
waiver of a material right under the Merger Agreement in the form as executed by
the Parties thereto as of the date of this Agreement has occurred;

 

(d)                                 Any required approvals of the Company’s
shareholders relating to the issuance of the Units pursuant to this Agreement
shall have been obtained at a meeting of the Company’s shareholders in
accordance with applicable Laws; and

 

(e)                                  The conditions set forth in ARTICLE VIII of
the Merger Agreement shall have been satisfied or waived, and the Parties to the
Merger Agreement shall have irrevocably committed, subject to no further
conditions, to effect the Closing under the Merger Agreement  immediately after
the Investment Closing.

 

6.2                               Investor’s Conditions.  The obligations of
each Investor to consummate the subscription of such Investor’s Investor Units
shall be subject to the satisfaction on or prior to the Investment Closing Date
of each of the following additional conditions (any or all of which may be
waived by such Investor on behalf of itself in writing, in whole or in part, to
the extent permitted by applicable Law):

 

(a)                                 The representations and warranties of the
Company set forth in Sections 3.1, respectively, qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, in each case, as of the date of this Agreement and as
of the Investment Closing as though made at and as of the Investment Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materially shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date);

 

(b)                                 the Company shall have performed and
complied in all material respects with its respective obligations and agreements
required in this Agreement to be performed or complied with by it on or prior to
the Investment Closing Date;

 

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(c)                                  the Shares shall have been approved for
listing on NASDAQ and the TSX, subject to official notice of issuances in
respect of NASDAQ and subject to compliance with all of the customary conditions
of the TSX, including receipt of all documentation required by the TSX;

 

(d)                                 the Company shall have delivered, or caused
to be delivered, to such Investor at the Investment Closing, the Company’s
closing deliverables described in Section 2.4; and

 

(e)                                  there shall not be pending any suit, action
or proceeding by any Person seeking to restrain, preclude, enjoin or prohibit
the transactions contemplated by this Agreement, which suit, action or
proceeding is reasonably likely to have a material adverse effect on such
Investor.

 

6.3                               Company Conditions.  The obligation of the
Company to consummate the allotment and issuance of the Units to each Investor
shall be subject to the satisfaction on or prior to the Investment Closing Date
of each of the following conditions with respect to such Investor (any or all of
which may be waived by the Company in writing, in whole or in part, to the
extent permitted by applicable Law):

 

(a)                                 the representations and warranties of such
Investor set forth in this Agreement qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all
material respects, in each case, as of the date of this Agreement and as of the
Investment Closing as though made at and as of the Investment Closing, except to
the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date);

 

(b)                                 such Investor shall have performed and
complied in all material respects with all obligations and agreements required
by this Agreement to be performed or complied with by such Investor on or prior
to the Investment Closing Date;

 

(c)                                  there shall not be pending any suit, action
or proceeding by any Person seeking to restrain, preclude, enjoin or prohibit
the transactions contemplated by this Agreement, which suit, action or
proceeding is reasonably likely to have a material adverse effect on the
Company; and

 

(d)                                 such Investor shall have delivered, or
caused to be delivered, to the Company at the Investment Closing such Investor’s
closing deliverables described in Section 2.5.

 

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ARTICLE VII

 

TERMINATION

 

7.1                               Termination.

 

(a)                                 This Agreement shall automatically
terminate, without the need for any further action by the Company or any
Investor, upon the valid termination of the Merger Agreement.

 

(b)                                 Notwithstanding anything in this Agreement
to the contrary, this Agreement may be terminated and abandoned at any time
prior to the Investment Closing with respect to the applicable parties as
follows:

 

(i)                                     by mutual written consent of the
Company, on the one hand, and one or more Investors, on the other hand, which
termination shall be effective as between or among the Company and such
Investor(s);

 

(ii)                                  by the Company or any of the Investors
(but only with respect to such terminating Investor’s rights and obligations
hereunder) if there shall be any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited, or if any
judgment, injunction, order or decree of a competent Governmental Authority
enjoining the Company or such Investor from consummating the transactions
contemplated by this Agreement shall have been entered and such judgment,
injunction, order or decree shall have become final and nonappealable; provided
that the party seeking to terminate this Agreement pursuant to this Section 
7.1(b)(ii) shall have used its commercially reasonable efforts to render
inapplicable such Law or regulation or remove such judgment, injunction, order
or decree as required by Section 5.2; or

 

(iii)                               by any of the Investors (but only with
respect to such terminating Investor’s rights and obligations hereunder) if the
Investment Closing shall not have occurred on or before the eight month
anniversary of the date of this Agreement.

 

7.2                               Procedure Upon Termination.  In the event of
termination and abandonment by the Company or any Investor pursuant to
Section 7.1, written notice thereof specifying the provision of this Agreement
pursuant to which such termination is effected, shall forthwith be given to the
other parties hereto, and, solely with respect to a termination by the Company
or all of the Investors, this Agreement shall terminate, and the subscription
for the Units hereunder shall be abandoned and any consideration received by the
Company from such Investor for such Investor’s Investor Units subscribed for
hereunder shall be immediately returned to such Investor.  For the avoidance of
doubt, a termination by any Investor shall only terminate the rights and
obligations of such Investor hereunder and shall not affect the rights and
obligations of the other parties hereto.  The parties acknowledge that the
failure by any one Investor to consummate the subscription for such Investor’s
Investor Units shall not affect or modify the obligations of the Company or the
other Investors to consummate the transactions contemplated hereby.

 

7.3                               Effects of Termination.  In the event of any
termination of this Agreement as provided in Section 7.1 by the Company or all
of the Investors, this Agreement, except for the provisions of Section 5.1, this
Section 7.3 and ARTICLE VIII, shall terminate and become void and have no
effect, without any liability on the part of any party or its directors,
officers or stockholders with respect thereto.  Notwithstanding the foregoing,
nothing in this Section 7.3 shall relieve any party to this Agreement of
liability for fraud or any material breach of any

 

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covenant or agreement set forth in this Agreement.  No termination of this
Agreement shall affect the obligations of the parties contained in any of the
Confidentiality Agreements, all of which obligations shall survive termination
of this Agreement in accordance with its terms.

 

ARTICLE VIII
MISCELLANEOUS

 

8.1                               Survival.  Notwithstanding any investigation
made by any party to this Agreement, all covenants, agreements, representations
and warranties made by the Company or the Investors herein shall survive for one
year following the Investment Closing, other than any covenants or agreements
that by their terms survive for a longer period of time.

 

8.2                               Expenses.  Except as otherwise provided in
this Agreement, whether or not the transactions contemplated by this Agreement
are consummated, all costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby shall be paid by the party incurring or required to incur such expenses,
including the Investor Registration Expenses (which shall be from the account of
the Company).

 

8.3                               Counterparts; Effectiveness.  This Agreement
may be executed in two or more counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered (by telecopy, electronic delivery or
otherwise) to the other parties.  Signatures to this Agreement transmitted by
facsimile transmission, by electronic mail in “portable document format”
(“.pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same
effect as physical delivery of the paper document bearing the original
signature.

 

8.4                               Governing Law.  This Agreement, and all claims
or causes of action (whether at Law, in contract or in tort or otherwise) that
may be based upon, arise out of or relate to this Agreement or the negotiation,
execution or performance hereof, shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.

 

8.5                               Jurisdiction; Specific Enforcement.  Each of
the parties hereto irrevocably agrees that any legal action or proceeding with
respect to this Agreement and the rights and obligations arising hereunder, or
for recognition and enforcement of any judgment in respect of this Agreement and
the rights and obligations arising hereunder brought by the other party hereto
or its successors or assigns, shall be brought and determined exclusively in the
Delaware Court of Chancery and any state appellate court therefrom within the
State of Delaware (or, if the Delaware Court of Chancery declines to accept
jurisdiction over a particular matter, any state or federal court within the
State of Delaware).  Each of the parties hereto hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect of its
property, generally and unconditionally, to the personal jurisdiction of the
aforesaid courts and agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by

 

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this Agreement in any court other than the aforesaid courts.  Each of the
parties hereto hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above named courts, (b) any claim that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) and (c) to the fullest extent permitted by
applicable Law, any claim that (i) the suit, action or proceeding in such court
is brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper or (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.  To the fullest extent permitted by
applicable Law, each of the parties hereto hereby consents to the service of
process in accordance with Section 8.7; provided, however, that nothing herein
shall affect the right of any party to serve legal process in any other manner
permitted by Law.

 

8.6                               WAIVER OF JURY TRIAL.  EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES 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.

 

8.7                               Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given (a) upon personal
delivery to the party to be notified; (b) when received when sent by email or
facsimile by the party to be notified, provided, however, that notice given by
email or facsimile shall not be effective unless either (i) a duplicate copy of
such email or fax notice is promptly given by one of the other methods described
in this Section 8.7 or (ii) the receiving party delivers a written confirmation
of receipt for such notice either by email or fax or any other method described
in this Section 8.7; or (c) when delivered by a courier (with confirmation of
delivery); in each case to the party to be notified at the following address:

 

If to the Company, to:

 

QLT Inc.

887 Great Northern Way, Suite 250
Vancouver, BC V5T 4T5
Canada

Facsimile:  (604) 707-7001

Attention:  Geoffrey Cox, Interim Chief Executive Officer

Dori Assaly, Senior Vice President, Legal

Email:  gfcox@qltinc.com

dassaly@qltinc.com

 

with copies (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Facsimile:  (212) 310-8007

 

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Attention:  Raymond O. Gietz

Email:  raymond.gietz@weil.com

 

If to an Investor, at its address set forth under its name on Schedule I hereto,
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated or personally delivered.  Any party to this Agreement may
notify any other party of any changes to the address or any of the other details
specified in this Section 8.7; provided, however, that such notification shall
only be effective on the date specified in such notice or five (5) Business Days
after the notice is given, whichever is later.  Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.

 

8.8                               Assignment; Binding Effect.  Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or delegated by any of the parties hereto without the prior written
consent of the other parties; provided, however, that any Investor may assign
any of its rights hereunder to any of its Affiliates without the prior written
consent of the Company, but no such assignment shall relieve such Investor of
any of its obligations hereunder.  Subject to the first sentence of this
Section 8.8, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.  Any
purported assignment not permitted under this Section 8.8 shall be null and
void.

 

8.9                               Severability.  Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction.  If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.

 

8.10                        Independent Legal and Investment Advice.  In
addition, each party to this Agreement acknowledges having had the opportunity
to obtain independent legal advice and independent investment advice in
connection with the execution of this Agreement and the transactions
contemplated hereby, prior to the execution of this Agreement, and further, each
party to this Agreement represents to the other parties that it has either
sought independent legal advice and independent investment advice or has waived
its right to seek such advice.

 

8.11                        Entire Agreement.  This Agreement together with the
annexes, schedules and exhibits hereto and, with respect to the Company and each
Investor, the Confidentiality Agreement between the Company and such Investor,
shall constitute the entire agreement, and supersede all other prior agreements
and understandings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof and thereof, and this Agreement is not
intended to grant standing to any Person other than the parties hereto.

 

8.12                        Amendments; Waivers.  At any time prior to the
Effective Time, any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company and each of the Investors; provided, however, that
(i) any amendment or waiver of any of the provisions of

 

20

--------------------------------------------------------------------------------

 

Annex A shall require only the signature of the Company and the affected
Investor, (ii) the amendment of this Agreement in order to have Units comprised
of the Warrants and a Derivative Security in lieu of the Shares shall require
only the signature of the Company and the affected Investor and (iii) that the
consent of the Investors will not be required in connection with an amendment of
this Agreement to add additional Investors and to issue additional Units
provided that the Per Share Subscription Price is not less than $1.76. 
Notwithstanding the foregoing, no failure or delay by any party hereto in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise of any
other right hereunder. “Derivative Security” shall mean a derivative security
that is exercisable for, or convertible into, Shares and which shall (i) be on
economic terms substantially similar to the Shares, (ii) in the case of a
capital stock, be non-voting (other than relating to the amendments to the terms
of such security and as otherwise required by law), (iii) be exercisable for, or
convertible into, Shares without the payment of any additional consideration
(other than the requirement to pay a de minimis amount of consideration if
required by law) and (iv) contain provisions, in substantially similar form to
those contained in the Warrants, limiting the exercise or conversion thereof in
a manner designed to prevent such Investor from beneficially owning the
underlying shares for purposes of Section 16 of the Exchange Act.

 

8.13                        Headings.  Headings of the Articles and Sections of
this Agreement are for convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.  The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

8.14                        No Third-Party Beneficiaries.  Each of the Investors
and the Company agrees that (a) their respective representations, warranties,
covenants and agreements set forth herein are solely for the benefit of the
other party hereto, in accordance with and subject to the terms of this
Agreement, and (b) this Agreement is not intended to, and does not, confer upon
any Person other than the parties hereto any rights or remedies hereunder,
including the right to rely upon the representations and warranties set forth
herein.

 

8.15                        Obligations of the Investors and the Company.  The
obligations of the Investors are several and not joint and the breach by any
Investor of its obligations hereunder shall not result in any liability being
incurred by any one or more of the other Investors as a result of such breach. 
The Company acknowledges and agrees that should one or more Investors not be
ready, willing and able to subscribe for its respective Units hereunder, any of
the other Investors may subscribe for such Units in lieu of the non-performing
Investor.

 

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

 

21

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

 

 

 

QLT INC.

 

 

 

 

 

By:

/s/ Glen Ibbott

 

 

Name: Glen Ibbott

 

 

Title: Chief Financial Officer

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

BROADFIN HEALTHCARE MASTER FUND

 

LTD

 

 

 

 

 

By:

/s/ Kevin Kotler

 

 

Name: Kevin Kotler

 

 

Title: Managing Partner of Broadfin Capital

 

 

LLC, Investment Manager of Broadfin

 

 

Healthcare Master Fund Ltd.

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

SARISSA CAPITAL DOMESTIC FUND LP

 

 

 

 

 

By:

/s/ Mark DiPaolo

 

 

Name: Mark DiPaolo

 

 

Title: Authorized Signatory

 

 

 

 

 

SARISSA CAPITAL OFFSHORE MASTER

 

FUND LP

 

 

 

 

 

By:

/s/ Mark DiPaolo

 

 

Name: Mark DiPaolo

 

 

Title: Authorized Signatory

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

ARMISTICE CAPITAL MASTER FUND, LTD.

 

 

 

 

 

By:

/s/ Steven Boyd

6/13/16

 

 

Name: Steven Boyd

 

 

Title: Managing Member, Armistice Capital

 

 

LLC, investment manager to Armistice

 

 

Capital Master Fund, Ltd.

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

HEALTHCARE VALUE PARTNERS, LP

 

 

 

By:

General Partner of Healthcare Value

 

 

Partners, LP

 

 

 

 

 

 

 

By:

/s/ Joseph Riccardo

 

 

Name: Joseph Riccardo

 

 

Title: Managing Member

 

 

Healthcare Value Capital General Partner,

 

 

LLC

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

TIGER LEGATUS CAPITAL MANAGEMENT,

 

 

LLC

 

 

 

 

 

 

 

By:

/s/ Jesse Ro

 

 

Name: Jesse Ro

 

 

Title: Managing Member

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

Levcap Alternative Fund, LP

 

 

 

 

 

Ulysses Partners, L.P.

 

 

 

 

 

Ulysses Offshore Fund, Ltd.

 

 

 

 

 

By:

/s/ Sam Hendel

 

 

Name: Sam Hendel

 

 

Title:   Portfolio Manager

 

--------------------------------------------------------------------------------

 

 

THE K2 PRINCIPAL FUND L.P.

 

 

 

By:

K2 Genpar Ltd. by its General Partner K2

 

 

Genpar 2009 Inc.

 

 

 

 

 

 

 

By:

/s/ Shawn Kimel

 

 

Name: Shawn Kimel

 

 

Title: President

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

JW PARTNERS, LP

 

 

 

By:

JW GP, LLC, its General Partner

 

 

 

 

 

 

 

By:

/s/ Jason Wild

 

 

Name: Jason Wild

 

 

Title: Managing Member

 

 

 

 

 

J.W. OPPORTUNITIES MASTER FUND, LTD.

 

 

 

By:

JW GP, LLC, its Manager

 

 

 

 

 

 

 

By:

/s/ Jason Wild

 

 

Name: Jason Wild

 

 

Title: Managing Member

 

[Signature Page to Unit Subscription Agreement]

 

--------------------------------------------------------------------------------

 

 

DEERFIELD PARTNERS, L.P.

 

 

 

By:

Deerfield Mgmt, L.P., its General Partner

 

 

 

 

By:

J.E. Flynn Capital, LLC, its General Partner

 

 

 

 

 

 

 

By:

/s/ David J. Clark

 

 

Name: David Clark

 

 

Title:   Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

DEERFIELD INTERNATIONAL MASTER

 

FUND, L.P.

 

 

 

By:

Deerfield Mgmt, L.P., its General Partner

 

 

 

 

By:

J.E. Flynn Capital, LLC, its General Partner

 

 

 

 

 

 

 

By:

/s/ David J. Clark

 

 

Name: David Clark

 

 

Title:   Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

[INVESTOR]

 

 

 

 

 

By:

/s/ Jason Aryeh

 

 

Name: Jason Aryeh

 

 

Title:   (individual)

 

--------------------------------------------------------------------------------

 

SCHEDULE I

 

SCHEDULE OF INVESTORS

 

Investor — Name (Jurisdiction) and Address

 

Subscription Price

 

 

 

 

 

Deerfield Partners, L.P. (Delaware)

 

$

660,000.00

 

 

 

 

 

Deerfield International Master Fund, L.P. (British Virgin Islands)

 

$

840,000.00

 

 

 

 

 

780 Third Avenue, 37th Floor

 

 

 

New York, New York 10017

 

 

 

 

 

 

 

Attn: David J. Clark

 

 

 

Fax: (212) 599-3075

 

 

 

Email: dclark@deerfield.com

 

 

 

 

 

 

 

JW Partners LP (Delaware)

 

$

37,500.00

 

 

 

 

 

JW Opportunities Master Fund, Ltd. (Cayman Islands)

 

$

12,500.00

 

 

 

 

 

515 Madison Ave., 14B

 

 

 

New York, New York 10022

 

 

 

 

 

 

 

Attn: Jason Wild

 

 

 

Fax: (212) 207-4674

 

 

 

Email: jwild@jwfunds.com

 

 

 

 

 

 

 

Broadfin Healthcare Master Fund, LTD (Cayman Islands)

 

$

5,000,000.00

 

 

 

 

 

P.O. Box 1344

 

 

 

20 Genesis Close

 

 

 

Ansbacher House, 2nd Fl

 

 

 

Grand Cayman, KY1-1108

 

 

 

 

 

 

 

Attn: Kevin Kotler

 

 

 

Fax: (212) 808-2464

 

 

 

 

 

 

 

The K2 Principal Fund L.P. (Ontario)

 

$

1,000,000.00

 

 

 

 

 

2 Bloor Street West, Suite 801

 

 

 

M4W 3E2

 

 

 

Ontario, Canada

 

 

 

 

 

 

 

Attn. Shawn Kimel

 

 

 

Fax # 416-703-4443

 

 

 

 

--------------------------------------------------------------------------------

 

Investor — Name (Jurisdiction) and Address

 

Subscription Price

 

 

 

 

 

Healthcare Value Partners, LP (Delaware)

 

$

3,520,000.00

 

 

 

 

 

50 Tice Blvd., Suite 140

 

 

 

Woodcliff Lake, NJ 07677

 

 

 

 

 

 

 

Attn: Thomas DesChamps,

 

 

 

Fax: 201-391-5376

 

 

 

 

 

 

 

Tiger Legatus Capital Management, LLC (Delaware)

 

$

250,000.00

 

 

 

 

 

330 Madison Avenue, 24th Floor

 

 

 

New York, NY 10017

 

 

 

 

 

 

 

Attn: Mike Spero

 

 

 

Fax: 212-716-2361

 

 

 

Email: mspero@tigerlegatus.com

 

 

 

 

 

 

 

Jason Aryeh

 

$

2,000,000.00

 

 

 

 

 

5811 Murphy Way

 

 

 

Malibu, California 90265

 

 

 

 

 

 

 

Fax: (203) 918-4174

 

 

 

 

 

 

 

Sarissa Capital Domestic Fund LP (Delaware)

 

$

2,398,891.25

 

 

 

 

 

Sarissa Capital Offshore Master Fund LP (Cayman Islands)

 

$

2,601,108.75

 

 

 

 

 

C/o Sarissa Capital Management LP

 

 

 

660 Steamboat Road, 3rd Floor

 

 

 

Greenwich, CT 06830

 

 

 

 

 

 

 

Attn: Mark Dipaolo

 

 

 

 

 

 

 

Armistice Capital Master Fund, Ltd. (Cayman Islands)

 

$

2,999,999.20

 

 

 

 

 

dms Corporate Services

 

 

 

DMS House, 2nd Floor

 

 

 

Genesis Close

 

 

 

Grand Cayman, KY1-1208

 

 

 

 

 

 

 

Attn: Steven Boyd

 

 

 

Fax: (212) 231-4939

 

 

 

Email: sboyd@armisticecapital.com

 

 

 

 

--------------------------------------------------------------------------------

 

Investor — Name (Jurisdiction) and Address

 

Subscription Price

 

 

 

 

 

Levcap Alternative Fund, L.P. (Delaware)

 

$

140,418.08

 

 

 

 

 

c/o Levin Capital Strategies, LP

 

 

 

595 Madison Avenue, 16th Floor

 

 

 

New York, New York 10022

 

 

 

 

 

 

 

Attn: Sam Hendel

 

 

 

 

 

 

 

Ulysses Partners, L.P. (Delaware)

 

$

241,079.52

 

 

 

 

 

One Rockefeller Plaza, 20th Floor

 

 

 

New York, New York 10020

 

 

 

 

 

 

 

Attn: Eric Squire

 

 

 

 

 

 

 

Ulysses Offshore Fund, Ltd. (Cayman Islands)

 

$

58,502.40

 

 

 

 

 

c/o Ulysses Management Offshore LLC

 

 

 

One Rockefeller Plaza, 20th Floor

 

 

 

New York, New York 10020

 

 

 

 

 

 

 

Attn: Eric Squire

 

 

 

Total:

 

$

21,759,999.20

 

 

--------------------------------------------------------------------------------

 

 

ANNEX A

 

INVESTORS’ REGISTRATION RIGHTS

 

1.1                               Certain Definitions.

 

(a)                                 “Investor Prospectus” shall mean the
prospectus (including any preliminary, final or summary prospectus) included in
the Investor Registration Statement, all amendments and supplements to such
prospectus and all other material incorporated by reference in such prospectus.

 

(b)                                 “Investor Registration Expenses” shall mean
any and all expenses incurred by the Company and its Subsidiaries in effecting
the Investor Registration pursuant to this Agreement, including, all
(a) Investor Registration and filing fees, and all other fees and expenses
payable in connection with the listing of securities on any securities exchange
or automated interdealer quotation system, (b) fees and expenses of compliance
with any securities or “Blue Sky” Laws (including reasonable fees and
disbursements of counsel in connection with “Blue Sky” qualifications of the
Investor Shares), (c) expenses in connection with the preparation, printing,
mailing and delivery of the Investor Registration Statement, Investor Prospectus
and other documents in connection therewith and any amendments or supplements
thereto, (d) printing expenses, (e) internal expenses of the Company (including,
all salaries and expenses of its officers and employees performing legal or
accounting duties), (f) fees and disbursements of counsel for the Company and
fees and expenses for independent certified public accountants retained by the
Company and (g) fees and expenses of any special experts retained by the Company
in connection with such Investor Registration.  Investor Registration Expenses
shall not include, and the Company shall not have any obligation to pay, any
out-of-pocket expenses of any Investor, including the attorneys’ fees of any
such Investor.

 

(c)                                  “Investor Registration” shall mean the
registration effected by preparing and filing (a) the Investor Registration
Statement in compliance with the Securities Act (and any post-effective
amendments filed or required to be filed) and the declaration or ordering of
effectiveness of such Investor Registration Statement, or (b) an Investor
Prospectus and/or Investor Prospectus supplement in respect of the effective
Investor Registration Statement.

 

(d)                                 The terms “register,” “registered” and
“registration” shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.

 

(e)                                  “Registrable Securities” shall mean: 
(i) the Investor Shares and any Shares issued or issuable to each Investor
(A) upon any distribution with respect to, any exchange for or any replacement
of such Investor Shares, or (B) upon any conversion, exercise or exchange of any
securities issued in connection with any such distribution, exchange or

 

A-1

--------------------------------------------------------------------------------

 

replacement; (ii) securities issued or issuable upon any stock split, stock
dividend, recapitalization or similar event with respect to the foregoing; and
(iii) any other security issued as a dividend or other distribution with respect
to, in exchange for or in replacement of the securities referred to in the
preceding clauses, except that any such Shares or other securities shall cease
to be Registrable Securities when (A) they have been sold to the public or
(B) they may be sold by such Investor without restriction pursuant to Rule 144.

 

(f)                                   “Selling Expenses” shall mean all selling
commissions and transfer taxes applicable to the sale, transfer, issuance or
allotment of Registrable Securities and all fees and disbursements of counsel
for Investors.

 

1.2                               Registration Requirements.  The Company shall
use its commercially reasonable efforts to effect the registration of the resale
of the Registrable Securities (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable Blue Sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as would
permit or facilitate the resale of all the Registrable Securities in the manner
(including manner of sale) and in all states reasonably requested by the
Investors, provided that in no event shall the Company be required to register
the resale of the Registrable Securities in an underwritten offering.  Such
commercially reasonable efforts by the Company shall include, without
limitation, the following:

 

(a)                                 The Company shall use commercially
reasonable efforts to, as expeditiously as possible:

 

(i)                                    prepare and promptly following the date
on which the Form S-4 (as defined in the Merger Agreement) is declared effective
by the SEC (and in no event later than the tenth (10th) Business Day following
the date of effectiveness of the Form S-4), file a registration statement with
the Commission pursuant to Rule 415 under the Securities Act covering resales by
the Investors as selling stockholders (not underwriters) of the Registrable
Securities (the “Investor Registration Statement”).  The Company shall use its
commercially reasonable efforts to cause such Investor Registration Statement
and other filings to be declared effective as soon as possible following its
filing.

 

(ii)                                respond to all Commission comments,
inquiries and requests, and shall request acceleration of effectiveness of the
Investor Registration Statement at the earliest possible date.  The Company
shall provide the Investors reasonable opportunity to review the portions of any
such Investor Registration Statement or amendment or supplement thereto
containing disclosure regarding the Investors prior to filing (such reasonable
opportunity being no less than 3 Business Days prior to the initial filing of
any Investor Registration Statement and one Business Day prior to the filing of
any amendment or supplement thereto).

 

(iii)                            prepare and file with the Commission such
amendments and supplements to such

 

A-2

--------------------------------------------------------------------------------

 

Investor Registration Statement and the Investor Prospectus used in connection
with such Investor Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Investor Registration Statement and notify the
Investors of the filing and effectiveness of such Investor Registration
Statement and any amendments or supplements.

 

(iv)                             furnish or otherwise make available to each
Investor copies of a current prospectus included in the Investor Registration
Statement conforming with the requirements of the Securities Act, copies of the
Investor Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as such
Investor may reasonably require in order to facilitate the disposition of
Registrable Securities owned by such Investor.

 

(v)                                 register and qualify the securities covered
by the Investor Registration Statement under the securities or “Blue Sky” Laws
of all domestic jurisdictions, to the extent required; provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.

 

(vi)                             notify each Investor of the happening of any
event (but not the substance or details of any such events) as a result of which
the Investor Prospectus (including any supplements thereto or thereof) included
in such Investor Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and use its commercially reasonable
efforts to promptly update and/or correct such prospectus.

 

(vii)                         notify each Investor of the issuance by the
Commission or any state securities commission or agency of any stop order
suspending the effectiveness of the Investor Registration Statement or the
threat or initiation of any proceedings for that purpose.  The Company shall use
its commercially reasonable efforts to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the earliest
possible time.

 

(viii)                     if required by the NASDAQ or the principal securities
exchange and/or market on which the Company’s common shares are then listed,
qualify the Registrable Securities covered by such Investor Registration
Statement for listing on the NASDAQ or the principal securities exchange and/or
market on which the Company’s common shares are then listed, including the
preparation and filing of any required filings with such principal market or
exchange.

 

(ix)                             Promptly notify each Investor who holds
Registrable Securities covered by the Investor Registration Statement of (i) the
Company’s submission of an acceleration request with respect to the Investor
Registration Statement; (ii) the

 

A-3

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effectiveness on the actual effective date thereof; and (iii) the issuance of
any “stop order” or order preventing or suspending the use of any prospectus
relating to the Registrable Securities.

 

(b)                               The Company may suspend the use of any
Investor Prospectus used in connection with the Investor Registration Statement
only in the event, and for such period of time as, (i) such a suspension is
required by the rules and regulations of the Commission or any self-regulatory
organization, or (ii) it is determined in good faith by the Board of the Company
that because of valid business reasons (not including the avoidance of the
Company’s obligations hereunder), it is in the best interests of the Company to
suspend such use, and prior to suspending such use in accordance with this
clause (b) the Company provides the Investors with written notice of such
suspension, which notice need not specify the nature of the event giving rise to
such suspension.  The Company will use commercially reasonable efforts to cause
such suspension to terminate at the earliest possible date.  Notwithstanding the
foregoing, the use of any Investor Prospectus may be suspended by reason of
clause (ii) of this subsection (b) for a period of time not to exceed (A) sixty
(60) consecutive days for any one such suspension or (B) an aggregate of ninety
(90) days during the Investor Registration Period; provided that the Company
shall not utilize this right more than twice in any 12-month period.

 

(c)                                The Company shall prepare and file with the
Commission such amendments (including post-effective amendments) and supplements
to the Investor Registration Statement and the Investor Prospectus used in
connection with the Investor Registration Statement, which prospectus is to be
filed pursuant to Rule 424 promulgated under the Securities Act, as may be
necessary to keep the Investor Registration Statement effective at all times
during the Investor Registration Period (as defined below), and, during such
period, comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by the Investor
Registration Statement.  In the case of amendments and supplements to the
Investor Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 1.2(c)) by reason of the Company
filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report
under the Exchange Act, the Company shall have incorporated such report by
reference into the Investor Registration Statement, if applicable, or shall file
such amendments or supplements with the Commission on the same day on which the
Exchange Act report is filed which created the requirement for the Company to
amend or supplement the Investor Registration Statement.

 

(d)                                 Each Investor agrees by its acquisition of
the Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Sections 1.2(a)(vi) or
(a)(vii), and upon notice of any suspension under Section 1.2(b), such Investor
will forthwith discontinue disposition of such Registrable Securities under the
Investor Registration Statement until such Investor’s receipt of the copies of
the supplemented prospectus and/or amendment to the Investor Registration
Statement contemplated by this Section 1.2, or until it is advised in writing by
the Company that the use of the applicable prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such prospectus or
the Investor Registration Statement.  The

 

A-4

--------------------------------------------------------------------------------

 

Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

 

(e)                                  If requested by an Investor, the Company
shall (i) as soon as practicable incorporate in a prospectus supplement or
post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the Subscription Price
being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering, (ii) as soon as practicable make all
required filings of such prospectus supplement or post-effective amendment after
being notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment, and (iii) as soon as practicable, supplement or
make amendments to the Investor Registration Statement if reasonably requested
by an Investor holding any Registrable Securities.

 

1.3                               Expenses of Investor Registration.  All
Investor Registration Expenses in connection with any registration,
qualification or compliance with registration pursuant to this Agreement shall
be borne by the Company, and all Selling Expenses of an Investor shall be borne
by such Investor.

 

1.4                               Investor Registration Period.

 

(a)                                 In the case of the Investor Registration,
the Company shall keep such registration effective from the date on which the
Investor Registration Statement initially became effective until the earlier of:
(i) the date on which all the Investors have completed the sales or distribution
described in the Investor Registration Statement relating to the Registrable
Securities registered for resale thereunder; (ii) until such Registrable
Securities may be sold by the Investors without restriction pursuant to Rule 144
(or any successor thereto); or (iii) one year from the effective date of the
Investor Registration Statement, other than with respect to any Investor who is
an “affiliate” (as defined in Rule 144(a)(1) of the Securities Act) of the
Company (the “Investor Registration Period”).  Thereafter, the Company shall be
entitled to withdraw such Investor Registration Statement and the Investors
shall have no further right to offer or sell any of the Registrable Securities
registered for resale thereon pursuant to the Investor Registration Statement
(or any prospectus relating thereto).

 

(b)                                 An Investor’s registration rights hereunder
shall expire at such time as it no longer holds any Registrable Shares. 
Termination of such registration rights shall be conditioned upon the Company’s
action to remove the restrictive legends from any Registrable Securities held by
such Investor and the reissuance of unlegended certificates, in physical or
electronic format, to such Investor prior to the effective termination of the
Agreement.

 

1.5                               Indemnification.

 

(a)                                 Indemnification by the Company.  The Company
agrees to indemnify and hold harmless, to the fullest extent permitted by Law,
(i) each Investor and its officers, directors, stockholders, employees,
advisors, agents and Affiliates, (ii) each Investor’s Affiliates’

 

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officers, directors, stockholders, employees, advisors, agents, and (iii) each
Person who controls (within the meaning of the Securities Act, the Exchange Act)
such Persons, against any and all claims, losses, damages, penalties, judgments,
suits, costs, liabilities and expenses (or actions in respect thereof)
(collectively, the “Losses”) arising out of or based on (A) any untrue statement
(or alleged untrue statement) of a material fact contained in the Investor
Registration Statement (including any Investor Prospectus) or any other document
incorporated by reference therein, (B) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not false or misleading (in the case of any Investor
Prospectus, in light of the circumstances under which they were made), or
(C) any violation by the Company of the Securities Act, the Exchange Act, the
Canadian Securities Laws or any state securities or “Blue Sky” Laws applicable
to the Company, and will reimburse each of the Persons listed above, for any
reasonable and documented out-of-pocket legal and any other expenses reasonably
incurred in connection with investigating and defending any such Losses;
provided, that the Company will not be liable in any such case to the extent
that any such Losses arise out of or are based on any untrue statement or
omission based upon written information furnished to the Company by such Person
and stated to be specifically for use in such Investor Registration Statement or
Investor Prospectus.

 

(b)                                 Indemnification by Investors.  Each Investor
agrees to indemnify and hold harmless, to the fullest extent permitted by Law,
(i) the Company and its officers, directors, stockholders, employees, advisors,
agents and Affiliates, (ii) each of the Company’s Affiliates’ officers,
directors, stockholders, employees, advisors, agents, and (iii) each Person who
controls the Company (within the meaning of the Securities Act, the Exchange Act
or the Canadian Securities Laws), against any and all Losses arising out of or
based on (A) any untrue statement (or alleged untrue statement) of a material
fact made by such Investor contained in the Investor Registration Statement
(including any Investor Prospectus) or any other document incorporated by
reference therein or (B) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
by such Investor therein not false or misleading (in the case of any Investor
Prospectus, in light of the circumstances under which they were made), and will
reimburse the Persons listed above for any reasonable and documented legal or
any other expenses reasonably incurred in connection with investigating or
defending any such Losses, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in reliance upon and in conformity with written information
furnished to the Company by such Investor and stated to be specifically for use
in such Investor Registration Statement or Investor Prospectus, provided,
however, that the obligations of each Investor hereunder shall be limited to
such Investor’s respective Subscription Price.

 

(c)                                  Conduct of the Indemnification
Proceedings.  Each Person entitled to indemnification under this Section 1.5
(the “Indemnified Party”) shall give notice to the Person required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct

 

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the defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld) and the Indemnified Party may participate in such defense at such
Indemnified Party’s expense (unless the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in such action, in which case the fees and
expenses of counsel shall be at the expense of the Indemnifying Party); and
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 1.5 unless the Indemnifying Party is actually and materially
prejudiced thereby.  It is understood and agreed that the Indemnifying Party
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate
legal counsel for all Indemnified Parties; provided, however, that where the
failure to be provided separate legal counsel would be reasonably likely to
result in a conflict of interest on the part of such legal counsel for all
Indemnified Party, separate counsel shall be appointed for the Indemnified
Parties to the extent needed to alleviate such potential conflict of interest. 
No Indemnifying Party, in the defense of any such claim or litigation shall,
except with the prior written consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.  Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnified Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.

 

(d)                                 Contribution.  If the indemnification
provided for in this Section 1.5 is held by a court of competent jurisdiction to
be unavailable to an Indemnified Party with respect to any Losses, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party, on the one hand, and the Indemnified
Party, on the other, in connection with the statements or omissions (or alleged
statements or omissions) which resulted in such Losses, as well as any other
relevant equitable considerations.  The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue (or alleged untrue) statement of a material fact or
the omission (or alleged omission) to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
such parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, however, that the
obligations of each Investor shall be limited to an amount equal to the such
Investor’s respective Subscription Price; and provided, further, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) or gross negligence shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation or gross
negligence.

 

(e)                                  Exclusivity.  Subject to the limitations on
each Investor’s liability set forth in Section 1.5(b) and Section 1.5(d), the
remedies provided for in this Section 1.5 are not exclusive

 

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and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Party at Law or equity.  The remedies shall remain in full force
and effect regardless of any investigation made by or on behalf of an Investor
or any Indemnified Party and survive the transfer of the Investor Shares by an
Investor.

 

1.6                               Survival.  The indemnity and contribution
agreements contained in Section 1.5 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by or on behalf
of the Company, and (iii) the consummation of the sale or successive resales of
the Registrable Securities.

 

1.7                               Information by Investors.  Each Investor shall
promptly furnish to the Company such information regarding such Investor and the
distribution and/or sale proposed by such Investor as the Company may from time
to time reasonably request in writing in connection with any Investor
Registration, qualification or compliance referred to in this Agreement, and the
Company may exclude from such Investor Registration the Registrable Securities
of any Investor who unreasonably fails to furnish such information within a
reasonable time after receiving such request.  The intended method or methods of
disposition and/or sale of such securities as so provided by such purchaser
shall be included without alteration in the Investor Registration Statement
covering the Registrable Securities and shall not be changed without written
consent of such Investor.  Each Investor agrees that, other than ordinary course
brokerage arrangements, in the event it enters into any arrangement with a
broker dealer for the sale of any Registrable Securities through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, such Investor shall promptly deliver to the Company in
writing all applicable information required in order for the Company to be able
to timely file a supplement to the Investor Prospectus pursuant to Rule 424(b),
or take any other action, under the Securities Act, to the extent that such
supplement or other action is legally required.  Such information shall include
a description of (i) the name of such Investor and of the participating broker
dealer(s), (ii) the number of Registrable Securities involved, (iii) the price
at which such Registrable Securities were or are to be sold, and (iv) the
commissions paid or to be paid or discounts or concessions allowed or to be
allowed to such broker dealer(s), where applicable.

 

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ANNEX B

 

FORM OF WARRANT AGREEMENT

 

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