Exhibit 10.1


 


 


SECURITIES
PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of May 8, 2017 (the “Effective Date”), between Cannabics
Pharmaceuticals Inc., a Nevada corporation (the “Company”), and D-Beta One EQ, Ltd (the “Investor”).


 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to the Investor, and the Investor
desires to purchase from the Company, securities of the Company as more fully described in this Agreement.


 


NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:


 


ARTICLE I.

DEFINITIONS


 


1.1             
 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the
following terms have the meanings set forth in this Section 1.1:


 


“Acquiring Person”
shall have the meaning ascribed to such term in Section 4.4.


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(j).


 


“Additional
Shares” shall mean the 1,500,000 additional shares to which the Investor shall be entitled to purchase hereunder as described
in Section 2.8.


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Aggregate
Purchase Amount” means $3,000,000.


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.


 


“Closing”
means the closing of the purchase and sale of the Purchased Shares.


 


“Closing
Date” means a Settlement Date.


 


“Code”
means the Internal Revenue Code of 1986, as amended.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.


 


 


 


 






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“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.


 


“Company
Counsel” means SRK Kronengold Law Offices.


 


“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.


 


“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Fundamental
Transaction” means that (i) the Company shall, directly or indirectly, in one or more related transactions, (1) consolidate
or merge with or into (whether or not the Company is the surviving corporation) another Person, with the result that the holders
of the Company’s capital stock immediately prior to such consolidation or merger together beneficially own less than 50%
of the outstanding voting power of the surviving or resulting corporation, or (2) sell, lease, license, assign, transfer, convey
or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (3) take action
to facilitate a purchase, tender or exchange offer by another Person that is accepted by the holders of more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated
or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share
purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or
(5) reorganize, recapitalize or reclassify its Common Stock, or (ii) any “person” or “group” (as these
terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Stock.


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(z).


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).


 


“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Prospectus”
means the final prospectus filed for the Registration Statement.


 


 


 


 






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“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with
the Commission and delivered by the Company to the Investor at the Closing.


 


“Purchase
Price” shall be $1.00


 


“Purchased
Shares” means 3,000,000 of duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock purchased pursuant to the Sale and Purchase Notice hereunder.


 


“Registration
Statement” means the effective registration statement with Commission file No. 333-216845 which registers the sale of
the Shares to the Investor.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


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


 


“Sale
and Purchase Exercise Date” shall have the meaning assigned to such term in Section 2.2 hereof.


 


“Sale
and Purchase Notice” shall have the meaning assigned to such term in Section 2.2 hereof.


 


“Sanctions”
means any sanctions administered or enforced by U.S. Department of Treasury’s Office of Office of Foreign Asset Control of
the U.S. Department of Treasury from time to time (“OFAC”) or the U.S. State Department, the United Nations
Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority.


 


“Sanction
Programs” means a country or territory that is, or whose government is, the subject of OFAC’s sanctions programs
(including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria).


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities”
means the Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Shares”
means the shares of Common Stock issued or issuable to the Investor pursuant to this Agreement.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” shall mean the OTC Markets, the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market,
the NASDAQ Capital Market, whichever is at the time the principal trading exchange or market for the Common Stock.


 


 


 






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“Transaction
Documents” means this Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means ClearTrust, LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Dr., Suite 210, Lutz, Florida 33558 and a telephone number of (813) 235-4490, and e-mail of inbox@cleartrusttransfer.com and any
successor transfer agent of the Company.


 


“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.10(b).


 


ARTICLE II.

PURCHASE AND SALE; DRAWDOWN


 


2.1             
Sale and Purchase of Stock.  Upon the terms and subject to the conditions of this Agreement, on the Effective
Date, the Company will issue and sell to the Investor, and the Investor shall purchase from the Company, 3,000,000 duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (also referred to as the “Purchased Shares”) at
a purchase price of $1.00 per share (also referred to as the “Purchase Price”) for an aggregate purchase price of $3,000,000
(also referred to as the “Aggregate Purchase Amount”), by the delivery to the Investor of a Sale and Purchase Notice
as provided below.


 


2.2             
Sale and Purchase Notice.  On the Effective Date and concurrent with the execution of this Agreement, the Company
shall provide to the Investor a Sale and Purchase Notice, substantially in the form attached hereto as Exhibit A (the
“Sale and Purchase Notice”), which Sale and Purchase Notice shall become effective at 9:30 a.m. (New York City
time) on the first Trading Day after the date specified in the Sale and Purchase Notice. The date on which the Company delivers
the Sale and Purchase Notice in accordance with this Section 2.2 shall be known as the Sale and Purchase Date (the “Sale
and Purchase Date”). The Sale and Purchase Notice shall specify the sale of 3,000,000 Shares to be purchased by
the Investor at a Purchase Price of $1.00 per share. Upon the terms and subject to the conditions of this Agreement, the Investor
is obligated to accept each Sale and Purchase Notice prepared and delivered in accordance with the provisions of this Agreement
and on the applicable Settlement Date shall purchase from the Company the Shares subject to such Sale and Purchase Notice at the
Purchase Price.


 


2.3             
Settlement. The payment for, against simultaneous delivery of, Shares in respect of such Sale and Purchase Notice
shall be settled not later than the 2nd Business Day following the date of Sale and Purchase Notice (the “Settlement
Date”). On such Settlement Date, the Company shall, or shall cause its transfer agent to, electronically transfer the
Shares purchased by the Investor by crediting the Investor’s or its designees’ account (provided the Investor shall
have given the Company written notice of such designee prior to the Settlement Date) at DTC through its Deposit/Withdrawal at Custodian
(DWAC) system, which Shares shall be freely tradable and transferable and without restriction on resale pursuant to the Prospectus
Supplement, against simultaneous payment therefor to the Company’s designated account by wire transfer of immediately available
funds; provided  that if the Shares are received by the Investor later than 1:00 p.m., New York City time, payment
therefor shall be made with next day funds.


 


2.4             
 Certain Limitations. Notwithstanding
anything to the contrary contained in this Agreement, such number of shares to be purchased by the Investor hereunder shall not,
when aggregated with all other shares of Common Stock then beneficially owned (as calculated pursuant to Section 13(d) of the Exchange
Act and Rule 13d-3 promulgated thereunder) by the Investor and its Affiliates, result in the beneficial ownership by the Investor
or any of its Affiliates of more than 9.99% of the then issued and outstanding shares of Common Stock (the “Ownership
Limitation”).


 


2.5             
In the event such Sale and Purchase Notice issued hereunder would cause the aggregate number of shares of Common Stock then
beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by the Investor
and its Affiliates to exceed the Ownership Limitation, such number of Shares to be issued pursuant to the Sale and Purchase Notice
shall be reduced by such number of shares of Common Stock otherwise issuable pursuant to such Sale and Purchase Notice, together
with all shares of Common Stock then beneficially owned by the Investor and its Affiliates, so that the Ownership Limitation is
not exceeded


 


2.6             
Closing Date; Settlement Dates. This Agreement shall become effective and binding upon the delivery of counterpart
signature pages of this Agreement executed by each of the parties hereto and thereto, and the delivery of all other documents,
instruments and writings required to be delivered at the Closing, in each case as provided in Article II on the Effective Date.


 


 


 






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2.7             
Initial Public Announcements and Required Filings.  The Company shall, immediately following settlement of the
Sale and Purchase Notice, at or before 8:30 a.m., New York City time, on the second Trading Day after the Effective Date, issue
a press release (the “Press Release”) reasonably acceptable to the Investor disclosing the execution of this
Agreement by the Company and the Investor and the issuance of the Shares to the Investor, and briefly describing the transactions
contemplated thereby. At or before 8:30 a.m., New York City time, on the second Trading Day following the Effective Date, the Company
shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents
in the form required by the Exchange Act and attaching copies of each of this Agreement and the Press Release as exhibits thereto
(including all exhibits thereto, the “Current Report”). The Company shall provide the Investor a reasonable
opportunity to comment on a draft of the Current Report prior to filing the Current Report with the Commission, shall give due
consideration to all such comments. From and after the issuance of the Press Release and the filing of the Current Report, the
Company shall have disclosed all material, nonpublic information delivered to the Investor (or the Investor’s representatives
or agents) by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees, agents or representatives
(if any) in connection with the transactions contemplated by the Transaction Documents. The Investor covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in this Section 2.7,
the Investor will maintain the confidentiality of all disclosures made to it in connection with the transactions contemplated by
the Transaction Documents (including the existence and terms of the transactions), except that the Investor may disclose the terms
of such transactions to its financial, accounting and legal advisors (provided that the Investor directs such Persons to maintain
the confidentiality of such information). At or before 8:30 a.m. (New York City time) on the 2nd Trading Day immediately
following the Effective Date, the Company shall file with the Commission in accordance with Rule 424(b) under the Securities Act
the Prospectus Supplement to be used in connection with sales pursuant to the Registration Statement of Shares under this Agreement
and of shares of Common Stock of the Company previously sold to the Investor.


 


2.8             
Additional Shares.


 


(a)              
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Investor is entitled,
subject to the terms set forth below, to purchase from the Company upon issuance of an Additional Share Notice to the Company,
in the form attached hereto as Exhibit B (the “Additional Share Subscription Notice”), at any time or times
on or after the date hereof, but not after May 7, 2018 (the “Expiration Date”) at its sole discretion, in whole
or in part, 1,500,000 fully paid and nonassessable shares of Common Stock of the Company (the “Additional Shares”)
at a purchase price of $2.00 per share (the “Additional Share Subscription Price”) provided, however, that in
no event shall the Investor be entitled to such number of Additional Shares in excess of that number of shares of the Company’s
Common Stock which, upon giving effect to such acquisition, would cause the aggregate number of shares of Common Stock beneficially
owned by the Investor and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following such exercise,
except within sixty (60) days of the Expiration Date (however, such restriction may be waived by Investor (but only as to itself
and not to any other holder) upon not less than 65 days prior notice to the Company). For purposes of the foregoing proviso, the
aggregate number of shares of Common Stock beneficially owned by the Investor and its affiliates shall include the number of shares
of Common Stock to be issued pursuant to an Additional Share Notice issued to the Company with respect to which the determination
of such proviso is being made, but in the event of an Additional Share Notice in an amount less than 1,500,000 shall not exclude
such Additional Shares not being requested by the Investor which would be issuable upon subsequent Additional Share Notices. Except
as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Section, in determining the number
of outstanding shares of Common Stock the Investor may rely on the number of outstanding shares of Common Stock as reflected in
(1) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public announcement by the
Company or (3) any other public filing by the Company or its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of the Investor, the Company shall promptly, but in no event later than 1 Business Day following
the receipt of such notice, confirm in writing to the Investor the number of shares of Common Stock then outstanding.


 


(b)              
Subject to the terms and conditions hereof, this Agreement, in the event the Investor has issued to the Company an Additional
Share Subscription Notice, which notice shall specify the number of Additional Shares to be purchased and such Additional Shares
are freely tradeable and without restriction on resale pursuant to the Prospectus Supplement or otherwise registered, payment
to the Company of an amount equal to the Additional Share Purchase Price applicable to the number of Additional Shares being purchased,
multiplied by the number of Additional Shares (at the applicable Additional Share Purchase Price) which the Investor is purchasing
(the “Aggregate Additional Share Purchase Price”) shall be made in cash or by wire transfer of immediately available
funds to the Company as described in Section 2.9 below (“Cash Basis Purchase”).


 


(c)              
Such Additional Shares shall be deemed fully earned as of the date hereof.



 



 


 






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2.9             
Settlement of Additional Shares.


 


(a)              
Cash Basis Purchase.In the event the Investor has submitted to the Company an Additional Share Subscription Notice
on a Cash Basis Purchase, the payment for, against simultaneous delivery of, the Additional Shares shall be settled not later than
the 5th Business Day following the date of the Additional Shares Notice (the “Additional Shares Settlement Date”).
On such Additional Shares Settlement Date, the Company shall, or shall cause its transfer agent to, electronically transfer the
Additional Shares to the Investor by crediting the Investor’s or its designees’ account (provided the Investor shall
have given the Company written notice of such designee prior to the Settlement Date) at DTC through its Deposit/Withdrawal at Custodian
(DWAC) system, which such Additional Shares shall be freely tradable and transferable and without restriction on resale pursuant
to the Prospectus Supplement or otherwise, against simultaneous payment therefor to the Company’s designated account by wire
transfer of immediately available funds; provided that if the Additional Shares are received by the Investor later
than 1:00 p.m., New York City time, payment therefor shall be made with next day funds.


 


(b)              
Upon delivery of the Additional Share Subscription Notice and Aggregate Additional Share Purchase Price upon a Cash-Basis
Purchase the Investor shall be deemed for all corporate purposes to have become the holder of record of the Additional Shares with
respect to which an Additional Share Subscription Notice has been submitted.


 


2.10         
Deliveries.


 


(a)              
On or prior to the Effective Date, the Company shall deliver or cause to be delivered to the Investor the following:


 


(i)                
this Agreement duly executed by the Company;


 


(ii)             
the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act) which
shall include for registration under the Registration Statement all shares previously acquired by the Investor or its Affiliates,
such Purchased Shares and the Additional Shares; and


 


(iii)           
the Press Release, Current Report and Prospectus Supplement to be filed hereunder.


 


(b)              
On or prior to the Effective Date, the Investor shall deliver or cause to be delivered to the Company the following:


 


(i)                
this Agreement duly executed by such Investor; and


 


(ii)             
countersigned Sale and Purchase Notice.


 


2.11         
Closing Conditions.


 


(a)       The
obligations of the Company hereunder in connection with the sale and purchase of the Shares hereunder are subject to the following
conditions being met:


 


(i)                
the accuracy in all material respects on the Closing Date of the representations and warranties of the Investor contained
herein (unless as of a specific date therein);


 


(ii)             
all obligations, covenants and agreements of the Investor required to be performed at or prior to the Closing Date shall
have been performed; and


 


(iii)           
the delivery by the Investor of the items set forth in Section 2.2(b) of this Agreement;


 


 


 






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(b)              
The respective obligations of the Investor hereunder in connection with the sale and purchase of the Shares hereunder are
subject to the following conditions being met on the Effective Date and Closing Date, respectively:


 


(i)                
the accuracy in all material respects (except that any representation and warranty that is qualified as to "materiality"
or "Material Adverse Effect” shall be true and correct in all respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (except for those which by their terms specifically refer to an earlier date, in
which case such representations and warranties shall have been true and correct in all material respects (except that any representation
and warranty that is qualified as to "materiality" or "Material Adverse Effect” shall be true and correct
in all respects) as of such earlier date);


 


(ii)             
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall
have been performed;


 


(iii)           
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;


 


(iv)            
there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and


 


(v)              
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or
the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally
as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by
the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of the Investor, makes it impracticable or inadvisable to purchase the Securities
at the Closing.


 


(vi)            
The Investor shall have received an opinion of counsel dated as of the Effective Date, from counsel for the Company and
its subsidiaries, in the form set forth on Exhibit C.


 


(vii)         
Delivery of such officer’s and secretary’s certificates and consents of the board of directors of the Company
and its stockholders (if required) as may reasonably be requested by the Investor;


 


(viii)       
The Registration Statement shall be effective, and the Investor shall be permitted to utilize the Prospectus therein to
resell (a) all of the Shares issuable pursuant to this Agreement, and (b) all of the shares of the Company’s Common Stock
previously sold and issued to the Investor,


 


(ix)            
So long as the Investor holds Shares of the Company's Common Stock acquired hereunder or such shares previously issued to
the Investor, and such shares are not eligible for resale pursuant to an exemption from registration, the Company shall maintain
the Registration Statement effective, so that the Investor shall be permitted to utilize the Prospectus therein to resell (a) all
of the Shares issuable pursuant to this Agreement, and (b) all of the shares of the Company’s Common Stock previously sold
and issued to the Investor; and


 


(x)              
None of the following events shall have occurred and be continuing: (a) receipt of any request by the Commission or any
other federal or state governmental authority for any additional information relating to the Registration Statement, the Prospectus
or any Prospectus Supplement, or for any amendment of or supplement to the Registration Statement, the Prospectus, or any Prospectus
Supplement; (b) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement,
or of the suspension of qualification or exemption from qualification of the Securities for offering or sale in any jurisdiction,
or the initiation or contemplated initiation of any proceeding for such purpose; or (c) the occurrence of any event or the existence
of any condition or state of facts, which makes any statement of a material fact made in the Registration Statement, the Prospectus
or any Prospectus Supplement untrue or which requires the making of any additions to or changes to the statements then made in
the Registration Statement, the Prospectus or any Prospectus Supplement in order to state a material fact required by the Securities
Act to be stated therein or necessary in order to make the statements then made therein (in the case of the Prospectus or any Prospectus
Supplement, in light of the circumstances under which they were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to comply with the Securities Act or any other law (other
than the transactions contemplated by the applicable Sale and Purchase Notice and the settlement thereof). The Company shall have
no knowledge of any event that could reasonably be expected to have the effect of causing the suspension of the effectiveness of
the Registration Statement or the prohibition or suspension of the use of the Prospectus or any Prospectus Supplement in connection
with the resale of the Registrable Securities by the Investor.


 


 


 






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ARTICLE III.

REPRESENTATIONS AND WARRANTIES


 


3.1             
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules and in the SEC Reports,
which SEC Reports and Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made
herein, the Company hereby makes the following representations and warranties to the Investor:


 


(a)              
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).
The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear
of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries,
all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded. Other than as contemplated
by the Transaction Documents, there are no outstanding preemptive, conversion or other rights, options, warrants or agreements
granted or issued by or binding upon any subsidiary for the purchase or acquisition of any shares of capital stock of any subsidiary
or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital
stock that would have a dilutive effect on the Company’s ownership of its subsidiaries. Other than as contemplated by the
Transaction Documents, neither the Company nor any subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of the capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company nor any subsidiary is party to, nor has any knowledge
of, any agreement restricting the voting or transfer of any shares of the capital stock of any subsidiary


 


(b)              
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with
the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations,
assets, business, prospects or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 


(c)              
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required
by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with
the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.


 


 






    	 	8	 



     

    

 


(d)              
No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents, the issuance and
sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do
not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property
or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result
in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(e)              
Filings, Consents and Approvals. The Company, to the best of its knowledge, is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with
the Commission of the Prospectus Supplement, (iii) application(s) to each applicable Trading Market for the listing of the Securities
for trading thereon in the time and manner required thereby and (iv) such filings as are required to be made under applicable state
securities laws (collectively, the “Required Approvals”).


 


(f)               
Issuance of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company. The Company has prepared and filed the Registration Statement in conformity with the requirements
of the Securities Act, which became effective on April 21, 2017 (the “Effective Date”), including the Prospectus,
and such amendments and supplements thereto as may have been required to the date of this Agreement. The Registration Statement
is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement
or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have
been instituted or, to the knowledge of the Company, are threatened by the Commission. The Company, if required by the rules and
regulations of the Commission, proposes to file the Prospectus, with the Commission pursuant to Rule 424(b). At the time the Registration
Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration
Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities
Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements
thereto, at time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform
in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.


 


(g)              
Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g). Except as set forth
on Schedule 3.1(g), the Company has not issued any capital stock since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of
shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans, issuances under Stock Consultant
Plan or other stock payments for services and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities and except as disclosed in the SEC Reports and as set forth on Schedule
3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which
the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person
(other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale
of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.


 


 


 






    	 	9	 



     

    

 


(h)              
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to
file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together
with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, to the best of the Company’s knowledge, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
To the best of the Company’s knowledge, the financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto
as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject,
in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.


 


(i)                
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date
hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required
to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment
of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i),
no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or
exist with respect to the Company or its Subsidiaries or their respective business, prospects, properties, operations, assets or
financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation
is made.


 


(j)                
Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability
of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities Act.


 


(k)              
Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to
any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge
of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


 


 






    	 	10	 



     

    

 


(l)                
Compliance. To the best of the Company’s knowledge, neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that
it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in
violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.


 


(m)            
Regulatory Permits. To the best of the Company’s knowledge, the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably
be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or modification of any Material Permit.


 


(n)              
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property
owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company
and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.
Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are in compliance.


 


(o)              
Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the
Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


(p)              
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against
losses and risks, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in
cost.


 


(q)              
Transactions with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors
of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner,
in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock
option plan of the Company.


 


 


 


 






    	 	11	 



     

    

 


(r)               
Sarbanes-Oxley; Internal Accounting Controls. The Company is in material compliance with all provisions of the Sarbanes-Oxley
Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general
or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date,
the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control
over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.


 


(s)               
Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Investor shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


(t)                
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for
the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company
Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.


 


(u)              
Registration Rights. Except as set forth on Schedule 3.1(u) herein, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the Company.


 


(v)              
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements.


 


(w)            
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms, to the best of its knowledge, that neither it nor any other Person acting on its behalf has provided
the Investor or its agents or counsel with any information that it believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Prospectus Supplement. The Company understands and confirms that the Investor
will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished
by or on behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including
the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which
they were made, not misleading. As of the Effective Date, and as of the Closing, the Prospectus Supplement did not and will not
(and any amendment or supplement thereto, at the date thereof, and on a Closing date, will not) contain any untrue statement of
a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the
date of this Agreement taken as a whole do 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 and when made, not misleading. The Company acknowledges and agrees that no Investor makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.


 


 


 






    	 	12	 



     

    

 


(x)              
No Integrated Offering. Assuming the accuracy of the Investor’s representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company are listed or designated.


 


(y)              
Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect
to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof,
and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect
of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(y) sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the
Company nor any Subsidiary is in default with respect to any Indebtedness.


 


(z)              
Tax Status. The Company and each of its Subsidiaries (i) has filed all necessary federal, state and foreign income
and franchise tax returns or has duly requested extensions thereof, except for those the failure of which to file would not have
a Material Adverse Effect, (ii) has paid all federal, state, local and foreign taxes due and payable for which it is liable, except
to the extent that any such taxes are being contested in good faith and by appropriate proceedings, except for such taxes the failure
of which to pay would not have a Material Adverse Effect, and (iii) does not have any tax deficiency or claims outstanding or assessed
or, to the Company’s knowledge, proposed against it which would have a Material Adverse Effect. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries
know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the Code.


 


(aa)           
ERISA. No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan by the
Company or any of its Subsidiaries which has had or would have a Material Adverse Effect.  No “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) or “accumulated funding deficiency” (as defined in
Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred with respect to any Plan which has
had or would have a Material Adverse Effect, and the execution and delivery of this Agreement and the issuance and sale of the
Securities hereunder shall not result in any of the foregoing events.  Each Plan is in compliance in all material respects
with applicable law, including ERISA and the Code; the Company has not incurred and does not expect to incur liability under Title
IV of ERISA with respect to the termination of, or withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or failure to act, which would cause the loss of such qualifications.  As used in this Section,
the term “Plan” shall mean an “employee pension benefit plan” (as defined in Section 3 of
ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any Subsidiary
or by any trade or business, whether or not incorporated, which, together with the Company or any Subsidiary, is under common control,
as described in Section 414(b) or (c) of the Code.


 


 


 






    	 	13	 



     

    

 


(bb)          
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting
on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is
in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


 


(cc)           
Accountants. The Company’s accounting firm is set forth on Schedule 3.1(bb). To the knowledge and belief
of the Company, such accounting firm is a registered public accounting firm as required by the Exchange.


 


(dd)          
 Acknowledgment Regarding Investor’s Purchase of Securities. The Company acknowledges and agrees that the Investor
is acting solely in the capacity of an arm’s length Investor with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Investor is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
given by any Investor or any of their respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Investor’s purchase of the Securities. The Company further
represents to the Investor that the Company’s decision to enter into this Agreement and the other Transaction Documents has
been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


(ee)           
Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken,
directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Company’s placement agent, if any, in connection with the placement of the Securities.


 


(ff)             
Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act) contained in either the Prospectus or the Prospectus Supplement has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.


 


(gg)          
Statistical and Market-Related Data. Any third-party statistical and market-related data included or incorporated
by reference in a Registration Statement, a Prospectus or the Prospectus Supplement are based on or derived from sources that the
Company believes to be reliable and accurate.


 


(hh)          
FCPA. Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate
of the Company is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder; and the Company and, to the knowledge
of the Company, its affiliates have instituted and maintain policies and procedures reasonably designed to ensure continued compliance
therewith.


 


 


 


 


 






    	 	14	 



     

    

 


(ii)             
OFAC and Sanctions. Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee
or Subsidiary or Affiliate of the Company is a person or entity (“Person”) that is, or is owned or controlled by a
Person that is:


 


		(1)	on the list of Specially Designated Nationals and Blocked Persons maintained by the U.S. Department
of Treasury’s Office of Office of Foreign Asset Control of the U.S. Department of Treasury from time to time (“OFAC”);



 


		(2)	the subject of any sanctions administered or enforced by OFAC or the U.S. State Department, the
United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively,
“Sanctions”), nor



 


		(3)	has a place of business or is operating, organized or resident in a country or territory that is,
or whose government is, the subject of Sanctions programs (including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan
and Syria) (“Sanctions Programs”).



 


(jj)             
Use of Proceeds. Neither the Company nor, any director, officer, agent, employee or Subsidiary or Affiliate of the
Company will directly or indirectly use the proceeds of the offering of the transactions contemplated hereby, or lend, contribute,
facilitate or otherwise make available such proceeds to any Person, joint venture partner or other person:


 


		(1)	to fund or finance any activities or business of or with any Person, or in any country or territory, that, at the time of such
funding, is, or whose government is, the subject of Sanctions or Sanctions Programs; or



 


		(2)	in any other manner that will result in a violation of Sanctions.



 


(kk)          
U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries or Affiliates has to the
best of the Company’s knowledge ever been a U.S. real property holding corporation within the meaning of Section 897 of the
Internal Revenue Code of 1986, as amended, and shall so certify upon the Investor’s request.


 


(ll)             
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,
directly or indirectly, 5% or more of the outstanding shares of any class of voting securities or 25% or more of the total equity
of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its
Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject
to the BHCA and to regulation by the Federal Reserve.


 


(mm)     
No Unlawful Payments. Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee
or Affiliate of the Company or any of its Subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; or (iii) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.


 


(nn)          
Anti-Money Laundering. The operations of the Company are and have been conducted at all times in compliance
in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively,
the “Money Laundering Laws”); and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator or non-governmental authority involving the Company with respect to the Money Laundering Laws
is pending or, to the Company’s knowledge, threatened.


 


 


 


 






    	 	15	 



     

    

 


(oo)          
Clinical Studies. All preclinical and clinical studies conducted by or on behalf of the Company that are material
to the Company and the Subsidiaries, taken as a whole, are or have been adequately described in the Registration Statement, the
Prospectus and the Prospectus Supplement in all material respects. To the Company’s knowledge, after reasonable inquiry,
the clinical and preclinical studies conducted by or on behalf of the Company and its Subsidiaries that are described in the Registration
Statement, the Prospectus and the Prospectus Supplement or the results of which are referred to in the Registration Statement,
the Prospectus and the Prospectus Supplement were and, if still ongoing, are being conducted in material compliance with all laws
and regulations applicable thereto in the jurisdictions in which they are being conducted and with all laws and regulations applicable
to preclinical and clinical studies from which data will be submitted to support marketing approval. The descriptions in the Registration
Statement, the Prospectus and the Prospectus Supplement of the results of such studies are accurate and complete in all material
respects and fairly present the data derived from such studies, and the Company has no knowledge of any large well-controlled clinical
study the aggregate results of which are inconsistent with or otherwise call into question the results of any clinical study conducted
by or on behalf of the Company that are described in the Registration Statement, the Prospectus and the Prospectus Supplement or
the results of which are referred to in the Registration Statement, the Prospectus and the Prospectus Supplement. Except as disclosed
in the Registration Statement, the Prospectus and the Prospectus Supplement, the Company has not received any written notices or
statements from the FDA, the European Medicines Agency (“EMA”) or any other governmental agency or authority
imposing, requiring, requesting or suggesting a clinical hold, termination, suspension or material modification for or of any clinical
or preclinical studies that are described in the Registration Statement, the Prospectus and the Prospectus Supplement or the results
of which are referred to in the Registration Statement, the Prospectus and the Prospectus Supplement. Except as disclosed in the
Registration Statement, the Prospectus and the Prospectus Supplement, the Company has not received any written notices or statements
from the FDA, the EMA or any other governmental agency, and otherwise has no knowledge or reason to believe, that (i) any investigational
new drug application for potential product of the Company is or has been rejected or determined to be non-approvable or conditionally
approvable; and (ii) any license, approval, permit or authorization to conduct any clinical trial of any potential product of the
Company has been, will be or may be suspended, revoked, modified or limited.


 


(pp)          
XBRL Language. The interactive data in eXtensible Business Reporting Language included as an exhibit to any document
incorporated by reference into the Registration Statement fairly presents the information called for in all material respects and
has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.


 


(qq)          
Material Agreements.  Except as set forth in the SEC Reports, neither the Company nor any Subsidiary of the
Company is a party to any written or oral contract, instrument, agreement commitment, obligation, plan or arrangement, a copy of
which would be required to be filed with the Commission as an exhibit to an annual report on Form 10-K (collectively, “Material
Agreements”).  Except as set forth in the SEC Reports, the Company and each of its Subsidiaries have performed in
all material respects all the obligations then required to be performed by them under the Material Agreements, have received no
notice of default or an event of default by the Company or any of its Subsidiaries thereunder and are not aware of any basis for
the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the Knowledge of the Company, any other contracting
party thereto are in default under any Material Agreement now in effect, the result of which would have a Material Adverse Effect. 
Except as set forth in the SEC Reports, each of the Material Agreements is in full force and effect, and constitutes a legal, valid
and binding obligation enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and, to the
Knowledge of the Company, each other contracting party thereto, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally
the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.


 


(rr)             
Listing. The Company shall use its commercially reasonable efforts to maintain the Common Stock’ authorization
for quotation on the Trading Market and shall notify the Investor promptly if the Common Stock shall cease to be authorized for
quotation on the Trading Market.


 


 


 


 






    	 	16	 



     

    

 


(ss)            
Compliance with Securities Act Requirements. (A) (i) At the time the Registration Statement initially became effective,
(ii) at the time of each amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether by
post-effective amendment, incorporated report or form of prospectus), (iii) at the Effective Time and (iv) on the Settlement Date,
the Registration Statement and Prospectus conformed and will conform in all material respects to the requirements of the Securities
Act and did not and will not include any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and (B) (i) on its date, (ii) at the time of filing the
Prospectus Supplement pursuant to Rule 424(b) and (v) on the Closing Date, the Prospectus Supplement will conform in all material
respects to the requirements of the Securities Act, and will not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein not misleading. The
documents incorporated by reference in the Registration Statement, the Prospectus and the Prospectus Supplement, when they became
effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the Registration Statement, the Prospectus and the Prospectus Supplement,
when such documents are filed with Commission, will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading. 


 


(tt)             
Form S-3. The Company meets the requirements for, and comply with the conditions for the use of, Form S-3 under the
Securities Act and the Rules and Regulations. The Company is subject to and in compliance
in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The proposed
offering of the Shares may be made pursuant to General Instruction I.B.1. of Form S-3. The Company is not a shell company
(as defined in Rule 405 of the Securities Act) and has not been a shell company for at least 12 calendar months previously and
if it has been a shell company at any time previously, has filed current Form 10 information (as defined in Instruction I.B.6 of
Form S-3) with the Commission at least 12 calendar months previously reflecting its status as an entity that is not a shell company.


 


3.2             
Representations and Warranties of the Investor. The Investor hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows (unless as of a specific date therein):


 


(a)              
Organization; Authority. Such Investor is either an individual or an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority
to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and performance by such Investor of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action,
as applicable, on the part of such Investor. Each Transaction Document to which it is a party has been duly executed by such Investor,
and when delivered by such Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation
of such Investor, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.


 


(b)              
Investor Status. At the time such Investor was offered the Securities, it was, and as of the date hereof it is: (i)
an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or
(ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not required
to be registered as a broker-dealer under Section 15 of the Exchange Act and is neither employed by nor an Affiliate of a broker-dealer.


 


 


 






    	 	17	 



     

    

 


(c)              
Experience of Such Investor. Such Investor, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks of such investment. Such Investor is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. The Investor
acknowledges that its investment contemplated by this Agreement involves a high degree of risk.


 


(d)              
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Investor
has not, nor has any Person acting on behalf of or pursuant to any understanding with such Investor, directly or indirectly executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time
that such Investor first received a term sheet (written or oral) as of the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Investor that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Investor’s assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such Investor’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Investor has maintained
the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares
to borrow in order to effect Short Sales or similar transactions in the future.


 


The Company acknowledges
and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Investor’s right to rely
on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained
in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transaction contemplated hereby.


 


ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1             
Furnishing of Information. Until the earliest of the time that no Investor owns Securities, the Company covenants
to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act. As long as any Investor owns Securities, if the Company is not required to file reports pursuant
to the Exchange Act, it will prepare and furnish to the Investor and make publicly available in accordance with Rule 144(c) such
information as is required for the Investor to sell the Securities, including without limitation, under Rule 144. The Company further
covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from
time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation,
within the requirements of the exemption provided by Rule 144.


 


4.2             
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing
of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.


 


 


 






    	 	18	 



     

    

 


4.3             
Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the 2nd Trading Day
immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby,
and issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby, and including the
Transaction Documents as exhibits thereto within the time required by the Exchange Act. From and after the issuance of such press
release, the Company shall have publicly disclosed all material, non-public information delivered to the Investor by the Company
or any of its subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and the Investor shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither the Company nor any Investor shall issue any such press
release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release
of any Investor, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Investor, or include the name of any Investor
in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Investor,
except (a) as required by federal securities law in connection with the filing of final Transaction Documents (including signature
pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (b). Investor acknowledges
that its identity will be disclosed by the Company to the NYSE/AMEX in connection with the listing of the Securities with the NYSE/AMEX.


 


4.4             
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any
other Person, that any Investor is an “Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Investor could be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Investor.


 


4.5             
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will
provide any Investor or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto such Investor shall have executed a written agreement with the Company regarding the confidentiality and use
of such information. The Company understands and confirms that the Investor shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, the Investor covenants and agrees that, neither it, nor any other Person acting on its behalf will
seek to obtain any information that constitutes material non-public information, unless prior thereto such Investor shall have
executed a written agreement with the Company regarding the confidentiality and use of such information.


 


4.6             
Use of Proceeds. The Company shall use the net proceeds from the sale of the Shares hereunder for working capital
purposes and capital expenditures as set forth in the Prospectus Supplement.


 


4.7             
Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue Shares pursuant to this Agreement.


 


4.8             
Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the
Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply
to list or quote all of the Shares on such Trading Market and promptly secure the listing of all of the Shares on such Trading
Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares
to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary
to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Trading Market.


 


 






    	 	19	 



     

    

 


4.9           
 Intentionally Left Blank.


 


4.10         
Certain Transactions and Confidentiality. The Investor covenants that neither it nor any Affiliate acting on its
behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s
securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Sections 2.7 and 4.3. 
The Investor covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by
the Company pursuant to the initial press release as described in Sections 2.7 and 4.3, it will maintain the confidentiality of
the existence and terms of this transaction and the information included in the Disclosure Schedules.  Notwithstanding
the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and
agrees that (i) Investor makes no representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.3, (ii) Investor shall not be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in
Sections 2.7 and 4.3 and (iii) Investor shall not have any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Sections 2.7 and 4.3.  Notwithstanding the foregoing, in the
case Investor is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Investor’s
assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing
other portions of such Investor’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.


 


4.11         
Filing of Prospectuses. The Company has filed or will file each Prospectus (including the Prospectus Supplement)
pursuant to and in accordance with Rule 424(b) not later than the 2nd business day following the earlier of the date it is first
used or the execution and delivery of this Agreement. The Company has complied and will comply with Rule 433.


 


4.12         
Filing of Amendments; Response to Commission Requests. The Company will promptly advise the Investor of any proposal
to amend or supplement the Registration Statement or any Prospectus or Prospectus Supplement at any time, will offer the Investor
a reasonable opportunity to comment on any such amendment or supplement and will not file any such proposed amendment or supplement
to which you reasonably object; and the Company will also advise the Investor promptly of (i) the filing of any such amendment
or supplement, (ii) any request by the Commission or its staff for any amendment to the Registration Statement, for any supplement
to any Prospectus or Prospectus Supplement or for any additional information, (iii) the institution by the Commission of any stop
order proceedings in respect of the Registration Statement or the threatening of any proceeding for that purpose, and (iv) the
receipt by the Company of any notification with respect to the suspension of the qualification of the Shares in any jurisdiction
or the institution or threatening of any proceedings for such purpose. The Company will use its reasonable best efforts to prevent
the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.


 


4.13         
Continued Compliance with Securities Laws. If, at any time when a Prospectus or Prospectus Supplement relating to
the Shares is (or but for the exemption in Rule 172 would be) required to be delivered under the Securities Act, any event occurs
as a result of which the Prospectus or Prospectus Supplement as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement
the Prospectus or Prospectus Supplement to comply with the Securities Act, the Company will promptly notify the Investor of such
event so that any use of any Prospectus or Prospectus Supplement may cease until it is amended or supplemented and will promptly
prepare and file with the Commission and furnish, at its own expense, to the Investor in such quantities as the Investor may reasonably
request, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance.


 


4.14         
Rule 158. As soon as practicable, but not later than 16 months, after the date of this Agreement, the Company will
make generally available to its security holders an earnings statement covering a period of at least 12 months beginning after
the date of this Agreement and satisfying the provisions of Section 11(a) of the Act and Rule 158.


 


 


 






    	 	20	 



     

    

 


4.15         
Furnishing of Prospectuses. The Company will furnish to the Investor, at the Investor’s expense, copies of
the Registration Statement, including all exhibits, any Prospectus or Prospectus Supplement and all amendments and supplements
to such documents, in each case as soon as available and in such quantities as the Investor reasonably requests.


 


4.16         
Free Writing Prospectuses. The Company represents and agrees that, unless it obtains the prior consent of the Investor,
it has not made and will not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus, or
that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the
Commission. Any such free writing prospectus consented to by the Company and the Investor is hereinafter referred to as a “Permitted
Free Writing Prospectus.” The Company represents that it has treated and agrees that it will treat each Permitted Free
Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply
with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus.


 


4.17         
Subsequent Equity Sales. For a period of 60 calendar days from the date hereof the Company shall not issue or sell
shares of the Company’s Common Stock other than to the Investor, which are freely tradable and transferable and without restriction
on resale pursuant to the Prospectus Supplement or otherwise at a price per share at or below the Purchase Price.


 


ARTICLE V.


TERMINATION


 


5.1            
Termination.  This Agreement shall terminate automatically on the 1 year anniversary of this Agreement.


 


5.2            
Effect of Termination.  Upon termination of this Agreement as pursuant to Section 5.1 this Agreement shall become
void and of no further force and effect, except that (i) the provisions of Article III (Representations and Warranties of the Company),
Article IX (Indemnification), Article IV (Other Agreements), Article V (Termination) and Article VI (Miscellaneous) shall remain
in full force and effect for 18 months following such termination notwithstanding such termination, and, (ii) so long as the Investor
owns any Shares, the covenants and agreements of the Company contained in Article IV (Other Agreements) shall remain in full force
and notwithstanding such termination for a period of 6 months following such termination.


 


ARTICLE VI.

MISCELLANEOUS


 


6.1             
Fees and Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes
and duties levied in connection with the delivery of any Securities to the Investor. Notwithstanding the foregoing, in consideration
for the Investor’s execution and delivery of this Agreement, concurrently with the execution and delivery of this Agreement
on the Effective Date, the Company shall deliver irrevocable instructions to its transfer agent to issue to the Investor, not later
than 4:00 p.m. (New York City time) on the 5th Trading Day immediately following the Closing Date in accordance with
the terms of this Agreement. For the avoidance of doubt, all of Purchased Shares and Additional Shares shall be fully earned as
of the Effective Date.


 


6.2             
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and
the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.


 


 


 






    	 	21	 



     

    

 


6.3             
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile or e-mail (with confirmation of transmission) on a day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set forth on the signature pages attached hereto.


 


6.4             
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a
written instrument signed, in the case of an amendment, by the Company and the Investor. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission
of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 


6.5             
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not
be deemed to limit or affect any of the provisions hereof.


 


6.6             
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written
consent of the Investor (other than by merger). The Investor may assign any or all of its rights under this Agreement to any Person
to whom such Investor assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Investor.”


 


6.7             
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


 


6.8             
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction
Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence
an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company
under Section 4.6, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action
or proceeding.


 


6.9           
 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the
Securities.


 


 


 






    	 	22	 



     

    

 


6.10         
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered
to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect
as if such facsimile or “.pdf” signature page were an original thereof.


 


6.11         
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.


 


6.12         
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in
the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under
such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance
of such replacement Securities.


 


6.13         
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery
of damages, the Investor and the Company will be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained
in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


6.14         
Payment Set Aside. To the extent that the Company makes a payment or payments to any Investor pursuant to any Transaction
Document or a Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 


6.15         
Intentionally Left Blank.


 


6.16         
Saturdays, Sundays, Holidays, etc.If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.


 


6.17         
Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject
to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.


 


6.18         
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY,
UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 


 


(Signature Pages Follow)


 


 


 


 


 






    	 	23	 



     

    

 



IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.


 


	
        CANNABICS PHARMACEUTICALS
        INC.

         

         
	
        Address for Notice:

	
        By: /s/ Itamar Borochov                        

        Name: Itamar Borochov

        Title: CEO

         

        With a copy to (which shall not constitute notice):
	E-mail:
		 


 


 


 


 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR INVESTOR FOLLOWS]


 


 


 


 


 


 


 


 


 






    	 	24	 



     

    

 


[INVESTOR SIGNATURE PAGES TO SECURITIES
PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.


 


Name of Investor: D-Beta One EQ, Ltd.


 


Executed By: Delta Beta Advisors, LLC


 


In its capacity as Investment Manager


 


Signature of Authorized Signatory of Investor:
  /s/ David Gonzalez   


 


Name of Authorized Signatory: David Gonzalez


 


Title of Authorized Signatory: Member &
Investment Manager & General Counsel


 


Email Address of Authorized Signatory:_________________________________________


 


Address for Notice of Investor:


 


1012 Springfield Avenue Mountainside, NJ 07092


 


 


 


 


Address for Delivery of Securities for Investor (if not same
as address for notice):


 


 


 


 


[SIGNATURE PAGES CONTINUE]


 


 


 






    	 	25	 



     

    

 


EXHIBIT
A TO THE

SECURITIES PURCHASE AGREEMENT

FORM OF SALE AND PURCHASE NOTICE


 


Reference is made to
the Securities Purchase Agreement dated as of May 8, 2017 (the  “Purchase Agreement”) between Cannabics
Pharmaceuticals Inc., a corporation organized and existing under the laws of the State of Nevada (the “Company”),
and the Investor signatory thereto. Capitalized terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. In accordance with and pursuant to Section 2.2 of the Purchase Agreement, the Company hereby issues
this Sale and Purchase Notice for the sale and purchase of Shares indicated below.


 


	Purchase Amount: $3,000,000

                                                                                 
	 
	
        Purchase Price: $1.00

        Number of Purchased Shares to be Issued: 3,000,000

         

        Settlement Date:
	 
	 	 


On behalf of the Company,
the undersigned hereby certifies to the Investor that (i) to the Company’s knowledge, the sale of Shares pursuant to this
Sale and Purchase Notice shall not cause the Company to sell or the Investor to purchase shares of Common Stock which would cause
the aggregate number of shares of Common Stock then beneficially owned (as calculated pursuant to Section 13(d) of the Exchange
Act and Rule 13d-3 promulgated thereunder) by the Investor and its Affiliates to exceed the Ownership Limitation, (ii) as of the
date hereof, the Company does not possess any material non-public information, and (iii) the Company has performed, satisfied and
complied in all material respects with all covenants, agreements and conditions required by the Purchase Agreement to be performed,
satisfied or complied with by the Company at or prior to the date hereof and shall perform, satisfy and comply in all material
respects with all covenants, agreements and conditions required by the Purchase Agreement to be performed, satisfied or complied
with by the Company at or prior to the applicable settlement date, including without limitation, delivery of all certificates and
opinions required to be delivered by the Purchase Agreement.


 


Dated: May 8, 2017


 


 


 


 


[Signature Page Follows]


 


 


 






    	 	26	 



     

    

 


		
        By:___________________________ 

        Name

        Title:

	 	 
	
        AGREED AND ACCEPTED

        D-Beta One EQ, Ltd.

        By: Delta Beta Advisors, LLC

        Its: Investment Manager

         

         

         
	 
	
        By:                                   
            

        Name

        Title:
	 

                                                         

                                                         

                                                         



 


 


 


 


 


 


 


 


 


 


 






    	 	27	 



     

    

 


EXHIBIT B


 


 


ADDITIONAL SHARE SUBSCRIPTION NOTICE


 


The undersigned holder hereby exercises
the right to purchase ______________ of the shares of Common Stock (“Additional Shares”) of Cannabics Pharmaceuticals
(the “Company”), evidenced by the attached Securities Purchase Agreement (the “Purchase Agreement”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Purchase Agreement.


 


Specify Method of exercise by check mark:


 


1. ___Cash Basis Purchase


 


(a) Payment of Additional
Share Purchase Price. The Investor shall pay the Aggregate Additioanl Share Purchase Price of $______________ to the Company
in accordance with the terms of the Purchase Agreement.


 


(b) Delivery of Additional
Shares. The Company shall deliver to the Investor _________ Additional Shares in accordance with the terms of the Purchase
Agreement.


 


 


 


 


Date: _______________ __, ______


 


Name of Registered Holder


 


By: ____________________________


Name: __________________________


Title: ___________________________


 


 


 


 


 


 


 


 


 






    	 	28	 



     

    

 


EXHIBIT C


 


OPINION OF COUNSEL


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    	 	29	 



     

    

 


Disclosure Schedule




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    	 	30