edsa_ex103






Exhibit 10.3



 
Execution
Copy



CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT
BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE
HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.


 






 


SECURITIES
PURCHASE AGREEMENT

 


This
Securities Purchase Agreement (this “Agreement”) is dated as
of April 17, 2020, between Edesa Biotech, Inc., a British Columbia
corporation (the “Company”), and NovImmune
SA (“Purchaser”).

 


WHEREAS, Purchaser has developed,
generated and produced certain monoclonal antibodies (the
“Monoclonal
Antibodies”) and Purchaser owns certain intellectual
property in the Monoclonal Antibodies;

 


WHEREAS, the Company and its
subsidiaries are interested in the development and
commercialization of the Monoclonal Antibodies known as [__]
(Anti-TLR4) (“[__]”) and [__] (Anti-CXCL10)
(“[__]”) (each a “Construct”, jointly the
“Constructs”); [Nature of constructs omitted
as competitively sensitive information.]

 


WHEREAS, on even date herewith, Edesa
Biotech Research, Inc., a wholly-owned subsidiary of the Company
(“Edesa
Research”), and Purchaser are entering into a License
Agreement (the “License Agreement”)
pursuant to which Edesa Research will obtain an exclusive worldwide
license to develop, register, manufacture, contract manufacture,
modify, market, sell, distribute and promote the Constructs on the
terms set forth therein (the “License”);
and

 


WHEREAS, as partial consideration for
the License and as contemplated by the License Agreement, the
Company has agreed to enter into this Agreement pursuant to which
the Company shall issue to Purchaser and Purchaser shall acquire
from the Company 250 shares of Series A-1 Convertible Preferred
Shares of the Company with no par value per share, (the
“Shares”) at an issue
price of $10,000 per share, subject to the terms and conditions set
forth 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 Purchaser 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:

 


“Action” means action,
suit, inquiry, notice of violation, proceeding or investigation
before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, provincial. state, county,
local or foreign).

 


“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.

 


“Articles” means the
articles of the Company, as amended from time to time.

 


“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 statutory
holiday or any other day on which banking institutions in Toronto,
Ontario, Canada are authorized or required by law or other
governmental action to close.

 


“Canadian Commissions”
shall have the meaning ascribed to such term in Section
4.8.

 


“Closing” means the
closing of the issuance and sale of the Shares pursuant to Section
2.1.

 


“Closing Date” means the
date of this Agreement.

 


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

 


“Common Shares” means the
common shares of the Company, with no par value per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.

 



 

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“Common Share Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Shares,
including, without limitation, any debt, preferred shares, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Shares.

 


“Conversion Shares” means
the Common Shares issuable upon conversion of the Shares pursuant
to the Articles.

 


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

 


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

 


“International
Jurisdiction” shall have the meaning ascribed to such
term in Section 3.2(i).

 


“Legend Removal Date”
shall have the meaning assigned to such term in Section
4.1(d).

 


“Liens” means a lien,
charge, pledge, 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).

 


“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint share 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.

 


“Public Information
Failure” shall have the meaning ascribed to such term
in Section 4.9(b).

 


“Public Information Failure
Payments” shall have the meaning ascribed to such term
in Section 4.9(b).

 


 “Purchaser
Information” shall have the meaning ascribed to such
term in Section 4.8.

 


“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 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.

 


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

 


“Securities” means,
collectively, the Shares and the Conversion Shares.

 


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

 


“Shares” has the meaning
ascribed to such term in the Recitals 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 locating
and/or borrowing Common Shares). 

 


“Subsidiary” means any
subsidiary of the Company as set forth on Exhibit 21.1 of the
Company’s Annual Report on Form 10-K for the nine-month
period ended September 30, 2019 filed with the Commission on
December 12, 2019.

 



 

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

 


“Trading Market” means any
of the following markets or exchanges on which the Common Shares
are listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange (or any
successors to any of the foregoing).

 


“Transaction Documents”
means this Agreement and the Articles.

 


“Transfer Agent” means
Computershare Investor Services Inc., the current transfer agent of
the Company, with a mailing address of 100 University Avenue, 8th
Floor, Toronto, Ontario M5J 2Y1, and any successor transfer agent
of the Company.

 



ARTICLE II.

 


PURCHASE
AND SALE

 

2.1 Closing.
As partial consideration for Purchaser’s granting of a
license to certain assets to the Company as contemplated in the
License Agreement, at the Closing and upon the terms and subject to
the conditions set forth herein, the Company agrees to issue and
deliver to Purchaser, and Purchaser agrees to acquire from the
Company, the Shares. The Closing shall occur at the offices of the
Company or such other location as the parties shall mutually
agree.

 

2.2 Deliveries.

 


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

 

(i) this Agreement and
the License Agreement duly executed by the Company;
and

 

(ii) a
DRS statement indicating the Shares registered
in the name of Purchaser.

 

(b) On or prior to the
Closing Date, Purchaser shall deliver or cause to be delivered to
the Company this Agreement and the License Agreement duly executed
by Purchaser.

 

2.3 Closing
Conditions.

 


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

 

(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of Purchaser contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);

 

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

 

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

 

(b) The obligations of
Purchaser hereunder in connection with the Closing are subject to
the following conditions being met:

 

(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such 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; and

 

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

 



 

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ARTICLE III.

 


REPRESENTATIONS
AND WARRANTIES

 

3.1 Representations
and Warranties of the Company.
Except as set forth in the SEC Reports, which SEC Reports shall
qualify any representation or warranty made herein, the Company
hereby makes the following representations and warranties to
Purchaser:

 


(a)            Subsidiaries.
The Company owns, directly or indirectly, all of the capital share
or other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital
share 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.

 

(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 in any material respect 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
condition (financial or otherwise) 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 this
Agreement and otherwise to carry out its obligations hereunder. The
execution and delivery of this Agreement 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 shareholders
in connection herewith or therewith other than in connection with
the Required Approvals. This Agreement has 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.

 

(d) No Conflicts or Breach. The
execution, delivery and performance by the Company of this
Agreement , the issuance and sale of the Securities at Closing and
the consummation by the Company of the transactions contemplated
hereby and thereby 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,
anti-dilution or similar adjustments, 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, provincial 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. Neither the
Company, its subsidiaries nor, to its knowledge, any other party is
in violation, breach or default of any agreement, lease, credit
facility, debt, note, bond, mortgage, indenture or other instrument
to which the Company or its subsidiaries is a party to that is
reasonably likely to result in a Material Adverse
Effect.

 

(e) Filings, Consents and
Approvals. The Company 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, provincial, local or other governmental authority or other
Person in connection with the execution, delivery and performance
by the Company of this Agreement, other than: (i) application(s) to
each applicable Trading Market for the listing of the Conversion
Shares for trading thereon in the time and manner required thereby,
and (ii) such consents, waivers and authorizations that shall be
obtained prior to Closing (collectively, the “Required
Approvals”).

 

(f) Issuance of the Securities;
Registration. The Shares are duly authorized and duly and
validly issued, fully paid and non-assessable, free and clear of
all Liens imposed by the Company. The Conversion Shares, when
issued in accordance with the terms of the Articles, will be
validly issued, fully paid and non-assessable, free and clear of
all Liens imposed by the Company. The Company has reserved from its
duly authorized capital shares the maximum number of Shares and
Conversion Shares issuable pursuant to this Agreement.

 



 

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(g) Capitalization. The Company has
not issued any capital shares since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of share
options under the Company’s share option plans and pursuant
to the conversion and/or exercise of Common Share 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 this
Agreement. Except as a result of the purchase and sale of the
Securities and as set forth in the SEC Reports, 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 Common Shares or the capital share of any
Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional Common Shares or Common Share
Equivalents or capital share of any Subsidiary. The issuance and
sale of the Securities will not obligate the Company or any
Subsidiary to issue Common Shares or other securities to any Person
(other than Purchaser). There are no outstanding securities or
instruments of the Company or any Subsidiary with any provision
that adjusts the exercise, conversion, exchange or reset price of
such security or instrument upon an issuance of securities by the
Company or any Subsidiary. There are no outstanding securities or
instruments of the Company or any Subsidiary that contain any
redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to redeem a security of the
Company or such Subsidiary. The Company does not have any share
appreciation rights or “phantom share” plans or
agreements or any similar plan or agreement. All of the outstanding
shares of capital share of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in
compliance with all federal, provincial 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
shareholder, the Board of Directors or others is required for the
issuance and sale of the Securities. There are no shareholders
agreements, voting agreements or other similar agreements with
respect to the Company’s capital share to which the Company
is a party or, to the knowledge of the Company, between or among
any of the Company’s shareholders. Except as a result of the
purchase and sale of the Securities and as set forth in the SEC
Reports, 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 Common Shares or the capital share
of any Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional Common Shares or Common Share
Equivalents or capital share of any Subsidiary. The issuance and
sale of the Securities will not obligate the Company or any
Subsidiary to issue Common Shares or other securities to any Person
(other than Purchaser).

 

(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 twelve months
preceding the date hereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein,
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, 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. 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.

 



 

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(i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports, (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, except for the outbreak of the COVID-19 pandemic, (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
shareholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital share and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company share
option plans.

 

(j) Registration Rights. Except as
described in the SEC Reports, no Person has any right to cause the
Company or any Subsidiary to effect the registration under the
Securities Act of any securities of the Company or any
Subsidiary.

 

(k) Listing and Maintenance
Requirements. The Common Shares are 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
Shares 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 Shares are or have 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. The Common Shares are currently eligible for
electronic transfer through the Depository Trust Company or another
established clearing corporation and the Company is current in
payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such
electronic transfer. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the
Trading Market.

 



 

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3.2 Representations
and Warranties of Purchaser.
Purchaser hereby represents and warrants as of the date hereof to
the Company as follows (unless as of a specific date therein, in
which case they shall be accurate as of such
date):

 

(a) Organization; Authority.
Purchaser is an entity duly incorporated or formed, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and
authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its
obligations hereunder . The execution and delivery of this
Agreement and performance by Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary
corporate, partnership, limited liability company or similar
action, as applicable, on the part of Purchaser. This Agreement has
been duly executed by Purchaser, and when delivered by Purchaser in
accordance with the terms hereof, will constitute the valid and
legally binding obligation of Purchaser, 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. Purchaser is a resident in, or otherwise
subject to applicable securities laws of, Switzerland.

 

(b) Understandings or Arrangements.
Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law or the laws of any
Canadian or foreign jurisdiction and are being issued in reliance
upon the exemption from the registration requirements thereof
afforded by Regulation S and/or other exemptions under the
Securities Act, or with any state securities commission or agency,
and applicable Canadian securities laws. Purchaser is acquiring
such Securities for investment and as principal for its own account
(and not for the account of any U.S. Person within the meaning of Rule 902(a) of
Regulation S) and not with a view to or for distributing or
reselling such Securities or any part thereof, including in
violation of the Securities Act or any applicable state securities
law or Canadian or foreign securities law. Purchaser has no present
intention of distributing any of such Securities in violation of
the Securities Act or any applicable state securities law or
Canadian or foreign securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of
the Securities Act or any applicable provincial, state or Canadian
securities law or foreign securities law. No sale by Purchaser of the Securities
has been pre-arranged with any prospective buyer in the United
States or Canada. In
connection with the transactions that are the subject of this
Agreement, Purchaser acknowledges that offers respecting the sale
of the Securities directed by the Company were received outside of
the United States and that Purchaser has not and is not engaged in
or directed any unsolicited offers to buy the Securities in the
United States on behalf of any U.S. Person. Purchaser agrees
and acknowledges that the Company will issue stop transfer
instructions to its registrar and transfer agent prohibiting the
transfer of the Shares and Conversion Shares delivered under this
Agreement made in violation of applicable securities
laws. The Company
has advised Purchaser that the Company is relying on an exemption
from the requirements to provide Purchaser with a prospectus and to
sell the Shares through a person registered to sell securities
under Canadian securities laws and, as a consequence of acquiring
the Shares pursuant to these exemptions, certain protections,
rights and remedies provided by Canadian securities laws, including
applicable statutory rights of rescission or damages, will not be
available to Purchaser, and no prospectus or registration statement
has been filed by the Company with any securities commission or
similar regulatory authority in any jurisdiction in connection with
the issuance of the Shares. Purchaser currently does not own any
Common Shares.

 

(c) Purchaser Status. At the time
Purchaser was offered the Securities, it was not, and as of the
date hereof it is not a
U.S. Person within the meaning of Rule 902(a) of Regulation
S. At the time Purchaser was offered the Securities, it was,
and as of the date hereof it is an “accredited investor” as
defined in National Instrument 45-106 - Prospectus
Exemptions and as
described in paragraph (m) of that definition. Purchaser pre-existed the
offering of Securities, has a bona fide purpose other than
investment in the Securities and was not created or used solely to
purchase or hold securities as an “accredited investor”
as described in paragraph (m) of the definition of
“accredited investor” in section 1.1 of National
Instrument 45-106 - Prospectus
Exemptions.

 

(d) Experience of Purchaser.
Purchaser, 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. Purchaser 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.

 

(e) Access to Information.
Purchaser acknowledges that it has had the opportunity to review
the Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment.  Purchaser has not
received, nor has it requested, nor does it have any need to
receive, any offering memorandum or any other document describing
the business and affairs of the Company that constitutes an
offering memorandum as such term is defined under applicable
Canadian securities laws, nor has any such document been prepared
for delivery to, or review by, prospective purchasers in order to
assist them in making an investment decision in respect of the
Securities. The Shares are not being purchased by Purchaser, as a
result of any material information concerning the Corporation that
has not been publicly disclosed, including any “material
fact” as such term is defined in the Securities Act (British
Columbia).

 



 

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(f) Certain Transactions. Other
than consummating the transactions contemplated hereunder, such
Purchaser has not, nor has any Person acting on behalf of or
pursuant to any understanding with such Purchaser, 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 Purchaser first received a communication from
the Company or any other Person representing the Company setting
forth the terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof.

 

(g) General Solicitation. Purchaser
is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or, to the
knowledge of Purchaser, any other general solicitation or general
advertisement.

 

(h) Restricted Securities.
Purchaser agrees that the
Securities acquired by it pursuant to this Agreement shall not be
voluntarily sold, transferred or otherwise disposed of in the
United States or Canada or to any U.S. Person except pursuant to an
available exemption from the registration requirements of the
Securities Act or pursuant to an effective registration statement
thereunder or pursuant to an available exemption from the
prospectus requirements of applicable Canadian securities laws, and
otherwise in compliance with any applicable state or provincial
securities laws. Purchaser agrees that there are restrictions on
Purchaser’s ability to resell the Securities under applicable
Canadian securities laws and it is the responsibility of Purchaser
to find out what those restrictions are and to comply with them
before selling the Securities. Purchaser acknowledges that no
transfer of the Securities shall be made by the Company’s
registrar and transfer agent upon the Company’s transfer
books or records unless there has been compliance with the terms of
this Agreement, including the above provisions. Purchaser agrees to
indemnify and hold the Company harmless from and against
liabilities, claims, damages and expenses (including reasonable
attorneys’ fees) that may result from or arise out of any
disposition of the Securities in violation of this
Agreement.

 

(i) International Jurisdiction.
Purchaser is resident in a jurisdiction other than Canada or the
United States (an “International
Jurisdiction”) and purchasing as principal, and the
decision to subscribe the Shares was made in such International
Jurisdiction. The delivery of the Subscription Agreement, the
acceptance of it by the Company and the issuance of the Shares to
Purchaser complies with all laws applicable to Purchaser, including
the laws of Purchaser’s jurisdiction of residence, and all
other applicable laws, and will not cause the Company to become
subject to, or require it to comply with, any disclosure,
prospectus, filing or reporting requirements under any applicable
laws of the International Jurisdiction. Purchaser is knowledgeable
of, or has been independently advised as to, the application or
jurisdiction of the laws of the International Jurisdiction that
would apply to the purchase. The Company is offering and selling
the Shares and Purchaser is purchasing the Securities pursuant to
exemptions from the prospectus and registration requirements under
the applicable securities laws of the International Jurisdiction
or, if such is not applicable, the Company is permitted to offer
and sell the Shares and Purchaser is permitted to purchase the
Shares under the applicable securities laws of such International
Jurisdiction without the need to rely on any such exemptions. The
applicable securities laws do not require the Company to register
any of the Shares, file a prospectus, registration statement,
offering memorandum or similar document, or make any filings or
disclosures or seek any approvals of any kind whatsoever from any
regulatory authority of any kind whatsoever in the International
Jurisdiction. Purchaser will not sell, transfer or dispose of the
Shares except in accordance with all applicable laws, including the
securities laws applicable in Canada and the United States, and
Purchaser acknowledges that the Company shall have no obligation to
register any such purported sale, transfer or disposition which
violates applicable Canadian or United States securities
laws.

 

(j) Limited
Resale. Purchaser understands
that it may not be able to resell the Shares except in accordance
with limited exemptions available under applicable securities laws,
and that Purchaser is solely responsible for Purchaser’s
compliance with applicable resale restrictions. Subject to any
exemptions available under applicable securities laws, Purchaser
will comply with all applicable securities laws concerning the
resale of the Shares and will not resell any of the Shares except
in accordance with the provisions of applicable securities
laws.

 



ARTICLE IV.

 


OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Removal
of Legends.

 

(a) The Securities may
only be disposed of in compliance with provincial, state and
federal securities laws and the laws of any applicable foreign
jurisdiction. In connection with any transfer of the Securities
other than pursuant to an effective registration statement, to the
Company or to an Affiliate of a Purchaser, the Company may require
the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred
Securities under the Securities Act or any applicable foreign
securities law.

 



 

8







 





 

(b) Purchaser agrees to
the imprinting, so long as is required by this Section 4.1, of a
legend on any of the Securities in the following form:

 


“NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.”

 

(c) Purchaser also
agrees to the imprinting of an additional legend on any of the
Securities (to the extent that such Securities are issued prior to
the expiry of the applicable hold period) in the following
form:

 


“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY
MUST NOT TRADE THE SECURITY BEFORE [the date which is four months
and one day after the Closing Date will be
inserted].”

 

(d) In connection with
a sale of Conversion Shares by Purchaser in reliance on Rule 144,
Purchaser or its broker shall deliver to the Company a broker
representation letter reasonably acceptable to the Company and the
Transfer Agent, providing to the Company the information required
under Rule 144 to determine that the sale of such Conversion Shares
is made in compliance with Rule 144, including, as may be
appropriate, a certification that Purchaser is not an affiliate of
the Company (as defined in Rule 144) and a certification as to the
length of time that such securities have been held. Upon receipt of
such representation letter, the Company shall promptly remove the
notation of a restrictive legend in Purchaser’s book-entry
account maintained by the Company, including the legend referred to
in Section 4.1(b), and the Company shall bear all costs associated
with the removal of such legend in the Company’s books. The
Company shall cooperate with Purchaser to effect the removal of the
legend referred to in Section 4.1(b) at any time such legend is no
longer appropriate. Without limiting the foregoing, upon the
written request of Purchaser, any legend (including the legend set
forth in Section 4.1(b) hereof) on Conversion Shares shall be
removed (i) while a registration statement covering the resale of
such security is effective under the Securities Act, (ii) if such
Conversion Shares are eligible for sale under Rule 144 without the
requirement to be in compliance with Rule 144(c)(1), or (iii) if
such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission), subject in
the case of clauses (ii) and (iii) to receipt from Purchaser by the
Company and the Transfer Agent of customary representations
reasonably acceptable to the Company and the Transfer Agent in
connection with such request. Upon such request and receipt of such
representations, the Company shall (A) deliver to the Transfer
Agent irrevocable instructions to the Transfer Agent to remove the
legend, and (B) cause its counsel to deliver to the Transfer Agent
one or more legal opinions to the effect that the removal of such
legend in such circumstances may be effected under the Securities
Act if required by the Transfer Agent to effect the removal of the
legend in accordance with the provisions of this Agreement. If all
or any portion of a Share is converted into Conversion Shares and
either (i) a registration statement covering the resale of such
security is then effective under the Securities Act, (ii) the
Conversion Shares issuable upon such exercise are then eligible for
sale under Rule 144 without the requirement to be in compliance
with Rule 144(c)(1), or (iii) if a legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission), then such Conversion Shares shall be issued free of
all legends, subject in the case of clauses (ii) and (iii) to
receipt from Purchaser by the Company and the Transfer Agent of
customary representations reasonably acceptable to the Company and
the Transfer Agent in connection therewith. The Company agrees that
following the effective date of a registration statement covering
the resale of the Conversion Shares or at such time as such legend
is no longer required under this Section 4.1(d), it will, no later
than two (2) Trading Days following the delivery by Purchaser to
the Company or the Transfer Agent of a request for legend removal,
and if relying on Rule 144, receipt from Purchaser by the Company
and the Transfer Agent of customary representations reasonably
acceptable to the Company and the Transfer Agent in connection
therewith (such second Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to Purchaser, as may be requested
by Purchaser, a certificate or book-entry position evidencing such
Conversion Shares that is free from all restrictive and other
legends or by crediting the account of Purchaser’s or its
designee’s account with the Depository Trust Company or
another established clearing corporation through its Deposit or
Withdrawal at Custodian system if the Company is then a participant
in such system.

 

(e) If the Company
fails to deliver any such Conversion Shares free from all
restrictive legends on or before the applicable Legend Removal Date
and if after the Legend Removal Date, due to the Company’s
continuing failure to deliver such Conversion Shares, Purchaser
purchases (in an open market transaction or otherwise) Common
Shares to deliver in satisfaction of a sale by Purchaser of all or
any portion of the Conversion Shares anticipated receiving from the
Company without any restrictive legend, then the Company shall pay
in cash to Purchaser in an amount equal to the excess of such
Purchaser’s total purchase price (including brokerage
commissions, if any) for the Common Shares so purchased over the
product of (A) such number of Conversion Shares the Company was
required to deliver to Purchaser by the Legend Removal Date
multiplied by (B) the lowest closing sale price of the Common
Shares on any Trading Day during the period commencing on the date
of the delivery by such Purchaser to the Company of the applicable
Conversion Shares and ending on the date of such delivery and
payment under this subsection 4.1(e).

 

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 in a manner that would require the
registration under the Securities Act of the sale of the Securities
or 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.

 



 

9







 





 

4.3 Publicity.
The Company and Purchaser shall consult with each other in issuing
any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor Purchaser 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 Purchaser, or without the prior consent of
Purchaser, with respect to any press release of the Company, 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.

 

4.4 Indemnification.
Subject to the provisions of this
Section 4.4, the Company and Purchaser will indemnify and hold each
other and each other’s directors, officers, members,
partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, an
“Indemnified
Party”) harmless from any
and all losses (excluding loss of profit), liabilities,
obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and costs of investigation
that any such Indemnified Party may suffer or incur as a result of
or relating to any breach of any of the representations,
warranties, covenants or agreements made by the other party in this
Agreement. If any action shall be brought against an Indemnified
Party in respect of which indemnity may be sought pursuant to this
Agreement, such Indemnified Party shall promptly notify the other
party in writing, and the other party shall have the right to
assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Indemnified Party. Any Indemnified
Party shall have the right to employ one separate counsel in any
such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such
Indemnified Party except to the extent that (a) the employment
thereof has been specifically authorized by the other party in
writing, (b) the other party has failed after a reasonable period
of time to assume such defense and to employ counsel or (c) in such
action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the other
party and the position of such Indemnified Party, in which case the
other party shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel. The other party
will not be liable to any Indemnified Party under this Agreement
(1) for any settlement by an Indemnified Party effected without the
other party’s prior written consent, which shall not be
unreasonably withheld or delayed; or (2) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable
to any Indemnified Party’s breach of any of the
representations, warranties, covenants or agreements made by such
Indemnified Party in this Agreement. The indemnification required
by this Section 4.4 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense,
as and when bills are received or are incurred.

 

4.5 Reservation
of Common Shares. 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 Common Shares for the
purpose of enabling the Company to issue the Conversion
Shares.

 

4.6 Listing
of Common Shares. The Company
hereby agrees to use reasonable best efforts to maintain the
listing or quotation of the Common Shares on the Trading Market on
which it is currently listed and will comply in all respects with
the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market. If required by the
Trading Market, the Company shall apply to list or quote all of the
Conversion Shares on such Trading Market and promptly secure the
listing of all of the Conversion Shares on such Trading Market. The
Company further agrees, if the Company applies to have the Common
Shares traded on any other Trading Market, it will then include in
such application all of the Conversion Shares, and will take such
other action as is necessary to cause all of the Conversion 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 or quotation and trading of its
Common Shares 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. The Company agrees
to maintain the eligibility of the Common Shares for electronic
transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by
timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such
electronic transfer.

 

4.7 Blue
Sky Filings. The Company shall
take such action, if any, as the Company shall reasonably determine
is necessary in order to obtain an exemption for, or to qualify the
Securities for, issuance to Purchaser at the Closing under
applicable securities or “Blue Sky” laws of the states
of the United States, and shall provide evidence of such actions
promptly upon request of Purchaser.

 



 

10







 





 

4.8 Privacy.
By accepting this Agreement, the
Company agrees that it will not collect any information about
Purchaser except that which is provided by Purchaser in this
Agreement (collectively, the “Purchaser
Information”). The
Company also agrees that it will keep all Purchaser Information
confidential, and will use and disclose the Purchaser Information
only for the purposes described below, unless (a) the Company
informs Purchaser of a proposed use or disclosure of the Purchaser
Information and Purchaser consents; or (b) the use or disclosure is
permitted by law to be made without the consent of Purchaser, or is
required by law, or by the by-laws, rules, regulations or policies
or any regulatory organization governing the Company. By signing
this Agreement, Purchaser agrees that the Company may collect and
use the Purchaser Information for the following purposes and
consents to the following: (c) the Company delivering to the
applicable securities regulatory authorities, including the British
Columbia Securities Commission, (collectively, the
“Canadian
Commissions”) any
personal information provided by Purchaser respecting itself
including such Purchaser’s full name, residential address and
telephone number, the amount of securities purchased, the purchase
price, the exemption relied on by Purchaser and the date of
distribution, such information being collected indirectly by the
Canadian Commissions under the authority granted to in applicable
securities laws for the purposes of the administration and
enforcement of applicable securities laws in British Columbia, (d)
to provide Purchaser with information; (e) to otherwise administer
Purchaser’s investment in the Company in accordance with the
terms of this Agreement; (f) for internal use with respect to
managing the relationships between and contractual obligations of
the Company and Purchaser; (g) for use and disclosure for income
tax related purposes, including without limitation, where required
by law, disclosure to Canada Revenue Agency; (h) for disclosure to
a governmental or other authority to which the disclosure is
required by court order or subpoena compelling such disclosure and
where there is no reasonable alternative to such disclosure; (i)
for disclosure to professional advisers of the Company in
connection with the performance of their professional services; (j)
for disclosure to any person where such disclosure is necessary for
legitimate business reasons and is made with Purchaser’s
prior written consent; (k) for disclosure to a court determining
the rights of the parties under this Agreement; and (l) for use and
disclosure as otherwise required or permitted by law. Purchaser
acknowledges and consents to the Company retaining the personal
information for as long as permitted or required by applicable law
or business practices. Purchaser consents to the indirect
collection of such information by the Canadian Commissions and
acknowledges that it may contact the following public official in
British Columbia , with respect to questions about the British
Columbia Securities Commission’s indirect collection of such
information at the following address and telephone number: British
Columbia Securities Commission: P.O. Box 10142, Pacific Centre 701
West Georgia Street Vancouver, British Columbia V7Y 1L2 Inquiries:
(604) 899-6854 Toll free in Canada: 1-800-373-6393 Facsimile: (604)
899-6581 Email: inquiries@bcsc.bc.ca.

 

4.9 Furnishing
of Information; Current Public Information.

 

(a) Until the time that
Purchaser owns no Securities, the Company covenants to maintain the
registration of the Common Shares under Section 12(b) or 12(g) of
the Exchange Act and 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.

 

(b) At any time during
the period commencing from the six (6) month anniversary of the
Closing Date and ending at such time that Conversion Shares may be
sold pursuant to Rule 144 without the requirement for the Company
be in compliance with Rule 144(c)(1), if the Company shall (i) fail
for any reason to satisfy the requirements of Rule 144(c)(1),
including, without limitation, the failure to satisfy the current
public information requirements under Rule 144(c) or (ii) if the
Company has ever been an issuer described in Rule 144(i)(1)(i) or
becomes such an issuer in the future, and the Company shall fail to
satisfy any condition set forth in Rule 144(i)(2) (each, a
“Public Information
Failure”) then, as partial relief for the damages to
the Purchaser by reason of any such delay in or reduction of its
ability to sell Securities (which remedy shall not be exclusive of
any other remedies available at law or in equity), the Company
shall pay to the Purchaser an amount in cash equal to one and a
half percent (1.5%) of the aggregate stated value of the Shares on
the day of a Public Information Failure and on every thirtieth day
(pro-rated for periods totaling less than thirty days) thereafter
until the earlier of (i) the date such Public Information Failure
is cured and (ii) such time that such Public Information Failure no
longer prevents a holder of Securities from selling such Conversion
Shares pursuant to Rule 144 without any restrictions or
limitations. The payments to which a holder shall be entitled
pursuant to this Section 4.9(b) are referred to herein as
“Public Information
Failure Payments”. Public Information Failure Payments
shall be paid on the earlier of (A) the last day of the calendar
month during which such Public Information Failure Payments are
incurred and (B) the third (3rd) Business Day after the event or
failure giving rise to the Public Information Failure Payments is
cured. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of one and a half
percent (1.5%) per month (prorated for partial months) until paid
in full.

 

4.10 Disclosure
of Transaction and Other Material Information. Within four (4) Business Days of the date of
this Agreement, the Company shall file a Current Report on Form 8-K
describing the terms and conditions of the transactions
contemplated by this Agreement and the License Agreement in the
form required by the Exchange Act.

 

4.11 Non-Public
Information. After the date of
this Agreement, except pursuant to the terms of the License
Agreement, the Company covenants and agrees that neither the
Company nor any other Person acting on its behalf will provide
Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto Purchaser
shall have consented to the receipt of such information and agreed
with the Company to keep such information
confidential.

 

4.12 Issuance
of Preferred Shares. For so
long as Purchaser holds Shares, the Company shall not, without the
prior written consent of Purchaser, create or issue any preferred
shares pursuant to the Articles where such preferred shares rank in
parity or priority to any right or special right attached to the
Shares under the Business Corporations
Act (British Columbia) or the
Articles.

 



 

11







 





 



ARTICLE V.

 


MISCELLANEOUS

 

5.1 Fees
and Expenses. Except as
expressly set forth in this Agreement to the contrary, 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
Purchaser.

 

5.2 Entire
Agreement. The Transaction
Documents, together with the exhibits and schedules thereto,
contain the entire understanding of the parties with respect to the
subject matter hereof and thereof 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.

 

5.3 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 time of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment at the email
address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (Toronto, Ontario time) on a Trading Day, (b)
the next Trading Day after the time of transmission, if such notice
or communication is delivered via facsimile at the facsimile number
or email attachment at the email address as set forth on the
signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (Toronto, Ontario time) on any Trading Day,
(c) the second (2nd)Trading
Day following the date of mailing, if sent by Canadian 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.

 

5.4 Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed by the Company and Purchaser. 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. Any
amendment effected in accordance with this Section 5.4 shall be
binding upon Purchaser, any holder of Securities and the
Company.

 

5.5 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.

 

5.6 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 Purchaser. Purchaser may assign any or all
of its rights under this Agreement to any Person to whom Purchaser
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 this Agreement that apply to the
“Purchaser.”

 

5.7 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, except as otherwise set forth in Section
4.4.

 

5.8 Governing
Law and Disputes. This
Agreement has been construed in accordance with and shall be
governed by the substantive laws of Switzerland with the exclusion
of the UN Convention on International Sales of Goods (Vienna
Convention) except that: (i) the Articles and all matters in
respect of corporate law in this Agreement have been construed in
accordance with and shall be governed by the substantive laws of
the Province of British Columbia; and (ii) all matters in respect
of securities law has been construed in accordance with and shall
be governed by the substantive securities laws of, to the extent
applicable, the Province of British Columbia and the laws of the
United States of America. All disputes arising out of or in
connection with the Transaction Documents, including disputes on
its conclusion, binding effect, amendment and termination, shall be
resolved, to the exclusion of the ordinary courts, by arbitration
in accordance with the Rules of Arbitration of the International
Chamber of Commerce in force on the date when the notice of
arbitration is submitted in accordance with these Rules. The number
of arbitrators shall be three (3), and they shall be appointed in
accordance with the Rules of Arbitration. The seat of the
arbitration shall be in London. The arbitral proceedings shall be
conducted in English.

 

5.9 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities for a period of one
(1) year.

 

5.10 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 each other party, it being
understood that the 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.

 



 

12







 





 

5.11 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.

 

5.12 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.

 

5.13 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise this Agreement 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 this Agreement or any
amendments hereto. In addition, each and every reference to share
prices and Common Shares in this Agreement shall be subject to
adjustment for reverse and forward share splits, share dividends,
share combinations and other similar transactions of the Common
Shares that occur after the date of this
Agreement.

 


 

 



(Signature Page Follows)

 


 




 

13








 






 


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.

 


 


	


EDESA BIOTECH, INC.

	

Address
for Notice:


	

 


By:
/s/Pardeep
Nijhawan


     Name:
Pardeep Nijhawan


     Title:
CEO


 


 


 


With
copies to (which shall not constitute notice):

	

100 Spy
Court


Markham,
ON, L3R 5H6 Canada


Attention:
Chief Executive Officer


Email:
notices@edesabiotech.com


Fax:
1-805-4882889


 


	

 


Stubbs
Alderton & Markiles, LLP


15260
Ventura Blvd., 20th Floor


Sherman
Oaks, CA 91403   U.S.A.


Attention:
Jonathan Friedman


Email:
jfriedman@stubbsalderton.com


Fax:
818-444-4500


 

	

 


Fasken
Martineau DuMoulin LLP


333 Bay
Street, Suite 2400, Toronto, ON, M5H 2T6 Canada


Attention:
Wojtek Baraniak


Email:
wbaraniak@fasken.com


Fax:
416-364-7813


 







 


	


NOVIMMUNE SA

	

Address
for Notice:


	

 


By:
/s/ Oliver
Eckelmann


     Name:
Oliver Eckelmann


     Title:
COO & CFO


 


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

	

Chemin
des Aulx 14


1228
Plan-les-Ouates


Switzerland


Attention:
Oliver Eckelmann



Email:


Fax:





[Personal information
omitted.]



	

 


Davies
Ward Phillips & Vineberg LLP


1501
McGill College Avenue, 26th Floor


Montréal,
QC H3A 3N9   Canada


Attention:
Olivier Désilets


Email:
odesilets@dwpv.com


Fax:
514-841-6499


 

	
 







 


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