Anavex Life Sciences Corp. - Exhibit 10.1 - Filed by newsfilecorp.com






SECURITIES PURCHASE AGREEMENT 

          This
Securities Purchase Agreement (this “Agreement”) is dated as of June ___,
2013, between Anavex Life Sciences Corp., a Nevada corporation (the
“Company”), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”). 

          WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Purchasers
are purchasing from the Company, severally and not jointly with the other
Purchasers, up to an aggregate of $2,000,000 in value of Units (each, a “Unit”;
the Units may also be hereinafter referred to as the “Securities”), each
consisting of (i) one share of common stock par value $0.001 per share (the
“Common Stock”) at a purchase price of $0.40. and (ii) a warrant to purchase
(“Warrants”) one share of the Company’s Common Stock, at a purchase price per
Unit of $0.75. The amount of Units to be sold does not include up to an
additional $1,800,000 of Units that may be sold to existing holders of debt and
accounts payable of the Company, which holders may agree to exchange such debt
or account payable on the same terms and conditions as the Units being sold
hereunder. 

          WHEREAS,
it is intended that the purchase of the securities be consummated pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”),
and the provisions of Rule 506 promulgated thereunder or Rule 903 of Regulation
S promulgated under the Securities Act; 

          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 each Purchaser agree as follows: 

ARTICLE I. 
DEFINITIONS 

          1.1      Definitions.
The following terms have the meanings set forth in this Section 1.1: 

          
“Closing” means the closing of the purchase and sale of the Securities
pursuant to Section 2.1. 

          “Closing
Date” means the Trading Day on which all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Securities, in each
case, have been satisfied or waived. 

          “Common
Stock” means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed. 

          “Company
Counsel” means legal counsel of Company represented by Clark Wilson LLP,
800-885 West Georgia Street Vancouver, BC V6C 3H1 




          
“Escrow Agreement” means the escrow agreement entered into prior to the
date hereof, by and among the Company and the Escrow Agent in substantially the
form of Exhibit C attached hereto pursuant to which the Purchasers, shall
deposit Subscription Amounts with the Escrow Agent to be applied to the
transactions contemplated hereunder. 

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

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

          
“Material Adverse Effect” means (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. 

          “Registration
Rights Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit B
attached hereto. 

          “Registration
Statement” means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale of the Shares by
each Purchaser as provided for in the Registration Rights Agreement. 

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


          “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. 

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


          “Securities”
means the Shares, the Warrants and the Warrant 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 each
Purchaser 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).

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          “Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the
Units purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds. 

          
“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
Stock is listed or quoted for trading on the date in question: the NYSE
Alternext, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or
any successors to any of the foregoing). 

          “Transaction
Documents” means this Agreement, the Warrants, the Registration Rights
Agreement, the Escrow 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 Nevada Agency & Transfer Company, the current transfer
agent of the Company, with a mailing address of 50 West Liberty Street, Suite
880, Reno Nevada 89501, and any successor transfer agent of the Company. 

          
“Warrants” means, collectively, the Common Stock purchase warrants
delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable at $0.75 per share and have a term
of exercise equal to five years from the initial date of exercise, in the form
of Exhibit A attached hereto. 

          “Warrant
Shares” means the shares of Common Stock issuable upon exercise of the
Warrants. 

ARTICLE II. 
PURCHASE AND SALE 

          2.1     
Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, up to an
aggregate of $2,000,000 in value of Units. Each Purchaser shall deliver to the
Escrow Agent via wire transfer equal to such Purchaser’s Subscription Amount as
set forth on the signature page hereto executed by such Purchaser and the
Company and each Purchaser shall deliver the other items set forth in Section
2.2 deliverable at the Closing. Upon satisfaction of the conditions set forth in
Sections 2.2, the Closing shall occur at the offices of Company Counsel or such
other location as the parties shall mutually agree and the Subscription Amount
shall be released from Escrow to the account of the Company in accordance with
the terms of the Escrow Agreement. 

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          2.2      Deliveries.


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

          (i)     
this Agreement duly executed by the Company; 

          (ii)     
a copy of the irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver, on an expedited basis, a certificate evidencing a
number of Shares, as set forth on the signature page hereto, registered in the
name of such Purchaser; 

          (iii)      a
Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 100% of such Purchaser’s Shares, with an
exercise price equal to $0.75, subject to adjustment therein (such Warrant
certificate may be delivered within five Trading Days of the Closing Date); and


          (vi)      the
Registration Rights Agreement duly executed by the Company;

          (vii)     
the Escrow Agreement, duly executed by the Company;

          (b)     
In addition to the forgoing, the Purchaser’s obligation to purchase the Units on
a Closing Date at which such purchase is to be consummated is subject to the
fulfillment on or prior to such Closing Date of the following conditions, which
conditions may be waived at the option of each Purchaser to the extent permitted
by law: 

          (a)     
Representations and Warranties. The representations and warranties made
by the Company shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date, and, the representations and
warranties made by the Company, except to the extent any such representation or
warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date.

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          (b)     
Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the date of such Closing
Date shall have been performed or complied with in all material respects. 

          (c)     
No Legal Order Pending. There shall not then be in effect any legal or
other order enjoining or restraining the transactions contemplated by this
Agreement. 

          (d)     
No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale or requiring
any consent or approval of any person, which shall not have been obtained, to
issue the Securities (except as otherwise provided in this Agreement). 

          (e)      Required
Consents. The Company shall have obtained any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Offering Materials, all of which shall be in
full force and effect. 

          (f)      Adverse
Changes. Since the date of execution of this Agreement, no event or series
of events shall have occurred that reasonably could have or result in a Material
Adverse Effect.

          (g)      Blue
Sky. The Company shall have completed any necessary qualification for the
Securities and the Shares under applicable Blue Sky laws. 

          (h)      Legal
Opinion. The Company’s corporate counsel shall have delivered a legal
opinion addressed to the Subscribers in a form reasonably acceptable to the
Placement Agent.

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

          (i)      this
Agreement duly executed by such Purchaser; 

          (ii)     
such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; 

          (iv)     
the Registration Rights Agreement, duly executed by such Purchaser; 

          (v)     
the Escrow Agreement, duly executed by such Purchaser; and 

          (vi)     
the Purchaser Questionnaires in the form on Annex A and Annex
B attached hereto. 

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ARTICLE III. 
REPRESENTATIONS, WARRANTIES AND
COVENANTS 

          3.1     
Representations and Warranties of the Company. In order to induce the
Purchaser to enter into this Agreement and consummate the transactions
contemplated hereby, the Company represents and warrants to the Purchaser as
follows: 

          (a)      Incorporation.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and is qualified to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification, except where the failure to
so qualify would not have a Material Adverse Effect. Each of the Company’s
subsidiaries (the “Subsidiaries”) is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is qualified to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Transaction Documents and to carry on its business as now conducted. Neither the
Company, nor any of its Subsidiaries is in violation of any of the provisions of
their respective articles of incorporation, bylaws or other organizational or
charter documents, including, but not limited to the Charter Documents (as
defined below). Each of the Company and its Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation 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, would not result in a direct
and/or indirect (i) Material Adverse Effect on the legality, validity or
enforceability of any of the Securities and/or this Agreement, (ii) Material
Adverse Effect on the results of operations, assets, business, condition
(financial and other) or prospects of the Company and its Subsidiaries, taken as
a whole, or (iii) Material Adverse Effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under this Agreement 

          (b)     
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 Company’s 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.

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          (c)      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, (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. 

          (d)      Issuance
of the Securities. The Shares 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 other
than restrictions on transfer provided for in the Transaction Documents. The
Warrant Shares, when issued in accordance with the terms of the Warrants, will
be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to
this Agreement and the Warrants. 

          (e)     
Capitalization. The Company is authorized to issue 150,000,000 shares of
common stock, par value $0.001, of which 30,240,687 shares are outstanding as of
the date hereof. 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 for 3,072,847 warrants and
770,000 options outstanding as of the date hereof and except as a result of the
purchase and sale of the Securities, 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. 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 Purchasers) 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 

7 




          (f)      Absence
of Litigation. There is no action, suit, claim, or proceeding, or, to the
Company's knowledge, inquiry or investigation, before or by any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company that
could, individually or in the aggregate, have a Material Adverse Effect. There
is no action, suit, claim, proceeding, inquiry or investigation by the Company
pending or which the Company intends to initiate. The foregoing includes,
without limitation, actions, suits, proceedings or investigations pending or
threatened in writing (for which there is any basis known to the Company)
involving the prior employment of any of the Company’s employees, their services
provided in connection with the Company’s business, or any information or
techniques allegedly proprietary to any of their former employers, or the
employees’ obligations under any agreements with prior employers. 

          (g)     
Title to Properties and Assets; Liens, Etc. The Company and its
Subsidiaries have good and marketable title to its properties and assets,
including the properties and assets reflected in the most recent balance sheet
included in the Company’s financial statements, and good title to its leasehold
estates, in each case subject to no mortgages, pledges, liens, claims, charges,
encumbrances or other restrictions (collectively, “Encumbrances”), other
than (a) those resulting from taxes which have not yet become delinquent; and
(b) Encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company; and (c)
those that have otherwise arisen in the ordinary course of business, none of
which are material. The Company is in compliance with all material terms of each
lease to which it is a party or is otherwise bound. 

8 




          (h)     
Intellectual Property. 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 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, except as set forth
in the SEC Reports, 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


          (i)      SEC
Reports; Financial Statements. The Company has made available to Purchaser
true and complete copies of all reports or registration statements the Company
has filed with the SEC under the Securities Act and the Exchange Act, for all
periods subsequent to December 31, 2012, all in the form so filed
(collectively the “SEC Reports”). To the Company’s knowledge, the Company has
filed in a timely manner all documents that the Company was required to file
under the Exchange Act during the 12 months preceding the date of this
Agreement. To the Company’s knowledge, as of their respective filing dates, the
SEC Reports complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as applicable, and none of the SEC
Reports filed under the Exchange Act contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading, except to the extent corrected by a
subsequently filed document with the SEC. To the Company’s knowledge, none of
the SEC Reports filed under the Securities Act contained an untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading at the time such SEC
Reports became effective under the Securities Act. 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 SEC with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the footnotes thereto, 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.


9 




          (j)     
Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
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,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables, accrued expenses and other liabilities 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 generally accepted accounting principles or required to be disclosed
in filings made with the SEC, (iii) the Company has not altered its method of
accounting or the identity of its auditors, and (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. The Company does not have pending before the
SEC any request for confidential treatment of information. 

          (k)      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. 

          (l)      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, 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 filing with the Commission pursuant to the Registration Rights
Agreement, (ii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Shares, and the listing of the Shares
for trading thereon in the time and manner required thereby, (iii) the filing
with the Commission of the Registration Statement, and (iv) the filing of Form D
with the Commission and such filings as are required to be made under applicable
state securities laws (collectively, the “Required Approvals”). 

          (m)     
Disclosure. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of
the Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers 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 Purchasers regarding the Company, its business and the transactions contemplated hereby, 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. 

10 




          (n)     
No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
Purchasers” within the meaning of Rule 501 under the Securities Act. 

          (o)     
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser 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 Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser 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. 

          (p)     
The Company will indemnify and hold Purchaser and its directors, officers,
shareholders, 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, a
“Purchaser Party”) harmless from any and all losses, 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 Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against the Purchaser Parties in any capacity, or any of them or their
respective affiliates, by any stockholder of the Company who is not an affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by
the Offering Materials (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ 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 Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company's prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party's breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 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. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. 

11 




          3.2     
Brokers. Except for R.F. Lafferty & Co, Inc. and as set forth on
Schedule 3.2,, no person is entitled to any fees payable by the Company
as a result of the transactions contemplated by this Agreement. Furthermore, it
is expected that Christopher U. Missling, PhD, an employee of RF Lafferty &
Co, Inc., will become the Chief Executive Officer, President and a Director of
the Company after the Closing.

          3.3     
Representations and Warranties of the Purchasers. Each Purchaser, for
itself and for no other Purchaser, 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 Purchaser 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
the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such 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. 

12 




          (b)     
Own Account. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
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 state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business. 

          (c)     
Purchaser Status. At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants, it will be either: (i) an “accredited Purchaser” 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. The Purchaser qualifies for an exemption from prospectus
requirements pursuant to Canadian NI 46-106 and has completed and signed Annex B
attached hereto. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. Notwithstanding the
foregoing, if the Purchaser is a Non-U.S. Person (a “Reg S Person”), such
Purchaser hereby represents that the representations contained in paragraphs (1)
through (7) of this Section 3.2(c) are true and correct with respect to such
Purchaser: 

          (1)     
(i) the issuance and sale to such Reg S Person of the Units is intended to be
exempt from the registration requirements of the Securities Act, pursuant to the
provisions of Regulation S; (ii) it is not a “U.S. Person,” as such term is
defined in Regulation S, and is not acquiring the Units for the account or
benefit of any U.S. Person; and (iii) the offer and sale of the Units has not
taken place, and is not taking place, within the United States of America or its
territories or possessions. Such Reg S Person acknowledges that the offer and
sale of the Units has taken place, and is taking place in an “offshore
transaction,” as such term is defined in Regulation S. 

13 




          (2)      Such
Reg S Person acknowledges and agrees that, pursuant to the provisions of
Regulation S, the Units cannot be sold, assigned, transferred, conveyed, pledged
or otherwise disposed of to any U.S. Person or within the United States of
America or its territories or possessions for a period of one year from and
after the Closing Date, unless such Units are registered for sale in the United
States pursuant to an effective registration statement under the Securities Act
or another exemption from such registration is available. Such Reg S Person
acknowledges that it has not engaged in any hedging transactions with regard to
the Units. 

          (3)      Such
Reg S Person consents to the placement of a legend on any certificate, note or
other document evidencing the Securities and understands that the Company shall
be required to refuse to register any transfer of securities not made in
accordance with applicable U.S. securities laws.

          (4)      Such
Reg S Person is not a “distributor” of securities, as that term is defined in
Regulation S, nor a dealer in securities. 

          (5)      Such
Reg S Person understands that the Units have not been registered under the
Securities Act, or the securities laws of any state and are subject to
substantial restrictions on resale or transfer. The Units are “restricted
securities” within the meaning of Regulation S and Rule 144, promulgated under
the Securities Act. 

          (6)      Such
Reg S Person acknowledges that the Securities may only be sold offshore in
compliance with Regulation S or pursuant to an effective registration statement
under the Securities Act or another exemption from such registration, if
available. In connection with any resale of the Securities pursuant to
Regulation S, the Company will not register a transfer not made in accordance
with Regulation S, pursuant to an effective registration statement under the
Securities Act or in accordance with another exemption from the Securities Act.


          (7)     
Such Reg S Person makes the representations, declarations and warranties as
contained in this Section 3(s) (1)-(7) with the intent that the same shall be
relied upon by the Company in determining its suitability as a purchaser of such
Units 

          (d)      Experience
of Such Purchaser. Such 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. Such 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)      General
Solicitation. Such Purchaser is not, to its knowledge, 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 such Purchaser's knowledge, any other general solicitation or general
advertisement. 

14 




          (f)      Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, 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 term sheet (written or oral) from 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 Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’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 Purchaser 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. 

ARTICLE IV. 
OTHER AGREEMENTS OF THE PARTIES


4.1     
Transfer Restrictions. 

          (a)      The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and the Registration Rights Agreement and shall have
the rights and obligations of a Purchaser under this Agreement and the
Registration Rights Agreement.

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

For U.S. Persons: 

NEITHER THIS SECURITY NOR THE
SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE, IF APPLICABLE, HAS 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY UNLESS SOLD OR TRANSFERRED TO A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 

15 




For Non-U.S. Persons 

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

For Canadian Persons 

THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY IN OR FROM A JURISDICTION OF CANADA UNLESS THE CONDITIONS IN
SECTION 13 OF MULTILATERAL INSTRUMENT 51-105 ISSUERS QUOTED IN THE U.S. OVER
THE COUNTER MARKETS ARE MET.

          (c)     
Each Purchaser, severally and not jointly with the other Purchasers, covenants
and agrees that such Purchaser will sell any Securities only pursuant to either
the registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and if Securities
are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company's reliance upon this understanding. Investor acknowledges that the Company is a reporting issuer in Canada, and under Canadian Multilateral Instrument 51-105 ("MI 51-105"), the securities of the Company may not be resold in Canada unless the resale conditions of MI 51-105 are met, including the placement of a MI 51-105 legend on the securities. Each non-Canadian Purchaser agrees not to resell the securities of the Company from or into Canada and instructs the Company not to place an MI 51-105 legend on the securities issued to the Investor.

16 




          4.2      Use
of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for debt payment, working capital and general corporate
purposes. 

          4.3      Equal
Treatment of Purchasers. No consideration (including any modification of any
Transaction Document) shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision constitutes a
separate right granted to the Purchaser by the Company and negotiated separately
by the Purchaser, and is intended for the Company to treat the Purchasers as a
class and shall not in any way be construed as the Purchasers acting in concert
or as a group with respect to the purchase, disposition or voting of Securities
or otherwise. 

ARTICLE V. 
MISCELLANEOUS 

          5.1      Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before June 30, 2013.


          5.2     
Fees and Expenses. Except as expressly set forth in the Transaction
Documents 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 the Purchasers.

          5.3      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 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. 

17 




          5.4     
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 or email at the
facsimile number or email address 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 email at the facsimile number or email address set
forth on the signature pages attached hereto 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 second
(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. 

          5.5     
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 Purchasers holding at least 75% in
interest of the Securities purchased hereunder or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is sought. 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. 

          5.6      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. 

          5.7     
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 each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such 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 the Transaction Documents that apply to the
“Purchasers.” 

          5.8      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 4.10. 

          5.9     
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 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. 

18 




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

          5.11     
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. 

          5.12     
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. 

          5.13     
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. 

19 




          5.14     
Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
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.

          5.15     
Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents.

          5.16      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. 

          5.17      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.

20 




(Signature Pages Follow) 

 

 

 

 

21 




          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. 

	Anavex Life Sciences Corp. 	Address for Notice: 
	  	c/o RF Lafferty & Co, Inc. 
	  	80 Broad Street 26th Floor 
	  	New York, NY 10004 


By: __________________________________________

       Name: 

       Title: 

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

Clark Wilson LLP 
Attention to Bernard Pinsky, Incorporated
Partner
800-885 West Georgia Street 
Vancouver, BC, V6C 3H1 


And to: 

RF Lafferty & Co, Inc. 
Attention to Rob Hackel,
CCO
80 Broad Street 26th Floor 
New York, New York 10004



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
SIGNATURE PAGE
FOR PURCHASER FOLLOWS] 

22 




           
PURCHASER 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 Purchaser:
________________________________________________________


Signature of Authorized Signatory of Purchaser:
__________________________________


Name of Authorized Signatory:
____________________________________________________


Title of Authorized Signatory:
_____________________________________________________


Email Address of Authorized Signatory:
_____________________________________________


Facsimile Number of Authorized Signatory:
__________________________________________

 

Address for Notice of Purchaser: 

 

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

 

 

Subscription Amount: _____________


Units: _________________________


 

EIN Number (if corporation): 
SSN or SIN Number (if
individual):

[SIGNATURE PAGES CONTINUE] 

23 




CONFIDENTIAL PURCHASER QUESTIONNAIRE 

Anavex Life Sciences Corp. 

THIS QUESTIONNAIRE MUST BE ANSWERED FULLY AND RETURNED ALONG
WITH YOUR COMPLETED SUBSCRIPTION AGREEMENT IN CONNECTION WITH YOUR PROSPECTIVE
PURCHASE OF SECURITIES FROM ANAVEX LIFE SCIENCES CORP.. (THE “COMPANY”).


THE INFORMATION SUPPLIED IN THIS QUESTIONNAIRE WILL BE HELD IN
STRICT CONFIDENCE. NO INFORMATION WILL BE DISCLOSED EXCEPT TO THE EXTENT THAT
SUCH DISCLOSURE IS REQUIRED BY LAW OR REGULATION, OTHERWISE DEMANDED BY PROPER
LEGAL PROCESS OR IN LITIGATION INVOLVING THE COMPANY AND ITS CONTROLLING
PERSONS. 

Capitalized terms used herein without definition shall have the
respective meanings given such terms as set forth in the Securities Purchase
Agreement between the Company and the Purchaser signatory thereto (the
“Purchase Agreement”) dated as of June __, 2013. 

US INVESTORS ARE REQUIRED TO FILL IN AND SIGN ANNEX
A.

ALL INVESTORS ARE REQUIRED TO FILL IN AND SIGN ANNEX
B.

Annex A 

US PERSONS 

         (1)     
The undersigned represents and warrants that he, she or it comes within at least
one category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
undersigned comes within that category. The undersigned agrees to furnish any
additional information which the Company deems necessary in order to verify the
answers set forth below. 

	Category A ________	
      The undersigned is an individual (not a partnership,
      corporation, etc.) whose individual net worth, or joint net worth with his
      or her spouse, presently exceeds $1,000,000, exclusive of the value of his
      or her primary residence. 

	  	     
	Category B ________	
      The undersigned is an individual (not a partnership,
      corporation, etc.) who had an income in excess of $200,000 in each of the
      two most recent years, or joint income with his or her spouse in excess of
      $300,000 in each of those years (in each case including foreign income,
      tax exempt income and full amount of capital gains and losses but
      excluding any income of other family members and any unrealized capital
      appreciation) and has a reasonable expectation of reaching the same income
  level in the current year. 



24 





	Category C ________	
      The undersigned is a director or executive officer of the
      Company which is issuing and selling the Securities. 

	  	     
	Category D ________	
      The undersigned is a bank, as defined in Section 3(a)(2)
      of the Securities Act of 1933, as amended (the “Act”); a savings and loan
      association or other institution as defined in Section 3(a)(5)(A) of the
      Act, whether acting in its individual or fiduciary capacity; any insurance
      company as defined in Section 2(13) of the Act; any investment company
      registered under the Investment Company Act of 1940 or a business
      development company as defined in Section 2(a)(48) of that Act; any Small
      Business Investment Company licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958; any plan established and maintained by a state,
      its political subdivisions, or any agency or instrumentality of a state or
      its political subdivisions, for the benefit of its employees, if such plan
      has total assets in excess of $5,000,000; any employee benefit plan within
      the meaning of the Employee Retirement Income Security Act of 1974 if the
      investment decision is made by a plan fiduciary, as defined in Section
      3(21) of such act, which is either a bank, savings and loan association,
      insurance company, or registered investment advisor, or if the employee
      benefit plan has total assets in excess of $5,000,000 or, if a
      self-directed plan, with investment decisions made solely by persons that
      are accredited Purchasers (describe entity). 

	  	     
	  	     
	  	     
	  	     
	Category E ________	
      The undersigned is a private business development company
      as defined in section 202(a) (22) of the Investment Advisors Act of 1940
      (describe entity) 

	  	     
	  	     
	  	     
	  	     
	Category F ________	
      The undersigned is either a corporation, partnership,
      Massachusetts business trust, or non-profit organization within the
      meaning of Section 501(c)(3) of the Internal Revenue Code, in each case
      not formed for the specific purpose of acquiring the Securities and with
      total assets in excess of $5,000,000. (describe entity) 

	 	 
	 	 
	 	 


25 





	Category G _______	
      The undersigned is a trust with total assets in excess of
      $5,000,000, not formed for the specific purpose of acquiring the
      Securities, where the purchase is directed by a “sophisticated Purchaser”
      as defined in Regulation 506(b)(2)(ii) under the Act. 

	  	
       

	  	
       

	Category H _______	
      The undersigned is an entity (other than a trust) in
      which all of the equity owners are “accredited Purchasers” within one or
      more of the above categories. If relying upon this Category alone, each
      equity owner must complete a separate copy of this Purchaser
      Questionnaire. (describe entity) 

	  	
       

	  	
       

	  	
       

	  	
       

	Category I ________	
      The undersigned is a non-U.S. Person (a “Reg S Person”),
      and as such Reg S Person, and hereby represents that the representations
  contained in paragraphs (1) through (7) below are true and correct:  

	  	
       

		
      (1)         
      (i) the issuance and sale to such Reg S Person of the Units is intended to
      be exempt from the registration requirements of the Securities Act,
      pursuant to the provisions of Regulation S; (ii) the undersigned is not a
      “U.S. Person,” as such term is defined in Regulation S, and is not
      acquiring the Units for the account or benefit of any U.S. Person; and
      (iii) the offer and sale of the Units has not taken place, and is not
      taking place, within the United States of America or its territories or
      possessions. Such Reg S Person acknowledges that the offer and sale of the
      Units has taken place, and is taking place in an “offshore transaction,”
      as such term is defined in Regulation S. 

	  	
       

		
      (2)         
      Such Reg S Person acknowledges and agrees that, pursuant to the provisions
      of Regulation S, the Units cannot be sold, assigned, transferred,
      conveyed, pledged or otherwise disposed of to any U.S. Person or within
      the United States of America or its territories or possessions for a
      period of one year from and after the Closing Date, unless such Units are
      registered for sale in the United States pursuant to an effective
      registration statement under the Securities Act or another exemption from
      such registration is available. Such Reg S Person acknowledges that it has
  not engaged in any hedging transactions with regard to the Units.  

	  	
       

		
      (3)         
      Such Reg S Person consents to the placement of a legend on any
      certificate, note or other document evidencing the Securities and
      understands that the Company shall be required to refuse to register any transfer of securities not made in accordance with applicable U.S. securities laws.      



26 




(4)   
      Such Reg S Person is not a “distributor” of
securities, as that term is defined in Regulation S, nor a dealer in securities.


(5)     
    Such Reg S Person understands that the Units have not been
registered under the Securities Act, or the securities laws of any state and are
subject to substantial restrictions on resale or transfer. The Units are
“restricted securities” within the meaning of Regulation S and Rule 144,
promulgated under the Securities Act. 

(6)     
    Such Reg S Person acknowledges that the shares of Common
Stock may only be sold offshore in compliance with Regulation S or pursuant to
an effective registration statement under the Securities Act or another
exemption from such registration, if available. In connection with any resale of
the shares of Common Stock pursuant to Regulation S, the Company will not
register a transfer not made in accordance with Regulation S, pursuant to an
effective registration statement under the Securities Act or in accordance with
another exemption from the Securities Act. 

(7)   
      Such Reg S Person makes the representations,
declarations and warranties as contained in the Purchase Agreement with the
intent that the same shall be relied upon by the Company in determining its
suitability as a purchaser of such Units. 

The undersigned agrees that the
undersigned will notify the Company at any time on or prior to the applicable
Closing in the event that the representations and warranties in this Purchaser
Questionnaire shall cease to be true, accurate and complete. 

	 	(2) 	
      Suitability (please answer each question)

	 	 	 	 
	 		(a) 	
      For an individual, please describe your current
      employment, including the company by which you are employed and its
      principal business:

	 	 	 	 
	 		(b) 	
      For individuals, do you expect your current level of
      income to significantly decrease in the foreseeable
  future?



YES
___________                                       
NO ___________ 

	 	(c) 	
      For trust, corporate, partnership and other institutional
      subscribers, do you expect your total assets to significantly decrease in
      the foreseeable future?



27 




YES
___________                                       
NO ___________

	 	(d) 	
      For all subscribers, are you familiar with the risk
      aspects and the non- liquidity of investments such as the Securities for
      which you seek to purchase?



YES
___________                                       
NO ___________

	 	(e) 	
      For all subscribers, do you understand that there is no
      guarantee of financial return on this investment and that you run the risk
      of losing your entire investment?



YES
___________                                       
NO ___________ 

	 	(3) 	
      Manner in which title is to be held: (circle
  one)

	 	 	 
	 		(a) 	
      Individual Ownership

	 		(b) 	
      Community Property

	 		(c) 	
      Joint Tenant with Right of Survivorship (both parties
      must sign)

	 		(d) 	
      Partnership

	 		(e) 	
      Tenants in Common

	 		(f) 	
      Company

	 		(g) 	
      Trust

	 		(h) 	
      Other

	 	 	 	 
	 	(4) 	
      FINRA Affiliation.

	 	 	 
	 		
      Are you affiliated or associated with an FINRA member
      firm (please check one):



YES
___________                                       
NO ___________

If Yes, please describe how you are
affiliated/associated: 

_________________________________________________________

_________________________________________________________

_________________________________________________________


*If subscriber is a Registered
Representative with an FINRA member firm, have the following acknowledgment
signed by the appropriate party: 

28 




The undersigned FINRA member firm
acknowledges receipt of the notice required by the FINRA Conduct Rules. 

_________________________________
Name of FINRA Member Firm


By:
______________________________
            
Authorized Officer 

Date: ____________________________

(5) For Trust Subscribers 

       
     A. Certain trusts generally may not qualify as
accredited Purchasers except under special circumstances. Therefore, if you
intend to purchase the shares of the Company’s stock in whole or in part through
a trust, please answer each of the following questions. 

            
Is the trustee of the trust a national or state bank that is acting in its
fiduciary capacity in making the investment on behalf of the trust? 

Yes [ 
 ]                                
No [   ] 

            
Does this investment in the Company exceed 10% of the trust assets? 

Yes [ 
 ]                                
No [   ] 

         
   B. If the trust is a revocable trust, please complete
Question 1 below. If the trust is an irrevocable trust, please complete
Question 2 below. 

	 	1. 	
      REVOCABLE TRUSTS

	 	 	 
	 		
      Can the trust be amended or revoked at any time by its
      grantors:



Yes [ 
 ]                                
No [   ] 

If yes, please answer the following
questions relating to each grantor (please add sheets if
necessary): 

Grantor Name:
_________________________

29 




            
Net worth of grantor (including spouse, if applicable), including home, home
furnishings and automobiles exceeds $1,000,000? 

Yes [ 
 ]                                
No [   ] 

OR 

       
     Income (exclusive of any income attributable to
spouse) was in excess of $200,000 for 2011 and 2012 and is reasonably expected
to be in excess of $200,000 for 2013? 

Yes [ 
 ]                                
No [   ] 

OR 

        
    Income (including income attributable to spouse) was in
excess of $300,000 for 2013 and 2012 and is reasonably expected to be in excess
of $300,000 for 2013? 

Yes [ 
 ]                                
No [   ] 

	2. 	
      IRREVOCABLE TRUSTS



If the trust is an irrevocable trust,
please answer the following questions: 

Please provide the name of each
trustee: 

Trustee Name:
________________________________________

Trustee Name:
________________________________________

            
Does the trust have assets greater than $5 million? 

Yes [ 
 ]                                
No [   ] 

       
     Do you have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company? 

Yes [ 
 ]                                
No [   ] 

            
Indicate how often you invest in: 

30 





	 	Marketable Securities 	 	  	  
	 	 	 	 	 
	 	Often [   ] 	Occasionally [   ] 	Seldom [   ] 	Never [   ] 
	 	  	  	  	  
	 	Restricted Securities 	 	  	  
	 	 	 	 	 
	 	Often [   ] 	Occasionally [   ] 	Seldom [   ] 	Never [   ] 
	 	 	 	 	 
	 	Venture Capital Companies 	 	  	  
	 	 	 	 	 
	 	Often [   ] 	Occasionally [   ] 	Seldom [   ] 	Never [   ] 


31 




Annex B 

CANADIAN INVESTOR QUESTIONNAIRE

(ALBERTA, BRITISH COLUMBIA, MANITOBA, NEWFOUNDLAND AND
LABRADOR, 
NEW BRUNSWICK, NOVA SCOTIA, ONTARIO, PRINCE EDWARD ISLAND,
QUEBEC, AND 
SASKATCHEWAN) 

	TO: 	Anavex Life Sciences Corp.
      (the “Issuer”) 
	 	 
	RE: 	Purchase of Units (the
      “Units”) of the Issuer 
	 	 


Capitalized terms used in this Questionnaire and not
specifically defined have the meaning ascribed to them in the Private Placement
Subscription Agreement between the Subscriber and the Issuer to which this
Exhibit A is attached. 

In connection with the purchase by the Subscriber (being the
undersigned, or if the undersigned is purchasing the Units as agent on behalf of
a disclosed beneficial Subscriber, such beneficial Subscriber, shall be referred
herein as the “Subscriber”) of the Units, the Subscriber hereby
represents, warrants and certifies to the Issuer that the Subscriber: 

	 	(i) 	
      is purchasing the Units as principal (or deemed principal
      under the terms of National Instrument 45-106 - Prospectus and
      Registration Exemptions adopted by the Canadian Securities
      Administrators (“NI 45-106”));

	 	 	 
	 	(ii) 	
      (A)     is resident in or is subject
      to the laws of one of the following (check
one):




	 	[   ] Alberta 	[   ] New Brunswick 	[   ] Prince Edward Island 
	 	[   ] British Columbia 	[   ] Nova Scotia 	[   ] Quebec 
	 	[   ] Manitoba 	[   ] Ontario 	[   ] Saskatchewan 
	 	[   ] Newfoundland and Labrador 	  	  
	 	[   ] United States:                               _________________________________(List State of
    Residence) 	 


or 

	 	(B) 	
      [   ] is resident in a country other than
      Canada or the United States; and




	 	(iii) 	
      has not been provided with any offering memorandum in
      connection with the purchase of the Units.



In connection with the purchase of the Units of the Issuer, the
Subscriber hereby represents, warrants, covenants and certifies that: 

32 





	I. 	
      ALL SUBSCRIBERS PURCHASING UNDER THE “ACCREDITED
      INVESTOR” EXEMPTION

	 	 
		
      the Subscriber is not a trust company or trust company
      registered under the laws of Prince Edward Island that is not registered
      or authorized under the Trust and Loan Companies Act (Canada) or
      under comparable legislation in another jurisdiction of Canada;
  and



___________the Subscriber is an
“accredited investor” within the meaning of NI 45-106, by virtue of satisfying
the indicated criterion as set out in Appendix “A” to this certificate (YOU
MUST ALSO INITIAL OR PLACE A CHECK-MARK ON THE APPROPRIATE LINE IN
APPENDIX “A” ATTACHED TO THIS CERTIFICATE). 

OR 

	II. 	
      SUBSCRIBERS PURCHASING UNDER THE “FAMILY, FRIENDS AND
      BUSINESS ASSOCIATES” EXEMPTION OTHER THAN ONTARIO OR
      SASKATCHEWAN SUBSCRIBERS




	(a) 	
      the Subscriber is (please initial or place a check-mark
      on the appropriate line below):




	 	(i) 	
      ___________ a director, executive officer or control
      person of the Issuer, or of an “affiliate” of the Issuer; 

	 	  	
       

	 	(ii) 	
      ___________a spouse, parent, grandparent, brother, sister
      child or grandchild of _________________________________(name of person) a
      director, executive officer or control person of the Issuer, or of an
      affiliate of the Issuer; 

	 	  	
       

	 	(iii) 	
      ___________a parent, grandparent, brother, sister, child
      or grandchild of the spouse of _________________________________(name of
      person) a director, executive officer or control person of the Issuer, or
      of an affiliate of the Issuer; 

	 	  	
       

	 	(iv) 	
      ___________a close personal friend (by reason of the fact
      that the Subscriber has directly known such individual well enough and for
      a sufficient period of time and in a sufficiently close relationship
      (where such relationship is direct and extends beyond being a relative or
      a member of the same organization, association or religious group or a
      client, customer or former client or customer or being a close personal
      friend of a close personal friend of such individual) to be in a position
      to assess the capabilities and the trustworthiness of such individual) of
      _________________________________(name of person), a director, executive
      officer or control person of the Issuer, or of an affiliate of the Issuer;
      

	 	  	
       

	 	(v) 	
      ___________a close business associate (by reason of the
      fact that the Subscriber has had direct sufficient prior business dealings
      with such individual (where such relationship is direct and extends beyond
      being a client, customer or former client or customer or being a close
      business associate of a close business associate of such individual) to be
      in a position to assess the capabilities and trustworthiness of such
      individual) of _________________________________(name of person), a
      director, executive officer or control person of the Issuer, or of an
      affiliate of the Issuer; 

	 	  	
       

	 	(vi) 	
      ___________a founder of the Issuer or a spouse, parent,
      grandparent, brother, sister, child, grandchild, close personal friend (as
      described in subsection II(a)(iv)) or close business associate (as
      described in subsection II(a)(v)) of
      _________________________________(name of person), a founder of the
      Issuer; 

	 	  	
       

	 	(vii) 	
      ___________a parent, grandparent, brother, sister, child
      or grandchild of the spouse of _________________________________(name of
      person), a founder of the Issuer; 

	 	  	
       

	 	(viii) 	
      ___________a person or company of which a majority of the
      voting securities are beneficially owned by, or a majority of the
      directors are, persons or companies described in subsections II(a)(i) to
      II(a)(vii) above; or 



33 





	 	(ix) 	
      ___________a trust or estate of which all of the
      beneficiaries or a majority of the trustees or executors are persons or
      companies described in subsections II(a)(i) to II(a)(viii)
  above.



OR 

	III. 	
      SASKATCHEWAN SUBSCRIBERS PURCHASING UNDER THE “FAMILY,
      FRIENDS AND BUSINESS ASSOCIATES - SASKATCHEWAN”
  EXEMPTION




	(a) 	
      the Subscriber is resident in the Province of
      Saskatchewan or is subject to the securities laws of the Province of
      Saskatchewan;

	 	 
		
      the Subscriber has provided the Issuer with a signed risk
      acknowledgment form (to be provided by the Issuer on request);
  and

	 	 
		
      the Subscriber is (please initial or place a check-mark
      on the appropriate line below):




	 	(i) 	
      ___________a close personal friend (as described in
      subsection II(a)(iv) above) of _________________________________(name of
      person), a director, executive officer or control person of the Issuer, or
      of an affiliate of the Issuer; 

	 	  	
       

	 	(ii) 	
      ___________a close business associate (as described in
      subsection II(a)(v) above) of _________________________________(name of
      person), a director, executive officer or control person of the Issuer, or
      of an affiliate of the Issuer; 

	 	  	
       

	 	(iii) 	
      ___________a close personal friend (as described in
      subsection II(a)(iv) above) or close business associate (as described in
      subsection II(a)(v) above) of _________________________________(name of
      person), a founder of the Issuer; 

	 	  	
       

	 	(iv) 	
      ___________a person or company of which a majority of the
      voting securities are beneficially owned by, or a majority of the
      directors are, persons or companies described in subsections II(a)(i) to
      II(a)(vii) above, if the distribution is based in whole or in part on a
      close personal friendship (as described in subsection II(a)(iv) above) or
      a close business association (as described in subsection II(a)(v) above);
      or 

	 	  	
       

	 	(v) 	
      ___________a trust or estate of which all of the
      beneficiaries or a majority of the trustees or executors are persons or
      companies described in subsections II(a)(i) to II(a)(vii) above, if the
      distribution is based in whole or in part on a close personal friendship
      (as described in subsection II(a)(iv) above) or a close business
      association (as described in subsection II(a)(v) above).




OR 

	IV. 	
      ONTARIO SUBSCRIBERS PURCHASING UNDER THE “FOUNDER,
      CONTROL PERSON AND FAMILY” EXEMPTION




	(a) 	
      the Subscriber is resident in the Province of Ontario or
      is subject to the securities laws of the Province of Ontario;
and

	 	 
		
      the Subscriber is (please initial or place a check-mark
      on the appropriate line below):





	 	(i) 	___________a founder of the Issuer; 
	 	  	 
	 	(ii) 	___________an affiliate of
      _________________________________(name of person) a founder of the Issuer;
    
	 	  	 
	 	(iii) 	___________ a spouse, parent, brother, sister,
      grandparent, grandchild or child of _________________________________
      (name of person) a director, executive officer or founder of the Issuer;
      or 



34 





	 	(iv) 	
      ___________ a person that is a control person of the
      Issuer.



OR 

	V. 	
      MINIMUM AMOUNT
INVESTMENT




	(a) 	
      the Subscriber is purchasing the Units as principal for
      its own account and not for the benefit of any other person;

	 	 
	(b) 	
      the Units have an acquisition cost to the Subscriber of
      not less than $150,000, payable in cash at the Closing of the Offering;
      and

	 	 
	(c) 	
      the Subscriber was not created and is not being used
      solely to purchase or hold securities in reliance on the registration and
      prospectus exemptions provided under Section 2.10 of NI 45-106, it
      pre-existed the Offering and has a bona fide purpose other than investment
      in the Units.



The above representations and warranties will be true and
correct both as of the execution of this certificate and as of the closing time
of the purchase and sale of the Securities and acknowledges that they will
survive the completion of the issue of the Securities. 

The Subscriber acknowledges that the foregoing representations
and warranties are made by the undersigned with the intent that they be relied
upon in determining the suitability of the Subscriber as a Subscriber of the
Securities and that this certificate is incorporated into and forms part of the
Agreement and the undersigned undertakes to immediately notify the Issuer of any
change in any statement or other information relating to the Subscriber set
forth herein which takes place prior to the closing time of the purchase and
sale of the Securities. 

By completing this certificate, the Subscriber authorizes
the indirect collection of this information by each applicable regulatory
authority or regulator and acknowledges that such information is made available
to the public under applicable legislation. 

35 




APPENDIX “A” 
TO CANADIAN INVESTOR QUESTIONNAIRE


Accredited Investors only: Please check the appropriate
box and initial

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

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

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

	  	  	     
	[   ] 		
      an individual whose net income before taxes exceeded
      $200,000 in each of the 2 most recent calendar years or whose net income
      before taxes combined with that of a spouse exceeded $300,000 in each of
      the 2 most recent calendar years and who, in either case, reasonably
      expects to exceed that net income level in the current calendar year,
    

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

	  	  	     
	[   ] 		
      a person, other than an individual or investment fund,
      that has net assets of at least $5,000,000 as shown on its most recently
      prepared financial statements and that has not been created or used solely
      to purchase or hold securities as an accredited investor as defined in
      this paragraph (f), 

	  	  	     
	[   ] 	  	
      an investment fund that distributes or has distributed
      its securities only to 




	 	(i) 	
      a person that is or was an accredited investor at the
      time of the distribution,

	 	 	 
	 	(ii) 	
      a person that acquires or acquired securities in the
      circumstances referred to in sections 2.10 [Minimum amount investment] of
      NI 45-106, or 2.19 [Additional investment in investment funds] of NI
      45-106, or

	 	 	 
	 	(iii) 	
      a person described in paragraph (i) or (ii) that acquires
      or acquired securities under section 2.18 [Investment fund reinvestment]
      of NI 45-106,




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

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

	  	     
	[   ] 	
      a person acting on behalf of a fully managed account
      managed by that person, if that person 




	 	(i) 	
      is registered or authorized to carry on business as an
      adviser or the equivalent under the securities legislation of a
      jurisdiction of Canada or a foreign jurisdiction, and

	 	 	 
	 	(ii) 	
      in Ontario, is purchasing a security that is not a
      security of an investment fund,



36 





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

	  	     
	[   ] 	
      an entity organized in a foreign jurisdiction that is
      analogous to the entity referred to in paragraph (a) in form and function,
      

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

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

	  	     
	[   ] 	
      a person that is recognized or designated by the
      securities regulatory authority or, except in Ontario and Québec, the
      regulator as an accredited investor. 



37 




            
The undersigned has been informed of the significance to the Company of the
foregoing representations and answers contained in this Confidential Purchaser
Questionnaire and such representations and answers have been provided with the
understanding that the Company and the Selling Agent will rely on them.

	 	Individual 
	 	 
	Date: __________________________________________	 
	 	Name of Individual 
	 	(Please type or print) 
	 	
	 	 
	 	Signature of Individual 
	 	 
	 	 
	 	Name of Joint Owner 
	 	(Please type or print) 
	 	
	 	 
	 	Signature (Joint Owner) 
	 	
	 	 
	 	Partnership, Corporation or 
	 	Other Entity 
	 	
	Date: __________________________________________	 
	 	Print or Type Entity Name 
	 	 
	 	By: Name:
      __________________________________________
	 	                                           
      Print or Type Name 
	 	
	 	Title:
      ______________________________________________
	 	 
	 	 
	 	 
	 	Signature 
	 	 
	 	
	 	Title:
      ______________________________________________
	 	 
	 	 
	 	 
	 	Signature (other authorized signatory)
  


38 




SCHEDULE 3.2 

The Company will offer the Units through R.F. Lafferty &
Co., Inc., a FINRA registered broker-dealer (the “Placement Agent”). Upon a
Closing, the Placement Agent will receive a cash placement fee of ten percent
(10%) of the gross proceeds received by the Company. The Placement Agent will
also receive a 5-year warrant to purchase 2% of the number of shares of Common
Stock issuable upon sale of the Units and exercise of the Warrants issued to the
investors at Closing on the same terms and conditions as the Warrants issued in
the Offering. The warrants to be issued to the Placement Agent may be exercised
on a cashless basis. 

The Company shall also pay R.F. Lafferty & Co., Inc.a cash
fee equal to 5% of the aggregate exercise price for any exercise of Warrants
(whether or not following a call for redemption) that occurs within five years
of the final Closing of the Offering. 

             Except
for the R.F. Lafferty & Co., Inc., neither the Company nor any of the
Company's officers, directors, employees or shareholders has employed or engaged
any broker or finder in connection with the transactions contemplated by this
Agreement and no fee or other compensation is or will be due and owing to any
broker, finder, underwriter, placement agent or similar person other than the
Placement Agent in connection with the transactions contemplated by this
Agreement. The Company is not party to any agreement, arrangement or
understanding whereby any person other than R.F. Lafferty & Co., Inc. has an
exclusive right to raise funds and/or place or purchase any debt or equity
securities for or on behalf of the Company.

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