Exhibit 10.1


 





STANDBY EQUITY DISTRIBUTION AGREEMENT


 


THIS STANDBY
EQUITY DISTRIBUTION AGREEMENT dated as of April 30th, 2018 (this “Agreement”) is made
by and between YAII PN, LTD., a Cayman Islands exempt limited partnership (the “Investor”), and CANNABICS
PHARMEUTICALS INC. a company organized under the laws of the State of Nevada (the “Company”).


 


WHEREAS, the
parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase from the Company up to $10,000,000 of the Company’s
common stock, par value $0.001 per share (the “Common Stock”); and


 


WHEREAS, the
shares of Common Stock are listed for trading on the OTC Markets under the symbol “CNBX;” and


 


WHEREAS, the
offer and sale of the Common Stock issuable hereunder shall be registered on the Company’s registration statement on Form
S-3 (File No. 333-216845) under Section 5 of the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act”).


 


NOW, THEREFORE,
the parties hereto agree as follows:


 


Article I.


Certain
Definitions


 


Section 1.01       
“Advance” shall mean the portion of the Commitment Amount requested by the Company in the Advance Notice.


 


Section 1.02       
“Advance Date” shall mean the 1st Trading Day after expiration of the applicable Pricing Period
for each Advance.


 


Section 1.03       
“Advance Notice” shall mean a written notice in the form of Exhibit A attached hereto to the Investor
executed by an officer of the Company and setting forth the Advance amount that the Company requests from the Investor.


 


Section 1.04       
“Advance Notice Date” shall mean each date the Company delivers (in accordance with Section 2.01 of this
Agreement) to the Investor an Advance Notice requiring the Investor to advance funds to the Company, subject to the terms of this
Agreement.


 


Section 1.05       
“Affiliate” shall have the meaning set forth in Section 3.07.


 


Section 1.06       
“Applicable Laws” shall mean applicable laws, statutes, rules, regulations, orders, executive orders,
directives, policies, guidelines and codes having the force of law, whether local, national, or international, as amended from
time to time, including without limitation (i) all applicable laws that relate to an entity holding cannabis related licenses,
cannabis cultivation, dispensing, extraction and or cannabis related production including but not limited to FinCen Guidance, (ii)
all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable
laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the FCPA, (iii) OFAC and
any Sanctions or Sanctions Programs, and (iv) CAATSA and any CAATSA Sanctions Programs.


 


Section 1.07       
 “Base Prospectus” shall mean the Company’s prospectus accompanying the Registration Statement.


 


Section 1.08       
“CAATSA” shall mean Public Law No. 115-44 The Countering America’s Adversaries Through Sanctions
Act.


 


Section 1.09       “CAATSA
Sanctions Programs” shall mean a country or territory that is, or whose government is, the subject of sanctions imposed
by CAATSA.


 


Section 1.10       
“Commitment Amount” shall mean the aggregate amount of up to $10,000,000.


 


Section 1.11       
“Commitment Period” shall mean the period commencing on the date hereof and expiring upon the date of
termination of this Agreement in accordance with Section 11.02.


 


 


 






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Section 1.12       
“Common Stock” shall have meaning set forth in the Recitals.


 


Section 1.13       
“Company Indemnitees” shall have the meaning set forth in Section 5.02.


 


Section 1.14       
“Condition Satisfaction Date” shall have the meaning set forth in Section 7.01.


 


Section 1.15       
“Consolidation Event” shall have the meaning set forth in Section 6.08.


 


Section 1.16       
“Daily Value Traded” in respect of a particular day means the product obtained by multiplying the daily
trading volume of the Common Stock for that day on the Principal Market by the VWAP for such day.


 


Section 1.17       
“Environmental Laws” shall have the meaning set forth in Section 4.08.


 


Section 1.18       
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.


 


Section 1.19       
“FCPA” shall mean the Foreign Corrupt Practices Act of 1977, as amended.


 


Section 1.20       
“FinCEN Guidance” shall mean the Financial Crimes Enforcement Network guidance released February 14,
2014.


 


Section 1.21       
“Indemnified Liabilities” shall have the meaning set forth in Section 5.01.


 


Section 1.22       
“Initial Registration Statement” shall have the meaning set forth in 6.01.


 


Section 1.23       
“Investor Indemnitees” shall have the meaning set forth in Section 5.01.


 


Section 1.24       
“Market Price” shall mean the lowest daily VWAP of the Common Stock during the relevant Pricing Period
that is greater than or equal to the Minimum Acceptable Price.


 


Section 1.25       
“Material Adverse Effect” shall mean any condition, circumstance, or situation that may result in, or
would reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of this Agreement
or the transactions contemplated herein, (ii) a material adverse effect on the results of operations, assets, business or condition
(financial or otherwise) of the Company and its 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 this Agreement.


 


Section 1.26       
“Maximum Advance Amount” shall not exceed $2,500,000.


 


Section 1.27       
“Minimum Acceptable Price” or “MAP” shall mean the minimum price notified by the Company
to the Investor in each Advance Notice.


 


Section 1.28       
“OFAC” shall mean the U.S. Department of Treasury’s Office of Foreign Asset Control.


 


Section 1.29       
“Ownership Limitation” shall have the meaning set forth in Section 2.01(c)(i).


 


Section 1.30       
“Person” shall mean an individual, a corporation, a partnership, an association, a trust or other entity
or organization, including a government or political subdivision or an agency or instrumentality thereof.


 


 


 






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Section 1.31       
“Plan of Distribution” shall mean the section of a Registration Statement disclosing the plan of distribution
of the Shares


 


Section 1.32       
“Pricing Period” shall mean the 5 consecutive Trading Days commencing on the Trading Day immediately
following the Advance Notice Date.


 


Section 1.33       
 “Principal Market” shall mean the OTC Markets, the New York Stock Exchange, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market, whichever is at the time the principal trading exchange or market
for the Common Stock.


 


Section 1.34       
“Prospectus” shall mean the Base Prospectus, as supplemented by any Prospectus Supplement.


 


Section 1.35       
“Prospectus Supplement” shall mean any prospectus supplement to the Base Prospectus filed with the SEC
pursuant to Rule 424(b) under the Securities Act, including, without limitation, the Prospectus Supplement to be filed in accordance
with Section 6.01 hereof.


 


Section 1.36       
“Purchase Price” shall mean the price per share obtained by multiplying the Market Price by 98%.


 


Section 1.37       
“Registrable Securities” shall mean (i) the Shares (ii) the Commitment Shares, and (iii) any securities
issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with
a combination of shares, recapitalization, consolidation or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities when (a) the Registration Statement has been declared
effective by the SEC and such Registrable Securities have been disposed of pursuant to the Registration Statement, (b) such Registrable
Securities have been sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provision then
in force) under the Securities Act (“Rule 144”) are met, or (c) such Registrable Securities may be sold without
any time, volume or manner limitations pursuant to Rule 144.


 


Section 1.38       
“Registration Limitation” shall have the meaning set forth in Section 2.01(c)(ii).


 


Section 1.39       
“Registration Period” shall mean the Initial Registration Statement or another registration statement
on a form promulgated by the SEC for which the Company then qualifies for the registration of the offer and sale of the Shares
to be offered and sold by the Company to the Investor and the resale of such Shares by the Investor, as the same may be amended
and supplemented from time to time and including any information deemed to be a part thereof pursuant to Rule 430B under the Securities
Act and any successor registration statement filed by the Company with the SEC under the Securities Act on a form promulgated by
the SEC for which the Company then qualifies and which form shall be available for the registration of the transactions contemplated
hereunder.


 


Section 1.40       
“Regulation D” shall mean Regulation D promulgated under the Securities Act.


 


Section 1.41       
“Sanctions” means any sanctions administered or enforced by OFAC, the U.S. State Department, the United
Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority.


 


Section 1.42       
“Sanctions Programs” means any OFAC economic sanction program (including, without limitation, programs
related to Crimea, Cuba, Iran, North Korea, Sudan and Syria).


 


Section 1.43       
“SEC” shall mean the U.S. Securities and Exchange Commission.


 


Section 1.44       
“SEC Documents” shall have the meaning set forth in Section 4.04.


 


Section 1.45       
“Securities Act” shall have the meaning set forth in the recitals of this Agreement.


 


 


 






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Section 1.46       
“Settlement Document” shall have the meaning set forth in Section 2.02(a).


 


Section 1.47       
“Shares” shall mean the Common Stock to be issued from time to time hereunder pursuant to Advances.


 


Section 1.48       
“Trading Day” shall mean any day during which the Principal Market shall be open for business.


 


Section 1.49       
“VWAP” means, for any Trading Day, the daily volume weighted average price of the Common Stock for such
date on the Principal Market as reported by Bloomberg L.P. during regular trading hours.


 


Article II.


Advances


 


Section 2.01       
Advances; Mechanics. Subject to the terms and conditions of this Agreement (including, without limitation, the provisions
of Article VII hereof), the Company, at its sole and exclusive option, may issue and sell to the Investor, and the Investor shall
purchase from the Company, Common Stock on the following terms:


 


		(a)	Advance Notice. At any time during the Commitment Period the Company may require the Investor
to purchase Shares by delivering an Advance Notice to the Investor, subject to the conditions set forth in Section 7.01, and in
accordance with the following provisions;



 


		(i)	After the first Advance Notice, the Company shall, in its sole discretion, select the Advance Amount
it desires to request in each Advance Notice and the time it desires to deliver each Advance Notice, which amount shall not exceed
the Maximum Advance Amount, provided however, the Company acknowledges and agrees that the total Advance Amount that the Company
will receive in connection with each Advance Notice may be less than the Advance Amount requested in the Advance Notice due to
reductions to the Advance Amount in accordance with Section 2.01(c) and (d) of this Agreement.



 


		(ii)	There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment
Amount or any part thereof.



 


		(b)	Date of Delivery of Advance Notice. Advance Notices shall be delivered in accordance with
the instructions set forth on the bottom of Exhibit A. An Advance Notice shall be deemed delivered on (i) the Trading Day it is
received by the Investor if such notice is received prior to 5:00 p.m. Eastern Time in accordance with the instructions set forth
on the bottom of Exhibit A, or (ii) the immediately succeeding Trading Day if it is received after 5:00 p.m. Eastern Time on a
Trading Day or at any time on a day which is not a Trading Day, in each case in accordance with the instructions set forth on the
bottom of Exhibit A. No Advance Notice may be deemed delivered on a day that is not a Trading Day.



 


		(c)	Advance Limitations. Regardless of the Advance Amount requested by the Company in the Advance
Notice, the final amount of the Advance shall be reduced in accordance with each of the following limitations:



 


		(i)	Ownership Limitation; Commitment Amount. In no event shall the number of shares of Common
Stock issuable to the Investor pursuant to an Advance cause the aggregate number of shares of Common Stock beneficially owned (as
calculated pursuant to Section 13(d) of the Exchange Act) by the Investor and its affiliates to exceed 4.99% of the then outstanding
Common Stock (the “Ownership Limitation”). In connection with each Advance Notice delivered by the Company,
any portion of an Advance that would (i) cause the Investor to exceed the Ownership Limitation or (ii) cause the aggregate amount
of Advances to exceed the Commitment Amount shall automatically be withdrawn with no further action required by the Company, and
such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount
equal to such withdrawn portion.



 


 


 


 






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		(ii)	Registration Limitation. In no event shall the aggregate number of Shares subject to an
Advance Notice cause the number of Shares purchased by the Investor pursuant to this Agreement to exceed the number of Shares registered
under the Registration Statement then in effect (the “Registration Limitation”). In connection with each Advance
Notice, any portion of an Advance that would exceed the Registration Limitation shall automatically be withdrawn with no further
action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of
the requested Advance by an amount equal to such withdrawn portion in respect of each Advance Notice.



 


		(d)	Minimum Acceptable Price.



 


		(i)	With respect to each Advance Notice, the Company shall notify the Investor of the MAP with respect
to such Advance by indicating an MAP on each Advance Notice. If no MAP is specified in an Advance Notice, then no MAP shall be
in effect in connection with such Advance. For each Advance: (A) the amount of the Advance set forth in such Advance Notice shall
automatically be reduced by 20% for each Trading Day during the Pricing Period for which the VWAP of the Common Stock is below
the MAP in effect with respect to such Advance Notice (if applicable), or for which there is no VWAP (each such day, an “Excluded
Day”), and (B) for the avoidance of doubt, each Excluded Day shall be excluded from the Pricing Period for purposes of
determining the Market Price.



 


		(ii)	The number of Shares to be issued and delivered to the Investor at each Closing with respect to
an Advance Notice with an Excluded Day shall be determined based on the Advance Notice amount as reduced pursuant to Section 2.01(d)(i)(A)
above (the “Adjusted Advance Amount”); provided, however, that the Adjusted Advance Amount shall be automatically
increased by an amount equal to the number of Shares sold by the Investor on such Excluded Day (in a total amount for each Excluded
Day not to exceed 20% of the amount of the Advance set forth in the original Advance Notice) at a price per share equal to the
MAP in effect with respect to such Advance Notice (without any further discount).



 


		(e)	Notwithstanding any other provision in this Agreement, the Company and the Investor acknowledge
and agree that upon the Investor’s receipt of a valid Advance Notice the parties shall be deemed to have entered into an
unconditional contract binding on both parties for the purchase and sale of Shares pursuant to such Advance Notice in accordance
with the terms of this Agreement and subject to applicable law.



 


Section 2.02       
Closings. Each Closing shall take place as soon as practicable after each Advance Date in accordance with the procedures
set forth below. In connection with each Closing, the Company and the Investor shall fulfill each of its obligations as set forth
below:


 


		(a)	On each Advance Date, the Investor shall deliver to the Company a written document, in the form
attached hereto as Exhibit B (each a “Settlement Document”), setting forth the amount of the Advance (taking
into account any adjustments pursuant to Section 2.01), the Purchase Price, the number of shares of Common Stock to be purchased
by the Investor, and a report by Bloomberg, L.P. indicating the VWAP for each of the Trading Days during the Pricing Period (or,
if not reported on Bloomberg, L.P., another reporting service reasonably agreed to by the parties), in each case in accordance
with the terms and conditions of this Agreement.



 


		(b)	Promptly after receipt of the Settlement Document with respect to each Advance (and, in any event,
not later than 2 Trading Days after such receipt), the Company will, or will cause its transfer agent to, electronically transfer
such number of shares of Common Stock to be purchased by the Investor (as set forth in the Settlement Document) by crediting the
Investor’s account or its designee’s account at the Depository Trust Company through its Deposit Withdrawal at Custodian
System or by such other means of delivery as may be mutually agreed upon by the parties hereto (which in all cases the resale of
such shares of Common Stock shall be covered by an effective Registration Statement and may be freely transferred by the Investor),
and transmit notification to the Investor that such share transfer has been requested. Promptly upon receipt of such notification,
the Investor shall pay to the Company of the aggregate amount of the Advance (as set forth in the Closing Statement) in cash in
immediately available funds to an account designated by the Company in writing. No fractional shares shall be issued, and any fractional
amounts shall be rounded to the next higher whole number of shares. Any certificates evidencing Common Stock delivered pursuant
hereto shall be free of restrictive legends. To facilitate the transfer of the share of Common Stock by the Investor, the shares
of Common Stock will not bear any restrictive legends so long as there is an effective Registration Statement covering such Common
Stock.



 


 


 


 






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		(c)	On or prior to the Advance Date, each of the Company and the Investor shall deliver to the other
all documents, instruments and writings required to be delivered by either of them pursuant to this Agreement in order to implement
and effect the transactions contemplated herein.



 


Section 2.03       
Hardship. In the event the Investor sells shares of Common Stock after receipt of an Advance Notice and the Company
fails to perform its obligations as mandated in Section 2.02, the Company agrees that in addition to and in no way limiting the
rights and obligations set forth in Article V hereto and in addition to any other remedy to which the Investor is entitled at law
or in equity, including, without limitation, specific performance, it will hold the Investor harmless against any loss, claim,
damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default
by the Company and acknowledges that irreparable damage would occur in the event of any such default. It is accordingly agreed
that the Investor shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically
enforce (subject to the Securities Act and other rules of the Principal Market), without the posting of a bond or other security,
the terms and provisions of this Agreement.


 


Article III.


Representations
and Warranties of Investor


 


Investor hereby represents
and warrants to, and agrees with, the Company that the following are true and correct as of the date hereof and as of each Advance
Date:


 


Section 3.01       
Organization and Authorization. The Investor is duly organized, validly existing and in good standing under the laws
of the Cayman Islands and has all requisite power and authority to execute, deliver and perform this Agreement, including all transactions
contemplated hereby. The decision to invest and the execution and delivery of this Agreement by the Investor, the performance by
the Investor of its obligations hereunder and the consummation by the Investor of the transactions contemplated hereby have been
duly authorized and require no other proceedings on the part of the Investor. The undersigned has the right, power and authority
to execute and deliver this Agreement and all other instruments on behalf of the Investor or its shareholders. This Agreement has
been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the
Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance
with its terms.


 


Section 3.02       
Evaluation of Risks. The Investor has such knowledge and experience in financial, tax and business matters as to
be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Company and
of protecting its interests in connection with the transactions contemplated hereby. The Investor acknowledges and agrees that
its investment in the Company involves a high degree of risk, and that the Investor may lose all or a part of its investment.


 


Section 3.03       
No Legal, Investment or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review
this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors.
The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any
of the Company’s representatives or agents for legal, tax, investment or other advice with respect to the Investor’s
acquisition of Common Stock hereunder, the transactions contemplated by this Agreement or the laws of any jurisdiction.


 


Section 3.04       
Investment Purpose. The shares of Common Stock purchased by the Investor hereunder are being or will be purchased
for its own account, for investment purposes, and without any view or intention to distribute such shares in violation of the Securities
Act or any other applicable securities laws. The Investor agrees not to assign or in any way transfer the Investor’s rights
to the securities or any interest therein or its obligations under this Agreement and acknowledges that the Company will not recognize
any purported assignment or transfer except in accordance with applicable Federal and state securities laws. No other Person has
or will have a direct or indirect beneficial interest in the securities. The Investor agrees not to sell, hypothecate or otherwise
transfer the Investor’s Common Stock unless such shares are registered under Federal and applicable state securities laws
or unless, in the opinion of counsel satisfactory to the Company, an exemption from such registration is available.


 


Section 3.05       
Accredited Investor. The Investor is an “Accredited Investor” as that term is defined in Rule
501(a)(3) of Regulation D.


 


 


 


 






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Section 3.06       
Information. The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating
to the business, finances and operations of the Company and information it deemed material to making an informed investment decision.
The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management and
has received answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Investor
or its advisors, if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement. The Investor understands that its investment involves a high degree
of risk. The Investor has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment
decision with respect to the transactions contemplated hereby.


 


Section 3.07       
Not an Affiliate. The Investor is not an officer, director or a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control with the Company or any “affiliate”
of the Company (as that term is defined in Rule 405 promulgated under the Securities Act).


 


Section 3.08       
Trading Activities. The Investor’s trading activities with respect to the Common Stock shall be in compliance
with all applicable federal and state securities laws, rules and regulations and the rules and regulations of the Principal Market
on which the Common Stock is listed or traded. Neither the Investor nor its affiliates has any open short position in the Common
Stock, nor has the Investor entered into any hedging transaction that establishes a net short position with respect to the Common
Stock, and the Investor agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales or hedging
transactions with respect to the Common Stock; provided that the Company acknowledges and agrees that upon receipt of an
Advance Notice the Investor has the right to sell the shares to be issued to the Investor pursuant to the Advance Notice prior
to receiving such shares.


 


Section 3.09       
General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Common Stock offered hereby.


 


Article IV.


Representations
and Warranties of the Company


 


Except as set forth
in the SEC Documents, or in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify
any representation or warranty otherwise made herein to the extent of the disclosure contained in the corresponding section of
the Disclosure Schedules or in another Section of the Disclosure Schedules, to the extent that it is reasonably apparent on the
face of such disclosure that such disclosure is applicable to such Section, the Company represents and warrants to the Investor
that, as of the date hereof and as of each Advance Date (other than representations and warranties which address matters only as
of a certain date, which shall be true and correct as written as of such certain date), that:


 


Section 4.01       
Organization and Qualification. Each of the Company and its Subsidiaries (as defined below) is an entity duly organized
and validly existing under the laws of its state of organization or incorporation, and has the requisite power and authority to
own its properties and to carry on its business as now being conducted. Each of the Company and its Subsidiaries is duly qualified
to do business and is in good standing (to the extent applicable) in every jurisdiction in which the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would
not have a Material Adverse Effect. “Subsidiaries” means any Person (as defined below) in which the Company,
directly or indirectly, (x) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or
(y) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing,
is individually referred to herein as a “Subsidiary.”


 


 


 


 






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Section 4.02       
Authorization, Enforcement, Compliance with Other Instruments. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities
in accordance with the terms hereof and thereof. The execution and delivery by the Company of this Agreement and the other Transaction
Documents, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Common Stock) have been or (with respect to consummation) will be duly authorized by the Company’s board
of directors or other governing body and no further consent or authorization will be required by the Company, its board of directors
or its shareholders. This Agreement and the other Transaction Documents to which it is a party have been (or, when executed and
delivered, will be) duly executed and delivered by the Company and, assuming the execution and delivery thereof and acceptance
by the Investor, constitute (or, when duly executed and delivered, will be) the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification
and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively,
this Agreement and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection
with the transactions contemplated hereby and thereby, as may be amended from time to time.


 


Section 4.03       
No Conflict. The execution, delivery and performance of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Stock)
will not (i) result in a violation of the articles of association or other organizational documents of the Company or its Subsidiaries
(with respect to consummation, as the same may be amended prior to the date on which any of the transactions contemplated hereby
are consummated), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which the Company or its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or its Subsidiaries
or by which any property or asset of the Company or its Subsidiaries is bound or affected except, in the case of clause (ii) or
(iii) above, to the extent such violations that would not reasonably be expected to have a Material Adverse Effect.


 


Section 4.04       
SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to Section 15(d) of the Exchange Act for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file such material) (all of the foregoing filed preceding
the date hereof or amended after the date hereof, or filed after the date hereof, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference therein, and all registration statements filed by the
Company under the Securities Act, being hereinafter referred to as the “SEC Documents”). The Company has made
available to the Investor through the SEC’s website at http://www.sec.gov, true and complete copies of the SEC Documents.
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the
Company as of the respective dates thereof and the results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).


 


Section 4.05       
Equity Capitalization. As of the date hereof there are 900,000,000 shares of Common Stock authorized, of which 120,535,672
are issued and outstanding. All of such outstanding shares are duly authorized, validly issued, fully paid and nonassessable.


 


 


 


 






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Section 4.06       
Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use
all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses
as now conducted, except as would not cause a Material Adverse Effect. The Company and its Subsidiaries do not have any knowledge
of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, or trade secrets, except as would not cause a Material Adverse
Effect. To the knowledge of the Company, there is no claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention,
copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and, except as
would not cause a Material Adverse Effect, the Company is not aware of any facts or circumstances which might give rise to any
of the foregoing.


 


Section 4.07       
Employee Relations. Neither the Company nor any of its Subsidiaries is involved in any labor dispute nor, to the
knowledge of the Company or any of its Subsidiaries, is any such dispute threatened, in each case which is reasonably likely to
cause a Material Adverse Effect.


 


Section 4.08       
Environmental Laws. The Company and its Subsidiaries (i) are in compliance in all material respects with all Environmental
Laws (as defined below), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license
or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all
applicable federal, state and local laws relating to pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances
or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans
or regulations issued, entered, promulgated or approved thereunder.


 


Section 4.09       
Title. Except as set forth in the SEC Documents or except as would not cause a Material Adverse Effect, the Company
has good and marketable title to its properties and material assets owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to the business of the Company. Any real property
and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings
by the Company and its subsidiaries.


 


Section 4.10       
Insurance. The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse Effect.


 


Section 4.11       
Regulatory Permits. Except as would not cause a Material Adverse Effect, the Company and its subsidiaries possess
all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the Company nor any such subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate, authorization or permits.


 


Section 4.12       
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general
or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.


 


 


 


 






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Section 4.13       
Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or
affecting the Company, the Common Stock or any of the Company’s Subsidiaries, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect.


 


Section 4.14       
Subsidiaries. Except as disclosed in the SEC Documents, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership, association or other business entity.


 


Section 4.15       
Tax Status. Each of the Company and its Subsidiaries (i) has timely made or filed all foreign, federal and state
income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely
paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company and its Subsidiaries know of no basis for any such claim.


 


Section 4.16       
Certain Transactions. Except as set forth in the SEC Documents (or as not required to be disclosed pursuant to applicable
law) none of the officers or directors of the Company is presently a party to any transaction with the Company (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 or director, or to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer
or director has a substantial interest or is an officer, director, trustee or partner.


 


Section 4.17       
Fees and Rights of First Refusal. The Company is not obligated to offer the Common Stock offered hereunder on a right
of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.


 


Section 4.18       
Dilution. The Company is aware and acknowledges that issuance of Common Stock hereunder could cause dilution to existing
shareholders and could significantly increase the outstanding number of Common Stock.


 


Section 4.19       
Acknowledgment Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor
is acting solely in the capacity of an arm’s length investor with respect to this Agreement and the transactions contemplated
hereunder. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions contemplated hereunder and any advice given by
the Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereunder
is merely incidental to the Investor’s purchase of the Shares hereunder. The Company is aware and acknowledges that it shall
not be able to request Advances under this Agreement if the Registration Statement is not effective or if any issuances of Common
Stock pursuant to any Advances would violate any rules of the Principal Market. The Company further is aware and acknowledges that
any fees paid or shares issued pursuant to Section 13.04 hereunder shall be earned on the date due as set forth therein and are
not refundable or returnable under any circumstances.


 


Section 4.20        FCPA.
Neither the Company nor its subsidiaries, nor to the knowledge of the Company, any agent or other person acting on behalf of the
Company or Subsidiaries, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company or its subsidiaries (or made by any person acting on its behalf of which the Company
is aware) which is in violation of law or (iv) violated in any material respect any provision of the FCPA.


 


 


 


 






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Section 4.21       
OFAC. Neither the Company or its subsidiaries, nor, to Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or subsidiaries, is a Person that is, or is owned or controlled by a Person that is:


 


(a)              
on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC from time to time;


 


(b)              
the subject of any Sanctions;


 


(c)              
has a place of business in, or is operating, organized, resident or doing business in a country or territory that is, or
whose government is, the subject of Sanctions Programs.


 


Section 4.22       
CAATSA. Neither the Company or its subsidiaries, nor, to Company’s knowledge, any director, officer, agent,
employee or affiliate of the Company or subsidiaries, is a Person that is, or is owned or controlled by a Person that has a place
of business in, or is operating, organized, resident or doing business in a country or territory that is, or whose government is,
the subject of the CAATSA Sanctions Programs.


 


Section 4.23       
 FinCEN Guidance. Neither the Company nor any director, officer, agent, employee or affiliate of the Company or subsidiaries,
is:


 


i)                 Assisting in the distribution of marijuana to minors;


 


ii)                Participating in the diversion of marijuana from states where it is legal under state law in some form to other states;


 


iii)               Contributing to adverse public health consequences associated with marijuana use;


 


iv)               Facilitating the growing of marijuana on federal property;


 


v)                Facilitating the possession of marijuana on federal property;


 


vi)               Facilitating the flow of revenue from the sale of marijuana to criminal enterprises;


 


vii)              Facilitating violence or the use of firearms in the cultivation and distribution of marijuana; and


 


viii)             Using
state-authorized marijuana activity as a cover or pretext for trafficking of other illegal drugs.


 


Article V.


Indemnification


 


The Investor and the
Company represent to the other the following with respect to itself:


 


 


 


 






    	 	11	 



     

    

 


Section 5.01       
Indemnification by the Company. In consideration of the Investor’s execution and delivery of this Agreement,
and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless the Investor, and all of its officers, directors, partners, employees and agents (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) and each person who controls the Investor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Investor Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and reasonable and documented expenses in connection therewith (irrespective of whether any such Investor Indemnitee is a party
to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them as a result of, or arising
out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement
for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on behalf of the Investor specifically for inclusion
therein; (b) any material misrepresentation or breach of any material representation or material warranty made by the Company in
this Agreement or any other certificate, instrument or document contemplated hereby or thereby; (c) any material breach of any
material covenant, material agreement or material obligation of the Company contained in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; or (d) any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee, and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument, document or agreement executed pursuant hereto
by any of the Investor Indemnitees. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.


 


Section 5.02       
Indemnification by the Investor. In consideration of the Company’s execution and delivery of this Agreement,
and in addition to all of the Investor’s other obligations under this Agreement, the Investor shall defend, protect, indemnify
and hold harmless the Company and all of its officers, directors, shareholders, employees and agents (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Company Indemnitees or any of them as a result of, or arising
out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement
for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading; provided, however, that
the Investor will only be liable for written information relating to the Investor furnished to the Company by or on behalf of the
Investor specifically for inclusion in the documents referred to in the foregoing indemnity, and will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished
to the Investor by or on behalf of the Company specifically for inclusion therein; (b) any misrepresentation or breach of any representation
or warranty made by the Investor in this Agreement or any instrument or document contemplated hereby or thereby executed by the
Investor; (c) any breach of any covenant, agreement or obligation of the Investor(s) contained in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor; or (d) any cause of action, suit or claim brought
or made against such Company Indemnitee not arising out of any action or inaction of a Company Indemnitee and arising out of or
resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason, the Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.


 


 


 


 






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Section 5.03       
Notice of Claim. Promptly after receipt by an Investor Indemnitee or Company Indemnitee of notice of the commencement
of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Investor
Indemnitee or Company Indemnitee, as applicable, shall, if a claim for an Indemnified Liability in respect thereof is to be made
against any indemnifying party under this Article V, deliver to the indemnifying party a written notice of the commencement thereof;
but the failure to so notify the indemnifying party will not relieve it of liability under this Article V except to the extent
the indemnifying party is prejudiced by such failure. The indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually reasonably satisfactory to the indemnifying party and the Investor Indemnitee or Company
Indemnitee, as the case may be; provided, however, that an Investor Indemnitee or Company Indemnitee shall have the right to retain
its own counsel with the reasonable fees and expenses of not more than one counsel for such Investor Indemnitee or Company Indemnitee
to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation
by such counsel of the Investor Indemnitee or Company Indemnitee and the indemnifying party would be inappropriate due to actual
or potential differing interests between such Investor Indemnitee or Company Indemnitee and any other party represented by such
counsel in such proceeding. The Investor Indemnitee or Company Indemnitee shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Investor Indemnitee or Company Indemnitee which relates to such action or claim.
The indemnifying party shall keep the Investor Indemnitee or Company Indemnitee fully apprised at all times as to the status of
the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Investor
Indemnitee or Company Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does
not include as an unconditional term thereof the giving by the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee
of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Investor Indemnitee or Company Indemnitee with respect to all third
parties, firms or corporations relating to the matter for which indemnification has been made. The indemnification required by
this Article V shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and
when bills are received and payment therefor is due.


 


Section 5.04       
Contribution. In the event that the indemnity provided in Section 5.01 or Section 5.02 is unavailable to or insufficient
to hold harmless an indemnified party for any reason, the Company and the Investor severally agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating
or defending the same) (collectively “Losses”) to which the Company or the Investor may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and by the Investor on the other from
transactions contemplated by this Agreement. If the allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the Investor severally shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and of the Investor on the other in connection with
the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total proceeds from the offering (net of all discounts and commissions but before
deducting expenses) received by it, and benefits received by the Investor shall be deemed to be equal to the total discounts received
by the Investor. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the
Company on the one hand or the Investor on the other, the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The Company and the Investor agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Article V shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or
alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 5.04, the Investor shall
not be required to contribute any amount in excess of the amount by which the Purchase Price for Shares actually purchased pursuant
to this Agreement exceeds the amount of any damages which the Investor has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Article V, each person who controls the Investor within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act and each director, officer, employee and agent of the Investor shall
have the same rights to contribution as the Investor, and each person who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this Section 5.04.


 


 


 


 






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Section 5.05       
Remedies. The remedies provided for in this Article V are not exclusive and shall not limit any right or remedies
which may otherwise be available to any indemnified person at law or in equity. The obligations of the parties to indemnify or
make contribution under this Article V shall survive expiration or termination of this Agreement for a period of three years.


 


Section 5.06       
Limitation of liability. Notwithstanding the foregoing, no party shall be entitled to recover from the other party
for punitive, indirect, incidental or consequential damages.


 


Article VI.

Covenants of the Company


 


Section 6.01       
Registration Statement.


 


		(a)	The Company has filed a registration statement (with File Number 333-216845) (the “Initial
Registration Statement”) with the SEC under the Securities Act on Form S-3 with respect to the issuance sale of the Shares
by the Company, which contains, among other things a Plan of Distribution section disclosing the methods by which the Company may
sell the Shares. The Initial Registration Statement was declared effective on April 21, 2017 and remains in effect on the date
hereof.



 


		(b)	Promptly after the date hereof (and prior to the Company delivering an Advance Notice to the Investor
hereunder), the Company shall file with the SEC a report on Form 8-K or such other appropriate form as determined by counsel to
the Company, relating to the transactions contemplated by this Agreement and a preliminary Prospectus Supplement pursuant to Rule
424(b) of the Securities Act disclosing all information relating to the transaction contemplated hereby required to be disclosed
therein and an updated Plan of Distribution, including, without limitation, the name of the Investor, the number of Shares being
offered hereunder, the terms of the offering, the purchase price of the Shares, and other material terms of the offering, and any
other information or disclosure necessary to register the transactions contemplated herein (collectively, the “Initial
Disclosure”) and shall provide the Investor with 24 hours to review the Initial Disclosure prior to its filing.



 


		(c)	Maintaining a Registration Statement. The Company shall maintain the effectiveness of any
Registration Statement with respect to Registrable Securities that has been declared effective at all times during the Commitment
Period or, if earlier, until such time as no Registrable Securities registered thereunder remain outstanding (the “Registration
Period”). Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed
and at all times while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto)
and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration
Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were
made) not misleading. During the Commitment Period, the Company shall notify the Investor promptly if (i) the Registration Statement
shall cease to be effective under the Securities Act, (ii) the Common Stock shall cease to be authorized for listing on the Principal
Market, (iii) the Common Stock ceases to be registered under Section 12(b) or Section 12(g) of the Exchange Act or (iv) the
Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange
Act.



 


		(d)	Filing Procedures. Not less than 1 business days prior to the filing of a Registration Statement
and not less than one business day prior to the filing of any related amendments and supplements to all Registration Statements
(except for any amendments or supplements caused by the filing of any annual reports on Form 10-K, current reports on Form 8-K,
and any similar or successor reports), the Company shall furnish to the Investor copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the reasonable and
prompt review of the Investor. The Investor shall furnish comments on a Registration Statement and any related amendment and supplement
to a Registration Statement to the Company within 24 hours of the receipt thereof. If the Investor fails to provide comments to
the Company within such 24-hour period, then the Registration Statement, related amendment or related supplement, as applicable,
shall be deemed accepted by the Investor in the form originally delivered by the Company to the Investor.



 


 


 


 






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		(e)	Delivery of Final Documents. The Company shall furnish to the Investor without charge, (i)
at least one copy of each Registration Statement as declared effective by the SEC and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) at
the request of the Investor, 10 copies of the final prospectus included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as the Investor may reasonably request) and (iii) such other documents as the Investor
may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor
pursuant to a Registration Statement.



 


		(f)	Amendments and Other Filings. The Company agrees that on such dates as the Securities Act
shall require, the Company will file a Prospectus Supplement or other appropriate form as determined by counsel with the SEC under
the applicable paragraph of Rule 424(b) under the Securities Act, which Prospectus Supplement will set forth, within the relevant
period, the amount of Shares sold to the Investor, the net proceeds to the Company and the discount paid by the Investor with respect
to such Shares. The Company shall provide the Investor at least 24 hours to comment on a draft of each such Prospectus Supplement
(and shall give due consideration to all such comments) and shall deliver or make available to the Investor, without charge, an
electronic copy of each form of Prospectus Supplement, together with the Base Prospectus. The Company consents to the use of the
Prospectus (and of any Prospectus Supplement thereto) in accordance with the provisions of the Securities Act and with the securities
or “blue sky” laws of the jurisdictions in which the Shares may be sold by the Investor, in connection with the offering
and sale of the Shares and for such period of time thereafter as the Prospectus is required by the Securities Act to be delivered
in connection with sales of the Shares. If during such period of time any event shall occur that in the judgment of the Company
and its counsel is required to be set forth in the Prospectus or should be set forth therein in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend
the Prospectus to comply with the Securities Act or any other applicable law or regulation, the Company shall forthwith prepare
and file with the SEC an appropriate Prospectus Supplement to the Prospectus and shall promptly furnish or make available to the
Investor an electronic copy thereof. The Company shall (i) prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the related prospectus used in connection with such Registration Statement,
which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period.



 


		(g)	Blue-Sky. The Company shall use its commercially reasonable efforts to, if applicable, (i)
register and qualify the Registrable Securities covered by a Registration Statement under such other securities or “blue
sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as
may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its
Articles of Incorporation or Bylaws, (x) qualify to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 6.01(g), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent
to service of process in any such jurisdiction. The Company shall promptly notify the Investor of the receipt by the Company of
any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.



 


Section 6.02        Listing
of Common Stock. The Company shall use its commercially reasonable efforts to maintain the Common Stock’ authorization
for quotation on the Principal Market and shall notify the Investor promptly if the Common Stock shall cease to be authorized
for quotation on the Principal Market.


 


Section 6.03        Opinion
of Counsel. Prior to the date of the first Advance Notice, the Investor shall have received an opinion letter from counsel
to the Company in the form attached hereto as Exhibit C.


 


Section 6.04       
Exchange Act Registration. The Company will file in a timely manner all reports and other documents required of it
as a reporting company under the Exchange Act and will not take any action or file any document (whether or not permitted by Exchange
Act or the rules thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act.


 


 


 






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Section 6.05       
Transfer Agent Instructions. For any time while there is a Registration Statement in effect for this transaction,
the Company shall, and (if required by the transfer agent) cause legal counsel for the Company to deliver, to the transfer agent
for such Registrable Securities (with a copy to the Investor) confirmation that such Registration Statement is effective and instructions
to issue Common Stock to the Investor free of restrictive legends upon each Advance.


 


Section 6.06       
Corporate Existence. The Company will take all steps necessary to preserve and continue the corporate existence of
the Company during the Commitment Period.


 


Section 6.07       
Notice of Certain Events Affecting Registration; Suspension of Right to Make an Advance. The Company will immediately
notify the Investor, and confirm in writing, upon its becoming aware of the occurrence of any of the following events in respect
of a Registration Statement or related prospectus relating to an offering of Registrable Securities: (i) receipt of any request
for additional information by the SEC or any other Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance
by the SEC or any other Federal governmental authority of any stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation
or written threat of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in the Registration
Statement or related prospectus of any document incorporated or deemed to be incorporated therein by reference untrue in any material
respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus,
it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or of the
necessity to amend the Registration Statement or supplement a related prospectus to comply with the Securities Act or any other
law; and (v) the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be
appropriate; and the Company will promptly make available to the Investor any such supplement or amendment to the related prospectus.
The Company shall not deliver to the Investor any Advance Notice, and the Investor shall not sell any Shares pursuant to a Registration
Statement, during the continuation of any of the foregoing events (each of the events described in the immediately preceding clauses
(i) through (v), inclusive, a “Material Outside Event”).


 


Section 6.08       
Consolidation. If an Advance Notice has been delivered to the Investor, then the Company shall not effect any consolidation
of the Company with or into, or a transfer of all or substantially all the assets of the Company to another entity (“Consolidation
Event”) before the transaction contemplated in such Advance Notice has been closed in accordance with Section 2.02 hereof.


 


Section 6.09       
Market Activities.The Company will not, directly or indirectly, take any action designed to cause or result in,
or that constitutes or might reasonably be expected to constitute, the stabilization or manipulation of the price of any security
of the Company under Regulation M of the Exchange Act.


 


Section 6.10       
Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is
terminated, will pay all expenses incident to the performance of its obligations hereunder, including but not limited to (i) the
preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each prospectus and
of each amendment and supplement thereto; (ii) the preparation, issuance and delivery of any Shares issued pursuant to this Agreement,
(iii) all fees and disbursements of the Company’s counsel, accountants and other advisors, (iv) the qualification of the
Shares under securities laws in accordance with the provisions of this Agreement, including filing fees in connection therewith,
(v) the printing and delivery of copies of any prospectus and any amendments or supplements thereto, (vi) the fees and expenses
incurred in connection with the listing or qualification of the Shares for trading on the Principal Market, or (vii) filing fees
of the SEC and the Principal Market.


 


Section 6.11       
Sales. Without the written consent of the Investor, the Company will not, directly or indirectly, offer to sell,
sell, contract to sell, grant any option to sell or otherwise dispose of any Common Stock (other than the Shares offered pursuant
to the provisions of this Agreement, the issuance of shares upon the exercise of outstanding options or warrants, and/or the issuance
of shares under publicly disclosed equity compensation plans of the Company) or securities convertible into or exchangeable for
Common Stock, warrants or any rights to purchase or acquire, Common Stock (other than the issuance of stock options and other equity
award under publicly disclosed equity compensation plans of the Company) during the period beginning on the 5th Trading Day immediately
prior to an Advance Notice Date and ending on the 5th Trading Day immediately following the corresponding Advance Date.


 


 


 


 






    	 	16	 



     

    

 


Section 6.12       
Current Report. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents not to, provide the Investor with any material, non-public information regarding
the Company or any of its Subsidiaries without the express prior written consent of the Investor (which may be granted or withheld
in the Investor’s sole discretion). Notwithstanding anything contained in this Agreement to the contrary, the Company expressly
agrees that it shall publicly disclose, no later than four (4) Business Days following the date hereof, any information communicated
to the Investor by or, to the knowledge of the Company, on behalf of the Company in connection with the transactions contemplated
herein, which, following the date hereof would, if not so disclosed, constitute material, non-public information regarding the
Company or its Subsidiaries.


 


Section 6.13       
Black-out Periods. Notwithstanding any other provision of this Agreement, the Company shall not deliver an Advance
Notice during any Company black-out periods or during any other period in which the Company is, or could be deemed to be, in possession
of material non-public information.


 


Section 6.14       
Use of Proceeds. The Company will use the proceeds from the sale of the Common Stock hereunder for working capital
and other general corporate purposes or, if different, in a manner consistent with the application thereof described in the Registration
Statement. Neither the Company nor any Subsidiary shall, directly or indirectly, use any portion of the proceeds of the transactions
contemplated herein, or lend, contribute, facilitate or otherwise make available such proceeds to any Person (i) to fund,
either directly or indirectly, any activities or business of or with any Person that is identified on the list of Specially Designated
Nationals and Blocker Persons maintained by OFAC, or in any country or territory, that, at the time of such funding, is, or whose
government is, the subject of Sanctions or Sanctions Programs, (iv) or in any manner or in a country or territory, that, at the
time of such funding, is, or whose government is, the subject of CAATSA or CAATSA Sanctions Programs or (iv) in any other manner
that will result in a violation of the FCPA, Sanctions or Sanctions Programs, CAATSA, CAATSA or FinCEN Guidance.


 


Section 6.15       
Compliance with Laws. The Company shall comply with all Applicable Laws and will not take any action which will cause
the Investor to be in violation of any such Applicable Laws.


 


Article VII.

Conditions for Advance and Conditions to Closing


 


Section 7.01       
Conditions Precedent to the Right of the Company to Deliver an Advance Notice. The right of the Company to deliver
an Advance Notice and the obligations of the Investor hereunder with respect to an Advance is subject to the satisfaction by the
Company, on each Advance Notice Date and Advance Date (a “Condition Satisfaction Date”), of each of the following
conditions:


 


		(a)	Accuracy of the Company’s Representations and Warranties. The representations and
warranties of the Company shall be true and correct in all material respects.



 


		(b)	Registration of the Common Stock with the SEC. There is an effective Registration Statement
pursuant to which the Investor is permitted to utilize the prospectus thereunder to resell all of the Common Stock issuable pursuant
to such Advance Notice. The Company shall have filed with the SEC all reports, notices and other documents required under the Exchange
Act and applicable SEC regulations during the twelve-month period immediately preceding the applicable Condition Satisfaction Date.



 


		(c)	Authority. The Company shall have obtained all permits and qualifications required by any
applicable state for the offer and sale of the Common Stock, or shall have the availability of exemptions therefrom. The sale and
issuance of the Common Stock shall be legally permitted by all laws and regulations to which the Company is subject.



 


		(d)	No Material Outside Event. No Material Outside Event shall have occurred and be continuing.



 


		(e)	Performance by the Company. The Company shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to each Condition Satisfaction Date.



 


 


 


 






    	 	17	 



     

    

 


		(f)	No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that
prohibits or directly and adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have
been commenced that may have a Material Adverse Effect.



 


		(g)	No Suspension of Trading in or Delisting of Common Stock. The Common Stock is quoted trading
on a Principal Market and all of the shares issuable pursuant to such Advance Notice will be listed or quoted for trading on such
Principal Market and the Company believes, in good faith, that trading of the Common Stock on a Principal Market will continue
uninterrupted for the foreseeable future. The issuance of Common Stock with respect to the applicable Advance Notice will not violate
the shareholder approval requirements of the Principal Market. The Company shall not have received any notice threatening the continued
quotation of the Common Stock on the Principal Market.



 


		(h)	Authorized. There shall be a sufficient number of authorized but unissued and otherwise
unreserved Common Stock for the issuance of all of the shares issuable pursuant to such Advance Notice.



 


		(i)	Executed Advance Notice. The Investor shall have received the Advance Notice executed by
an officer of the Company and the representations contained in such Advance Notice shall be true and correct as of the applicable
Condition Satisfaction Date.



 


		(j)	Consecutive Advance Notices. Except with respect to the first Advance Notice, the Company
shall have delivered all Shares relating to all prior Advances.



 


Article VIII.

Non-Disclosure of Non-Public Information


 


The Company covenants
and agrees that it shall refrain from disclosing, and shall cause its officers, directors, employees and agents to refrain from
disclosing, any material non-public information (as determined under the Securities Act, the Exchange Act, or the rules and regulations
of the SEC) to the Investor without also disseminating such information to the public, unless prior to disclosure of such information
the Company identifies such information as being material non-public information and provides the Investor with the opportunity
to accept or refuse to accept such material non-public information for review. Unless specifically agreed to in writing, in no
event shall the Investor have a duty of confidentially, or be deemed to have agreed to maintain information in confidence, with
respect to (i) any information disclosed in violation of this provision or (ii) the delivery of any Advance Notices.


 


Article IX.

Non Exclusive Agreement


 


Notwithstanding anything
contained herein, this Agreement and the rights awarded to the Investor hereunder are non-exclusive, and, subject to the provisions
in Section 6.13, the Company may, at any time throughout the term of this Agreement and thereafter, issue and allot, or undertake
to issue and allot, any shares and/or securities and/or convertible notes, bonds, debentures, options to acquire shares or other
securities and/or other facilities which may be converted into or replaced by Common Stock or other securities of the Company,
and to extend, renew and/or recycle any bonds and/or debentures, and/or grant any rights with respect to its existing and/or future
share capital.


 


Article X.

Choice of Law/Jurisdiction


 


This Agreement shall
be governed by and interpreted in accordance with the laws of the State of New Jersey without regard to the principles of conflict
of laws. The parties further agree that any action between them shall be heard in state and federal courts sitting in the State
of New Jersey, and expressly consent to the jurisdiction and venue of the Union County Superior Court, sitting in Union County,
New Jersey and the United States Federal District Court for the District of New Jersey, sitting in Newark, New Jersey, for the
adjudication of any civil action asserted pursuant to this paragraph.


 


 


 


 






    	 	18	 



     

    

 


Article XI.


Assignment;
Termination


 


Section 11.01   
Assignment. Neither this Agreement nor any rights of the parties hereto may be assigned to any other Person.


 


Section 11.02   
Termination.


 


		(a)	Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on
the earliest of (i) the first day of the month next following the 36-month anniversary of the date hereof or (ii) the date
on which the Investor shall have made payment of Advances pursuant to this Agreement in the aggregate amount of the Commitment
Amount.



 


		(b)	The Company may terminate this Agreement effective upon 15 Trading Days’ prior written notice
to the Investor; provided that (i) there are no outstanding Advance Notices, the Common Stock under which have yet to be issued,
and (ii) the Company has paid all amounts owed to the Investor pursuant to this Agreement. This Agreement may be terminated at
any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise
provided in such written consent.



 


		(c)	Nothing in this Section 11.02 shall be deemed to release the Company or the Investor from any liability
for any breach under this Agreement, or to impair the rights of the Company and the Investor to compel specific performance by
the other party of its obligations under this Agreement. The indemnification provisions contained in Article V shall survive termination
hereunder.



 


Article XII.


Notices


 


Any notices, consents,
waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will
be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii) upon receipt, when sent by electronic mail
if sent on a business day, or if not sent on a business day, on the immediately following business (provided that the electronic
mail transmission is not returned in error or the sender is not otherwise notified of any error in transmission, (iii) 7 days after
being sent by U.S. or Israeli certified mail, return receipt requested, or (iv) 1 day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the Party to receive the same. The addresses and email addresses
for such communications shall be:


 


	If to the Company, to:	Cannabics Pharmaceuticals Inc.
	 	
        #3 Bethesda Metro Centre – Suite 700

        Bethesda, MD 20814

	 	
        Attention: Eyal Barad

        Telephone:(877) 424-2429

        Email: eyalbarad@cannabics.com

	 	
	
        With a copy to (which shall not

        Constitute notice or delivery of process) to:
	 
	 	
        Office of David E. Price, Esq.

        Washington, D.C.

	 	Attention: David E. Price, Esq.
	 	Telephone:(202)536-5191
	 	Email:david@toptier.eu
	 	 
	 	 



 


 


 


 






    	 	19	 



     

    

 


	 	 
	If to the Investor(s):	YAII PN, Ltd.
	 	1012 Springfield Avenue
	 	Mountainside, NJ 07092
	 	Attention:Matthew Beckman
	 	Portfolio Manager
	 	Telephone:(201) 985-8300
	 	
        Email:mbeckam@yorkvilleadvisors.com

	 	 
	
        With a Copy (which shall not

        Constitute notice or delivery of process) to:
	 
	 	
        David Gonzalez, Esq.

        1012 Springfield Avenue

	 	Mountainside, NJ 07092
	 	Telephone:(201) 985-8300
	 	Email: dgonzalez@yorkvilleadvisors.com
	 	 


Either may change its information contained
in this Article XII by delivering notice to the other party as set forth herein.


 


Article XIII.


Miscellaneous


 


Section 13.01   
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which 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. Facsimile or other electronically scanned and delivered signatures, including by e-mail attachment, shall be deemed originals
for all purposes of this Agreement.


 


Section 13.02   
Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor,
the Company, their respective affiliates and persons acting on their behalf with respect to the matters discussed herein, and this
Agreement, and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than
by an instrument in writing signed by the party to be charged with enforcement.


 


Section 13.03   
Reporting Entity for the Common Stock. The reporting entity relied upon for the determination of the trading price
or trading volume of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any
successor thereto. The written mutual consent of the Investor and the Company shall be required to employ any other reporting entity.


 


 


 


 


 






    	 	20	 



     

    

 


Section 13.04   
Commitment Fee. The Company shall pay a commitment fee to YA Global II SPV as designee of the Investor (the “Subsidiary
Fund”) in an amount equal to 3% of the Commitment Amount as a commitment fee (“Commitment Fee”), of
which 0.75% will be due upon signing of this Agreement (the “First Installment of the Commitment Fee”) (the
“First Installment Due Date”), 0.75% shall be due on the six-month anniversary of the date hereof (the “Second
Installment of the Commitment Fee”) provided however such Second Installment of the Commitment Fee shall not be due if
the Company has issued Advances hereunder in an amount equal to $2,000,000 or greater by such six-month anniversary date of the
date hereof (the “Second Installment Due Date”). On the one year anniversary of the of the date hereof (the
“Third Installment Due Date”) the Company shall pay to the Subsidiary Fund an amount equal 1.5% of the Commitment
Amount (the “Third Installment of the Commitment Fee”) provided however such Third Installment of the Commitment
Fee shall not be due if the Company has issued Advances hereunder in an amount equal to $5,000,000 between such First Installment
Due Date and the Third Installment Due Date.


The Commitment Fee may
be paid in cash or shares (the “Commitment Shares”) which will be registered under the Initial Registration
Statement or shall have piggy-back registration rights on such follow on registration statements. If paid in shares the number
of shares shall be based on the volume weighted average price of the Company’s Common Stock on the installment First Installment
Due Date, Second Installment Due Date or Third Installment Due Date, as applicable.


The Commitment Shares
shall be deemed fully earned as of the date they are issued.


 


Section 13.05   
Due Diligence and Structuring Fee. As of the date hereof the Company has paid the Subsidiary Fund a due diligence
and structuring fee of $10,000.


 


Section 13.06   
Brokerage. Each of the parties hereto represents that it has had no dealings in connection with this transaction
with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and
the Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities
to any person claiming brokerage commissions or finder’s fees on account of services purported to have been rendered on behalf
of the indemnifying party in connection with this Agreement or the transactions contemplated hereby.


 


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IN WITNESS WHEREOF,
the parties hereto have caused this Standby Equity Distribution Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.


 


	 	COMPANY:
	 	
        CANNABICS PHARMEUTICALS INC

	 	 
	 	By: /s/ Eyal Barad                         
	 	Name: Eyal Barad
	 	Title:Chief Executive Officer
	 	 
	 	 
	 	 
	 	 
	 	INVESTOR:
	 	
        YAII PN, Ltd.

	 	 
	 	By:Yorkville Advisors Global, LP
	 	Its:Investment Manager
	 	 
	 	
        By: Yorkville Advisors Global II, LLC

        Its: General Partner

	 	 
	 	By: /s/ David Gonzales             
	 	Name: David Gonzales
	 	Title: Member and General Counsel
	 	 


 


 


 


 


 


 


 


 


 


 


 








    	 	22	 



     

    

 


EXHIBIT A

ADVANCE NOTICE


 


CANNABICS PHARMEUTICALS INC.


 





	Dated: ____________________	Advance Notice Number: ____



 


The
undersigned, _______________________ hereby certifies, with respect to the sale of Common Stock of CANNABICS PHARMEUTICALS
INC. (the “Company”) issuable in connection with this Advance Notice, delivered
pursuant to that certain Standby Equity Distribution Agreement, dated as of April 30th, 2018 (the “Agreement”),
as follows: 


 


1.       The
undersigned is the duly elected ______________ of the Company.


 


2.       There
are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.


 


3.        The
Company has performed in all material respects all covenants and agreements to be performed by the Company and has complied in
all material respects with all obligations and conditions contained in this Agreement on or prior to the Advance Notice Date, and
shall continue to perform in all material respects all covenants and agreements to be performed by the Company through the applicable
Advance Date. All conditions to the delivery of this Advance Notice are satisfied as of the date hereof.


 


4.       The
undersigned hereby represents, warrants and covenants that it has made all filings (“SEC Filings”) required
to be made by it pursuant to applicable securities laws (including, without limitation, all filings required under the Securities
Exchange Act of 1934). All SEC Filings have been reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public accountants. None of the SEC Filings contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.


 


5.       The
Advance requested is _____________________.


 


6.       The
Minimum Acceptable Price with respect to this Advance Notice is _________ (if left blank then no Minimum Acceptable Price will
be applicable to this Advance).


 


7.       4.99%
of the outstanding Common Stock of the Company as of the date hereof is ___________.


 


The undersigned has
executed this Advance Notice as of the date first set forth above.


 


 





	 	CANNABICS PHARMEUTICALS INC.
	 	 
	 	By: 
	 	Name:
	 	Title:



 





Please
deliver this Advance Notice by email with a follow up phone call to:


Email: Trading@yorkvilleadvisors.com


Attention:
Trading Department and Compliance Officer


Confirmation
Telephone Number: (201) 985-8300


 


 


 


 






    	 	23	 



     

    





EXHIBIT B


FORM OF SETTLEMENT DOCUMENT


 


VIA EMAIL


 


CANNABICS PHARMEUTICALS INC.


Attn: 


Email:


 


	 	Below please find the settlement information with respect to the Advance Notice Date of:	 
	1.	Amount of Advance Notice	 
	2.	Minimum Acceptable Price for this Advance (if any)	 
	3.	Number of Excluded Days (if any)	 
	4.	Adjusted Advance Amount (after taking into account any adjustments pursuant to Section 2.01):	 
	5.	Market Price	 
	6.	Purchase Price (Market Price x 98%) per share	 
	7.	Number of Shares due to Investor	 
	

                                                            If there were any Excluded Days then add the following (see Section 2.01(d)):

                                                            

	8.	Number of Shares Sold by Investor on Excluded Days	 
	9.	Additional Amount to be paid by Investor (Shares in number 8 x MAP)	 
	10.	Total Amount to be paid to Company (Adjusted Advance Amount + Additional Amount):	 
	11.	Total Shares to be issued to Investor (Shares due to Investor + Additional Shares):	 



 


Please issue the number of Shares due to the Investor to the account of the Investor as follows:


 


Investor’s
DTC participant #:


 


ACCOUNT NAME:


ACCOUNT NUMBER:


ADDRESS:


CITY:


COUNTRY:


Contact person:


Number and/or email:



 





	 	Sincerely, 
	 	 
	 	YAII PN, LTD.
	 	 
	 	 



 








Approved By CANNABICS PHARMEUTICALS INC.:


 


 


 


__________________________________


Name: 


 


 


 


 






    	 	24	 



     

    

 


EXHIBIT C


 


FORM OF OPINION


 


1.       The
Company is a corporation validly existing and in good standing under the laws of the State of Nevada, with corporate power and
authority to own, lease and operate its properties and to conduct its business as described in the Company’s latest Form
10-K or 10-Q filed by the Company under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)
and the rules and regulations of the SEC thereunder (the “Public Filings”) and to enter into and perform its
obligations under the Standby Equity Distribution Agreement (the “Agreement”).


 


2.       The
Company has the requisite corporate power and authority to enter into and perform its obligations under the Agreement and to issue
the Shares in accordance with their terms. The execution and delivery of the Agreement by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is required. The Agreement has been duly executed and delivered
by the Company and constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with
its terms, except as may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.


 


3.       The
Shares are duly authorized and, upon issuance in accordance with the terms of the Agreement, will be duly and validly issued, fully
paid and nonassessable, free of any liens, encumbrances and preemptive or similar rights contained to our knowledge, in any agreement
filed by the Company as an exhibit to the Company’s Public Filings.


 


4.       The
execution, delivery and performance of the Agreement by the Company (other than performance by the Company of its obligations under
the indemnification sections of the Agreement, as to which no opinion need be rendered) will not (i) result in a violation of the
Company’s Articles of Incorporation or By-laws; (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement or, indenture filed by the Company as an exhibit to the Company’s Public Filings; or (iii)
to our knowledge, result in a violation of any federal law, rule or regulation, order, judgment or decree applicable to the Company
or by which any material property or asset of the Company is bound or affected.


 


5.       To
our knowledge without independent investigation and other than as set forth in the Public Filings, there are no legal or governmental
proceedings pending to which the Company is a party or of which any property or assets of the Company is subject which is required
to be disclosed in any Public Filings.


 


 


 


 


 


 


 








    	 	25