Document:

Blueprint

 

Exhibit 10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as
of January 6, 2020, between Edesa Biotech, Inc., a British Columbia
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to (i) an effective registration statement under the Securities Act
of 1933, as amended (the “Securities Act”) as to
the Shares and (ii) an exemption from the registration requirements
of Section 5 of the Securities Act contained in Section 4(a)(2)
thereof and/or Regulation D thereunder as to the Warrants, the
Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the
Company, securities of the Company as more fully described in this
Agreement.

 

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

 

ARTICLE I.

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been
satisfied or waived, but in no event later than the second
(2nd)
Trading Day following the date hereof.

 

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

 

 

 

1

 

 

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

 

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

 

“Company Canadian Counsel”
means Fasken Martineau DuMoulin LLP, with offices located at 333
Bay Street, Suite 2400, Toronto, ON, M5H 2T6, Canada.

 

“Company U.S. Counsel”
means Stubbs Alderton & Markiles, LLP, with offices located at
15260 Ventura Blvd., 20th Floor, Sherman Oaks, California,
91403.

 

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

 

“Disclosure Time” means,
(i) if this Agreement is signed on a day that is not a Trading Day
or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time)
on the Trading Day immediately following the date hereof, unless
otherwise instructed as to an earlier time by the Placement Agent,
and (ii) if this Agreement is signed between midnight (New York
City time) and 9:00 a.m. (New York City time) on any Trading Day,
no later than 9:01 a.m. (New York City time) on the date hereof,
unless otherwise instructed as to an earlier time by the Placement
Agent.

 

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

 

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

 

 “FCPA”
means the Foreign Corrupt Practices Act of 1977, as
amended.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

2

 

 

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

 

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

 

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

 

“Per Share Purchase Price”
equals (i) $3.20 for each Purchaser
other than Purchasers that are officers, directors, employees or
consultants of the Company and (ii) $4.11 for each Purchaser that
is an officer, director, employee or consultant of the Company
(other than issuances to certain entities controlled by an officer,
director, employee, or consultant of the Company where such
issuances would not be considered equity compensation under
applicable Nasdaq Listing Rules), subject, in each case, to
adjustment for reverse and forward share splits, share dividends,
share combinations and other similar transactions of the Common
Shares that occur after the date of this Agreement.

 

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

 

“Pharmaceutical Product”
shall have the meaning ascribed to such term in Section
3.1(hh).

 

“Placement Agent” means
Brookline Capital Markets.

 

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

 

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

 

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

 

“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.6.

 

“Registration Statement”
means the effective registration statement with Commission file No.
333-233567 which registers the sale of the Shares to the
Purchasers.

 

 

3

 

 

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

 

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

 

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

 

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

 

“Securities” means,
collectively, the Shares, the Warrants and the Warrant
Shares.

 

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

 

“Shares” means the Common
Shares issued or issuable to each Purchaser pursuant to this
Agreement.

 

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

 

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

 

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

 

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

 

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

 

 

 

4

 

 

 

 

“Transaction Documents”
means this Agreement and the Warrants.

 

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

 

“Variable Rate
Transaction” shall have the meaning ascribed to such
term in Section 4.9.

 

“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Share is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Share for such date (or the nearest preceding date) on the
Trading Market on which the Common Share is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Share for such date (or the nearest
preceding date) on OTCQB or OTCQX as applicable, (c) if the Common
Share is not then listed or quoted for trading on OTCQB or OTCQX
and if prices for the Common Share are then reported in the
“Pink Sheets” published by OTC Markets Group, Inc. (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Share so reported, or (d) in all other cases, the fair
market value of a share of Common Share as determined by an
independent appraiser selected in good faith by the Company, the
fees and expenses of which shall be paid by the
Company.

 

“Warrants” means,
collectively, the Common Shares purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a)(v) and
Section 2.2(a)(vi) hereof. The Common Shares purchase warrants
delivered to the Purchasers at the Closing in accordance with
Section 2.2(a)(v) hereof (the “Class A Warrants”) shall
be exercisable following the six month anniversary of the Closing
Date and have a term of exercise equal to three years, in the form
of Exhibit A
attached hereto. The Common Shares purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a)(vi)
hereof (the “Class B Warrants”) shall be exercisable
following the six month anniversary of the Closing Date and have a
term of exercise equal to four months, in the form of Exhibit B attached
hereto.

 

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

 

 

 

5

 

 

 

 

ARTICLE II.

PURCHASE
AND SALE

 

2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of
$3,215,000 of Shares and Warrants. Each Purchaser’s
Subscription Amount as set forth on the signature page hereto
executed by such Purchaser shall be made available for
“Delivery Versus Payment” settlement with the Company
or its designees. The Company shall deliver to each Purchaser its
respective Shares and Warrants as determined pursuant to Section
2.2(a)(v) and Section 2.2(a)(vi), and the Company and each
Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of the Placement Agent or such other location
as the parties shall mutually agree. Unless otherwise directed by
the Placement Agent, settlement of the Shares shall occur via
“Delivery Versus Payment” (“DVP”) (i.e., on the Closing Date, the Company shall
issue the Shares registered in the Purchasers’ names and
addresses upon receipt of payment).

 

2.2 Deliveries.

 

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

 

(i) this Agreement duly
executed by the Company;

 

(ii) a
legal opinion of Company Canadian Counsel and Company U.S. Counsel,
in a form acceptable to the Placement Agent and
Purchasers;

 

(iii) the
Company shall have provided each Purchaser or its designee with the
Company’s wire instructions, on Company letterhead and
executed by the Chief Executive Officer or Chief Financial
Officer;

 

(iv) subject
to the last sentence of Section 2.1, a copy of the irrevocable
instructions to the Transfer Agent instructing the Transfer Agent
to deliver on an expedited basis via The Direct Registration System
(“DRS”)
Shares equal to such Purchaser’s Subscription Amount divided
by the Per Share Purchase Price, registered in the name of such
Purchaser;

 

(v) a Class A Warrant
registered in the name of such Purchaser to purchase up to a number
of Common Shares equal to 75% of such Purchaser’s Shares,
with an exercise price equal to $4.80, subject to
adjustment therein (such Warrant certificate may be delivered
within three Trading Days of the Closing Date);

 

(vi) a
Class B Warrant registered in the name of such Purchaser to
purchase up to a number of Common Shares equal to 50% of such
Purchaser’s Shares, with an exercise price per share, equal
to $4.00, subject, in each case, to adjustment therein (such
Warrant certificate may be delivered within three Trading Days of
the Closing Date);

 

 

6

 

 

(vii) the
Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act).

 

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

 

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

 

(ii) such
Purchaser’s Subscription Amount, which shall be made
available for “Delivery Versus Payment” settlement with
the Company or its designees.

 

2.3 Closing
Conditions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

7

 

 

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

 

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

 

ARTICLE III.

REPRESENTATIONS
AND WARRANTIES

 

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

 

(a)     Subsidiaries.
The Company owns, directly or indirectly, all of the capital share
or other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital
share of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

 

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

 

 

 

8

 

 

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

 

(d) No Conflicts or Breach. The
execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation
by it of the transactions contemplated hereby and thereby do not
and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, anti-dilution or
similar adjustments, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt
or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to
the Required Approvals, conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.
Neither the Company, its subsidiaries nor, to its knowledge, any
other party is in violation, breach or default of any agreement,
lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument that is reasonably likely to result in a Material
Adverse Effect.

 

 

 

9

 

 

(e) Filings, Consents and
Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.3 of this Agreement, (ii) the filing
with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of
the Shares and Warrant Shares for trading thereon in the time and
manner required thereby, and (iv) the filing of Form D with the
Commission and such filings as are required to be made under
applicable state securities laws, and (v) such consents, waivers
and authorizations that shall be obtained prior to Closing
(collectively, the “Required
Approvals”).

 

(f) Issuance of the Securities;
Registration. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company.
The Warrant Shares, when issued in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Company has
reserved from its duly authorized capital shares the maximum number
of Common Shares issuable pursuant to this Agreement and the
Warrants. The Company has prepared and filed the Registration
Statement in conformity with the requirements of the Securities
Act, which became effective on September 12, 2019 (the
“Effective
Date”), including the Prospectus, and such amendments
and supplements thereto as may have been required to the date of
this Agreement. The Company was at the time of the filing of the
Registration Statement eligible to use Form S-3. The Company is
eligible to use Form S-3 under the Securities Act and it meets the
transaction requirements with respect to the aggregate market value
of securities being sold pursuant to this offering and during the
twelve (12) calendar months prior to this offering as set forth in
General Instruction I.B.6 of Form S-3. The Registration Statement
is effective under the Securities Act and no stop order preventing
or suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been
instituted or, to the knowledge of the Company, are threatened by
the Commission. The Company, if required by the rules and
regulations of the Commission, shall file the Prospectus Supplement
with the Commission pursuant to Rule 424(b). At the time the
Registration Statement and any amendments thereto became effective,
at the date of this Agreement and at the Closing Date, the
Registration Statement and any amendments thereto conformed and
will conform in all material respects to the requirements of the
Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendments or
supplements thereto, at the time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of
the Securities Act and did not and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading.

 

 

 

10

 

 

(g) Capitalization. The Company has
not issued any capital share since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of share
options under the Company’s share option plans and pursuant
to the conversion and/or exercise of Common Share Equivalents
outstanding as of the date of the most recently filed periodic
report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale
of the Securities and as set forth in the Prospectus Supplement,
there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire, any Common Shares or the capital share
of any Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional Common Shares or Common Share
Equivalents or capital share of any Subsidiary. Except as set forth
in the Prospectus Supplement, the issuance and sale of the
Securities will not obligate the Company or any Subsidiary to issue
Common Shares or other securities to any Person (other than the
Purchasers and the Placement Agent). There are no outstanding
securities or instruments of the Company or any Subsidiary with any
provision that adjusts the exercise, conversion, exchange or reset
price of such security or instrument upon an issuance of securities
by the Company or any Subsidiary. There are no outstanding
securities or instruments of the Company or any Subsidiary that
contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to redeem a
security of the Company or such Subsidiary. The Company does not
have any share appreciation rights or “phantom share”
plans or agreements or any similar plan or agreement. All of the
outstanding shares of capital share of the Company are duly
authorized, validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any
shareholder, the Board of Directors or others is required for the
issuance and sale of the Securities. There are no shareholders
agreements, voting agreements or other similar agreements with
respect to the Company’s capital share to which the Company
is a party or, to the knowledge of the Company, between or among
any of the Company’s shareholders.

 

 

 

11

 

 

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

 

(i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports, (i)
there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or
disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other
property to its shareholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital share
and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company
share option plans. The Company does not have pending before the
Commission any request for confidential treatment of
information.

 

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

 

 

 

12

 

 

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

 

(l) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or
in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
would not have or reasonably be expected to result in a Material
Adverse Effect.

 

(m) Environmental Laws. The Company
and its Subsidiaries (i) are in compliance with all federal, state,
local and foreign laws relating to pollution or protection of human
health or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata), including 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 (“Environmental Laws”);
(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 clause (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

 

 

13

 

 

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

 

(o) Title to Assets. The Company
and the Subsidiaries do not own any real property and have good and
marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in
each case free and clear of all Liens, except for (i) Liens as do
not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries, and (ii) Liens
for the payment of federal, state or other taxes, for which
appropriate reserves have been made therefor in accordance with
GAAP and, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance, except where the failure to be in
compliance would not reasonably be expected to result in a Material
Adverse Effect.

 

(p) Intellectual Property. The
Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights
necessary or required for use in connection with their respective
businesses as described in the SEC Reports except where the failure
to so have would not have a Material Adverse Effect (collectively,
the “Intellectual
Property Rights”). To the knowledge of the Company,
there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have
taken reasonable measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights, except
where failure to do so would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as
described in the SEC Reports, the Company has no knowledge of any
facts that would preclude it from having valid license rights or
clear title to the Intellectual Property Rights. The Company has no
knowledge that it lacks or will be unable to obtain any rights or
licenses to use all Intellectual Property Rights that are necessary
to conduct its business.

 

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

 

 

 

14

 

 

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

 

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

 

 

 

15

 

 

(t) Certain Fees. Except as set
forth in the Prospectus Supplement, no brokerage or finder’s
fees or commissions are or will be payable by the Company or any
Subsidiary to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by the Transaction
Documents. The Purchasers shall have no obligation with respect to
any fees or with respect to any claims made by or on behalf of
other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the
Transaction Documents.

 

(u) Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

 

(v) Registration Rights. No Person
has any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the
Company or any Subsidiary.

 

(w) Listing and Maintenance
Requirements. The Common Shares are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Shares under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the
date hereof, received notice from any Trading Market on which the
Common Shares are or have been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements. The Common Shares are currently eligible for
electronic transfer through the Depository Trust Company or another
established clearing corporation and the Company is current in
payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such
electronic transfer. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the
Trading Market.

 

(x) Application of Takeover
Protections. The Company and the Board of Directors have
taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become
applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation as a
result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

 

 

 

16

 

 

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

 

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

 

(aa) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) has 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 and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material 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 or of any
Subsidiary know of no basis for any such claim.

 

 

 

17

 

 

(bb) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, 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 any Subsidiary (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 FCPA.

 

(cc) Accountants.
The Company’s independent registered public accounting firm
is MNP, LLP. To the knowledge and belief of the Company, such
accounting firm is a registered public accounting firm as required
by the Exchange Act.

 

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

 

(ee) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein
to the contrary notwithstanding (except for Sections 3.2(f) and
4.11 hereof), it is understood and acknowledged by the Company
that: (i) none of the Purchasers has been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term; (ii) past or future open
market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser
is a party, directly or indirectly, presently may have a
“short” position in the Common Shares, and (iv) each
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) one or more Purchasers may
engage in hedging activities at various times during the period
that the Securities are outstanding, and (z) such hedging
activities (if any) could reduce the value of the existing
shareholders' equity interests in the Company at and after the time
that the hedging activities are being conducted.  The Company
acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction
Documents.

 

 

 

18

 

 

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

 

(gg)
FDA. As to each product subject
to the jurisdiction of the U.S. Food and Drug Administration
(“FDA”)
under the Federal Food, Drug and Cosmetic Act, as amended, and the
regulations thereunder (“FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or
marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”),
such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company
in compliance with all applicable requirements under FDCA and
similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application
approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse
Effect. There is no pending, completed or, to the Company's
knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge,
complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries
has received any notice, warning letter or other communication from
the FDA or any other governmental entity, which (i) contests the
premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of,
the testing of, the sale of, or the labeling and promotion of any
Pharmaceutical Product, (ii) withdraws its approval of, requests
the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating
to, any Pharmaceutical Product, (iii) imposes a clinical hold on
any clinical investigation by the Company or any of its
Subsidiaries, (iv) enjoins production at any facility of the
Company or any of its Subsidiaries, (v) enters or proposes to enter
into a consent decree of permanent injunction with the Company or
any of its Subsidiaries, or (vi) otherwise alleges any violation of
any laws, rules or regulations by the Company or any of its
Subsidiaries, and which, either individually or in the aggregate,
would have a Material Adverse Effect. The properties, business and
operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and
regulations of the FDA.  The Company has not been informed by
the FDA that the FDA will prohibit the marketing, sale, license or
use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any
concern as to approving or clearing for marketing any product being
developed or proposed to be developed by the Company.

 

 

 

19

 

 

(hh) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 

(ii) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Purchaser’s
request.

 

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

 

(kk) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in material
compliance with applicable financial record-keeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act
of 1970, as amended, applicable money laundering statutes and
applicable rules and regulations thereunder (collectively, the
“Money Laundering
Laws”), and no Action or Proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or
any Subsidiary, threatened.

 

(ll) Private
Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Warrants or the Warrant Shares by the Company to the
Purchasers as contemplated hereby.

 

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

 

 

 

20

 

 

(nn) No
Disqualification Events. With respect to the Warrant and
Warrant Shares to be offered and sold hereunder in reliance on Rule
506 under the Securities Act, none of the Company, any of its
predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering
hereunder, any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on
the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the Securities Act) connected with the
Company in any capacity at the time of sale (each, an "Issuer
Covered Person") is subject to any of the "Bad Actor"
disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act (a "Disqualification Event"), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Purchasers
a copy of any disclosures provided thereunder.

 

(oo) Other
Covered Persons. Other than the Placement Agent, the Company
is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration
for solicitation of purchasers in connection with the sale of any
Securities.

 

(pp) Notice
of Disqualification Events. The Company will notify the
Purchasers and the Placement Agent in writing, prior to the Closing
Date of (i) any Disqualification Event relating to any Issuer
Covered Person and (ii) any event that would, with the passage of
time, reasonably be expected to become a Disqualification Event
relating to any Issuer Covered Person, in each case of which it is
aware.

 

3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a
specific date therein, in which case they shall be accurate as of
such date):

 

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

 

 

 

21

 

 

 

 

(b)                 Understandings
or Arrangements. Such Purchaser
is acquiring the Securities as principal for its own account and
has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting such
Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. Such
Purchaser understands that the Warrants and the Warrant Shares are
“restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and
is acquiring such Securities as principal for his, her or its own
account and not with a view to or for distributing or reselling
such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of
the Securities Act or any applicable state securities law and has
no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such
Securities in violation of the Securities Act or any applicable
state securities law (this representation and warranty not limiting
such Purchaser’s right to sell such Securities pursuant to a
registration statement or otherwise in compliance with applicable
federal and state securities laws).

 

(c)                 Purchaser
Status. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Warrants,
it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities
Act.

 

(d)            Experience
of Such Purchaser. Such
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete
loss of such investment.

 

(e)            Access
to Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment.  Such Purchaser
acknowledges and agrees that neither the Placement Agent nor any
Affiliate of the Placement Agent has provided such Purchaser with
any information or advice with respect to the Securities nor is
such information or advice necessary or desired.  Neither the
Placement Agent nor any Affiliate has made or makes any
representation as to the Company or the quality of the Securities
and the Placement Agent and any Affiliate may have acquired
non-public information with respect to the Company which such
Purchaser agrees need not be provided to it.  In connection
with the issuance of the Securities to such Purchaser, neither the
Placement Agent nor any of its Affiliates has acted as a financial
advisor or fiduciary to such Purchaser.

 

 

 

22

 

 

 

 

(f)                 Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that such Purchaser first
received a communication from the Company or the Placement Agent or
any other Person representing the Company setting forth the terms
of the transactions contemplated hereunder and ending immediately
prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set
forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement or to such Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this
transaction).

 

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

 

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

 

ARTICLE IV.

OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Removal
of Legends.

 

(a) The Warrants and
Warrant Shares may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of
Warrants or Warrant Shares other than pursuant to an effective
registration statement or Rule 144, to the Company or to an
Affiliate of a Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the
transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Warrant
under the Securities Act.

 

 

 

23

 

 

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

 

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

 

The
Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Warrants or Warrant Shares to a financial institution
that is an “accredited investor” as defined in Rule
501(a) under the Securities Act and, if required under the terms of
such arrangement, such Purchaser may transfer pledged or secured
Warrants or Warrant Shares to the pledgees or secured parties. Such
a pledge or transfer would not be subject to approval of the
Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the
appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party
of Warrants and Warrant Shares may reasonably request in connection
with a pledge or transfer of the Warrants or Warrant
Shares.

 

 

 

24

 

 

(c) Certificates
evidencing the Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i)
while a registration statement covering the resale of such security
is effective under the Securities Act, or (ii) following any sale
of such Warrant Shares pursuant to Rule 144 (assuming cashless
exercise of the Warrants), or (iii) if such Warrant Shares are
eligible for sale under Rule 144 (assuming cashless exercise of the
Warrants), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent or the Purchaser promptly if required
by the Transfer Agent to effect the removal of the legend
hereunder, or if requested by a Purchaser, respectively; provided,
however, that if any such legal opinion relates to legend removal,
or sale of Securities, pursuant to Rule 144, such opinion may be
qualified in the event that the Company then fails for any reason
to satisfy the current public information requirement under Rule
144(c). If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the
resale of the Warrant Shares, or if such Warrant Shares may be sold
under Rule 144 (assuming cashless exercise of the Warrants) or if
such legend is not otherwise required under applicable requirements
of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such
Warrant Shares shall be issued free of all legends. The Company
agrees that following such time as such legend is no longer
required under this Section 4.1(c), the Company will, no later than
the earlier of (i) three (3) Trading Days and (ii) the number of
Trading Days comprising the Standard Settlement Period (as defined
below) following the delivery by a Purchaser to the Company or the
Transfer Agent (with notice to the Company) of a certificate
representing Warrant Shares, as applicable, issued with a
restrictive legend (such date, the “Legend Removal
Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such shares that is free from all
restrictive and other legends. Warrant Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime
broker with the Depository Trust Company System as directed by such
Purchaser. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of
Trading Days, on the Company’s primary Trading Market with
respect to the Common Shares as in effect on the date of delivery
of a certificate representing Warrant Shares issued with a
restrictive legend.

 

 

 

25

 

 

(d) In addition to such
Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, (i) as partial liquidated damages and not
as a penalty, for each $1,000 of Warrant Shares (based on the VWAP
of the Common Shares on the date such Securities are submitted to
the Transfer Agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day (increasing to
$20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend and (ii) if
the Company fails to (a) issue and deliver (or cause to be
delivered) to a Purchaser by the Legend Removal Date a certificate
representing the Securities so delivered to the Company by such
Purchaser that is free from all restrictive and other legends and
(b) if after the Legend Removal Date such Purchaser purchases (in
an open market transaction or otherwise) Common Shares to deliver
in satisfaction of a sale by such Purchaser of all or any portion
of the number of Common Shares, or a sale of a number of Common
Shares equal to all or any portion of the number of Common Shares,
that such Purchaser anticipated receiving from the Company without
any restrictive legend, then an amount equal to the excess of such
Purchaser’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
Common Shares so purchased (including brokerage commissions and
other out-of-pocket expenses, if any) (the “Buy-In
Price”) over the product of (A) such number of Warrant Shares
that the Company was required to deliver to such Purchaser by the
Legend Removal Date multiplied by (B) the lowest closing sale price
of the Common Shares on any Trading Day during the period
commencing on the date of the delivery by such Purchaser to the
Company of the applicable Warrant Shares (as the case may be) and
ending on the date of such delivery and payment under this Section
4.1(d).

 

 

 

26

 

 

(e) The Shares shall be
issued free of legends.

 

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

 

4.3 Securities
Laws Disclosure; Publicity. The
Company shall (a) by the Disclosure Time, issue a press release
disclosing the material terms of the transactions contemplated
hereby, and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the
issuance of such press release, the Company represents to the
Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In
addition, effective upon the issuance of such press release, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on
the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate (other than with respect to
Purchasers that are officers, directors, employees or Affiliates of
the Company). The Company and each Purchaser shall consult with
each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company,
with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such
Purchaser, except (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the
Commission and (b) to the extent such disclosure is required by law
or Trading Market or FINRA regulations, in which case the Company
shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b).

 

4.4 Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, which shall be disclosed
pursuant to Section 4.4, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such
Purchaser shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company. To the extent that the Company delivers
any material, non-public information to a Purchaser without such
Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. The
Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company.

 

4.5 Use
of Proceeds. The Company shall
use the net proceeds from the sale of the Shares hereunder as
described in the Prospectus Supplement.

 

 

 

27

 

 

4.6 Indemnification
of Purchasers.
Subject to the provisions of this
Section 4.6, the Company will indemnify and hold each Purchaser and
its directors, officers, shareholders, members, partners, employees
and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees
and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
shareholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
solely based upon a material breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party
may have with any such shareholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct
by such Purchaser Party which is finally judicially determined to
constitute fraud, gross negligence or willful misconduct) or (c) in
connection with any registration statement of the Company providing
for the resale by the Purchasers of the Warrant Shares issued and
issuable upon exercise of the Warrants, the Company will indemnify
each Purchaser Party, to the fullest extent permitted by applicable
law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses, as incurred, arising out of or
relating to (i) any untrue or alleged untrue statement of a
material fact contained in such registration statement, any
prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any prospectus or supplement
thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon
information regarding such Purchaser Party furnished in writing to
the Company by such Purchaser Party expressly for use therein, or
(ii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder in connection therewith. If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement or any
other Transaction Document, such Purchaser Party shall promptly
notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Purchaser Party. Any Purchaser Party
shall have the right to employ one separate counsel in any such
action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (x) the employment thereof has been
specifically authorized by the Company in writing, (y) the Company
has failed after a reasonable period of time to assume such defense
and to employ counsel or (z) in such action there is, in the
reasonable opinion of counsel, a material conflict on any material
issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for
the reasonable fees and expenses of no more than one such separate
counsel. The Company will not be liable to any Purchaser Party
under this Agreement (1) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (2) to the
extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements
made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section
4.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.

 

 

 

28

 

 

 

 

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

 

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

 

 

 

29

 

 

 

 

4.9 
Subsequent Equity
Sales. From the date hereof
until the six (6) month year anniversary of the Closing Date, the
Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Shares or Common Share Equivalents (or a
combination of units thereof) involving a Variable Rate
Transaction. “Variable Rate Transaction” means a
transaction in which the Company (i) issues or sells any debt or
equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional Common
Shares either (A) at a conversion price, exercise price or exchange
rate or other price that is based upon and/or varies with the
trading prices of or quotations for the Common Shares at any time
after the initial issuance of such debt or equity securities, or
(B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Shares or (ii) enters
into, or effects a transaction under, any agreement, including, but
not limited to, an equity line of credit, whereby the Company may
issue securities at a future determined price. Any Purchaser shall
be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages.

 

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

 

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

 

 

 

30

 

 

4.12 Exercise
Procedures. The form of Notice
of Exercise included in the Warrants set forth the totality of the
procedures required of the Purchasers in order to exercise the
Warrants. No additional legal opinion, other information or
instructions shall be required of the Purchasers to exercise their
Warrants. Without limiting the preceding sentences, no ink-original
Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise form be required in order to exercise the
Warrants. The Company shall honor exercises of the Warrants and
shall deliver Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Transaction
Documents.

 

4.13 Form
D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the Warrant
and Warrant Shares as required under Regulation D and to provide a
copy thereof, promptly upon request of any Purchaser. The Company
shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the
Warrant and Warrant Shares for, sale to the Purchasers at the
Closing under applicable securities or “Blue Sky” laws
of the states of the United States, and shall provide evidence of
such actions promptly upon request of any
Purchaser.

 

4.14 Registration
Statement. Within 45 calendar
days of the date of this Agreement), the Company shall file a
registration statement on Form S-3 (or other appropriate form if
necessary to comply with General Instruction I.B.6. of Form S-3 and
Commission interpretations thereof) providing for the resale by the
Purchasers of the Warrant Shares issued and issuable upon exercise
of the Warrants. The Company shall use commercially reasonable
efforts to cause such registration to become effective within 75
days of the Closing Date, or in the case of review by the SEC,
within 105 days of the Closing Date, and to keep such registration
statement effective at all times until no Purchaser owns any
Warrants or Warrant Shares issuable upon exercise
thereof.

 

4.15 Furnishing
of Information.

 

(a) Until the earlier
of the time that (i) no Purchaser owns Securities or (ii) the
Warrants have expired, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act even if the Company is
not then subject to the reporting requirements of the Exchange
Act.

 

(b) At any time during
the period commencing from the date hereof and ending at such time
that all of the Warrant Shares (assuming cashless exercise) may be
sold without the requirement for the Company to be in compliance
with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company (i) shall fail for any reason
to satisfy the current public information requirement under Rule
144(c) or (ii) has ever been an issuer described in Rule
144(i)(1)(i) or becomes an issuer in the future, and the Company
shall fail to satisfy any condition set forth in Rule 144(i)(2) (a
“Public Information Failure”) then, in addition to such
Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a
penalty, by reason of any such delay in or reduction of its ability
to sell the Warrant Shares, an amount in cash equal to two percent
(2.0%) of the aggregate Exercise Price of such Purchaser’s
Warrants on the day of a Public Information Failure and on every
thirtieth (30th) day (pro rated for periods totaling less than
thirty days) thereafter until the earlier of (a) the date such
Public Information Failure is cured and (b) such time that such
public information is no longer required for the Purchasers to
transfer the Warrant Shares pursuant to Rule 144. The payments to
which a Purchaser shall be entitled pursuant to this Section 4.2(b)
are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during
which such Public Information Failure Payments are incurred and
(ii) the third (3rd) Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the
event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall
bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Public
Information Failure, and such Purchaser shall have the right to
pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief.

 

 

 

31

 

 

 

ARTICLE V.

MISCELLANEOUS

 

5.1 Termination. 
This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before the fifth
(5th)
Trading Day following the date hereof; provided,
however,
that no such termination will affect the right of any party to sue
for any breach by any other party (or parties).

 

5.2 Fees
and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any exercise notice
delivered by a Purchaser), stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the
Purchasers.

 

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

 

 

 

32

 

 

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

 

5.5 Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and Purchasers which purchased at least 50.1% in interest
of the Shares based on the initial Subscription Amounts hereunder
or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought, provided that if any
amendment, modification or waiver disproportionately and adversely
impacts a Purchaser (or group of Purchasers), the consent of such
disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of
any such right. Any proposed amendment or waiver that
disproportionately, materially and adversely affects the rights and
obligations of any Purchaser relative to the comparable rights and
obligations of the other Purchasers shall require the prior written
consent of such adversely affected Purchaser. Any amendment
effected in accordance with this Section 5.5 shall be binding upon
each Purchaser and holder of Securities and the
Company.

 

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

 

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

 

5.8 No
Third-Party Beneficiaries. The
Placement Agent shall be the third party beneficiary of the
representations and warranties of the Company in Section 3.1 and
the representations and warranties of the Purchasers in Section
3.2. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.6
and this Section 5.8.

 

 

 

33

 

 

5.9 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.8, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.

 

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

 

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

 

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

 

 

 

34

 

 

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

 

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

 

5.15 Independent
Nature of Purchasers’ Obligations and
Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any Proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its
review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, each Purchaser and its respective
counsel have chosen to communicate with the Company through the
legal counsel of the Placement Agent. The legal counsel of the
Placement Agent does not represent any of the Purchasers and only
represents the Placement Agent. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for
the convenience of the Company and not because it was required or
requested to do so by any of the Purchasers. It is expressly
understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the
Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the
Purchasers.

 

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

 

 

 

35

 

 

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

 

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

 

 

 

(Signature Pages Follow)

 

 

 

36

 

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

 

 

	

EDESA BIOTECH, INC.

	

Address for
Notice:

	

 

By:__________________________________________

     Name:

     Title:

 

 

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

	

Fax:

E-mail:

	

 

 

Stubbs
Alderton & Markiles, LLP

15260
Ventura Blvd., 20th Floor

Sherman
Oaks, CA 91403

Attention:
Jonathan Friedman

Email:
jfriedman@stubbsalderton.com

Business:
818-444-4514

 

	
 

 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

37

 

[PURCHASER
SIGNATURE PAGES TO EDSA SECURITIES PURCHASE AGREEMENT]

 

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

 

Name of
Purchaser:
______________________________________________________

Signature of Authorized Signatory of
Purchaser: _________________________________

Name of
Authorized Signatory:
_______________________________________________

Title
of Authorized Signatory:
________________________________________________

Email
Address of Authorized
Signatory:_________________________________________

Facsimile Number of
Authorized Signatory:
__________________________________________

Address
for Notice to Purchaser:

 

 

 

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

 

 

 

DWAC
for Shares:

 

 

Subscription
Amount: $_________________

Shares:
_________________

Class A
Warrant Shares Pursuant to Section 2.2(a)(v):
__________________

Class B
Warrant Shares Pursuant to Section 2.2(a)(vi):
__________________

EIN
Number: ____________________

☐
Notwithstanding anything contained in this Agreement to the
contrary, by checking this box (i) the obligations of the
above-signed to purchase the securities set forth in this Agreement
to be purchased from the Company by the above-signed, and the
obligations of the Company to sell such securities to the
above-signed, shall be unconditional and all conditions to Closing
shall be disregarded, (ii) the Closing shall occur by the second
(2nd) Trading Day following the date of this Agreement and (iii)
any condition to Closing contemplated by this Agreement (but prior
to being disregarded by clause (i) above) that required delivery by
the Company or the above-signed of any agreement, instrument,
certificate or the like or purchase price (as applicable) shall no
longer be a condition and shall instead be an unconditional
obligation of the Company or the above-signed (as applicable) to
deliver such agreement, instrument, certificate or the like or
purchase price (as applicable) to such other party on the Closing
Date.

 

 

[SIGNATURE
PAGES CONTINUE]

 

 

38Blueprint

Exhibit 10.2

Form of Subscription Agreement for Accredited
Investors

(Canadian and Non-US Residents)

 

 

 

 

 

NON-BROKERED PRIVATE PLACEMENT OF UNITS

 

SUBSCRIPTION AGREEMENT

 

INSTRUCTIONS

 

1. 

Complete and sign
the Execution Page (which
follows this cover page) of the Subscription
Agreement.

 

2. 

Complete and sign
Exhibit
1 (Certificate of Accredited Investors) and initial next to the appropriate
category in Appendix “A” to Exhibit 1
and complete and
sign Appendix
“B” to Exhibit 1 (Form 45-106F9), if you
are an individual accredited investor required to do
so.

 

3. 

Provide payment of
the purchase price in United States dollars by
delivering a certified cheque or
bank draft made payable to “Fasken Martineau DuMoulin LLP in
trust” to Fasken Martineau, 333 Bay Street, Suite 2400, Bay
Adelaide Centre, Box 20, Toronto, ON M5H 2T6, Attention: Jordana
Keslassy or by wire transfer according to the wire
instructions below, representing the full subscription price
payable by the Subscriber for the Units set out on the first page
of this Subscription Agreement:

 

	

Currency:

	

	

Correspondent/Intermediary Bank:

	

	

Correspondent/Intermediary SWIFT:

	

	

Fedwire/ABA:

	

	

Settlement Bank Name:

	

	

Settlement Bank Address:

	

	

Clearing Code:

	

	

Transit Number:

	

	

Institution Number:

	

	

Swift Code:

	

	

Beneficiary:

	

	

Beneficiary Address:

	

	

Beneficiary Account Number:

	

	

Payment Details

	

 

Any
associated wire transfer fees are the responsibility of the
subscriber.

 

4. 

Return a completed
and originally executed copy of this Subscription Agreement and the
other documents required to be delivered with it (including payment
of the subscription price) by no later than 4:00 p.m. on December
27, 2019 to Fasken Martineau DuMoulin LLP, 333 Bay Street, Suite
2400, Bay Adelaide Centre, Toronto, ON M5H 2T6, Attention: Jordana
Keslassy, Telephone: +1 416 865 4405, email:
jkeslassy@fasken.com.

1

 

 

EXECUTION PAGE - SUBSCRIPTION FOR UNITS

 

TO:            

Edesa
Biotech, Inc. (the “Corporation”)

 

The
undersigned (the “Subscriber”) hereby irrevocably
subscribes for and agrees to purchase from Edesa Biotech, Inc. (the
“Corporation”)
that number of units of the Corporation (individually, a
“Unit” and
collectively, the “Units”) as is equal to the
Aggregate Subscription Price set out below divided by the Unit
Price. The “Unit
Price” shall be the lower of (i) the price determined
by calculating a 20% discount to the average of each of five
trailing daily volume-weighted average prices (“VWAP”) for the Common Shares on
The NASDAQ Capital Market (“NASDAQ”) as determined by
Bloomberg prior to the date a registration statement for the
Offering is filed (the “Execution Date”), or (2) a price
determined by calculating a 20% discount to the VWAP on the
Execution Date; provided that issuances of Units to officers,
directors, employees or consultants shall be made at a price no
less than the consolidated closing bid price immediately preceding
the Execution Date. The Unit Price shall be denominated and payable
in United States dollars.

 

Each
Unit comprises one common share of the Corporation (individually, a
“Common Share”
and collectively, the “Common
Shares”), three-quarters of one whole Common Share
purchase warrant (each such Common Share purchase warrant, a
“Class A Warrant”), and one-half of one
whole Common Share purchase warrant (each such Common Share
purchase warrant, “Class B
Warrant”, and collectively with the Class A Warrants,
the “Warrants”).

 

Each
Warrant shall be exercisable for one Common Share on the terms
described herein.

 

The
Subscriber agrees to be bound by the terms and conditions set forth
in the attached “Terms and Conditions of Subscription for
Units” including, without limitation, the representations,
warranties and covenants set forth in the applicable Schedules and
Exhibits attached thereto (together with this Execution Page, the
“Subscription
Agreement”). The Subscriber further agrees, without
limitation, that the Corporation (and its counsel) may rely upon
the Subscriber’s representations, warranties and covenants
contained in such documents.

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Number of Units:

	
 

	
 

	
 

	

(Name
of Subscriber – please print)

	
 

	
 

	

 

Aggregate Subscription Price: US$

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Signature
of Subscriber or authorized Signatory)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

If the Subscriber is signing as agent for a principal, complete the
following and ensure that the applicable Exhibit(s) are completed
on behalf of such principal (the “Disclosed
Principal”), UNLESS the Subscriber is deemed to be purchasing
as a principal under National Instrument 45-106 - Prospectus Exemptions (“NI
45-106”) by virtue of being either (i) a trust company or
trust corporation acting on behalf of a fully managed account
managed by a trust company or trust corporation; or (ii) a person
acting on behalf of a fully managed account managed by it, and in
each case satisfying the criteria set forth in NI
45-106:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Official
Capacity or Title – please print)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Please
print name of individual whose signature appears

	
 

	
 

	
 

	
 

	
 

	

above
if different than the name of the Subscriber

	
 

	
 

	
 

	
 

	
 

	

printed
above.)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Subscriber’s
Address)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Subscriber’s
Address)

	
 

	
 

	

(Telephone
Number)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Name
of Disclosed Principal)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(E-Mail
Address)

	
 

	
 

	
 

	

(Disclosed
Principal’s Address)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

[Execution
Pages Continue]

 

2

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Register the Securities as set forth below:

	
 

	
 

	
 

	

Deliver the Securities as set forth below:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Same as
Registered Address (otherwise complete

	
 

	
 

	

(Name)

	
 

	
 

	
 

	
 

	

below)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Account
reference, if applicable)

	
 

	
 

	
 

	

(Name)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Account
reference, if applicable)

	
 

	
 

	

(Address)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Contact
Name)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Address)

	
 

	
 

	
 

	

(Address)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

(Address)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

	
 

	

Is the
Subscriber (or the Disclosed Principal) an “insider” of
the Corporation (as defined in applicable securities laws, which
generally

	
 

	
 

	
 

	

Excluding
securities subscribed for in this Agreement, the Subscriber owns,
directly or indirectly, or exercises control or direction
over:

	
 

	
 

	

includes
a director, an officer or a 10% shareholder)?

	
 

	
 

	
 

	

(a)

	
 

	

Common
Shares; and

	
 

	
 

	

(yes/no):

	
 

	
 

	
 

	
 

	
 

	

(b)
securities convertible or exercisable into an

	
 

	
 

	

Is the
Subscriber registered or required to be registered

	
 

	
 

	
 

	

additional

	
 

	

Common
Shares.

	
 

	

under
applicable securities laws?

	
 

	
 

	

(yes/no):

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

3

 

 

ACCEPTANCE: The Corporation hereby accepts the subscription
as set forth above on the terms and conditions contained in this
Subscription Agreement.

 

_____________________,
20___

 

 

	

EDESA BIOTECH, INC.

	

By:

	
 

	
 

	

Name:

	
 

	

Title:

 

4

 

 

TERMS AND CONDITIONS OF SUBSCRIPTION

 

Terms of the Offering

 

1. Irrevocable
Subscription; Subject to Acceptance.

 

  By
signing this Agreement, the Subscriber irrevocably offers to
subscribe for the number of Units equal to the aggregate
Subscription Price set out on the cover page of this Agreement,
determined with reference to the Unit Price. The Corporation may,
in its absolute discretion, accept or reject the Subscriber’s
subscription for Units set out in this Agreement, in whole or in
part, and the Corporation reserves the right to allot to the
Subscriber less than the amount of Units subscribed for under this
Agreement. This Agreement is not enforceable against the
Corporation unless (and except to the extent to which) it has been
accepted by the Corporation. The Subscriber waives any requirement
of the Corporation to communicate its acceptance of the
subscription (in whole or in part) to the Subscriber. The
Subscriber acknowledges (on its own behalf and, if applicable, on
behalf of the Disclosed Principal) that the subscription for the
Units will be made in accordance with and subject to the terms and
conditions of this Subscription Agreement.

 

2. Return
of Funds.

 

  The
funds for the aggregate subscription price will be held in trust by
Fasken Martineau DuMoulin LLP (“Fasken”), counsel to the
Corporation, for the benefit of the Subscriber pending closing of
the Offering. If the Offering is not completed for any reason, or
this Agreement is rejected in whole, any payment delivered on
account of the subscription price for the Units will, following
receipt by Fasken of written notification from the Corporation of
such rejection, be promptly returned to the Subscriber, without
interest. If this Agreement is accepted only in part, payment in
the amount of any excess payment delivered by the Subscriber to
Fasken on account of the subscription price for the Units will,
following receipt by Fasken of written notification from the
Corporation of such partial acceptance, be promptly delivered to
the Subscriber, without interest. No fractions of any Securities
(as defined herein) will be issued for any subscription. Any funds
in excess of the aggregate Subscription Price for the actual number
of Units issued shall be promptly delivered to the Subscriber after
Closing. Any return of funds by Fasken hereunder shall be made by
the issuance of a cheque sent by regular mail to the
Subscriber.

 

3. The
Offering.

 

  The
Subscriber acknowledges (on its own behalf and, if applicable, on
behalf of the Disclosed Principal) that the Units subscribed for
hereunder form part of a larger offering of Units by the
Corporation in the United States, of which the Common Shares
composing the Units shall be registered pursuant to a registration
statement filed with the United States Securities and Exchange
Commission (the “SEC”) for aggregate gross proceeds
of up to US$5.1 million (the “Offering”). The Units and the
Common Shares and Warrants composing the Units as the context
requires are also referred to herein as the “Securities”.

 

4. Description
of the Warrants.

 

Each
whole Class A Warrant shall be exercisable to purchase one Class A
Warrant Share at a price equal to 150% of the subscription price
for a term expiring three years from the vesting date for the Class
A Warrants, which vesting date shall be six months from the Closing
Date. The Class A Warrants will provide for cashless exercise
provisions in some circumstances.

 

Each
whole Class B Warrant shall be exercisable for one Class B Warrant
Share at a price equal to either (a) 100% of the Nasdaq Official
Closing Price (i.e. the “Nasdaq Minimum Price”) for
each Subscriber that is not an officer, director, employee or
consultant of the Company, or (b) for each Subscriber that is an
officer, director, employee or consultant of the Corporation (other
than issuances to certain entities controlled by an officer,
director, employee, or consultant of the Corporation where such
issuances would not be considered equity compensation under
applicable Nasdaq Listing Rules), the greater of the Nasdaq Minimum
Price or the consolidated closing bid price per Common Share on
NASDAQ immediately preceding the Execution Date, for a term
expiring four months from the vesting date for the Class B
Warrants, which vesting date shall be six months from the Closing
Date. The Class B Warrants will provide for cashless exercise
provisions in some circumstances.

 

The
Warrants will be created and issued pursuant to definitive physical
warrant certificates. Additional specific attributes of the
Warrants shall be set forth in the certificates representing the
Warrants, including, among other things, provisions for the
appropriate adjustment in number and price of the Warrants upon the
occurrence of certain events, including any subdivision,
consolidation or reclassification of the Units.

 

No
fractional Warrants will be issued in any circumstance. Any
entitlement to a fraction of a Warrant in connection with the
purchase of Units shall be rounded down to the nearest whole
Warrant.

 

 

5

 

 

5. Registration
Rights.

 

  The
Company will file a registration statement with the SEC on Form S-3
or other appropriate form if necessary to comply with General
Instruction I.B.6. of Form S-3 and Commission interpretations
thereof) within 45 days of the Closing Date to register the Common
Shares issuable upon exercise of the Warrants and shall use its
best efforts to have the registration statement declared effective
within 75 days of the Closing Date, or in the case of review by the
SEC, within 105 days of the Closing Date and to keep such
registration statement effective at all times until no Purchaser
owns any Warrants or Common Shares issuable upon exercise
thereof.

 

6. Deliveries by
Subscriber.

 

  In
connection with the purchase of the Securities, the Subscriber
agrees to return the following to the Corporation’s legal
counsel, Fasken Martineau DuMoulin LLP (“Fasken”), in accordance with the
instructions on the cover page to this Agreement:

 

(a)

this Agreement,
completed and signed, including, if the Subscriber is subscribing
under the “accredited investor” exemption from the
prospectus requirements of applicable securities laws, a completed
and signed Accredited Investor Certificate attached as Exhibit 1;

 

(b)

a wire transfer,
bank draft or certified cheque for the aggregate subscription price
for the Securities, denominated in United States dollars, payable
to Fasken Martineau DuMoulin LLP, in trust, with wire transfer
being payable as follows:

 

	

Currency:

	

	

Correspondent/Intermediary Bank:

	

	

Correspondent/Intermediary SWIFT:

	

	

Fedwire/ABA:

	

	

Settlement Bank Name:

	

	

Settlement Bank Address:

	

	

Clearing Code:

	

	

Transit Number:

	

	

Institution Number:

	

	

Swift Code:

	

	

Beneficiary:

	

	

Beneficiary Address:

	

	

Beneficiary Account Number:

	

	

Payment Details

	

 

(c)

any further
documentation required under securities laws or by NASDAQ or other
regulatory authority, or otherwise contemplated by this
Agreement;

 

7. Compliance
with Laws.

 

  The
Subscriber (or the Disclosed Principal) agree to comply with
applicable securities laws and the policies of NASDAQ concerning
the purchase of, the holding of, and the resale restrictions
applicable to, the Securities.

 

8. Expenses.

 

  All
costs incurred by the Subscriber (including any fees and
disbursements of any legal counsel or other advisors retained by
the Subscriber) relating to the subscription for Units will be
borne by the Subscriber.

 

 

6

 

 

9. Conditions
of Closing

 

The
obligation of the Corporation to complete the sale of the
Securities is subject to the fulfillment of the following
conditions at or before the Closing Time:

 

(a)

the Subscriber will
have delivered the items set out in Section 6;

 

(b)

the representations
and warranties made by the Subscriber in this Agreement will have
been true and correct when made and at the Closing Time with the
same force and effect as if they had been made as of the Closing
Time;

 

(c)

all covenants
contained in this Agreement to be performed by the Subscriber at or
before the Closing Time will have been performed in all material
respects;

 

(d)

the Corporation
will have received approval of the Offering from
NASDAQ;

 

(e)

all other necessary
regulatory approvals will have been obtained;

 

(f)

the portion of the
Offering undertaken in the United States shall have closed;
and

 

(g)

the sale of the
Units to the Subscribers will be exempt from prospectus
requirements under applicable Canadian provincial and harmonized
securities laws.

 

Closing

 

10. Closing.

 

The
closing of the sale of the Securities (the “Closing”) will take place at
Fasken’s offices in Toronto, Bay Adelaide Centre West, 333
Bay Street, Toronto, Ontario, M5H 2T6 at 9:00 a.m. (Eastern time),
or such other time as the Corporation may determine (the
“Closing Time”)
on January 7, 2020, or such other date as the Corporation may
determine (the “Closing Date”). If, at the Closing, the
terms and conditions contained in this Agreement have been complied
with to the satisfaction of the Corporation, the Corporation shall
notify Fasken in writing of such and (a) Fasken will deliver to the
Corporation (i) all completed subscription agreements, including
this Agreement, and (ii) the aggregate subscription price for the
Units (net of commissions and expenses) and (b) the Corporation
will deliver certificates representing the Common Shares and
Warrants composing the Units registered in accordance with the
Subscriber’s instructions to the Subscriber in accordance
with the delivery instructions provided by the
Subscriber.

 

 

7

 

 

11. Failure
to Close.

 

  If the
Closing does not occur on or prior to January 10, 2019, Fasken
shall promptly return this Agreement and any funds, certified
cheques and bank drafts delivered by the Subscriber representing
the aggregate consideration for the Securities without interest, to
the Subscriber.

 

12. Representations,
Warranties and Covenants of the Subscriber

 

  The
Subscriber (on its own behalf and, if applicable, on behalf of a
Disclosed Principal) represents, warrants, acknowledges and
covenants to the Corporation and its counsel (and acknowledges that
they are relying thereon) both at the date hereof and at the
Closing Time (as herein defined) that:

 

(a)

it recognizes that
the purchase of the Securities involves a high degree of risk
including, but not limited to, the following: (i) the Corporation
has a limited operating history and requires substantial funds in
addition to the proceeds of the Offering; (ii) an investment in the
Corporation is highly speculative and only investors who can afford
the loss of their entire investment should consider investing in
the Corporation and the Securities; (iii) the Subscriber may not be
able to liquidate his, her or its investment; (iv) there are
restrictions on the ability of the Subscriber to sell the
Securities; (v) in the event of a disposition, the Subscriber could
sustain the loss of its entire investment; and (vi) the Corporation
has not paid any dividends since its inception and does not
anticipate paying any dividends in the near future;

 

(b)

it acknowledges and
represents that it: (i) has adequate means of providing for its
current financial needs and contingencies, (ii) has knowledge and
experience in business and financial matters and prior investment
experience, including investments in securities without the benefit
of a prospectus; (iii) recognizes the speculative nature of an
investment in the Securities; (iv) is able to bear the economic
risk that it hereby assumes; and (v) could afford a complete loss
of such investment in the Securities;

 

(c)

the Subscriber is
aware that there are restrictions on the Subscriber’s ability
to resell the Securities and it is the Subscriber’s
responsibility to consult the Subscriber’s own advisors to
find out what those restrictions are and to comply with them before
selling the Securities, and confirms that no representation has
been made to it by or on behalf of the Corporation with respect
thereto; acknowledges that it is aware of the characteristics of
the Securities, the risks relating to an investment therein and of
the fact that it may not be able to resell the Securities, except
in accordance with limited exemptions under applicable securities
legislation until expiry of the applicable restricted period and
compliance with the other requirements of applicable
law;

 

(d)

the Subscriber is
aware that any certificates representing the Securities will bear a
legend (or an ownership statement issued under a book-entry system
will bear a legend restriction notation) in substantially the
following form:

 

“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY
MUST NOT TRADE THE SECURITY BEFORE [THE DATE THAT IS 4 MONTHS AND
ONE DAY AFTER THE CLOSING DATE WILL BE
INSERTED.]”

 

(e)

it hereby
represents that it has been furnished by the Corporation during the
course of the Offering with all information regarding the
Corporation, the terms and conditions of the Offering and any
additional information that it has requested or desired to know,
and has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other
representatives of the Corporation concerning the Corporation and
the terms and conditions of the Offering;

 

(f)

it has not received
or been provided with, nor has it requested, nor does it have any
need to receive, any offering memorandum, any prospectus, sales or
advertising literature, or any other document describing the
business and affairs of the Corporation which has been prepared for
delivery to, and review by, a prospective purchaser in order to
assist it in making an investment decision in respect of the
Securities and the Subscriber’s decision to subscribe for the
Securities was not based upon, and the Subscriber has not relied
upon, any oral or written representations as to facts made by or on
behalf of the Corporation, except as set forth herein and in the
Corporation’s current public disclosure record available on
the system for electronic document analysis and retrieval at
www.sedar.com..To the extent necessary, the Subscriber has
retained, at its own expense, and relied upon appropriate
professional advice regarding the investment, tax and legal merits
and consequences of this Subscription Agreement and the purchase of
the Securities hereunder. The Subscriber disclaims reliance on any
statements made or information provided by any person or entity in
the course of the Subscriber’s consideration of an investment
in the Securities and the results of Subscriber’s own
independent investigation;

 

 

8

 

 

(g)

it has not become
aware of any advertisement in printed media of general and regular
paid circulation (or other printed public media), radio, television
or other means of telecommunications or other form of advertisement
(including electronic display such as the Internet) with respect to
the distribution of the Securities;

 

(h)

the Subscriber has
no knowledge of a “material fact” or “material
change” with respect to the Corporation (as those terms are
defined in applicable securities laws, and which generally includes
a fact or change which would reasonably be expected to have a
significant effect on the market price of the Common Shares) that
has not been generally disclosed to the public;

 

(i)

unless disclosed to
the Corporation, the Subscriber is not a “control
person” of the Corporation (within the meaning of applicable
securities laws, and which generally includes a person holding or
controlling (alone or in concert with other persons) more than 20%
of the Common Shares), and unless disclosed to the Corporation, the
purchase of securities under the Offering will not result in the
Subscriber becoming a “control person” (and, if the
Subscriber is purchasing on behalf of a Disclosed Principal, the
purchase of securities under the Offering will not result in the
Disclosed Principal becoming a “control
person”);

 

(j)

it is purchasing
the Securities as principal for its own account, not for the
benefit of any other person, for investment only and not with a
view to the resale or distribution of all or any of the Securities,
it is resident in the jurisdiction set out as the
“Subscriber’s Address” on the face page hereof
and that address is not being used solely for the purpose of
acquiring the Securities, and if the Subscriber is acting for a
Disclosed Principal, such Disclosed Principal is purchasing as
principal for its own account, not for the benefit of any other
person, for investment only and not with a view to resale or
distribution, and is resident in the jurisdiction set forth in the
Subscription Agreement as the “Disclosed Principal’s
Address” of the Disclosed Principal and that address is not
being used solely for the purpose of acquiring the Securities, and
either:

 

(i)

the Subscriber is
an Accredited Investor and has concurrently executed and delivered
a Certificate in the form attached as Exhibit 1
to this Subscription Agreement and has completed the appropriate
Appendices; or

 

(ii)

the Subscriber (or
any Disclosed Principal) is purchasing pursuant to an exemption
from prospectus and registration requirements (particulars of which
have been enclosed herewith by the Subscriber) available to the
Subscriber under applicable securities legislation of the
jurisdiction of the Subscriber’s residence and shall deliver
to the Corporation such further particulars of the exemption(s) and
the Subscriber’s qualifications thereunder as the Corporation
or its counsel may request;

 

(k)

the Subscriber is
aware that the Corporation is relying on exemptions from the
requirements under Canadian securities laws to provide the
Subscriber with a prospectus, and no prospectus has been filed by
the Corporation with any stock exchange or regulatory authority in
Canada in connection with the issuance of the Securities, and as a
consequence:

 

(i)

the Subscriber is
restricted from using some of the civil remedies otherwise
available under Canadian securities laws and certain protections,
rights and remedies provided by securities laws, including
statutory rights of rescission or damages, will not be available to
the Subscriber; and

 

(ii)

the Subscriber may
not receive information that would otherwise be required to be
provided to the Subscriber under Canadian securities
laws;

 

(l)

if the Subscriber
is resident in or otherwise subject to applicable securities laws
of a jurisdiction other than
Canada, the Subscriber confirms, represents and warrants
that:

 

(i)

the Subscriber is
knowledgeable with respect to, or has been independently advised as
to, the applicable securities laws of the jurisdiction in which the
Subscriber is resident (the “International Jurisdiction”) and which would
apply to the acquisition of the Securities;

 

(ii)

the Subscriber
is purchasing the Securities pursuant to exemptions from prospectus
or registration requirements or equivalent requirements under
applicable securities laws or, if such is not applicable, the
Subscriber is permitted to purchase the Securities under the
applicable securities laws of the International Jurisdiction
without the need to rely on any exemptions;

 

(iii)

the applicable
securities laws of the International Jurisdiction do not require
the Corporation to make any filings or seek any approvals of any
kind whatsoever from any securities regulator of any kind
whatsoever in the International Jurisdiction in connection with the
issue and sale or resale of the Securities;

 

(iv)

the purchase of
the Securities by the Subscriber does not trigger:

 

(A)

any obligation to
prepare and file a prospectus or similar document, or any other
report with respect to such purchase in the International
Jurisdiction; or

 

(B)

any continuous
disclosure reporting obligation of the Corporation in the
International Jurisdiction; and

 

(v)

the Subscriber
will, if requested by the Corporation, deliver to the Corporation a
certificate or opinion of local counsel from the International
Jurisdiction which will confirm the matters referred to in
subsections (ii), (iii) and (iv)
above to the satisfaction of the Corporation acting
reasonably;

 

 

9

 

 

(m)

it acknowledges
that:

 

(i)

no stock exchange,
securities commission or similar regulatory authority has reviewed
or passed on the merits of the Securities;

 

(ii)

there is no
government or other insurance covering the Securities;
and

 

(iii)

there are risks
associated with the purchase of the Securities;

 

(n)

the Subscriber is
not a “U.S. person” (as defined in Regulation S under
the United States Securities Act
of 1933 (the “U.S.
Securities Act”) and which includes an individual
resident in the United States, an estate or trust of which any
executor, administrator or trustee is a U.S. person, and any
corporation or partnership incorporated or organized under the laws
of the United States) (a “U.S. Person”) and the Securities
were not offered to the Subscriber in the United States. At the
time the buy order for the Securities originated, the Subscriber
was outside the United States, and this Agreement was executed and
delivered by (or on behalf of) the Subscriber outside the United
States;

 

(o)

it understands that
the Warrants will not be registered under the securities laws of
the United States, and unless a registration statement is filed
with the SEC registering the Class A Warrant Shares and Class B
Warrant Shares and such registration statement is made effective,
the Class A Warrant Shares and Class B Warrant Shares may not be
offered or sold, directly or indirectly, in the United States
except pursuant to registration under the U.S. Securities Act and
the securities laws of all applicable states or available
exemptions therefrom;

 

(p)

it undertakes and
agrees that it will not offer or sell Securities in the United
States unless such securities are registered under the U.S.
Securities Act and the securities laws of all applicable states of
the United States or an exemption from such registration
requirements is available, and further that it will not resell the
Securities, except in accordance with the provisions of applicable
securities legislation, regulations, rules, policies and orders and
stock exchange rules, and the Subscriber is solely responsible for
compliance with such legislation, rules, and
regulations;

 

(q)

if the Subscriber
is a corporation, partnership, unincorporated association or other
entity, it has the legal capacity and competence to enter into and
be bound by this Subscription Agreement and to perform all of its
obligations hereunder, and if it is a body corporate, it is duly
incorporated or created and validly subsisting under the laws of
the jurisdiction of its incorporation, and further certifies that
all necessary approvals of directors, shareholders or otherwise
have been given and obtained;

 

(r)

the performance and
compliance with the terms hereof, the subscription for the Units
and the completion of the transactions described herein by the
Subscriber will not result in any material breach of, or be in
conflict with, or constitute a material default under, or create a
state of facts that, after notice or lapse of time, or both, would
constitute a material default under any term or provision of the
constating documents, by-laws or resolutions of the Subscriber (if
the Subscriber is not an individual), applicable securities laws or
any other laws applicable to the Subscriber, any agreement to which
the Subscriber is a party, or any judgment, decree, order, statute,
rule or regulation applicable to the Subscriber;

 

(s)

if the Subscriber
is an individual, it is of the full age of majority and is legally
competent to execute this Subscription Agreement and take all
action pursuant hereto;

 

(t)

this Subscription
Agreement and any other documents contemplated hereby, have been
duly and validly authorized, executed and delivered by and
constitute a legal, valid, binding and enforceable obligation of
the Subscriber in accordance with its terms;

 

 

10

 

 

(u)

in the case of a
subscription by it for Securities acting as agent for a Disclosed
Principal, it is duly authorized to execute and deliver this
Subscription Agreement and all other necessary documentation in
connection with such subscription on behalf of such Disclosed
Principal and this Subscription Agreement has been duly authorized,
executed and delivered by or on behalf of, and constitutes a legal,
valid and binding agreement of, such Disclosed Principal and the
Subscriber acknowledges that the Corporation is required by law to
disclose to certain principal regulatory authorities the identity
of the Disclosed Principal for whom the Subscriber may be
acting;

 

(v)

the Subscriber will
execute, deliver, file and otherwise assist the Corporation in
filing, such reports, undertakings and other documents with respect
to the issue of the Securities as may be required by any securities
commission, stock exchange or other regulatory
authority;

 

(w)

the entering into
of this Subscription Agreement and the transactions contemplated
hereby, will not result in a violation of any of the terms or
provisions of any law applicable to the Subscriber, or if the
Subscriber is not a natural person, any of the Subscriber’s
constating documents, or any agreement to which the Subscriber is a
party or by which it is bound;

 

(x)

none of the funds
the Subscriber is using to purchase the Securities represent
proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada) (the “PCMLTFA”) or the United States Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act (the “Patriot Act”) and the Subscriber
acknowledges that the Corporation may in the future be required by
law to disclose the Subscriber’s (and if applicable, the
Disclosed Principal’s) name and other information relating to
this Subscription Agreement and the Subscriber’s (and if
applicable, the Disclosed Principal’s) subscription
hereunder, on a confidential basis, pursuant to the PCMLTFA or the Patriot Act. To the best of its
knowledge: (a) none of the subscription funds to be provided by the
Subscriber: (i) have been or will be derived from or related to any
activity that is deemed criminal under the law of Canada, the
United States or any other jurisdiction; or (ii) are being tendered
on behalf of a person or entity who has not been identified to the
Subscriber, and (b) it shall promptly notify the Corporation if the
Subscriber discovers that any of such representations ceases to be
true, and to provide the Corporation with appropriate information
in connection therewith;

 

(y)

the Subscriber
acknowledges that the Corporation’s counsel is acting as
counsel to the Corporation and not as counsel to the Subscriber,
and acknowledges that it is solely responsible for and has been
encouraged to and should obtain independent legal, income tax and
investment advice with respect to its subscription for Securities
and accordingly, has been independently advised as to the meanings
of all terms contained herein relevant to the Subscriber for
purposes of giving representations, warranties and covenants under
this Subscription Agreement;

 

(z)

no person
(including the Corporation) has made to the Subscriber any written
or oral representations:

 

(i)

that any person
will resell or repurchase any of the Securities;

 

(ii)

that any person
will refund the purchase price for the Securities; or

 

(iii)

as to the future
price or value of any of the Securities;

 

(aa)

in making its
decision to enter into this Agreement for the purchase of the
Securities, the Subscriber has relied solely on the
Corporation’s current public disclosure record available on
the system for electronic document analysis and retrieval at
www.sedar.com, which includes the prospectus supplement for the
Offering;

 

 

11

 

 

(bb)

the
Subscriber’s offer to subscribe for Securities has not been
induced by any representations with regard to the present or future
value of the Securities;

 

(cc)

the Subscriber is
aware that: the Corporation may complete additional financings in
the future to develop the proposed business of the Corporation and
to fund its ongoing development; that there is no assurance that
any financings will be available or, if available, that the
financings will be available on reasonable terms; any future
financings may have a dilutive effect on current securityholders,
including the Subscriber (or a Disclosed Principal); and, if future
financings are not available, the Corporation may be unable to fund
its ongoing development and the lack of capital resources may
result in the failure of its business venture;

 

(dd)

other than
Brookline Capital Markets as described in the prospectus supplement
to be filed with the SEC in connection with the Offering, there is
no person acting or purporting to act in connection with the
Offering who is entitled to any brokerage or finder’s fee and
if any person establishes a claim that any fee or other
compensation is payable in connection with this subscription for
Units, the Subscriber covenants to indemnify and hold harmless the
Corporation with respect thereto and with respect to all costs
reasonably incurred in the defence thereof;

 

(ee)

the Subscriber is
not purchasing Units with knowledge of material information
concerning the Corporation that has not been generally
disclosed;

 

(ff)

the Subscriber does
not act jointly or in concert with any other person for the
purposes of the acquisition of the Securities; and

 

(gg)

if the Subscriber,
or any person for whom it is contracting hereunder, is a
corporation or a partnership, syndicate, trust, association, or any
other form of unincorporated organization or organized group of
persons, the Subscriber or such person was not created and is not
being used solely to permit purchases of or to hold securities
without a prospectus in reliance on a prospectus and registration
exemption (including but not limited to the “Minimum
Investment Amount” exemption provided under section 2.10 of
NI 45-106 or as an accredited investor as described in paragraph
(m) of the definition of
“accredited investor” in section 1.1 of NI 45-106) and
it pre-existed the Offering and has a bona fide purpose other than
investment in the Securities.

 

13. Compensation.

 

  The
Subscriber understands that in connection with the issue and sale
of the Units, Brookline Capital Markets (“BCM”), in its capacity as
placement agent for the Offering, will receive from the
Corporation: (i) a cash commission in an amount equal to 6.5% of
the gross subscription proceeds from any persons introduced to the
Offering by such finders and 3.5% of the gross subscription
proceeds from certain persons introduced to the Offering by the
Company and settled by the Company directly; and (ii) that number
of compensation options (the “Broker Warrants”) as is equal to
1.25% of the Units sold in the Offering. Each Broker Warrant will
be exercisable by the holder thereof to purchase one Common Share
the Unit Price for a period of five years from the Closing Date.
BCM shall not be entitled to compensation in connection with
subscriptions from Subscribers not resident in the United
States.

 

General

 

14. Accuracy
of Representations and Warranties.

 

  The
Subscriber agrees that the representations, warranties and
covenants of the Subscriber herein will be true and correct both as
of the execution of this Subscription Agreement and as of the
Closing Time and will survive the completion of the issuance of the
Securities. The representations, warranties and covenants of the
Subscriber herein are made with the intent that they be relied upon
by the Corporation in determining the eligibility of a purchaser of
Securities and the Subscriber agrees to indemnify the Corporation
and its directors, officers, partners, employees and agents against
all losses, claims, costs, expenses and damages or liabilities
which any of them may suffer or incur which are caused or arise
from a breach thereof. The Subscriber undertakes to immediately
notify the Corporation at its head office, to the attention of the
Chief Financial Officer, of any change in any statement or other
information relating to the Subscriber set forth herein which takes
place prior to the Closing Time.

 

15. Responsibility
for Costs.

 

  The
Subscriber acknowledges and agrees that all costs incurred by the
Subscriber (including any fees and disbursements of any special
counsel retained by the Subscriber) relating to the sale of the
Securities to the Subscriber shall be borne by the
Subscriber.

 

 

12

 

 

16. Collection
of Personal Information.

 

  This
Subscription Agreement requires the Subscriber to provide certain
personal information to the Corporation. Such information is being
collected by the Corporation for the purposes of completing the
Offering, which includes, without limitation, determining the
Subscriber’s eligibility to purchase the Securities under
applicable securities legislation, preparing and registering
certificates (or other evidence of subscription) representing the
Common Shares and Warrants to be issued to the Subscriber and
completing filings required by taxation authorities and any stock
exchange or securities regulatory authority. Securities regulatory
authorities in each of the provinces of Canada have been granted
the authority to indirectly collect this personal information
pursuant to securities legislation and this personal information is
also being collected for the purpose of administration and
enforcement of securities legislation. The Subscriber hereby
acknowledges and consents to the collection, use, and disclosure of
certain personal information by securities regulatory authorities
in Canada. If the Subscriber is resident in or otherwise subject to
the securities laws applicable in another province of Canada, the
information provided by the Subscriber on the first page of this
Subscription Agreement identifying the name, address and telephone
number of the Subscriber, the Securities being purchased hereunder
and the subscription price, as well as the Closing Date and the
exemption that the Subscriber is relying on in purchasing the
Securities will be disclosed to the applicable securities
regulatory authority, and such information is being indirectly
collected by such securities regulatory authority under the
authority granted to it under securities legislation. This
information is being collected for the purposes of the
administration and enforcement of the securities legislation of the
applicable province. Each Subscriber (and for certainty, including
each Disclosed Principal) hereby authorizes the indirect collection
of such information by the applicable securities regulatory
authority. In the event the Subscriber has any questions with
respect to the indirect collection of such information by
securities regulatory authorities, the Subscriber should contact
the applicable securities regulatory authority at the addresses set
out at Schedule "C" hereto. The
Subscriber’s (and if applicable, each Disclosed
Principal’s) personal information may be disclosed by the
Corporation to: (a) regulatory authorities (including stock
exchanges, if applicable); (b) the Corporation’s registrar
and transfer agent; (c) taxation authorities; and (d) any of the
other parties involved in the Offering, including legal counsel. By
executing this Agreement, the Subscriber (and if applicable, any
other Disclosed Principal) is deemed to be consenting to the
foregoing collection (including the indirect collection of personal
information), use and disclosure of the Subscriber’s personal
information. The Subscriber (and if applicable, the Disclosed
Principal) also consents to the filing of copies or originals of
any of the Subscriber’s documents described in this
Subscription Agreement as may be required to be filed with any
stock exchange or securities regulatory authority in connection
with the transactions contemplated hereby.

 

17. Governing
Law.

 

  The
contract arising out of this Subscription Agreement and all
documents relating thereto shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein. The parties irrevocably attorn
to the exclusive jurisdiction of the courts of the Province of
Ontario.

 

18. Time
of the Essence.

 

  Time
shall be of the essence hereof.

 

19. Entire
Agreement.

 

  This
Subscription Agreement represents the entire agreement of the
parties hereto relating to the subject matter hereof and there are
no representations, covenants or other agreements relating to the
subject matter hereof except as stated or referred to
herein.

 

20. Assignment.

 

  The
terms and provisions of this Subscription Agreement shall be
binding upon and enure to the benefit of the Subscriber and the
Corporation and their respective heirs, executors, administrators,
successors and assigns; provided that, except for the assignment by
a Subscriber who is acting as nominee or agent for the beneficial
owner and as otherwise herein provided, this Subscription Agreement
shall not be assignable by the Subscriber without prior written
consent of the other parties.

 

21. Modification.

 

  Neither
this Subscription Agreement nor any provision hereof shall be
modified, changed, discharged or terminated except by an instrument
in writing signed by the party against whom any waiver, change,
discharge or termination is sought.

 

 

13

 

 

22. Severability.

 

  The
invalidity, illegality or unenforceability of any provision of this
Subscription Agreement shall not affect the validity, legality or
enforceability of any other provision hereof.

 

23. Agreement
For Consideration.

 

  The
Subscriber, on its own behalf and, if applicable, on behalf of the
Disclosed Principal, agrees that this subscription is made for
valuable consideration and may not be withdrawn, cancelled,
terminated or revoked by the Subscriber, on its own behalf and, if
applicable, on behalf of the Disclosed Principal.

 

24. Currency.

 

  In this
Subscription Agreement, references to “US$” or
“United States dollars” are to the lawful currency of
the United States, and references to “$” or “CDN
$” are to Canadian dollars, unless otherwise stated
herein.

 

*****

 

14

 

 

Schedule?"A"                                 

EXHIBIT 1

 

CERTIFICATE OF “ACCREDITED INVESTOR”

 

TO:            

Edesa
Biotech, Inc. (the “Corporation”)

 

In
connection with the proposed purchase of Units of the Corporation
(the “Securities”) by the subscriber or
if applicable, the Disclosed Principal on whose behalf the
subscriber is purchasing as agent (the “Subscriber”), the Subscriber
represents, warrants, covenants and certifies that:

 

1.

the Subscriber
is purchasing the Securities as principal for its own account and
not for the benefit of another, or is deemed to be purchasing the
Securities as principal pursuant to applicable securities laws, and
is:

 

(a)

_________ an
“accredited investor” within the meaning of National
Instrument 45-106 - Prospectus
Exemptions (“NI
45-106”) by virtue of satisfying the indicated
criterion as set out in Appendix “A” to this
Certificate (YOU MUST ALSO INITIAL
BESIDE THE APPLICABLE CATEGORY ON APPENDIX
“A” TO THIS
CERTIFICATE); or

 

(b)

_________
purchasing the Securities as agent or trustee for a beneficial
purchaser, and each such beneficial purchaser is purchasing as
principal for its own account and not for the benefit of another,
and each such beneficial purchaser is an “accredited
investor” within the meaning of NI 45-106 by virtue of
satisfying the indicated criterion as set out in Appendix “A” to this certificate
(YOU MUST ALSO INITIAL BESIDE THE
APPLICABLE CATEGORY ON APPENDIX “A”
TO THIS
CERTIFICATE).

 

2.

if the Subscriber
(or beneficial purchaser) is not an individual, the person was not
created or used solely to purchase or hold securities as an
accredited investor;

 

3.

these
representations, warranties, covenants and certifications will be
true and correct both as of the execution of this certificate and
as of the Closing Time of the purchase and sale of the Securities
purchased by the Subscriber and will survive the completion of the
issue of the Subscriber’s Securities; and

 

4.

these
representations, warranties, covenants and certifications are made
by the Subscriber with the intent that they be relied upon in
determining the suitability of the beneficial purchaser as a
purchaser of the Securities, and the Subscriber undertakes to
immediately notify the Corporation of any change in any statement
or other information relating to the Subscriber (and the beneficial
purchaser) set forth herein which takes place prior to the Closing
Time of the purchase and sale of the Subscriber’s
Securities.

 

Dated:
________________________, 2019.

 

	
 

	
 

	

Print
name of Subscriber

 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Signature

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Print
name of signatory (if different from Subscriber)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Title

 

IMPORTANT:

 

(A) 

PLEASE
INITIAL BESIDE THE APPLICABLE CATEGORY ON APPENDIX
“A” TO THIS CERTIFICATE.

 

(B) 

INDIVIDUAL
ACCREDITED INVESTORS IN THE CATEGORIES DESCRIBED IN (J), (K) OR (L)
OF APPENDIX “A” TO THIS
CERTIFICATE MUST ALSO COMPLETE AND SIGN APPENDIX
“B” TO THIS CERTIFICATE.

 

(C) 

FOR
A DEFINITION OF CERTAIN TERMS USED IN THIS EXHIBIT AND ITS
APPENDICES, PLEASE REFER TO SCHEDULE "B" OF THIS SUBSCRIPTION
AGREEMENT.

 

15

 

 

APPENDIX “A”

 

TO 
EXHIBIT
1

 

DEFINITION OF “ACCREDITED INVESTOR”

 

INSTRUCTIONS:

 

(1) 

Prior to completing
this Appendix “A”, please
carefully review the definitions set forth in Schedule "B" of the Subscription
Agreement, particularly the definitions of “financial assets” as distinguished
from “net
assets”, as well as “related liabilities”.

 

(2) 

The Subscriber must
initial beside the applicable category of “accredited investor” the
Subscriber qualifies under below.

 

“accredited
investor”, as used in this Schedule,
means:

 

Initials

 

	

_______

	

(a) a Canadian
financial institution, or a Schedule III bank; or

	

_______

	

(b) the
Business Development Bank of Canada incorporated under the
Business Development Bank of
Canada Act (Canada); or

	

_______

	

(c) a
subsidiary of any person referred to in paragraphs (a) or (b), if
the person owns all of the voting securities of the subsidiary,
except the voting securities required by law to be owned by
directors of that subsidiary; or

	

_______

	

(d) a person
registered under the securities legislation of a jurisdiction of
Canada as an adviser or dealer; or

	

_______

	

(e) an
individual registered under the securities legislation of a
jurisdiction of Canada as a representative of a person referred to
in paragraph (d); or

	

_______

	

(e.1) an
individual formerly registered under the securities legislation of
a jurisdiction of Canada, other than an individual formerly
registered solely as a representative of a limited market dealer
under one or both of the Securities Act (Ontario) or the
Securities Act
(Newfoundland and Labrador); or

	

_______

	

(f) the
Government of Canada or a jurisdiction of Canada, or any crown
corporation, agency or wholly owned entity of the Government of
Canada or a jurisdiction of Canada; or

	

_______

	

(g) a
municipality, public board or commission in Canada and a
metropolitan community, school board, the Comité de gestion de
la taxe scolaire de l’île de Montréal or an
intermunicipal management board in Québec; or

	

_______

	

(h) any
national, federal, state, provincial, territorial or municipal
government of or in any foreign jurisdiction, or any agency of that
government; or

	

_______

	

(i) a pension
fund that is regulated by the Office of the Superintendent of
Financial Institutions (Canada), a pension commission or similar
regulatory authority of a jurisdiction of Canada; or

	

_______

	

(j) an
individual who, either alone or with a spouse, beneficially owns
financial assets (which term
excludes real estate) having an
aggregate realizable value that, before taxes but
net of any related liabilities, exceeds $1,000,000;
or

	
 

	

[AN
INDIVIDUAL IN THIS CATEGORY MUST FULLY COMPLETE AND EXECUTE FORM
45-106F9 ATTACHED HERETO AS APPENDIX
“B” TO THIS EXHIBIT
1.]

	

_______

	

(j.1) an
individual who beneficially owns financial assets (which term excludes
real estate) having an aggregate
realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000;
or

	

_______

	

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

	
 

	

[AN INDIVIDUAL IN THIS CATEGORY MUST FULLY
COMPLETE AND EXECUTE FORM 45-106F9 ATTACHED HERETO AS APPENDIX
“B” TO THIS EXHIBIT 1]

	

_______

	

(l) an
individual who, either alone or with a spouse, has net assets that exceed $5,000,000; or
[AN INDIVIDUAL IN THIS CATEGORY
MUST FULLY COMPLETE AND EXECUTE FORM 45-106F9 ATTACHED HERETO
AS APPENDIX “B”
TO THIS EXHIBIT
1.]

	

_______

	

(m) a person,
other than an individual or investment fund, that has net assets of at least $5,000,000 as
shown on its most recently prepared financial statements;
or

	

_______

	

(n) an
investment fund that distributes or has distributed its securities
only to

	
 

	
 

	

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

	
 

	
 

	

(b) a person
that acquires or acquired securities in the circumstances referred
to in sections 2.10 [“Minimum Amount Investment
exemption”] or 2.19 [“Additional Investment in Investment Funds
exemption”] of NI 45-106; or

	
 

	
 

	

(c) a person
described in paragraph (i) or (ii) that acquires or acquired
securities under section 2.18 [“Investment Fund Reinvestment
exemption”] of NI 45-106; or

	

_______

	

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

 

 

16

 

 

	

_______

	

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

	

_______

	

(q) a person
acting on behalf of a fully managed account managed by that person,
if that person is registered or authorized to carry on business as
an adviser or the equivalent under the securities legislation of a
jurisdiction of Canada or a foreign jurisdiction; or

	

_______

	

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

	

_______

	

(s) an entity
organized in a foreign jurisdiction that is analogous to any of the
entities referred to in paragraphs (a) to (d) or paragraph (i) in
form and function; or

	

_______

	

(t) a person
in respect of which all of the owners of interests, direct,
indirect or beneficial, except the voting securities required by
law to be owned by directors, are persons that are accredited
investors (as defined in this Schedule); or

	

_______

	

(u) an
investment fund that is advised by a person registered as an
adviser or a person that is exempt from registration as an adviser;
or

	

_______

	

(v) a person
that is recognized or designated by the securities regulatory
authority or, except in Ontario and Québec, the regulator as
an accredited investor; or

	

_______

	

(w) a trust
established by an accredited investor (as defined in this Appendix)
for the benefit of the accredited investor’s family members
of which a majority of the trustees are accredited investors (as
defined in this Appendix) and all of the beneficiaries are the
accredited investor’s spouse, a former spouse of the
accredited investor or a parent, grandparent, brother, sister,
child or grandchild of that accredited investor, of that accredited
investor’s spouse or of that accredited investor’s
former spouse.

 

All
dollar amounts referred to in this Schedule are expressed in
Canadian dollars.

 

For the
purposes of this Appendix
“A”:

 

(a)

a trust company or
trust corporation described in paragraph (p) above, other than a
trust company or trust corporation registered under the laws of
Prince Edward Island that is not registered or authorized under the
Trust and Loan Companies Act (Canada) or under comparable
legislation in another jurisdiction of Canada, is deemed to be
purchasing as principal; and

 

(b)

a person described
in paragraph (q) above is deemed to be purchasing as
principal.

 

17

 

 

APPENDIX “B”

 

TO 
EXHIBIT
1

 

Form 45-106F9

 

Form for Individual Accredited Investors

 

	

WARNING!

This investment is risky. Don’t invest unless you can afford
to lose all the money you pay for this investment.

 

 

 

	

SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY
HOLDER

 

	

1.            About
your investment

 

	

Type of
securities: Units

 

	

Issuer:
Edesa Biotech, Inc.

 

	

Purchased
from:                                 Edesa
Biotech, Inc.

 

	

SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER

 

	

2.            Risk
acknowledgement

 

	

This
investment is risky. Initial that you understand that:

 

	

Your initials

 

	

Risk of loss – You could lose your entire investment
of $__________________. [Instruction: Insert the total dollar amount of
the investment.]

 

	
 

	

Liquidity risk – You may not be able to sell your
investment quickly – or at all.

 

	
 

	

Lack of information – You may receive little or no
information about your investment.

 

	
 

	

Lack of advice – You will not receive advice from the
salesperson about whether this investment is suitable for you
unless the salesperson is registered. The salesperson is the person
who meets with, or provides information to, you about making this
investment. To check whether the salesperson is registered, go to
www.aretheyregistered.ca.

 

	
 

	

3.            Accredited
investor status

 

	

You
must meet at least one of
the following criteria to be able to make this investment. Initial
the statement that applies to you. (You may initial more than one
statement.) The person identified in section 6 is responsible for
ensuring that you meet the definition of accredited investor. That
person, or the salesperson identified in section 5, can help you if
you have questions about whether you meet these
criteria.

 

	

Your initials

 

	
 

● Your net income
before taxes was more than $200,000 in each of the 2 most recent
calendar years, and you expect it to be more than $200,000 in the
current calendar year. (You can find your net income before taxes
on your personal income tax return.)

 

	
 

	
 

● Your net income
before taxes combined with your spouse’s was more than
$300,000 in each of the 2 most recent calendar years, and you
expect your combined net income before taxes to be more than
$300,000 in the current calendar year.

 

	
 

	
 

● Either alone or
with your spouse, you own more than $1 million in cash and
securities, after subtracting any debt related to the cash and
securities.

 

	
 

	
 

● Either alone or
with your spouse, you have net assets worth more than $5 million.
(Your net assets are your total assets (including real estate)
minus your total debt.)

 

	
 

 

 

18

 

 

	

4.            Your
name and signature

 

	

By
signing this form, you confirm that you have read this form and you
understand the risks of making this investment as identified in
this form.

 

	

First
and last name (please print):

 

	
 

	

Signature:

 

	
 

	

Date:

 

	
 

	

SECTION 5 TO BE COMPLETED BY THE SALESPERSON

 

	

5.            Salesperson
information

 

	

[Instruction:
The salesperson is the person who meets with, or provides
information to, the purchaser with respect to making this
investment. That could include a representative of the issuer or
selling security holder, a registrant or a person who is exempt
from the registration requirement.]

 

	

First
and last name of salesperson (please print):

 

	

Par
Nijhawan

 

	

Telephone:

 

	

 

	

Email:

 

	

 

	

Name of
firm (if registered):

 

	

N/A

 

	

SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY
HOLDER

 

	

6.            For
more information about this investment contact:

 

	

Edesa Biotech, Inc.

100 Spy
Court

Markham,
Ontario, L3R 5H6

Attention:
Par Nijhawan

Phone:                       

Email:                       

For more information about prospectus exemptions, contact your
local securities regulator. You can find contact information at
www.securities-administrators.ca.

 

 

Form instructions:

 

1. 

The information in sections 1, 5 and 6 must be completed before the
purchaser completes and signs the form.

 

2. 

The purchaser must sign this form. Each of the purchaser and the
issuer or selling security holder must receive a copy of this form
signed by the purchaser. The issuer or selling security holder is
required to keep a copy of this form for 8 years after the
distribution.

 

19

 

 

Schedule "B"

 

 

 

DEFINITIONS

 

“affiliate”
– an issuer is an affiliate of another issuer
if:

 

(a)

one of them is the
subsidiary of the other;

 

(b)

each of them is
controlled by the same person.

 

For the
purposes hereof, a person (first person) is considered to control
another person (second person) if

 

(a)

the first person
beneficially owns directly or indirectly, beneficially owns or
exercises control or direction over securities of the second person
carrying votes which, if exercised, would entitle the first person
to elect a majority of the directors of the second person, unless
that first person holds the voting securities only to secure an
obligation,

 

(b)

the second person
is a partnership, other than a limited partnership, and the first
person holds more than 50% of the interests of the partnership,
or

 

(c)

the second person
is a limited partnership and the general partner of the limited
partnership is the first person.

 

“bank”
means a bank named in Schedule I or II of the Bank Act (Canada);

 

“Canadian
financial institution” means

 

(a)

an association
governed by the Cooperative Credit
Associations Act (Canada) or a central credit cooperative
society for which an order has been made under section 473(1) of
that Act, or

 

(b)

a bank, loan
corporation, trust company, trust corporation, insurance company,
treasury branch, credit union, caisse populaire, financial services
cooperative, or league that, in each case, is authorized by an
enactment of Canada or a jurisdiction of Canada to carry on
business in Canada or a jurisdiction of Canada;

 

“control
person” has the meaning ascribed thereto in applicable
securities legislation;

 

“director”
means

 

(a)

a member of the
board of directors of a company or an individual who performs
similar functions for a company, and

 

(b)

with respect to a
person that is not a company, an individual who performs functions
similar to those of a director of a company;

 

“eligibility
adviser” means

 

(a)

a person that is
registered as an investment dealer and authorized to give advice
with respect to the type of security being distributed,
and

 

(b)

in Saskatchewan or
Manitoba, also means a lawyer who is a practicing member in good
standing with a law society of a jurisdiction of Canada or a public
accountant who is a member in good standing of an institute or
association of chartered accountants, certified general accountants
or certified management accountants in a jurisdiction of Canada
provided that the lawyer or public accountant must not

 

(i)

have a
professional, business or personal relationship with the issuer, or
any of its directors, executive officers, founders, or control
persons, and

 

(ii)

have acted for or
been retained personally or otherwise as an employee, executive
officer, director, associate or partner of a person that has acted
for or been retained by the issuer or any of its directors,
executive officers, founders or control persons within the previous
12 months;

 

 

20

 

 

“executive
officer” means, for an issuer, an individual who
is

 

(a)

a chair, vice-chair
or president,

 

(b)

a vice-president in
charge of a principal business unit, division or function including
sales, finance or production, or

 

(c)

performing a
policy-making function in respect of the issuer;

 

“financial
assets” means cash, securities or a contract of
insurance, a deposit or an evidence of a deposit that is not a
security for the purposes of securities legislation; and specifically excludes real estate. For the purposes of
paragraphs (j) and (j.1) of Exhibit 1,
financial assets are those financial assets which are beneficially
owned. The following factors are indicative of beneficial ownership
of financial assets:

 

(a)

physical or
constructive possession of evidence of ownership of the financial
asset;

 

(b)

entitlement to
receipt of any income generate d by the financial
asset;

 

(c)

risk of loss of the
value of the financial asset; and

 

(d)

the ability to
dispose of the financial asset or otherwise deal with it as the
individual sees fit.

 

Financial
assets are generally liquid or relatively easy to liquidate.
Realizable value of financial assets generally means the fair
market value of the assets that may reasonably be obtained in an
orderly liquidation. To satisfy the thresholds in paragraphs (j)
and (j.1) above, the value must be net of related
liabilities.

 

“foreign
jurisdiction” means a country other than Canada or a
political subdivision of a country other than Canada;

 

“founder”
means, in respect of an issuer, a person who,

 

(a)

acting alone, in
conjunction, or in concert with one or more persons, directly or
indirectly, takes the initiative in founding, organizing or
substantially reorganizing the business of the issuer,
and

 

(b)

at the time of the
distribution or trade is actively involved in the business of the
issuer;

 

“fully
managed account” means an account of a client for
which a person makes the investment decisions if that person has
full discretion to trade in securities for the account without
requiring the client’s express consent to a
transaction;

 

“jurisdiction”
or “jurisdiction of
Canada” means a province or territory of Canada except
when used in the term foreign jurisdiction;

 

“local
jurisdiction” means, in a national instrument or
multilateral instrument adopted or made by a Canadian securities
regulatory authority, the jurisdiction in which the Canadian
securities regulatory authority is situate;

 

“net
assets” means total assets (including real estate)
less total liabilities (including mortgages). For the purposes of
paragraph 1 of Exhibit
1, the value attributed to assets should reasonably reflect
their estimated fair value and tax is considered a liability to be
deducted if the obligation to pay the tax is outstanding at the
date of closing of the purchase of the Securities.

 

“person”
includes

 

(a)

an
individual,

 

(b)

a
corporation,

 

(c)

a partnership,
trust, fund and an association, syndicate, organization or other
organized group of persons, whether incorporated or not,
and

 

(d)

an individual or
other person in that person’s capacity as a trustee,
executor, administrator or personal or other legal
representative;

 

 

“regulator”
means, for the local jurisdiction, the person referred to in
Appendix D of National Instrument 14-101, opposite the name of the
local jurisdiction;

 

“related
entity” means, for an issuer, a person that controls
or is controlled by the issuer or that is controlled by the same
person that controls the issuer;

 

“related
liabilities” means

 

(a)

liabilities
incurred or assumed for the purpose of financing the acquisition or
ownership of financial assets, or

 

(b)

liabilities that
are secured by financial assets;

 

 

21

 

 

“Schedule
III bank” means an authorized foreign bank named in
Schedule III of the Bank
Act (Canada);

 

“securities
legislation” means the applicable securities
legislation of a jurisdiction of Canada;

 

“spouse”
means, an individual who

 

(a)

is married to
another individual and is not living separate and apart within the
meaning of the Divorce Act
(Canada), from the other individual,

 

(b)

is living with
another individual in a marriage-like relationship, including a
marriage-like relationship between individuals of the same gender,
or

 

(c)

in Alberta, is an
individual referred to in paragraph (a) or (b) above,
or is an adult interdependent partner within the meaning of the
Adult Interdependent Relationships
Act (Alberta);

 

“subsidiary”
means an issuer that is controlled directly or indirectly by
another issuer and includes a subsidiary of that subsidiary;
and

 

For the
purpose of this Subscription Agreement, for residents of Manitoba,
“distribution”
means a primary distribution to the public.

 

For the
purpose of this Subscription Agreement, for residents of
Québec, “trade” refers to any of the
following activities:

 

(a)

the activities
described in the definition of “dealer” in section 5 of the
Securities Act
(Québec), including the following activities;

 

(i)

the sale or
disposition of a security by onerous title, whether the terms of
payment be on margin, instalment or otherwise, but does not
include, a transfer or the giving in guarantee of securities in
connection with a debt or the purchase of a security, except as
provided in paragraph (b);

 

(ii)

participation as a
trader in any transaction in a security through the facilities of
an exchange or a quotation and trade reporting system;

 

(iii)

the receipt by a
registrant of an order to buy or sell a security;

 

(b)

a transfer or
the giving in guarantee of securities of an issuer from the
holdings of a control person in connection with a
debt.

 

*****

 

22

 

 

Schedule "C"

 

CONTACT
INFORMATION WITH RESPECT TO THE COLLECTION OF PERSONAL
INFORMATION

 

	

Alberta Securities Commission

Suite
600, 250 - 5th Street SW

Calgary,
Alberta T2P 0R4

Telephone:
(403) 297-6454

Toll
free in Canada: 1-877-355-0585

Facsimile:
(403) 297-2082

	

Government of Nunavut

Department
of Justice

Legal
Registries Division

P.O.
Box 1000, Station 570

1st
Floor, Brown Building

Iqaluit,
Nunavut X0A 0H0

Telephone:
(867) 975-6590

Facsimile:
(867) 975-6594

	

British Columbia Securities Commission

P.O.
Box 10142,

Pacific
Centre

701
West Georgia Street

Vancouver,
British Columbia V7Y 1L2

Inquiries:
(604) 899-6854

Toll
free in Canada: 1-800-373-6393

Facsimile:
(604) 899-6581

Email:
inquiries@bcsc.bc.ca

	

Ontario Securities Commission

20
Queen Street West, 22nd Floor

Toronto,
Ontario M5H 3S8

Telephone:
(416) 593-8314

Toll
free in Canada: 1-877-785-1555

Facsimile:
(416) 593-8122

Email:
exemptmarketfilings@osc.gov.on.ca

Public
official contact regarding indirect collection of information:
Inquiries Officer

	

The Manitoba Securities Commission

500 -
400 St. Mary Avenue

Winnipeg,
Manitoba R3C 4K5

Telephone:
(204) 945-2548

Toll
free in Manitoba: 1-800-655-5244

Facsimile:
(204) 945- 0330

	

Prince Edward Island Securities Office

95
Rochford Street, 4th Floor Shaw Building

P.O.
Box 2000

Charlottetown,
Prince Edward Island

C1A
7N8

Telephone:
(902) 368-4569

Facsimile:
(902) 368-5283

	

Financial and Consumer Services Commission (New
Brunswick)

85
Charlotte Street, Suite 300

Saint
John, New Brunswick E2L 2J2

Telephone:
(506) -658-3060

Toll
free in Canada: 1-866-933-2222

Facsimile:
(506) 658-3059

Email:
info@fcnb.ca

	

Autorité des marchés financiers

800,
Square Victoria, 22e étage

C.P.
246, Tour de la Bourse

Montréal,
Québec H4Z 1G3

Telephone:
(514) 395-0337 or 1-877-525-0337

Facsimile:
(514) 864-6381

(For
privacy requests only)

Email:
financementdessocietes@lautorite.qc.ca (For
corporate finance issuers)

	

Government of Newfoundland and Labrador

Financial Services Regulation Division

P.O.
Box 8700

Confederation
Building

2nd
Floor, West Block

Prince
Philip Drive

St.
John’s, Newfoundland and Labrador A1B 4J6

Attention:
Director of Securities

Telephone:
(709) 729-4189

Facsimile:
(709) 729-6187

	

Financial and Consumer Affairs Authority of
Saskatchewan

Suite
601 - 1919 Saskatchewan Drive

Regina,
Saskatchewan S4P 4H2

Telephone:
(306) 787-5879

Facsimile:
(306) 787-5899

	

Government of the Northwest Territories

Office of the Superintendent of Securities

P.O.
Box 1320

Yellowknife,
Northwest Territories

X1A
2L9

Attention:
Deputy Superintendent,

Legal
& Enforcement

Telephone:
(867) 920-8984

Facsimile:
(867) 873-0243

	

Government of Yukon

Department of Community Services

Law
Centre, 3rd Floor

2130
Second Avenue

Whitehorse,
Yukon Y1A 5H6

Telephone:
(867) 667-5314

Facsimile:
(867) 393-6251

	

Nova Scotia Securities Commission

Suite
400, 5251 Duke Street

Duke
Tower, P.O. Box 458

Halifax,
Nova Scotia B3J 2P8

Telephone:
(902) 424-7768

Facsimile:
(902) 424-4625

	
 

 

 

23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00303-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00303-of-00352.parquet"}]]