U.S.
Securities and Exchange Commission
Washington,
D.C. 20549
____________________
Form
8-k
____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
October 7, 2014
____________________
Commission File No. 001-33718
____________________
Bioheart, Inc.
(Name of small business issuer as specified
in its charter)
Florida |
65-0945967 |
State of Incorporation |
IRS Employer Identification No. |
13794 NW 4th
Street, Suite 212, Sunrise, Florida 33325
(Address of principal executive offices)
(954) 835-1500
(Issuer’s telephone number)
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
In this Current Report on Form 8-K, “Company,” “our
company,” “us,” and “our” refer to Bioheart, Inc., unless the context requires otherwise.
Item 1.01 |
Entry into Material Definitive Agreement |
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Securities Purchase Agreement and Convertible Note
On October 7, 2014 (the
“Closing Date”), Bioheart, Inc., a Florida corporation (the “Company”), entered into a securities
purchase agreement dated as of the Closing Date (the “Purchase Agreement”) with Magna Equities II, LLC, a New
York limited liability company (“Magna”). The Purchase Agreement provides that, upon the terms and
subject to the conditions set forth therein, Magna shall purchase from the Company on the Closing Date a senior convertible note
with an initial principal amount of $307,500 (the “Convertible Note”) for a purchase price of $205,000 (an approximately
33.33% original issue discount). Pursuant to the Purchase Agreement, on the Closing Date, the Company issued the Convertible Note
to Magna.
$40,000 of the outstanding
principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal
amount) shall be automatically extinguished (without any cash payment by the Company) if (i) the Company has properly filed a registration
statement with the Securities and Exchange Commission (“SEC”) on or prior to the Filing Deadline (defined below)
covering the resale by Magna of all of the shares of Common Stock issued or issuable upon conversion of the Convertible Note and
(ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has
occurred on or prior to such date. Moreover, $62,500 of the outstanding principal amount of the Convertible Note (together with
any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without
any cash payment by the Company) if (i) the Company has filed a registration statement with the SEC that has been declared effective
by the SEC on or prior to the Effectiveness Deadline (defined below) and the prospectus contained therein is available for use
by Magna for the resale by Magna of all of the shares of Common Stock issued or issuable upon conversion of the Convertible Note
and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default
has occurred on or prior to such date.
The Convertible Note matures
on August 7, 2015 and, in addition to the approximately 33.33% original issue discount, accrues interest at the rate of 12% per
annum. The Convertible Note is convertible at any time, in whole or in part, at Magna’s option into shares of the Company’s
common stock, par value $0.01 per share (the “Common Stock”), at a fixed conversion price of $0.01035 per share
(subject to adjustment). This conversion price represents a discount of approximately 55% from the lowest trading price of the
Common Stock during the five trading days prior to the Closing Date. If the Company has not properly filed a registration statement
with the SEC on or prior to the date that is 70 calendar days after the Closing Date covering the resale by Magna of all of the
shares of Common Stock issued or issuable upon conversion of the Convertible Note, then, from and after such date, the Convertible
Note
will be convertible at any time, in whole or
in part, at Magna’s option into Common Stock at a conversion price equal to a 55% discount from the lowest trading price
of the Common Stock during the five consecutive trading days ending and including the trading day immediately preceding the applicable
date of conversion. At no time will Magna be entitled to convert any portion of the Convertible Note to the extent that after such
conversion, Magna (together with its affiliates) would beneficially own more than 4.99% of the outstanding shares of Common Stock
as of such date. The Convertible Note includes “full ratchet” and standard anti-dilution protection.
The Convertible Note includes
customary event of default provisions, and provides for a default interest rate of 18%. Upon the occurrence of an event of default,
Magna may require the Company to pay in cash the “Event of Default Redemption Price” which is defined in the Convertible
Note to mean the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 140% (or 100% if an insolvency related
event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by (Y) the product of (1)
140% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price of the Common Stock
on any trading day during the period commencing on the date immediately preceding such event of default and ending on the date
the Company makes the entire payment required to be made under this provision.
The Company has the right
at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in
cash at a price equal to 140% of the total amount of the Convertible Note then outstanding.
The Purchase Agreement
contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Company also agreed
to pay up to $30,000 of reasonable attorneys’ fees and expenses incurred by Magna in connection with the transaction. The
Purchase Agreement also provides for indemnification of Magna and its affiliates in the event that Magna incurs losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses related to a breach by the Company of any of its representations,
warranties or covenants under the Purchase Agreement.
The issuance of the Convertible
Note to Magna under the Purchase Agreement was exempt from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”), pursuant to the exemption for transactions by an issuer not involving any public offering
under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act (“Regulation
D”). The Company made this determination based on the representations of Magna that Magna is an “accredited
investor” within the meaning of Rule 501 of Regulation D and has access to information about the Company and its investment.
This Current Report on
Form 8-K (this “Report”) is neither an offer to sell nor the solicitation of an offer to buy any securities.
The securities have not been registered under the Securities Act and may not be offered or sold in the United States of America
absent registration or an exemption from registration
under the Securities Act.
Registration Rights Agreement
In connection with the
execution of the Purchase Agreement, on the Closing Date, the Company and Magna also entered into a registration rights agreement
dated as of the Closing Date (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement,
the Company has agreed to file an initial registration statement (“Registration Statement”) with the SEC to
register the resale of the Common Stock into which the Convertible Note may be converted, on or prior to November 17, 2014 (the
“Filing Deadline”) and have it declared effective at the earlier of (i) the 120th calendar day after
the Closing Date and (ii) the fifth business day after the date the Company is notified by the SEC that such Registration Statement
will not be reviewed or will not be subject to further review (the “Effectiveness Deadline”).
If at any time all of the
shares of Common Stock underlying the Convertible Note are not covered by the initial Registration Statement, the Company has agreed
to file with the SEC one or more additional Registration Statements so as to cover all of the shares of Common Stock underlying
the Convertible Note not covered by such initial Registration Statement, in each case, as soon as practicable, but in no event
later than the applicable filing deadline for such additional Registration Statements as provided in the Registration Rights Agreement.
The Company also agreed,
among other things, to indemnify Magna from certain liabilities and fees and expenses of Magna incident to the Company’s
obligations under the Registration Rights Agreement, including certain liabilities under the Securities. Magna has agreed to indemnify
and hold harmless the Company and each of its directors, officers and persons who control the Company against certain liabilities
that may be based upon written information furnished by Magna to the Company for inclusion in a registration statement pursuant
to the Registration Rights Agreement, including certain liabilities under the Securities Act.
The foregoing descriptions
of the Purchase Agreement, the Convertible Note and the Registration Rights Agreement are qualified in their entirety by reference
to the provisions of the Convertible Note, the Purchase Agreement, and the Registration Rights Agreement filed as Exhibits 4.1,
10.1 and 10.2 to this Report, respectively, which are incorporated herein by reference.
Item 2.03
Creation of Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth
under Item 1.01 of this Report is incorporated by reference into this Item.
Item 9.01 Financial Statements and Exhibits
| 4.1 | Senior Convertible Note dated October 7, 2014. |
| 10.1 | Securities Purchase Agreement, dated as of October 7, 2014, by and between Magna Holdings I, LLC and Bioheart, Inc. |
| 10.2 | Registration Rights Agreement, dated as of October 7, 2014, by and between Magna Holdings I, LLC and Bioheart, Inc. |
SIGNATURES
Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant
Date: October 10, 2014
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Bioheart, Inc.
By: /s/ Mike Tomas |
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Mike Tomas |
|
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Chief Executive Officer |
Exhibit 4.1
SENIOR CONVERTIBLE
NOTE
NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 17(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.
BIOHEART,
INC.
Senior
Convertible Note
Issuance Date: October 7, 2014 |
Original Principal Amount: U.S. $307,500 |
FOR VALUE RECEIVED,
BIOHEART, INC., a Florida corporation (the “Company”), hereby promises to pay to the order of MAGNA EQUITIES
II, LLC or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”)
when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal (as defined below)
(as such interest on any outstanding Principal may be reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise) at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance
Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption
or otherwise (in each case in accordance with the terms hereof). This Senior Convertible Note (this “Note”,
including all Senior Convertible Notes issued in exchange, transfer or replacement hereof, collectively, the “Notes”)
was initially issued pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date (as defined below). Certain
capitalized terms used herein are defined in Section 28.
1.
PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to
the Holder an amount in cash representing
all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 23(c)) on such
Principal and Interest (as adjusted with respect to any Note Reduction (as defined in Section 12)). Other than as specifically
permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued
and unpaid Late Charges on Principal and Interest, if any.
2.
INTEREST; INTEREST RATE.
(a)
Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year
and twelve 30-day months and shall be payable in cash on the Maturity Date or any applicable Redemption Date, subject to adjustment
with respect to any Note Reduction.
(b)
Prior to the payment of Interest on the Maturity Date or any applicable Redemption Date, Interest on this Note shall accrue
at the Interest Rate and be payable by way of inclusion of the Interest in the Conversion Amount on each Conversion Date
in accordance with Section 3(b)(i). From and after the occurrence and during the continuance of any Event of Default, the Interest
Rate shall automatically be increased to eighteen percent (18.0%) per annum. In the event that such Event of Default is subsequently
cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following
the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such
Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through
and including the date of such cure of such Event of Default.
3.
CONVERSION OF NOTES. This Note shall be convertible into validly issued, fully paid and non-assessable shares of
Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a)
Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date,
the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly
issued, fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined
below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the
nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.
(b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant
to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion
Rate”).
(i)
“Conversion Amount” means the portion of the Principal to be converted, redeemed or otherwise
with respect to which this determination is being
made, plus all accrued and unpaid
Interest with respect to such portion of the Principal amount and accrued and unpaid Late Charges with respect to such portion
of such Principal and such Interest.
(ii)
“Conversion Price” means, as of any Conversion Date or other date of determination, $0.01035,
subject to adjustment as provided herein; provided, however, that if the Company has not properly filed a registration
statement with the SEC on or prior to the date that is seventy (70) calendar days after the Issuance Date covering the resale by
the Holder of all of the shares of Common Stock issued or issuable upon conversion of this Note or otherwise pursuant to the terms
of this Note in accordance with the 1933 Act and the Registration Rights Agreement (the “Registration Failure”),
then, from and after such Registration Failure, “Conversion Price” shall mean, as of any Conversion Date
or other date of determination, the product of (x) the lowest trading price of the Common Stock during the five (5) consecutive
Trading Days ending and including the Trading Day immediately preceding the applicable Conversion Date (as appropriately adjusted
for any stock splits, stock dividends, stock combinations or other similar transactions during any such measuring period) and (y)
forty-five percent (45%).
(c)
Mechanics of Conversion.
(i)
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion
Date”), the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., New
York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company. If required by Section 3(c)(iii), the Holder shall surrender this Note to a nationally recognized
overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case
of its loss, theft or destruction as contemplated by Section 17(b)). On or before the first (1st) Trading Day following
the date of receipt of a Conversion Notice, the Company shall transmit by facsimile an acknowledgment of confirmation, in the form
attached hereto as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent
(the “Transfer Agent”) . On or before the second (2nd) Trading Day following the date of receipt
of a Conversion Notice, the Company shall (1) provided that the Transfer Agent is participating in The Depository Trust Company’s
(“DTC”) Fast Automated Securities Transfer Program and such shares of Common Stock may be issued without
restrictive legend in accordance with Section 4.4 of the Securities Purchase Agreement, credit such aggregate number of shares
of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or such shares of Common Stock may not be issued without restrictive legend in accordance with Section 4.4 of
the Securities Purchase Agreement, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion
Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which
the Holder shall be entitled. If this Note is
physically surrendered for conversion
as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after receipt
of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 17(d))
representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable
upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock
on the Conversion Date.
(ii)
Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to
the Holder within three (3) Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile or otherwise)
(the “Share Delivery Deadline”), a certificate for the number of shares of Common Stock to which the
Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s
or its designee’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon
the Holder’s conversion of any Conversion Amount (as the case may be) (a “Conversion Failure”)
then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after
such Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 2% of the
product of (A) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder
is entitled multiplied by (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible
date which the Company could have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the
Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the
case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date
of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery
Deadline, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the
Company’s share register or credit the Holder’s or its designee’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if
on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of
a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such conversion
that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the
Company shall, within three (3) Business Days after receipt of the Holder’s written request, pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased (including,
without limitation, by any other
Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue
such shares of Common Stock) shall terminate.
(iii)
Book-Entry. Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any
portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to
the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be
delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company
with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical
surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted
and/or paid and/or adjusted (as the case may be) and the dates of such conversions and/or payments and/or adjustments (as the case
may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender
of this Note upon conversion.
(iv)
Pro Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the
Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock
not in dispute and resolve such dispute in accordance with Section 22.
(d)
Limitations on Conversions. Notwithstanding anything to the contrary contained in this Note, this Note shall not
be convertible by the Holder hereof, and the Company shall not effect any conversion of this Note or otherwise issue any shares
of Common Stock pursuant hereto, to the extent (but only to the extent) that after giving effect to such conversion or other share
issuance hereunder the Holder (together with its affiliates) would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the Common Stock. To the extent the above limitation applies, the determination of whether this
Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any
of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities
owned by the Holder and its affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the
first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to convert this Note,
or to issue shares of Common Stock, pursuant to this paragraph shall have any effect on the applicability of the provisions of
this paragraph with respect to any subsequent determination of convertibility. For purposes of this paragraph, beneficial ownership
and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall
be determined in accordance with Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules
and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict
conformity with the terms of this paragraph to correct this paragraph (or any portion hereof)
which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply
to a successor Holder of this Note. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company
may not waive this paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time, upon
the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without limitation, pursuant to this Note or securities issued pursuant to
the Securities Purchase Agreement. The Company or its transfer agent shall advise the Holder within 24 hours to the extent that
any issuance of Common Stock hereunder, after giving effect thereto, would result in the Holder (together with its affiliates)
beneficially owning in excess of 4.99% of the Common Stock.
4.
RIGHTS UPON EVENT OF DEFAULT.
(a)
Event of Default. Each of the following events shall constitute an “Event of Default”:
(i)
the suspension (or threatened suspension) from trading or the failure (or threatened failure) of the Common Stock to be
trading or listed (as applicable) on an Eligible Market for a period of five (5) consecutive days or for more than an aggregate
of ten (10) days in any 365-day period, or the imposition of any suspension of, or restriction on, accepting additional deposits
of the Common Stock, or electronic trading or book-entry services by DTC with respect to the Common Stock;
(ii)
the Company’s or any Subsidiary’s (as defined in the Securities Purchase Agreement) failure to pay to the Holder
any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation,
the Company’s or any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction
Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered
in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late
Charges when and as due, in which case only if such failure remains uncured for a period of at least five (5) days;
(iii)
the occurrence of any default under, redemption of or acceleration prior to maturity of an aggregate of any Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries;
(iv)
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be
instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party,
shall not be dismissed within thirty (30) days of their initiation;
(v)
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state
or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt
or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the
consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence
of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts
generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action
or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under
federal, state or foreign law;
(vi)
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary
of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt
or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;
(vii)
a final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company
and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any
judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000
amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which
written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or
indemnity within thirty (30)
days of the issuance of such judgment;
(viii)
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable
grace period, any payment with respect to any Indebtedness in excess of $100,000 due to any third party (other than, with respect
to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by
proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP)
or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $100,000, which breach
or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer
to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely
to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition
(including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;
(ix)
other than as specifically set forth in another clause of this Section 4(a), the Company
or any Subsidiary breaches any representation, warranty, covenant or other term or condition of any Transaction Document, except,
in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period
of three (3) consecutive Trading Days;
(x)
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs; or
(xi)
any Change of Control occurs.
(b)
Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this
Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier (with next
day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of
the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require
the Company to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note by delivering
written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default
Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to
redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i)
the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the
Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption
Notice multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the
date the Company makes the entire payment required to be made
under this Section 4(b) (the “Event
of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance
with the provisions of Section 10. To the extent redemptions required by this Section 4(b) are deemed or determined by a court
of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the Event of Default Redemption
Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section
4(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to
the terms of this Note. In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the
Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest
rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any
redemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of
the Holder’s actual loss of its investment opportunity and not as a penalty.
5.
RIGHTS UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.
(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor
Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance
with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved
by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such
Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes,
including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and
the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to
the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Section 14, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of
the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental
Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on
the conversion of this Note), as adjusted in
accordance with the provisions of this
Note. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written notice to the Company to
waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note.
(b)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall
make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i)
in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder
would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon
the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of
this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as
the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder.
(c)
The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the conversion of this Note.
6.
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a)
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Closing Date and before
a Registration Failure, the Company issues or sells, or in accordance with this Section 6(a) is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the
Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share
(the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior
to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive Issuance,
the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Conversion Price and consideration per share under this Section 6(a)),
the following shall be applicable:
(i)
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock
shall be deemed to
be outstanding and to have been
issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this
Section 6(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option”
shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion,
exercise or exchange of any Convertible Security issuable upon exercise of such Option and (y) the lowest exercise price set forth
in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise
or exchange of any Convertible Securities issuable upon exercise of any such Option, minus (2) the sum of all amounts paid or payable
to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated
below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of
such Convertible Securities upon the exercise of such Options or upon the actual issuance of such share of Common Stock upon conversion,
exercise or exchange of such Convertible Securities.
(ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less
than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 6(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise
or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received
or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and
upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all
amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible
Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible
Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon
the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion
Price has been or is to be made pursuant to other provisions of this Section 6(a), except as contemplated below, no further adjustment
of the Conversion Price shall be made by
reason of such issue or sale.
(iii)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases
or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted,
issued or sold. For purposes of this Section 6(a)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the Closing Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 6(a) shall be made if such
adjustment would result in an increase of the Conversion Price then in effect.
(iv)
Calculation of Consideration Received. If any Option or Convertible Security or Adjustment Right is issued or deemed
issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising
one integrated transaction, (x) such Option or Convertible Security (as applicable) or Adjustment Right (as applicable) will be
deemed to have been issued for consideration equal to the Black Scholes Consideration Value thereof and (y) the other securities
issued or sold or deemed to have been issued or sold in such integrated transaction shall be deemed to have been issued for consideration
equal to the difference of (I) the aggregate consideration received or receivable by the Company minus (II) the Black Scholes Consideration
Value of each such Option or Convertible Security (as applicable) or Adjustment Right (as applicable). If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock,
Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received
by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities,
in which case the amount of consideration received by the Company for such securities will be the average of the Closing Bid Price
of such security for each Trading Day during the five (5) Trading Day period immediately preceding the date of receipt. If any
shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair value of any consideration other
than cash or publicly traded
securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of
such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation
Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser
shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by
the Company.
(v)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the
case may be).
(b)
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of
Section 5 or Section 6(a), if the Company at any time on or after the Closing Date and before a Registration Failure subdivides
(by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced. Without limiting any provision of Section 5 or Section 6(a), if the Company at any time
on or after the Closing Date and before a Registration Failure combines (by any stock split, stock dividend, stock combination,
recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment
pursuant to this Section 6(b) shall become effective immediately after the effective date of such subdivision or combination. If
any event requiring an adjustment under this Section 6(b) occurs during the period that a Conversion Price is calculated hereunder,
then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.
(c)
Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof
are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of
the type contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect
the rights of the Holder, provided that no such adjustment pursuant to this Section 6(c) will increase the Conversion Price as
otherwise determined pursuant to this Section 6, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such
appropriate adjustments, whose determination
shall be final and binding and whose fees and expenses shall be borne by the Company.
7.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its articles
of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may
be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall
not increase the par value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then
in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as any of
the Notes are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the Notes, the maximum number of shares of Common Stock as
shall from time to time be necessary to effect the conversion of the Notes then outstanding (without regard to any limitations
on conversion).
8.
RESERVATION OF AUTHORIZED SHARES.
(a)
Reservation. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares
of Common Stock for each of the Notes equal to 150% of the entire Conversion Rate with respect to the entire Conversion Amount
of each such Note as of the Issuance Date. So long as any of the Notes are outstanding, the Company shall take all action
necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, 150% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion
of all of the Notes then outstanding, provided that at no time shall the number of shares of Common Stock so reserved be less than
the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions) (the “Required
Reserve Amount”).
(b)
Insufficient Authorized Shares. If, notwithstanding Section 8(a), and not in limitation thereof, at any time while
any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common
Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock
equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately
take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval
of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its best efforts to solicit its
stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve
such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon any conversion due to the failure
by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering
such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the
Conversion Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number
of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date the Holder delivers the applicable Conversion Notice with respect to such Authorization Failure Shares to
the Company and ending on the date of such issuance and payment under this Section 8(b) and (ii) to the extent the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization
Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
Nothing contained in Section 8(a) or this Section 8(b) shall limit any obligations of the Company under any provision of the
Securities Purchase Agreement.
9.
Company Optional Redemption. At any time after the Issuance Date,
the Company shall have the right to redeem all, but not less than all, of the Conversion Amount then remaining under this Note
(the “Company Optional Redemption Amount”) on the Company Optional Redemption Date (as defined below)
(a “Company Optional Redemption”). The portion of this Note subject to redemption pursuant to this Section
9 shall be redeemed by the Company in cash at a price (the “Company Optional Redemption Price”) equal
to 140% of the Conversion Amount of this Note then outstanding. The Company may exercise its right to require redemption under
this Section 9 by delivering an irrevocable written notice thereof by facsimile and overnight courier to the Holder (the “Company
Optional Redemption Notice” and the date the Holder receives such notice is referred to as the “Company
Optional Redemption Notice Date”). The Company may deliver only one Company Optional Redemption Notice in any ninety
(90) day period. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption shall
occur (the “Company Optional Redemption Date”) which date shall not be less than sixty (60) calendar
days nor more than ninety (90) calendar days following the Company Optional Redemption Notice Date, and (y) state the aggregate
Conversion Amount of the Notes which is being redeemed in such Company Optional Redemption from the Holder pursuant to this Section
9 on the Company Optional Redemption Date. Notwithstanding anything herein to the contrary, at any time prior to the date the Company
Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the
Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the Holder after the Company Optional
Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company
Optional Redemption Date. Redemptions made pursuant to this Section 9 shall be made in accordance with Section 10.
10.
REDEMPTIONS.
(a)
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within
five (5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice. The Company
shall deliver the applicable Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption
Date. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to
be issued and delivered to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal which
has not been redeemed. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following
such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the
date of such notice with respect to the Conversion Amount subject to such notice.
11.
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including,
without limitation, the Florida Business Corporations Act) and as expressly provided in this Note.
12.
NOTE REDUCTIONS.
(a)
Filing Date Reduction. As of the Trading Day immediately following the Filing Deadline (as such term is defined in
the Registration Rights Agreement), if (i) the Company has properly filed a registration statement with the SEC on or prior to
the Filing Deadline covering the resale by the Holder of all of the shares of Common Stock issued or issuable upon conversion of
this Note or otherwise pursuant to the terms of this Note in accordance with the 1933 Act and the Registration Rights Agreement
and (ii) no Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default
has occurred on or prior to such date, then $40,000 of the outstanding Principal hereunder (together with any accrued and unpaid
Interest with respect to such portion of the Principal amount and accrued and unpaid Late Charges with respect to such portion
of such Principal and such Interest) shall be automatically extinguished and shall no longer remain outstanding hereunder without
any payment thereof by the Company.
(b)
Effective Date Reduction. As of the Trading Day immediately following the Effectiveness Deadline (as such term is
defined in the Registration Rights Agreement), if (i) the Company has filed a registration statement with the SEC that has been
declared effective by the SEC on or prior to the Effectiveness Deadline and the prospectus contained therein is available for use
by the Holder for the resale by the Holder of all of the shares of Common Stock issued or issuable upon conversion of this Note
or otherwise pursuant to the terms of this Note and (ii) no Event of Default or an event that with the passage of time or giving
of notice would constitute an Event of Default has occurred on or prior to such date, then $62,500 of the outstanding Principal
hereunder (together with any accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and unpaid
Late Charges with respect to such portion of such Principal and such Interest) shall be automatically extinguished and shall no
longer remain outstanding hereunder without any payment thereof by the Company.
(c)
Disputes. In the event of a dispute as to the arithmetic calculation of any Note Reduction, the Company and the Holder
shall resolve such dispute in accordance with Section 22.
13.
COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a)
Rank. All payments due under this Note shall be senior to all other Indebtedness of the Company and its Subsidiaries.
(b)
Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this
Note and (ii) other Permitted Indebtedness).
(c)
Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”)
other than Permitted Liens.
(d)
Restricted Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents
(in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion
of any Indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness
if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event
of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute
an Event of Default has occurred and is continuing.
(e)
Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders
of a majority in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the
Securities Purchase Agreement and the Notes) or (ii) issue any other securities that would cause a breach or default under the
Notes.
(f)
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
(g)
Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to
not, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of
any assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of
related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such
assets or rights by the Company and its Subsidiaries in the ordinary course of business and (ii) sales of inventory in the ordinary
course of business.
(h)
Maturity of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, permit any Indebtedness of the Company or any of the Subsidiaries to mature or accelerate prior to the Maturity
Date.
(i)
Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to
not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted
by the Company and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The
Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate
structure or purpose.
(j)
Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain,
duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification necessary.
(k)
Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions
of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof
or thereunder.
(l)
Maintenance of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action
necessary or advisable to maintain all of the intellectual property rights of the Company and/or any of its Subsidiaries that are
necessary or material to the conduct of its business in full force and effect.
(m)
Maintenance of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability,
hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned
by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly
situated.
(n)
Transactions with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into,
renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase,
sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate,
except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable
for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than
would be obtainable in a comparable arm’s length transaction with a Person that is not an affiliate thereof.
14.
PARTICIPATION. In addition to any adjustments pursuant to Section 6, the
Holder, as the holder of this Note,
shall be entitled to receive such dividends paid and distributions made to the holders of Common Stock to the same extent as if
the Holder had converted this Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and
had held such shares of Common Stock on the record date for such dividends and distributions. Payments under the preceding sentence
shall be made concurrently with the dividend or distribution to the holders of Common Stock (provided, however, to the extent that
the Holder’s right to participate in any such dividend or distribution would result in the Holder exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such dividend or distribution to such extent (or the beneficial ownership
of any such shares of Common Stock as a result of such dividend or distribution to such extent) and such dividend or distribution
to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Maximum Percentage).
15.
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment
to this Note.
16.
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned
or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 4.4 of the Securities
Purchase Agreement.
17.
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 17(d)), registered as the
Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 17(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this
Note may be less than the Principal stated on the face of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding
Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for a new Note or Notes (in accordance with Section 17(d) and in principal amounts of at
least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new
Note will represent such portion of
such outstanding Principal as is designated by the Holder at the time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such
new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated
by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal
and Interest of this Note, from the Issuance Date.
18.
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note
shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of
this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject
to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other
available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing
economic loss and without any bond or other security being required. The Company shall provide all information and documentation
to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Note (including, without limitation, compliance with Section 6).
19.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company
shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly
acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price
paid for this Note was less than the original Principal amount hereof.
20.
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not
be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not
form part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents
shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented
to in writing by the Holder.
21.
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless
it is in writing and signed by an authorized representative of the waiving party.
22.
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Conversion Price (including, without
limitation, any disputed adjustment thereto or any dispute as to whether any issuance or sale or deemed issuance or sale was an
issuance or sale or deemed issuance or sale of Excluded Securities), any Redemption Price, the Closing Bid Price, the Closing Sale
Price or fair market value (as the case may be) or the arithmetic calculation of the Conversion Rate, any Note Reduction or the
applicable Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations
or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable
notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute,
at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable
to agree upon such determination or calculation within two (2) Business Days of such disputed determination or arithmetic calculation
(as the case may be) being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2)
Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, any Redemption Price, the Closing Bid
Price, the Closing Sale Price or fair market value (as the case may be) to an independent, reputable investment bank selected by
the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate, any Note Reduction or
any Redemption Price (as the case may be) to an independent, outside accountant selected by the Holder that is reasonably acceptable
to the Company. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the
determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10)
Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s
or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error.
23.
NOTICES; CURRENCY; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall
be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the
reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the
Conversion Price, setting forth in reasonable
detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to
any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other
property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder.
(b)
Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”),
and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note,
the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood
and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the
final date of such period of time).
(c)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn
on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the
Company in writing, provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction
Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal
to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is
paid in full (“Late Charge”).
24.
CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note
have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation
and shall not be reissued.
25.
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment,
protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this
Note and the Securities Purchase Agreement.
26.
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other
than the State of New York. The Company
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, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained
herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in
any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
27.
MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest
or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid
or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Holder and thus refunded to the Company.
28.
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
“Adjustment Right” means any right granted with respect to any securities issued in connection
with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 6) of shares of Common Stock
that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities
(including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(b)
“Approved Stock Plan” means any employee benefit plan which has been approved by the board of
directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options
to purchase Common Stock may be issued to any employee, officer or director for services provided to the Company in their capacity
as such.
(c)
“Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security
or Adjustment Right (as the case may be) as of the date of issuance
thereof calculated using the Black Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal
to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution
of definitive documents with respect to the issuance of such Option, Convertible Security or Adjustment Right (as the case may
be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option,
Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or
Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as
of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be).
(d)
“Bloomberg” means Bloomberg, L.P.
(e)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks
in The City of New York are authorized or required by law to remain closed.
(f)
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company
or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately
prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification
to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power
of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries.
(g)
“Closing Bid Price” and “Closing Sale Price” means, for any security
as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).
(h)
“Closing Date” shall have the meaning set forth in the Securities Purchase Agreement, which date
is the date the Company initially issued the Note pursuant to the terms of the Securities Purchase Agreement.
(i)
“Common Stock” means (i) the Company’s common stock, $0.001 par value per share, and (ii)
any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of
such common stock.
(j)
“Convertible Securities” means any stock or other security (other than Options) that is at any
time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any shares of Common Stock.
(k)
“Eligible Market” means the OTC Bulletin Board, the NASDAQ Global Market, the NASDAQ Global Select
Market, the NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB Marketplace
operated by OTC Markets Group Inc. (or any successor to any of the foregoing).
(l)
“Excluded Securities” means any (i) shares of Common Stock or standard options to purchase Common
Stock to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined
below), provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options
granted after the date of this Note, but not such shares issuable upon exercise of such options granted before the date of this
Note) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 5.0% of the Common Stock issued
and outstanding immediately prior to the date hereof and (B) the exercise price of any such options is not lowered, none of such
options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options
are otherwise materially changed in any manner that adversely affects any of the Holders; (ii) shares of Common Stock issued upon
the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion price of
any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number
of shares issuable thereunder or extend the maturity date or expiration date of such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) and none of the
terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to
an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects
any of the Holders; (iii) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of
the Notes and (iv) any shares of Common Stock issued to the Holder or any of its affiliates.
(m)
“Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly
or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of
its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise
dispose of all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to
make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting
Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to,
or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a
stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement
or other business combination), or (ii) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Voting Stock of the Company.
(n)
“GAAP” means United States generally accepted accounting principles, consistently applied.
(o)
“Interest Rate” means twelve percent (12%) per annum, as may be adjusted from time
to time in accordance with Section 2.
(p)
“Maturity Date” shall mean August 2, 2015; provided, however, the Maturity Date
may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred
and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would
result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental
Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered
prior to the Maturity Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3
hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be
extended until such time as such provision shall not limit the conversion of this Note.
(q)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
(r)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(s)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(t)
“Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii)
Indebtedness described on Schedule 13(b) attached hereto and (iii) Indebtedness secured by Permitted Liens described in
clauses (iv) and (v) of the definition of Permitted Liens, in an aggregate amount not to exceed $25,000.
(u)
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in
good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory
Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent,
(iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested
in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its
Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition
or lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection
with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clause (iv) above, provided
that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed or refinanced does not increase, and (vi) Liens securing the Company’s
obligations under the Notes.
(v)
“Principal Market” means, as of any date of determination, the principal securities exchange or
securities market on which the Common Stock is then traded.
(w)
“Redemption Notices” means, collectively, the Event of Default Redemption Notices and the Company
Optional Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”
(x)
“Redemption Premium” means (i) in the case of the Events of Default described in Section 4(a)
(other than Sections 4(a)(iv) through 4(a)(vi)), 140% or (ii) in the case of the Events of Default described in Sections 4(a)(iv)
through 4(a)(vi), 100%.
(y)
“Redemption Prices” means, collectively, Event of Default Redemption Prices, and the Company Optional
Redemption Prices and each of the foregoing, individually, a “Redemption Price.”
(z)
“Registration Rights Agreement” means that certain registration rights agreement, dated as of
the Closing Date, by and between the Company and the Holder relating to, among other things, the registration of the resale of
the Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes, as may be amended from
time to time.
(aa)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(bb)
“Securities Purchase Agreement” means that certain Securities Purchase Agreement, dated as of
the Closing Date, by and between the Company and the Holder pursuant to which the Company issued this Note, as may be amended from
time to time.
(cc)
“Subsidiary” or “Subsidiaries” shall have the meaning as set forth in
the Securities Purchase Agreement.
(dd)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed
by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.
(ee)
“Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if
the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities
market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day
on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock
is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate
in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time)
unless such day is otherwise designated as a Trading Day in writing by the Holder.
(ff)
“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant
to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the
board of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time
capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).
(gg)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such
security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the
principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01
a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price”
function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If
VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date
shall be the fair market value as mutually
determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 22. All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.
29.
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless
the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to the Company or its Subsidiaries. Nothing contained in this Section 29 shall limit any obligations of the Company, or
any rights of the Holder, under Section 4.3 of the Securities Purchase Agreement.
[signature page follows]
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date set out above.
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BIOHEART,
INC.
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By: /s/ Mike Tomas_____ |
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Name: Mike Tomas |
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Title: President & CEO |
Senior Secured Convertible Note - Signature
Page
EXHIBIT
I
BIOHEART, INC.
CONVERSION NOTICE
Reference is made
to the Convertible Note (the “Note”) issued to the undersigned by Bioheart, Inc. (the “Company”).
In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the
Note) of the Note indicated below into shares of Common Stock, $0.001 par value per share (the “Common Stock”),
of the Company, as of the date specified below Capitalized terms not defined herein shall have the meaning as set forth in the
Note.
Date of Conversion: |
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Aggregate Principal to be converted: |
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Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: |
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AGGREGATE CONVERSION AMOUNT
TO BE CONVERTED: |
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Please confirm the following information: |
Conversion Price: |
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Number of shares of Common Stock to be issued: |
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Please issue the Common Stock into which the Note is being converted in the following name and to the following address: |
Issue to: |
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Facsimile Number: |
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Holder: |
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By: |
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Title: |
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Dated: |
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Account Number: |
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(if electronic book entry transfer) |
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Transaction Code Number: |
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(if electronic
book entry transfer)
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ACKNOWLEDGMENT
The Company hereby
acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed
to by ________________________.
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BIOHEART, INC. |
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By:_________________________________ |
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Name: |
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Title: |
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Exhibit 10.1
SECURITIES PURCHASE
AGREEMENT
THIS SECURITIES
PURCHASE AGREEMENT (the “Agreement”) is made as of the 7th day of October, 2014
by and between Bioheart, Inc., a Florida corporation (the “Company”), and Magna Equities II, LLC, a New
York limited liability company (the “Investor”).
WHEREAS,
the Investor is willing to lend the Company $205,000, which loan is evidenced by a promissory note, in substantially the form attached
hereto as Exhibit A (the “Note”), which is convertible into shares of the Company’s common
stock, $0.001 par value (the “Common Stock”), in accordance with the terms of this Agreement and such
Note;
WHEREAS,
upon the terms and condition stated in the Agreement and pursuant to Section 4(a)(2) of the 1933 Act (as defined below) and Rule
506 of Regulation D promulgated thereunder, the Investor wishes to purchase, and the Company wishes to sell, the Note with the
principal amount equal to $307,500 (the shares of Common Stock issuable upon conversion of the Note, collectively, the “Conversion
Shares”). The Note, together with the Conversion Shares, are referred to herein as the “Securities”
and the offering contemplated hereby is referred to herein as the “Offering”;
WHEREAS,
the parties have agreed that the obligation to repay the Note shall be an unsecured obligation of the Company; and
WHEREAS,
at the Closing (as defined below), the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached
hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company has agreed
to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement),
under the 1933 Act (as defined below) and the rules and regulations promulgated thereunder, and applicable state securities laws.
NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the
premises and the mutual agreements, representations and warranties, provisions and covenants contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
1.
Purchase and Sale of Note. On the Closing Date (as hereinafter defined), subject to the terms and conditions of this
Agreement, the Investor hereby agrees to purchase, and the Company hereby agrees to sell and issue, a Note in the principal amount
of $307,500 (the “Principal Amount”).
2.
Purchase Price. The purchase price for the Note to be purchased by the Investor at the Closing shall be $205,000
(the “Purchase Price”). The Note will be issued with an original issue discount of approximately 33.33%.
The Investor shall pay approximately $0.6666 for each $1.00 of principal amount of the Note to be purchased at the Closing. At
the Closing, the Investor shall fund the Purchase Price by wire transfer of immediately available funds to the account specified
in writing by the Company prior to the date hereof.
3.
The Closing. Subject to the conditions set forth below, the purchase and sale of the Note shall take place at the
offices of Greenberg Traurig, LLP, The MetLife Building, 200
Park Avenue, New York, New York 10166,
on the date hereof (the “Closing” and the “Closing Date”). At the Closing,
the Company shall deliver to the Investor: (i) this Agreement duly executed by the Company, (ii) the Note in the Principal Amount
duly executed by the Company and registered in the name of the Investor and (iii) the Registration Rights Agreement duly executed
by the Company. At the Closing, the Investor shall deliver to the Company (i) this Agreement duly executed by the Investor and
(ii) the Registration Rights Agreement duly executed by the Investor.
4.
Closing Conditions; Certain Covenants.
4.1
Conditions to the Investor’s Obligations. The obligation of the Investor to purchase the Note to be issued
to the Investor at the Closing is subject to the fulfillment, to the Investor’s reasonable satisfaction, prior to or at the
Closing, of each of the following conditions:
(a)
Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on the date hereof.
(b)
Note. At the Closing, the Company shall have tendered to the Investor the Note.
(c)
Registration Rights Agreement. The Company shall have duly executed and delivered the Registration Rights Agreement
to the Investor.
(d)
No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial
damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.
(e)
Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents
and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Investor, and the Investor
shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request.
4.2
Conditions to the Company’s Obligations. The obligation of the Company to sell and issue the Note to the Investor
at the Closing is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or at the Closing, of each
of the following conditions:
(a)
Representations and Warranties. The representations and warranties of the Investor contained in this Agreement shall
be true and correct in all material respects on the date hereof.
(b)
Purchase Price. At the Closing, the Investor shall have tendered to the Company the Purchase Price (less the amounts
to be withheld pursuant to Section 10.12) by wire
transfer of immediately available funds
to the account specified in writing by the Company prior to the date hereof.
(c)
Registration Rights Agreement. The Investor shall have duly executed and delivered the Registration Rights Agreement
to the Company.
(d)
No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial
damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.
(e)
Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents
and instruments incident to such transactions shall be satisfactory in substance and form to the Company and the Company shall
have received all such counterpart originals or certified or other copies of such documents as the Company may reasonably request.
4.3
Securities Law Disclosure; Publicity. The Company shall (a) by 9:00 a.m. (New York City time) on the business day
immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby
and (b) issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby, and including
the Transaction Documents as exhibits thereto, within the time required by the 1934 Act. From and after the issuance of such press
release, the Company represents to the Investor that the Company shall have publicly disclosed all material, non-public information
delivered to the Investor by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction Documents. The Company shall afford the Investor
and its counsel with a reasonable opportunity to review and comment upon, shall consult with the Investor and its counsel on the
form and substance of, and shall give due consideration to all such comments from the Investor or its counsel on, any press release,
Commission filing or any other public disclosure made by or on behalf of the Company relating to the Investor, its purchases hereunder
or any aspect of the Transaction Documents or the transactions contemplated thereby, prior to the issuance, filing or public disclosure
thereof, and the Company shall not issue, file or publicly disclose any such information to which the Investor shall object. For
the avoidance of doubt, the Company shall not be required to submit for review any such disclosure contained in periodic reports
filed with the Commission under the Exchange Act if it shall have previously provided the same disclosure for review in connection
with a previous filing.
4.4
Legends. The Securities may only be disposed of in compliance with state and federal securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration statement or Rule 144 under the 1933 Act (“Rule
144”), to the Company or to an affiliate of the Investor or in connection with a pledge, the Company may require
the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to
the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer
does not require registration of such transferred Securities under the 1933 Act. The Investor understands that the certificate
or other instrument representing the Note and, the stock certificates representing the
Conversion Shares, except as set forth
below, shall bear any legends as required by applicable state securities or “Blue Sky” laws in addition to a restrictive
legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The Company shall
use its reasonable best efforts to cause its transfer agent to remove the legend set forth above and to issue a certificate without
such legend to the holder of the Securities upon which it is stamped, or to issue to such holder by electronic delivery at the
applicable balance account at the Depository Trust Company (“DTC”), unless otherwise required by state
securities or “blue sky” laws, at such time as (i) such Securities are registered for resale under the 1933 Act, (ii)
in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a form
generally acceptable to the Company’s legal counsel, to the effect that such sale, assignment or transfer of the Securities
may be made without registration under the 1933 Act, or (iii) such holder provides the Company and its legal counsel with reasonable
assurance in writing that the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A. In furtherance
of the foregoing, the Company agrees that, following the Effective Date or at such time as such legend is not required pursuant
to this Section 4.4, the Company shall, no later than three Trading Days following the delivery by the Investor to the Company
or the Company’s transfer agent of a certificate representing Conversion Shares issued with a restrictive legend (such third
Trading Day, the “Legend Removal Date”), either: (A) issue and deliver (or cause to be issued and delivered)
to the Investor a certificate representing such Conversion Shares that is free from all restrictive and other legends or (B) cause
the Company’s transfer agent to credit the Investor’s or its designee’s account at DTC through its Deposit/Withdrawal
at Custodian (DWAC) system with a number of shares of Common Stock equal to the number of Conversion Shares represented by the
certificate so delivered by the Investor. If the Company fails on or prior to the Legend Removal Date to either (i) issue and deliver
(or cause to be issued and delivered) to the Investor a certificate representing the Conversion Shares that is free from all restrictive
and other legends or (ii) cause the Company’s transfer agent to credit the balance account of the Investor or its designee
at DTC through its Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of
Common Stock equal to the number of
Conversion Shares represented by the certificate delivered by the Investor pursuant hereto, then, in addition to all other remedies
available to the Investor, the Company shall pay in cash to the Investor on each day after the Legend Removal Date that the issuance
or credit of such shares is not timely effected an amount equal to 2.0% of the product of (A) the sum of the number of Conversion
Shares not issued to the Investor on a timely basis and to which the Investor is entitled and (B) the VWAP for the five Trading
Day period immediately preceding the Legend Removal Date. In addition to the foregoing, if the Company fails to so properly deliver
such unlegended certificates or so properly credit the account of the Investor or its designee at DTC by the Legend Removal Date,
and if on or after the Legend Removal Date the Investor purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Investor of shares of Common Stock that the Investor anticipated receiving from
the Company without any restrictive legend, then the Company shall, within three Trading Days after the Investor’s request,
pay cash to the Investor in an amount equal to the Investor’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased, at which point the Company’s obligation to deliver a certificate or credit the
Investor’s or its designee’s account at DTC for such shares of Common Stock shall terminate and such shares shall be
cancelled.
5.
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure
contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and
warranties to the Investors:
5.1
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida. The Company is duly qualified to transact business and is in good standing
in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.
5.2
Capitalization and Voting Rights. The authorized capital stock of the Company and the shares thereof issued and outstanding
were as set forth in the Public Reports as of the dates reflected therein. All of the outstanding shares of Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth in the Public Reports, this Agreement
and the Registration Rights Agreement, there are no agreements or arrangements under which the Company is obligated to register
the sale of any securities under the Securities Act. Except as set forth in the Public Reports, no shares of Common Stock are entitled
to preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings, or arrangements
by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into or exchangeable for, any shares of capital stock of the Company other than those issued or granted in the ordinary course
of business pursuant to the Company’s equity incentive and/or compensatory plans or arrangements. Except for customary transfer
restrictions contained in agreements entered into by the Company to sell restricted securities or as set forth in the Public Reports,
the Company is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares of the
capital stock of the Company. Except as set
forth in the Public Reports, the offer
and sale of all capital stock, convertible or exchangeable securities, rights, warrants or options of the Company issued prior
to the Closing Date complied with all applicable federal and state securities laws, and no stockholder has any right of rescission
or damages or any “put” or similar right with respect thereto that would have a Material Adverse Effect. Except as
set forth in the Public Reports, there are no securities or instruments containing anti-dilution or similar provisions that will
be triggered by the Note, this Agreement or the Registration Rights Agreement or the consummation of the transactions described
herein or therein.
5.3
Authorization; Enforcement. All corporate action on the part of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement, the Note, the Registration Rights Agreement (the “Transaction
Documents”) and the performance of all obligations of the Company hereunder and thereunder, and the authorization
(or reservation for issuance), sale and issuance of the Note, and the Common Stock into which the Note is convertible or exercisable,
have been taken on or prior to the date hereof. Each of the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited by applicable law.
5.4
Valid Issuance of the Conversion Shares; Reservation of Shares. The Note is duly authorized and, when issued and
paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, and free and clear of
all Liens imposed by the Company other than restrictions on transfer under this Agreement and under applicable state and federal
securities laws. The Conversion Shares when issued and delivered in accordance with the terms of this Agreement and the Note for
the consideration expressed herein and therein, will be duly and validly issued, fully paid and non-assessable and free and clear
of all Liens imposed by the Company other than restrictions on transfer under this Agreement and under applicable state and federal
securities laws. The Company has reserved from its duly authorized capital stock a sufficient number of shares of Common Stock
for issuance of the Conversion Shares.
5.5
Offering. Subject to the truth and accuracy of the Investor’s representations set forth in Section 6 of this
Agreement, the offer and issuance of the Note, together with the Conversion Shares, as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act of 1933, as amended (the “1933 Act”), and the
qualification or registration requirements of state securities laws or other applicable blue sky laws. Neither the Company nor
any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions.
5.6
Public Reports. The Company is current in its filing obligations under the 1934 Act, including without limitation
as to its filings of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (collectively,
the “Public
Reports”). The
Public Reports do not contain any untrue statement of a material fact or omit to state any fact necessary to make any statement
therein not misleading. The financial statements included within the Public Reports for the fiscal year ended December 31, 2013
and for each quarterly period thereafter (the “Financial Statements”) have been prepared in accordance with
generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods indicated
and with each other, except that unaudited Financial Statements may not contain all footnote required by generally accepted accounting
principles. The Financial Statements fairly present, in all material respects, the financial condition and operating results of
the Company as of the dates, and for the periods, indicated therein, subject in the case of unaudited Financial Statements to
normal year-end audit adjustments.
5.7
Compliance With Laws. The Company has not violated any law or any governmental regulation or requirement which violation
has had or would reasonably be expected to have a Material Adverse Effect on its business and the Company has not received written
notice of any such violation.
5.8
Violations. The consummation of the transactions contemplated by the Transaction Documents and all other documents
and instruments required to be delivered in connection therewith will not result in or constitute any of the following: (a) a violation
of any provision of the certificate of incorporation, bylaws or other governing documents of the Company; (b) a violation of any
provisions of any applicable law or of any writ or decree of any court or governmental instrumentality; (c) a default or an event
that, with notice or lapse of time or both, would be a default, breach, or violation of a lease, license, promissory note, conditional
sales contract, commitment, indenture, mortgage, deed of trust, or other agreement, instrument, or arrangement to which the Company
is a party or by which the Company or its property is bound; (d) an event that would permit any party to terminate any agreement
or to accelerate the maturity of any indebtedness or other obligation of the Company; or (e) the creation or imposition of any
lien, pledge, option, security agreement, equity, claim, charge, encumbrance or other restriction or limitation on the capital
stock or on any of the properties or assets of the Company.
5.9
Consents; Waivers. No consent, waiver, approval or authority of any nature, or other formal action, by any Person,
firm or corporation, or any agency, bureau or department of any government or any subdivision thereof, not already obtained, is
required in connection with the execution and delivery of the Transaction Documents by the Company or the consummation by the Company
of the transactions provided for herein and therein.
5.10
Sarbanes-Oxley Act. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act
of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof.
5.11
Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against
or affecting the Company, the Common Stock or any of the Company’s officers or directors in their capacities as such.
5.12
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial
statements included within the Public Reports, except as specifically disclosed in a subsequent Public Report filed prior to the
date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result
in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant
to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment
of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been
publicly disclosed at least one Trading Day prior to the date that this representation is made.
5.13
Intellectual Property. The Company has, or has 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 as described in the Public Reports as necessary or required for use in connection with their respective businesses
and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
The Company has not received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated
or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.
The Company has not received, since the date of the latest audited financial statements included within the Public Reports, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any
Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
5.14
Registration Rights. Other than the Investor or as set forth in the Public Reports, no Person has any right to cause
the Company to effect the registration under the 1933 Act of any securities of the Company.
5.15
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither
it nor any other Person acting on its
behalf has provided the Investor or its agents or counsel with any information that it believes constitutes or might constitute
material, non-public information. The Company understands and confirms that the Investor will rely on the foregoing representation
in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Investor
regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they
were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement
taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when
made, not misleading. The Company acknowledges and agrees that the Investor does not make nor has made any representations or warranties
with respect to the transactions contemplated hereby other than those specifically set forth in Section 6 hereof.
5.16
No Integrated Offering. Assuming the accuracy of the Investor’s representations and warranties set forth in
Section 6, 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 1933 Act which would require
the registration of any such securities under the 1933 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.
5.17
Seniority. As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Note in right
of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured
by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations
(which is senior only as to the property covered thereby).
5.18
Bankruptcy Status; Indebtedness. The Company has no current intention or expectation to file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 5.18
sets forth as of the date hereof all outstanding secured and unsecured Indebtedness (as defined below) of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $25,000 (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 $25,000 due under leases required to be capitalized in
accordance with GAAP. The Company is not in default with respect to any Indebtedness.
5.19
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.
5.20
Acknowledgment Regarding Investor’s Purchase of Securities. The Company acknowledges and agrees that the Investor
is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated
hereby and that the Investor is not (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar
capacity) with respect to this Agreement and the transactions contemplated hereby, and any advice given by the Investor or any
of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental
to the Investor’s purchase of the Securities. The Company further represents to the Investor that the Company’s decision
to enter into this Agreement, the Registration Rights Agreement, the Note and the other transaction documents to which it is a
party has been based solely on the independent evaluation by the Company and its representatives.
5.21
No General Solicitation. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on
its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D)
in connection with the offer or sale of the Securities.
5.22
Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison
pill (including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover
provision under its articles of incorporation, bylaws or other organizational documents, as amended to date, or the laws of the
jurisdiction of its incorporation or otherwise which is or could become applicable to the Investor as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and the Investor’s
ownership of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render
inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of
Common Stock or a change in control of the Company or any of its Subsidiaries.
5.23
Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor any director, officer, agent, employee
or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf
of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
5.24
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or
any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company
in its Public Reports and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
5.25
Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an
“investment company,” an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter” for,
an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
5.26
U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and
so long as any of the Securities are held by the Investor, shall become, a U.S. real property holding corporation within the meaning
of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon the Investor’s request.
5.27
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries 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 (25%) or more of the total equity of a bank or any equity 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.
5.29
Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, paragraph (i)
of Rule 144.
5.30
Public Utility Holding Act. Neither the Company nor any of its Subsidiaries is a “holding company,” or
an “affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
5.31
Federal Power Act. Neither the Company nor any of its Subsidiaries is subject to regulation as a “public utility”
under the Federal Power Act, as amended.
5.32
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to
the best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors,
employees, agents
or other representatives of the Company
or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated
or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services,
whether or not in contravention of applicable law, (a) as a kickback or bribe to any Person or (b) to any political organization,
or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving
the direct or indirect use of funds of the Company or any of its Subsidiaries.
5.33
Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the
USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without
limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets
Control, including, without limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
5.34
No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering contemplated hereby, 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 1933 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 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3) under the 1933 Act. The Company has exercised reasonable care to determine whether any Issuer Covered
Person is subject to a Disqualification Event.
6.
Representations and Warranties of the Investor. The Investor hereby represents, warrants and covenants that:
6.1
Authorization. The Investor has full power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby and has taken all action necessary to authorize the execution
and delivery of this Agreement and the Registration Rights Agreement, the performance of its obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby.
6.2
No Public Sale or Distribution. The Investor is (i) acquiring the Note and (ii) upon conversion of the Note will
acquire the Conversion Shares for its own account, not as a nominee or agent, and not with a view towards, or for resale in connection
with, the public sale or distribution of any part thereof, except pursuant to sales registered or exempted under the 1933 Act.
The Investor is acquiring the Securities hereunder in the ordinary course of its business. The Investor does not presently have
any contract, agreement, undertaking, arrangement or understanding, directly or indirectly, with any individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
and a government or any department or
agency thereof (a “Person”) to sell, transfer, pledge, assign or otherwise distribute any of the Securities.
6.3
Accredited Investor Status; Investment Experience. The Investor is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D. The Investor can bear the economic risk of its investment in the Securities, and has
such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment
in the Securities.
6.4
Reliance on Exemptions. The Investor understands that the Securities are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company
is relying in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and
the eligibility of the Investor to acquire the Securities.
6.5
Information. The Investor and its advisors, if any, have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested
by the Investor. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by the Investor or its advisors, if any, or its representatives
shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained
herein. The Investor understands that its investment in the Securities involves a high degree of risk. The Investor has sought
such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its
acquisition of the Securities. The Investor is relying solely on its own accounting, legal and tax advisors, and not on any statements
of the Company or any of its agents or representatives, for such accounting, legal and tax advice with respect to its acquisition
of the Securities and the transactions contemplated by this Agreement.
6.6
No Governmental Review. The Investor understands that no United States federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
6.7
Validity; Enforcement; No Conflicts. This Agreement and each Transaction Document to which the Investor is a party
have been duly and validly authorized, executed and delivered on behalf of the Investor and shall constitute the legal, valid and
binding obligations of the Investor enforceable against the Investor in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies. The execution, delivery and performance by the Investor of this Agreement and each Transaction Document to which the
Investor is a party and the consummation by the Investor of the transactions contemplated hereby and thereby will not (i) result
in a violation of the
organizational documents of the Investor
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities or “Blue Sky” laws) applicable to the Investor, except in the case of clause (ii) above,
for such conflicts, defaults or rights which would not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Investor to perform its obligations hereunder.
6.8
Organization and Standing. The Investor is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of New York.
7.
Use of Proceeds. The Investor acknowledges that the Company will use the proceeds received from the purchase of the
Note for, among other things, (i) costs and expenses relating to the sale of the Note to the Investor and (ii) general working
capital purposes.
8.
Rule 144 Availability; Public Information. At all times during the period commencing on the six (6) month anniversary
of the Closing Date and ending at such time that all of the Securities can be sold without the requirement to be in compliance
with Rule 144(c)(1) under the 1933 Act and otherwise without restriction or limitation pursuant to Rule 144, the Company shall
use its reasonable best efforts to ensure the availability of Rule 144 to the Investor with regard to the Conversion Shares, including
compliance with Rule 144(c)(1) under the 1933 Act. If, (i) at any time during the period commencing from the six (6) month anniversary
of the Closing Date and ending on the first anniversary of the Closing Date, the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) under the 1933 Act (a “Public Information Failure”),
or (ii) the Company shall fail to take such action as is reasonably requested by the Investor to enable the Investor to sell the
Conversion Shares pursuant to Rule 144 (including, without limitation, delivering all such legal opinions, consents, certificates,
resolutions and instructions to the Company’s transfer agent as may be reasonably requested from time to time by the Investor
and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144),
then, in either case, in addition to the Investor’s other available remedies, the Company shall pay to a Investor, in cash,
as liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities,
an amount in cash equal to two percent (2.0%) of the aggregate Purchase Price of the Investor’s Securities 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 Investor to transfer the Shares or the Warrant Shares pursuant to Rule 144. The payments to which the Investor
shall be entitled pursuant to this Section 8 are referred to herein as “Rule 144 Failure Payments.”
Rule 144 Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Rule 144 Failure
Payments are incurred and (ii) the third (3rd) Trading Day after the event or failure giving rise to the Rule 144 Failure Payments
is cured.
9.
Indemnification. In consideration of the Investor’s execution and delivery of this Agreement and acquiring
the Securities hereunder and in addition to all of the Company’s other obligations under this Agreement, the Registration
Rights Agreement and the Note, the Company
shall defend, protect, indemnify and
hold harmless the Investor and each holder of any Securities and all of their stockholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Registration Rights Agreement, (b) any breach of any covenant, agreement
or obligation of the Company contained in this Agreement or the Registration Rights Agreement or (c) any cause of action, suit
or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on
behalf of the Company or any Subsidiary) and arising out of or resulting from (i) the execution, delivery, performance or enforcement
of any of this Agreement, the Registration Rights Agreement or the Note, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of the Investor or
holder of the Securities as an investor in the Company pursuant to the transactions contemplated by this Agreement. To the extent
that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise
set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 9 shall be the same
as those set forth in Section 6 of the Registration Rights Agreement. Notwithstanding anything to the contrary in this Section
9, the Company shall not be obligated to pay an Indemnitee any sums otherwise due under this Section 9 if the Company has already
paid the Indemnitee such sums for the same Indemnified Liabilities under Section 6 of the Registration Rights Agreement.
10.
Miscellaneous
10.1
Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of the Securities).
Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
10.2
Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State 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, and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
10.3
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
10.4
Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a)
upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business
hours of the recipient; if not, then on the next business day, (c) five (5) business days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to (a) in the case
of the Company, to Bioheart, Inc., 13794 NW 4th Street, Suite 212, Sunrise, Florida 33325, Telephone Number: (954) 835-1500,
Fax: (954) 845-9976, Attention: Mike Tomas, with a copy (which shall not constitute notice) to Joseph I. Emas, 1224 Washington
Avenue, Miami Beach, Florida 33139, Telephone: (305) 531-1174, or (b) in the case of the Investor, to Magna Equities II, LLC, a
New York limited liability company, c/o Magna, 5 Hanover Square, New York, NY 10004, Telephone Number: (347) 491-4240, Fax: (646)
737-9948, Attention: Marc Manuel, with a copy (which shall not constitute notice) to Greenberg Traurig, LLP, The MetLife Building,
200 Park Avenue, New York, New York 10166, Telephone Number (212) 801-9200, Fax: (212) 801-6400, Attention: Anthony J. Marsico,
Esq.
10.5
Finder’s Fees. Each party represents that it neither is nor will be obligated for any finders’ fee or
commission in connection with this transaction. The Company shall indemnify and hold harmless each Investor from any liability
for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.
10.6
Amendments and Waivers. No provision of this Agreement may be amended other than by a written instrument signed by
both parties hereto. No provision of this Agreement may be waived other than in a written instrument signed by the party against
whom enforcement of such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude
other or further exercises thereof or of any other right, power or privilege.
10.7
Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.
10.8
Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein.
10.9
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
10.10
Interpretation. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include
the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “including”
has the inclusive meaning frequently identified with the phrase “but not limited to” and (d) references to “hereunder”
or “herein” relate to this Agreement.
10.11
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery
of damages, the Investor and the Company will be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained
in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
10.12
Fees and Expenses. Each party shall bear its own fees and expenses related to the transactions contemplated by this
Agreement; provided, however, that $30,000 (less $10,000 heretofore paid by the Company to the Investor) shall be withheld by the
Investor from the Purchase Price at the Closing as a non-accountable and non-refundable document preparation fee (the “Document
Preparation Fee”) in connection with the preparation, negotiation, execution and delivery of this Agreement, the
Registration Rights Agreement and the Note and legal due diligence of the Company, and shall be paid directly to the Investor’s
counsel on the Closing Date by wire transfer of immediately available funds. For the avoidance of doubt, the Document Preparation
Fee shall be non-refundable when paid. 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 conversion or exercise notice delivered by the
Investor), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investor.
10.13
No Short Sales. So long as the Investor or its affiliates holds any Securities, neither the Investor nor any of its
affiliates nor any entity managed or controlled by
the Investor (collectively, the “Restricted
Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall,
directly or indirectly, engage in any Short Sales involving the Company’s securities; provided, that it is expressly understood
and agreed that, for purposes of determining whether a Short Sale shall be deemed to exist hereunder, a sale by a Restricted Person
of Common Stock shall not be deemed to be a “Short Sale” if executed at a time when such Restricted Person has an equivalent
offsetting long position in the Common Stock (or is deemed to have a long position hereunder or otherwise in accordance with Regulation
SHO under the 1934 Act); provided, further that no “Short Sale” shall be deemed to exist as a result of any failure
by the Company (or its agents) to deliver Conversion Shares upon conversion of the Note to any Restricted Person exercising the
Note. For purposes of determining whether a Restricted Person has an equivalent offsetting long position in the Common Stock, such
Restricted Person shall be deemed to hold “long” all Common Stock that is either (i) then owned by such Restricted
Person, if any, or (ii) then issuable to such Restricted Person as Conversion Shares pursuant to the terms of the Note held by
such Restricted Person, if any, (without regard to any limitations on conversion set forth in the Note and giving effect to any
conversion price adjustments that would take effect given only the passage of time). Notwithstanding the foregoing, nothing contained
herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person from selling “long”
(as defined under Rule 200 promulgated under Regulation SHO under the 1934 Act) the Securities or any other Common Stock then owned
by such Restricted Person.
10.14
No Frustration. So long as the Investor or its affiliates hold any Securities, neither the Company nor any of its
affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents or other representatives,
will, without the prior written consent of the Investor (which consent may be withheld, delayed or conditioned in the Investor’s
sole discretion), effect, enter into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction
(or issue, amend or waive any security) that would or would reasonably be expected to restrict, delay, conflict with or impair
the ability or right of the Company to timely perform its obligations under this Agreement, the Registration Rights Agreement or
the Note, including, without limitation, the obligation of the Company to timely deliver Conversion Shares upon conversion of the
Note.
11.
Additional Defined Terms. In addition to the terms defined elsewhere in this Agreement, the Registration Rights Agreement
or the Note, the following terms have the meanings set forth in this Section 11:
11.1
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
11.2
“Commission” means the United States Securities and Exchange Commission.
11.3
“Effective Date” means the earliest of the date that (a) the initial Registration Statement has
been declared effective by the Commission, (b) all of the Registrable Securities have been sold pursuant to Rule 144 or may be
sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required
under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year
anniversary of the Closing Date provided
that a holder of Registrable Securities is not an affiliate of the Company, all of the Registrable Securities may be sold pursuant
to an exemption from registration under Section 4(1) of the 1933 Act without volume or manner-of-sale restrictions.
11.4
“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
11.5
“Material Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction Document.
11.6
“Registrable Securities” shall have the meaning set forth in the Registration Rights Agreement.
11.7
“Short Sales” means “short sales” as defined in Rule 200 promulgated under Regulation
SHO under the 1934 Act.
11.8
“Subsidiary” or “Subsidiaries” means any corporation or other entity
of which at least a majority of the securities or other ownership interest having ordinary voting power for the election of directors
or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other
Subsidiaries.
11.9
“Trading Day” means any day on which the Common Stock is traded on the Trading Market, provided
that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on the Trading
Market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on the
Trading Market (or if the Trading Market does not designate in advance the closing time of trading on the Trading Market, then
during the hour ending at 4:00:00 p.m., New York City time) unless such day is otherwise designated as a Trading Day in writing
by the Investor.
11.10
“Trading Market” means any of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the OTC Bulletin Board, the NASDAQ Global Market, the NASDAQ Global Select
Market, the NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, or the OTCQX Marketplace or the OTCQB
Marketplace operated by OTC Markets Group Inc. (or any successor to any of the foregoing).
11.11
“VWAP” means the volume weighted average price (the aggregate sales price of all trades of Common
Stock during a Trading Day divided by the total number of shares of Common Stock traded during such Trading Day) of the Common
Stock during a Trading Day as reported by Bloomberg L.P. using the AQR function.
[SIGNATURES ON THE
FOLLOWING PAGE]
IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered as of the date provided above.
THE COMPANY
BIOHEART, INC.
By: |
/s/ Mike Tomas |
|
Name: Mike Tomas |
|
Title: President & CEO |
IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered as of the date provided above.
THE INVESTOR:
MAGNA EQUITIES II, LLC, a New York limited liability
company
By: | /s/ Joshua Sason
Name: Joshua Sason
Title: Managing Member |
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION
RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of October 7, 2014, between Bioheart,
Inc., a Florida corporation (the “Company”), and Magna Equities II, LLC, a New York limited liability
company (the “Investor”).
In connection with
the Securities Purchase Agreement, dated as of October 7, 2014, entered into by the Company and the Investor (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase
Agreement, to issue and sell to the Investor a promissory note of the Company (the “Note”), which will,
among other things, be convertible into shares of the Company’s common stock, $0.001 par value per share (the “Common
Stock”) to the Investor (as converted, the “Conversion Shares”) in accordance with the
terms of the Note.
To induce the Investor
to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide certain registration
rights under the 1933 Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the “1933 Act”), and applicable state securities laws.
The Company and
the Investor hereby agrees as follows:
Section
1. Definitions. Capitalized terms
used and not otherwise defined herein that are defined in the Securities Purchase Agreement shall have the meanings given such
terms in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the SEC pursuant to the 1933 Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated
by reference in such Prospectus.
“Effectiveness
Deadline” means, (i) with respect to the Initial Registration Statement required to be filed hereunder, the earlier
of (A) the 120th calendar day after the date of hereof in the event that such Registration Statement is subject to a
limited or full review by the SEC and (B) the fifth Trading Day after the date the Company is
notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review,
and (ii) with respect to any additional Registration Statements which may be required pursuant to Section 2, the earlier of (A)
the 90th calendar day following the date on which an additional Registration Statement is required to be filed hereunder
in the event that such Registration Statement is subject to a limited or full review by the SEC and (B) the fifth Trading Day after
the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will
not be reviewed or will not be subject to further review.
“Filing
Deadline” means, with respect to the Initial Registration Statement required hereunder, the 45th calendar
day after the date of hereof, and, with respect to any additional Registration Statements which may be required pursuant to Section
2, the earliest practical date on which the Company is permitted to file such additional Registration Statement related to the
Registrable Securities (taking into account any Staff position with respect to date on which the Staff will permit such additional
Registration Statement to be filed with the SEC).
“Registrable
Securities” means, as of any date of determination, (a) all Conversion Shares then issuable upon conversion in full
of the Note (assuming on such date the Note are converted in full without regard to any conversion limitations therein), and (b)
any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities
for so long as (x) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the
SEC under the 1933 Act and such Registrable Securities have been disposed of in accordance with such effective Registration Statement,
or (y) such Registrable Securities have been previously sold in accordance with Rule 144.
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2, including (in each
case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such
registration statement.
“Rule
144” means Rule 144 promulgated by the SEC pursuant to the 1933 Act, as such rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such rule.
“Rule
415” means Rule 415 promulgated by the SEC pursuant to the 1933 Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as
such Rule.
“SEC”
means the United States Securities and Exchange Commission.
Section
2. Registration Statement Requirements.
(a)
The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with
the SEC the Initial Registration Statement on Form S-1, or such other form reasonably acceptable to the Investor, covering the
resale by the Investor of all or such portion of the Registrable Securities (as determined on the date of such filing and the effective
date of such Registration Statement, as applicable) as permitted by the SEC (provided that the Company shall use diligent efforts
to advocate with the SEC for the registration of all of the Registrable Securities) pursuant to Rule 415. In no event shall the
Company include any securities other than Registrable Securities on any Registration Statement pursuant to this Section 2 without
the prior written consent of the Investor. The Company shall have such Initial Registration Statement, and each other Registration
Statement required to be filed pursuant to the terms hereof, declared effective by the SEC as soon as practicable, but in no event
later than the applicable Effectiveness Deadline. If at any time all Registrable Securities are not covered by the Initial Registration
Statement filed pursuant to this Section 2, the Company shall file with the SEC one or more additional Registration Statements
so as to cover all of the Registrable Securities not covered by the Initial Registration Statement, in each case, as soon as practicable
(taking into account any Staff position with respect to date on which the Staff will permit such additional Registration Statement(s)
to be filed with the SEC), but in no event later than the applicable Filing Deadline for such additional Registration Statement(s).
By 9:30 a.m. New York time on the Business Day following the effective date of each Registration Statement filed in accordance
herewith, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in
connection with sales pursuant to such Initial Registration Statement.
(b)
If the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant
to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities that does not permit such
Registration Statement to become effective and be used for resales by the Investor on a delayed or continuous basis under Rule
415 at then-prevailing market prices (and not fixed prices) (or as otherwise may be reasonably acceptable to the Investor), or
if after the filing of the Initial Registration Statement with the SEC pursuant to this Section 2, the Company is otherwise required
by the Staff or the SEC to reduce the number of Registrable Securities included in such Initial Registration Statement, then the
Company shall reduce the number of Registrable Securities to be included in such Initial Registration Statement (with the prior
consent, not to be unreasonably withheld, of the Investor as to the specific Registrable Securities to be removed therefrom) until
such time as the Staff and the SEC shall so permit such Registration Statement to become effective and be used as aforesaid. Notwithstanding
anything in this Agreement to the contrary, if after giving effect to the actions referred to in the immediately preceding sentence,
the Staff or the SEC does not permit such Registration Statement to become effective and be used for resales by the Investor on
a delayed or continuous basis under Rule 415 at then-prevailing market prices (and not fixed prices) (or as otherwise may be reasonably
acceptable to the Investor), the Company shall not request acceleration of the effective date of such Registration Statement, the
Company shall promptly (but in no event later than 48 hours) request the withdrawal of such Registration Statement pursuant to
Rule 477 under the 1933 Act, and the Effectiveness Deadline shall automatically be deemed to have elapsed with respect to such
Registration Statement at such time as the Staff or the SEC has made a final and non-appealable determination that the SEC will
not permit such
Registration Statement to be so utilized
(unless prior to such time the Company and the Investor have received assurances from the Staff or the SEC reasonably acceptable
to the Investor that a new Registration Statement filed by the Company with the SEC promptly thereafter may be so utilized). In
the event of any reduction in Registrable Securities pursuant to this paragraph, the Company shall file additional Registration
Statements as permitted by the Staff or the SEC in accordance with this Section 2 until such time as all Registrable Securities
have been included in Registration Statements that have been declared effective and the prospectus contained therein is available
for use by the Investor.
(c)
In addition, in the event that the Staff or the SEC requires the Investor seeking to resell securities under a Registration
Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to
permit such Registration Statement to become effective, and the Investor does not consent to being so named as an underwriter in
such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities
to be registered on behalf of the Investor, until such time as the Staff or the SEC does not require such identification
or until the Investor accepts such identification and the manner thereof. If notwithstanding any such reduction, the Staff or the
SEC still requires that the Investor be specifically identified as an “underwriter” in order to permit such Registration
Statement to be declared effect, the Investor may, at its option, elect to have no Registrable Securities of the Investor be included
in such Registration Statement.
Section
3. Registration Procedures.
(a)
If and whenever the Company is required by the provisions of Section 2 to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:
| (i) | subject to the timelines provided in this Agreement, prepare and file the Registration Statement
with the SEC, with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement
to become and remain effective for the period of the distribution contemplated thereby (determined as herein provided), respond
as promptly as commercially practicable to any comments received from the SEC with respect to a Registration Statement or any amendment
thereto and file any pre-effective amendments with respect to a Registration Statement as promptly as reasonable possible, and
promptly provide to the Investor copies of all filings and SEC letters of comment (provided that the Company shall excise any information
contained therein which would constitute material non-public information regarding the Company or any subsidiary) and notify the
Investor (by telecopier or by e-mail address provided by the Investor) on or before the second business day thereafter that the
Company receives notice that (i) the SEC has no comments or no further comments on the registration statement, and (ii) the registration
statement has been declared effective; |
| (ii) | prepare and file with the SEC such amendments and supplements to such Registration Statement and
the prospectus used in connection therewith as |
may be necessary to keep such
Registration Statement effective and prepare and file with the SEC such additional Registration Statements as may be required hereunder
and to keep each additional Registration Statement effective;
| (iii) | furnish to the Investor such number of copies of the Registration Statement and the prospectus
included therein (including each preliminary prospectus) as the Investor reasonably may request in order to facilitate the public
sale or their disposition of the securities covered by such Registration Statement or make them electronically available; |
| (iv) | use its reasonable best efforts to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or “Blue Sky” laws of such jurisdictions as the Investor shall request
in writing, provided, however, that the Company shall not for any such purpose be required to qualify to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to consent to service of process in any such jurisdiction; |
| (v) | if applicable, list the Registrable Securities covered by such Registration Statement with the
principal market or exchange on which the Common Stock is then listed; |
| (vi) | promptly notify the Investor of the Company’s becoming aware that a prospectus relating thereto
is required to be delivered under the 1933 Act, of the happening of any event or passage of time of which the Company has knowledge
as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing or the financial statements included therein ineligible for inclusion or
which becomes subject to a SEC, state or other governmental order suspending the effectiveness of the Registration Statement covering
any of the Registrable Securities; and |
| (vii) | cooperate with any broker-dealer through which the Investor proposes to resell its Registrable
Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by the
Investor, and the Company shall pay the filing fee required by such filing within two (2) business days of request therefor |
(b)
The Investor hereby covenants that it will not sell any Registrable Securities pursuant to such prospectus during
the period commencing at the time at which the Company gives the Investor notice of the suspension of the use of such prospectus
in accordance with this Section 3(b) and ending at the time the Company gives the Investor notice that the Investor may thereafter
effect sales pursuant to the prospectus, or until the Company delivers to the Investor or files with the SEC an amended or supplemented
prospectus.
Section 4. Provision of Documents. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of the Investor that the Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and
shall execute such documents in connection with such registration as the Company may reasonably request.
Section
5. Expenses. All expenses incurred
by the Company in complying with Section 2, including, without limitation, all registration and filing fees, printing expenses
(if required), fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state securities or “Blue Sky” laws, fees of the
Financial Industry Regulatory Authority, Inc. (“FINRA”) in connection with any filing with FINRA pursuant
to FINRA Rule 5110 that may be required to be made by any broker through which the Investor intends to make sales of Registrable
Securities, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.”
The Company will pay all Registration Expenses in connection with any Registration Statement described in Section 2.
Section
6. Indemnification.
(a) In the event
any Registrable Securities are included in any Registration Statement under this Agreement, to the fullest extent permitted by
law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each of its directors, officers, shareholders,
members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls the
Investor within the meaning of Section 15 of the 1933 Act or Section 20 of the Securities Exchange Act of 1934 Act, as amended
(the “1934 Act”) and each of the directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
the lack of such title or any other title) of such controlling Persons (each, an “Investor Party” and
collectively, the “Investor Parties”), against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’
fees, costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, lawsuit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an Investor Party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under
the securities or other “Blue Sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue
Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary
to make the
statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact contained in any prospectus (as amended or supplemented)
or in any prospectus supplement or the omission or alleged omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein were made, not misleading (the matters in the foregoing
clauses (i) and (ii) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse
the Investor Parties, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Investor Party arising
out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company
by such Investor Party for such Investor Party expressly for use in connection with the preparation of such Registration Statement,
prospectus or prospectus supplement or any such amendment thereof or supplement thereto; (ii) shall not be available to the Investor
to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus (as amended
or supplemented) made available by the Company (to the extent applicable), including, without limitation, a corrected prospectus,
if such prospectus (as amended or supplemented) or corrected prospectus was timely made available by the Company pursuant to Section
3 and then only if, and to the extent that, following the receipt of the corrected prospectus no grounds for such Claim would have
existed; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an Investor Party and shall survive the transfer of any
of the Registrable Securities by the Investor pursuant to Section 8(f).
(b) In connection
with any Registration Statement in which the Investor is participating, the Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the
1934 Act (each, an “Company Party”), against any Claim or Indemnified Damages to which any of them may
become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information relating to the Investor furnished to the Company by the Investor expressly for use in connection
with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), the Investor will reimburse
a Company Party any legal or other expenses reasonably incurred by such Company Party in connection with investigating or defending
any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld or delayed, provided
further that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to the Investor as a result of the applicable sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company
Party and shall survive
the transfer of any of the Registrable
Securities by the Investor pursuant to Section 8(f).
(c) Promptly
after receipt by an Investor Party or Company Party (as the case may be) under this Section 6 of notice of the commencement of
any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Investor
Party or Company Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under
this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and such
Investor Party or Company Party (as the case may be); provided, however, an Investor Party or Company Party (as the
case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying
party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have
failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Investor Party or Company
Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any
impleaded parties) include both such Investor Party or Company Party (as the case may be) and the indemnifying party, and such
Investor Party or Company Party (as the case may be) shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Investor Party or Company Party and the indemnifying party (in which case, if
such Investor Party or Company Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof
on behalf of the indemnified party and such counsel shall be at the expense of the indemnifying party, provided further that in
the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than
one (1) separate legal counsel for all Investor Parties or Company Parties (as the case may be). The Company Party or Investor
Party (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense
of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available
to such Company Party or Investor Party (as the case may be) which relates to such action or Claim. The indemnifying party shall
keep the Company Party or Investor Party (as the case may be) reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim
or proceeding effected without its prior written consent; provided, however, the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Company Party or
Investor Party (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which does
not include as an unconditional term thereof the giving by the claimant or plaintiff to such Company Party or Investor Party (as
the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include
any admission as to fault on the part of the Company Party. For the avoidance of doubt, the immediately preceding sentence shall
apply to Sections 6(a) and 6(b) hereof. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated
to all rights of the Company Party or Investor Party (as the case may be) with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any liability to such Investor Party or Company Party
(as the case may be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced
in its ability to defend such action.
(d) No Person
involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the 1933 Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale of Registrable
Securities who is not guilty of fraudulent misrepresentation.
(e) The indemnification
required by this Section 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 Indemnified Damages are incurred; provided that the Investor shall promptly reimburse
the Company for all such payments to the extent a court of competent jurisdiction determines that any Investor Party was not entitled
to such payments.
(f) The indemnity
and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Company Party
or Investor Party against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant
to the law; provided, however, that the Company shall not be obligated to pay an Investor Party for Indemnified Damages associated
with a particular Claim under this Section 6 if the Company has already paid such Investor Party such Indemnified Damages under
Section 9 of the Securities Purchase Agreement.
Section
7. Contribution. To the extent any
indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided,
however: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities
which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with
such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty
of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the
amount of net proceeds received by such seller from the applicable sale of such Registrable Securities pursuant to such Registration
Statement. Notwithstanding the provisions of this Section 7, the Investor shall not be required to contribute, in the aggregate,
any amount in excess of the amount by which the net proceeds actually received by the Investor from the applicable sale of the
Registrable Securities subject to the Claim exceeds the amount of any damages that the Investor has otherwise been required to
pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission
or alleged omission.
Section
8. Miscellaneous.
(a)
Remedies. In the event of a breach by the Company or by the Investor of any of their respective obligations
under this Agreement, the Investor or the Company, as the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this
Agreement. Each of the Company and the Investor agrees that monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of
any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at
law would be adequate.
(b)
Compliance. The Investor covenants and agrees that it will comply with the prospectus delivery requirements
of the 1933 Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to a
Registration Statement.
(c)
Piggy-Back Registrations. If, at any time prior to the six month anniversary of the date hereof, there is
not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and
file with the SEC a registration statement relating to an offering for its own account or the account of others under the 1933
Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then
equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall
deliver to the Investor a written notice of such determination and, if within fifteen days after the date of the delivery of such
notice, the Investor shall so request in writing, the Company shall include in such registration statement all or any part of such
Registrable Securities the Investor requests to be registered; provided, however, that the Company shall not be required to register
any Registrable Securities pursuant to this Section 8(c) that are the subject of a then effective Registration Statement.
(d)
Amendments and Waivers. No provision of this Agreement may be (i) amended other than by a written instrument
signed by both parties hereto or (ii) waived other than in a written instrument signed by the party against whom enforcement of
such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party
in exercising such right or remedy, shall not operate as a waiver thereof.
(e)
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder
shall be delivered as set forth in the Securities Purchase Agreement.
(f)
Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties. The Company may not assign (except by merger) its rights or obligations hereunder without
the prior written consent of the Investor. The Investor may assign its rights hereunder if: (i) the Investor agrees in writing
with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such
transfer or assignment (as the case
may be); (ii) the Company is, within a reasonable time after such transfer or assignment (as the case may be), furnished with written
notice of (a) the name and address of such transferee or assignee (as the case may be), and (b) the securities with respect to
which such registration rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer
or assignment (as the case may be) the further disposition of such securities by such transferee or assignee (as the case may be)
is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives
the written notice contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing
with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall
have been made in accordance with the applicable requirements of the Securities Purchase Agreement and the Note; and (vi) such
transfer or assignment (as the case may be) shall have been conducted in accordance with all applicable federal and state securities
laws. The term “Investor” in this Agreement shall also include all such transferees and assignees.
(g)
Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with
the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
(h)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be determined in accordance with the provisions of the Securities Purchase Agreement.
(i)
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 reasonable best 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.
(j)
Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement
and shall not be deemed to limit or affect any of the provisions hereof.
(Signature Pages Follow)
IN WITNESS WHEREOF,
the parties have executed this Registration Rights Agreement as of the date first written above.
BIOHEART,
INC.
By: | /s/ Mike Tomas |
| Name: Mike
Tomas |
| Title: President
& CEO |
IN WITNESS WHEREOF,
the parties have executed this Registration Rights Agreement as of the date first written above.
Magna Equities II, LLC, a
New York Limited Liability Company
By: | /s/ Joshua Sason |
| Name: Joshua
Sason |
| Title: Managing
Member |
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