UNITED STATES
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):
July 9, 2015
AMARANTUS BIOSCIENCE HOLDINGS, INC.
(Exact name of registrant as specified in
its charter)
Nevada |
000-55016 |
26-0690857 |
(State or other jurisdiction of
incorporation or organization) |
(Commission File Number) |
IRS Employer
Identification No.) |
655 Montgomery Street, Suite 900
San Francisco, CA |
94111 |
(Address of Principal Executive Offices) |
(Zip Code) |
(408) 737-2734
(Registrant’s telephone number, including
area code)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 1.01 | Entry Into a Material Definitive Agreement. |
Acquisition
of Cutanogen Corporation
On July 8, 2015, Amarantus Bioscience Holdings,
Inc. (the “Company”) exercised its previously disclosed option to acquire Cutanogen Corporation. Pursuant to a Share
Purchase Agreement among the Company and Lonza Walkersville, Inc. (“Lonza”) dated July 14, 2015 (the “Agreement”),
the Company paid $4,000,000 to Lonza upon closing. Pursuant to the Agreement, the Company will be required to pay up to $5,000,000
in aggregate milestone payments upon the achievement of certain regulatory milestones.
The Company intends to submit a FOIA Confidential
Treatment Request to the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, requesting that it be permitted to redact certain portions of the Agreement. The omitted material will be included in
the request for confidential treatment.
The foregoing summary is qualified in
its entirety by reference to the Agreement, a redacted copy of which will be attached as an exhibit to the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2015.
The press release announcing
the acquisition of Cutanogen Corporation by the Company is attached as Exhibit 99.2 to this report on Form 8-K and is
incorporated herein by reference.
Series E Preferred Stock Financing
On July 9, 2014, the Company entered into
a securities purchase agreement (the “Series E SPA”) with institutional investors pursuant to which the Company agreed
to issue 1,100 shares of its Series E Convertible Preferred Stock (”Series E Preferred Stock”) for gross proceeds
of $1,000,000. On July 13, 2015, the Company sold an additional 125 shares of Series E Preferred Stock to institutional investors
for gross proceeds of $125,000.
On July 9, 2015, the Company filed a Second
Amended and Restated Certificate of Designation to its Series E Convertible Preferred Stock to, among other things, provide for
a cash redemption of the Series E Preferred Stock at the Company’s discretion and a further extension of any downward adjustment
in the $7.50 fixed conversion price until January 8, 2016.
The sale of the shares of the Series E Preferred
Stock were made upon the same terms and conditions of the Series E Preferred Stock transaction previously disclosed by the Company
in its current reports on Form 8-K filed with the Securities and Exchange Commission on November 14, 2014, December 24, 2014, January
14, 2015 and March 3, 2015.
Series G Preferred Stock Financing
On July 10, 2015, the Company entered into
an Amended and Restated Securities Purchase Agreement (the “Series G SPA”) with an institutional investor for the sale
of 435 shares of the Company’s Series G Preferred Stock and an additional 100 shares of Series G Preferred Stock as a fee
(collectively, the “Shares”) in a registered direct offering (the “Offering”), subject to customary closing
conditions. The gross proceeds to the Company from the registered direct offering were $2,000,000. Closing conditions were
met on July 10, 2015 and the transaction was closed on July 13, 2015. The Series G Preferred Stock has a fixed conversion price of $9.00.
The Shares were issued
pursuant to amendment no. 1 dated July 10, 2015 to prospectus supplement dated July 9, 2015 filed with the Securities and Exchange
Commission on July 9, 2015, in connection with a takedown from the Registration Statement on Form S-3 (File No. 333-203845),
which was declared effective by the SEC on May 22, 2015.
The foregoing summary of the terms
of the Series G SPA is subject to, and qualified in its entirety by, such document attached hereto as Exhibit 10.1, which
is incorporated herein by reference.
Note Purchase Transaction
On July 9, 2015, the Company entered into
a Securities Purchase Agreement (the “Notes SPA”) with four investors (the “Investors”) pursuant to which
such Investors purchased an aggregate of $1,000,000 in principal amount of 12% Promissory Notes (the “Notes”) due July
9, 2016 (the “Note Purchase Transaction”).
The principal
amount of the Notes shall accrue interest at a rate equal to 12% per annum, which interest amount shall be guaranteed, payable
on the first Business Day of each month in cash. If the original principal amount of this Note, and all accrued and unpaid
interest thereon, is not paid in full by the six month anniversary of the Original Issue Date, then the Company shall pay additional
interest to the Investor on the aggregate outstanding principal amount of this Note at the rate of 2% per annum, payable on the
Maturity Date. At any time upon ten (10) days written notice to the Investor, the Company may prepay
any portion of the principal amount of the Notes and any accrued and unpaid interest.
The Notes contain certain customary Events
of Default (including, but not limited to, default in payment of principal or interest thereunder, breaches of covenants, agreements,
representations or warranties thereunder, the occurrence of an event of default under certain material contracts of the Company,
including the transaction documents relating to the Note Purchase Transaction, changes in control of the Company and the entering
or filing of certain monetary judgments against the Company). Upon the occurrence of any such Event of Default the outstanding
principal amount of the Notes, plus accrued but unpaid interest, liquidated damages, and other amounts owing in respect thereof
through the date of acceleration, shall become, at the Investor’s election, immediately due and payable in cash. Upon any
Event of Default that results in acceleration of the Notes, the interest rate on the Notes shall accrue at an interest rate equal
to the lesser of 24% per annum or the maximum rate permitted under applicable law.
In connection with the Note Transaction,
effective on July 9, 2015, the Company entered into a Security Agreement with the Investors (the “Security Agreement”)
pursuant to which the Company agreed to grant a security interest in certain of its property (the “Collateral”) to
the Investors in order to secure the prompt payment, performance and discharge in full of all of the Company’s obligations
under the Notes.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information set forth in Item 1.01 with
respect to the acquisition of Cutanogen Corporation is incorporated by reference herein.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.10 with
respect to the Note Purchase Transaction is incorporated by reference herein.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in Item 1.01 with
respect to the Series E Preferred Stock Financing is incorporated by reference herein. The issuance of the Series E Preferred Stock
described above was completed in accordance with the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
The information set forth in Item 1.01 with
respect to the Series E Preferred Stock Financing and the Series G Preferred Stock Financing is incorporated by reference herein.
On July 13,
2015, the Company announced that it has received approval to commence trading on the OTCQX® Best
Marketplace (OTCQX) at market open, July 13, 2015, under existing ticker symbol, “AMBS.” The press
release is attached as Exhibit 99.1 to this report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit
No. |
|
Description |
3.1(a) |
|
Second Amended and Restated Certificate of Designations of Series E Preferred Stock |
3.1(b) |
|
Amended and Restated Certificate of Designations of Series G Preferred Stock |
5.1 |
|
Opinion of Sichenzia Ross Friedman Ference |
10.1 |
|
Form of Amended and Restated Securities Purchase Agreement for Series G Preferred Stock. |
10.2 |
|
Form of Securities Purchase Agreement for Series E Preferred Stock |
10.3 |
|
Form of Securities Purchase Agreement for the Notes |
10.4 |
|
Form of 12% Promissory Note |
10.5 |
|
Form of Security Agreement |
99.1 |
|
Press Release dated July 13, 2015 |
99.2 |
|
Press Release dated July 15, 2015 |
SIGNATURES
Pursuant to the requirements
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.
|
AMARANTUS BIOSCIENCE HOLDINGS, INC. |
|
|
|
|
Date: July 15, 2015 |
By: |
/s/ Gerald E. Commissiong |
|
|
|
Name: Gerald E. Commissiong |
|
|
|
Title: Chief Executive Officer |
|
Exhibit 3.1(a)
AMARANTUS
BIOSCIENCE HOLDINGS, INC.
SECOND AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES E
12% CONVERTIBLE PREFERRED STOCK
(PURSUANT
TO NRS 78.1955)
The undersigned, Gerald
E. Commissiong and Marc E. Faerber, do hereby certify that:
1. They are the Chief
Executive Officer and Secretary, respectively, of Amarantus BioScience Holdings, Inc., a Nevada corporation (the “Corporation”).
2. The Corporation
is authorized to issue 10,000,000 shares of preferred stock, of which 250,000 are designated Series A Convertible Preferred Stock,
2,500,000 are designated Series B Convertible Preferred Stock, 750,000 are designated Series C Convertible Preferred Stock and
1,300 are designated Series D 8% Convertible Preferred Stock.
3. The following resolutions
were duly adopted by the board of directors of the Corporation (the “Board of Directors”):
WHEREAS, the Certificate
of Incorporation of the Corporation, as amended, provides for a class of its authorized stock known as preferred stock, consisting
of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;
WHEREAS, the Board
of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption
and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and
the designation thereof, of any of them; and
WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement,
up to 13,335 shares of the preferred stock which the Corporation has the authority to issue, as follows:
NOW, THEREFORE, BE
IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange
of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters
relating to such series of preferred stock as follows:
TERMS OF PREFERRED STOCK
Section 1. Definitions.
For the purposes hereof, the following terms shall have the following meanings:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 7(e).
“Bankruptcy
Event” means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Corporation or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for
it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e)
the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Corporation
or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring
of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting
any of the foregoing.
“Base
Conversion Price” shall have the meaning set forth in Section 7(b).
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Buy-In”
shall have the meaning set forth in Section 6(c)(iv).
“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise)
of in excess of 40% of the voting securities of the Corporation (other than by means of conversion of Preferred Stock), (b) the
Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and,
after giving effect to such transaction, the stockholders of the Corporation immediately prior to such transaction own less than
60% of the aggregate voting power of the Corporation or the successor entity of such transaction, (c) the Corporation sells or
transfers all or substantially all of its assets to another Person and the stockholders of the Corporation immediately prior to
such transaction own less than 60% of the aggregate voting power of the acquiring entity immediately after the transaction, (d)
a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which is not
approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals
who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority
of the members of the Board of Directors who are members on the Original Issue Date), or (e) the execution by the Corporation of
an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
“Conversion
Amount” means the sum of the Stated Value at issue.
“Conversion
Date” shall have the meaning set forth in Section 6(a).
“Conversion
Price” shall have the meaning set forth in Section 6(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.
“Dilutive
Issuance” shall have the meaning set forth in Section 7(b).
“Dilutive
Issuance Notice” shall have the meaning set forth in Section 7(b).
“Dividend
Conversion Rate” means the lesser of (a) the Conversion Price or (b) 95% of the lowest VWAPs for the 15 consecutive Trading
Days ending on the Trading Day that is immediately prior to the applicable Dividend Payment Date.
“Dividend
Conversion Shares” shall have the meaning set forth in Section 3(a).
“Dividend
Notice Period” shall have the meaning set forth in Section 3(a).
“Dividend
Payment Date” shall have the meaning set forth in Section 3(a).
“Dividend
Share Amount” shall have the meaning set forth in Section 3(a).
“Equity
Conditions” means, during the period in question, (a) the Corporation
shall have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable
Holder on or prior to the dates so requested or required, if any, (b) the Corporation shall have paid all liquidated damages and
other amounts owing to the applicable Holder in respect of the Preferred Stock, (c) all of the Conversion Shares issuable pursuant
to the Transaction Documents (and shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without
volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation
as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders,
(d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed
or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common Stock on
a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized, but unissued
and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction
Documents, (f) there is no existing Triggering Event and no existing event which, with the passage of time or the giving of notice,
would constitute a Triggering Event, (g) the issuance of the shares in question to the applicable Holder would not violate the
limitations set forth in Section 6(d) herein, (h) there has been no public announcement of a pending or proposed Fundamental Transaction
or Change of Control Transaction that has not been consummated, (i) the applicable Holder is not in possession of any information
provided by the Corporation that constitutes, or may constitute, material non-public information, (j) for each Trading Day in a
period of 20 consecutive Trading Days prior to the applicable date in question, the daily trading volume for the Common Stock on
the principal Trading Market exceeds $100,000 per Trading Day, and (k) the Company’s Common Stock must be DTC and DWAC eligible.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Corporation
pursuant to the Company’s existing stock option plan or any stock or option plan duly adopted by a majority of the non-employee
members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee directors established
for such purpose; provided, however, such issuances to consultants under this clause (a) shall not exceed five (5%)
percent of the issued and outstanding shares of the Corporation in any fiscal quarter, (b) securities upon the exercise or exchange
of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into
shares of Common Stock, issued and outstanding on the date of this Agreement, or pursuant to other agreements of the Company existing
prior to the date hereof and listed on Schedule 3.1(g) of the Purchase Agreement, provided that such securities and/or agreements
have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Corporation and shall provide to the Corporation additional benefits in addition
to the investment of funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing in securities.
“Fundamental
Transaction” shall have the meaning set forth in Section 7(e).
“GAAP”
means United States generally accepted accounting principles.
“Holder”
shall have the meaning given such term in Section 2.
“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (b) 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 Corporation’s 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 (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP.
“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Liquidation”
shall have the meaning set forth in Section 5.
“Mandatory Conversion
Price” shall have the meaning set forth in Section 6(e).
“New
York Courts” shall have the meaning set forth in Section 11(d).
“Notice
of Conversion” shall have the meaning set forth in Section 6(a).
“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred
Stock.
“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.
“Preferred
Stock” shall have the meaning set forth in Section 2.
“Purchase
Agreement” means the Securities Purchase Agreement, dated on or about the Original Issue Date, among the Corporation
and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“Qualified
Public Offering” means a public offering of the Company’s securities resulting in gross proceeds of at least $10,000,000
and the Company’s common stock being listed on a national securities exchange.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Securities”
means the Preferred Stock and the Conversion Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 6(c).
“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.
“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock purchased pursuant to
the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement and next to
the heading “Subscription Amount,” in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable,
also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.
“Successor
Entity” shall have the meaning set forth in Section 7(e).
“Trading
Day” means a day on which the principal Trading Market is open for business.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
“Transaction
Documents” means this Certificate of Designation, the Purchase Agreement, the Transfer Agent Instruction Letter, all
exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
pursuant to the Purchase Agreement.
“Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Corporation with a mailing address of 18 Lafayette
Place, Woodmere, New York, 11598 and a facsimile number of (646) 536-3179, and any successor transfer agent of the Corporation.
“Transfer
Agent Instruction Letter” shall have the meaning ascribed to such term in the Purchase Agreement.
“Triggering
Event” means, wherever used herein any of the following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body):
i. the
Corporation shall fail to deliver certificates representing Conversion Shares issuable upon a conversion hereunder that comply
with the provisions hereof prior to the fifth Trading Day after such shares are required to be delivered hereunder, or the Corporation
shall provide written notice to any Holder, including by way of public announcement, at any time, of its intention not to comply
with requests for conversion of any shares of Preferred Stock in accordance with the terms hereof;
ii. the
Corporation shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In within three calendar days after
notice therefor is delivered hereunder;
iii. the
Corporation shall fail to have available a sufficient number of authorized and unreserved shares of Common Stock to issue to such
Holder upon a conversion hereunder;
iv. unless
specifically addressed elsewhere in this Certificate of Designation as a Triggering Event, the Corporation shall fail to observe
or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction Documents,
and such failure or breach shall not, if subject to the possibility of a cure by the Corporation, have been cured within 30 calendar
days after the date on which written notice of such failure or breach shall have been delivered;
v. the
Corporation shall redeem more than a de minimis number of Junior Securities other than as to repurchases of Common
Stock or Common Stock Equivalents from departing officers and directors, provided that, while any of the Preferred Stock remains
outstanding, such repurchases shall not exceed an aggregate of $100,000 from all officers and directors;
vi. the
Corporation shall be party to a Change of Control Transaction;
vii. there
shall have occurred a Bankruptcy Event;
viii. the
Common Stock shall fail to be listed or quoted for trading on a Trading Market for more than five Trading Days, which need not
be consecutive Trading Days or the transfer of shares of Common Stock through the Depository Trust Company System is no longer
available or “chilled”; or
ix. any
monetary judgment, writ or similar final process shall be entered or filed against the Corporation, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b) of the Purchase Agreement.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board,
(c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are
then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the
Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the fees and
expenses of which shall be paid by the Corporation.
Section
2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series E 12% Convertible
Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 13,335 (which
shall not be subject to increase without the written consent of all of the holders of the Preferred Stock (each, a “Holder”
and collectively, the “Holders”)). Each share of Preferred Stock shall have a par value of $0.001 per share
and a stated value equal to $1,000, subject to increase set forth in Section 3 below (the “Stated Value”).
Section
3. Dividends.
a) Dividends
in Cash or in Kind. Holders shall be entitled to receive, and the Corporation shall pay, cumulative dividends at the rate
per share (as a percentage of the Stated Value per share) of 12% per annum payable quarterly on January 1, April 1, July 1 and
October 1, beginning on the first such date after the Original Issue Date and on each Conversion Date (with respect only to Preferred
Stock being converted) (each such date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Trading
Day, the applicable payment shall be due on the next succeeding Trading Day) in cash, or at the Corporation’s option, in
duly authorized, validly issued, fully paid and non-assessable shares of Common Stock as set forth in this Section 3(a), or a
combination thereof (the dollar amount to be paid in shares of Common Stock, the “Dividend Share Amount”).
The form of dividend payments to each Holder shall be determined in the following order of priority: (i) if funds are legally
available for the payment of dividends and the Equity Conditions have not been met during the 20 consecutive Trading Days immediately
prior to the applicable Dividend Payment Date (the “Dividend Notice Period”), in cash only, (ii) if funds are
legally available for the payment of dividends and the Equity Conditions have been met during the Dividend Notice Period, at the
sole election of the Corporation, in cash or shares of Common Stock which shall be valued at the Dividend Conversion Rate, (iii)
if funds are not legally available for the payment of dividends and the Equity Conditions have been met during the Dividend Notice
Period, in shares of Common Stock which shall be valued at the Dividend Conversion Rate, and (iv) if funds are not legally available
for the payment of dividends and the Equity Conditions have not been met during the Dividend Notice Period, then, at the election
of such Holder, such dividends shall accrue to the next Dividend Payment Date or shall be accreted to, and increase, the outstanding
Stated Value. In addition, as a condition to paying dividends in shares of Common Stock, as to such Dividend Payment Date, prior
to such Dividend Notice Period (but not more than five (5) Trading Days prior to the commencement of such Dividend Notice Period),
the Corporation shall have delivered to each Holder’s account with The Depository Trust Company a number of shares of Common
Stock to be applied against such Dividend Share Amount equal to the quotient of (x) the applicable Dividend Share Amount divided
by (y) the Dividend Conversion Rate, assuming for such purposes that the Dividend Payment Date is the Trading Day immediately
prior to the commencement of the Dividend Notice Period (the “Dividend Conversion Shares”). The Holders shall
have the same rights and remedies with respect to the delivery of any such shares as if such shares were being issued pursuant
to Section 6 herein.
b) Corporation’s
Ability to Pay Dividends in Cash or Kind. The Corporation shall promptly notify the Holders at any time the Corporation shall
become able or unable, as the case may be, to legally pay cash dividends. If at any time the Corporation has the right to pay dividends
in cash or shares of Common Stock, the Corporation must provide the Holders with at least 20 Trading Days’ notice of its
election to pay a regularly scheduled dividend in shares of Common Stock (the Corporation may indicate in such notice that the
election contained in such notice shall continue for later periods until revised by a subsequent notice). The aggregate number
of shares of Common Stock otherwise issuable to a Holder on a Dividend Payment Date shall be reduced by the number of shares of
Common Stock previously issued to such Holder in connection with such Dividend Payment Date. If any Dividend Conversion Shares
are issued to a Holder in connection with a Dividend Payment Date and are not applied against a Dividend Share Amount, then such
Holder shall promptly return such excess shares to the Corporation.
c) Dividend
Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year, consisting of twelve 30
calendar day periods, and shall accrue daily commencing on the Original Issue Date, and shall be deemed to accrue from such date
whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends. Payment of dividends in shares of Common Stock shall otherwise occur pursuant to Section 6(c)(i)
herein and, solely for purposes of the payment of dividends in shares, the Dividend Payment Date shall be deemed the Conversion
Date. Dividends shall cease to accrue with respect to any Preferred Stock converted, provided that, the Corporation actually delivers
the Conversion Shares within the time period required by Section 6(c)(i) herein. Except as otherwise provided herein, if at any
time the Corporation pays dividends partially in cash and partially in shares, then such payment shall be distributed ratably among
the Holders based upon the number of shares of Preferred Stock held by each Holder on such Dividend Payment Date.
d) Late
Fees. Any dividends, whether paid in cash or shares of Common Stock, that are not paid within three Trading Days following
a Dividend Payment Date shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 112% per
annum or the lesser rate permitted by applicable law which shall accrue daily from the Dividend Payment Date through and including
the date of actual payment in full.
e) Other
Securities. So long as any Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall
redeem, purchase or otherwise acquire directly or indirectly any Junior Securities. So long as any Preferred Stock shall remain
outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend or make
any distribution upon (other than a dividend or distribution described in Section 6 or dividends due and paid in the ordinary course
on preferred stock of the Corporation at such times when the Corporation is in compliance with its payment and other obligations
hereunder), nor shall any distribution be made in respect of, any Junior Securities as long as any dividends due on the Preferred
Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or
otherwise) of any Junior Securities or shares pari passu with the Preferred Stock.
f) Stock
Dividend. If the Corporation, at any time while this Preferred Stock is outstanding pays a stock dividend or otherwise makes
a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents
of the Corporation (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon
conversion of, or payment of a dividend on, this Preferred Stock), the Corporation shall pay such dividend or make such distribution
to the holders of the Preferred Stock in such amounts as each share of Preferred Stock would have been entitled to receive if such
share of Preferred Stock was converted into shares of Common Stock at the time of payment of such stock dividend or distribution.
g) Make-Whole
Amount. Upon conversion of the Series E Preferred Stock, the Holder shall receive the Dividend Share Amount that, but for the
applicable conversion, would have accrued and become payable pursuant to this Section 3 with respect to the Series E Preferred
Stock being so converted, for the period commencing on the date of the issuance of the Series E Preferred Stock and ending on the
three year (one year in the event of a Qualified Public Offering) anniversary of such issuance, less any dividends previously paid
by the Corporation on such shares of Series E Preferred Stock.
Section 4. Voting
Rights. Except as otherwise expressly required by law, each holder of Series E Preferred Stock shall be entitled to vote on
all matters submitted to shareholders of the Corporation and shall be entitled to such number of votes that is equal to the number
of Common Stock that each share of Series E Preferred Stock is convertible into, pursuant to Section 6, herein. Except as otherwise
required by law, the holders of shares of Series E Preferred Stock shall vote together with the holders of Common Stock on all
matters and shall not vote as a separate class.
Section 5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the
Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon
under this Certificate of Designation, for each share of Preferred Stock before any distribution or payment shall be made to the
holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then
the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective
amounts that would be payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction or Change
of Control Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not
less than 45 days prior to the payment date stated therein, to each Holder.
Section 6. Conversion.
a) Conversions
at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the
Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations
set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders
shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice
of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the
number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent
to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the
applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date, the “Conversion Date”).
If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and
entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions
of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred
Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder
shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue. Shares
of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not
be reissued.
b) Conversion
Price. The conversion price for the Preferred Stock shall equal $7.50, subject to adjustment herein commencing on January 8,
2016 (the “Conversion Price”); provided, however, after January 8, 2016, in the event
that Preferred Stock is outstanding, a Holder delivers a Notice of Conversion within 5 Trading Days following a period that the
average of 3 consecutive VWAPs is less than $9.00 (subject to adjustment for reverse and forward stock splits and the like)(“Trigger
Period”), the Conversion Price shall be thereafter reduced, and only reduced, to equal the lesser of the then Conversion
Price (as previously adjusted pursuant to this provision) and 65% of the average of the lowest 2 consecutive VWAPs out of the prior
10 consecutive Trading Days prior to the delivery of such Conversion Notice. Such adjustment may occur on multiple occasions
during any Trigger Period and shall permanently reduce, and never increase, the Conversion Price. Notwithstanding the foregoing
if the common stock of the Company is listed on NASDAQ and the price is $18.00 at the time of listing and for 10 consecutive Trading
Days after such listing (subject to adjustment for reverse and forward stock splits and the like), then the adjustment of the Conversion
Price above shall be 80% instead of 65% of the average of the lowest 2 consecutive VWAPs out of the prior 10 consecutive Trading
Days.
c) Mechanics
of Conversion
i. Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) a certificate or certificates
representing the Conversion Shares which, on or after the six month anniversary of the Original Issue Date, shall be free of restrictive
legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number
of Conversion Shares being acquired upon the conversion of the Preferred Stock (including, if the Corporation has given continuous
notice pursuant to Section 3(b) for payment of dividends in shares of Common Stock at least 20 Trading Days prior to the date on
which the Notice of Conversion is delivered to the Corporation, shares of Common Stock representing the payment of accrued dividends
otherwise determined pursuant to Section 3(a) but assuming that the Dividend Notice Period is the 20 Trading Days period immediately
prior to the date on which the Notice of Conversion is delivered to the Corporation and excluding for such issuance the condition
that the Corporation deliver the Dividend Share Amount as to such dividend payment prior to the commencement of the Dividend Notice
Period), and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation has elected or is required to pay
accrued dividends in cash). On or after the six month anniversary of the Original Issue Date, the Corporation shall use its best
efforts to deliver any certificate or certificates required to be delivered by the Corporation under this Section 6 electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.
ii. Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to
the Corporation at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which
event the Corporation shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation
and the Holder shall promptly return to the Corporation the Common Stock certificates issued to such Holder pursuant to the rescinded
Conversion Notice.
iii. Obligation
Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion
of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by
a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation
of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that
such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder.
In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may not refuse
conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation
of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining
conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation posts
a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject to the
injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the
proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation
shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails to deliver
to a Holder such certificate or certificates pursuant to Section 6(c)(i) on the second Trading Day after the Share Delivery Date
applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for
each $5,000 of Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on the
third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each
Trading Day after such second Trading Day after the Share Delivery Date until such certificates are delivered or Holder rescinds
such conversion. .
iv. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if the Corporation fails for any reason to deliver to a Holder the applicable certificate or certificates by the Share Delivery
Date pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to
such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Preferred Stock equal to the
number of shares of Preferred Stock submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver
to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its
delivery requirements under Section 6(c)(i). For example, if a Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with respect to which
the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was
a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder
$1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the
Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of the shares of Preferred Stock as required pursuant to the terms hereof.
v. Reservation
of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock and payment
of dividends on the Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of
shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking
into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Preferred Stock
and payment of dividends hereunder. The Corporation covenants that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly authorized, validly issued, fully paid and nonassessable.
vi. Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.
vii. Transfer
Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Preferred Stock shall
be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or
delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the
Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless
or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall
have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent
fees required for same-day processing of any Notice of Conversion.
d)
Beneficial Ownership Limitation. The Corporation shall not effect any
conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred Stock, to
the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder
(together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such
Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to
which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i)
conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its
Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of
the Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially
owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the
determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together
with any Affiliates) and of how many shares of Preferred Stock are convertible shall be in the sole discretion of such
Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether the
shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any
Affiliates) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time
it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this
paragraph and the Corporation shall have no obligation to verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 6(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated
in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the
Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written
notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon
the written or oral request of a Holder, the Corporation shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the
Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of Preferred Stock held by the applicable Holder. A Holder, upon not less than 61 days’ prior notice to the
Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its
Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 19.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this
Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase or
decrease will not be effective until the 61st day after such notice is delivered to the Corporation and shall only
apply to such Holder and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of Preferred Stock.
e) Mandatory
Conversion. Notwithstanding anything herein to the contrary, simultaneously with the consummation of a Qualified Public Offering,
each share of outstanding Preferred Stock, shall be converted into shares of Common Stock of the Company at a conversion price
per share of Preferred Stock equal to the lower of $7.50 or 85% of the public offering price of the Qualified Public Offering (“Mandatory
Conversion Price”). In addition, upon consummation of a Qualified Public Offering 30% (25% if no warrants are sold to
the public in the Qualified Public Offering) of the Stated Amount of the outstanding Preferred Stock together with any Make-Whole
Amount shall, at the Company’s option, in whole or in part, be paid in cash or in shares of common stock priced at the Mandatory
Conversion Price.
Section 7. Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common
Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion
of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number
of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the
Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section
7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent
Equity Sales. If, at any time while this Preferred Stock is outstanding, the Corporation or any Subsidiary, as applicable sells
or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any
sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price,
the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if
the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment
will be made under this Section 7(b) in respect of an Exempt Issuance. If the Corporation enters into a Variable Rate Transaction,
despite the prohibition set forth in the Purchase Agreement, the Corporation shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised. The Corporation
shall notify the Holders in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive
Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the Notice of
Conversion.
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred
Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder
shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Preferred Stock (without regard
to any limitations on Conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before
the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to
the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
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 Beneficial Ownership Limitation).
e) Fundamental
Transaction. If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one
or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly,
in one or more related transactions consummates a stock or share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other
Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock 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) (each a “Fundamental Transaction”), then,
upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without
regard to any limitation in Section 6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the
successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 6(d) on the conversion of this Preferred Stock). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation
shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary
to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall
file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent
with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration.
The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the
“Successor Entity”) to assume in writing all of the obligations of the Corporation under this Certificate of
Designation and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this
Section 7(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Preferred Stock,
deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Preferred Stock which is convertible for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable
upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this Preferred Stock) prior to
such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the
value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose
of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such 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 Certificate of Designation and the other Transaction Documents referring to the “Corporation”
shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of
the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Corporation herein.
f) Calculations.
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
g) Notice
to the Holders.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
ii. Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be
filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to be delivered
to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date
as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein
or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation
or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or any part hereof) during
the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as
may otherwise be expressly set forth herein.
iii. Additional
Notice Rights. The Corporation shall provide each Holder on the last Trading Day of each week, or if earlier, within two Trading
Days of the occurrence of any transaction or event that is subject to this clause, a notice in reasonable detail describing (A)
the issuance of any Indebtedness, as defined in the Purchase Agreement or (B) the payment of any dividend to or the exercise of
any right by any holder of any other series of the Company’s preferred stock, including without limitation the exercise of
any conversion right, whether such series of preferred stock is currently outstanding or is issued after the Original Issue Date
of the Preferred Stock.
Section 8. Redemption
for Cash The Corporation will have the right at any time upon 2 Trading Days’ prior written notice, in its sole and absolute
discretion, to redeem for cash all or any portion of the shares of Preferred Stock then outstanding by paying the Holders an amount
per share equal to 115% of Stated Value plus any accrued but unpaid dividends.
Section 9. Negative
Covenants. As long as any shares of Preferred Stock are outstanding, unless the holders of at least 67% in Stated Value of
the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and
shall not permit any of the Subsidiaries to, directly or indirectly:
a) amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;
b) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion Shares as permitted or required under the
Transaction Documents;
c) pay
cash dividends or distributions on Junior Securities of the Corporation;
d) enter
into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the
Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested
directors of the Corporation (even if less than a quorum otherwise required for board approval); or
e) enter
into any agreement with respect to any of the foregoing.
Section 10. [RESERVED]
Section 11. Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at the address set forth above Attention: Gerald Commissiong, facsimile number
(408) 852-4427, or such other facsimile number or address as the Corporation may specify for such purposes by notice to the Holders
delivered in accordance with this Section 11. Any and all notices or other communications or deliveries to be provided by the Corporation
hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Corporation, or if no
such facsimile number or address appears on the books of the Corporation, at the principal place of business of such Holder, as
set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the
obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest,
as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.
c) Lost
or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of
such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding
to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.
e) Waiver.
Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as
or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate
of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to
any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or
any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of
Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.
f) Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum
rate of interest permitted under applicable law.
g) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
h) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions hereof.
i) Status
of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement.
If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status
of authorized but unissued shares of preferred stock and shall no longer be designated as Series E 12% Convertible Preferred Stock.
*********************
RESOLVED, FURTHER,
that the Chairman, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and
they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations
in accordance with the foregoing resolution and the provisions of Nevada law.
IN WITNESS WHEREOF,
the undersigned have executed this Certificate this 9th day of July 2015.
/s/ Gerald E. Commissiong |
|
/s/ Marc E. Faerber |
Name: Gerald E. Commissiong |
|
Name: Marc E. Faerber |
Title: President and Chief Executive Officer |
|
Title: Secretary |
ANNEX A
NOTICE OF CONVERSION
(To
be Executed by the Registered Holder in order to Convert Shares of Preferred Stock)
The undersigned hereby elects to convert
the number of shares of Series E 12% Convertible Preferred Stock indicated below into shares of common stock, par value $0.001
per share (the “Common Stock”), of Amarantus BioScience Holdings, Inc., a Nevada corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be
charged to the Holders for any conversion, except for any such transfer taxes.
Conversion calculations:
Date to Effect Conversion: _____________________________________________
Number of shares of Preferred
Stock owned prior to Conversion: _______________
Number of shares of Preferred
Stock to be Converted: ________________________
Stated Value of shares of Preferred
Stock to be Converted: ____________________
Number of shares of Common Stock
to be Issued: ___________________________
Applicable Conversion Price:____________________________________________
Number of shares of Preferred
Stock subsequent to Conversion: ________________
Address for Delivery: ______________________
or
DWAC Instructions:
Broker no: _________
Account no: ___________
|
[HOLDER] |
|
|
|
|
By: |
|
|
|
Name: |
|
|
Title: |
Exhibit 3.1(b)
AMARANTUS BIOSCIENCE HOLDINGS, INC.
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATIONS OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES G PREFERRED STOCK
The undersigned, Gerald E. Commissiong
and Robert Farrell, hereby certify that:
1. The
undersigned are the Chief Executive Officer and Chief Financial Officer, respectively, of Amarantus BioScience Holdings, Inc.,
a Nevada corporation (the “Corporation”);
2. The
Corporation is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value, of which currently 250,000 shares are
designated as Series A, none of which are issued and outstanding, 3,000,000 shares are designated as Series B, none of which are
issued and outstanding, 750,000 shares are designated as Series C, 750,000 of which are issued and outstanding, 1,300 are designated
as Series D, 350 of which are issued and outstanding, 13,335 are designated as Series E, 8,822.22 of which are issued and outstanding;
and
3. The
following resolutions were duly adopted by the Board of Directors:
WHEREAS, the Certificate
of Incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, comprised of 10,000,000
shares, $0.001 par value per share (the “Preferred Stock”), issuable from time to time in one or more series;
WHEREAS, the Board
of Directors of the Corporation is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights
and terms of redemption and liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting
any Series and the designation thereof, of any of them;
WHEREAS, it is the
desire of the Board of Directors of the Corporation, pursuant to its authority as aforesaid and as set forth in this Amended and
Restated Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock, to designate the rights,
preferences, restrictions and other matters relating to the Series G Preferred Stock, which will consist of up to 10,000 shares
of the Preferred Stock which the Corporation has the authority to issue, as follows:
NOW, THEREFORE, BE
IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of Preferred Stock for cash or exchange
of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters
relating to such series of Preferred Stock as follows:
I. Terms
of Preferred Stock.
A. Designation
and Amount. A series of Preferred Stock is hereby designated as the Corporation’s Series G Preferred Stock, par value
of $0.001 per share (the “Series G Preferred Stock”), the number of shares of which so designated are 10,000
shares of Series G Preferred Stock; which Series G Preferred Stock will not be subject to increase without any consent of the holders
of the Series G Preferred Stock (each a “Holder” and collectively, the “Holders”) that may
be required by applicable law.
B. Ranking
and Voting.
1. Ranking.
The Series G Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank:
(a) senior to the Corporation’s Common Stock, $0.001 par value per share (“Common Stock”); (b) pari passu
with any other series of the Preferred Stock, as set forth in the Certificate of Designations of Preferences, Rights and Limitations
with respect to such Preferred Stock; and (c) junior to all existing and future indebtedness of the Corporation. Without the prior
written consent of the Holders of a majority of the outstanding shares of Series G Preferred Stock (voting separately as a single
class), the Corporation may not issue any additional shares of Series G Preferred Stock, or, excluding shares of Series E Preferred
Stock, any other Preferred Stock that is pari passu or senior to the Series G Preferred Stock with respect to any rights, until
6 months after the earlier of such date (i) a registration statement is effective and available for the resale of all Conversion
Shares underlying the outstanding shares of Series G Preferred Stock, or (ii) Securities Act Rule 144 is available for the immediate
unrestricted resale of all Conversion Shares underlying the outstanding shares of Series G Preferred Stock.
2. Voting.
Except as required by applicable law or as set forth herein, the holders of shares of Series G Preferred Stock will have no right
to vote on any matters, questions or proceedings of this Corporation including, without limitation, the election of directors.
C. Dividends.
1. Commencing
on the date of the issuance of any such shares of Series G Preferred Stock (each respectively an “Issuance Date”),
each outstanding share of Series G Preferred Stock will accrue cumulative dividends (“Dividends”), at a rate
equal to 8.25% per annum, subject to adjustment as provided in this Certificate of Designations (“Dividend Rate”),
of the Face Value. Dividends will be payable with respect to any shares of Series G Preferred Stock upon any of the following:
(a) upon redemption of such shares in accordance with Section I.F; (b) upon conversion of such shares in accordance with
Section I.G; and (c) when, as and if otherwise declared by the board of directors of the Corporation.
2. Dividends,
as well as any applicable Conversion Premium payable hereunder, will be paid: (a) in the Corporation’s sole and absolute
discretion, immediately in cash; or (b) to the extent not paid in cash within 3 Trading Days after the Notice Date for any reason
whatsoever, in shares of Common Stock valued at (i) if there is no Event of Default, (A) 80.0% of the average of the lowest 5 individual
daily volume weighted average prices during the applicable Measurement Period, which may be non-consecutive, less $0.75 per share
of Common Stock, not to exceed (B) 100% of the lowest sales price on the last day of such period less $0.75 per share of Common
Stock (ii) following any Event of Default, (A) 65.0% of the lowest daily volume weighted average price during any Measurement Period,
less $0.75 per share of Common Stock, not to exceed (B) 70.0% of the lowest sales price on the last day of any such period, less
$0.75 per share of Common Stock. All amounts that are required or permitted to be paid in cash pursuant to this Certificate of
Designations will be paid by wire transfer of immediately available funds to an account designated by Holder.
3. So
long as any shares of Series G Preferred Stock are outstanding, the Company will not repurchase shares of Common Stock other than
as payment of the exercise or conversion price of a convertible security or payment of withholding tax, and no dividends or other
distributions will be paid, declared or set apart with respect to any Common Stock, except for Purchase Rights.
D. Protective
Provision.
1. So
long as any shares of Series G Preferred Stock are outstanding, the Corporation will not, without the affirmative approval of the
Holders of a majority of the shares of the Series G Preferred Stock then outstanding (voting separately as one class), (i) alter
or change adversely the powers, preferences or rights given to the Series G Preferred Stock or alter or amend this Certificate
of Designations, (ii) authorize or create any class of stock ranking as to distribution of dividends senior to the Series G Preferred
Stock, (iii) amend its certificate of incorporation or other charter documents in breach of any of the provisions hereof, (iv)
increase the authorized number of shares of Series G Preferred Stock or (v) enter into any agreement with respect to the foregoing.
2. A
“Deemed Liquidation Event” will mean: (a) a merger or consolidation in which the Corporation is a constituent
party or a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant
to such merger or consolidation, except any such merger or consolidation involving the Corporation or a subsidiary in which the
shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent,
or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation,
at least a majority, by voting power, of the capital stock of the surviving or resulting corporation or if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent
corporation of such surviving or resulting corporation; or (b) the sale, lease, transfer, exclusive license or other disposition,
in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially
all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise)
of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken
as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition
is to a wholly owned subsidiary of the Corporation.
3. The
Corporation will not have the power to effect a Deemed Liquidation Event unless the agreement or plan of merger or consolidation
for such transaction provides that the consideration payable to the stockholders of the Corporation will be allocated among the
holders of capital stock of the Corporation in accordance with Section I.E.
E. Liquidation.
1. Upon
any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for
payment of debts and other liabilities of the Corporation, pari passu with any distribution or payment made to the holders of Preferred
Stock and Common Stock by reason of their ownership thereof, the Holders of Series G Preferred Stock will be entitled to be paid
out of the assets of the Corporation available for distribution to its stockholders an amount with respect to each share of Series
G Preferred Stock equal to $5,000.00 (“Face Value”), plus any accrued but unpaid Dividends thereon (collectively
with the Face Value, the “Liquidation Value”). If, upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the amounts payable with respect to the shares of Series G Preferred Stock are not paid in full,
the holders of shares of Series G Preferred Stock will share equally and ratably with the holders of shares of Preferred Stock
and Common Stock in any distribution of assets of the Corporation in proportion to the liquidation preference and an amount equal
to all accumulated and unpaid Dividends, if any, to which each such holder is entitled.
2. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation will be insufficient to make
payment in full to all Holders, then such assets will be distributed among the Holders at the time outstanding, ratably in proportion
to the full amounts to which they would otherwise be respectively entitled.
F. Redemption
for Cash.
1. Corporation’s
Redemption Option. Provided that no Event of Default has occurred, the Corporation will have the right at any time upon
3 Trading Days’ prior written notice, in its sole and absolute discretion, to redeem for cash all or any portion of the shares
of Series G Preferred Stock then outstanding. On the Dividend Maturity Date, the Corporation may redeem paying Holder an amount
per share equal to 100% of the Liquidation Value for the shares redeemed.
2. Early
Redemption.
a. Prior
to the Dividend Maturity Date, the Corporation may redeem outstanding Series G Preferred Stock by paying Holder an amount per share
(the “Early Redemption Price”) equal to the sum of the following: (i) 100% of the Face Value, plus (ii) the
Conversion Premium, minus (iii) any Dividends that have been paid, with respect to the shares redeemed.
b. After
receipt of approval to list the Common Stock on NASDAQ or NYSE and within 10 days prior to the effectiveness of the listing, the
Corporation may redeem outstanding Series G Preferred Stock by paying Holder an amount per share equal to 120% of the Face Value.
3. Credit
Risk Adjustment.
a. The
Dividend Rate will adjust downward by an amount equal to the Credit Spread Adjustment for each amount, if any, equal to the Adjustment
Factor that the Measuring Metric rises above the Maximum Triggering Level.
b. The
Dividend Rate will adjust upward by an amount equal to the Credit Spread Adjustment for each amount, if any, equal to the Adjustment
Factor that the Measuring Metric falls below the Minimum Triggering Level. In addition, the Dividend Rate will adjust upward by
10% upon any Event of Default.
c. The
adjusted Dividend Rate used for calculation of the Liquidation Value, Conversion Premium, Early Redemption Price or Dividend, as
applicable, will be determined based upon the volume weighted average price of the Common Stock for the Trading Day prior to the
Notice Date.
d. Notwithstanding
the foregoing, in no event will the Dividend Rate at any time be below 0 or above 24%.
4. Mandatory
Redemption. If the Corporation determines to liquidate, dissolve or wind-up its business and affairs, or effect any Deemed
Liquidation Event, the Corporation will, within three Trading Days of such determination and prior to effectuating any such action,
redeem the Series G Preferred Stock for cash, at the Early Redemption Price set forth in Section I.F.2 if the event is prior
to the Dividend Maturity Date, or at the Liquidation Value if the event is on or after the Dividend Maturity Date.
5. Mechanics
of Redemption. In order to redeem any of the Holders’ Series G Preferred Stock then outstanding, 3 Trading Days prior
to payment the Corporation must deliver written notice to each Holder setting forth (a) the number of shares of Series G Preferred
Stock that the Corporation is redeeming, (b) the applicable Dividend Rate, Liquidation Value and Early Redemption Price, and (c)
the calculation of the amount paid. Upon receipt of payment in cash, each Holder will promptly submit to the Corporation such Holder’s
Series G Preferred Stock certificates. For the avoidance of doubt, the delivery of such a notice shall not affect Holder’s
rights under Section I.G until after receipt of cash payment by Holder.
G. Conversion.
1. Mechanics
of Conversion.
a. One
or more shares of the Series G Preferred Stock may be converted, in part or in whole, into shares of Common Stock, at any time
or times after the Issuance Date, in the sole and absolute discretion of Holder or, subject to the terms and conditions hereof,
the Corporation; (i) if at the option of Holder, by delivery of one or more written notices to the Corporation or its transfer
agent (each, a “Holder Conversion Notice”), of the Holder’s election to convert any or all of its Series
G Preferred Stock; or (ii) if at the option of the Corporation, if the Equity Conditions are met, delivery of written notice to
Holder (each, a “Corporation Conversion Notice” and, with the Holder Conversion Notice, each a “Conversion
Notice”), of the Corporation’s election to convert the Series G Preferred Stock. Each Conversion Notice will set
forth the number of shares of Series G Preferred Stock being converted, the minimum number of Conversion Shares and the amount
of Dividends and any applicable Conversion Premium due as of the date of the Conversion Notice (the “Notice Date”),
and the calculation thereof.
b. Notwithstanding
Section I.G.1.c, if the Corporation pays in cash no later than close of the 3rd Trading Day after the Notice
Date, time being of the essence, the full amount of Dividends and Conversion Premium due as of the Notice Date, no further amount
will be due with respect to Dividends and Conversion Premium for the shares in the Conversion Notice.
c. As
soon as practicable, and in any event within 3 Trading Days after the Notice Date, time being of the essence, the Corporation will
do all of the following: (i) transmit the Delivery Notice by facsimile or electronic mail to the Holder, and to the Corporation’s
transfer agent (the “Transfer Agent”) with instructions to comply with the Delivery Notice; (ii) either (A)
if the Corporation is approved through The Depository Trust Corporation (“DTC”), authorize and instruct the
credit by the Transfer Agent of such aggregate number of Conversion Shares to which Holder is then entitled, as set forth in the
Delivery Notice, to Holder’s or its designee’s balance account with the DTC Fast Automated Securities Transfer (FAST)
Program, through its Deposit/Withdrawal at Custodian (DWAC) system, or (B) only if the Corporation is not approved through DTC,
issue and surrender to a common carrier for overnight delivery to the address as specified in the Delivery Notice a certificate
bearing no restrictive legend, registered in the name of Holder or its designee, for the number of Conversion Shares to which Holder
is then entitled, as set forth in the Delivery Notice; and (iii) at all times thereafter diligently take or cause to be taken all
actions reasonably necessary to cause the Conversion Shares to be issued as soon as practicable.
d. If
during the Measuring Period the Holder is entitled to receive additional Conversion Shares with regard to a Conversion Notice,
Holder may at any time deliver one or more additional written notices to the Corporation or its transfer agent (each, an “Additional
Notice” and with the Conversion Notice, each a “Delivery Notice”) setting forth the additional number
of Conversion Shares to be delivered, and the calculation thereof.
e. If
the Corporation for any reason does not issue or cause to be issued to the Holder within 3 Trading Days after the date of a Delivery
Notice, the number of Conversion Shares to which the Holder is entitled as stated in the Delivery Notice, then, in addition to
all other remedies available to the Holder, the Corporation will pay in cash to the Holder on each day after such 3rd Trading Day
that the issuance of such Conversion Shares is not timely effected an amount equal to 2% of the product of (i) the aggregate number
of Conversion Shares not issued to the Holder on a timely basis and to which the Holder is entitled and (ii) the highest Closing
Price of the Common Stock between the date on which the Corporation should have issued such shares to the Holder and the actual
date of receipt of Conversion Shares by Holder.
f. Notwithstanding
any other provision: all of the requirements of Section I.F and this Section I.G are each independent covenants;
the Corporation’s obligations to issue and deliver Conversion Shares upon any Conversion Notice are absolute, unconditional
and irrevocable; any breach or alleged breach of any representation or agreement, or any violation or alleged violation of any
law or regulation, by any party or any other person will not excuse full and timely performance of any of the Corporation’s
obligations under these sections; and under no circumstances may the Corporation seek or obtain any temporary, interim or preliminary
injunctive or equitable relief to prevent or interfere with any issuance of Conversion Shares to Holder.
g. No
fractional shares of Common Stock are to be issued upon conversion of Series G Preferred Stock, but rather the Corporation will
issue to Holder scrip or warrants registered on the books of the Corporation (certificated or uncertificated) which will entitle
Holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. The Holder will not
be required to deliver the original certificates for the Series G Preferred Stock in order to effect a conversion hereunder. The
Corporation will pay any and all taxes which may be payable with respect to the issuance and delivery of any Conversion Shares.
2. Holder
Conversion. In the event of a conversion of any Series G Preferred Stock pursuant to a Holder Conversion Notice, the Corporation
will (a) satisfy the payment of Dividends and Conversion Premium as provided in Section I.C.2, and (b) issue to the Holder
of such Series G Preferred Stock a number of Conversion Shares equal to (i) the Face Value multiplied by (ii) the number of such
Series G Preferred Stock subject to the Holder Conversion Notice divided by (iii) the applicable Conversion Price with respect
to such Series G Preferred Stock; all in accordance with the procedures set forth in Section I.G.1.
3. Corporation
Conversion. The Corporation will have the right to send the Holder a Corporation Conversion Notice at any time in its sole
and absolute discretion, if the Equity Conditions are met as of the time such Corporation Conversion Notice is given. Upon any
conversion of any Series G Preferred Stock pursuant to a Corporation Conversion Notice, the Corporation will on the date of such
notice (a) satisfy the payment of Dividends and Conversion Premium as provided in Section I.C.2, and (b) issue to the Holder
of such Series G Preferred Stock a number of Conversion Shares equal to (i) the Face Value multiplied by (ii) the number of such
Series G Preferred Stock subject to the Holder Conversion Notice divided by (iii) the applicable Conversion Price with respect
to such Series G Preferred Stock; all in accordance with the procedures set forth in Section I.G.1.
4. Stock
Splits. If the Corporation at any time on or after the filing of this Certificate of Designations subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the applicable Conversion Price, Adjustment Factor, Maximum Triggering Level, Minimum Triggering Level, and other
share based metrics in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of
Common Stock issuable will be proportionately increased. If the Corporation at any time on or after such Issuance Date combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the applicable Conversion Price, Adjustment Factor, Maximum Triggering Level, Minimum Triggering Level, and other
share based metrics in effect immediately prior to such combination will be proportionately increased and the number of Conversion
Shares will be proportionately decreased. Any adjustment under this Section will become effective at the close of business on the
date the subdivision or combination becomes effective.
5. Rights.
In addition to any adjustments pursuant to Section I.G.4, if at any time the Corporation grants, issues or sells any options,
convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which Holder could have acquired if Holder had held the number
of shares of Common Stock acquirable upon conversion of all Preferred Stock held by Holder immediately before the date on which
a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
6. Definitions.
The following terms will have the following meanings:
a. “Adjustment
Factor” means $0.375 per share of Common Stock.
b. “Closing
Price” means, for any security as of any date, the last closing bid price for such security on the Trading Market, or,
if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last
bid price of such security prior to 4:00 p.m., Eastern time, or, if the Trading Market is not the principal securities exchange
or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading
market where such security is listed or traded, or if the foregoing do not apply, the last closing bid price of such security in
the over-the-counter market on the electronic bulletin board for such security, or, if no closing bid price is reported for such
security, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by
Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
c. “Conversion
Price” means a price per share of Common Stock equal to $9.00 per share of Common Stock, subject to adjustment as otherwise
provided herein.
d. “Conversion
Shares” means all shares of Common Stock that are required to be or may be issued upon conversion of Series G Preferred
Stock.
e. “Credit
Spread Adjustment” means 150 basis points.
f. “Dividend
Maturity Date” means the 6-year anniversary of the Issuance Date.
g. “Conversion
Premium” for each share of Series G Preferred Stock means the Face Value, multiplied by the product of (i) the applicable
Dividend Rate, and (ii) the number of whole years between the Issuance Date and the Dividend Maturity Date.
h. “Equity
Conditions” means on each day during the Measuring Period, (i) the Common Stock is not under chill or freeze from DTC,
the Common Stock is designated for trading on the OTCQB, NASDAQ or NYSE and shall not have been suspended from trading on such
market, and delisting or suspension by the Trading Market has not been threatened or pending, either in writing by such market
or because Company has fallen below the then effective minimum listing maintenance requirements of such market; (ii) the Corporation
has delivered Conversion Shares upon all conversions or redemptions of the Series G Preferred Stock in accordance with their terms
to the Holder on a timely basis; (iii) the Corporation will have no knowledge of any fact that would cause both of the following
(A) a registration statement not to be effective and available for the resale of all Conversion Shares, and (B) Section 3(a)(9)
under the Securities Act of 1933, as amended, not to be available for the issuance of all Conversion Shares, or Securities Act
Rule 144 not to be available for the resale of all the Conversion Shares underlying the Series G Preferred Stock without restriction;
(iv) there has been a minimum of $5 million, or 5 times the Face Value of Preferred Share being converted, whichever is lower;
in aggregate trading volume in the prior 20 Trading Days; (v) all shares of Common Stock to which Holder is entitled have been
timely received into Holder’s designated account in electronic form fully cleared for trading; (vi) the Corporation otherwise
shall have been in compliance with and shall not have breached any provision, covenant, representation or warranty of any Transaction
Document; and (vii) no Event of Default shall have occurred.
i. “Measuring
Metric” means the volume weighted average price of the Common Stock on any Trading Day following the Issuance Date of
the Series G Preferred Stock.
j. “Measuring
Period” means the period beginning on the Issuance Date and ending 3 Trading Days after all applicable Conversion Shares
have actually been received into Holder’s designated brokerage account in electronic form and fully cleared for trading;
provided that for each day during the Measurement Period on which less than all of the conditions set forth in Section I.G.6.h
exist, 1 Trading Day will be added to what otherwise would have been the end of the Measurement Period.
k. “Maximum
Triggering Level” means $12.00 per share of Common Stock.
l. “Minimum
Triggering Level” means $6.75 per share of Common Stock.
m. “Stock
Purchase Agreement” means the Stock Purchase Agreement or other agreement pursuant to which any share of Series G Preferred
Stock is issued, including all exhibits thereto and all related Transaction Documents as defined therein.
n. “Trading
Day” means any day on which the Common Stock is traded on the Trading Market.
o. “Trading
Market” means or whatever is at the time the principal trading exchange or market for the Common Stock. All Trading Market
data will be measured as provided by the appropriate function of the Bloomberg Professional service of Bloomberg Financial Markets
or its successor performing similar functions.
7. Issuance
Limitation. Notwithstanding any other provision, at no time may the Corporation issue shares of Common Stock to Holder
which, when aggregated with all other shares of Common Stock then deemed beneficially owned by Holder, would result in Holder owning
more than 4.99% of all Common Stock outstanding immediately after giving effect to such issuance, as determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder; provided, however, that Holder may increase
such amount to 9.99% upon not less than 61 days’ prior notice to the Corporation. No provision of this paragraph may be waived
by Holder or the Corporation.
8. Conversion
at Maturity. On the Dividend Maturity Date, all remaining outstanding Series G Preferred Stock will automatically be converted
into shares of Common Stock.
H. Events
of Default. Any occurrence of any one or more of the following shall constitute an “Event of Default”:
1. Holder
does not timely receive Conversion Shares for any reason whatsoever following a Conversion Notice, including without limitation
the issuance of restricted shares if Holder provides a legal opinion that shares may be issued without restrictive legend;
2. Any
breach or failure to perform any covenant or provision of this Certificate of Designations, the Stock Purchase Agreement, or any
Transaction Document;
3. Any
representation or warranty made in the Stock Purchase Agreement or any Transaction Document shall be untrue or incorrect in any
respect as of the date when made or deemed made;
4. The
occurrence of any default or event of default under any material agreement, lease, document or instrument to which the Corporation
or any subsidiary is obligated, including without limitation of an aggregate of at least $100,000 of indebtedness;
5. Any
Registration Statement required pursuant to the Stock Purchase Agreement is not timely filed on the requisite form for any reason;
6. While
any Registration Statement is required to be maintained effective, the effectiveness of the Registration Statement lapses for any
reason, including, without limitation, the issuance of a stop order, or the Registration Statement, or the prospectus contained
therein, is unavailable to Holder sale of all Conversion Shares for any 3 or more Trading Days, which may be non-consecutive;
7. The
suspension from trading or the failure of the Common Stock to be trading or listed on the OTCQB, OTCQX, NASDAQ or NYSE stock market;
8.
The Corporation’s notice, written or oral, to Holder, including without limitation, by way of public announcement or through
any of its agents, of its intention not to comply, as required, with a Conversion Notice at any time, including without limitation
any objection or instruction to its transfer agent not to comply with any notice from Holder;
9. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Corporation or any subsidiary and, if instituted against the Corporation or any subsidiary by a third party, an order
for relief is entered or the proceedings are not be dismissed within 30 days of their initiation;
10. The
appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, or other similar official of the Corporation
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
Corporation or any Subsidiary in furtherance of any such action or the taking of any action by any person to commence a foreclosure
sale or any other similar action under any applicable law;
11. A
judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Corporation or any of
its subsidiaries and are not satisfied upon entry;
12. Except
for its quarterly report on Form 10-Q for the quarter ended March 31, 2015, which will be filed within the applicable extension
period, the Corporation does not for any reason timely file when first due all reports, schedules, forms, proxy statements, statements
and other documents required to be filed by it pursuant to the reporting requirements of the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder;
13. Any
regulatory, administrative or enforcement proceeding is initiated against Corporation or any subsidiary by any governmental agency;
or
14. Any
provision of the Stock Purchase Agreement or any Transaction Document shall at any time for any reason, other than pursuant to
the express terms thereof, cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability
thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Corporation or any subsidiary or any
governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or
the Corporation or any subsidiary denies that it has any liability or obligation purported to be created under any Transaction
Document.
I. Stock
Register. The Corporation will keep at its principal office, or at the offices of the transfer agent, a register of the
Series G Preferred Stock, which will be prima facie indicia of ownership of all outstanding shares of Series G Preferred Stock.
Upon the surrender of any certificate representing Series G Preferred Stock at such place, the Corporation, at the request of the
record Holder of such certificate, will execute and deliver (at the Corporation’s expense) a new certificate or certificates
in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate. Each such new
certificate will be registered in such name and will represent such number of shares as is requested by the Holder of the surrendered
certificate and will be substantially identical in form to the surrendered certificate.
II. Miscellaneous.
A. Notices.
Any and all notices to the Corporation will be addressed to the Corporation’s Chief Executive Officer at the Corporation’s
principal place of business on file with the Secretary of State of the State of Nevada. Any and all notices or other communications
or deliveries to be provided by the Corporation to any Holder hereunder will be in writing and delivered personally, by electronic
mail or facsimile, sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile telephone
number or address of such Holder appearing on the books of the Corporation, or if no such facsimile telephone number or address
appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder will be deemed
given and effective on the earliest of (1) the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Section II.A prior to 5:30 p.m. Eastern time, (2) the date after the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in
this section later than 5:30 p.m. but prior to 11:59 p.m. Eastern time on such date, (3) the second business day following the
date of mailing, if sent by nationally recognized overnight courier service, or (4) upon actual receipt by the party to whom such
notice is required to be given.
B. Lost
or Mutilated Preferred Stock Certificate. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit
of the registered Holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series G Preferred Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the Holder is a financial institution or other institutional investor
its own agreement will be satisfactory) or in the case of any such mutilation upon surrender of such certificate, the Corporation
will, at its expense, execute and deliver in lieu of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
C. Headings.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designations and will not
be deemed to limit or affect any of the provisions hereof.
RESOLVED, FURTHER,
that the chairman, chief executive officer, chief financial officer, president or any vice-president, and the secretary or any
assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file a Designation of Preferences,
Rights and Limitations of Series G Preferred Stock in accordance with the foregoing resolution and the provisions of Nevada law.
IN WITNESS WHEREOF,
the undersigned have executed this Certificate this 10th day of June 2015.
Signed: |
/s/ Gerald E. Commissiong |
|
Name: |
Gerald E. Commissiong |
|
Title: |
Chief Executive Officer |
|
|
|
|
Signed: |
/s/ Robert Farrell |
|
Name: |
Robert Farrell |
|
Title: |
Chief Financial Officer |
|
Exhibit 5.1
July
10, 2015
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Amarantus Bioscience Holdings, Inc.,
Form S-3 Registration Statement
Ladies and Gentlemen:
We have acted as special counsel for Amarantus
Bioscience Holdings, Inc., a Nevada corporation (the “Company”), in connection with the preparation and filing
of a Registration Statement on Form S-3 (File No. 333-203845) (the “Registration Statement”) with the Securities
and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities
Act”), and the rules and regulations promulgated thereunder, and declared effective by the Commission on May 22, 2015,
the prospectus included therein (the “Prospectus”), and Amendment No. 1 dated July 10, 2015 to the prospectus
supplement dated July 9, 2015 (the “Prospectus Supplement), filed with the Commission pursuant to Rule 424(b) of the
rules and regulations of the Securities Act.
The
Prospectus Supplement pertains to the offer and sale by the Company pursuant to an amended and restated stock purchase agreement
dated July 9, 2015 (“SPA”) of 535 shares of Series G Preferred Stock (the
“Series G Shares”) and up to 297,322 shares of common stock issuable upon conversion of 535 shares of Series G Preferred
Stock and up to 3,000,000 shares of common stock that may be issued as a conversion premium, or may be issued, at the Company’s
sole and absolute discretion, in payment of dividends on such shares of Series G Preferred Stock (the “Common Stock Share”
and together with the Series G Shares, the “Shares”).
We understand that the Shares are to be
sold, as described in the Registration Statement, the Prospectus and the Prospectus Supplement, pursuant to the SPA filed as Exhibit
10.1 to the Current Report on Form 8-K to which this opinion is attached as Exhibit 5.1.
In connection with this opinion, we have
examined the Registration Statement, the Prospectus and the Prospectus Supplement. We also have examined such corporate
records, certificates and other documents and such questions of law as we have considered necessary or appropriate for the purpose
of this opinion. We have assumed: (A) the genuineness and authenticity of all documents submitted to us as originals and (B) the
conformity to originals of all documents submitted to us as copies thereof. As to certain factual matters, we have relied
upon certificates of officers of the Company and have not sought independently to verify such matters.
Without limiting any of the other limitations,
exceptions and qualifications stated elsewhere herein, we express no opinion with regard to the applicability or effect of the
laws of any jurisdiction other than the corporate laws of the State of Nevada (based solely on our review of a standard compilation
thereof) as in effect on the date hereof. This opinion letter deals only with the specified legal issues expressly addressed herein,
and you should not infer any opinion that is not explicitly stated herein from any matter address in this opinion letter.
Based on the foregoing, and subject to
the assumptions, limitations and qualifications set forth herein, we are of the opinion that the issuance and sale of the
Shares have been duly authorized and, when issued and sold in the manner described in the Registration Statement, the Prospectus
and the Prospectus Supplement and in accordance with the terms and conditions of the SPA, the Shares will be validly issued, fully
paid and non-assessable;
We hereby consent to the inclusion of this
opinion as an exhibit to the Registration Statement and to the references to our firm therein and in the Prospectus and the Prospectus
Supplement under the caption “Legal Matters.” In giving our consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
Very truly yours,
/s/ Sichenzia Ross Friedman Ference
LLP
Exhibit 10.1
AMENDED AND RESTATED STOCK PURCHASE
AGREEMENT
This Amended and Restated
Stock Purchase Agreement (“Agreement”) is made and entered into on July 9, 2015 (“Effective Date”),
by and between Amarantus BioScience Holdings, Inc., a Nevada corporation (“Company”),
and _________ (“Investor”).
Recitals
A. The
parties desire that, upon the terms and subject to the conditions herein, Investor will purchase $2 Million in shares of redeemable
Series G Preferred Stock of the Company, which is convertible into Common Stock at $9.00 per share;
B. The
offer and sale of the Preferred Shares provided for herein are being made pursuant to an effective registration statement under
the Act, File No. 333-203845 (the “Registration Statement”); and
C. Company
and Investor previously entered into a Stock Purchase Agreement dated June 23, 2015, which the parties desire to amend, restate
and replace in its entirety by this Agreement.
Agreement
In consideration of the
foregoing, the receipt and adequacy of which are hereby acknowledged, Company and Investor agree as follows:
I. Definitions.
This Agreement amends and restates the Stock Purchase Agreement between the parties dated June 23, 2015. In addition to the terms
defined elsewhere in this Agreement and the Transaction Documents, capitalized terms that are not otherwise defined have the meanings
set forth in the Glossary of Defined Terms attached hereto as Exhibit 1.
II. Purchase
and Sale.
A. Purchase
Amount. Subject to the terms and conditions herein and the satisfaction of the conditions
to Closing set forth below, Investor hereby irrevocably agrees to purchase 435 Preferred Shares of Company at $5,000.00 per share
with an 8.0% original issue discount for the sum of $2,000,000.00 (“Purchase Amount”)
in cash.
B. Deliveries.
The following documents will be fully executed and delivered at the Closing:
1. Amended
and Restated Certificate of Designations (“Certificate of Designations”), in the form attached hereto as Exhibit
2, as filed with and accepted by the Secretary of State of Company’s state of incorporation;
2. Transfer
Agent Instructions, in the form attached hereto as Exhibit 3;
3. Legal
Opinion, in the form attached hereto as Exhibit 4;
4. Officer’s
Certificate, in the form attached hereto as Exhibit 5;
5. Secretary’s
Certificate, in the form attached hereto as Exhibit 6; and
6. Stock
certificate for 535 Preferred Shares in the name of Investor.
C. Closing
Conditions. The consummation of the transactions contemplated by this Agreement (“Closing”)
is subject to the satisfaction of each of the following conditions:
1. All
documents, instruments and other writings required to be delivered by Company to Investor pursuant to any provision of this Agreement
or in order to implement and effect the transactions contemplated herein have been fully executed and delivered, including without
limitation those enumerated in Section II.B above;
2. The
Common Stock is listed for and currently trading on the same or higher Trading Market and, subject to Section IV.L below,
Company is in compliance with all requirements to maintain listing on the Trading Market, and there
is no notice of any suspension or delisting with respect to the trading of the shares of Common Stock on such
Trading Market;
3. The
representations and warranties of Company and Investor set forth in this Agreement are true and correct in all material respects
as if made on such date;
4. No
material breach or default has occurred under any Transaction Document or any other agreement between Company and Investor;
5. Company
has the number of duly authorized shares of Common Stock reserved for issuance
as required pursuant to the terms of this Agreement;
6. There
is not then in effect any law, rule or regulation prohibiting or restricting the transactions contemplated in any Transaction
Document, or requiring any consent or approval which will not have been obtained, nor is there any pending or threatened proceeding
or investigation which may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this
Agreement; no statute, rule, regulation, executive order, decree, ruling or injunction will have been enacted, entered, promulgated
or adopted by any court or governmental authority of competent jurisdiction that prohibits the transactions contemplated by this
Agreement, and no actions, suits or proceedings will be in progress, pending or, to Company’s knowledge threatened, by any
person other than Investor or any Affiliate of Investor, that seek to enjoin or prohibit the transactions contemplated by this
Agreement;
7. Any
rights of first refusal, preemptive rights, rights of participation, or any similar right to participate in the transactions contemplated
by this Agreement have been waived in writing; and
8. The
Registration Statement is current and effective, and a Prospectus Supplement with regard to the offering and sale of all Shares
pursuant to this Agreement has been filed with the Commission.
D. Closing.
Immediately when all conditions set forth in Section II.C have been fully satisfied, Company will issue and sell to
Investor and Investor will purchase 435 Preferred Shares by payment to Company of $2,000,000.00 in cash, by wire transfer of immediately
available funds to an account designated by Company, and receive an additional 100 Preferred Shares as a fee for entering into
this Agreement.
III. Representations
and Warranties.
A. Representations
Regarding Transaction. Except as set forth under the corresponding section of the Disclosure
Schedules, if any, Company hereby represents and warrants to, and as applicable covenants with, Investor as of the Closing:
1. Organization
and Qualification. Company and each Subsidiary is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, as applicable, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither Company
nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents, except as would not reasonably be expected to result in a Material Adverse
Effect. Each of Company and each Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected
to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing
or seeking to revoke, limit or curtail such power and authority or qualification.
2. Authorization;
Enforcement. Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder or thereunder. The execution
and delivery of each of the Transaction Documents by Company and the consummation by it of the transactions contemplated hereby
or thereby have been duly authorized by all necessary action on the part of Company and no further consent or action is required
by Company. Each of the Transaction Documents has been, or upon delivery will be, duly executed by Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding obligation of Company, enforceable against Company
in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) insofar as indemnification
and contribution provisions may be limited by applicable law.
3. No
Conflicts. The execution, delivery and performance of the Transaction Documents by Company, the issuance and sale of the
Shares and the consummation by Company of the other transactions contemplated thereby do not and will not (a) conflict with or
violate any provision of Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational
or charter documents, (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien upon any of the properties or assets of Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing Company or Subsidiary debt or otherwise) or other
understanding to which Company or any Subsidiary is a party or by which any property or asset of Company or any Subsidiary is
bound or affected, (c) conflict with or result in a violation of any material law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which Company or a Subsidiary is subject (including U.S.
federal and state securities laws and regulations), or by which any property or asset of Company or a Subsidiary is bound or affected,
or (d) conflict with or violate the terms of any material agreement by which Company or any Subsidiary is bound or to which any
property or asset of Company or any Subsidiary is bound or affected; except in the case of each of clauses (b), (c) and (d), such
as would not reasonably be expected to result in a Material Adverse Effect.
4. Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of Company, threatened against or affecting Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”), which would reasonably be expected to adversely affect or challenge
the legality, validity or enforceability of any of the Transaction Documents or the issuance of any Shares hereunder. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by Company or any
Subsidiary under the Exchange Act or the Act.
5. Filings,
Consents and Approvals. Neither Company nor any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by Company of the Transaction Documents,
other than required federal and state securities filings and such filings and approvals as are required to be made or obtained
under the applicable Trading Market rules in connection with the transactions contemplated hereby, each of which has been, or
if not yet required to be filed will be, timely filed.
6. Issuance
of Shares. The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. Company has reserved and
will continue to reserve from its duly authorized capital stock sufficient shares of its Common Stock for issuance pursuant to
the Transaction Documents.
7. Disclosure;
Non-Public Information. Company will timely file a current report on Form 8-K prior to market open on the Trading Day
following the Effective Date describing the material terms and conditions of this Agreement. Notwithstanding any other provision,
except with respect to information that must be, and only to the extent that it actually is, timely publicly disclosed by Company
pursuant to the foregoing sentence, neither Company nor any other Person acting on its behalf has provided Investor or its representatives,
agents or attorneys with any information that constitutes or might constitute material, non-public information, including without
limitation this Agreement and the Exhibits and Disclosure Schedules hereto. No information contained in the Disclosure Schedules
constitutes material non-public information. There is no adverse material information regarding Company that has not been publicly
disclosed prior to the Effective Date. Company understands and confirms that Investor will rely on the foregoing representations
and covenants in effecting transactions in securities of Company. All disclosure provided to Investor regarding Company, its business
and the transactions contemplated hereby, including without limitation the Prospectus Supplement and Disclosure Schedules, furnished
by or on behalf of Company with respect to the representations and warranties made herein are true and correct in all material
respects and do 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.
8. No
Integrated Offering. Neither 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 to be integrated with prior offerings by Company that cause a violation of the Act or any applicable
stockholder approval provisions, including, without limitation, under the rules and regulations of the Trading Market.
9. Financial
Condition. Based on the financial condition of Company and its projected operating and capital requirements, effective
as of the Effective Date, the Company will require additional capital to carry on its business as now conducted and as proposed
to be conducted. Company does not intend to incur debts beyond its ability to pay such debts as they mature, taking into account
the timing and amounts of cash to be payable on or in respect of its debt. The Public Reports set forth as of the dates thereof
all outstanding secured and unsecured Indebtedness of Company or any Subsidiary, or for which Company or any Subsidiary has commitments,
and any default with respect to any Indebtedness.
10. Section
5 Compliance. No representation or warranty or other statement made by Company in the Transaction Documents contains any
untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was
made, not misleading. Company is not aware of any facts or circumstances that would cause the transactions contemplated by the
Transaction Documents, when consummated, to violate Section 5 of the Act or other federal or state securities laws or regulations.
11. Investment
Company. Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Preferred Shares,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. Company will conduct its business in a manner so that it will not become subject to the Investment Company Act.
12. No
Bad Actor Disqualification. Neither Company, any predecessor of Company, any affiliate of Company, any director, executive
officer, other officer of Company participating in the offering, or any beneficial owner of 20% or more of Company’s outstanding
voting equity securities is subject to any bad actor disqualification as provided in Rule 506(d) of Regulation D.
13. Offshore
Transaction. Company has not, and will not, engage in any directed selling efforts, as defined in Regulation S, in the
United States in respect of any of the Preferred Shares. Company is offering and selling the Preferred Shares only in offshore
transactions, in accordance with Regulation S. Company and its Affiliates have complied, and will comply, with the offering restrictions
requirements of Regulation S. Company has only offered, and will only offer, the Preferred Shares to Investor.
14. Acknowledgments
Regarding Investor. Company’s decision to enter into this Agreement has been based solely on the independent evaluation
of Company and its representatives, and Company acknowledges and agrees that:
a. Investor
is not, has never been, and as a result of the transactions contemplated by the Transaction Documents will not become an officer,
director, insider, control person, to Company’s knowledge 10% or greater shareholder, or otherwise an affiliate of Company
as defined under Rule 12b-2 of the Exchange Act;
b. Investor
does not make or has not made any representations, warranties or agreements with respect to the Shares, this Agreement, or the
transactions contemplated hereby other than those specifically set forth in Section III.C below;
c. The
conversion of Preferred Shares and resale of Conversion Shares will result in dilution, which may be substantial; the number of
Conversion Shares will increase in certain circumstances; and Company’s obligation to issue and deliver Conversion Shares
in accordance with this Agreement and the Certificate of Designations is absolute and unconditional regardless of the dilutive
effect that such issuances may have; and
d. Investor
is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated
hereby; neither Investor nor any of its Affiliates, agents or representatives has or is acting as a legal, financial, investment,
accounting, tax or other advisor to Company, or fiduciary of Company, or in any similar capacity; neither Investor nor any of
its Affiliates, agents or representatives has provided any legal, financial, investment, accounting, tax or other advice to Company;
any statement made in connection with this Agreement or the transactions contemplated hereby is not advice or a recommendation,
and is merely incidental to Investor’s purchase of the Shares.
15. Registration
Statement. The Registration Statement is current and effective, and a Prospectus Supplement with regard to the offering
and sale of all Shares pursuant to this Agreement has been filed with the Commission.
B. Representations
Regarding Company. Except as set forth in any current Public Reports and attached exhibits,
or under the corresponding section of the Disclosure Schedules, if any, Company hereby represents and warrants to, and as applicable
covenants with, Investor as of the Closing:
1. Capitalization.
The capitalization of the Company as of the Effective Date is as described in the Public Reports. No Person has any right
of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated
by the Transaction Documents which has not been waived or satisfied. Except as a result of the purchase and sale of the Shares,
there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which Company or any Subsidiary
is or may become bound to issue additional shares of Common Stock or securities convertible into or exercisable for shares of
Common Stock. The issuance and sale of the Shares will not obligate Company to issue shares of Common Stock or other securities
to any Person, other than Investor, and will not result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange, or reset price under such securities. All of the outstanding shares of capital stock of Company are validly
issued, fully paid and nonassessable, have been issued in material compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any stockholder, the Board
of Directors of Company or others is required for the issuance and sale of the Shares. There are no stockholders agreements, voting
agreements or other similar agreements with respect to Company’s capital stock to which Company is a party or, to the knowledge
of Company, between or among any of Company’s stockholders.
2. Subsidiaries.
All of the direct and indirect subsidiaries of Company are set forth in the Public Reports or the corresponding section
of the Disclosure Schedules. Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary, and all of such directly or indirectly owned capital stock
or other equity interests are owned free and clear of any Liens. All the issued
and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive and similar rights to subscribe for or purchase securities.
3. Public
Reports; Financial Statements. Company has filed all required Public
Reports for the one year preceding the Effective Date. As of their respective
dates or as subsequently amended, the Public Reports complied in all material respects with the requirements of the Act and the
Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the Public Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
The financial statements of Company included in the Public Reports, as amended, comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of Company and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
4. Material
Changes. Except as specifically disclosed in the current Public Reports, since the end of the most recent year for which
an Annual Report on Form 10-K has been filed with the Commission, (a) there has been no event, occurrence or development that
has had, or that would reasonably be expected to result in, a Material Adverse Effect, (b) Company has not incurred any liabilities
(contingent or otherwise) other than (i) trade payables and accrued expenses incurred in the ordinary course of business consistent
with past practice, and (ii) liabilities not required to be reflected in Company’s financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (c) Company has not altered its method of accounting, (d) 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 (e) Company has not issued any equity securities
to any officer, director or Affiliate, except pursuant to existing Company equity incentive plans. Company does not have pending
before the Commission any request for confidential treatment of information.
5. Litigation.
There is no Action pending or, to the knowledge of the Company, threatened,
which would reasonably be expected to result in a Material Adverse Effect. Neither Company nor any Subsidiary, nor to
the knowledge of Company any director or officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of Company, there is not pending or contemplated, any investigation by the Commission involving Company or any
current or former director or officer of Company.
6. No
Bankruptcy. There has not been any petition or application filed, or any judicial or administrative proceeding commenced
which has not been discharged, by or against the Company or any Subsidiary or with respect to any of the properties or assets
of Company or any Subsidiary under any applicable law relating to bankruptcy, insolvency, reorganization, fraudulent transfer,
compromise, arrangement of debt, creditors’ rights and no assignment has been made by the Company or any Subsidiary for
the benefit of creditors.
7. Labor
Relations. No material labor dispute exists or, to the knowledge of
Company, is imminent with respect to any of the employees of Company, which would reasonably be expected to result in a Material
Adverse Effect.
8. Compliance.
Neither Company nor any Subsidiary (a) is in material default under or in
material violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result
in a default by Company or any Subsidiary under), nor has Company or any Subsidiary received notice of a claim that it is in material
default under or that it is in material violation of, any indenture, loan or credit agreement or any other similar agreement or
instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has
been waived), (b) is in violation of any order of any court, arbitrator or governmental body, or (c) is or has been in violation
of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and
local laws applicable to its business, except in each case as would not reasonably be expected to have a Material Adverse Effect.
9. Regulatory
Permits. Company and each Subsidiary possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the Public Reports,
except where the failure to possess such permits would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material Permit.
10. Title
to Assets. Company and each Subsidiary have good and marketable title in fee
simple to all real property owned by them that is material to the business of Company and each Subsidiary and good and
marketable title in all personal property owned by them that is material to the business of Company and each Subsidiary, in each
case free and clear of all Liens, except for Liens that do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by Company and each Subsidiary and Liens for the payment
of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities
held under lease by Company and each Subsidiary are held by them under valid, subsisting and enforceable leases of which Company
and each Subsidiary are in compliance.
11. Patents
and Trademarks. Company and each Subsidiary have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with their respective businesses as described in the
Public Reports and which the failure to so have would have a Material Adverse Effect (collectively, “Intellectual Property
Rights”). Neither Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used
by Company or any Subsidiary violates or infringes
upon the rights of any Person. To the knowledge of Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual Property Rights of Company or each Subsidiary.
12. Insurance.
Except as set forth in the Disclosure Schedules, the Company and each Subsidiary are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which Company
and each Subsidiary are engaged, including but not limited to directors and officers insurance coverage at least equal to the
Purchase Amount. To Company’s knowledge, such insurance contracts and policies are accurate and complete in all material
respects. Neither Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue
its business without an increase in cost that would constitute a Material Adverse Effect.
13. Transactions
with Affiliates and Employees. Except as set forth in the Public Reports, none of the officers or directors of Company
and, to the knowledge of Company, none of the employees of Company is presently a party to any transaction with Company or any
Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case
in excess of $120,000 other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of Company and (iii) for other employee benefits, including stock option agreements under any equity incentive
plan of Company.
14. Sarbanes-Oxley;
Internal Accounting Controls. Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002,
which are applicable to it as of the date of the Closing. Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness of Company’s disclosure controls and procedures
based on their evaluations as of the evaluation date. Since the date of the most recently filed periodic report under the Exchange
Act, there have been no significant changes in Company’s internal accounting controls or its disclosure controls and procedures
or, to Company’s knowledge, in other factors that could materially affect Company’s internal accounting controls or
its disclosure controls and procedures.
15. Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.
Notwithstanding any other provision, Investor will have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions
contemplated by this Agreement or the other Transaction Documents.
16. Registration
Rights. No Person has any right to cause Company to effect the registration under the Act of any securities of Company.
17. Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12 of the Exchange Act, and Company has
taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has Company received any notification that the Commission is contemplating terminating such registration.
Except as disclosed in the Public Reports, Company has not, in the 12 months preceding the Effective Date, received notice from
any Trading Market on which the Common Stock is or has been listed or quoted to the effect that Company is not in compliance with
the listing or maintenance requirements of such Trading Market. Company is, and has
no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance
requirements.
18. Application
of Takeover Protections. Company and its Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under Company’s Certificate of Incorporation (or similar charter documents) or
the laws of its state of incorporation that is or could become applicable to Investor as a result of Investor and Company fulfilling
their obligations or exercising their rights under the Transaction Documents, including without limitation Company’s issuance
of the Shares and Investor’s ownership of the Shares.
19. Tax
Status. Company and each of its Subsidiaries has made or filed all federal,
state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes). Company has not executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal, statute or local tax. None of Company’s tax returns is
presently being audited by any taxing authority. Company would not be classified as a PFIC for its most recently completed taxable
year, and does not expect to be classified as a PFIC for its current taxable year.
20. Foreign
Corrupt Practices. Neither Company, nor to the knowledge of Company, any agent or other person acting on behalf of Company,
has (a) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (b) made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from corporate funds, (c) failed to disclose fully any
contribution made by Company, or made by any person acting on its behalf of which Company is aware, which is in violation of law,
or (d) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
21. Accountants.
Company’s accountants are set forth in the Public Reports and such
accountants are an independent registered public accounting firm.
22. No
Disagreements with Accountants or Lawyers. There are no material disagreements presently existing, or reasonably anticipated
by Company to arise, between Company and the accountants or lawyers formerly or presently employed by Company.
23. Powers
of Attorney. There are no outstanding powers of attorney executed on behalf of the Company or any Subsidiary.
C. Representations
and Warranties of Investor. Investor hereby represents and warrants to Company as of the
Closing as follows:
1. Organization;
Authority. Investor is an entity validly existing and in good standing under the laws of the jurisdiction of its organization
with full right, company power and authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by Investor of the transactions
contemplated by this Agreement have been duly authorized by all necessary company or similar action on the part of Investor. Each
Transaction Document to which it is a party has been, or will be, duly executed by Investor, and when delivered by Investor in
accordance with the terms hereof, will constitute the valid and legally binding obligation of Investor, enforceable against it
in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) insofar as indemnification
and contribution provisions may be limited by applicable law.
2. Investor
Status. At the time Investor was offered the Shares, it was, and at the Effective Date it is: (a) an accredited investor
as defined in Rule 501(a) under the Act; (b) not a registered broker-dealer, member of FINRA, or an affiliate thereof; and (c)
not a U.S. Person, and is not acquiring the Shares for the account or beneficial ownership of any U.S. Person.
3. Experience
of Investor. Investor, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Shares, and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment
in the Shares and, at the present time, is able to afford a complete loss of such investment.
4. Ownership.
Investor is acquiring the Preferred Shares as principal for its own account. Investor will not engage in hedging transactions
with regard to the Shares unless in compliance with the Act, and will resell the Shares only pursuant to registration under the
Act or an available exemption therefrom.
5. No
Short Sales. Neither Investor nor any Affiliate holds any short position in, nor has engaged in any Short Sales of the
Common Stock, or engaged in any hedging transactions with regard to the Shares prior to the Effective Date.
IV. Securities
and Other Provisions.
A. Investor
Due Diligence. Investor will have the right and opportunity to conduct customary due diligence
with respect to any Registration Statement or Prospectus in which the name of Investor or any Affiliate of Investor appears.
B. Furnishing
of Information. As long as Investor owns any Shares, Company will timely file all reports
required to be filed by Company after the Effective Date pursuant to the Exchange Act. As long as Investor owns any Shares, Company
will prepare and furnish to Investor and make publicly available such information as is required for Investor to sell its Conversion
Shares under Rule 144. Company further covenants that, as long as Investor owns any Shares, Company will take such further action
as Investor may reasonably request, all to the extent required from time to time to enable Investor to sell its Conversion Shares
without registration under the Act within the limitation of the exemptions provided by Rule 144.
C. Integration.
Company will not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security, as defined in Section 2 of the Act, that would be integrated with the offer or sale of the Shares to Investor
for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing
of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
D. Disclosure
and Publicity. Company will notify Investor prior to issuing any current report, press release,
public statement or communication with respect to the transactions contemplated hereby.
E. Shareholders
Rights Plan. No claim will be made or enforced by Company or, to the knowledge of Company,
any other Person that Investor is an “Acquiring Person” under any shareholders rights plan or similar plan or arrangement
in effect or hereafter adopted by Company, or that Investor could be deemed to trigger the provisions of any such plan or arrangement,
in either such case, by virtue of receiving Shares under the Transaction Documents or under any other agreement between Company
and Investor. Company will conduct its business in a manner so that it will not become subject to the Investment Company Act of
1940, as amended.
F. No
Non-Public Information. Company covenants and agrees that neither it nor any other Person
acting on its behalf will, provide Investor or its agents or counsel with any information that Company believes or reasonably
should believe constitutes material non-public information. On and after the Effective Date, neither Investor nor any Affiliate
of Investor will have any duty of trust or confidence that is owed directly, indirectly, or derivatively, to Company or the stockholders
of Company, or to any other Person who is the source of material non-public information regarding Company. Company understands
and confirms that Investor will be relying on the foregoing in effecting transactions in securities of Company, including without
limitation sales of the Shares.
G. Indemnification
of Investor.
1. Obligation
to Indemnify. Subject to the provisions of this Section IV.G,
Company will indemnify and hold Investor, its Affiliates, managers and advisors, and each of their officers, directors, shareholders,
partners, employees, representatives, agents and attorneys, and any person who controls Investor within the meaning of Section
15 of the Act or Section 20 of the Exchange Act (collectively, “Investor Parties”
and each a “Investor Party”), harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, reasonable costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”)
that any Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by Company in this Agreement or in the other Transaction Documents, (b) any action instituted against
any Investor Party by any creditor or stockholder of Company who is not an Affiliate of an Investor Party, with respect to any
of the transactions contemplated by the Transaction Documents, (c) any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement, Prospectus, Prospectus Supplement,
or any filing or public statement made by Company, or arising out of or based
upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; or (d) any Investor
Party becoming involved in any capacity in any proceeding by or against any Person who is a creditor or stockholder of Company,
as a result of Investor’s acquisition of the Shares under this Agreement; provided, however, that Company will not
be obligated to indemnify any Investor Party for any Losses finally adjudicated to be caused solely by (i) a false statement of
material fact contained within written information provided by such Investor Party expressly for the purpose of including it in
the applicable Registration Statement, or (ii) such Investor Party’s unexcused material breach of an express provision
of this Agreement or another Transaction Document.
2. Procedure
for Indemnification. If any action will be brought against an Investor Party in respect of which indemnity may be sought
pursuant to this Agreement, such Investor Party will promptly notify Company in writing, and Company will have the right to assume
the defense thereof with counsel of its own choosing. Investor Parties will have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel will be at the expense of Investor Parties
except to the extent that (a) the employment thereof has been specifically authorized by Company in writing, (b) Company has failed
after a reasonable period of time to assume such defense and to employ counsel or (c) in such action there is, in the reasonable
opinion of such separate counsel, a material conflict with respect to the dispute in
question on any material issue between the position of Company and the position of
Investor Parties such that it would be inappropriate for one counsel to represent Company and Investor Parties. Company
will not be liable to Investor Parties under this Agreement (i) for any settlement by an Investor Party effected without Company’s
prior written consent, which will not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that
a loss, claim, damage or liability is either attributable to Investor’s
breach of any of the representations, warranties, covenants or agreements made by Investor in this Agreement or in the other Transaction
Documents. In no event will the Company be liable for the reasonable fees and expenses for more than one separate firm of attorneys
(plus local counsel as applicable) to represent all Investor Parties.
3. Other
than the liability of Investor to Company for uncured material breach of the express provisions of this Agreement,
no Investor Party will have any liability to Company or any Person asserting claims on behalf of or in right of Company as a result
of acquiring the Shares under this Agreement.
H. Reservation
of Shares. Company will at all times maintain a reserve from its duly authorized Common
Stock for issuance pursuant to the Transaction Documents authorized shares of Common Stock in an amount equal to thrice the number
of shares sufficient to immediately issue all Conversion Shares potentially issuable at such time.
I. Activity
Restrictions. For so long as Investor or any of its Affiliates holds any Shares, neither
Investor nor any Affiliate will: (1) vote any shares of Common Stock owned or controlled by it, sign or solicit any proxies, or
seek to advise or influence any Person with respect to any voting securities of Company; (2) engage or participate in any actions,
plans or proposals which relate to or would result in (a) acquiring additional securities of Company, alone or together with any
other Person, which would result in beneficially owning or controlling more than 9.99% of the total outstanding Common Stock or
other voting securities of Company, (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation,
involving Company or any of its Subsidiaries, (c) a sale or transfer of a material amount of assets of Company or any of its Subsidiaries,
(d) any change in the present board of directors or management of Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board, (e) any material change in the present capitalization or
dividend policy of Company, (f) any other material change in Company’s business or corporate structure, including but not
limited to, if Company is a registered closed-end investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act of 1940, (g) changes in Company’s charter,
bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of Company by any Person,
(h) a class of securities of Company being delisted from a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of Company
becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act, or (j) any action, intention, plan
or arrangement similar to any of those enumerated above; or (3) request Company or its directors, officers, employees, agents
or representatives to amend or waive any provision of this section.
J. No
Shorting. Provided no Event of Default under Sections I.H.(1), (5), (6), (8), (9),
or (10) of the Certificate of Designations has occurred, for so long as Investor holds any Shares,
neither Investor nor any of its Affiliates will engage in or effect, directly or indirectly, any Short Sale of Common Stock. For
the avoidance of doubt, selling against delivery of Conversion Shares after delivery of a Conversion Notice is not a Short Sale.
There will be no restriction or limitation of any kind on Investor’s right or ability to sell or transfer any or all of
the Conversion Shares at any time, in its sole and absolute discretion. Investor may not sell, transfer or assign any Preferred
Shares or any of its rights under this Agreement.
K. Stock
Splits. If Company at any time on or after the Effective Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) or combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater or lesser number of shares, the share numbers, prices and other amounts
set forth in this Agreement, as in effect immediately prior to such subdivision or combination, will be proportionately reduced
or increased, as applicable, effective at the close of business on the date the subdivision or combination becomes effective.
L. Intentionally
Omitted.
M. Intentionally
Omitted.
N. Subsequent
Financings. Until the earlier of (i) 18 months after the Closing or (ii) when Investor no longer holds any Preferred Shares,
Company will not: (a) exercise any rights under Section I.F.2.b of the Certificate of Designations; or (b) enter into any financing
or agreement to issue securities, except an underwritten public offering of fixed price common stock in conjunction with a listing
onto a NASDAQ stock market. For the avoidance of doubt, Company may enter into an unregistered financing of restricted stock.
V. Intentionally
Omitted.
VI. General
Provisions.
A. Notice.
Unless a different time of day or method of delivery is specifically provided in the Transaction
Documents, any and all notices or other communications or deliveries required or permitted to be provided hereunder will be in
writing and will be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication
is delivered via facsimile or electronic mail prior to 5:00 p.m. Eastern time on a Trading Day and an electronic confirmation
of delivery is received by the sender, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered later than 5:00 p.m. Eastern time or on a day that is not a Trading Day, (c) the next Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such notices and communications are such other address as may be designated
in writing, in the same manner, by such Person.
B. Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a written instrument
signed, in the case of an amendment, by Company and Investor or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement
will be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor will any delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
C. No
Third-Party Beneficiaries. Except as otherwise set forth in Section IV.G,
this Agreement and the Transaction Documents will inure solely to the benefit of the parties hereto, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person. A Person who is not a party shall not have any rights under
the Contracts (Rights of Third Parties) Law, 2014 of the Cayman Islands to enforce any term of this Agreement or any Transaction
Document.
D. Fees
and Expenses. Company has paid a flat rate documentation fee to Investor’s counsel
incurred in connection with drafting this Agreement and the other Transaction Documents. Except as otherwise provided in this
Agreement, each party will pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the
Transaction Documents. Company acknowledges and agrees that Investor’s counsel solely represents Investor, and does not
represent Company or its interests in connection with the Transaction Documents or the transactions contemplated thereby. Company
will pay all stamp and other taxes and duties, if any, levied in connection with the sale or issuance of the Shares to Investor.
E. Severability.
If any provision of this Agreement is held to be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this Agreement will not in any way be affected or impaired
thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, will incorporate such substitute provision in this Agreement.
F. Replacement
of Certificates. If any certificate or
instrument evidencing any Shares is mutilated, lost, stolen or destroyed, Company will issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument,
but only upon receipt of evidence reasonably satisfactory to Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument under such circumstances will also pay any reasonable
third-party costs associated with the issuance of such replacement certificates.
G. Governing
Law. All matters between the parties, including without limitation questions concerning
the construction, validity, enforcement and interpretation of the Transaction Documents will be governed by and construed and
enforced in accordance with the laws of the Cayman Islands, without regard to the principles of conflicts of law that would require
or permit the application of the laws of any other jurisdiction, except for corporation law matters applicable to Company which
will be governed by the corporate law of its jurisdiction of formation. The parties hereby waive all rights to a trial by jury.
In any action, arbitration or proceeding, including appeal, arising out of or relating to any of the Transaction Documents or
otherwise involving the parties, the prevailing party will be awarded its reasonable attorneys’ fees and other costs and
expenses reasonably incurred in connection with the investigation, preparation,
prosecution or defense of such action or proceeding.
H. Arbitration.
Any dispute, controversy, claim or action of any kind arising out of, relating to, or in connection
with this Agreement, or in any way involving Company and Investor or their respective Affiliates, including any issues of arbitrability,
will be resolved solely by final and binding arbitration in English before a retired judge at JAMS International, or its successor,
in the Territory of the Virgin Islands, pursuant to the most expedited and Streamlined Arbitration Rules and Procedures available.
Any interim or final award may be entered and enforced by any court of competent jurisdiction. The final award will include the
prevailing party’s reasonable arbitration, expert witness and attorney fees, costs and expenses.
I. Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including
recovery of damages, each of Investor and Company will be entitled to specific performance under the Transaction Documents, and
equitable and injunctive relief to prevent any actual or threatened breach under the Transaction Documents, to the full extent
permitted under applicable laws.
J. Payment
Set Aside. To the extent that Company makes a payment or payments to Investor pursuant to
any Transaction Document or Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to Company, a trustee, receiver
or any other person under any law, including, without limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action, then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied
will be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had
not occurred.
K. Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and
will not be deemed to limit or affect any of the provisions hereof
L. Time
of the Essence. Time is of the essence with respect to all provisions of this Agreement.
M. Survival.
The representations and warranties contained herein will survive the Closing and the delivery
of the Shares until all Preferred Shares issued to Investor have been converted or redeemed.
N. Construction.
The parties agree that each of them and/or their respective counsel has reviewed and had an
opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party will not be employed in the interpretation of the Transaction Documents or any amendments
hereto. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. All
currency references in any Transaction Document are to U.S. dollars.
O. Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together
will be considered one and the same agreement and will 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 portable document format, facsimile or electronic transmission, such signature will 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 signature
page were an original thereof.
P. Entire
Agreement. This Agreement, including the Exhibits hereto,
which are hereby incorporated herein by reference, contains the entire agreement and understanding of the parties,
and supersedes all prior and contemporaneous agreements, term sheets, letters,
discussions, communications and understandings, both oral and written, which
the parties acknowledge have been merged into this Agreement. No party, representative, advisor, attorney or agent has
relied upon any collateral contract, agreement, assurance, promise, understanding, statement or representation not expressly set
forth herein. The parties hereby absolutely, unconditionally and irrevocably waive all rights and remedies, at law and in equity,
directly or indirectly arising out of or relating to, or which may arise as a result of, any Person’s reliance on any such
statement or assurance.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their respective authorized signatories on the Effective Date.
Company:
AMARANTUS BIOSCIENCE HOLDINGS, INC. |
|
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
Investor: |
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
Exhibit 1
Glossary of Defined Terms
“$”
means the currency of the United States of America, in which all dollar amounts in the Transaction Documents will be expressed.
“Act”
means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder.
“Action”
has the meaning set forth in Section III.A.4.
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with a Person, as such terms are used in and construed under Rule 144 under the Act.
“Agreement”
means this Stock Purchase Agreement.
“Approval”
has the meaning set forth in Section IV.K.
“Certificate
of Designations” has the meaning set forth in Section II.B.1.
“Closing”
has the meaning set forth in Section II.D.
“Commission”
means the U.S. Securities and Exchange Commission.
“Common Stock”
means the Common Stock of Company and any replacement or substitute thereof, or any share capital into which such Common Stock
will have been changed or any share capital resulting from a reclassification of such Common Stock.
“Company”
has the meaning set forth in the first paragraph of the Agreement.
“Conversion Shares”
includes all shares of Common Stock potentially issuable in relation to the Preferred Shares, including Common Stock that
must be issued upon conversion of any Preferred Shares, and Common Stock that must or may be issued in payment of any Dividends
or Conversion Premium.
“Disclosure Schedules”
means the disclosure schedules of Company delivered concurrently herewith. The Disclosure Schedules will contain no material
non-public information.
“DTC”
means The Depository Trust Company, or any successor performing substantially the same function for Company.
“Exchange Act”
means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder.
“Effective Date”
has the meaning set forth in the first paragraph of the Agreement.
“GAAP”
means U.S. generally accepted accounting principles applied on a consistent basis during the periods involved.
“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $100,000, other than trade accounts payable incurred
in the ordinary course of business, (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness
of others, whether or not the same are or should be reflected in Company’s
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 (c) the present value of any lease payments in excess of $100,000 due under
leases required to be capitalized in accordance with GAAP.
“Intellectual
Property Rights” has the meaning set forth in Section III.B.10.
“Legal Opinion”
means an opinion from Company’s independent legal counsel, in the form attached as Exhibit 4.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material Adverse
Effect” includes any material adverse effect on (a) the legality, validity or enforceability of any Transaction Document,
or (b) the results of operations, assets, business, or financial condition of Company and the Subsidiaries, taken as a whole,
which is not disclosed in the Public Reports prior to the Effective Date, or (c) Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document.
“Material Permits”
has the meaning set forth in Section III.B.8.
“Officer’s
Certificate” means a certificate executed by an authorized officer of Company, in the form attached as Exhibit 5.
“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.
“Preferred Shares”
means shares of Series G Preferred Stock of the Company to be issued to Investor pursuant to this Agreement or any other agreement
with Investor.
“Prospectus”
means the final prospectus filed for the Registration Statement.
“Prospectus Supplement”
means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to Investor.
“Public Reports”
includes all reports filed by Company under the Act or the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the Effective Date and thereafter.
“Purchase
Amount” has the meaning set forth in Section II.A.1.
“Investor”
has the meaning set forth in the first paragraph of the Agreement.
“Registration
Statement” includes a valid, current and effective Registration Statement registering all Shares for resale, including
the prospectus therein, amendments and supplements to 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 such
registration statement, and any information contained or incorporated by reference in a prospectus filed with the Commission in
connection with the Registration Statement, to the extent such information is deemed under the Act to be part of any registration
statement.
“Regulation D”
means Regulation D under the Securities Act and the rules promulgated by the Commission thereunder.
“Regulation S”
means Regulation S under the Securities Act and the rules promulgated by the Commission thereunder.
“Secretary’s
Certificate” means a certificate, in the form attached as Exhibit 6, signed by the secretary of Company.
“Shares”
include the Preferred Shares and the Conversion Shares.
“Short Sale”
means a “short sale” as defined in Rule 200 of Regulation SHO of the Exchange Act.
“Subsidiary”
means any Person Company owns or controls, or in which Company, directly or indirectly, owns a majority of the capital stock
or similar interest that would be disclosable pursuant to Regulation S-K, Item 601(b)(21).
“Trading Day”
means any day on which the Common Stock is traded on the Trading Market; provided that it will
not include any day on which the Common Stock is (a) scheduled to trade for less than 5 hours, or (b) suspended from trading.
“Transaction
Documents” means this Agreement, the other agreements, certificates and documents referenced herein or the form of which
is attached hereto, and the exhibits, schedules and appendices hereto and thereto.
“Transfer Agent
Instructions” means a letter agreement executed by Company, its current transfer agent, and any successor transfer agent
for the Common Stock, in the form attached as Exhibit 3.
“U.S. Person”
has the meaning set forth in Regulation S promulgated under the Act.
Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
This Securities Purchase
Agreement (this “Agreement”) is dated as of July 9, 2015, between Amarantus Bioscience Holdings, Inc., a Nevada
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) and 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
and/or (b) exchange a certain note of the Company for securities of the Company, as more fully described in this Agreement.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings
set forth in this Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Certificate
of Designation” means the Second Amended and Restated Certificate of Designation of the Series E Preferred Stock of the
Company filed with the Secretary of State of Nevada on July 9, 2015, a copy of which is attached as Exhibit A hereto.
“Closing
Dates” means the Trading Days on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligations to pay the
Subscription Amount as to such Closing and (ii) the Company’s obligations to deliver the Securities as to such Closing, in
each case, have been satisfied or waived.
“Closing(s)”
means the one or more closings of the purchase and sale of the Securities pursuant to Section 2.1.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company
Counsel” means Sichenzia Ross Friedman Ference LLP, with offices located at 61 Broadway, 32nd Floor, New York
NY 10006.
“Conversion
Price” shall have the meaning ascribed to such term in the Certificate of Designation.
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors or consultants
of the Company pursuant to the Company’s existing stock option plans and any stock or option plan duly adopted for such purpose,
by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose; provided, however, such issuances to consultants under this clause (a) shall
not exceed five (5%) percent of the issued and outstanding shares of the Company in any 30 day period, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for
or convertible into shares of Common Stock, issued and outstanding on the date of this Agreement, or pursuant to other agreements
of the Company existing prior to the date hereof and listed on Schedule 3.1(g), provided that such securities and/or agreements
have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“FDA”
shall have the meaning ascribed to such term in Section 3.1(kk).
“FDCA”
shall have the meaning ascribed to such term in Section 3.1(kk).
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.
“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.12(a).
“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.
“Pharmaceutical
Product” shall have the meaning ascribed to such term in Section 3.1(kk).
“Preferred
Stock” means up to 5555.55 shares of the Company’s Series E 12% Convertible Preferred Stock issued hereunder having
the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.
“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.12(b).
“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.12(e).
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).
“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.
“Qualified
Public Offering” means a public offering of the Company’s securities resulting in gross proceeds of at least $10,000,000
and the Company’s common stock being listed on a national securities exchange.
“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Conversion Shares issuable upon conversion in full of all shares
of Preferred Stock, ignoring any conversion limits set forth therein.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Preferred Stock and the Conversion Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Stated
Value” means $1,000 per share of Preferred Stock.
“Subscription
Amount” shall mean, as to each Purchaser, the aggregate amount to be paid for the Preferred Stock purchased hereunder
as specified below such Purchaser’s name on Annex A under the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.12(a).
“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board or the OTC Markets (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Certificate of Designation, the Transfer Agent Instruction Letter, all exhibits
and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.
“Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette
Place, Woodmere, New York 11598 and a facsimile number of (646) 536-3179, and any successor transfer agent of the Company.
“Transfer
Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent
to issue shares of Common Stock upon conversion of the Preferred Stock or upon the payment of dividends in shares of Common Stock,
in the form of Exhibit B attached hereto.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
ARTICLE II.
PURCHASE AND SALE
2.1 Closings.
From time to time after the date hereof, upon the terms and subject to the conditions set forth herein, on the dates set forth
below, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $5,555,500
of the Preferred Stock, which includes an original issue discount of 10%. Each Purchaser shall deliver to the Company, via wire
transfer or a certified check, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on
the signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser such number of shares of
the Preferred Stock purchased and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall mutually agree.
2.2 In
partial satisfaction of its obligation to tender the applicable Subscription Amount, Dominion Capital, LLC may exchange its 12%
Promissory Notes in an aggregate principal amount of $650,000 against receipt of [$689,000] of the Preferred Stock.
2.3 Deliveries.
(a) On
or prior to each Closing Date (or as otherwise indicated below), the Company shall deliver or cause to be delivered to each Purchaser
the following:
(i) At
the first Closing, this Agreement duly executed by the Company;
(ii) the
Transfer Agent Instruction Letter, duly executed by the Company and the Transfer Agent; and
(iii) a
certificate evidencing a number of shares of Preferred Stock equal to such Purchaser’s Subscription Amount divided by $1,000,
registered in the name of such Purchaser and evidence of the filing and acceptance of the Certificate of Designation, as amended,
from the Secretary of State of Nevada.
(b) On
or prior to each Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable, the following:
(i) At
the first Closing, this Agreement duly executed by such Purchaser; and
(ii) such
Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company.
2.4 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects on the applicable Closing Date of the representations and warranties of the Purchasers contained
herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the applicable Closing Date shall
have been performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection with each Closing are subject to the following conditions being
met:
(i) the
accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the applicable Closing Date shall
have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(v) from
the date hereof to the applicable Closing Date, trading in the Common Stock shall not have been suspended by the Commission or
the Company’s principal Trading Market and, at any time prior to the applicable Closing Date, trading in securities generally
as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by
the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the
Securities at the applicable Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 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 each Purchaser:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii)
and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing of the Conversion Shares for trading thereon in the time and
manner required thereby, and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable
state securities laws (collectively, the “Required Approvals”).
(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Conversion Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion Shares at least equal to 150% of
the Required Minimum on the date hereof.
(g) Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the
number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except
as set forth on Schedule 3.1(g), the Company has not issued any capital stock since its most recently filed periodic report under
the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the
conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under
the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 3.1(g) and except as a result of
the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for,
or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights
to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.
(h) SEC
Reports; Financial Statements. Except as set forth on Schedule 3.1(h), the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required
by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received
a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has ceased to be an issuer subject to Rule 144(i) under the Securities
Act, one year has elapsed from the time the Company has filed current Form 10 information with the SEC and has filed all required
annual and quarterly reports in the preceding 12 months period. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC 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 or as set forth on Schedule 3.1(i), 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 1 Trading Day prior to the date that this representation is made.
(j) Litigation.
Except as may be disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities Act.
(k) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(l) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(n) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP
and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.
(o) Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights as described in the SEC 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”).
None of, and neither the Company nor any Subsidiary has 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. Neither the Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC 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 and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Insurance.
Except as set forth on Schedule 3.1(p), the Company and the Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries
are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription
Amount. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
(q) Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.
(r) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are 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 and as of each Closing Date. Except as disclosed in the SEC
Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and
the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date,
the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is
reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.
(s) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker,
financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by the Transaction Documents.
(t) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(u) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.
(v) Registration
Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities
of the Company or any Subsidiary.
(w) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements.
(x) [RESERVED]
(y) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company 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 no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 3.2 hereof.
(z) No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.
(aa) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, whether or not shown or determined
to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company or of any Subsidiary know of no basis for any such claim.
(bb) No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(cc) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision
of FCPA.
(dd) Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(ee) of the Disclosure Schedules. To the knowledge and belief
of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall
express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal
year ending December 31, 2015.
(ee) Seniority.
As of each Closing Date, no Indebtedness or other claim against the Company is senior to the Preferred Stock 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).
(ff) No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.
(gg) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to
each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(hh) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after a closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction.
The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at
various times during the period that the Securities are outstanding, including, without limitation, during the periods that the
value of the Conversion Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if
any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute
a breach of any of the Transaction Documents.
(ii) 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.
(jj) FDA.
As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged,
labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed
by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company's knowledge,
threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint,
or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received
any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket
clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing
of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall,
suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries,
(iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have
a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been informed by the
FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product
being developed or proposed to be developed by the Company.
(kk) Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value
of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The Company has not granted, and there is no and has been no Company
policy or practice to grant, stock options prior to, or otherwise coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(ll) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(mm) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
(nn) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(oo) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of each Closing Date to the Company as follows (unless as of a specific date therein):
(a) Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(b) Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it converts any shares of Preferred Stock, it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined
in Rule 144A(a) under the Securities Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.
The Company acknowledges
and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to
rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained
in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the
terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.
(b) The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY [AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if
the Securities are registered under a registration statement, the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list
of selling stockholders thereunder.
(c) Certificates
evidencing the Conversion Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of
such Conversion Shares pursuant to Rule 144, (iii) if such Conversion Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Conversion
Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall
cause its counsel to issue a legal opinion to the Transfer Agent promptly after the events described in clauses (i)-(iv) in the
immediately preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any shares
of Preferred Stock are converted at a time when there is an effective registration statement to cover the resale of the Conversion
Shares, or if such Conversion Shares may be sold under Rule 144 and the Company is then in compliance with the current public information
required under Rule 144, or if the Conversion Shares may be sold under Rule 144 without the requirement for the Company to be in
compliance with the current public information required under Rule 144 as to such Conversion Shares and without volume or manner-of-sale
restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then such Conversion Shares shall be issued free of all
legends. The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), it will, no
later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing
Conversion Shares, as applicable, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and
other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4. Certificates for Conversion Shares subject to legend removal hereunder shall
be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository
Trust Company System as directed by such Purchaser.
(d) In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Conversion Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after
the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.
4.2 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Conversion Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.
4.3 Furnishing
of Information; Public Information.
(a)
The Company agrees to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60th
calendar day following the date hereof. Thereafter, until the date on which no Purchaser owns Securities, the Company covenants
to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
Act.
(b) At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Purchaser’s other
available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason
of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate
Subscription Amount of such Purchaser’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 Purchasers to transfer the
Conversion Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b)
are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments
shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments
are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information
Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a
timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for
partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public
Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
4.4 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.5 Conversion
Procedures. The form of Notice of Conversion included in the Certificate of Designation set forth the totality of the procedures
required of the Purchasers in order to convert the Preferred Stock. Without limiting the preceding sentences, no ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Conversion form be required in order to convert the Preferred Stock. No additional legal opinion, other information or instructions
shall be required of the Purchasers to convert their Preferred Stock. The Company shall honor conversions of the Preferred Stock
and shall deliver Conversion Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.6 Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current
Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the
Exchange Act. From and after the issuance of such press release, the Company represents to the Purchaser that it shall have publicly
disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or
any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make
any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without
the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection
with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted
under this clause (b).
4.7 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.8 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto
such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.
4.9 Use
of Proceeds. The Company shall use the proceeds to acquire Cutanogen Corporation from Lonza Walkersville, Inc.
4.10 Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not
be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.
4.11 Reservation
and Listing of Securities.
(a) The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as equals 150% of the Required Minimum.
(b) If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than 150% of (i) the
Required Minimum on such date, minus (ii) the number of shares of Common Stock previously issued pursuant to the Transaction Documents,
then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation
to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time (minus the
number of shares of Common Stock previously issued pursuant to the Transaction Documents), as soon as possible and in any event
not later than the 90th day after such date, provided that the Company will not be required at any time to authorize
a number of shares of Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued
after such time pursuant to the Transaction Documents.
(c) The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing
or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or
quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on
such date on such Trading Market or another Trading Market.
4.12 Participation
in Future Financing.
(a) From
the date hereof until the date that is the 12 month anniversary of the last Closing Date, upon any issuance by the Company or any
of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof
(a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of the Subsequent
Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions
and price provided for in the Subsequent Financing.
(b) At
least two (2) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed
to be effected and shall include a term sheet or similar document relating thereto as an attachment.
(c) Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the second (2nd) Trading Day after all of the Purchasers have received the Pre-Notice that
such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing
and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such second (2nd) Trading Day, such
Purchaser shall be deemed to have notified the Company that it does not elect to participate.
(d) If
by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all of the Purchasers have received
the Pre-Notice, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their
designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect
the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
(e) If
by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased
by a Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased
by all Purchasers participating under this Section 4.12.
(f) The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.
(g) The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree
to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of such Purchaser.
(h) Notwithstanding
anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to
the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such
Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession
of any material, non-public information with respect to the Company or any of its Subsidiaries.
(i) Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance.
4.13 Intentionally
omitted.
4.14 Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. For clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat
the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect
to the purchase, disposition or voting of Securities or otherwise.
4.15 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will (i) execute any Short Sales, of any of
the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in
Section 4.6 or (ii) from the date hereof until the earlier of the 12 month anniversary of the date hereof and the date that the
Preferred Stock is no longer outstanding, execute any Short Sales of the Common Stock (provided that this provision shall not prohibit
any sales made where a corresponding Notice of Conversion or Notice of Exercise is tendered to the Company and the shares received
upon such conversion or exercise are used to close out such sale) (a “Prohibited Short Sale”). Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement
are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.6, such Purchaser will maintain
the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and
the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary,
the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6, (ii) except for
a Prohibited Short Sale, no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the
Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release as described in Section 4.6 and (iii) no Purchaser shall have
any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as described in
Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets,
the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Securities covered by this Agreement.
4.16 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such
actions promptly upon request of any Purchaser.
4.17 Lock-Up.
The undersigned agrees that during the period commencing on the date of the issuance of the Preferred Stock and ending on the earlier
of (i) six (6) months from the date of issuance or (ii) the closing of a Qualifed Public Offering, the undersigned will not directly
or indirectly, offer, sell, assign, transfer, pledge, grant any option to purchase, contract to sell, or otherwise dispose of or
announce the intention to otherwise dispose of, any of the Shares of Preferred Stock or the shares of Common Stock underlying the
Preferred Stock.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the first
Closing has not been consummated on or before July 15, 2015; provided, however, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties).
5.2 Fees
and Expenses. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each party shall
pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered
by the Company and any conversion notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.6 Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.10 and this Section 5.8.
5.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence
an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the
Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive each Closing and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of a conversion of the Preferred Stock, the applicable Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded conversion notice concurrently with the restoration of such Purchaser’s right
to acquire such shares pursuant to such Purchaser’s Preferred Stock.
5.14 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
5.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.
5.18 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with
the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do
so by any of the Purchasers.
5.19 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
5.20 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.21 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
5.22 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
amarantus bioscience holdings, inc. |
Address for Notice: |
|
|
|
655 Montgomery Street, Suite 900 |
|
San Francisco, CA 94111 |
|
Attn: Gerald Commissiong |
|
Fax: (408) 852-4427 |
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
Title: |
|
|
|
|
With a copy to (which shall not constitute notice): |
|
|
|
Sichenzia Ross Friedman Ference LLP |
|
61 Broadway, 32nd Floor |
|
New York, NY 10006 |
|
Attn: Jeffrey Fessler, Esq. |
|
Fax: (212) 930-9725 |
|
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO AMBS
SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.
Name of Purchaser: ____________________________________________________
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory: ____________________________________
Title of Authorized Signatory: _____________________________________
Email Address of Authorized Signatory: ___________________________________________
Facsimile Number of Authorized Signatory: _________________________________________
Address for Notice to Purchaser:
Address for Delivery of Securities to Purchaser (if not same
as address for notice):
Subscription Amount: $_____________
Shares of Preferred Stock: ___________
EIN Number: _______________________
[SIGNATURE PAGES CONTINUE]
Exhibit 10.3
SECURITIES PURCHASE AGREEMENT
This Securities Purchase
Agreement (this “Agreement”) is dated as of July __, 2015, between Amarantus Bioscience Holdings, Inc. (the
“Company”), and each purchaser identified on the signature pages hereto (each, including its successors and
assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth in this
Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Closing
Dates” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligations to pay the
Subscription Amount as to such Closing and (ii) the Company’s obligations to deliver the Securities as to such Closing, in
each case, have been satisfied or waived.
“Closing(s)”
means the one or more closings of the purchase and sale of the Securities pursuant to Section 2.2.
“Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.
“Notes”
means the 12% Promissory Notes due, subject to the terms therein, 12 months from their date of issuance, issued by the Company
to the Purchasers hereunder, in the form of Exhibit A attached hereto.
“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.
“Principal
Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature
pages hereto next to the heading “Principal Amount,” in United States Dollars, which shall equal such Purchaser’s
Subscription Amount as to the applicable Closing.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Robinson
Brog” means Robinson Brog Leinwand Greene Genovese & Gluck P.C., with offices located at 875 Third Avenue, New York,
New York 10022.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Notes.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security
Agreement” means the Security Agreement, dated the date hereof, among the Company and the Purchasers, in the form of
Exhibit B attached hereto.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes purchased hereunder as specified below
such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Notes, the Security Agreement, all exhibits and schedules thereto and hereto and
any other documents or agreements executed in connection with the transactions contemplated hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 Purchase.
The Purchasers will purchase an aggregate of up to $1,000,000 in Subscription Amount of Notes. The purchase will occur upon execution
of this Agreement.
2.2 Closing.
On each Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser, severally and not jointly,
agrees to purchase, such Purchaser’s Closing Subscription Amount as set forth on the signature page hereto executed by such
Purchaser. At each Closing, each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available
funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser,
and the Company shall deliver to each Purchaser its respective Note, as determined pursuant to Section 2.3(a), and the Company
and each Purchaser shall deliver the other items set forth in Section 2.3 deliverable at the first Closing. Upon satisfaction of
the covenants and conditions set forth in Sections 2.3 and 2.4 for each Closing, each Closing shall occur at the offices of Robinson
Brog or such other location as the parties shall mutually agree.
2.3 Deliveries.
(a) On
or prior to each Closing Date (except as noted), the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
Note with a principal amount equal to such Purchaser’s Principal Amount as to the applicable Closing, registered in the name
of such Purchaser; and
(iii) the
Security Agreement, duly executed by the Company.
(b) On
or prior to the applicable Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable, the
following:
(i) this
Agreement duly executed by such Purchaser;
(ii) such
Purchaser’s Subscription Amount as to the applicable Closing by wire transfer to the account specified in writing by the
Company; and
(iii) the
Security Agreement, duly executed by such Purchaser.
2.4 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects on the applicable Closing Date of the representations and warranties of the Purchasers contained
herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the applicable Closing Date shall
have been performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.3(b) of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection with each Closing are subject to the following conditions being
met:
(i) the
accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the applicable Closing Date shall
have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.3(a) of this Agreement;
(iv) there
is no existing Event of Default (as defined in the Notes) and no existing event which, with the passage of time or the giving of
notice, would constitute an Event of Default; and
(v) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 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 each Purchaser:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii)
and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6 of this Agreement, and (ii) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents.
(g) Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the
number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company
has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than the exercise
of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant
to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of the Securities and as disclosed in the SEC Reports, there
are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe
for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale
of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.
(h) SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension, except as disclosed on Schedule 3.1(h).
As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under
the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for
the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC 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 or as set forth on Schedule 3.1(i), 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 1 Trading Day prior to the date that this representation is made.
(j) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.
(k) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(l) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(n) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP
and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.
(o) Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights as described in the SEC 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”).
None of, and neither the Company nor any Subsidiary has 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. Neither the Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC 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 and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without
a significant increase in cost.
(q) Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.
(r) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are 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 and as of the applicable Closing Date. Except as disclosed
in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and
the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date,
the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.
(s) Certain
Fees. Other than as set forth on Schedule 3.1(s), no brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(t) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(u) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.
(v) Registration
Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities
of the Company or any Subsidiaries.
(w) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements.
(x) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(y) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company 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 no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 3.2 hereof.
(z) No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.
(aa) Solvency.
Based on the consolidated financial condition of the Company as of the applicable Closing Date, after giving effect to the receipt
by the Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the applicable Closing Date. Schedule 3.1(aa)
sets forth as of the date hereof all outstanding secured and unsecured Indebtedness 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 $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(bb) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in
a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.
(cc) No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(dd) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision
of FCPA.
(ee) Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(ee) of the Disclosure Schedules. To the knowledge and belief
of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall
express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal
year ending December 31, 2013.
(ff) Seniority.
As of each Closing Date, no Indebtedness or other claim against the Company is senior to the Notes 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).
(gg) No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.
(hh) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to
each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(ii) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the
Securities are outstanding, and (z) such hedging activities (if any) could reduce the value of the existing stockholders' equity
interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
(jj) 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.
(kk) Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value
of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has
been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock
options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(ll) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(mm) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
(nn) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(oo) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):
(a) Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(b) Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.
(f) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.
The Company acknowledges and agrees that
the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the
terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.
(b) The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
[NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.
4.2 [Intentionally
omitted.]
4.3 [Intentionally
omitted.]
4.4 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.5 [Intentionally
omitted.]
4.6 Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current
Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the
Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly
disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or
any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make
any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without
the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection
with any registration statement and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.7 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.8 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto
such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.
4.9 Use
of Proceeds. The Company shall use the net proceeds hereunder only for general corporate purposes, and shall not use such proceeds:
(a) for the satisfaction of any portion of the Company’s debt, (b) for the redemption of any Common Stock or Common Stock
Equivalents, or (c) in violation of FCPA or OFAC regulations.
4.10 Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not
be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.
4.11 [Intentionally
omitted.]
4.12 [Intentionally
omitted.]
4.13 [Intentionally
omitted.]
4.14 Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. Further, the Company shall not make any payment of principal or interest
on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable
time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.
4.15 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until
such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6 and (iii) no Purchaser
shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as described
in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets,
the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Securities covered by this Agreement.
4.16 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the applicable Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of any Purchaser.
4.17 Debt
Issuances. Until the Note and all accrued and unpaid interest thereon has been paid in full, the Company shall not incur any
Indebtedness without the prior written consent of the Purchaser, other than in the ordinary course of business.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the first
Closing has not been consummated on or before July 10, 2015; provided, however, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties).
5.2 Fees
and Expenses. The Company has agreed to reimburse the Purchasers up to $10,000 for their legal fees at the first Closing. Accordingly,
in lieu of the foregoing payments, the aggregate amount that the Purchasers are to pay for the Securities at the first Closing
shall be reduced by $10,000, in lieu thereof. The Company shall deliver to each Purchaser, prior to each Closing, a completed and
executed copy of the Closing Statement, attached hereto as Annex A. Except as expressly set forth in the Transaction Documents
to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all fees, stamp taxes and other taxes and duties levied in connection with the delivery of any
Securities to the Purchasers.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.6 Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.10.
5.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence
an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the
Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive the Closings and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights.
5.14 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
5.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.
5.18 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through Robinson Brog. Robinson Brog does not
represent any of the Purchasers. The Company has elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.
5.19 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
5.20 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken
or such right may be exercised on the next succeeding Business Day.
5.21 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
5.22 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Amarantus Bioscience Holdings, Inc. |
|
Address for Notice: |
|
|
|
|
By: |
|
|
Fax: |
|
Name: |
|
|
|
Title: |
|
|
|
|
|
|
With a copy to (which shall not constitute notice): |
|
|
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO ITEN SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.
Name of Purchaser: ________________________________________________________
Signature of Authorized Signatory of
Purchaser: __________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory:
_____________________________________________
Facsimile Number of Authorized Signatory: __________________________________________
Address for Notice to Purchaser:
Address for Delivery of Securities to Purchaser (if not same
as address for notice):
Subscription Amount: _____________
EIN Number: _______________________
[SIGNATURE PAGES CONTINUE]
Annex A
CLOSING STATEMENT
Pursuant to
the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase Notes from Amarantus Bioscience
Holdings, Inc. (the “Company”). All funds will be wired into an account maintained by the Company. All funds
will be disbursed in accordance with this Closing Statement.
Disbursement
Date: July __, 2015
I. PURCHASE PRICE | |
|
| |
|
Gross Proceeds to be Received | |
$ | | |
| |
| | |
II. DISBURSEMENTS | |
| | |
| |
| | |
| |
$ | | |
| |
$ | | |
| |
$ | | |
| |
$ | | |
| |
$ | | |
| |
| | |
Total Amount Disbursed: | |
$ | | |
WIRE INSTRUCTIONS:
Duly executed this __ day of July, 2015:
Amarantus Bioscience Holdings, Inc.
Name:
Title:
Exhibit 10.4
THIS SECURITY HAS NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
Original Issue Date: July 9, 2015
$____
12%
PROMISSORY NOTE
DUE
July 9, 2016
THIS 12% PROMISSORY
NOTE is one of a series of duly authorized and validly issued 12% Promissory Notes of Amarantus Bioscience Holdings, Inc. (the
“Company”), having its principal place of business at 655 Montgomery Street, Suite 900, San Francisco, CA 94111,
designated as its 12% Promissory Note due July 9, 2016 (this Note, the “Note” and, collectively with the other
Notes of such series, the “Notes”).
FOR VALUE RECEIVED,
the Company promises to pay to ___________ or its registered assigns (the “Holder”), or shall have paid pursuant
to the terms hereunder, the principal sum of $_______ on July 9, 2016 (the “Maturity Date”) or such earlier
date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate
then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is subject to the following
additional provisions:
Section 1. Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or
any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case
or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is
adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the
Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part
of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company
or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence
in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 33% of the voting securities of the Company, (b) the Company merges into or consolidates with any other Person, or
any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately
after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events
set forth in clauses (a) through (d) above.
“Event
of Default” shall have the meaning set forth in Section 4(a).
“Late
Fees” shall have the meaning set forth in Section 2(c).
“Make-Whole
Amount” means, with respect to the applicable date of determination, an amount in cash equal to all of the interest that,
but for the applicable default payment, would have accrued pursuant to Section 2 with respect to the applicable principal amount
being so redeemed for the period commencing on the applicable redemption date or default payment date and ending on July 9, 2016.
“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Note and accrued and unpaid interest
hereon, in addition to the payment of (a) all other amounts, costs, expenses and liquidated damages due in respect of this Note
and (b) the Make-Whole Amount.
“New
York Courts” shall have the meaning set forth in Section 5(d).
“Note
Register” shall have the meaning set forth in Section 2(c).
“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of July 9, 2015 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
Section 2. Interest.
a) Payment
of Interest in Cash. The Company shall pay interest to the Holder on the aggregate outstanding principal amount of this Note
at the rate of 12% per annum, which interest amount shall be guaranteed, payable on the first Business Day of each month in cash
by wire transfer to the account indicated on Exhibit 1 hereto. If the original principal amount of this Note, and all accrued
and unpaid interest thereon, is not paid in full by the six month anniversary of the Original Issue Date, then the Company shall
pay additional interest to the Holder on the aggregate outstanding principal amount of this Note at the rate of 2% per annum, payable
on the Maturity Date. For the avoidance of doubt, attached hereto as Exhibit 2 is a schedule showing interest payments due
on the entire $1,000,000 series of Notes.
b) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and
shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all
accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder
will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers
of this Note (the “Note Register”).
c) Late
Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue
daily from the date such interest is due hereunder through and including the date of actual payment in full.
d) Optional
Prepayment. At any time upon ten (10) days written notice to the Holder, the Company may prepay any portion of the principal
amount of this Note and any accrued and unpaid interest.
.
Section 3. Registration
of Transfers and Exchanges.
a) Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in
the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
c) Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company
may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.
Section 4. Events
of Default.
a) “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body):
i. any
default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing to
a Holder on any Note, as and when the same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise)
which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within 3 Business
Days;
ii. the
Company shall fail to observe or perform any other covenant or agreement contained in the Notes which failure is not cured, if
possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other
Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such failure;
iii. a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which
the Company or any Subsidiary is obligated (and not covered by clause (vi) below);
iv. any
representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;
v. the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;
vi. the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $50,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. the
Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of 33% of its
assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
viii. the
Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not
in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);
ix. if
the Borrower or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian
or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;
x. if
any order, judgment or decree shall be entered, without the application, approval or consent of the Borrower or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Borrower
or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Borrower or any Subsidiary, or of all or
any substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of
sixty (60) days;
xi. the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Borrower or
any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after
the date thereof; or
xii. any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.
b) Remedies
Upon Event of Default. If any Event of Default occurs, then the outstanding principal amount of this Note, plus accrued but
unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. After the occurrence of any
Event of Default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an additional
interest rate equal to the lesser of 2% per month (24% per annum) or the maximum rate permitted under applicable law. Upon the
payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company.
In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration
may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder
of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 4(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 5. Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other facsimile number or address as the Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section 5(a). Any and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if
no such facsimile number or address appears on the books of the Company, at the principal place of business of such Holder, as
set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day
after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service
or (iv) upon actual receipt by the party to whom such notice is required to be given.
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the
Company. This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.
c) Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this
Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees
and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
e) Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or
the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other
occasion. Any waiver by the Company or the Holder must be in writing.
f) Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and
the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has been enacted.
g) 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 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.
h) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
i) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit
or affect any of the provisions hereof.
j) Secured
Obligation. The obligations of the Company under this Note are secured pursuant to the Security Agreement, dated as of the
date hereof between the Company and the Secured Parties (as defined therein).
*********************
(Signature Pages Follow)
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
|
Amarantus Bioscience Holdings, Inc. |
|
|
|
|
|
By: |
|
|
|
Name: |
|
|
Title: |
|
Facsimile No. for delivery of Notices: ________________________ |
Exhibit 10.5
SECURITY AGREEMENT
This SECURITY AGREEMENT,
dated as of July __, 2015 (this “Agreement”), is among Amarantus Bioscience Holdings, Inc. (the “Company”),
all of the Subsidiaries of the Company (such subsidiaries, the “Guarantors”
and together with the Company, the “Debtors”) and the holders of the Company’s 12% Promissory
Notes due twelve (12) months from the date hereof, in the original aggregate principal amount of $1,000,000 (collectively, the
“Notes”) signatory hereto, their endorsees, transferees and assigns (collectively, the “Secured Parties”).
WITNESSETH:
WHEREAS, pursuant
to the Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to the Debtors
evidenced by the Notes; and
WHEREAS, in order
to induce the Secured Parties to extend the loans evidenced by the Notes, the Debtors have agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through
the Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtors to secure the prompt payment,
performance and discharge in full of all of the Debtors’ obligations under the Notes.
NOW, THEREFORE, in
consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used
but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.
(a) “Collateral”
means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the following personal property of the Debtors,
whether presently owned or existing or hereafter acquired or coming into existence, wherever situated, and all additions and accessions
thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection
therewith, and all dividends, interest, cash, notes, securities, equity
interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined below):
(i) All goods,
including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and
wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in
connection with the Debtors’ businesses and all improvements thereto; and (B) all inventory, including all now owned or hereafter
acquired inventory wherever located including in transit or in warehouses;
(ii) All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed
by Debtors), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights,
goodwill, Intellectual Property and income tax refunds;
(iii) All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit accounts);
(vii) All
investment property;
(viii) All
supporting obligations; and
(ix) All
files, records, books of account, business papers, and computer programs; and
(x) the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.
Without limiting
the generality of the foregoing, the “Collateral” shall include all investment property and general
intangibles respecting ownership and/or other equity interests in each subsidiary of the Debtors, including, without limitation,
the shares of capital stock and the other equity interests listed on Schedule H hereto (as the same may be modified from
time to time pursuant to the terms hereof), and any other shares of capital stock and/or other equity interests of any other direct
or indirect subsidiary of Debtors obtained in the future, and, in each case, all certificates representing such shares and/or
equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter
be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in
connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash.
Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent
that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided,
however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset
and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.
(b) “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent
of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof,
(iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service
marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country
or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under
the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals
or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of
the foregoing.
(c) “Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amounts
of Notes at the time of such determination) of the Secured Parties.
(d) “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and
such other instruments or documents as the Agent (as that term is defined below) may reasonably request.
(e) “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing to, of Debtors to the Secured Parties, including, without
limitation, all obligations under this Agreement, the Notes, and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from
any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term “Obligations”
shall include, without limitation: (i) principal of, and interest on the Notes and the loans extended pursuant thereto; (ii) any
and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection with
this Agreement, the Notes, and any other instruments, agreements or other documents executed and/or delivered in connection herewith
or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would
be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of
a bankruptcy, reorganization or similar proceeding involving Debtors.
(f) “Organizational
Documents” means with respect to Debtors, the documents by which Debtors were organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the internal governance of Debtors (such as bylaws,
a partnership agreement or an operating, limited liability or members agreement).
(g) “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).
(h) “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).
(i) “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed
in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones
shall be controlling.
2. Grant of Security Interest
in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes and to secure the complete
and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, Debtors hereby unconditionally
and irrevocably pledge, grant and hypothecate to the Secured Parties a security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security
Interest” and, collectively, the “Security Interests”).
3. Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, Debtors shall deliver or cause to be
delivered to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and
(b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together
with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or has previously
delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.
4. Representations, Warranties,
Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules delivered
to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall
be deemed a part hereof, Debtors represent and warrant to, and covenants and agrees with, the Secured Parties as follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by Debtors of this Agreement and
the filings contemplated therein have been duly authorized by all necessary action on the part of Debtors and no further action
is required by Debtors. This Agreement has been duly executed by Debtors. This Agreement constitutes the legal, valid and binding
obligation of Debtors, enforceable against Debtors in accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and
remedies of creditors and by general principles of equity.
(b) Each
Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, Debtors are the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property. Except as disclosed on
Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except
as set forth on Schedule B attached hereto, the Debtors are the sole owner of the Collateral (except for non-exclusive licenses
granted by Debtors in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or
claims, and is fully authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto, there
is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured
Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached
hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtors shall not execute and shall
not knowingly permit to be on file in any such office or agency any other financing statement or other document or instrument (except
to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).
(d) Except
as set forth on Schedule I attached hereto, no written claim has been received that any Collateral or Debtors’ use
of any Collateral violates the rights of any third party. Except as set forth on Schedule I attached hereto, there has been
no adverse decision to Debtors’ claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to Debtors’ right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of Debtors, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.
(e) The
Debtors shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and
records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken to
perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing perfected first priority
lien in the Collateral.
(f) This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral securing the payment and performance
of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder
in any Collateral which may be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately following paragraph, the
recordation of the Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and
copyright applications in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit
account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of
the Debtors, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create,
perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery
of said deposit account control agreements, no consent of any third parties and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and
performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or
(iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.
(g) Debtors
hereby authorizes the Agent to file one or more financing statements under the UCC or any other similar law, with respect to the
Security Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it, including foreign jurisdictions,
including but not limited to filing a fixed and floating charge over the Security Interests in the United Kingdom.
(h) The
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of Debtors or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to Debtors or (ii) conflict with, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing Debtors’
debt or otherwise) or other understanding to which Debtors are a party or by which any property or asset of Debtors are bound or
affected. If any, all required consents (including, without limitation, from stockholders or creditors of Debtors) necessary for
Debtors to enter into and perform its obligations hereunder have been obtained.
(i) The
capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent
all of the capital stock and other equity interests of all of the subsidiaries of the Debtors, and represent all capital stock
and other equity interests owned, directly or indirectly, by the Debtors. All of the Pledged Securities are validly issued, fully
paid and nonassessable, and except as set forth on Schedule H attached hereto the Debtors is the legal and beneficial owner
of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests
created by this Agreement.
(j) The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not
held in a securities account or by any financial intermediary.
(k) Debtors
shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected first priority liens
and security interests in the Collateral in favor of the Secured Parties until this Agreement and the Security Interest hereunder
shall be terminated pursuant to Section 14 hereof. Debtors hereby agree to defend the same against the claims of any and all persons
and entities. Debtors shall safeguard and protect all Collateral for the account of the Secured Parties. At the request of the
Agent, Debtors will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time one or more
financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same
in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, Debtors shall pay all fees, taxes and other amounts necessary
to maintain the Collateral and the Security Interests hereunder, and Debtors shall obtain and furnish to the Agent from time to
time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the
Security Interests hereunder.
(l) Debtors
will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by Debtors in their ordinary course of business and sales of inventory by Debtors in their ordinary course of
business) without the prior written consent of a Majority in Interest.
(m) Debtors
shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
(n) Debtors
shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation
having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other
such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the
full replacement cost thereof. Debtors shall cause each insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under
each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent for at least
thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase coverage
under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment
of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the Notes)
exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each
instance will be applied by the Debtors to the repair and/or replacement of property with respect to which the loss was incurred
to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall
be payable to the Debtors; provided, however, that payments received by Debtors after an Event of Default occurs
and is continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf
of the Secured Parties and, if received by Debtors, shall be held in trust for the Secured Parties and immediately paid over to
the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates, in each case,
naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and at the time
any new policy of insurance is issued.
(o) Debtors
shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material
adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of
the Collateral or on the Secured Parties’ security interest, through the Agent, therein.
(p) Debtors
shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request
and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the
Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect
to Debtors’ Intellectual Property (“Intellectual Property Security Agreement”) in which the Secured Parties
have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.
(q) Debtors
shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable
prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time
to time.
(r) Debtors
shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.
(s) Debtors
shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other information received by Debtors that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of Debtors with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.
(u) The
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to its business.
(v) Debtors
will not change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice
to the Secured Parties of such change and, at the time of such written notification, Debtors provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(w) Except
in the ordinary course of business, Debtors may not consign any of its inventory or sell any of its inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably
withheld.
(x) Debtors
may not relocate their chief executive office to a new location without providing 30 days prior written notification thereof to
the Secured Parties and so long as, at the time of such written notification, Debtors provide any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(y) Debtors
were organized and remains organized solely under the laws of the state set forth next to Debtors’ name in Schedule D
attached hereto, which Schedule D sets forth Debtors’ organizational identification number or, if Debtors do not have
one, states that one does not exist.
(z) (i) The actual name of Debtors are the name set forth in Schedule D attached hereto; (ii) Debtors have no trade names except
as set forth on Schedule E attached hereto; (iii) Debtors have not used any name other than that stated in the preamble
hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into Debtors or been acquired
by Debtors within the past five years except as set forth on Schedule E.
(aa) At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the Debtors shall deliver such Collateral
to the Agent.
(bb) Debtors,
in their capacity as issuer, hereby agree to comply with any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of Debtors as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, Debtors agree that they shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.
(cc) Debtors
shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this
Agreement. To the extent that any Collateral consists of electronic chattel paper, the Debtors shall cause the underlying chattel
paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
(dd) If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the Debtors shall cause such an account control agreement, in form and substance in each case satisfactory
to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.
(ee) To
the extent that any Collateral consists of letter-of-credit rights, the Debtors shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
(ff) To
the extent that any Collateral is in the possession of any third party, the Debtors shall join with the Agent in notifying such
third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.
(gg) If
Debtors shall at any time hold or acquire a commercial tort claim, Debtors shall promptly notify the Secured Parties in a writing
signed by Debtors of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.
(hh) Debtors
shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and
proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent
in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or
local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.
(ii) Debtors
shall cause each subsidiary of Debtors to immediately become a party hereto (an “Additional Debtor”), by
executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply
with the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement
schedules for, or supplements to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement
schedules shall supersede, or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also
deliver such opinions of counsel, authorizing resolutions, good standing certificates, incumbency certificates,
organizational documents, financing statements and other information and documentation as the Agent may reasonably request.
Upon delivery of the foregoing to the Agent, the Additional Debtor shall be and become a party to this Agreement with the
same rights and obligations as the Debtors, for all purposes hereof as fully and to the same extent as if it were an original
signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth herein as of the
date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtor” shall
be deemed to include each Additional Debtor.
(jj) Debtors shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.
(kk) Debtors
shall register the pledge of the applicable Pledged Securities on the books of Debtors. Debtors shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such
issuer. Further, except with respect to certificated securities delivered to the Agent, the Debtors shall deliver to Agent an
acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection
by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has
registered the pledge on its books and records; and (b) at any time directed by Agent during the continuation of an Event of Default,
such issuer will transfer the record ownership of such Pledged Securities into the name of any designee of Agent, will take such
steps as may be necessary to effect the transfer, and will comply with all other instructions of Agent regarding such Pledged
Securities without the further consent of the Debtors.
(ll) In
the event that, upon an occurrence of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party
or parties (herein called the “Transferee”)
or shall purchase or retain all or any of the Pledged Securities, Debtors shall, to the extent applicable: (i) deliver to Agent
or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate
seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all other Organizational
Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations
of the persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries, if so requested;
and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order to permit
the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by Agent and allow
the Transferee or Agent to continue the business of the Debtors and their direct and indirect subsidiaries.
(mm) Without
limiting the generality of the other obligations of the Debtors hereunder, Debtors shall promptly (i) cause to be registered at
the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect
to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be
duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.
(nn) Debtors
will from time to time promptly execute and deliver all such further instruments and documents, and take all such further action
as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder
and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.
(oo) Schedule
F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights,
and domain names owned by the Debtors as of the date hereof. Schedule F lists all material licenses in favor of Debtors
for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks
of the Debtors have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.
(pp) Except
as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule in respect of such Collateral.
5. Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership
interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to which Debtors are subject or to which Debtors
are party.
6. Defaults.
The following events shall be “Events of Default”:
(a) The occurrence
of an Event of Default (as defined in the Notes) under the Notes;
(b) Any representation
or warranty of Debtors in this Agreement shall prove to have been incorrect in any material respect when made;
(c) The failure
by Debtors to observe or perform any of its obligations hereunder for five (5) days after delivery to Debtors of notice of such
failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time frame and
Debtors are using best efforts to cure same in a timely fashion; or
(d) If any
provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Debtors, or a proceeding shall be commenced by Debtors, or by any governmental authority having
jurisdiction over Debtors, seeking to establish the invalidity or unenforceability thereof, or Debtors shall deny that Debtors
have any liability or obligation purported to be created under this Agreement.
7. Duty To Hold
In Trust.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, Debtors shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or
of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same
in trust for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the
Secured Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of Notes for
application to the satisfaction of the Obligations (and if any Note is not outstanding, pro-rata in proportion to the initial
purchases of the remaining Notes).
(b) If
Debtors shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any reorganization of Debtors or any of their
direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange
for, such Pledged Securities or otherwise), Debtors agree to (i) accept the same as the agent of the Secured Parties; (ii) hold
the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to Agent on or before the close of business on the fifth business day following the receipt thereof by Debtors,
in the exact form received together with the Necessary Endorsements, to be held by Agent subject to the terms of this Agreement
as Collateral.
8. Rights and Remedies
Upon Default.
(a) Upon the occurrence of any Event
of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties shall have all the rights and remedies of a secured party
under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the following rights and powers:
(i) The Agent
shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person,
any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and Debtors shall assemble the
Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at Debtors’ premises
or elsewhere, and make available to the Agent, without rent, all of Debtors’ respective premises and facilities for the purpose
of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.
(ii) Upon
notice to the Debtors by Agent, all rights of Debtors to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of Debtors to receive the dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties,
any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s
discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or
Debtors or any of their direct or indirect subsidiaries.
(iii) The Agent
shall have the right to operate the business of Debtors using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to Debtors or right
of redemption of Debtors, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral,
the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all
or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of Debtors,
which are hereby waived and released.
(iv) The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such
account debtors and obligors.
(v) The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.
(vi) The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of Debtors at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.
(b) The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors
will only be credited with payments actually made by the purchaser. In addition, Debtors waive any and all rights that they may
have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.
(c) For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, Debtors hereby grant to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to Debtors) to use, license or sublicense following an Event
of Default, any Intellectual Property now owned or hereafter acquired by Debtors, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9. Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of
Notes at the time of any such determination), and to the payment of any other amounts required by applicable law, after which the
Secured Parties shall pay to the Debtors any surplus proceeds. If, upon the sale, license or other disposition of the Collateral,
the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable
law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties to collect
such deficiency. To the extent permitted by applicable law, Debtors waive all claims, damages and demands against the Secured Parties
arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful
misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
10. Securities
Law Provision. Debtors recognize that Agent may be limited in its ability to effect a sale to the public of all or part of
the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state
securities laws (collectively, the “Securities Laws”),
and may be compelled to resort to one or more sales to a restricted group of purchasers who may be required to agree to acquire
the Pledged Securities for their own account, for investment and not with a view to the distribution or resale thereof. Debtors
agree that sales so made may be at prices and on terms less favorable than if the Pledged Securities were sold to the public,
and that Agent has no obligation to delay the sale of any Pledged Securities for the period of time necessary to register the
Pledged Securities for sale to the public under the Securities Laws. Debtors shall cooperate with Agent in its attempt to satisfy
any requirements under the Securities Laws (including, without limitation, registration thereunder if requested by Agent) applicable
to the sale of the Pledged Securities by Agent.
11. Costs and
Expenses. Debtors agree to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial
releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent. The Debtors
shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice, imperil
or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents,
which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction,
foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or
enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the Secured
Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of
the Secured Parties under the Notes. Until so paid, any fees payable hereunder shall be added to the principal amount of the Notes
and shall bear interest at the Default Rate.
12. Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i) has any duty
(either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating
to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) Debtors shall remain
obligated and liable under each contract or agreement included in the Collateral to be observed or performed by Debtors thereunder.
Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral,
nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations of Debtors under or pursuant
to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent or any
Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled at any time or times.
13. Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from the Notes or any other agreement entered into in connection with the foregoing; (c) any
exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by
the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or
arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or
equitable defense available to Debtors, or a discharge of all or any part of the Security Interests granted hereby. Until the
Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the
Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or
bankruptcy. Debtors expressly waive presentment, protest, notice of protest, demand, notice of nonpayment and demand for
performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured
Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to
any party other than the Secured Parties, then, in any such event, Debtors’ obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of
this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions
hereof. Debtors waive all right to require the Secured Parties to proceed against any other person or entity or to apply any
Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Debtors waive
any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.
14. Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Notes have
been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtors contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative
and in full force and effect regardless of the termination of this Agreement.
15. Power
of Attorney; Further Assurances.
(a) Debtors
authorize the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as Debtors’ true and lawful attorney-in-fact, with power, in the name of the Agent or Debtors,
to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders
or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or
any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtors, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Notes all as fully and effectually as the Debtors might
or could do; and Debtors hereby ratify all that said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any
of the Obligations shall be outstanding. The designation set forth herein shall be
deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which
Debtors are subject or to which Debtors are a party. Without limiting the generality of the foregoing, after the occurrence
and during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United
States Patent and Trademark Office and the United States Copyright Office.
(b) On
a continuing basis, Debtors will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached
hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested
by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under
the UCC.
(c) Debtors
hereby irrevocably appoint the Agent as Debtors’ attorney-in-fact, with full authority in the place and instead of Debtors
and in the name of Debtors, from time to time in the Agent’s discretion, to take any action and to execute any instrument
which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole
discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without
the signature of Debtors where permitted by law, which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent.
This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding.
16. Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement
(as such term is defined in the Notes).
17. Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying
or affecting any of the Secured Parties’ rights and remedies hereunder.
18. Appointment
of Agent. The Secured Parties hereby appoint GEMG LLC to act as their agent (“Agent”) for purposes of
exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment shall continue until revoked in
writing by a Majority in Interest, at which time a Majority in Interest
shall appoint a new Agent. The Agent shall have the rights,
responsibilities and immunities set forth in Annex B hereto.
19. Miscellaneous.
(a) No
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b) All
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or
by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c) This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors
and the Secured Parties holding 51% or more of the principal amount of Notes then outstanding, or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is sought.
(d) If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(e) No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f) This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtors
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other
than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”
(g) Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
(h) Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily
governed by the jurisdiction or situs where the Collateral is located, Debtors agree that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Notes (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the City of New York, Borough of Manhattan. Except to the extent mandatorily governed
by the jurisdiction or situs where the Collateral is located, Debtors hereby irrevocably submit 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 proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any
such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
(i) This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such facsimile signature were the original thereof.
(j) Debtors
shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively,
“Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the foregoing) imposed
on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from this Agreement
or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from
the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision of a court of competent
jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification provision in
the Notes, the Purchase Agreement (as such term is defined in the Notes) or any other agreement, instrument or other document executed
or delivered in connection herewith or therewith.
(k) Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in Debtors or any if their
direct or indirect subsidiaries that is a partnership or as a member in Debtors or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any
partnership agreement or limited liability company agreement, as applicable, of any Debtors or any of their direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for Debtors as a partner
or member, as applicable, pursuant hereto.
(l) To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the
consent, approval or action of any partner or member, as applicable, of Debtors or any direct or indirect subsidiary of Debtors
or compliance with any provisions of any of the Organizational Documents, the Debtors hereby grants such consent and approval
and waives any such noncompliance with the terms of said documents.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF,
the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
Amarantus Bioscience Holdings, Inc. |
Amarantus THERAPEUTICS, Inc. |
Amarantus THERAPEUTICS, Inc. |
[SIGNATURE PAGE OF HOLDERS TO SA]
Name of Investing Entity: __________________________
Signature of Authorized Signatory of
Investing entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
ANNEX A
to
SECURITY
AGREEMENT
FORM OF
ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of July 9, 2015
made by
Amarantus Bioscience Holdings, Inc.,
and its subsidiaries party thereto from
time to time, as Debtors
to and in favor of
the Secured Parties identified therein (the
“Security Agreement”)
Reference is made to
the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings
given to such terms in, or by reference in, the Security Agreement.
The undersigned hereby
agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned shall (a)
be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtor under the Security
Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made
the representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor Joinder.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST
IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS
SET FORTH THEREIN.
Attached hereto are
supplemental and/or replacement Schedules to the Security Agreement, as applicable.
An executed copy of
this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on or
after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured
Parties.
IN WITNESS WHEREOF,
the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.
|
[Name of Additional Debtor] |
|
|
|
By: |
|
Name: |
|
Title: |
|
|
|
Address: |
Dated:
ANNEX B
to
SECURITY
AGREEMENT
THE AGENT
1. Appointment.
The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided
in the Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance of the benefits
of the Agreement, hereby designate ______ (“Agent”) as the Agent to act as specified herein and in the Agreement.
Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions of
the Agreement and any other Transaction Document (as such term is defined in the Purchase Agreement) and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof
and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or
through its agents or employees.
2. Nature of Duties.
The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither the Agent nor any
of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted
by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence of any
oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct
as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement or any other Transaction
Document a fiduciary relationship in respect of Debtor or any Secured Party; and nothing in the Agreement or any other Transaction
Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect
of the Agreement or any other Transaction Document except as expressly set forth herein and therein.
3. Lack of Reliance
on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Debtor and
its subsidiaries in connection with such Secured Party’s investment in the Debtor, the creation and continuance of the Obligations,
the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of the Debtor and its subsidiaries, and of the value of the Collateral from
time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured
Party with any credit, market or other information with respect thereto, whether coming into its possession before any Obligations
are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtor or any Secured Party for any
recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered
in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility,
priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition of the Debtor or the
value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of the Debtor, or
the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under the Agreement,
the Notes or any of the other Transaction Documents.
4. Certain Rights
of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the Secured
Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any material act
or action (including failure to act) in connection with the Agreement or any other Transaction Document, and shall be entitled
to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions are not provided
despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such action, and if
such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions to be taken
by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without limiting the
foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and the Debtor
shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to the foregoing
and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected to expose
it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.
5. Reliance. The
Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made
by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Transaction Documents
and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and the
other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary notwithstanding,
the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned by the Debtor
or is cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently or
lawfully created, perfected, or enforced or are entitled to any particular priority.
6. Indemnification.
To the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties will jointly and severally reimburse
and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Notes, from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder
or under the Agreement or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other
Transaction Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction
to have resulted solely from the Agent's own gross negligence or willful misconduct. Prior to taking any action hereunder as Agent,
the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect
the Agent for costs and expenses associated with taking such action.
7. Resignation by
the Agent.
(a) The Agent
may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents at any
time by giving 30 days' prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties. Such resignation
shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.
(b)
Upon any such notice of resignation, the Secured Parties, acting by a Majority in Interest, shall appoint a successor Agent
hereunder.
(c) If a
successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtor and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not limited
to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable by the Debtor
on demand.
8. Rights with respect
to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not, and shall
not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other agreement
or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or any of the other Secured
Parties in respect of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement)
and (ii) that such Secured Party has no other rights with respect to the Collateral other than as set forth in this Agreement and
the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and
the retiring Agent shall be discharged from its duties and obligations under the Agreement. After any retiring Agent’s
resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex B shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent.
SCHEDULE A
¨
SCHEDULE B
¨
SCHEDULE C
¨
SCHEDULE D
¨
SCHEDULE E
¨
SCHEDULE F
¨
SCHEDULE G
¨
SCHEDULE H
¨
SCHEDULE I
¨
Exhibit 99.1
Amarantus
to Commence Trading on the OTCQX Marketplace under Existing Ticker Symbol AMBS
- Company progressing toward a national
stock exchange listing -
SAN FRANCISCO, CA and GENEVA,
SWITZERLAND, July 13, 2015 - Amarantus BioScience Holdings, Inc. (OTCQX: AMBS), a biotechnology company focused on
developing therapeutic and diagnostic products for diseases in the areas of neurology, psychiatry, ophthalmology and regenerative
medicine, announced that it has received approval to commence trading on the OTCQX® Best Marketplace (OTCQX)
at market open today, July 13, 2015, under existing ticker symbol, “AMBS.”
“We are very pleased to have achieved
OTC Markets Group’s requirements for its premier securities marketplace,” said Gerald E. Commissiong, President and
Chief Executive Officer of Amarantus. “Trading on the OTCQX is another step toward our goal of a near-term up-listing to
a national stock exchange, and will improve the Company’s ability to attract institutional investors from both inside and
outside the United States. This latest corporate milestone should provide additional visibility within the investment community
enabling us to build awareness more broadly and expand the current shareholder base in order to drive shareholder value.”
Investors may find current financial disclosure
and real-time quotes for Amarantus on www.otcmarkets.com.
About Amarantus BioScience Holdings,
Inc.
Amarantus BioScience Holdings (AMBS) is
a biotechnology company developing treatments and diagnostics for diseases in the areas of neurology, psychiatry, ophthalmology
and regenerative medicine. AMBS' Therapeutics division has development rights to eltoprazine, a Phase 2b ready small molecule indicated
for Parkinson's disease levodopa-induced dyskinesia, adult ADHD and Alzheimer's aggression, and owns the intellectual property
rights to a therapeutic protein known as mesencephalic-astrocyte-derived neurotrophic factor (MANF) and is developing MANF-based
products as treatments for brain and ophthalmic disorders. AMBS' Diagnostics division owns the rights to MSPrecise®,
a proprietary next-generation DNA sequencing (NGS) assay for the identification of patients with relapsing-remitting multiple sclerosis
(RRMS) at first clinical presentation, has an exclusive worldwide license to the Lymphocyte Proliferation test (LymPro Test®)
for Alzheimer's disease, which was developed by Prof. Thomas Arendt, Ph.D., from the University of Leipzig, and owns intellectual
property for the diagnosis of Parkinson's disease (NuroPro). AMBS also owns the discovery of neurotrophic factors (PhenoGuard™)
that led to MANF's discovery.
For further information please visit www.Amarantus.com,
or connect with the Company on Facebook, LinkedIn, Twitter and Google+.
Forward-Looking Statements
Certain statements, other than purely historical
information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results,
and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally
are identified by the words "believes," "project," "expects," "anticipates," "estimates,"
"intends," "strategy," "plan," "may," "will," "would," "will be,"
"will continue," "will likely result," and similar expressions. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include,
but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating
forward-looking statements and undue reliance should not be placed on such statements.
Investor and Media Contact:
Jenene Thomas
Jenene Thomas Communications, LLC
Investor Relations and Corporate Communications Advisor
T: (US) 908.938.1475
E: jenene@jenenethomascommunications.com
Source: Amarantus Bioscience Holdings, Inc.
###
Exhibit 99.2
Amarantus Completes Acquisition of ESS
from Lonza
for the Treatment of Severe Burns
- Amarantus now has full ownership
of Cutanogen Corporation, which has exclusive worldwide license to Orphan Drug Product Candidate Engineered Skin Substitute (ESS)
-
SAN FRANCISCO, CA, and GENEVA, SWITZERLAND
– July 15, 2015 - Amarantus BioScience Holdings, Inc. (OTCQX: AMBS), a biotechnology
company focused on developing therapeutic and diagnostic products for diseases in the areas of neurology, psychiatry, ophthalmology
and regenerative medicine, announced that it has completed the acquisition of Cutanogen Corporation (“Cutanogen”)
from Lonza Walkersville, Inc. (“Lonza”), a subsidiary of Lonza Group Ltd. Cutanogen has an exclusive worldwide license
to intellectual property rights associated with Engineered Skin Substitute (“ESS”), an autologous full thickness skin
replacement product in development for the treatment of severe burns. ESS has received orphan drug designation from the U.S. Food
and Drug Administration for the treatment of hospitalized patients with deep partial and full thickness burns requiring grafting.
With this agreement, Amarantus has engaged Lonza via a long-term services agreement to manufacture ESS under Good Manufacturing
Practices for human clinical trials, and subsequent commercial distribution.
“The completion of the acquisition
of Cutanogen from Lonza represents a cornerstone of Amarantus’ therapeutics acquisition strategy as the company prepares
for its upcoming listing on a national exchange,” said Gerald E. Commissiong, President & CEO of Amarantus. “ESS
is a potentially revolutionary solution for the treatment of severe burns that has demonstrated initial human proof-of-concept
in an investigator-initiated setting. Going forward, Amarantus plans to take this program through a stringent corporate-sponsored
regulatory development program under an already open IND with the FDA, to gain marketing approval, initially for the treatment
of severe burns in the United States. The company intends to work closely with US regulatory authorities under the orphan drug
designation pathway to achieve this objective.”
Details regarding the financial components
of the transaction are available on Form 8-K filed with the Securities Exchange Commission (“SEC”) and may be accessed
on the SEC’s website at www.sec.gov.
Maxim Group, LLC served as M&A advisor
to Amarantus on the transaction.
About Engineered Skin Substitute (ESS)
Engineered Skin Substitute (ESS) is a tissue-engineered
skin prepared from autologous (patient's own) skin cells. It is a combination of cultured epithelium with a collagen-fibroblast
implant that produces a skin substitute that contains both epidermal and dermal components. This model has been shown in preclinical
studies to generate a functional skin barrier. Most importantly, self-to-self skin grafts for autologous skin tissue are less likely
to be rejected by the immune system of the patient, unlike with porcine or cadaver grafts in which immune system rejection is a
possibility. ESS has been used in an investigator initiated clinical setting in over 130 human subjects, primarily pediatric patients,
for the treatment of severe burns up to 95% total body surface area.
About Amarantus BioScience Holdings,
Inc.
Amarantus BioScience Holdings (AMBS) is
a biotechnology company developing treatments and diagnostics for diseases in the areas of neurology, psychiatry, ophthalmology
and regenerative medicine. AMBS’ Therapeutics division has development rights to eltoprazine, a Phase 2b small molecule indicated
for Parkinson's disease levodopa-induced dyskinesia, adult ADHD and Alzheimer’s aggression, an exclusive worldwide license
to intellectual property rights associated with Engineered Skin Substitute (“ESS”), an autologous full thickness skin
replacement product in development for the treatment of severe burns and owns the intellectual property rights to a therapeutic
protein known as mesencephalic-astrocyte-derived neurotrophic factor (MANF) and is developing MANF-based products as treatments
for brain and ophthalmic disorders. AMBS’ Diagnostics division owns the rights to MSPrecise®, a proprietary
next-generation DNA sequencing (NGS) assay for the identification of patients with relapsing-remitting multiple sclerosis (RRMS)
at first clinical presentation, has an exclusive worldwide license to the Lymphocyte Proliferation test (LymPro Test®)
for Alzheimer's disease, which was developed by Prof. Thomas Arendt, Ph.D., from the University of Leipzig, and owns intellectual
property for the diagnosis of Parkinson's disease (NuroPro). AMBS also owns the discovery of neurotrophic factors (PhenoGuard™)
that led to MANF’s discovery.
For further information please visit www.Amarantus.com,
or connect with the Company on Facebook, LinkedIn, Twitter and Google+.
Forward-Looking Statements
Certain statements, other than purely historical
information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results,
and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally
are identified by the words "believes," "project," "expects," "anticipates," "estimates,"
"intends," "strategy," "plan," "may," "will," "would," "will be,"
"will continue," "will likely result," and similar expressions. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include,
but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating
forward-looking statements and undue reliance should not be placed on such statements.
Investor and Media Contact:
Jenene Thomas
Jenene Thomas Communications, LLC
Investor Relations and Corporate Communications
Advisor
T: (US) 908.938.1475
E: jenene@jenenethomascommunications.com
Source: Amarantus Bioscience Holdings,
Inc.
###
Amarantus Bioscience (CE) (USOTC:AMBS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Amarantus Bioscience (CE) (USOTC:AMBS)
Historical Stock Chart
From Apr 2023 to Apr 2024