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):
March 4, 2016
MEDICAL ALARM CONCEPTS HOLDING, INC.
(Exact name of registrant as specified in its
charter)
Nevada |
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333-153290 |
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26-3534190 |
(State or other jurisdiction |
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(Commission File Number) |
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(IRS Employer |
of incorporation) |
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Identification No.) |
200
W. Church Road, Suite B
King
of Prussia, PA 19406
(Address of principal executive offices and
zip code)
Registrant’s telephone number, including
area code: (877) 639-2929
(Former name or former address, if changed since
last report.)
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:
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o 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.
On March 3, 2016 (the
“Closing Date”), Medical Alarm Concepts Holding, Inc. (the “Company”) closed its sale of $625,000 worth
of units (the “Units”), pursuant to separate subscription agreements (the “Subscription Agreements”) with
two accredited investors (the “Investors”) entered into on March 1, 2016 and March 3, 2016, respectively, at a purchase
price of $25,000 per Unit. Each Unit consists of (i) $25, 000 face amount of 10% original issue discount unsecured convertible
notes (the “Notes”), convertible into shares (as converted, the “Note Conversion Shares”) of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”) at a conversion price equal to $0.01 and (ii) one warrant
(the “Warrant”) to purchase 277,778 shares (the “Preferred C Shares”) of Series C Convertible Preferred
Stock, par value $0.0001 per preferred share, at an exercise price of $0.09 per share (such sale and issuance, the “Private
Placement”).
Any portion of the outstanding
and unpaid conversion amount of the Notes is convertible, at any time, following the date the Notes are issued, into fully paid
and nonassessable shares of Common Stock at a conversion price of $0.01 per share.
The Warrants are exercisable,
at any time, following the date the Warrants were issued, at a price of $0.09 per share, subject to adjustment, and expire three
years from the date of issuance.
The Preferred C Shares
are convertible into shares of the Company’s Common Stock in an amount equal to ten shares of Common Stock for each one share
of Preferred C stock surrendered. The stated value of each Preferred C Share is one-ten thousandth ($0.0001) of one cent and the
initial conversion price is $0.01 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations,
subdivisions or other similar events.
The Company is prohibited
from effecting a conversion of the Preferred C Shares to the extent that, as a result of such conversion, such Investor would beneficially
own more than 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon conversion of the Preferred C Shares, which beneficial ownership limitation may be increased by the holder
up to, but not exceeding, 9.99%.
Pursuant to the
Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock (the “Series C Certificate
of Designations”), the holders of shares of Series C Preferred Stock shall vote together with the holders of Common Stock
on all matters and shall not vote as a separate class. From February 26, 2016 through February 25, 2017, a holder of shares of
Series C Preferred Stock shall be entitled to that number of votes, on a pro rata basis with all other holders of Series C Preferred
Stock, equal to that number of common shares which is not less than 51% of the vote required to approve any action, which Nevada
law provides may or must be approved by vote or consent of the holders of other series of voting preferred shares and the holders
of common shares or the holders of other securities entitled to vote. Following February 28, 2017, each holder of Series C Preferred
Stock shall be entitled to vote on all matters submitted to shareholders of the Corporation and shall be entitled to ten votes
for each share of Series C Preferred Stock owned on the record date for the determination of shareholders entitled to vote on such
matter or, if no such record date is established, on the date such vote is taken or any written consent of shareholders is solicited.
The offering was made
pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”). On the Closing Date the Company entered into separate registration rights agreements (the “Registration
Rights Agreements”) with each of the Investors, pursuant to which the Company will undertake to file a registration statement
to register the Common Stock issued as part of the Units and the Common Stock issuable upon the conversion of the Preferred C Shares,
within thirty days following the Closing Date, to cause such registration statement to be declared effective by the Securities
and Exchange Commission within ninety-days of the filing day and to maintain the effectiveness of the registration statement until
all of such shares of Common Stock have been sold or are otherwise able to be sold pursuant to Rule 144. In the event
the Company fails to file, or obtain effectiveness of, such registration statement with the given period of time, the Company will
be obligated to pay liquidated damages to the Investors for every thirty days during which such filing is not made and/or effectiveness
obtained, such fee being subject to certain exceptions.
The foregoing descriptions
of the Notes, the Warrants, the Preferred C Shares, the Subscription Agreements and the Registration Rights Agreements are not
complete and are qualified in their entireties by reference to the full text of the Series C Certificate of Designations, the Form
of the convertible Notes, the Form of the purchase Warrants, the Form of Subscription Agreements and the Form of Registration Rights
Agreements copies of which are filed as Exhibit 3.1, Exhibit 4.1, Exhibit 4.2, Exhibit 4.3, Exhibit 4.4, respectively, to this
report and are incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities
On March 3, 2016, the Company
completed the closing of the Private Placement and issued the Units, each consisting of a total of one $25,000 Note and one Warrant
to purchase Preferred C Shares, in exchange for aggregate gross proceeds of $612,500. The details of this transaction are described
in Item 1.01, which is incorporated by reference, in its entirety, into this Item 3.02.
The Units, the Notes, the
Warrants and the Preferred C Shares have not been registered under the Securities Act, or the securities laws of any state, and
were offered and issued in reliance on the exemption from registration under the Securities Act, afforded by Section 4(a)(2).
Item 5.03 Amendments to Articles of Incorporation
or Bylaws; Change in Fiscal Year.
On February 29, 2016 the
Company filed the Series C Certificate of Designations with the Nevada Secretary of State. Reference is made to the disclosure
set forth under Item 1.01 above, which is incorporated by reference, in its entirety, into this Item 5.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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 hereunto duly authorized.
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Medical Alarm Concepts Holding, Inc. |
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Dated: March 4, 2016 |
/s/ Ronnie Adams |
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Ronnie Adams |
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Chief Executive Officer |
EXHIBIT INDEX
3.1 |
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Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of Medical Alarm Concepts Holding, Inc. |
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4.1 |
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Form of Convertible Notes |
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4.2 |
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Form of Purchase Warrants |
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4.3 |
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Form of Subscription Agreements |
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4.4 |
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Form of Registration Rights Agreements |
MEDICAL ALARM CONCEPTS HOLDINGS, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 78 OF THE
NEVADA REVISED STATUTES
The undersigned,
Chief Executive Officer of Medical Alarm Concepts Holdings, Inc., a Nevada corporation (the “Corporation”) DOES
HEREBY CERTIFY that the following resolutions were duly adopted by the Board of Directors of the Corporation by unanimous written
consent on February 29, 2016;
WHEREAS, the Board
of Directors is authorized within the limitations and restrictions stated in the Articles of Incorporation of the Corporation,
as amended (the “Articles”), to provide by resolution or resolutions for the issuance of 80,000,000 shares of
Preferred Stock, par value $0.000l per share, of the Corporation, in such series and with such designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations or restrictions as the Corporation’s Board
of Directors shall fix by resolution or resolutions providing for the issuance thereof duly adopted by the Board of Directors;
and
WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as aforesaid, to authorize and fix the terms of a series of Preferred
Stock and the number of shares constituting such series.
NOW, THEREFORE,
BE IT RESOLVED:
Section 1. Designation
and Authorized Shares. The Corporation shall be authorized to issue 6,944,445 shares of Series C Preferred Stock, par value
$0.0001 per share (the “Series C Preferred Stock”).
Section 2. Stated
Value. Each share of Series C Preferred Stock shall have a stated value of one-ten thousandth ($0.0001) of one cent (the
“Stated Value”).
Section 3. Liquidation.
(a) Upon the
liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary, each holder of Series
C Preferred Stock shall be entitled to receive, for each share thereof, out of assets of the Corporation legally available therefor,
a preferential amount in cash equal to (and not more than) the Stated Value.
All preferential amounts to be paid to the holders of Series C Preferred Stock in connection with such liquidation, dissolution
or winding up shall be paid before the payment or setting apart for payment of any amount for, or the distribution of any assets
of the Corporation to the holders of (i) any other class or series of capital stock whose terms expressly provide that the
holders of Series C Preferred Stock should receive preferential payment with respect to such distribution (to the extent of such
preference) and (ii) the Corporation’s common stock (the “Common Stock”). If upon any such distribution
the assets of the Corporation shall be insufficient to pay the holders of the outstanding shares of Series C Preferred Stock (or
the holders of any class or series of capital stock ranking on a parity with the Series C Preferred Stock as to distributions in
the event of a liquidation, dissolution or winding up of the Corporation) the full amounts to which they shall be entitled, such
holders shall share ratably in any distribution of assets in accordance with the sums which would be payable on such distribution
if all sums payable thereon were paid in full.
(b) Any distribution
in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall
be made in cash to the extent possible. Whenever any such distribution shall be paid in property other than cash, the value of
such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors of the
Corporation.
Section 4.
Conversion.
(a) Conversion Right. Each holder of Series C Preferred Stock may, from time to time, convert any or all
of such holder’s shares of Series C Preferred Stock into fully paid and non-assessable shares of Common Stock in an amount
equal to ten shares of Common Stock for each one share of Series C Preferred Stock surrendered (the
“Converted Common Stock”).
(b) Conversion Procedure. In order to exercise the conversion privilege under this Section 4, the holder
of any shares of Series C Preferred Stock to be converted shall give written notice to the Corporation at its principal office
that such holder elects to convert such shares of Series C Preferred Stock or a specified portion thereof into shares of Common
Stock as set forth in such notice. At such time as the certificate or certificates representing the Series C Preferred Stock which
has been converted are surrendered to the Corporation, the Corporation shall issue and deliver a certificate or certificates representing
the number of shares of Common Stock determined pursuant to this Section 4. In case of conversion of only a part of the shares
of Series C Preferred Stock represented by a certificate surrendered to the Corporation, the Corporation shall issue and deliver
a new certificate for the number of shares of Series C Preferred Stock which have not been converted. Until such time as the certificate
or certificates representing Series C Preferred Stock which has been converted are surrendered to the Corporation and a certificate
or certificates representing the Common Stock into which such Series C Preferred Stock has been converted have been issued and
delivered, the certificate or certificates representing the Series C Preferred Stock which have been converted shall represent
the shares of Common Stock into which such shares of Series C Preferred Stock have been converted. The Corporation shall pay all
documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock issuable upon conversion of the
Series C Preferred Stock.
(c) Maximum
Conversion. Notwithstanding anything to the contrary contained herein and subject to Section 4(d), a holder of shares of Series
C Preferred Stock shall not be entitled to convert shares of Series C Preferred Stock if upon such conversion the number of shares
of Common Stock to be received, together with the number of shares of Common Stock beneficially owned by the holder and its affiliates
on the conversion date, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock of the Corporation on such conversion date (the “Beneficial Ownership Limitation”). For
the purposes of the provision in the immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. The holder shall
have the authority and obligation to determine whether the restriction contained in this Section 4(c) will limit any conversion
hereunder and to the extent that the holder determines that the limitation contained in this Section applies, the determination
of the number of shares of Series C Preferred Stock that are convertible shall be the responsibility and obligation of the holder.
By written notice to the Company, any Holder may increase or decrease the Beneficial Ownership Limitation to any other percentage
not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the 61st day after
such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to such Holder sending such notice
and not to any other Holder.
(d) Waiver of Beneficial Ownership Limitation. If the holder was a party to that certain Securities Purchase Agreement
by and between the Corporation and certain investors dated as of February 26, 2016, the holder shall be entitled to, at its option,
waive the Beneficial Ownership Limitation upon written notice to the Corporation pursuant to Section 5(o) of the Securities Purchase
Agreement.
Section 5. Voting.
(a) Except
as otherwise required by law or the conversion limitations of Section 4(c), the holders of shares of Series C Preferred Stock shall
vote together with the holders of Common Stock on all matters and shall not vote as a separate class. From February 26, 2016 through
February 25, 2017, (i) a holder of shares of Series C Preferred Stock shall be entitled to that number of votes, on a pro rata
basis with all other holders of Series C Preferred Stock, equal to that number of common shares which is not less than 51% of the
vote required to approve any action, which Nevada law provides may or must be approved by vote or consent of the holders of other
series of voting preferred shares and the holders of common shares or the holders of other securities entitled to vote and (ii)
for purposes of determining a quorum for any annual or special meeting of shareholders, the outstanding shares of Series C Preferred
Stock Shares shall be included and shall be deemed as the equivalent of
51% of the aggregate of all shares of
Common Stock and preferred stock having voting rights on the issues, represented at and entitled to vote at such meetings.
(b) Following
February 28, 2017, and subject to the conversion limitations of Section 4, (i) each holder of Series C Preferred Stock shall be
entitled to vote on all matters submitted to shareholders of the Corporation and shall be entitled to ten votes for each share
of Series C Preferred Stock owned on the record date for the determination of shareholders entitled to vote on such matter or,
if no such record date is established, on the date such vote is taken or any written consent of shareholders is solicited and (ii)
for purposes of determining a quorum for any annual or special meeting of shareholders, each outstanding share of Series C Preferred
Stock Shares shall be included and shall be deemed as the equivalent of one share of Common Stock.
Section 6. Other
Provisions. The Corporation and its transfer agent, if any, for the Series C Preferred Stock may deem
and treat the record holder of any shares of Series C Preferred Stock and, upon conversion of the Series C Preferred Stock, the
Converted Common Stock, as reflected on the books and records of the Corporation as the sole true and lawful owner thereof for
all purposes, and neither the Corporation nor any such transfer agent shall be affected by any notice to the contrary.
Section 7. Restriction
and Limitations. Except as expressly provided herein or as required by law, so long as any shares of Series C Preferred Stock
remain outstanding, the Corporation shall not, without the vote or written consent of the holders of at least a majority of the
then outstanding shares of the Series C Preferred Stock, take any action which would adversely and materially affect any of the
preferences, limitations or relative rights of the Series C Preferred Stock, including without limitation:
(A) Reduce the
amount payable to the holders of Series C Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, or change the relative seniority of the liquidation preferences of the holders of Series C Preferred Stock
to the rights upon liquidation of the holders of any other capital stock in the Corporation; or
(B) Cancel or
modify adversely and materially the voting rights as provided in Section 5 herein.
Section 8. Certain Adjustments.
(a) Stock
Dividends and Stock Splits. If the Corporation, at any time while the Series C Preferred Stock is outstanding: (A) shall
pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Corporation pursuant to the Series C Preferred Stock), (B) subdivide outstanding shares of Common Stock
into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into
a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporations,
each share of Series C Preferred Stock shall receive such consideration as if such number of shares of Series C Preferred Stock
had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder
of one share of Common Stock. Any adjustment made pursuant to this Section 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) Fundamental
Transaction. If, at any time while the Series C Preferred Stock is outstanding, (A) the Corporation effects any merger
or consolidation of the Corporation with or into another Person, (B) the Corporation effects any sale of all or substantially
all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether
by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, or (D) the Corporation effects any reclassification 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 (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this
Series C Preferred Stock, the holders of the Series C Preferred Stock shall have the right to receive, for each share of Common
Stock that would have been issuable upon such conversion immediately prior to the occurrence of such
Fundamental Transaction, the same kind
and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction
if it had been immediately prior to such Fundamental Transaction, the holder of one share of Common Stock. For purposes
hereof, “Person” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or Section 14(d)(2)
of the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, the undersigned have
executed this Certificate of Designation this 29th day of February, 2016.
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MEDICAL ALARM CONCEPTS HOLDING, INC.
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By: |
/s/ Ronnie Adams |
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Name: |
Ronnie Adams |
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Title: |
Chief Executive Officer |
SENIOR CONVERTIBLE NOTE
NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF.
MEDICAL
ALARM CONCEPTS HOLDING, Inc.
SENIOR
CONVERTIBLE NOTE
Issuance Date: February __, 2016 |
Original Principal Amount: U.S. $________ |
FOR VALUE RECEIVED,
MEDICAL ALARM CONCEPTS HOLDING, Inc., a Nevada corporation (the "Company"), hereby promises to pay to __________
or registered assigns (the "Holder") in cash and/or in shares of Common Stock (as defined below) the amount set
out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise,
the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise
(in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal
at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date") until the
same becomes due and payable, whether upon the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in
accordance with the terms hereof). This Senior Convertible Note (including all Convertible Notes issued in exchange, transfer or
replacement hereof, this "Note") is one of an issue of Senior Convertible Notes issued pursuant to the Securities
Purchase Agreement on the Closing Date (collectively, the "Notes" and such other Senior Convertible Notes, the
"Other Notes"). Certain capitalized terms used herein are defined in Section 27. The parties confirm that
this is an original issue discount note and that upon execution thereof the Company shall receive $_____.
(1)
PAYMENTS OF PRINCIPAL; PREPAYMENT. The Company acknowledges and agrees that this Note
was issued at an original issue discount. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing
all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 21(b)) on such
Principal and Interest. The "Maturity Date" shall be February ___, 2017, as may be extended at the option
of the Holder. In order to extend the Maturity Date pursuant to the immediately preceding sentence, the Holder shall, on or prior
to the then existing Maturity Date, deliver a written notice to the Company specifying the terms of the extension. Other than as
specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest
or accrued and unpaid Late Charges on Principal and Interest, if any.
(2)
INTEREST. Interest on this Note shall commence accruing on the Issuance Date at the
Interest Rate and shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in arrears on
the Maturity Date. Interest shall be payable on the Maturity Date or, if such date falls on a Holiday, the next day that is not
a Holiday, to the record holder of this Note on the Maturity Date in cash by wire transfer of immediately available funds pursuant
to wire instructions provided by the Holder in writing to the Company. Prior
to the payment of Interest on the Maturity
Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of inclusion of the Interest in the Conversion
Amount (as defined in Section 3(b)(i)) on each (i) Conversion Date (as defined in Section 3(c)(i)) in accordance with Section 3(c)(i)
and/or (ii) Redemption Date. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the date of such cure; provided however, for the avoidance of doubt, that the
Interest as calculated at such increased rate shall continue to apply to the extent relating to the period between the Issuance
Date through and including the date of cure of such Event of Default; provided, further, that for the purpose of
this Section 2, such Event of Default shall not be deemed cured unless and until any accrued and unpaid Interest shall be paid
to the Holder, including, without limitation, Interest accrued at the increased rate of eighteen percent (18.0%).
(3)
CONVERSION OF NOTES. At any time or times after the Issuance Date, this Note shall
be convertible into shares of Common Stock on the terms and conditions set forth in this Section 3.
(a)
Conversion Right. Subject to the provisions of Section 3(d), at any time or times on
or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount
into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below).
The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole
share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and
delivery of Common Stock upon conversion of any Conversion Amount.
(b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any
Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(the "Conversion Rate").
(i)
"Conversion Amount" means the sum of (A) the portion of the Principal to
be converted, redeemed or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest with
respect to such Principal and (C) accrued and unpaid Late Charges, if any, with respect to such Principal and Interest.
(ii)
"Conversion Price" means, as of any Conversion Date or other date of determination,
$0.01 per share, subject to adjustment as provided herein.
(c)
Mechanics of Conversion.
(i)
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on
any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile or electronic mail (or otherwise deliver),
for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached
hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 3(c)(iii),
but without delaying the Company's requirement to deliver shares of Common Stock on the applicable Share Delivery Date (as defined
below, surrender this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or
an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction). On or before the first
(1st) Business Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic
mail a confirmation of receipt of such Conversion Notice to the Holder and the Company's transfer agent (the "Transfer
Agent"). On or before the third (3rd) Trading Day following the date of receipt of a Conversion Notice (the "Share
Delivery Date"), the Company shall (x) provided that the Transfer Agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock
to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal
At Custodian system and the Company is able to provide unlegended shares hereunder in accordance with the provisions of Section
2(i) of the Securities Purchase Agreement or (y) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or is not able to provide unlegended shares hereunder in accordance with the provisions of Section 2(i) of the
Securities Purchase Agreement, issue and deliver to the address as specified in the Conversion Notice, a
certificate, registered in the
name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note
is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater
than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event
later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note
(in accordance with Section 15(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive
the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date, irrespective of the date such shares of Common Stock are credited to the
Holder's account with DTC or the date of delivery of the certificates evidencing such shares of Common Stock, as the case may be.
(ii)
Company's Failure to Timely Convert. If the Company shall fail within three business
days after the Share Delivery Date to issue and deliver a certificate to the Holder, if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, or credit the Holder's balance account with DTC, if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer Program, for the number of shares of Common Stock to which the Holder
is entitled upon the Holder's conversion of any Conversion Amount (a "Conversion Failure"), then the Holder, upon
written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be,
any portion of this Note that has not been converted pursuant to such Conversion Notice; provided that the voiding of a
Conversion Notice shall not affect the Company's obligations to make any payments which have accrued prior to the date of such
notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if the Company shall fail on or prior to the
Share Delivery Date to issue and deliver a certificate to the Holder, if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, or credit the Holder's balance account with DTC, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, for the number of shares of Common Stock to which the Holder is entitled
upon the Holder's conversion of any Conversion Amount or on any date of the Company's obligation to deliver shares of Common Stock
as contemplated pursuant to clause (y) below, and if on or after such Trading Day the Holder purchases (in an open market transaction
or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that
the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Trading
Days after the Holder's request and in the Holder's discretion, either (x) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock
so purchased (the "Buy-In Price"), at which point the Company's obligation to issue and deliver such certificate
or credit the Holder's balance account with DTC for the shares of Common Stock to which the Holder is entitled upon the Holder's
conversion of the applicable Conversion Amount shall terminate, or (y) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common Stock or credit the Holder's balance account with DTC for such shares
of Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.
(iii)
Registration; Book-Entry. The Company shall maintain a register (the "Register")
for the recordation of the names and addresses of the holders of each Note and the Principal amount of the Notes (and stated interest
thereon) held by such holders (the "Registered Notes"). The entries in the Register shall be conclusive and binding
for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded
in the Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of Principal
and Interest, if any, hereunder, notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or
in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign or sell all or
part of any Registered Note by the Holder, the Company shall record the information contained therein in the Register and issue
one or more new Registered Notes in the same aggregate Principal amount as the Principal amount of the surrendered Registered Note
to the designated assignee or transferee pursuant to Section 14. Notwithstanding anything to the contrary in this Section 3(c)(iii),
the Holder may assign any Note or any portion thereof to an Affiliate of such Holder or a Related Fund of such Holder without delivering
a request to assign or sell such Note to the Company and the
recordation of such assignment
or sale in the Register (a "Related Party Assignment"); provided, that (x) the Company may continue to
deal solely with such assigning or selling Holder unless and until such Holder has delivered a request to assign or sell such Note
or portion thereof to the Company for recordation in the Register; (y) the failure of such assigning or selling Holder to deliver
a request to assign or sell such Note or portion thereof to the Company shall not affect the legality, validity, or binding effect
of such assignment or sale and (z) such assigning or selling Holder shall, acting solely for this purpose as a non-fiduciary agent
of the Company, maintain a register (the "Related Party Register") comparable to the Register on behalf of the
Company, and any such assignment or sale shall be effective upon recordation of such assignment or sale in the Related Party Register.
Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice
may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and
the Company shall maintain records showing the Principal, Interest and Late Charges, if any, converted and the dates of such conversions
or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender
of this Note upon conversion.
(iv)
Disputes. In the event of a dispute as to the number of shares of Common Stock issuable
to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common
Stock not in dispute and resolve such dispute in accordance with Section 20.
(d)
Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the
Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right to convert any portion
of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated as if
never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the "Maximum Percentage") of the shares of Common Stock outstanding
immediately after giving effect to such conversion. For purposes of determining the number of outstanding shares of Common Stock
the Holder may acquire upon the conversion of the Note without exceeding the Maximum Percentage, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (i) the Company's most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (ii) a more recent public announcement
by the Company or (iii) any other written notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding (the "Reported Outstanding Share Number"). If the Company receives a Conversion Notice from
the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number,
the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that
such Conversion Notice would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section 3(d), to
exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Common Stock to be purchased
pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall
within one (1) Trading Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock
then outstanding. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 3(d) to the extent necessary to correct this paragraph (or any portion of this paragraph) which
may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 3(d) or to make changes
or supplements necessary or desirable to properly give effect to such limitation. By written notice to the Company, any Holder
may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided
that (i) any such increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any
such increase or decrease will apply only to such Holder sending such notice and not to any other Holder.
(4)
RIGHTS UPON EVENT OF DEFAULT.
(a)
Event of Default. Each of the following events shall constitute an "Event of
Default":
(i)
(A) the suspension of the Common Stock from trading on an Eligible Market for a period of
two (2) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period or (B) the failure
of the Common Stock to be listed on an Eligible Market;
(ii)
the Company's (A) failure to cure a Conversion Failure by delivery of the required number
of shares of Common Stock within five (5) Business Days after the applicable Conversion Date or (B) notice, written or oral, to
the Holder or any holder of the Other Notes, including by way of public announcement or through any of its agents, at any time,
of its intention not to comply with a request for conversion of this Note or any Other Notes into shares of Common Stock that is
tendered in accordance with the provisions of this Note or the Other Notes, other than pursuant to Section 3(d) (and analogous
provisions under the Other Notes);
(iii)
the Company's failure to pay to the Holder any amount of Principal, Interest, Late Charges
or other amounts when and as due under this Note or any other Transaction Document or any other agreement, document, certificate
or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Holder is a party,
except, in the case of a failure to pay Interest and/or Late Charges when and as due, in which case only if such failure continues
for a period of at least an aggregate of two (2) Business Days;
(iv)
any default under, redemption of or acceleration prior to maturity of any Indebtedness of
the Company or any of its Subsidiaries other than with respect to this Note or any Other Notes in excess of $100,000 of principal
amount of unsecured Indebtedness;
(v)
the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S.
Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, "Bankruptcy Law"),
(A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents
to the appointment of a receiver, trustee, assignee, liquidator or similar official (a "Custodian"), (D) makes
a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as
they become due;
(vi)
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that
(A) is for relief against the Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company
or any of its Subsidiaries or (C) orders the liquidation of the Company or any of its Subsidiaries;
(vii)
a final judgment or judgments for the payment of money aggregating in excess of $100,000 are
rendered against the Company or any of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided,
however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included
in calculating the $100,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer
or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment
is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty
(30) days of the issuance of such judgment;
(viii)
other than as specifically set forth in another clause of this Section 4(a), the Company or
any of its Subsidiaries breaches any representation, warranty, covenant or other term or condition of any Transaction Document,
except, in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable, only if
such breach continues for a period of at least an aggregate of five (5) Business Days;
(ix)
any breach or failure in any respect to comply with Section 12 of this Note;
(x)
any material damage to, or loss, theft or destruction of, a material amount of property of
the Company, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could reasonably be expected
to have a Material Adverse Effect (as defined in the Securities Purchase Agreement);
(xi)
a false or inaccurate certification (including a false or inaccurate deemed certification)
by the Company as to whether any Event of Default has occurred; or
(xii)
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b)
Redemption Right. Upon the occurrence of an Event of Default with respect to this Note
or any Other Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile or electronic mail
and overnight courier (an "Event of Default Notice") to the Holder. At any time after the earlier of the Holder's
receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company
to redeem (an "Event of Default Redemption") all or any portion of this Note by delivering written notice thereof
(the "Event of Default Redemption Notice") to the Company, which Event of Default Redemption Notice shall indicate
the portion of this Note the Holder is electing to require the Company to redeem. Each portion of this Note subject to redemption
by the Company pursuant to this Section 4(b) shall be redeemed by the Company in cash by wire transfer of immediately available
funds at a price equal to 125% of the Conversion Amount being redeemed (the "Event of Default Redemption Price").
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 10. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any interest thereon) is paid in full,
the Conversion Amount submitted for redemption under this Section 4(b) (together with any interest thereon) may be converted, in
whole or in part, by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the event of the Company's
redemption of any portion of the Note under this Section 4(b), the Holder's damages would be uncertain and difficult to estimate
because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any Event of Default redemption premium due under this Section 4(b) is intended
by the parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and
not as a penalty.
(5)
RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction
unless the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction
Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory
to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements, if so
requested by the Holder, to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal
amount and interest rate equal to the Principal amounts and the Interest Rates of the Notes then outstanding held by such holder,
having similar conversion rights and having similar ranking to the Notes, and satisfactory to the Required Holders. Any security
issuable or potentially issuable to the Holder pursuant to the terms of this Note on the consummation of a Fundamental Transaction
shall be registered and freely tradable by the Holder without any restriction or limitation or the requirement to be subject to
any holding period pursuant to any applicable securities laws. No later than (i) thirty (30) days prior to the occurrence or consummation
of any Fundamental Transaction or (ii) if later, the first Trading Day following the date the Company first becomes aware of the
occurrence or potential occurrence of a Fundamental Transaction, the Company shall deliver written notice thereof via facsimile
or electronic mail and overnight courier to the Holder. Upon the occurrence or consummation of any Fundamental Transaction, and
it shall be a required condition to the occurrence or consummation of any Fundamental Transaction that, the Company and the Successor
Entity or Successor Entities, jointly and severally, shall succeed to, and the Company shall cause any Successor
Entity or Successor Entities to jointly
and severally succeed to, and be added to the term "Company" under this Note (so that from and after the date of such
Fundamental Transaction, each and every provision of this Note referring to the "Company" shall refer instead to each
of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Company and the Successor Entity
or Successor Entities, jointly and severally, may exercise every right and power of the Company prior thereto and shall assume
all of the obligations of the Company prior thereto under this Note with the same effect as if the Company and such Successor Entity
or Successor Entities, jointly and severally, had been named as the Company in this Note, and, solely at the request of the Holder,
if the Successor Entity and/or Successor Entities is a publicly traded corporation whose common capital stock is quoted on or listed
for trading on an Eligible Market, shall deliver (in addition to and without limiting any right under this Note) to the Holder
in exchange for this Note a security of the Successor Entity and/or Successor Entities evidenced by a written instrument substantially
similar in form and substance to this Note and convertible for a corresponding number of shares of capital stock of the Successor
Entity and/or Successor Entities (the "Successor Capital Stock") equivalent (as set forth below) to the shares
of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of
this Note) prior to such Fundamental Transaction (such corresponding number of shares of Successor Capital Stock to be delivered
to the Holder shall equal the greater of (I) the quotient of (A) the aggregate dollar value of all consideration (including cash
consideration and any consideration other than cash ("Non-Cash Consideration"), in such Fundamental Transaction,
as such values are set forth in any definitive agreement for the Fundamental Transaction that has been executed at the time of
the first public announcement of the Fundamental Transaction or, if no such value is determinable from such definitive agreement,
as determined in accordance with Section 20 with the term "Non-Cash Consideration" being substituted for the term "Conversion
Price") that the Holder would have been entitled to receive upon the happening of such Fundamental Transaction or the record,
eligibility or other determination date for the event resulting in such Fundamental Transaction, had this Note been converted immediately
prior to such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental
Transaction (without regard to any limitations on the conversion of this Note) (the "Aggregate Consideration")
divided by (B) the per share Closing Sale Price of such corresponding Successor Capital Stock on the Trading Day immediately prior
to the consummation or occurrence of the Fundamental Transaction and (II) the product of (A) the quotient obtained by diving (x)
the Aggregate Consideration, by (y) the Closing Sale Price of the Common Stock on the Trading Day immediately prior to the consummation
or occurrence of the Fundamental Transaction and (B) the highest exchange ratio pursuant to which any stockholder of the Company
may exchange Common Stock for Successor Capital Stock) (provided, however, to the extent that the Holder's right
to receive any such shares of publicly traded common stock (or their equivalent) of the Successor Entity would result in the Holder
and its other Attribution Parties exceeding the Maximum Percentage, if applicable, then the Holder shall not be entitled to receive
such shares to such extent (and shall not be entitled to beneficial ownership of such shares of publicly traded common stock (or
their equivalent) of the Successor Entity as a result of such consideration to such extent) and the portion of such shares shall
be held in abeyance for the Holder until such time or times, as its right thereto would not result in the Holder and its other
Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be delivered such shares to the extent
as if there had been no such limitation), and such security shall be satisfactory to the Holder, and with an identical conversion
price to the Conversion Price hereunder (such adjustments to the number of shares of capital stock and such conversion price being
for the purpose of protecting after the consummation or occurrence of such Fundamental Transaction the economic value of this Note
that was in effect immediately prior to the consummation or occurrence of such Fundamental Transaction, as elected by the Holder
solely at its option). Upon occurrence or consummation of the Fundamental Transaction, and it shall be a required condition to
the occurrence or consummation of such Fundamental Transaction that, the Company and the Successor Entity or Successor Entities
shall deliver to the Holder confirmation that there shall be issued upon conversion of this Note at any time after the occurrence
or consummation of the Fundamental Transaction, as elected by the Holder solely at its option, shares of Common Stock, Successor
Capital Stock or, in lieu of the shares of Common Stock or Successor Capital Stock (or other securities, cash, assets or other
property purchasable upon the conversion of this Note prior to such Fundamental Transaction), such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights), which for purposes
of clarification may continue to be shares of Common Stock, if any, that the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such
Fundamental Transaction, had this Note been converted immediately prior to such Fundamental Transaction or the record, eligibility
or other determination date for the event resulting in such Fundamental Transaction (without regard to any limitations on the conversion
of this Note), as adjusted in accordance with the provisions of this Note. The provisions of this Section 5(a) shall apply similarly
and equally to successive Fundamental Transactions.
(b)
Redemption Right. No sooner than twenty-five (25) days nor later than twenty (20) days
prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Company
shall deliver written notice thereof via facsimile or electronic mail and overnight courier to the Holder (a "Change of
Control Notice"). At any time during the period beginning on the earlier to occur of (x) any oral or written agreement
by the Company or any of its Subsidiaries, upon consummation of which the transaction contemplated thereby would reasonably be
expected to result in a Change of Control, (y) the Holder becoming aware of a Change of Control and (z) the Holder's receipt of
a Change of Control Notice and ending twenty-five (25) Trading Days after the date of the consummation of such Change of Control,
the Holder may require the Company to redeem (a "Change of Control Redemption") all or any portion of this Note
by delivering written notice thereof ("Change of Control Redemption Notice") to the Company, which Change of Control
Redemption Notice shall indicate the Conversion Amount the Holder is electing to require the Company to redeem. The portion of
this Note subject to redemption pursuant to this Section 5(b) shall be redeemed by the Company in cash by wire transfer of immediately
available funds at a price equal to the greater of (x) 125% of the Conversion Amount being redeemed and (y) the product of (A)
the Conversion Amount being redeemed and (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares
of Common Stock during the period beginning on the date immediately preceding the earlier to occur of (x) the consummation of the
Change of Control and (y) the public announcement of such Change of Control and ending on the date the Holder delivers the Change
of Control Redemption Notice, by (II) the lowest Conversion Price in effect during such period (the "Change of Control
Redemption Price"). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section
10 and shall have priority to payments to stockholders in connection with a Change of Control. To the extent redemptions required
by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company,
such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject
to Section 3(d), until the Change of Control Redemption Price (together with any interest thereon) is paid in full, the Conversion
Amount submitted for redemption under this Section 5(b) (together with any interest thereon) may be converted, in whole or in part,
by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the event of the Company's redemption of
any portion of the Note under this Section 5(b), the Holder's damages would be uncertain and difficult to estimate because of the
parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment
opportunity for the Holder. Accordingly, any Change of Control redemption premium due under this Section 5(b) is intended by the
parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as
a penalty.
(6)
DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a)
Distribution of Assets. If the Company shall declare or make any dividend or other
distributions of its assets (or rights to acquire its assets) to any or all 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, options,
evidence of Indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme
of arrangement or other similar transaction) (the "Distributions"), then the Holder will be entitled to such Distributions
as if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking
into account any limitations or restrictions on the convertibility of this Note) immediately prior to the date on which a record
is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be
determined for such Distributions (provided, however, that to the extent that the Holder's right to participate in
any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of
such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such
Distribution shall be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such rights
(and any rights under this Section 6(a) on such initial rights or on any subsequent such rights to be held similarly in abeyance)
to the same extent as if there had been no such limitation).
(b)
Purchase Rights. If at any time the Company 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 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 this Note (without taking into account any limitations or restrictions on the convertibility
of this Note) immediately prior to 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, that to the extent that the Holder's right to participate
in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until such time or times as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall
be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase
Right to be held similarly in abeyance) to the same extent as if there had been no such limitation).
(c)
Other Corporate Events. In addition to and not in substitution for any other rights
hereunder, prior to the occurrence or consummation of any Fundamental Transaction pursuant to which holders of shares of Common
Stock are entitled to receive securities, cash, assets or other property with respect to or in exchange for shares of Common Stock
(a "Corporate Event"), the Company shall make appropriate provision to ensure that, and any applicable Successor
Entity or Successor Entities shall ensure that, and it shall be a required condition to the occurrence or consummation of such
Corporate Event that, the Holder will thereafter have the right to receive upon conversion of this Note at any time after the occurrence
or consummation of the Corporate Event, shares of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu
of the shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the conversion of this Note
prior to such Corporate Event (but not in lieu of such items still issuable under Sections 6(a) and 6(b), which shall continue
to be receivable on the Common Stock or on such shares of stock, securities, cash, assets or any other property otherwise receivable
with respect to or in exchange for shares of Common Stock), such shares of stock, securities, cash, assets or any other property
whatsoever (including warrants or other purchase or subscription rights and any shares of Common Stock) which the Holder would
have been entitled to receive upon the occurrence or consummation of such Corporate Event or the record, eligibility or other determination
date for the event resulting in such Corporate Event, had this Note been converted immediately prior to such Corporate Event or
the record, eligibility or other determination date for the event resulting in such Corporate Event (without regard to any limitations
on conversion of this Note). Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to
the Required Holders. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events.
(7)
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a)
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If
the Company at any time on or after the Subscription Date 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 Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Subscription 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 Conversion Price in effect immediately prior to such combination will be proportionately increased.
(b)
Voluntary Adjustment by Company. The Company may at any time during the term of this
Note, with the prior written consent of the Required Holders, reduce the then current Conversion Price to any amount and for any
period of time deemed appropriate by the Board of Directors of the Company.
(c)
Ratchet. If the Company sells securities at a price less than $0.01 per share or issues
convertible or exchangeable securities with an exercise price or conversion price less than $0.01 (other than securities issued
to officers, directors or employees) at any time when any Principal, accrued and unpaid Interest or accrued and unpaid Late Charges
remain outstanding through the two year anniversary of the Issuance Date, the Conversion Price shall be reduced to such lower number.
(8)
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not,
by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note
and take all action as may be required to protect the rights of the Holder of this Note.
(9)
Amended and Restated Charter and Reservation of Securities.
Within forty-five days from the Closing Date, the Board of Directors shall approve the Amended and Restated Articles of Incorporation,
solicit shareholder approval of the Amended and Restated Charter, and file such Amended and Restated Charter with the Secretary
of State of Nevada. Following adoption of the Amended and Restated Charter, the Company shall maintain a reserve from its duly
authorized shares of Common Stock and Preferred Shares for issuance pursuant to the Transaction Documents in such amount as may
be required to fulfill its obligations in full under the Transaction Documents, but not less than 125% of the maximum number of
shares of Common Stock and Preferred Shares issuable pursuant to the Transaction Documents (the “Required Minimum”).
If, on any date following adoption of the Amended and Restated Charter, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock or Preferred Shares is less than the Required Minimum on such date, then the Board of Directors shall approve
the amendment of the Company’s Articles of Incorporation to increase the number of authorized but unissued shares of Common
Stock or Preferred Shares, as applicable, to at least the Required Minimum and submit such amendment to the Company’s stockholders
for approval, as soon as possible and in any event not later than the 60th
day after such date.
(10)
REDEMPTIONS.
(a)
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price
to the Holder within three (3) Business Days after the Company's receipt of the Holder's Event of Default Redemption Notice (the
"Event of Default Redemption Date"). If the Holder has submitted a Change of Control Redemption Notice in accordance
with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder (i) concurrently with
the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and (ii)
within three (3) Business Days after the Company's receipt of such notice otherwise (such date, the "Change of Control
Redemption Date"). The Company shall pay the applicable Redemption Price to the Holder in cash by wire transfer of immediately
available funds pursuant to wire instructions provided by the holder in writing to the Company on the applicable due date. In the
event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and
delivered to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal which has not been
redeemed and any accrued Interest on such Principal which shall be calculated as if no Redemption Notice has been delivered. In
the event that the Company does not pay the applicable Redemption Price to the Holder within the time period required, at any time
thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption,
to require the Company to promptly return to the Holder all or any portion of this Note representing the Conversion Amount that
was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges thereon) has not been
paid. Upon the Company's receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such
Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 15(d)) to
the Holder representing such Conversion Amount to be redeemed and (z) the Conversion Price of this Note or such new Notes shall
be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided
and (B) the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is
voided. The Holder's delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not
affect the Company's obligations to make any payments of Late Charges which have accrued prior to the date of such notice with
respect to the Conversion Amount subject to such notice.
(b)
Redemption by Other Holders. Upon the Company's receipt of notice from any of the holders
of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences
described in Section 4(b) or Section 5(b) or pursuant to equivalent provisions set forth in the Other Notes (each, an "Other
Redemption Notice"), the Company shall immediately, but no later than
one (1) Business Day of its receipt
thereof, forward to the Holder by facsimile or electronic mail a copy of such notice. If the Company receives a Redemption Notice
and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is
three (3) Business Days prior to the Company's receipt of the Holder's Redemption Notice and ending on and including the date which
is three (3) Business Days after the Company's receipt of the Holder's Redemption Notice and the Company is unable to redeem all
principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such
seven (7) Business Day period, then the Company shall redeem a pro rata amount from the Holder and each holder of the Other Notes
(including the Holder) based on the Principal amount of this Note and the Other Notes submitted for redemption pursuant to such
Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.
(c)
Insufficient Assets. If upon a Redemption Date, the assets of the Company are insufficient
to pay the applicable Redemption Price, the Company shall (i) take all appropriate action reasonably within its means to maximize
the assets available for paying the applicable Redemption Price, (ii) redeem out of all such assets available therefor on the applicable
Redemption Date the maximum possible Conversion Amount that it can redeem on such date, pro rata among the Holder and the holders
of the Other Notes to be redeemed in proportion to the aggregate Principal amount of this Note and the Other Notes outstanding
on the applicable Redemption Date and (iii) following the applicable Redemption Date, at any time and from time to time when additional
assets of the Company become available to redeem the remaining Conversion Amount of this Note and the Other Notes, the Company
shall use such assets, at the end of the then current fiscal quarter, to redeem the balance of such Conversion Amount of this Note
and the Other Notes, or such portion thereof for which assets are then available, on the basis set forth above at the applicable
Redemption Price, and such assets will not be used prior to the end of such fiscal quarter for any other purpose. Interest on the
Principal amount of this Note and the Other Notes that have not been redeemed shall continue to accrue until such time as the Company
redeems this Note and the Other Notes. The Company shall pay to the Holder the applicable Redemption Price without regard to the
legal availability of funds unless expressly prohibited by applicable law or unless the payment of the applicable Redemption Price
could reasonably be expected to result in personal liability to the directors of the Company.
(11)
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except
as required by law and as expressly provided in this Note.
(12)
COVENANTS.
(a)
Rank. All payments due under this Note shall rank pari passu with all Other
Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries.
(b)
Incurrence of Indebtedness. So long as this Note is outstanding, the Company shall
not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer
to exist any Indebtedness, other than Permitted Indebtedness.
(c)
Existence of Liens. So long as this Note is outstanding, the Company shall not, and
the Company shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned
by the Company or any of its Subsidiaries (collectively, "Liens") other than Permitted Liens.
(d)
Restriction on Redemption and Cash Dividends. Until all of the Notes have been converted,
redeemed or otherwise satisfied in accordance with their terms, the Company shall not, and the Company shall not permit any of
its Subsidiaries to, directly or indirectly, redeem or repurchase its Equity Interest, or permit any Subsidiary to redeem or repurchase
its Equity Interests (except on a pro rata basis among all holders thereof) or declare or pay any cash dividend or distribution
on any Equity Interest of the Company or of its Subsidiaries without in each case the prior express written consent of the Required
Holders.
(e)
Change in Nature of Business. The Company shall not make, or permit any of its Subsidiaries
to make, any change in the nature of its business as described in the Company's most recent Annual Report filed on Form 10-K with
the SEC. The Company shall not modify its corporate structure or purpose.
(f)
Intellectual Property. The Company shall not, and the Company shall not permit any
of its Subsidiaries, directly or indirectly, to encumber or allow any Liens on, any of its own or its licensed copyright rights,
copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published
or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals,
reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of the business of the Company and its Subsidiaries
connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of the foregoing, other than Permitted Liens.
(g)
Preservation of Existence, Etc. The Company shall maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of
its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such qualification necessary.
(h)
Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of
its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries
to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property,
so as to prevent any loss or forfeiture thereof or thereunder.
(i)
Maintenance of Insurance. The Company shall maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive
general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties
leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having
jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar
businesses similarly situated.
(j)
Transactions with Affiliates. The Company shall not, nor shall it permit any of its
Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any
kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice
and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to
it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate
thereof.
(13)
VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly
called for such purpose or the written consent without a meeting of the Required Holders shall be required for any change or amendment
or waiver of any provision to this Note or any of the Other Notes. Any change, amendment or waiver by the Company and the Required
Holders shall be binding on the Holder of this Note and all holders of the Other Notes.
(14)
Limitations on Issuances and Financings.
For the period beginning on the Issuance Date and ending on eighteen (18) month anniversary thereof, the Company shall not
issue any Common Stock or securities convertible into or exercisable for shares of Common Stock (or modify any of the foregoing
which may be outstanding) to any person or entity or incur any financing debt, without the express written consent of the Lead
Investor.
(15)
Limitations on Issuances to Insiders. For
the period beginning on the Issuance Date and ending on twenty-four (24) month anniversary thereof, the Company
shall not issue to employees, directors, officers or consultants any Common Stock or securities convertible into or exercisable
for shares of Common Stock (or modify any of the foregoing which may be outstanding).
(16)
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note
may be offered, sold, assigned or transferred by the Holder without the consent of the Company.
(17)
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to
the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with
Section 15(d) and subject to Section 3(c)(iii)), registered as the Holder may request, representing the outstanding Principal being
transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with
Section 15(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance
of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of
any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face
of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender
and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 15(d))
representing the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 15(d)
representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such
outstanding Principal as is designated by the Holder at the time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant
to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face
of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 15(a) or Section
15(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection
with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new
Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of
this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and
Late Charges, if any, on the Principal and Interest of this Note, from the Issuance Date.
(18)
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the
other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder's right to pursue actual and consequential damages for any failure by the Company to comply
with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion, redemption 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 breach, without the necessity of showing economic
loss and without any bond or other security being required.
(19)
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the
hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy,
reorganization, receivership of the Company or other proceedings affecting Company creditors' rights and involving a claim under
this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection
with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys' fees and disbursements.
(20)
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company
and all the purchasers of the Notes pursuant to the Securities Purchase Agreement (the "Purchasers") and shall
not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall
not form part of, or affect the interpretation of, this Note.
(21)
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in
the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
(22)
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing
Bid Price or the Closing Sale Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or any Redemption
Price, the Company shall submit the disputed determinations or arithmetic calculations via facsimile or electronic mail within
one (1) Business Day of receipt, or deemed receipt, of the Conversion Notice or Redemption Notice or other event giving rise to
such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation
within one (1) Business Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company
shall, within one (1) Business Day submit via facsimile or electronic mail (a) the disputed determination of the Closing Bid Price
or the Closing Sale Price to an independent, reputable investment bank selected by the Holder and approved by the Company, such
approval not to be unreasonably withheld, conditioned or delayed, or (b) the disputed arithmetic calculation of the Conversion
Rate, Conversion Price or any Redemption Price to an independent, outside accountant, selected by the Holder and approved by the
Company, such approval not to be unreasonably withheld, conditioned or delayed. The Company, at the Company's expense, shall cause
the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company
and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations.
Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.
(23)
NOTICES; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall
provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description
of such action and the reason therefore. Without limiting the generality of the foregoing, the Company shall give written notice
to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying,
the calculation of such adjustment and (ii) at least twenty (20) days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription
offer to holders of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such
notice being provided to the Holder.
(b)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant
to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the
Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Purchasers, shall initially be as set forth on the signature pages of each Securities
Purchase Agreement); provided, that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder's wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction
Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal
to interest on such amount at the rate of eighteen percent (18.0%) per annum from the date such amount was due until the same is
paid in full ("Late Charge").
(24)
CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed
on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.
(25)
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand,
notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Securities Purchase Agreement.
(26)
GOVERNING LAW; JURISDICTION; JURY TRIAL. 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 either 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.
(27)
Severability. If any
provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of
the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(28)
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with
the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its Subsidiaries, the Company shall within one (1) Business Day after
any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its Subsidiaries,
the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries.
(29)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the
following meanings:
(a)
"Affiliate" means, with respect to any Person, any other Person that directly
or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this
definition that "control" of a Person means the power directly or indirectly either to vote 10% or more of the stock
having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
(b)
"Bloomberg" means Bloomberg Financial Markets.
(c)
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law to remain closed.
(d)
"Change of Control" means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in which holders of the Company's voting power immediately
prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification
to hold publicly traded securities and, directly or indirectly, are, in all material respect, the holders of the voting power of
the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent
if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification or (ii)
pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.
(e)
"Closing Bid Price" and "Closing Sale Price" means, for
any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal
Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate
the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink
OTC Markets Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 20. All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during
the applicable calculation period.
(f)
"Closing Date" shall have the meaning set forth in the Securities Purchase
Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(g)
"Common Stock" means (i) the Company's shares of Common Stock, par value
$0.0001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting
from a reclassification of such Common Stock.
(h)
"Contingent Obligation" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
(i)
"Convertible Securities" means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.
(j)
"Eligible Market" means the Principal Market, the OTCQB Marketplace,
the OTCQX Marketplace, The New York Stock Exchange, The Nasdaq Global Market, The
Nasdaq Global Select Market or the NYSE MKT.
(k)
"Equity Interests" means (a) all shares of capital stock (whether denominated
as common capital stock or preferred capital stock), equity interests, beneficial, partnership or membership interests, joint venture
interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person
(other than an individual), whether voting or non-voting and (b) all securities convertible into or exchangeable for any of the
foregoing and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any of the foregoing, whether
or not presently convertible, exchangeable or exercisable.
(l)
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m)
"Fundamental Transaction" means (A) that the Company shall, directly or indirectly,
including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or
into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or
otherwise dispose of all or substantially all of the properties or assets of the Company or any of its "significant subsidiaries"
(as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities
to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities
making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares
of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject
Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer
were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated
with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners
(as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate
a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with one or more Subject Entities whereby such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated
as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making
or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange
Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock,
(B) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related
transactions allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition, purchase,
assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all
such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect
a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their shares of Common
Stock without approval of the stockholders of the Company or (C) directly or indirectly, including through Subsidiaries, Affiliates
or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct
this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument
or transaction.
(n)
"GAAP" means United States generally accepted accounting principles, consistently
applied.
(o)
"Group" means a "group" as that term is used in Section 13(d) of
the Exchange Act and as defined in Rule 13d-5 thereunder.
(p)
"Holiday" means a day other than a Business Day or on which trading does
not take place on the Principal Market.
(q)
"Indebtedness" of any Person means, without duplication (i) all indebtedness
for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services,
including (without limitation) "capital leases" in accordance with GAAP (other than trade payables entered into in the
ordinary course of business consistent with past practice), (iii) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness
created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with
respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller
or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby,
is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust,
lien, pledge, charge, security interest or other encumbrance of any nature whatsoever in or upon any property or assets (including
accounts and contract rights) with respect to any asset or property owned by any Person, even though the Person which owns such
assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
(r)
"Interest Rate" means 0% per annum, subject to adjustment as set forth
in Section 2.
(s)
“Lead Investor” means, collectively, Benza Pharma LLC and its Affiliates.
(t)
"Options" means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
(u)
"Parent Entity" of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common capital stock or equivalent equity security is quoted or listed
on an Eligible Market (or, if so elected by the Required Holders, any other market, exchange or quotation system), or, if there
is more than one such Person or such entity, the Person or entity designated by the Required Holders or in the absence of such
designation, such Person or such entity with the largest public market capitalization as of the date of consummation of the Fundamental
Transaction.
(v)
"Permitted Indebtedness" means (i) Indebtedness evidenced by this Note and
the Other Notes, (ii) trade payables incurred in the ordinary course of business consistent with past practice, (iii) unsecured
Indebtedness incurred by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this
Note, as reflected in a written agreement acceptable to the Required Holders and approved by the Required Holders in writing.
(w)
"Permitted Liens" means (i) any Lien for taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is
not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen's liens, mechanics' liens and other
similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that
are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company
or any of its Subsidiaries to secure the purchase price of such
equipment or Indebtedness incurred solely
for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment,
(v) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described
in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi) leases
or subleases and licenses and sublicenses granted to others in the ordinary course of the Company's business, not interfering in
any material respect with the business of the Company and its Subsidiaries taken as a whole, (vii) Liens in favor of customs
and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods,
and (viii) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section
4(a)(viii).
(x)
"Person" means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or
agency thereof.
(y)
"Principal Market" means the OTCPink Marketplace.
(z)
"Redemption Dates" means, collectively, the Event of Default Redemption Dates
and the Change of Control Redemption Dates, each of the foregoing, individually, a Redemption Date.
(aa)
"Redemption Notices" means, collectively, the Event of Default Redemption
Notices and the Change of Control Redemption Notices, each of the foregoing, individually, a Redemption Notice.
(bb)
"Redemption Prices" means, collectively, the Event of Default Redemption
Prices and the Change of Control Redemption Prices, each of the foregoing, individually, a Redemption Price.
(cc)
"Related Fund" means, with respect to any Person, a fund or account managed
by such Person or an Affiliate of such Person.
(dd)
"Required Holders" means the Lead Investor; provided however, that if the
Lead Investor does not hold any Notes, “Required Holders” means the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes then outstanding.
(ee)
"SEC" means the United States Securities and Exchange Commission.
(ff)
"Securities Act" means the Securities Act of 1933, as amended.
(gg)
"Securities Purchase Agreement" means that certain securities purchase agreement
dated as of the Subscription Date by and among the Company and the Purchasers of the Notes pursuant to which the Company issued
the Notes.
(hh)
"Subject Entity" means any Person, Persons or Group or any Affiliate or associate
of any such Person, Persons or Group.
(ii)
"Subscription Date" means February ___, 2016.
(jj)
"Subsidiary" shall mean any wholly owned subsidiary of the Company.
(kk)
"Successor Entity" means one or more Person or Persons (or, if so elected
by the Required Holders, the Company or Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or one
or more Person or Persons (or, if so elected by the Required Holders, the Company or the Parent Entity) with which such Fundamental
Transaction shall have been entered into.
(ll)
"Trading Day" means any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading market for the Common Stock on such day, then on the principal
securities exchange or securities market on which the Common Stock is then traded; provided that in circumstances where "Trading
Day" is used (i) in connection with determining a Closing Bid Price, Closing Sale Price or any other pricing provisions, including,
without limitation, the determination of any pricing period and (ii) in any other context provided such day is the last day of
a period of time expressed in Trading Days, "Trading Day" shall not include any day on which the Common Stock trades
on exchanges and markets for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour
of trading on such exchanges or markets (or if such exchange or market does not designate in advance the closing time of trading
on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).
(mm)
"Transaction Document" has the meaning ascribed to such term in the Securities
Purchase Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date set out above.
MEDICAL ALARM CONCEPTS HOLDING, Inc. |
By:______________________________________ |
Name: |
Title: |
EXHIBIT I
MEDICAL ALARM CONCEPTS HOLDING, inc.
CONVERSION NOTICE
Reference is made to the Senior Convertible
Note (the "Note") issued to the undersigned by MEDICAL ALARM CONCEPTS HOLDING, Inc., a Nevada corporation (the
"Company"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.0001 per share (the "Common
Stock") of the Company, as of the date specified below.
Date of Conversion: |
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Aggregate Conversion Amount to be converted: |
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Please confirm the following information: |
Conversion Price: |
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Number of shares of Common Stock to be issued: |
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Please issue the Common Stock into which the Note is being converted in the following name and to the following address: |
Issue to: |
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Facsimile Number and Electronic Mail: |
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Authorization: |
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By: |
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Title: |
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Dated: |
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Account Number: |
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(if electronic book entry transfer) |
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Transaction Code Number: |
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(if electronic book entry transfer) |
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MEDICAL ALARM CONCEPTS HOLDING, INC.
WARRANT TO PURCHASE PREFERRED STOCK
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A FORM REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
Warrant No.: __________________
Number of Shares of Preferred Stock: _____________
Date of Issuance: _______________ ("Issuance Date")
Medical Alarm
Concepts Holding, Inc., a Nevada corporation (the "Company"), hereby certifies that, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, [_________________________], the registered holder hereof or its
permitted assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company,
at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Preferred Stock (including
any Warrants to Purchase Preferred Stock issued in exchange, transfer or replacement hereof, the "Warrant"), at
any time or times on or after the date hereof (the “Exercisability Date”), but not after 11:59 p.m., New York
time, on the Expiration Date (as defined below), ______________ fully
paid nonassessable shares of Preferred Stock (as defined below) (the "Warrant Shares"). Except as
otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15. This Warrant is the
Warrant to purchase Preferred Stock issued pursuant to Section 1(a) of that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated as of February ___, 2016 by and between the Company and the Holder.
1. EXERCISE OF
WARRANT.
(a) Mechanics
of Exercise. Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on or after the Exercisability
Date, in whole or in part, by delivery of a written notice, in the form attached hereto as Exhibit A (the "Exercise
Notice"), of the Holder's election to exercise this Warrant. Within two (2) days following the Exercise Notice, the Holder
shall make payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares
as to which this Warrant is being exercised (the "Aggregate Exercise Price") in cash or by wire transfer of immediately
available funds. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder, but
shall deliver the original Warrant within five (5) Business Days thereafter. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance
of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the first (1st)
Business Day following the date on which the Company has received the Exercise Notice, the Company shall transmit by facsimile
an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company's transfer agent (the "Transfer
Agent"). On or before the third (3rd) Business
Day following the date on which the Company has received the Exercise Notice (the "Share Delivery Date"), the
Company shall issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered
in the Company's share register in the name of the Holder or its designee, for the number of shares of Preferred Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise
Notice, the Holder shall be deemed for all corporate purposes
to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of
the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise
pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than
the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later
than three (3) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Preferred Stock are to be issued
upon the exercise of this Warrant, but rather the number of shares of Preferred Stock to be issued shall be rounded up to the nearest
whole number. The Company shall pay any and all transfer taxes which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant.
(b) Exercise
Price. For purposes of this Warrant, "Exercise Price" means $0.09, subject to adjustment as provided herein.
(c) Company's
Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to issue to the Holder within
three (3) Trading Days after receipt of the Exercise Notice in compliance with the terms of this Section 1, a certificate for the
number of shares of Preferred Stock to which the Holder is entitled and register such shares of Preferred Stock on the Company's
share register, then, so long as the Holder has paid the Aggregate Exercise Price, the Company shall, within three (3) Business
Days after the Holder's request and in the Holder's discretion, pay cash to the Holder in an amount equal to 25% of the Aggregate
Exercise Price.
(d) Ratchet.
If the Company sells securities at a price less than $0.09 per share or issues convertible or exchangeable securities with an exercise
price or conversion price less than $0.09 at any time when any Warrants remain outstanding through the two year anniversary of
the Issuance Date, the Exercise Price shall be reduced to such lower number.
(e) Reserved.
(f) Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.
2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. If the Company at any time on or after the Date of Issuance subdivides (by
any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time
on or after the Date of Issuance combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement
or otherwise) one or more classes of its outstanding shares of Common Stockinto a smaller number of shares, the Exercise Price
in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately
decreased. Any adjustment under this Section 2(a) shall become effective at the close of business on the date the subdivision or
combination becomes effective.
3. RESERVED.
4. FUNDAMENTAL
TRANSACTIONS. If the Company enters into or becomes a party to any Fundamental Transaction, then the registered holder shall
have the right thereafter to receive, upon exercise of the Warrant, the same amount and kind of securities, cash or property as
it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of the Warrant (the
“Alternate Consideration”). The Company shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, any successor to the Company, surviving entity or the corporation purchasing or otherwise
acquiring such assets or other appropriate corporation or Person shall assume the Warrant and the
obligation to deliver to the registered holder, such Alternate
Consideration as, in accordance with the foregoing provisions, the registered holder may be entitled to receive, and the other
obligations under the Warrant.
5. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will
at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights
of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares
of Preferred Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect and (ii) shall take
all such actions as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Preferred Stock upon the exercise of this Warrant. If, on any date following adoption of the Amended
and Restated Charter, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock or Preferred Stock
is less than the Required Minimum on such date, then the Board of Directors shall approve the amendment of the Company’s
Articles of Incorporation to increase the number of authorized but unissued shares of Common Stock or Preferred Stock, as applicable,
to at least the Required Minimum and submit such amendment to the Company’s stockholders for approval, as soon as possible
and in any event not later than the 60th day after such date.
6. WARRANT HOLDER
NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity as
a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company
for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company.
7. REISSUANCE
OF WARRANTS.
(a) Transfer
of Warrant. If this Warrant is to be transferred (which may only be transferred in compliance with the Securities Purchase
Agreement), the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon
the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the
right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred.
(b) Lost, Stolen or Mutilated Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver
to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying
this Warrant.
(c) Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion
of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional
shares of Preferred Stock shall be given.
(d) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Preferred Stock underlying
the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date,
and (iv) shall have the same rights and conditions as this Warrant.
8. NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with Section 8(e) of the Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken
pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor.
9. AMENDMENT
AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the
written consent of the Holder.
10. GOVERNING
LAW; JURISDICTION; JURY TRIAL. All questions concerning the construction, validity, enforcement and interpretation of this
Warrant 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 this Warrant 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, 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 Warrant 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 Warrant or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Warrant, 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.
11. CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant.
12. DISPUTE RESOLUTION.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall submit the disputed determinations or arithmetic calculations, as the case may be, via facsimile within two (2) Business
Days of receipt of the Exercise Notice giving rise to such dispute to the Holder. If the Holder and the Company are unable to agree
upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit
via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the
Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent,
outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the
time it receives the disputed
determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
13. REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition
to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company
to comply with the terms of this Warrant.
14. TRANSFER. Subject
to the Purchase Agreement and compliance with all applicable securities laws, this Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Company.
15. CERTAIN DEFINITIONS.
For purposes of this Warrant, the following terms shall have the following meanings:
(a) "Bloomberg"
means Bloomberg Financial Markets.
(b) "Business
Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
(c) "Common
Stock" means (i) the Company's shares of Common Stock, par value $0.001 per share, and (ii) any share capital
into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.
(d) "Expiration
Date" means the date three (3) years after the Issuance Date or, if such date falls on a day other than a Business Day
or on which trading does not take place on the Principal Market (a "Holiday"), the next date that is not a Holiday.
(e) "Fundamental
Transaction" means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate
or merge with or into (whether or not the Company is the surviving corporation, unless the holders of the Company’s voting
power immediately prior to such transaction or series of related transactions continue after such transaction or series of related
transactions to have a majority of the voting power of the surviving entity) another Person, or (ii) sell, assign, transfer, convey
or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares
of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock 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 purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify
its Common Stock, or (vi) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.
(f) "Person"
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency thereof.
(g) "Preferred
Stock" means (i) the Company's shares of Series C Convertible Preferred Stock, par value $0.001 per share, and (ii) any
share capital into which such Preferred Stock shall have been changed or any share capital resulting from a reclassification of
such Preferred Stock.
(g) "Principal
Market" means the OTCPink Marketplace.
(h) "Trading
Day" means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock are scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during
the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).
IN WITNESS
WHEREOF, the Company has caused this Warrant to Purchase Preferred Stock to be duly executed as of the Issuance Date set out
above.
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Warrant Signature Page
EXHIBIT
A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS
WARRANT TO PURCHASE PREFERRED STOCK
MEDICAL ALARM CONCEPTS HOLDING, INC.
The undersigned holder hereby exercises
the right to purchase _________________ of the shares of Preferred Stock ("Warrant Shares") of MEDICAL ALARM
CONCEPTS HOLDING, INC., a Nevada corporation (the "Company"), evidenced by the attached Warrant to Purchase
Preferred Stock (the "Warrant"). Capitalized terms used herein and not otherwise defined shall have the respective
meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder
intends that payment of the Exercise Price shall be made as a "Cash Exercise" with respect to _________________
Warrant Shares.
2. Payment of Exercise Price. The holder
shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company
shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
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ACKNOWLEDGMENT
The Company hereby
acknowledges this Exercise Notice and hereby directs the transfer agent for its Preferred Stock to issue the above indicated number
of shares of Preferred Stock in accordance with the Transfer Agent Instructions dated ______________ from the Company.
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SUBSCRIPTION AGREEMENT
This Subscription Agreement (this “Agreement”)
is being delivered to the purchaser identified on the signature page to this Agreement (the “Subscriber”) in
connection with its investment in the securities of Medical Alarm Concepts Holding, Inc., a Nevada corporation (the “Company”). The
Company is conducting a private placement (the “Offering”) of 25 units of the Company’s securities (the
“Units”) at a purchase price of $25,000 per Unit (the “Purchase Price”) with each Unit consisting
of (i) $25,000 face amount of 10% original issue discount unsecured convertible notes, in the Form attached hereto as Exhibit A
(the “Notes”), convertible into shares (as converted, the “Note Conversion Shares”) of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”) at a conversion price equal to
$0.01 and (ii) one warrant, in the form attached hereto as Exhibit B (the “Warrant”) to purchase 277,778 shares
(the “Preferred Shares”) of Series C Convertible Preferred Stock, par value $0.0001 per share, at an exercise
price of $0.09 per share. The Preferred Shares are convertible into shares of the Company’s common stock (the “Preferred
Conversion Shares”), with such rights and designations as set forth in the form of Certificate of Designation of Preferences,
Rights and Limitations of Series C Convertible Preferred Stock, attached hereto as Exhibit C (the “Certificate of Designation”).
For purposes of this Agreement, the term “Securities” shall refer to the Notes, the Note Conversion Shares,
the Warrants, the Preferred Shares and the Preferred Conversion Shares.
IMPORTANT INVESTOR NOTICES
NO OFFERING LITERATURE OR ADVERTISEMENT IN ANY FORM MAY BE RELIED
UPON IN THE OFFERING OF THESE SECURITIES EXCEPT FOR THIS SUBSCRIPTION AGREEMENT AND ANY SUPPLEMENTS HERETO, AND NO PERSON HAS BEEN
AUTHORIZED TO MAKE ANY REPRESENTATIONS EXCEPT THOSE CONTAINED HEREIN.
UNTIL SUCH TIME AS A FORM 8-K IS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION DISCLOSING THE TRANSACTIONS CONTEMPLATED HEREBY, THIS AGREEMENT IS CONFIDENTIAL AND THE CONTENTS HEREOF MAY NOT BE REPRODUCED,
DISTRIBUTED OR DIVULGED BY OR TO ANY PERSONS OTHER THAN THE RECIPIENT OR ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMPANY. EACH PERSON WHO ACCEPTS DELIVERY OF THIS AGREEMENT, ACKNOWLEDGES AND AGREES
TO THE FOREGOING RESTRICTIONS.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION OF AN
OFFER TO ANY PERSON OR IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS UNLAWFUL OR NOT AUTHORIZED. EACH PERSON
WHO ACCEPTS DELIVERY OF THIS AGREEMENT AGREES TO RETURN IT AND ALL RELATED DOCUMENTS IF SUCH PERSON DOES NOT PURCHASE ANY OF THE
SECURITIES DESCRIBED HEREIN.
NEITHER THE DELIVERY OF THIS AGREEMENT AT ANY TIME NOR ANY SALE
OF SECURITIES HEREUNDER SHALL IMPLY THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THE
COMPANY WILL EXTEND TO EACH PROSPECTIVE SUBSCRIBER (AND TO ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, IF ANY) THE OPPORTUNITY,
PRIOR TO ITS PURCHASE OF UNITS, TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY CONCERNING THE OFFERING AND TO OBTAIN
ADDITIONAL INFORMATION, TO THE EXTENT THE COMPANY POSSESSES THE SAME OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE,
IN ORDER TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN. ALL SUCH ADDITIONAL INFORMATION SHALL ONLY BE PROVIDED
IN WRITING AND IDENTIFIED AS SUCH BY THE COMPANY THROUGH ITS DULY AUTHORIZED OFFICERS AND/OR DIRECTORS ALONE; NO ORAL INFORMATION
OR INFORMATION PROVIDED BY ANY BROKER OR THIRD PARTY MAY BE RELIED UPON.
NO REPRESENTATIONS, WARRANTIES OR ASSURANCES OF ANY KIND ARE MADE
OR SHOULD BE INFERRED WITH RESPECT TO THE ECONOMIC RETURN, IF ANY, THAT MAY ACCRUE TO AN INVESTOR IN THE COMPANY.
FOR RESIDENTS OF ALL STATES
THIS OFFERING IS BEING MADE SOLELY TO “ACCREDITED INVESTORS,”
AS SUCH TERM IS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN
RELIANCE UPON THE EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(a)(2) THEREUNDER AND REGULATION D (RULE 506) OF THE SECURITIES
ACT AND CORRESPONDING PROVISIONS OF STATE SECURITIES LAWS.
THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SEC, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS AGREEMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
PROSPECTIVE SUBSCRIBERS SHOULD NOT CONSTRUE THE CONTENTS OF THIS
AGREEMENT AS INVESTMENT, LEGAL, BUSINESS, OR TAX ADVICE. EACH SUBSCRIBER SHOULD CONTACT HIS, HER OR ITS OWN ADVISORS
REGARDING THE APPROPRIATENESS OF THIS INVESTMENT AND THE TAX CONSEQUENCES THEREOF, WHICH MAY DIFFER DEPENDING ON A SUBSCRIBER’S
PARTICULAR FINANCIAL SITUATION. IN NO EVENT SHOULD THIS AGREEMENT BE DEEMED OR CONSIDERED TO BE TAX ADVICE PROVIDED
BY THE COMPANY.
FOR FLORIDA RESIDENTS ONLY
THE SECURITIES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED
BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER § 517.061 OF THE FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN
REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING
THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH SUBSCRIBER TO THE COMPANY, AN AGENT
OF THE COMPANY, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH SUBSCRIBER,
WHICHEVER OCCURS LATER.
1. SUBSCRIPTION
AND PURCHASE PRICE
(a) Subscription. Subject
to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase the number of Units
indicated on page 22 hereof on the terms and conditions described herein.
(b) Purchase
of Units. The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange
for the Units shall be set at $25,000 per Unit, for an aggregate purchase price as set forth on page 22 hereof (the “Aggregate
Purchase Price”). The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment for
the Units subscribed for hereunder, payable in United States Dollars, by wire transfer of immediately available funds delivered
to the Company in accordance with the wire instructions set forth on Exhibit D attached hereto. The Subscriber understands and
agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering into a binding agreement.
2. ACCEPTANCE,
OFFERING TERM AND CLOSING PROCEDURES
(a) Acceptance.
Subject to full, faithful and punctual performance and discharge by the Company of all of its duties, obligations and responsibilities
as set forth in this Agreement, the Notes, the Warrant , the Certificate of Designation, the Registration Rights Agreement (as
defined below), the Adams Lockup (as defined below) and any other agreement entered into between the Subscriber and the Company
relating to this subscription (collectively, the "Transaction Documents") to be performed or discharged on or
prior to the Closing in which such Subscriber participates, the Subscriber shall be legally bound to purchase the Units pursuant
to the terms and conditions set forth in this Agreement. For the avoidance of doubt, upon the occurrence of the failure
by the Company to fully, faithfully and punctually perform and discharge any of its duties, obligations and responsibilities as
set forth in any of the Transaction Documents, which shall have been performed or otherwise discharged prior to the Closing (as
defined below), the Subscriber may, on or prior to the Closing, at its sole and absolute discretion, elect not to purchase the
Units and provide instructions to the Company to receive the full and immediate refund of the Aggregate Purchase Price.
(b) Closing. The
closing of the purchase and sale of the Units hereunder (the “Closing”) shall take place on a Business Day promptly
following the satisfaction of the conditions set forth in Section 6 below, as determined by the Company (the “Closing
Date”). “Business Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time)
of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required
to be closed. The Units purchased by the Subscriber will be delivered by the Company promptly following the Closing Date . Officers,
directors and affiliates of the Company and the placement agents, if any, may purchase Units in the Offering.
(c) Following
Acceptance or Rejection. The Subscriber acknowledges and agrees that this Agreement and any other documents delivered
in connection herewith will be held by the Company. Prior to the Company’s execution, in the event that this Agreement is
not accepted by the Company for whatever reason, which the Company expressly reserves the right to do, this Agreement, the Aggregate
Purchase Price received (without interest thereon) and any other documents delivered in connection herewith will be returned to
the Subscriber at the address of the Subscriber as set forth in this Agreement. If this Agreement is accepted by the Company, the
Company is entitled to treat the Aggregate Purchase Price received as an interest free loan to the Company until such time as the
Subscription is accepted.
(d) Reserved.
(e) Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of Common Stock
as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or
(c) combine its outstanding shares of the Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase
Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and
the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted
in the same manner upon the happening of any successive event or events described herein. The number of Units that the Subscriber
shall thereafter be entitled to receive (including number of shares of Note Conversion Shares, or Preferred Shares or Preferred
Conversion Shares the Subscriber may thereafter be entitled to receive upon conversion of the Notes or exercise of the Warrants,
as the case may be) shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise
(but for the provisions of this Section) be issuable on such conversion or exercise by a fraction of which (a) the numerator is
the Purchase Price that would otherwise (but for the provisions of this Section) be in effect, and (b) the denominator is the Purchase
Price then in effect.
(f) Certificate
as to Adjustments. In each case of any adjustment or readjustment in (i) the Notes, (ii) the number of Note Conversion
Shares issuable upon conversion of the Notes (iii) the number of Preferred Shares issuable upon the exercise of the Warrants, (iv)
the number of Preferred Conversion Shares issuable upon conversion of the Preferred Shares, (v) the exercise price of the Warrants
and/or (v) the conversion price of the Notes or Preferred Shares, the Company, at its expense, will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms hereof and of the
Note or the Warrant, as applicable, and prepare a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment
is based. The Company will forthwith mail a copy of each such certificate to the Subscriber. To the extent any such certificate
contains material non-public information, the Company shall, no later than the first Business Day after the date of delivery of
such certificate to the Subscriber, include such material non-public information in a Current Report on Form 8-K filed with the
United States Securities and Exchange Commission (the “SEC”). From and after the filing of such Form
8-K, the Company shall have disclosed all material non-public information (if any) delivered to the Subscriber by the Company or
any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions
described in such certificate.
3. THE
SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Subscriber, severally and not jointly,
hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:
(a) The
Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized,
if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber, except as may be limited
by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement
of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or law).
(b) The
Subscriber acknowledges its understanding that the Offering and sale of the Securities is intended to be exempt from registration
under the Securities Act, by virtue of Section 4(a)(2) of the Securities Act and the provisions of Regulation D promulgated thereunder
(“Regulation D”). In furtherance thereof, the Subscriber represents and warrants to the Company and
its affiliates as follows:
(i) The
Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s
representations contained herein, the Subscriber is merely acquiring the Securities for a fixed or determinable period in the future,
or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.
(ii) The
Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade registration
provisions of the Securities Act or any applicable state or federal securities laws, except sales pursuant to a registration statement
or sales that are exempted under the Securities Act.
(iii) The
Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not
with a view towards, or resale in connection with, any distribution of the Securities.
(iv) The
Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing
for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.
(v) The
Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively,
the “Advisors”) has such knowledge and experience in financial and business matters as to be capable of evaluating
the merits and risks of a prospective investment in the Securities. If other than an individual, the Subscriber also represents
it has not been organized solely for the purpose of acquiring the Securities.
(vi) The
Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, and has carefully
reviewed them and understands the information contained therein, prior to the execution of this Agreement.
(c) The
Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax,
economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with,
only its Advisors. Each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this Agreement)
the specific details of any and all past,
present or future relationships, actual or contemplated, between
the Advisor and the Company or any affiliate or sub-agent thereof.
(d) The
Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands
that the Securities are a speculative investment that involves a high degree of risk of loss of the Subscriber’s entire investment.
Among other things, the Subscriber has carefully considered each of the risks described under the heading “Risk Factors”
and “Forward Looking Statements” in the Company’s SEC Filings (as defined below) and any additional disclosures
in the nature of Risk Factors described herein.
(e) The
Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom,
and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other reasons,
the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot
be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under
the applicable securities laws of such states, or an exemption from such registration is available. In particular, the
Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated
under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions
of Rule 144 are met. The Subscriber also understands that the Company is under no obligation to register the Securities on behalf
of the Subscriber or to assist the Subscriber in complying with any exemption from registration under the Securities Act or applicable
state securities laws. The Subscriber understands that any sales or transfers of the Securities are further restricted by state
securities laws and the provisions of this Agreement.
(f) No
oral or written representations or warranties have been made, or information furnished, to the Subscriber or its Advisors, if any,
by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection with the
Offering, other than any representations of the Company contained herein, and in subscribing for the Units the Subscriber is not
relying upon any representations other than those contained herein.
(g) The
Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s
net worth, and an investment in the Securities will not cause such overall commitment to become excessive.
(h) The
Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend:
“[NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”
(i) Certificates
evidencing Securities shall not be required to contain the legend set forth in Section 3(h) above or any other legend (i)
while a registration statement covering the resale of such Securities is effective under the Securities Act, (ii) following any
sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities
are eligible to be sold, assigned or transferred under Rule 144 and the Subscriber is not an affiliate of the Company (provided
that the Subscriber provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer
under Rule 144 which shall not include an opinion of the Subscriber’s counsel), (iv) in connection with a sale, assignment
or other
transfer (other than under Rule 144), provided that the Subscriber
provides the Company with an opinion of counsel (at the expense of the Company), in a form generally acceptable to the
Company, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable
requirements of the Securities Act or (v) if such legend is not required under applicable requirements of the Securities Act (including,
without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required
pursuant to the foregoing, the Company shall no later than three (3) business days following the delivery by the Subscriber to
the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed
or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer,
if applicable), together with any other deliveries from the Subscriber as may be required above in this Section 3(i), as directed
by the Subscriber, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated
Securities Transfer Program and such Securities are Note Conversion Shares or Preferred Conversion Shares, credit the aggregate
number of shares of Common Stock to which the Subscriber shall be entitled to the Subscriber’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Subscriber, a
certificate representing such Securities that is free from all restrictive and other legends, registered in the name of the Subscriber
or its designee. The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance
of Securities or the removal of any legends with respect to any Securities in accordance herewith.
(j) Neither
the SEC nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Offering.
There is no government or other insurance covering any of the Securities.
(k) The
Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations and
prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors,
if any.
(l) (i) In
making the decision to invest in the Securities the Subscriber has relied solely upon the information provided by the Company in
the Transaction Documents. To the extent necessary, the Subscriber has retained, at its own expense, and relied upon
appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase
of the Securities hereunder. The Subscriber disclaims reliance on any statements made or information provided by any
person or entity in the course of Subscriber’s consideration of an investment in the Securities other than the Transaction
Documents.
(ii) The
Subscriber represents and warrants that: (i) the Subscriber was contacted regarding the sale of the Securities by the Company (or
an authorized agent or representative thereof) with whom the Subscriber had a prior substantial pre-existing relationship and
(ii) no Securities were offered or sold to it by means of any form of general solicitation or general advertising, and in connection
therewith, the Subscriber did not (A) receive or review any advertisement, article, notice or other communication published in
a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available;
or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general
advertising; or (C) observe any website or filing of the Company with the SEC in which any offering of securities by the Company
was described and as a result learned of any offering of securities by the Company.
(m) The
Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or
the like relating to this Agreement or the transactions contemplated hereby.
(n) The
Subscriber is not relying on the Company or any of its employees, agents, or advisors with respect to the legal, tax, economic
and related considerations of an investment in the Securities, and the Subscriber has relied on the advice of, or has consulted
with, only its own Advisors.
(o) The
Subscriber acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber
were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking
statements cannot be guaranteed by the Company or its management and should not be relied upon.
(p) No
oral or written representations have been made, or oral or written information furnished, to the Subscriber or its Advisors, if
any, in connection with the Offering that are in any way inconsistent with the information contained herein.
(q) (For
ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of
and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan
assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification
of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible for the decision
to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to make such investment
decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation
of the Company or any of its affiliates.
(r) This
Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges and
agrees that the Company reserves the right to reject any subscription for any reason.
(s) The
Subscriber is an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited
Investor” is deemed to be an institution with assets in excess of $5,000,000 or individuals with a net worth in excess of
$1,000,000 (excluding such person’s residence) or annual income exceeding $200,000 or $300,000 jointly with his or her spouse.
(t) The
Subscriber, 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 Offering, and has so evaluated the merits and risks
of such investment. The Subscriber has not authorized any person or entity to act as its Purchaser Representative (as that term
is defined in Regulation D of the General Rules and Regulations under the Securities Act) in connection with the Offering. The
Subscriber 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.
4. THE
COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company hereby acknowledges, agrees with
and represents, warrants and covenants to each Subscriber as of the date hereof and as of the Closing Date, except as set forth
in the disclosure schedule attached hereto (the “Company Disclosure Schedule”, which Company Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation made herein only to the extent of the disclosure contained in
the corresponding section of the Disclosure Schedules, as follows:
(a) Organization and Qualification. The
Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation. The
Company is duly qualified to do business, and is in good standing in the states required due to (a) the ownership or lease of real
or personal property for use in the operation of the Company's business or (b) the nature of the business conducted by the Company,
except where the failure to so qualify would not, individually or in the aggregate, have a Material Adverse Effect. The
Company has all requisite power, right and authority to own, operate and lease its properties and assets, to carry on its business
as now conducted, to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which
it is a party, and to carry out the transactions contemplated hereby and thereby, subject to the Required Approvals. All
actions on the part of the Company and its officers and directors necessary for the authorization, execution, delivery and performance
of this Agreement and the other Transaction Documents, the consummation of the transactions contemplated hereby and thereby, and
the performance of all of the Company's obligations under this Agreement and the other Transaction Documents have been taken or
will be taken prior to the Closing. This Agreement has been, and the other Transaction Documents to which the Company
is a party on the Closing will be, duly executed and delivered by the Company, and this Agreement is, and each of the other Transaction
Documents to which it is a party on the Closing will be, a legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar
laws of general application relating to or affecting the
enforcement of rights of creditors, and except as enforceability
of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or law).
(b) Issuance
of Securities. The Securities to be issued to the Subscriber pursuant to this Agreement and the applicable Transaction
Documents, when issued and delivered in accordance with the terms of this Agreement and the applicable Transaction Documents, will
be duly and validly issued and will be fully paid and non-assessable and the Preferred Shares, Preferred Conversion Shares and
the Note Conversion Shares, when issued and delivered in accordance with Warrant, the Certificate of Designation and the Note,
as applicable, and assuming proper payment (with respect to the Preferred Shares) and exercise or conversion in accordance with
the provisions of such documents, will be duly and validly issued and will be fully paid and non-assessable.
(c) Authorization;
Enforcement. Except as set forth in Schedule 4(c), the execution, delivery and performance of this Agreement and
the other Transaction Documents by the Company, and the consummation of the transactions contemplated hereby and thereby, will
not (a) constitute a violation (with or without the giving of notice or lapse of time, or both) of any provision of any law or
any judgment, decree, order, regulation or rule of any court, agency or other governmental authority applicable to the Company,
(b) except as set forth in Section 4(d) below, require any consent, approval or authorization of, or declaration, filing or registration
with, any person, (c) result in a default (with or without the giving of notice or lapse of time, or both) under, acceleration
or termination of, or the creation in any party of the right to accelerate, terminate, modify or cancel, any agreement, lease,
note or other restriction, encumbrance, obligation or liability to which the Company is a party or by which it is bound or to which
any assets of the Company are subject, (d) result in the creation of any lien or encumbrance upon the assets of the Company, or
upon any shares of Common Stock, preferred stock or other securities of the Company, (e) conflict with or result in a breach of
or constitute a default under any provision of the articles of incorporation or bylaws of the Company, or (f) invalidate or adversely
affect any permit, license, authorization or status used in the conduct of the business of the Company.
(d) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than:
(i) the filing of Form D with the SEC and such filings as are required to be made under applicable state securities laws, (ii)
obtaining shareholder approval of the Amended and Restated Charter (as defined below), (iii) the filing of the Certificate of Designation
with the Secretary of State of Nevada or (iv) as set forth on Schedule 4(d) (collectively, the “Required Approvals”).
(e) SEC
Filings. The Company is subject to, and in full compliance with, the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The Company has made available to each Subscriber through
the EDGAR system true and complete copies of the Company’s filings for the prior two full fiscal years plus any interim period
(collectively, the “SEC Filings”), and all such SEC Filings are incorporated herein by reference. The
SEC Filings, when they were filed with the SEC (or, if any amendment with respect to any such document was filed, when such amendment
was filed), complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations
thereunder and did not, as of such date, contain an 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 the light of the circumstances under which they were
made, not misleading. All reports and statements required to be filed by the Company under the Exchange Act have been filed, together
with all exhibits required to be filed therewith. The Company and each of its direct and indirect subsidiaries, if any (collectively,
the “Subsidiaries”), are engaged in all material respects only in the business described in the SEC Filings,
and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and the
Subsidiaries.
(f) No
Financial Advisor. The Company acknowledges and agrees that each Subscriber is acting solely in the capacity of
an arm’s length purchaser with respect to the Securities and the transactions contemplated hereby. The Company further acknowledges
that Subscriber is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by any Subscriber or any of its representatives or agents
in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Subscriber’s purchase
of the Securities. The Company
further represents to each Subscriber that the Company’s decision
to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
(g) Indemnification. The
Company will indemnify and hold harmless each Subscriber and, where applicable, its directors, officers, employees, agents, advisors
and shareholders (each, an “Indemnitee”, from and against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened)
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to
(i) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction
Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction
Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee
that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents,
(B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of
the Securities, or (C) the status of such Subscriber or holder of the Securities either as an investor in the Company pursuant
to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as
a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the
extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
(h) Capitalization
and Additional Issuances. The capitalization of the Company is as set forth in Schedule 4 (h). Except
as set forth in Schedule 4 (h), the Company has not issued any capital stock since its 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 disclosed on Schedule
4 (h), 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. Except
as set forth on Schedule 4 (h), 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 Subscribers) 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 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. Except for shareholder approval of the Amended and
Restated Charter, 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.
(i) Private
Placements. Assuming the accuracy of each Subscriber’s representations and warranties set forth in Section
3, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Subscribers
as contemplated hereby.
(j) Investment
Company. The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Units
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 subject to the Investment
Company Act.
(k) Reporting
Company/Shell Company Status. The Company is a publicly-held company subject to reporting obligations pursuant to
Sections 12(g) and 13 of the Exchange Act. Pursuant to the provisions of the Exchange Act, the Company has timely filed
all reports and other materials required to be filed by the Company
thereunder with the SEC during the preceding twelve months. The
Company, as of the Closing Date, is not a “shell company”, as that term is employed in Rule 144 under the Securities
Act. Except as set forth on Schedule 4(k), the Company is in full compliance with the continued listing standards of
the OTCPink Marketplace, 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.
(l) Litigation. Except
as set forth on Schedule 4 (l), there is no action, suit, proceeding, inquiry or investigation before or by the Trading
Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s
or its Subsidiaries’ officers or directors which is outside of the ordinary course of business or individually or in the
aggregate material to the Company or any of its Subsidiaries. No director, officer or employee of the Company or any of its
Subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation.
Without limitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the
Company or any of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company under the Securities Act or the Exchange Act. “Governmental
Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature,
federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization
or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned
or controlled by a government or a public international organization or any of the foregoing. “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,
OTCQB, OTCQX, OTCPink Marketplace or the OTC Bulletin Board (or any successors to any of the foregoing).
(m) Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company believes that its and its Subsidiaries’ relations with their respective
employees are good. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and
hours, except as disclosed in Schedule 4(m) or where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. “Material Adverse Effect” means any
material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability of the Company or any of its
Subsidiaries to perform any of their respective obligations under any of the Transaction Documents.
(n) Tax
Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all
taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as
to qualify as a passive foreign investment company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.
(o) Indebtedness
and Other Contracts. Except as set forth on Schedule 4(o) annexed hereto, neither the Company nor any of
its Subsidiaries, (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument,
the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably
be expected to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement
or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse
Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital leases” in accordance with generally
accepted accounting principles) (other than trade payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession
or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally
accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any mortgage, claim, lien, tax, right of first refusal, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even
though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and
(H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through
(G) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent
or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary
purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with,
or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and any Governmental Entity or any department or agency thereof.
(p) No
Undisclosed Events, Liabilities, Developments or Circumstances. Since the date of the latest audited financial statements
included within the SEC Filings, except as specifically disclosed in a subsequent SEC Filing: (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 material 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 SEC, (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) except as set forth
on Schedule 4(h), the Company has not issued any equity securities to any officer, director or Affiliate. The Company does
not have pending before the SEC any request for confidential treatment of information. Except for the issuance of the
Securities contemplated by this Agreement or as set forth on Schedule 4 (p), 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 two trading days prior to the date that this representation is made.
(q) No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any
Subscriber with respect to the transactions contemplated by the Transaction Documents other than pursuant to documents substantially
identical to the Transaction Documents.
(r) No
Disqualification Events.
To the Company’s knowledge, none of the
Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating
in the offering contemplated hereby, any beneficial owner of 20% or more of the Company's outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected
with the
Company in any capacity at the time of sale (each, an “Issuer
Covered Person”) is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii)
under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)
or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event.
(s) General
Solicitation.
None of the Company, any of its affiliates (as
defined in Rule 501(b) under the Securities Act) or any person acting on behalf of the Company or such affiliate will solicit any
offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning
of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper,
magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(t) Compliance. To
the Company’s knowledge, 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.
(u) 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
Filings, 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.
(v) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property (if
any) 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
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.
(w) Intellectual
Property.
1. The
term “Intellectual Property Rights” includes:
(a) the
name of the Company and each Subsidiary, all fictional business names, trading names, registered and unregistered trademarks, service
marks, and applications of the Company and each Subsidiary (collectively, “Marks'');
(b) all
patents, patent applications, and inventions and discoveries that may be patentable of the Company and each Subsidiary (collectively,
“Patents'');
(c) all
copyrights in both published works and published works of the Company and each Subsidiary (collectively, “Copyrights”);
(d) all
rights in mask works of the Company and each Subsidiary (collectively, “Rights in Mask Works''); and
(e) all
know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, “Trade Secrets''); owned, used, or licensed by the Company and each Subsidiary
as licensee or licensor.
2. Know-How
Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the Company’s
businesses as it is currently conducted or as represented, in writing, to the Subscriber to be conducted. The Company is the owner
of all right, title, and interest in and to each of the Intellectual Property Rights, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims, and has the right to use all of the Intellectual Property Rights. To
the Company’s knowledge, no employee of the Company has entered into any contract that restricts or limits in any way the
scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than of the Company.
3. Patents.
The Company is the owner of all right, title and interest in and to each of the Patents, free and clear of all liens and other
adverse claims, purchase price payments, or license agreements now or hereafter existing).
4. Trademarks.
The Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of all liens and other adverse
claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
5. Copyrights.
The Company is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all liens and other
adverse claims. All the Copyrights have been registered and are currently in compliance with formal requirements, are
valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the
date of the Closing.
6. Trade
Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory
of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade
Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets.
The Trade Secrets are not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person (other the Company) or to the detriment of the Company. No Trade
Secret is subject to any adverse claim or has been challenged or threatened in any way.
(x) Stock
Option Plans. Since inception, each stock option granted by the Company under any stock option plan was granted (i) in accordance
with the terms of such 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 any
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.
(y) 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 is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”).
(z) Listing
and Maintenance Requirements. The Common Stock is quoted on the OTCPink Marketplace under the symbol MDHI. Except
as set forth on Schedule 4(z), the Company has not, in the twenty-
four (24) 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.
(aa) 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.
(bb) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
in all material respects 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
(cc) Acknowledgment
Regarding Subscriber’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding,
it is understood and acknowledged by the Company that: (i) none of the Subscribers has been asked by the Company to agree, nor
has any Subscriber 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 Subscriber, 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 Subscriber, and counter-parties in “derivative” transactions
to which any such Subscriber is a party, directly or indirectly, may presently have a “short” position in the Common
Stock and (iv) each Subscriber 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 Subscribers
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 Underlying 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. 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.
(dd) Acknowledgment
Regarding Subscribers’ Purchase of Securities. The Company acknowledges and agrees that each of the Subscribers
is acting solely in the capacity of an arm’s length Subscriber with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Subscriber 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 Subscriber or any of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the Subscribers’ purchase of the Securities. The
Company further represents to each Subscriber that the Company’s decision to enter into this Agreement and the other Transaction
Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(ee) No
Integrated Offering. Assuming the accuracy of the Subscribers’ representations and warranties set forth in Section 3,
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.
(ff) Application
of Takeover Protections. The Company and the Board of Directors will have taken as of the Closing Date 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 articles of incorporation
(or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Subscribers
as a result of the Subscribers 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 Subscribers’ ownership
of the Securities.
(gg) Registration
Rights. Other than as set forth on Schedule 4(gg), no Person other than the Subscribers herein has any right
to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or
any Subsidiary.
(hh) Certain
Fees. Except as disclosed on Schedule 4(hh), no brokerage, finder’s fees, commissions or due diligence
fees 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
Subscribers shall have no obligation with respect to any such fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 4(hh) that may be due in connection with the transactions contemplated
by the Transaction Documents.
(ii) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in material 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 Closing Date. Except
as set forth on Schedule 4(ii), 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. Except as disclosed in the SEC Filings, 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.
(jj) Transactions
With Affiliates and Employees. Except as set forth on Schedule 4(jj), 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 $50,000 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 except as disclosed on Schedule 4(jj).
(kk) 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.
(ll)
Disclosure.
The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Subscribers or their agents or counsel with any information that constitutes
or could reasonably be expected to constitute material, non-public information regarding the Company or any of its Subsidiaries,
other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands
and confirms that each of the Subscribers will rely on the foregoing representations in effecting transactions in securities of
the Company. All disclosure provided to the Subscribers regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries
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 the light of the circumstances under which they were made, not misleading. No
event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which,
under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company
but which has not been so publicly disclosed. The Company acknowledges and agrees that no Subscriber makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.
(mm) Survival. The
foregoing representations and warranties shall survive the Closing.
5. OTHER
AGREEMENTS OF THE PARTIES
(a) Furnishing
of Information. As long as any Subscriber owns Securities, the Company covenants to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. As long as any Subscriber owns Securities, if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to the Subscribers and make publicly available in accordance
with Rule 144(c) under the Securities Act such information as is required for the Subscribers to sell the Securities under Rule
144. The Company further covenants that it will take such further action as any holder of Securities may reasonably
request, at the sole cost and expense of the Company including transfer agent and legal opinion fees and expenses, all to the extent
required from time to time to enable such person to sell such Securities without registration under the Securities Act within the
limitation of the exemptions proved by Rule 144 under the Securities Act.
(b) Shareholder
Rights Plan. No claim will be made or enforced by the Company or, to the knowledge of the Company, any other person
that any Subscriber is an “Acquiring Person” under any shareholder rights plan or similar plan or arrangement in effect
or hereafter adopted by the Company, or that any Subscriber 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 Subscribers.
(c) Securities
Laws Disclosure; Publicity. The Company shall by 8:30 a.m. (New York City time) (a) on the first Business Day after
this Agreement has been executed, file a Current Report on Form 8-K with the SEC (the “8-K Filing”), including
the Transaction Documents as exhibits thereto. From and after the issuance of the 8-K Filing, the Company shall have
publicly disclosed all material, non-public information delivered to any of the Subscribers by the Company or any of its Subsidiaries,
or any of their respective officers, directors, employees or
agents. The Company and each Subscriber shall consult
with each other in issuing any press releases with respect to the transactions contemplated hereby, and no Subscriber shall issue
any such press release or otherwise make any such public statement without the prior consent of the Company, which consent shall
not unreasonably be withheld. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any
Subscriber, or include the name of any Subscriber in any filing with the SEC or any regulatory agency, without the prior written
consent of such Subscriber, except to the extent such disclosure is required by law or in connection with the Registration Rights
Agreement, in which case the Company shall provide the Subscribers with prior notice of such disclosure. The Company
understands that any such disclosure shall cause irreparable harm and each Subscriber shall be entitled to injunctive relief and
liquidated damages in connection therewith.
(d) Integration. The
Company shall not, and shall use its best efforts to ensure that no affiliate of the Company shall, after the date hereof, sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any security that would be integrated with the offer
or sale of the Units in a manner that would require the registration under the Securities Act of the sale of the Units to the Subscribers.
(e) Amended
and Restated Charter and Reservation of Securities. Within forty-five days from the Closing Date, the Board of Directors shall
approve the Amended and Restated Articles of Incorporation, substantially in the form attached hereto as Exhibit E (the “Amended
and Restated Charter”), solicit shareholder approval of the Amended and Restated Charter, and file such Amended and Restated
Charter with the Secretary of State of Nevada. Following adoption of the Amended and Restated Charter, the Company shall maintain
a reserve from its duly authorized shares of Common Stock and Preferred Stock for issuance pursuant to the Transaction Documents
in such amount as may be required to fulfill its obligations in full under the Transaction Documents, but not less than 125% of
the maximum number of shares of Common Stock and Preferred Stock issuable pursuant to the Transaction Documents (the “Required
Minimum”). If, on any date following adoption of the Amended and Restated Charter, the number of authorized but unissued
(and otherwise unreserved) shares of Common Stock or Preferred Stock is less than the Required Minimum on such date, then the Board
of Directors shall approve the amendment of the Company’s Articles of Incorporation to increase the number of authorized
but unissued shares of Common Stock or Preferred Stock, as applicable, to at least the Required Minimum and submit such amendment
to the Company’s stockholders for approval, as soon as possible and in any event not later than the 60th
day after such date.
(f) Use
of Proceeds. The Company anticipates using the gross proceeds from the Offering as set forth on Exhibit F
or as otherwise agreed to be the lead investor set forth on Exhibit G, attached hereto (the “Lead Investor”.
(g)
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 Subscriber or its agents or counsel with any information that the Company believes constitutes or could constitute
material non-public information, and each Subscriber agrees, and shall direct its agents and counsel not to, request any material
non-public information from the Company or any Person acting on its behalf, unless prior thereto such Subscriber shall have executed
a written agreement with the Company regarding the willingness to accept receipt of such material non-public information and acknowledges
the confidentiality and use of such information and the Company’s covenant to file a further SEC filing or report and the
period in which such information shall remain confidential or be required to not be disclosed. The Company understands
and confirms that each Subscriber shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality
or similar obligations under any agreement, whether written or oral, between the Company and any of its Subsidiaries or any of
their respective officers, directors, affiliates, employees or agents, on the one hand, and the Subscriber or any of its affiliates
on the other hand, shall terminate.
(h) Limitations
on Issuances and Financings. For as long as the Lead Investor holds Securities, for the period beginning on the
Closing Date and ending on the eighteen (18) month anniversary thereof the Company shall not issue any Common Stock or securities
convertible into or exercisable for shares of Common Stock (or modify any of the foregoing which may be outstanding) to any person
or entity or incur any financing debt, without the express written consent of the Lead Investor. For the period beginning on the
Closing Date and ending on twenty-four (24) month anniversary thereof, the Company shall not issue to employees,
directors, officers or
consultants any Common Stock or securities convertible into or exercisable
for shares of Common Stock (or modify any of the foregoing which may be outstanding).
(i) Stock
Issuance to Officer and Director. Upon filing of the Amended and Restated Charter with the Secretary of State of
the State of Nevada, the Company shall issue 25,000,000 shares of Common Stock to Ronnie Adams (the “Adams Shares”).
The Adams Shares shall be subject to a lockup agreement substantially in the form attached hereto as Exhibit H (the “Adams
Lockup Agreement”).
(j) DTC
Program. From the Closing Date until such time as no Subscriber holds any of the Securities (such date, the “Release
Date”), the Company shall use its best efforts to employ as the transfer agent for the Note Conversion Shares and Preferred
Conversion Shares a participant in the Depository Trust Company Automated Securities Transfer Program (FAST) and cause the Common
Stock to be transferable pursuant to such program.
(k) Reserved.
(l) Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Subscriber promptly after such filing. The availability of the filed Form D on EDGAR shall satisfy
the foregoing delivery requirement. The Company shall, on or before the Closing Date, 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 Subscribers
at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United
States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Subscribers
on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company
shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities
laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and
the Company shall comply with all applicable federal, foreign, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Subscribers.
(m) Restriction
on Redemption and Cash Dividends. From the date hereof through the Release Date, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written
consent of the Subscribers.
(n) Fees.
The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees,
the costs associated with any legal opinions required to be rendered to the Company’s transfer agent in connection with the
lifting of any legends on the Securities, DTC fees or broker’s commissions (other than for Persons engaged by any Subscriber)
relating to or arising out of the transactions contemplated hereby. The Company (subject to the foregoing qualification) shall
pay, and hold each Subscriber harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’
fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. The Company shall
also pay all legal fees of the Lead Investor in connection with any documentation, corporate actions or other actions of the Company
reviewed or prepared by counsel to the Lead Investor on its behalf.
(o)
Waiver of Beneficial Ownership Limitation. Upon written notice to the Company by the Subscriber substantially in the
form attached hereto as Annex A (the “Waiver”), the Subscriber may waive the Beneficial Ownership Limitation
(as defined in the COD). The Waiver will not be effective until the 61st day after a Subscriber delivers the Waiver
to the Company; provided however, that if the Waiver is delivered on or prior to the Closing Date, the Beneficial Ownership Limitation
shall be waived effective on the Closing Date. The Waiver shall only apply to the notifying Subscriber and to
no other Subscriber.
6. CONDITIONS
TO ACCEPTANCE OF SUBSCRIPTION
(a) The Closing of the sale of the Units is
conditioned upon satisfaction of the following conditions precedent on or before the Closing Date:
(i) As
of the Closing, no legal action, suit or proceeding shall be pending against the Company that seeks to restrain or prohibit the
transactions contemplated by this Agreement.
(ii) The
representations and warranties of the Company and the Subscribers contained in this Agreement shall have been true and correct
in all material respects on the date of this Agreement (except whether such representations are qualified by material or material
adverse effect, which shall be true and correct in all respects) and shall be true and correct as of the Closing as if made on
the Closing Date and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and
conditions required to be performed, satisfied or complied with by the Company in connection with the consummation of the transactions
contemplated by the Transaction Documents at or prior to the Closing Date and the Company shall deliver a certificate, executed
by its Chief Executive Officer, dated as of the Closing Date, certifying that the foregoing is true.
(iii) The
Company shall deliver to the Subscribers, a certificate from the Company, signed by its Secretary or Assistant Secretary, including
incumbency specimen signatures of any signatory of any Transaction Document of the Company and certifying that the attached copies
of the Company’s Articles of Incorporation, as amended and Bylaws, as amended, and resolutions of the Board of Directors
of the Company approving this the Offering, are all true, complete and correct and remain in full force and effect.
(iv) Ronnie Adams and the Company shall have
executed and delivered to the Subscribers the fully executed Adams Lockup Agreement.
(v) The Company shall have executed and delivered
to the Subscribers this Agreement and a file stamped copy of the Certificate of Designation, filed with the Secretary of State
of Nevada. The Company shall have executed and delivered to the Subscribers the Notes and Warrants in the respective amounts set
forth on page 22 affixed hereto. Each Subscriber shall have executed this Agreement and completed and executed the Investor Questionnaire
and delivered them to the Company. The Subscribers shall have delivered to the Company the Aggregate Purchase Price as set forth
on page 22 hereto pursuant to the wire instructions set forth on Exhibit D.
7. REGISTRATION
RIGHTS. The Company shall file a “resale” registration statement with the SEC
covering the 7,500,000 of the Note Conversion Shares and 7,500,000 of the Preferred Conversion Shares, so that such shares of Common
Stock will be registered under the Securities Act. The Company will maintain the effectiveness of the “resale” registration
statement from the effective date of the registration statement until all Registrable Securities (as defined in the Registration
Rights Agreement) covered by such registration statement have been sold, or may be sold without the requirement to be in compliance
with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144. The Company will use its reasonable
best efforts to have such “resale” registration statement filed by the Filing Date (as defined in the Registration
Rights Agreement) and declared effective by the SEC as soon as possible and, in any event, by the Effectiveness Date (as defined
in the Registration Rights Agreement).
The Company is obligated to pay to the Subscribers
a fee of 2% per month of the investors’ investment, payable in cash, up to a maximum of eighteen (18%) percent, on the Filing
Date and the Effectiveness Date if the registration obligations set forth herein have not been met, and pro- rata for each month,
or partial month, in excess of the Filing Date and/or the Effectiveness Date that the registration statement has not
been declared effective; provided, however, that the Company shall not be obligated to pay any such liquidated damages if the Company
is unable to fulfill its registration obligations as a result of rules, regulations, positions or releases issued or actions taken
by the SEC pursuant to its authority with respect to “Rule 415”, provided the Company registers at such time the maximum
number of shares of Common Stock permissible upon consultation with the staff of the SEC.
The description of registration rights is qualified
in its entirety by reference to Registration Rights Agreement annexed hereto as Exhibit J (the “Registration Rights
Agreement”).
8. |
MISCELLANEOUS PROVISIONS |
(a) All
parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of
the fact that such party’s counsel was or was not the principal draftsman of this Agreement.
(b) Each
of the parties hereto shall be responsible to pay the costs and expenses of its own legal counsel in connection with the preparation
and review of this Agreement and related documentation.
(c) Neither
this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, modification, discharge or termination is sought.
(d) The
representations, warranties and agreement of each Subscriber and the Company made in this Agreement shall survive the execution
and delivery of this Agreement and the delivery of the Securities.
(e) Any
party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on
the signature page of this Agreement or to the Company at its primary office (including personal delivery, expedited courier, messenger
service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed
to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to
which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written
notice in the manner herein set forth.
(f) Except
as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement
and their heirs, executors, administrators, successors, legal representatives and assigns. If any Subscriber is more
than one person or entity, the obligation of any Subscriber shall be joint and several and the agreements, representations, warranties
and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs,
executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
(g) This
Agreement is not transferable or assignable by the Company.
(h) The
Company hereby represents and warrants as of the date hereof and as of any Closing Date that none of the terms offered to any Person
with respect to any offer, sale or subscription of Securities (each a "Subscription Document"), is or will be
more favorable to such Person than those of the Subscriber and this Agreement shall be, without any further action by the Subscriber
or the Company, deemed amended and modified in an economically and legally equivalent manner such that the Subscriber shall receive
the benefit of the more favorable terms contained in such Subscription Document. Notwithstanding the foregoing, the
Company agrees, at its expense, to take such other actions (such as entering into amendments to the Transaction Documents) as the
Subscriber may reasonably request to further effectuate the foregoing.
(i) The
obligations of each Subscriber under any Transaction Document are several and not joint with the obligations of any other Subscriber,
and no Subscriber shall be responsible in any way for the performance or non-performance of the obligations of any other Subscriber
under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by
any Subscriber pursuant hereto or thereto, shall be deemed to constitute the Subscribers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Subscribers 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 Subscriber 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 Subscriber to be joined as an additional
party in any proceeding for such purpose. Each Subscriber 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 Subscribers 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 Subscribers. It is expressly understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and a Subscriber, solely, and not between the Company and the Subscribers
collectively and not between and among the Subscribers. The Company acknowledges that any actions of Subscribers now,
and in the future, in which (A) any review or approval is sought by the Company, including, without limitation, review, approval
or acceptance of any
reportable event required to be reported in any SEC filing or report
by the Company; or (B) any amendment, waiver, right of first refusal, participation right, acquisition or financing, including
any acquisition or financing is proposed, introduced, offered or arranged by any one or more Subscribers or their affiliates or
sought by the Company, shall not be claimed by the Company or any person seeking to assert such a claim on behalf of the Company,
to constitute the forming of any “Group” as such term is defined under Section 13(d) or Section 16 of the Exchange
Act, nor shall any activity permit the Company or any third party holder of securities of the Company to assert any claim that
any beneficial ownership limitations or conversion limitations of the Certificate of Designation or Notes have been exceeded and
such Subscriber, alone or in conjunction with others, constitutes a “Group” for purposes of the Exchange Act as a result
thereof.
(j) Except
as otherwise provided herein, this Agreement shall not be changed, modified or amended and no right hereunder shall be waived,
except in writing signed by both (a) the Company and (b) the Required Holders. The Company shall be prohibited from
offering any additional consideration to any Subscriber in this Offering (or such original Subscriber’s transferee) for the
purposes of inducing such person to change, modify, waive or amend any term of this Agreement or any other Transaction Document
without making the same offer on a pro-rata basis to all other Subscribers (and those transferees) in this Offering allocable to
the securities acquired by such transferee(s). "Required Holders" means the Lead Investor; provided however, that if
the Lead Investor no longer holds any Securities, “Required Holders” means Subscribers holding at least 60% of the
Units sold in the Offering outstanding on the date of determination.
(k) This
Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts
of law principles.
(l) The
Company and each Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with this
Agreement shall be adjudicated before a court located in the City of New York, Borough of Manhattan, and they hereby submit to
the exclusive jurisdiction of the federal and state courts of the State of New York located in the City of New York, Borough of
Manhattan with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such
court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the
securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified
mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party
shall furnish in writing to the other.
(m) 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.
(n) This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[Signature Pages Follow]
ALL SUBSCRIBERS MUST COMPLETE THIS PAGE
IN WITNESS WHEREOF, the Subscriber has executed
this Agreement on the ____ day of _____, 2016.
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x $25,000 for per Unit = |
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Aggregate Purchase Price |
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Total Note Conversion Shares Underlying the Note |
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Total Preferred Shares Underlying the Warrant |
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Total Preferred Conversion Shares Underlying the Preferred Shares |
Manner in which Title is to be held (Please Check One):
1. |
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Individual |
7. |
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Trust/Estate/Pension or Profit sharing Plan
Date Opened:______________ |
2. |
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Joint Tenants with Right of Survivorship |
8. |
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As a Custodian for
________________________________
Under the Uniform Gift to Minors Act of the State of
________________________________ |
3. |
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Community Property |
9. |
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Married with Separate Property |
4. |
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Tenants in Common |
10. |
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Keogh |
5. |
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Corporation/Partnership/ Limited Liability Company |
11. |
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Tenants by the Entirety |
6. |
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IRA |
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ALTERNATIVE DISTRIBUTION INFORMATION
To direct distribution to a party other than
the registered owner, complete the information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.
Name of Firm (Bank, Brokerage, Custodian):
Account Name:
Account Number:
Representative Name:
Representative Phone Number:
Address:
City, State, Zip:
IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER
MUST SIGN.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE
23.
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE
PAGE 24.
EXECUTION BY NATURAL PERSONS
_____________________________________________________________________________
Exact Name in Which Title is to be Held |
_________________________________
Name (Please Print) |
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_________________________________
Name of Additional Purchaser |
_________________________________
Residence: Number and Street |
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_________________________________
Address of Additional Purchaser |
_________________________________
City, State and Zip Code |
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_________________________________
City, State and Zip Code |
_________________________________
Social Security Number |
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_________________________________
Social Security Number |
_________________________________
Telephone Number |
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_________________________________
Telephone Number |
_________________________________
Fax Number (if available) |
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________________________________
Fax Number (if available) |
_________________________________
E-Mail (if available) |
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________________________________
E-Mail (if available) |
__________________________________
(Signature)
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________________________________
(Signature of Additional Purchaser) |
ACCEPTED this ___ day of _________ 2016, on behalf of the Company. |
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By:_________________________________
Name:
Title: |
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[SIGNATURE PAGE FOR SUBSCRIPTION AGREEMENT]
EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation, Partnership, LLC, Trust, Etc.)
_____________________________________________________________________________
Name of Entity (Please Print) |
Date of Incorporation or Organization: |
State of Principal Office: |
Federal Taxpayer Identification Number:
____________________________________________
Office Address
____________________________________________
City, State and Zip Code
____________________________________________
Telephone Number
____________________________________________
Fax Number (if available)
____________________________________________
E-Mail (if available)
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By: _________________________________
Name:
Title: |
[seal]
Attest: _________________________________
(If Entity is a Corporation) |
_________________________________
_________________________________
Address |
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ACCEPTED this ____ day of __________ 2016, on behalf of the Company. |
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By: _________________________________
Name:
Title: |
[SIGNATURE PAGE FOR SUBSCRIPTION AGREEMENT]
INVESTOR QUESTIONNAIRE
Instructions: Check all boxes below which correctly
describe you.
o |
You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1) the decision that you shall subscribe for and purchase shares of common stock or preferred stock, is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Units is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for and purchase the Securities is made solely by persons or entities that are accredited investors. |
o |
You are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. |
o |
You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose of making an investment in the Securities and its underlying securities in excess of $5,000,000. |
o |
You are a director or executive officer of the Company. |
o |
You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 (excluding residence) at the time of your subscription for and purchase of the Securities. |
o |
You are a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching the same income level in the current year. |
o |
You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities and whose subscription for and purchase of the Securities is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D. |
o |
You are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs. |
Check all boxes below which correctly describe you.
With respect to this investment in the Securities, your:
Investment Objectives: p Aggressive
Growth
p Speculation
Risk Tolerance: o Low
Risk o Moderate
Risk p High
Risk
Are you associated with a FINRA Member Firm? o Yes o No
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Your initials (purchaser and co-purchaser, if applicable) are required for each item below: |
____ ____ |
I/We understand that this investment is not guaranteed. |
____ ____ |
I/We are aware that this investment is not liquid. |
____ ____ |
I/We are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment in this offering. |
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I/We confirm that this investment is considered “high risk.” (This type of investment is considered high risk due to the inherent risks including lack of liquidity and lack of diversification. Success or |
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failure of private placements such as this is dependent on the corporate issuer of these securities and is outside the control of the investors. While potential loss is limited to the amount invested, such loss is possible.) |
The Subscriber hereby represents and warrants
that all of its answers to this Investor Questionnaire are true as of the date of its execution of the Subscription Agreement pursuant
to which it purchased the Securities.
___________________________________
Name of Purchaser [please print]
___________________________________
Signature of Purchaser (Entities please
provide signature of Purchaser’s duly
authorized signatory.)
___________________________________
Name of Signatory (Entities only)
___________________________________
Title of Signatory (Entities only) |
___________________________________
Name of Co-Purchaser [please print]
___________________________________
Signature of Co-Purchaser |
[SIGNATURE PAGE FOR INVESTOR QUESTIONNAIRE]
Exhibit A
Form of Note
Exhibit B
Form of Warrant
Exhibit C
Certificate of Designations
Exhibit D
Company Wire Instructions
Medical Alarm Concepts
Contact: Ronnie Adams
1-877-639-2929x113
Allen Polsky
1-877-639-2929x 116
Bank Information: Wells Fargo
San Francisco, Ca
Medical Alarm Concepts
200 West Church Road
Suite B
King of Prussia, Pa 19406
Account # 2000029817308
• Wires ABA #: 121000248
• Swift Code: WFBIUS6S
Exhibit E
Amended and Restated Charter
Exhibit F
Use of Proceeds
$250,000 at the direction of the Lead Investor to be used to pay
for the Company’s public relations and expenses associated with publications, reports and communications with shareholders
and others concerning the Company's business.
Exhibit G
Lead Investor
Benza Pharma, LLC
Exhibit H
Adams Lockup Agreement
Exhibit I
Registration Rights Agreement
Annex A
NOTICE OF BENEFICIAL OWNERSHIP LIMITATION
In accordance with Section 5(o) of the Securities
Purchase Agreement (the “Agreement”) by and between Medical Alarm Concepts Holding, Inc., a Nevada corporation
(the “Corporation”) and the undersigned, the undersigned hereby elects that, effective immediately, the
Corporation shall not effect any conversion of the undersigned’s Preferred Shares that are outstanding at the Closing or
anytime following the Closing, and that the undersigned shall not have the right to convert or vote any portion of the Preferred
Shares, to the extent that, after giving effect to such conversion, the undersigned (together with its Affiliates, and any Persons
acting as a group together with the undersigned or any of the undersigned’s Affiliates) would beneficially own in excess
of the Beneficial Ownership Limitation. All terms not defined herein shall have the meanings assigned to them
in the Agreement.
[SUBSCRIBER]
By:___________________________________
Name:
Title: |
REGISTRATION RIGHTS AGREEMENT
This Registration Rights
Agreement (this “Agreement”) is made and entered into as of February ___, 2016, between Medical Alarm Concepts
Holding, Inc., a Nevada corporation (the “Company”), and each of the several purchasers signatory hereto (each
such purchaser, a “Purchaser” and, collectively, the “Purchasers”).
This Agreement is made
pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase
Agreement”).
The Company and each Purchaser
hereby agrees as follows:
1. Definitions.
Capitalized terms used
and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(d).
“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 75th calendar day
following the Closing Date and with respect to any additional Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the 90th calendar day following the date on which an additional Registration Statement is required
to be filed hereunder; provided, however, that in the event the Company is notified by the Commission that one or
more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness
Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if
such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not
a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
“Event”
shall have the meaning set forth in Section 2(d).
“Event
Date” shall have the meaning set forth in Section 2(d).
“Filing
Date” means (i) with respect to the Initial Registration Statement required hereunder, the 30th calendar day following
the Closing Date, and (ii) with respect to any additional Registration Statements which may be required pursuant to Section 2(c)
or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration
Statement related to the Registrable Securities.
“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified
Party” shall have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses”
shall have the meaning set forth in Section 5(a).
“Plan
of Distribution” shall have the meaning set forth in Section 2(a).
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.
“Registrable
Securities” means, as of any date of determination, (a) 7,500,000 shares of Common Stock issuable upon conversion of
the Notes (the “Conversion Shares”) and 7,500,000 shares of Common Stock issuable upon conversion of the Preferred
Shares (the “Preferred Conversion Shares”) underlying the Warrants sold in the offering for which this Agreement relates,
(b) any additional shares of Common Stock issuable in connection with any anti-dilution provisions in the Notes, Warrants or Preferred
Shares, without giving effect to any limitations on conversion or exercise set forth in the Notes, Warrants or Preferred Shares
and (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable
Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement
hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities
is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder
in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance
with Rule 144, or (c) commencing twenty-four (24) months after the Closing Date, such securities become eligible for resale without
the requirement for the Company to be in compliance with current public information under Rule 144 and without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect,
addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities
issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable,
were at no time held by any Affiliate of the Company).
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional
registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements
to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule
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.
“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.
“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC
Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.
“Underlying
Shares” means the Conversion Shares and the Preferred Conversion Shares as a whole.
2. Registration.
(a)
On or prior to each Filing Date, the Company shall prepare and file with the Commission a
Registration Statement covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415 (assuming on such date the Notes, Warrants and Preferred shares are converted and exercised in full, as applicable,
without regard to any exercise limitation therein). Each Registration Statement filed hereunder shall be on Form S-3 (except if
the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless
otherwise directed by at least a majority in interest of the Holders of Registrable Securities then outstanding) substantially
the “Plan of Distribution” attached hereto as Annex A. Subject to the terms of this Agreement, the Company
shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section
3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later
than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder
or pursuant to Rule 144, or (ii) commencing twenty-four (24) months after the Closing Date, may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information
requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon
exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no
time held by any Affiliate of the Company) (the “Effectiveness Period”). The Company shall telephonically
request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall immediately
notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such
Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such Registration
Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one (1)
Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under
Section 2(d).
(b)
Notwithstanding the registration obligations set forth in Section 2(a), if the Commission
informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for
resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof
and use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission,
covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form
available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e);
provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to
advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including
without limitation, Compliance and Disclosure Interpretation 612.09.
(c)
Notwithstanding any other provision of this Agreement if the Commission or any
SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for
the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to
its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced
as follows:
| a. | First, the Company shall reduce or eliminate any securities to be
included by any Person other than a Holder; |
| b. | Second, the Company shall reduce Registrable Securities represented
by Underlying Shares (applied, in the case that some Underlying Shares may be registered, to the Holders on a pro rata basis based
on the total number of unregistered Underlying Shares held by such Holders). |
In the event of a cutback hereunder,
the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s
allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will
use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company
or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register
for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d)
If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if
the Company files a Registration Statement without affording the Holders the opportunity to review and comment on the same as required
by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with
the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission
pursuant to the Securities Act, within five (5) Trading Days of the date that the Company is notified (orally or in writing, whichever
is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further
review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within twenty (20) Business
Days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration
Statement to be declared effective
unless such delay is caused by the need to update financial statements, or (iv) a Registration Statement registering for resale
all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration
Statement, or (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not
permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than fifteen (15) calendar days or
more than an aggregate of thirty (30) calendar days (which need not be consecutive calendar days) during any 12-month period (any
such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iv), the date on
which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for
purpose of clause (iii) the date which such twenty (20) day period is exceeded, and for purpose of clause (v) the date on which
such fifteen (15) or thirty (30) calendar day period, as applicable, is exceeded being referred to as “Event Date”),
then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each
monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal
to 2% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for the Registrable Securities held
by Holder for the first such Event Date and on each of the following Subsequent Event Dates. If the Company fails to pay any partial
liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.
The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior
to the cure of an Event. The foregoing liquidated damages shall not be payable in connection with cutbacks required to be made
by the Company in compliance with Section 2(b) and 2(c) above, provided the Company has complied with all of its obligations pursuant
to Section 2(b) and 2(c) above.
(e)
If Form S-3 is not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake
to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain
the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the Commission.
3. Registration Procedures.
In connection with the
Company’s registration obligations hereunder, the Company shall:
(a)
Not less than five (5) Trading Days prior to the filing of each Registration Statement and
not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including
any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated
by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel
to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the
Company shall not be obligated to provide the
Holders advance copies of any universal
shelf registration statement registering securities in addition to those required hereunder, or any Prospectus prepared thereto.
The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the
Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified
of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration
Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements
thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex
B (a “Selling Stockholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to
the Filing Date or by the end of the fourth (4th) Trading Day following the date on which such Holder receives draft
materials in accordance with this Section.
(b)
(i) Prepare and file with the Commission such amendments, including post-effective amendments,
to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement
continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities,
(ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of
this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide
as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating
to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material
non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable
provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by
a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.
(c)
If during the Effectiveness Period, the number of Registrable Securities at any time exceeds
100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as
reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the
resale by the Holders of not less than the number of such Registrable Securities.
(d)
Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses
(iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have
been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such
filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be
filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement
and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement
or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal
or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional
information, (iii) of the issuance
by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be,
it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of
the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material
and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability
of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information
which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e)
Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i)
any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f)
Furnish to each Holder, without charge, at least one conformed copy of each such Registration
Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission;
provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g)
Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to
Section 3(d).
(h)
The Company shall cooperate with any broker-dealer through which a Holder proposes to resell
its Registrable Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as
requested by any such Holder, and the Company shall pay the filing fee required by such filing within two (2) Business Days of
request therefor.
(i)
Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable
efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption
from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration
or qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts
or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration
Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is
not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file
a general consent to service of process in any such jurisdiction.
(j)
If requested by a Holder, cooperate with such Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.
(k)
Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible
under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company
and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment,
to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have
been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use
of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this
Section 3(k) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated
damages otherwise required pursuant to Section 2(d), for a period not to exceed 60 calendar days (which need not be consecutive
days) in any 12-month period.
(l)
Comply with all applicable rules and regulations of the Commission.
(m)
From and after the date the Company becomes eligible to use Form S-3, the Company shall use
its best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale
of Registrable Securities.
(n)
The Company may require each selling Holder to furnish to the Company a certified statement
as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations
hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information
within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder
only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only,
until such information is delivered to the Company.
4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred
to in
the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel
and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings
required to be made with any Trading Market on which the Common Stock is then listed for trading, (C) in compliance with applicable
state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements
of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not
previously paid by the Company in connection with an Issuer Filing, with respect to any filing that may be required to be made
by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so
long as the broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses
(including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires
such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of
the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit
and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the Holders.
5. Indemnification.
(a)
Indemnification by the Company. The Company shall, notwithstanding any termination
of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin
call of Common Stock), investment advisors and 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 each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors,
members, stockholders, partners, agents and 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 each such controlling Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1)
any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation
thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly
for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it
being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event
of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus
after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use
by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent
that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. The Company
shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with
the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable
Securities by any of the Holders in accordance with Section 6(h).
(b)
Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify
and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees
of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based solely upon: (x) such Holder’s failure to comply with any applicable prospectus delivery requirements
of the Securities Act through no fault of the Company or (y) any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made)
not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus
or (ii) to the extent, but only to the extent, that such information relates to such Holder’s proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration
Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment
or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), to the
extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable Prospectus
after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use
by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent
that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. In no
event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net
proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
(c)
Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly
notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal
or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named
parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
Subject to the
terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d)
Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall
be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other
fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified
for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its
terms.
The parties hereto
agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation
or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to
this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
The indemnity
and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.
6. Miscellaneous.
(a)
Remedies. In the event of a breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that,
in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that
a remedy at law would be adequate.
(b)
No Piggyback on Registrations; Prohibition on Filing Other Registration Statements.
Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities
of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration
statements (other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating
to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable
in connection with the Company’s stock option or other employee benefit plans which are Exempt Issuances) until all Registrable
Securities are registered pursuant to a Registration Statement that is declared effective by the Commission.
(c)
Compliance. Each Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with
sales of Registrable Securities pursuant to a Registration Statement.
(d)
Discontinued Disposition. By its acquisition of Registrable Securities, each Holder
agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii)
through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement
until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it
may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required
to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).
(e)
Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is
not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act)
or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then
the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the
delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement
all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale
pursuant to Rule 144 (without the requirement for the Company to be in compliance with current public information under Rule 144
and without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities
Act (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend
upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company.
(f)
Amendments and Waivers. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company and the Required Holders. If a Registration Statement
does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence,
then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each
Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively
to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given
only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of
the first sentence of this Section 6(f). No consideration 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 also is offered to all of the parties to this
Agreement.
(g)
Notices. Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
(h)
Successors and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may
not assign (except by merger) its rights or obligations hereunder without the prior written consent of the Required Holders. Each
Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase
Agreement.
(i)
No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered,
as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the
date of this Agreement, enter into
any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(i), neither the Company nor
any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(j)
Execution and Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data
file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
(k)
Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.
(l)
Cumulative Remedies. The remedies provided herein are cumulative and not exclusive
of any other remedies provided by law.
(m)
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.
(n)
Headings. The headings in this Agreement are for convenience only, do not constitute
a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.
(o)
Independent Nature of Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible
in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement
or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute
the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that
the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated
by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group,
and the Company shall not asset any such claim, with respect to such obligations or transactions. Each Holder shall be entitled
to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary
for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with
respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any
Holder, and was done solely for the convenience
of the Company and not because it
was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement
is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among
Holders.
********************
(Signature
Pages Follow)
IN WITNESS WHEREOF, the
parties have executed this Registration Rights Agreement as of the date first written above.
MEDICAL ALARM CONCEPTS
HOLDING, INC.
|
By:__________________________________________
Name:
Title:
|
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO
MEDICAL
ALARM CONCEPTS HOLDING, INC. RRA]
Name of Holder: _______________________________________________________________
Signature of Authorized Signatory of
Holder: ________________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory:
_____________________________________________
Facsimile Number of Authorized Signatory:
__________________________________________
Address for Notice to Holder: _____________________________________________________
______________________________________________________________________________
______________________________________________________________________________
[SIGNATURE PAGES CONTINUE]
Annex A
Plan of Distribution
Each Selling Stockholder
(the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities covered hereby on the NASDAQ Capital Market, OTCQB or any other stock
exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed
or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block trades in which the broker-dealer will attempt to sell the securities as agent but
may position and resell a portion of the block as principal to facilitate the transaction; |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately negotiated transactions; |
| · | settlement of short sales entered into after the effective date of the registration statement
of which this prospectus is a part; |
| · | in transactions through broker-dealers that agree with the Selling Stockholders to sell a
specified number of such securities at a stipulated price per security; |
| · | through the writing or settlement of options or other hedging transactions, whether through an
options exchange or otherwise; |
| · | a combination of any such methods of sale; or |
| · | any other method permitted pursuant to applicable law. |
The Selling Stockholders
may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”),
if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities,
from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with
the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions
they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions,
or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter
into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which
securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The Selling Stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive
fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
The Company is required
to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
Because Selling
Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the
prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with
the proposed sale of the resale securities by the Selling Stockholders.
We agreed to keep
this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of
similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or
any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be
sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable
rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions
of the Exchange Act and the rules and
regulations thereunder, including Regulation
M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver
a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the
Securities Act).
Annex B
MEDICAL
ALARM CONCEPTS HOLDING, INC.
Selling Stockholder Notice and Questionnaire
The undersigned
beneficial owner of common stock (the “Registrable Securities”) of Medical Alarm Concepts Holding, Inc., a Nevada
corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and
Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”)
for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”),
of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain legal consequences
arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned
beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
The undersigned hereby provides the
following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
(a) Full
Legal Name of Selling Stockholder
(b) Full
Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
(c) Full
Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to
vote or dispose of the securities covered by this Questionnaire):
2. Address for Notices to Selling
Stockholder:
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Telephone: |
Fax: |
Contact Person: |
3. Broker-Dealer Status:
(a) Are
you a broker-dealer?
Yes ☐ No ☐
(b) If
“yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services
to the Company?
Yes ☐ No ☐
Note: If
“no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in
the Registration Statement.
(c) Are
you an affiliate of a broker-dealer?
Yes ☐ No ☐
(d) If
you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of
business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings,
directly or indirectly, with any person to distribute the Registrable Securities?
Yes ☐ No ☐
Note: If
“no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in
the Registration Statement.
4. Beneficial Ownership of Securities
of the Company Owned by the Selling Stockholder.
Except as set forth below in
this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.
(a) Type
and Amount of other securities beneficially owned by the Selling Stockholder:
5. Relationships with the Company:
Except as set forth below,
neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.
| | State any exceptions here: |
The undersigned
agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent
to the date hereof at any time while the Registration Statement remains effective.
By signing below,
the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion
of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF
the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person
or by its duly authorized agent.
Date: Beneficial Owner:
By:
Name:
Title:
PLEASE FAX A COPY (OR EMAIL A .PDF COPY)
OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
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